Exhibit 2.1
EXECUTION VERSION
PURCHASE AND SALE AGREEMENT
by and among
COEN OIL COMPANY, LLC
COEN MARKETS, INC.
THE THOMASTON LAND COMPANY, LLC
(“Sellers”)
and
SPRAGUE OPERATING RESOURCES LLC
(“Purchaser”)
Dated as of September 18, 2017
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ...........................................................................................................1
ARTICLE II PURCHASE AND SALE OF COMPANY INTERESTS AND
TRANSFERRED ASSETS ................................................................................................14
Purchase and Sale ..................................................................................................14
Excluded Assets .....................................................................................................15
Assumed Liabilities ...............................................................................................16
Excluded Liabilities ...............................................................................................16
Closing Actions ......................................................................................................16
Closing ...................................................................................................................18
Estimated Closing Statement; Final Closing Statement ........................................18
Earnout ...................................................................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS .............................25
Organization of Seller; Authority and Binding Effect ...........................................25
Organization of the Companies .............................................................................26
Capitalization .........................................................................................................26
Subsidiaries ............................................................................................................26
No Violation; Consents and Approvals .................................................................26
Financial Reports ...................................................................................................27
Personal Property ...................................................................................................27
Real Property .........................................................................................................27
Intellectual Property ...............................................................................................28
Litigation ................................................................................................................29
Employee Benefit Plans .........................................................................................29
Taxes ......................................................................................................................30
Contracts and Commitments ..................................................................................31
Compliance with Laws ..........................................................................................32
Labor Matters .........................................................................................................32
Environmental Matters...........................................................................................34
Customers and Suppliers........................................................................................35
Brokers ...................................................................................................................35
Affiliate Transactions.............................................................................................35
Undisclosed Liabilities; Payables; Receivables .....................................................35
Insurance ................................................................................................................36
Company Debt and Transaction Expenses ............................................................36
Inventory ................................................................................................................36
Absence of Certain Changes, Events and Conditions ............................................36
Exclusivity of Representations ..............................................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER ......................37
Organization; Authority and Binding Effect..........................................................37
No Violation; Consents and Approvals .................................................................38
Litigation ................................................................................................................38
Investment Intent ...................................................................................................38
Funding ..................................................................................................................38
Purchaser’s Reliance ..............................................................................................39
Brokers ...................................................................................................................39
Solvency .................................................................................................................39
R&W Policy ...........................................................................................................40
ARTICLE V COVENANTS OF THE PARTIES ........................................................................40
Conduct of Business ..............................................................................................40
Access to Information Prior to the Closing; Confidentiality .................................40
Commercially Reasonable Efforts .........................................................................42
Consents .................................................................................................................42
Public Announcements ..........................................................................................42
Notice of Events .....................................................................................................43
Officer and Director Indemnification and Insurance .............................................43
No Solicitation or Negotiation ...............................................................................44
Tax Matters ............................................................................................................45
Employees ..............................................................................................................47
Preservation of Records .........................................................................................48
Conflicts; Privileges ...............................................................................................48
Resignation of Officers and Directors ...................................................................49
No Modification of R&W Policy ...........................................................................49
Pre-Closing Reorganization ...................................................................................50
Transition License Agreement ...............................................................................50
Transition Services Agreement ..............................................................................50
Non-Competition ...................................................................................................50
Receivables and Administrative Support ...............................................................52
Change of Name ....................................................................................................52
Estoppel Certificate ................................................................................................53
Title Insurance Proforma and Land Title Survey ..................................................53
Joseph Action .........................................................................................................53
ARTICLE VI CONDITIONS TO CLOSING ..............................................................................53
Conditions to Sellers’ Obligations .........................................................................53
Conditions to Purchaser’s Obligations...................................................................54
Frustration of Closing Conditions ..........................................................................56
ARTICLE VII TERMINATION..................................................................................................56
Termination ............................................................................................................56
Procedure and Effect of Termination .....................................................................57
ARTICLE VIII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNIFICATION .............................................................................57
Survival of Representations, Warranties and Covenants .......................................57
Indemnification ......................................................................................................57
Indemnification Claim Procedures ........................................................................58
Limitations on Indemnification Liability ...............................................................59
Mitigation of Damages ..........................................................................................60
Order and Manner of Payment ...............................................................................60
Sole and Exclusive Remedy ...................................................................................61
Sellers’ and Founders’ Release ..............................................................................62
Release of Indemnity Escrow ................................................................................62
Adjustment to Purchase Price ................................................................................62
ARTICLE IX MISCELLANEOUS..............................................................................................63
Further Assurances.................................................................................................63
Notices ...................................................................................................................63
Exhibits and Schedules ..........................................................................................64
Amendment, Modification and Waiver .................................................................64
Entire Agreement ...................................................................................................64
Severability ............................................................................................................64
Binding Effect; Assignment ...................................................................................65
No Third-Party Beneficiaries .................................................................................65
Fees and Expenses; Transfer Taxes .......................................................................65
Counterparts; Facsimile Signatures .......................................................................66
Interpretation; Construction ...................................................................................66
Forum; Service of Process .....................................................................................67
Governing Law ......................................................................................................67
WAIVER OF JURY TRIAL ..................................................................................67
Specific Performance .............................................................................................67
No Recourse Against Nonparty Affiliates .............................................................68
Acknowledgment of Purchaser; Disclaimers .........................................................68
Exhibits
Exhibit A: Bill of Sale
Exhibit B: Assignment and Assumption of Lease
Exhibit C: Final Closing Statement
Exhibit D: R&W Policy
Exhibit E: Transition License Agreement
Exhibit F: Transition Services Agreement
Exhibit G: FIRPTA Certificate
Schedules
Schedule 1.1(a) – Petroleum Products Inventory Value Calculation and Adjustment
Schedule 1.1(b) – Seller Fraud Parties
Schedule 1.1(c) – Purchaser Fraud Parties
Schedule 1.1(d) – Inventory
Schedule 1.1(e) – Retained Company Property
Schedule 1.1(f) – Energy Sector Customers and Value Chain
Schedule 1.1(g) – Stay Bonuses for Continuing Employees
Schedule 1.1(h) – Capital Expenditures
Schedule 1.1(i) – OPIS and Transfer Price Comparison Methodology
Schedule 2.1(b)(i) – Transferred Real Property
Schedule 2.1(b)(ii) – Transferred Personal Property
Schedule 2.3(a) – Assumed Liabilities – Asset Sale
Schedule 2.8(b) – Earnout Calculation Illustration
Schedule 4.2 – Purchaser Governmental Approvals
Schedule 5.9(a) – Purchase Price Allocation
Schedule 5.10(a)(i) – Employees Excluded from Non-Solicit
Schedule 5.10(a)(ii) – Retained Employees
Schedule 5.15(b) – Leases to be Terminated
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of
September 18, 2017, by and among COEN OIL COMPANY, LLC, a Pennsylvania limited liability
company (“Seller Parent”), COEN MARKETS, INC., a Pennsylvania corporation (“Coen
Markets”), THE THOMASTON LAND COMPANY, LLC a Pennsylvania limited liability
company (“Thomaston Land”, together with Seller Parent and Coen Markets, “Sellers”) and
SPRAGUE OPERATING RESOURCES LLC, a Delaware limited liability company (the
“Purchaser”).
WHEREAS, the respective boards of directors or managers, as applicable, of
Sellers and Purchaser deem it advisable and in the best interests of their respective limited liability
company or corporation, as applicable, and their respective members or shareholders, as
applicable, to enter into this Agreement and to consummate the Transaction (as defined herein)
and the other transactions contemplated hereby upon the terms and conditions set forth herein;
WHEREAS, Seller Parent owns (i) all of the outstanding limited liability company
membership interests (the “Coen Energy Interests”) of Coen Energy, LLC, a Pennsylvania
limited liability company (“Coen Energy”) and (ii) all of the outstanding limited liability company
membership interests (the “Coen Transport Interests”, together with the Coen Energy Interests,
the “Company Interests”) of Coen Transport, LLC, a Pennsylvania limited liability company
(“Coen Transport” together with Coen Energy, the “Companies”);
WHEREAS, Seller Parent, Coen Markets and Thomaston Land own the
Transferred Assets (as defined herein);
WHEREAS, Purchaser desires to purchase from Seller Parent, and Seller Parent
desires to sell, transfer and convey to Purchaser, all of Seller Parent’s right, title and interest in and
to the Company Interests, subject to the retention of the Retained Company Assets (as defined
herein) and the Excluded Liabilities (as defined herein) and subject to the terms and conditions of
this Agreement; and
WHEREAS, Purchaser desires to purchase from Seller Parent, Coen Markets and
Thomaston Land and each of Seller Parent, Coen Markets and Thomaston Land desire to sell,
transfer and convey to Purchaser, all of their respective right, title and interest in and to the
Transferred Assets, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the representations,
warranties, covenants and agreements hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings
specified below:
“Accounts Receivable” means the Companies’ accounts receivable.
“Acquisition Entity” has the meaning set forth in Section 2.8(g).
“Acquisition Notice” has the meaning set forth in Section 5.18(c).
“Action” means any claim, action, suit, audit, assessment, arbitration or inquiry, or
any proceeding or investigation, by or before any Governmental Authority.
“Actual Gross Profit” means (i) product sales revenue generated from the sale of
fuel, additives and diesel exhaust fluid to Energy Sector Customers, plus (ii) Field Service Fee
Revenue, minus (iii) the cost of fuel sold to Energy Sector Customers which shall be capped based
on a comparison with OPIS Low prices (as described on Schedule 1.1(i)), minus (iv) the cost of
additives and diesel exhaust fluid sold to Energy Sector Customers, minus (v) Field Service Direct
Labor Cost, minus (vi) a capital charge for any Actual Gross Profit generated in Texas based on
the capital expenditures, in accordance with Sprague’s capital expenditure policies, directly used
to support the Texas operations and amortized over an eight year period. For the avoidance of
doubt, there shall be no indirect or direct overhead costs or any capital charges included in the
calculation of Actual Gross Profit other than those listed above.
“Affiliate” has the meaning set forth in Section 9.11(a).
“Agreement” has the meaning set forth in the preamble of this Agreement.
“Antitrust Laws” means the Sherman Antitrust Act, as amended; the Clayton
Antitrust Act of 1914, as amended; the HSR Act; the Federal Trade Commission Act of 1914, as
amended; and all other federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or restraint of trade.
“APKS” has the meaning set forth in Section 5.12.
“Applicable Law” has the meaning set forth in Section 3.5.
“Arbiter” has the meaning set forth in Section 2.7(e)(i).
“Asset Sale” has the meaning set forth in Section 2.1(b).
“Assignment and Assumption of Lease” has the meaning 2.5(c)(iv).
“Assumed Liabilities” has the meaning set forth in Section 2.3.
“Babst” has the meaning set forth in Section 5.12.
“Base Purchase Price” means $33.75 million.
“Basket Amount” has the meaning set forth in Section 8.4(a).
“Bill of Sale” has the meaning set forth in Section 2.5(c)(i).
“Business” means the distribution of fuel products to commercial and residential
customers and the energy field services operations in which the Companies are currently engaged
and in the geographic markets in which they currently compete on the date hereof, which are
Pennsylvania, West Virginia, Ohio and Texas.
“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks in New York City are authorized or obligated by law or executive order to close.
“Cap” has the meaning set forth in Section 8.4(a).
“Capital Expenditures” means the amount set forth on Schedule 1.1(h), which
shall be updated by the Sellers from time to time in advance of the Closing and which shall be
subject to adjustment following the Closing in accordance with the procedures set forth in Section
2.7.
“Cash” means all cash (including, for the avoidance of doubt, restricted cash) and
cash equivalents (including marketable securities and short form investments) of the Companies
calculated in accordance with the Companies’ accounting methodology.
“Closing” has the meaning set forth in Section 2.6.
“Closing Amounts” has the meaning set forth in Section 2.7(a).
“Closing Cash” means the amount, if any, of Cash as of immediately prior to the
Closing.
“Closing Certificate” has the meaning set forth in Section 6.2(h).
“Closing Date” has the meaning set forth in Section 2.6.
“Closing Fees” has the meaning set forth in Section 9.9(b).
“Code” means Internal Revenue Code of 1986, as amended.
“Coen Energy” has the meaning set forth in the recitals to this Agreement.
“Coen Energy Interests” has the meaning set forth in the recitals to this
Agreement.
“Coen Markets” has the meaning set forth in the preamble of this Agreement.
“Coen Transport” has the meaning set forth in the recitals to this Agreement.
“Coen Transport Interests” has the meaning set forth in the recitals to this
Agreement.
“Companies” has the meaning set forth in the recitals to this Agreement.
“Company Debt” means, without duplication, all liabilities and obligations of the
Companies for (i) borrowed money, (ii) notes, bonds, debentures, hedging and swap arrangements
or other similar instruments, (iii) conditional sale or other title retention agreements with respect
to property acquired, (iv) any obligations with respect to letters of credit, bankers acceptances or
similar credit transactions (other than any undrawn amount in respect of such letters of credit or
similar credit transactions), (v) Liabilities of a third party which are guaranteed by either of the
Companies or secured by any Lien on any property of the Companies or the Transferred Assets,
(vi) direct or indirect guarantees of Company Debt of the type referred to in clauses (i) through
(v) above to other Persons, and (vi) all accrued interest, premiums, penalties, redemption costs and
other charges in respect of each of the foregoing in clauses (i) through (v) above, in each case if
and to the extent that any of the foregoing would appear as a liability on a balance sheet prepared
in accordance with the Companies’ accounting methodology. For the avoidance of doubt, capital
lease obligations shall be deemed Company Debt for purposes hereof.
“Company Interests” has the meaning set forth in the recitals to this Agreement.
“Company Plans” has the meaning set forth in Section 3.11(a).
“Confidential Information” means any confidential or proprietary information
concerning the Companies, Sellers or any of their respective unitholders, Affiliates, and/or its or
their business, employees, financial information, marketing, products or services, including
information provided in connection with this Agreement and the terms and conditions of this
Agreement; provided, however, that “Confidential Information” shall not include information that
the receiving party can establish by clear and convincing written evidence: (i) is independently
developed by the receiving party without use of or reference to any Confidential Information
belonging to the disclosing party; (ii) is acquired by the receiving party from a third party having
the legal right to furnish same to the receiving party and not otherwise bound by confidentiality
undertakings covering such information; (iii) is at the time in question (whether at disclosure or
thereafter) generally known by or available to the public through no fault of the receiving party;
or (iv) is required to be disclosed by the written order of a court or other Governmental Authority;
provided, however, that the receiving party shall provide prompt written notice to the disclosing
party so that the disclosing party may have time to take action to oppose or limit such order, and
the receiving party shall provide reasonable cooperation to the disclosing party in furtherance of
any such actions taken by the disclosing party; provided, further, that in the absence of a protective
order, the disclosure shall be limited to that information that is required by Applicable Law to be
disclosed.
“Confidentiality Agreement” has the meaning set forth in Section 5.2(d).
“Continuing Employees” means any Current Employee that, after Closing, is
employed by Purchaser or Purchaser’s Affiliates.
“Contract” has the meaning set forth in Section 3.13.
“Cumulative Earnout Amount” has the meaning set forth in Section 2.8(b)(iii).
“Current Employee” and “Current Employees” shall have the meanings set forth
in Section 3.15(d).
“Damages” means all out-of-pocket losses, damages, liabilities, debts, obligations,
claims, Actions, judgments, Orders, awards, settlements, injunctions, decrees, fines, Taxes, costs
and expenses, including, without limitation, interest, penalties and reasonable attorneys’ fees and
expenses, provided, however, that Damages shall not include punitive damages, except to the
extent paid to a third party.
“Deed” has the meaning set forth in Section 2.5(c)(ii).
“Dispute Notice” has the meaning set forth in Section 2.7(c).
“Dispute Period” has the meaning set forth in Section 2.7(c).
“Disclosure Schedule” means the disclosure schedules attached to this Agreement
as the same may be updated or supplemented in accordance with Section 5.6.
“Earnout Amount” has the meaning set forth in Section 2.8(b).
“Earnout Determination Date” has the meaning set forth in Section 2.8(a).
“Earnout Dispute Period” has the meaning set forth in Section 2.8(d).
“Earnout Period” has the meaning set forth in Section 2.8(f).
“Energy Sector Business” means the delivered fuels business in which the
Companies are engaged on the date hereof with the Energy Sector Customers.
“Energy Sector Customers” means the Companies’ (i) current customers set forth
on Schedule 1.1(f) and (ii) future customers in the Energy Sector Business, regardless of whether
such future customers are obtained organically or through acquisition, whose business is actively
and directly linked to the operations associated with the Marcellus or Utica shales as well as other
similar shales, such as the Eagle Ford, where the Companies supply fuel, field services, or both to
support the foregoing operations. For the avoidance of doubt, the definition of Energy Sector
Customers is not bound by geography and will incorporate any of the activities associated with the
value chain set forth on Schedule 1.1(f).
“Environment” means soil, land surface and subsurface strata, surface waters
(including navigable and non-navigable inland and ocean waters), ground waters, sediments and
ambient and indoor air.
“Environmental Law” means any Applicable Law that provides for or relates to
(i) protection or restoration of the Environment and plant and animal life, (ii) protection of human
health from environmental exposure to Hazardous Materials, or (iii) the distribution, generation,
handling, importing, management, processing, production, Release, threatened Release, storage,
transfer, transportation, treatment or use of Hazardous Materials.
“ERISA” has the meaning set forth in Section 3.11(a).
“Escrow Agent” has the meaning set forth in Section 2.5(a)(ii).
“Escrow Agreement” has the meaning set forth in Section 2.5(a)(ii).
“Estimated Closing Statement” has the meaning set forth in Section 2.7(a).
“Excess Earnout Amount” has the meaning set forth in Section 2.8.
“Excluded Liabilities” has the meaning set forth in Section 2.4.
“Exercise Notice” has the meaning set forth in Section 5.18(c).
“Field Service Direct Labor Cost” means those direct labor costs for fuelers, site
supervisors, and field service managers inclusive of regular pay, overtime pay, FICA tax, and
benefits of 15% of the total of regular, overtime pay and FICA tax. For the avoidance of doubt,
no overhead, indirect, capital or other costs shall be included in the definition of Field Service
Direct Labor Cost for purposes of the earn out calculation in Section 2.8.
“Field Service Fee Revenue” means revenue received from Energy Sector
Customers for onsite fueling or other support services provided by the Companies.
“Final Closing Amounts” has the meaning set forth in Section 2.7(b).
“Final Closing Statement” has the meaning set forth in Section 2.7(b).
“Final Submission” has the meaning set forth in Section 2.8(d).
“Financial Reports” has the meaning set forth in Section 3.6.
“Founders” means Charles McIlvaine and Andrew McIlvaine.
“Fraud” means actual and intentional fraud with respect to the making of the
representations and warranties pursuant to Article III or Article IV (as applicable), provided, that
such actual and intentional fraud shall only be deemed to exist if, and the party asserting or relying
on the occurrence of such actual and intentional fraud shall satisfy its burden of proof of
establishing by clear and convincing evidence that, any of the individuals identified on Schedule
1.1(b) (in the case of an assertion by Purchaser) or any of the individuals included on Schedule
1.1(c) (in the case of an assertion by Sellers) had actual knowledge (as opposed to imputed or
constructive knowledge) of a fact or matter that would make the representations and warranties
made by a party pursuant to, in the case of Sellers, Article III, or, in the case of Purchaser, Article
IV, inaccurate or untrue when and as made, and that such breach was committed with the express
intention and purpose that the another party be deceived and rely thereon to its detriment.
“Fundamental Representations” has the meaning set forth in Section 8.1.
“GAAP” means generally accepted accounting principles.
“Governmental Approval” has the meaning set forth in Section 3.5.
“Governmental Authority” has the meaning set forth in Section 3.5.
“Hazardous Material” means any substance, material, or waste that is regulated
by any Governmental Authority, including any material, substance, or waste that is defined or
classified as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely
hazardous waste,” “pollutant,” “restricted hazardous waste,” “contaminant,” “toxic waste,”
“pollutant,” or “toxic substance” under any provision of Environmental Law, including petroleum,
petroleum products, asbestos, asbestos-containing material, urea formaldehyde, or polychlorinated
biphenyls.
“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
“Indemnification Claim” has the meaning set forth in Section 8.3.
“Indemnified Party” has the meaning set forth in Section 8.3.
“Indemnitor” means the party required to provide indemnification pursuant to
Section 8.2.
“Indemnity Escrow Amount” means an amount equal to $337,500.
“Indemnity Escrow Funds” means, at any given time after Closing, the funds
remaining in the one or more accounts in which the Escrow Agent has deposited the Indemnity
Escrow Amount in accordance with the Escrow Agreement, including remaining amounts of
interest actually earned.
“Indemnity Escrow Release Date” has the meaning set forth in Section 8.9.
“Information Technology” means computers, computer systems, servers,
workstations, databases, and software programs.
“Intellectual Property” means all intellectual property owned, licensed or used in
the Business including all (a) patents, and all registrations and applications therefor,
(b) trademarks, service marks, trade names, logos, and all registrations and applications therefor,
(c) copyrights, and all registrations and applications therefor, (d) internet domain names and all
registrations therefor, (e) all know-how, trade secrets, confidential or proprietary information,
customer lists, technical information, data, databases, process technology or the like and (f) the
website (www.coenenergy.com).
“Inventory” means all inventory of the Companies as set forth on Schedule 1.1(d)
but excluding Petroleum Products Inventory.
“IRS” means the Internal Revenue Service.
“Joseph Action” means, without duplication, any and all (i) Actions including any
amendments to such Actions, (ii) claims whether in worker’s compensation or otherwise, (iii) cross
claims or (iv) other claims, whether currently existing or asserted in the future, associated with,
arising out of, or resulting from the vehicle accident occurring on or about May 8, 2015 involving
Casey Joseph, including, but not limited to, Joseph v. Goodyear Tire and Rubber Company, et. al.
filed on May 2, 2017 in the Court of Common Pleas of Allegheny County, Pennsylvania, Civil
Division, GD 17-006580.
“Land Title Survey” has the meaning set forth in Section 6.2(l).
“Leased Real Property” has the meaning set forth in Section 3.8(b).
“Leases” has the meaning set forth in Section 3.8(b).
“Liabilities” means liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or
unaccrued, matured or unmatured or otherwise.
“Liens” means, with respect to any specified asset, any and all liens, claims,
encumbrances, options, pledges, security interests, mortgages, deed of trusts, charges, easements
or encroachments thereon except for Permitted Liens.
“Material Adverse Effect” means an event, change, condition, circumstance or
effect that, individually or in the aggregate, is or would reasonably expected to be materially
adverse to the financial condition or results of operations of the Business or Companies taken as a
whole, and the financial condition of the Transferred Assets taken as a whole, other than events,
changes or effects: (i) occurring in economic or political conditions or the financing, banking,
currency or capital markets in general to the extent that such conditions do not disproportionately
affect the Companies as compared to other companies participating in the same industry as the
Companies; (ii) occurring generally in, or generally affecting, the industries or the markets in
which the Companies conduct business to the extent that such conditions do not disproportionately
affect the Companies as compared to other companies participating in the same industry as the
Companies; (iii) resulting from the negotiation, announcement, execution, pendency or
performance of this Agreement or the transactions contemplated hereby or any communication by
either of the Companies or any of their respective Affiliates of its plans or intentions (including in
respect of employees) with respect to the Business (so long as such action or occurrence was in
compliance with this Agreement), including (a) losses or threatened losses of, or any adverse
change in the relationship with, employees, customers, suppliers, distributors, financing sources,
joint venture partners, licensors, licensees or others having relationships with the Companies and
(b) the initiation of litigation or other administrative proceedings by any Person with respect to
this Agreement or any of the transactions contemplated hereby; (iv) resulting from the
consummation of the transactions contemplated by this Agreement, the compliance with the terms
of this Agreement or the taking of any action required or contemplated by this Agreement or
consented to by Purchaser; (v) resulting from changes in laws or Orders, or accounting
requirements or principles, or any interpretation thereof, after the date hereof; (vi) resulting from
an outbreak or escalation of hostilities involving any country where the Companies do business,
the declaration by any country where the Companies do business of a national emergency or war,
or the occurrence of any acts of terrorism and any actions or reactions thereto in such country;
(vii) resulting from any natural disaster, (viii) resulting from any failure of the Companies to meet
any projections or forecasts; or (ix) resulting from any action required to be taken under any
Applicable Law or Order or any existing Material Contract by which the Companies (or any of
their respective properties) are bound; provided, that in determining whether a Material Adverse
Effect has occurred or would reasonably be likely to occur, there shall be taken into account any
right to insurance or indemnification available to the Companies. For the avoidance of doubt, a
“Material Adverse Effect” shall be measured only against past performance of the Companies,
and, as it relates to the Business and Transferred Assets and not against any forward-looking
statements, projections or forecasts of Sellers, the Companies or any other Person.
“Material Contract” has the meaning set forth in Section 3.13.
“Material Customer” has the meaning set forth in Section 3.17(a).
“Material Supplier” has the meaning set forth in Section 3.17(b).
“Maximum Earnout Amount” has the meaning set forth in Section 2.8.
“Membership Interest Sale” has the meaning set forth in Section 2.1(a).
“Nonparty Affiliates” has the meaning set forth in Section 9.16.
“Order” has the meaning set forth in Section 3.5.
“Pending Claim” has the meaning set forth in Section 8.9.
“Permits” has the meaning set forth in Section 3.14.
“Permitted Liens” means (i) statutory Liens or other Liens arising by operation of
law securing payments not yet due or which are being contested in good faith, including Liens of
warehouseman, mechanics, suppliers, materialmen and repairmen, (ii) Liens for Taxes not yet due
and payable or for current Taxes that may thereafter be paid without penalty or which are being
contested in good faith and by appropriate proceedings, (iii) Liens affecting the Real Property set
forth in Section 3.8 of the Disclosure Schedule, including: (a) easements, rights of way,
servitudes, permits, licenses, surface leases, ground leases to utilities, municipal agreements,
railway siding agreements and other rights, (b) conditions, covenants or other similar restrictions,
(c) easements for streets, alleys, highways, telephone lines, gas pipelines, power lines, railways
and other easements and rights of way of public record on, over or in respect of any such real
property, (d) encroachments and other matters that would be shown in an accurate survey or
physical inspection of such real property, (e) Liens in favor of the lessors under Real Property
leases or encumbering the interests of the lessors in such Real Property, (f) all matters showing on
title commitments made available or delivered to Purchaser on or prior to the date hereof, and
(g) any other such Liens, including irregularities of title or connected with or in lieu of
environmental remediation affecting such Real Property, as would not reasonably be expected to
have a Material Adverse Effect, (iv) Liens created by licenses granted in the ordinary course of
business in any Information Technology, (v) Liens reflected or reserved against or otherwise
disclosed in the Financial Reports or notes thereto or securing liabilities reflected in the Financial
Reports or notes thereto, (vi) Liens listed in Section 1.1 of the Disclosure Schedule, and (vii) any
other Liens not described in clauses (i) through (vi) above created by this Agreement or connected
with the transactions contemplated hereby or by the actions of Purchaser or any respective
Affiliates (including Liens granted to any financing source in connection with any financing by
Purchaser of the transactions contemplated hereby).
“Person” has the meaning set forth in Section 9.11.
“Personal Property” has the meaning set forth in Section 3.7(a).
“Petroleum Products Inventory” means (i) Coen Energy’s physical inventory of
fungible, marketable petroleum products, including petroleum additives and diesel exhaust fluid,
held for its own account that are usable and salable in the Ordinary Course of Business (as such
term is defined in Schedule 1.1(a)) and (ii) Tank Bottoms (as such term is defined in Schedule
1.1(a)) owned by Coen Energy. Physical inventory of such petroleum products, including
petroleum additives and diesel exhaust fluid, shall be determined in the manner specified in
Schedule 1.1(a) attached hereto and as set forth in a detailed calculation certified by Coen Energy
in the Closing Certificate.
“Petroleum Products Inventory Value” “ means (i) the average of the prices for
the fungible, marketable petroleum products, including petroleum additives and diesel exhaust
fluid, that are usable and salable in the Ordinary Course of Business included in the Petroleum
Products Inventory, as reported by OPIS for Pittsburgh, PA low for the day before, the day of and
the day following the Closing, in the case of petroleum products, or on Seller’s most recent paid
invoice, in the case of petroleum additives and diesel exhaust fluid, and (ii) with respect to the
Tank Bottoms included in the Petroleum Products Inventory, the value shall be Zero Dollars ($0).
“Plans” has the meaning set forth in Section 3.11(a).
“Position Statement” has the meaning set forth in Section 2.7(e)(i).
“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and the portion of any Straddle Period up to and including the Closing Date.
“Purchase Price” means an amount equal to (i) the Base Purchase Price, plus (ii)
Closing Cash, if any, plus (iii) the Petroleum Products Inventory Value, plus (iv) Capital
Expenditures.
“Purchaser” has the meaning set forth in the preamble of this Agreement.
“Purchaser Claims” has the meaning set forth in Section 8.2(a).
“Purchaser Group” has the meaning set forth in Section 8.4(e).
“Purchaser Indemnified Parties” has the meaning set forth in Section 8.2(a).
“Purchaser Plans” has the meaning set forth in Section 5.10(d).
“Purchaser Related Persons” has the meaning set forth in Section 8.8(a).
“Purchaser Transaction Agreements” has the meaning set forth in Section 4.1.
“Purchaser’s Knowledge” or words of similar effect means to the actual
knowledge of any of the following individuals: Gary Rinaldi, Joseph Smith and Bob Blanchard
without any obligation of inquiry.
“Purchaser’s Release” has the meaning set forth in Section 8.8(a).
“Real Property” has the meaning set forth in Section 3.8(a).
“Release” means any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching, or migration on or into the
Environment.
“Released Claims” has the meaning set forth in Section 8.7(a).
“Representatives” means, with respect to any Person, the directors, officers,
employees, managers, members, partners, equity holders, agents, consultants, advisors (including
legal counsel, accountants and financial advisors), representatives and potential financing sources
of such Person.
“Resolution Period” has the meaning set forth in Section 2.7(d).
“Resolved Closing Statement” has the meaning set forth in Section 2.7(e)(i).
“Restricted Period” means the period commencing on the Closing Date and
ending on the fifth anniversary of the Closing Date.
“Retained Company Assets” means, collectively, the Retained Working Capital
and the Retained Company Property.
“Retained Company Property” are those items of personal property retained by
the Sellers and described on Schedule 1.1(e), as well as all records and documentation relating to
the Joseph Action that exist prior to the Closing.
“Retained Working Capital” means, all of the Companies’ (i) accounts receivable
and notes receivable, (ii) accounts payable, which includes trade payables for fuel and other goods
purchased, and notes payable, and (iii) accrued fuel tax payable, which includes fuel taxes
collected but not yet paid to any Governmental Authority but excludes any amounts included in
Transaction Expenses and Company Debt.
“R&W Policy” has the meaning set forth in Section 4.9.
“Sales Event” means a sale of all of the equity or substantially all of the assets of
either of the Companies or the Purchaser to an unrelated third party.
“Seller Claims” has the meaning set forth in Section 8.2(b)
“Seller Indemnified Parties” has the meaning set forth in Section 8.2(b).
“Seller Notice of Dispute” has the meaning set forth in Section 2.8(d).
“Seller Parent” has the meaning set forth in the preamble of this Agreement.
“Seller Parent IP” means all patents, trade names, trademarks, trade devices,
service marks, assumed names, copyrights, domain names or symbols, in each case, whether
registered or not, and including pending registrations for any of the foregoing, owned by Seller
Parent or its Affiliates, which, for the avoidance of doubt, shall include any derivation of the name
“Coen” or any name that is confusingly similar.
“Seller Plans” has the meaning set forth in Section 3.11(a).
“Seller Related Persons” has the meaning set forth in Section 8.7(a).
“Seller Returns” has the meaning set forth in Section 5.9(b).
“Seller Transaction Agreements” has the meaning set forth in Section 3.1.
“Sellers” has the meaning set forth in the preamble of this Agreement.
“Sellers Deficit Amount” has the meaning set forth in Section 2.7(e)(ii)(B)(2).
“Sellers’ Knowledge” or words of similar effect means to the actual knowledge of
any of the following individuals: Charles McIlvaine, Andrew McIlvaine and Colin Dornish,
without any obligation of inquiry.
“Sellers’ Release” has the meaning set forth in Section 8.8(a).
“Side Letter” means that certain side letter agreement, dated as of the date hereof,
by and among the Purchaser and Sellers.
“Stay Bonuses” means all bonuses paid to the Continuing Employees listed on
Schedule 1.1(g) who are expected to remain employed by the Companies and/or the Purchaser
through June 30, 2018.
“Straddle Period” means any taxable period beginning on or prior to and ending
after the Closing Date.
“Subsidiaries” means, when used with respect to any party means any corporation,
partnership, limited liability company or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities, or other interests having by their
terms voting power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, is directly or indirectly,
beneficially owned or controlled by such party or by any one or more of its Subsidiaries.
“Survival Expiration Date” has the meaning set forth in Section 8.1.
“Target Gross Profit” means (i) $7.637 million for the period beginning on the
Closing Date and ending on the day before the first anniversary of the Closing Date; (ii) $7.828
million for the period beginning on the first anniversary of the Closing Date and ending on the day
before the second anniversary of the Closing Date and (iii) $23.489 million for the period
beginning on the Closing Date and ending on the day before the third anniversary of the Closing
Date.
“Target Operations” has the meaning set forth in Section 5.18(c).
“Tax” (including “Taxes”) means all U.S. federal, state, provincial, local, non-U.S.
and other net income, gross income, gross receipts, sales, use ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax, interest or additional amounts
with respect thereto.
“Tax Law” means any Applicable Law related to Taxes.
“Tax Proceeding” has the meaning set forth in Section 5.9(g).
“Tax Return” means any return, declaration, report, claim for refund, statement,
information return or statement or other document required to be filed with respect to Taxes
including any schedule thereto, and including any amendment thereof.
“Termination Date” has the meaning set forth in Section 7.1(b).
“Third Party Intellectual Property” has the meaning set forth in Section 3.9(b).
“Thomaston Land” has the meaning set forth in the preamble of this Agreement.
“Three-Year Cumulative Earnout Ratio” has the meaning set forth in
Section 2.8(b)(iii).
“Title Insurance Proforma” shall mean, with respect to each parcel of Transferred
Real Property, the form of title insurance policy reasonably satisfactory to Purchaser to be issued
by a nationally recognized title insurance company (reasonably acceptable to Purchaser) written
as of the Closing Date.
“Title Insurance Policy” has the meaning set forth in Section 6.2(l).
“Transaction” means, collectively, the Membership Interest Sale and the Asset
Sale.
“Transaction Agreements” means the Seller Transaction Agreements and the
Purchaser Transaction Agreements.
“Transaction Expenses” means an amount in cash equal to, as of immediately
prior to the Closing, the sum of (i) the outstanding fees and expenses of Sellers’ and the
Companies’ (under the control of Seller Parent) counsel and accountants incurred by Sellers and
the Companies (under the control of Seller Parent) in connection with the transactions
contemplated by this Agreement and the Transaction Agreements, (ii) all other outstanding fees
and expenses (including, without limitation, the investment banking fees referred to in
Section 3.18) incurred by Sellers and the Companies (under the control of Seller Parent) in
connection with the transactions contemplated by this Agreement and the Transaction Agreements,
and (iii) with respect to any employee, consultant, director, officer or advisor of the Companies
(under the control of Seller Parent), any transaction bonuses, including 50% of the Stay Bonuses
paid by the Companies to the drivers and fuelers set forth on Schedule 1.1(g), change of control
payments, severance payments or other similar payments payable as a result of the Transaction,
other than the remaining 50% of such Stay Bonuses to such Persons and Stay Bonuses for all other
Continuing Employees, which are for the Purchaser to bear. For the avoidance of doubt, no
amounts which Purchaser is obligated to pay or bear pursuant to Section 9.9(b) shall be included
in Transaction Expenses.
“Transfer Taxes” has the meaning set forth in Section 9.9(b).
“Transferred Assets” has the meaning set forth in Section 2.1(b).
“Transferred Real Property” has the meaning set forth in Section 2.1(b)(i).
“Transition License Agreement” has the meaning set forth in Section 5.16.
“Transition Services Agreement” has the meaning set forth in Section 5.17.
“Year 1 Earnout Amount” has the meaning set forth in Section 2.8(b)(i).
“Year 1 Earnout Ratio” has the meaning set forth in Section 2.8(b)(i).
“Year 2 Earnout Amount” has the meaning set forth in Section 2.8(b)(ii).
“Year 2 Earnout Ratio” has the meaning set forth in Section 2.8(b)(ii).
“Underground Storage Tank Indemnification Fund” means the program to
reimburse eligible participants for certain expenses incurred, pursuant to the Pennsylvania Storage
Tank and Spill Prevention Act (Act 32), as amended, and other similar reimbursement programs,
if any, that may apply to the Transferred Real Property.
ARTICLE II
PURCHASE AND SALE OF COMPANY INTERESTS AND TRANSFERRED ASSETS
Purchase and Sale. On the terms and subject to the conditions set forth herein, at
the Closing:
(a) Seller Parent hereby agrees to sell and Purchaser hereby agrees to purchase
all right, title and interest of Seller Parent in and to the Company Interests, subject to the retention
of the Retained Company Assets, held or owned by Seller Parent as of the Closing (the
“Membership Interest Sale”). For the avoidance of doubt, the Retained Company Assets include
the Retained Working Capital and the Retained Company Property, which are those items of
personal property described on Schedule 1.1(e). At the Closing, Seller Parent shall convey,
transfer, assign and deliver to Purchaser the Company Interests except for the Retained Company
Assets.
(b) Coen Markets and Thomaston Land each hereby agree to sell and Purchaser
hereby agrees to purchase, all right, title and interest of Coen Markets and Thomaston Land in and
to the Transferred Assets (as defined below) owned by them as of the Closing (the “Asset Sale”).
At the Closing, Coen Markets and Thomaston Land shall convey, transfer, assign and deliver to
Purchaser the following assets used in connection with the Business (collectively, the
“Transferred Assets”), free and clear of all Liens, other than Permitted Liens:
(i) Each of Coen Markets’ and Thomaston Land’s right, title and
interest in and to, the Real Property owned or leased to or by them described or listed on
Schedule 2.1(b)(i) (the “Transferred Real Property”), together with all of the applicable
right, title and interest owned by Coen Markets or Thomaston Land, respectively, in and to
all land, buildings, fixtures, structures, improvements, racks, parking lots and all
easements, rights-of-way and other rights and privileges appurtenant thereto;
(ii) All tanks, computers, furniture, fixtures, vehicles and related
equipment of Coen Markets listed on Schedule 2.1(b)(ii);
(iii) All Permits held by Coen Markets and Thomaston Land required for
the ownership, operation and use of the Transferred Assets and listed in Section 3.14 of the
Disclosure Schedule;
(iv) All of Coen Markets’ and Thomaston Land’s right, title and interest,
of any kind and nature whatsoever, solely as it relates to the Transferred Real Property, in
and to any and all pending, current and/or future claims arising under the Underground
Storage Tank Indemnification Fund, including, without limitation, any claims related to
corrective actions and/or third party liability;
(v) The current records and documentation of Seller Parent, Coen
Markets and Thomaston Land, as applicable, solely relating to those items described in
Section 2.1(b)(i)-(iv) above.
Notwithstanding anything to the contrary herein, Sellers (i) shall not sell any right, title and interest
to, and Purchaser shall not have any right, title or interest to the Retained Company Assets and (ii)
shall not contribute, convey, assign, or transfer to Purchaser, and Purchaser shall not acquire or
have any rights to acquire, any assets or liabilities of Seller Parent, Coen Markets or Thomaston
Land except for the Transferred Assets and the Assumed Liabilities.
Excluded Assets. In connection with the Asset Sale and notwithstanding the
foregoing, any and all items not specifically set forth in Section 2.1(b) (and the schedules referred
to therein) will not be included in the Transferred Assets. In connection with the Membership
Interest Sale, the Retained Company Assets will not be included in the sale of the Company
Interests to Purchaser.
Assumed Liabilities. Subject to the terms and conditions of this Agreement,
Purchaser shall assume and agrees to pay, perform and discharge the following Liabilities (the
“Assumed Liabilities”) and no other Liabilities:
(a) With respect to the Asset Sale, all Liabilities of Coen Markets and
Thomaston Land set forth on Schedule 2.3(a), including those Liabilities, solely as it relates to the
Transferred Assets, arising under or relating to Environmental Laws or Hazardous Materials
without regard to whether the related facts, circumstances or conditions existed or occurred or exist
or occur before, as of or after the Closing Date.
(b) With respect to the Membership Interest Sale, all Liabilities of the
Companies as it relates to the Company Interests, excluding any Liabilities of the Companies as it
relates to the Retained Company Assets, but including those Liabilities of the Companies,
exclusive of the Retained Company Assets, arising under or relating to Environmental Laws or
Hazardous Materials without regard to whether the related facts, circumstances or conditions
existed or occurred or exist or occur before, as of or after the Closing Date.
Excluded Liabilities. Notwithstanding the provisions of Section 2.3 or any other
provision in this Agreement to the contrary, Purchaser shall not assume and shall not be responsible
to pay, perform or discharge any Liabilities of Seller Parent, Coen Markets or Thomaston Land of
any kind or nature whatsoever other than the applicable Assumed Liabilities (the “Excluded
Liabilities”). For the avoidance of doubt, the following shall be Excluded Liabilities:
(a) Company Debt, Transaction Expenses, any expenses included in the
definition of Retained Working Capital and any Liabilities relating to the Retained Company
Property; and
(b) Any Liabilities arising from claims, whether in contract, tort or otherwise,
asserted or brought by any prior or purported owner of the Companies or the Transferred Assets
arising out of any act or omission of the Founders or the Companies with respect to the acquisition
of ownership interests in the Companies, the Companies’ predecessors or the Transferred Assets.
(c) Any and all Liabilities or Damages associated with the Joseph Action,
Without limiting the foregoing, Sellers shall be and remain solely liable for the Excluded
Liabilities
Closing Actions.
(a) In accordance with Section 2.5(e), Purchaser shall make the following
payments:
(i) to Sellers, an amount equal to the Purchase Price minus the
Indemnity Escrow Amount;
(ii) to People’s United Bank, National Association, as escrow agent of
the parties hereto (the “Escrow Agent”), an amount equal to the Indemnity Escrow
Amount, to be held in escrow and invested by the Escrow Agent in accordance with the
terms of an Escrow Agreement in a form reasonably acceptable to the parties hereto (the
“Escrow Agreement”).
(b) At the Closing, Seller Parent shall deliver to Purchaser all proper and
necessary instruments for the conveyance of all of Seller Parent’s right, title and interest in, to and
under all of the Company Interests, subject to the retention of the Retained Company Assets, held
or owned by Seller Parent as of the Closing.
(c) At the Closing, Seller Parent, Coen Markets and/or Thomaston Land, as
applicable, shall deliver, or cause to be delivered, to Purchaser each of the following:
(i) a bill of sale in the form attached hereto as Exhibit A (the “Bill of
Sale”) duly executed by Coen Markets transferring the tangible Personal Property included
in the Transferred Assets;
(ii) with respect to each parcel of owned Real Property included in the
Transferred Assets, a deed of special warranty in form and substance satisfactory to
Purchaser (each, a “Deed”), duly executed and notarized by the applicable Seller;
(iii) with respect to each Deed, real property transfer tax returns, duly
executed and notarized by the applicable Seller;
(iv) with respect to that certain Leased Real Property leased by
Thomaston Land, an Assignment and Assumption of Lease in the form attached hereto as
Exhibit B (each, an “Assignment and Assumption of Lease”), duly executed by
Thomaston Land;
(v) the Escrow Agreement, duly executed by Seller Parent;
(vi) the Transition License Agreement, duly executed by Seller Parent;
(vii) the Transition Services Agreement, duly executed by the relevant
parties; and
(viii) such other customary instruments of transfer (including motor
vehicle registrations), assumption, filings or documents, in form and substance reasonably
satisfactory to Purchaser, as may be required to give effect to this Agreement.
(d) At the Closing, Purchaser shall deliver to Sellers each of the following:
(i) the Assignment and Assumption of Lease, duly executed by
Purchaser;
(ii) the Escrow Agreement, duly executed by Purchaser;
(iii) the Transition License Agreement, duly executed by Purchaser;
(iv) the Transition Services Agreement, duly executed by Purchaser; and
(v) such other customary instruments of transfer (including motor
vehicle registrations), assumption, filings or documents, in form and substance reasonably
satisfactory to Sellers, as may be required to give effect to this Agreement.
(e) Mechanics of Payments. Assuming the satisfaction or waiver of all
conditions to Closing set forth in Article VI hereof, cash payments pursuant to Section 2.5(a)(i)
shall be made by wire transfer of immediately available funds on October 2, 2017 (unless the
parties hereto agree otherwise), to the account or accounts designated by Sellers. Wire instructions
for such account or accounts shall be provided by Sellers to Purchaser no later than three (3)
Business Days prior to the Closing Date.
(f) Petroleum Products Inventory Calculation and Adjustment.
(i) On the Closing Date, the ownership of all of the Petroleum Products
Inventory owned by Coen Energy, including any Petroleum Products Inventory on trucks
as of the Closing Date, will be transferred to Purchaser.
(ii) The parties hereto will agree as to the time and date for the gauging
of the Petroleum Products Inventory and quality determination but in no event will such
date and time be more than twenty-four hours prior to the Closing Date. Purchaser’s
auditors, Ernst & Young LLP, will be allowed to observe the gauging. The volume of
product, specifications of the product and Tank Bottoms and calculation of final Petroleum
Products Inventory will be determined in accordance with the procedures set forth on
Schedule 1.1(a).
(iii) The Petroleum Products Inventory Value shall be subject to
adjustment within five (5) Business Days following the Closing in accordance with the
procedures set forth on Schedule 1.1(a).
Closing. The closing of the transactions contemplated hereby (the “Closing”) shall
take place at the offices of Arnold & Porter Kaye Scholer LLP at 250 West 55th Street, New York,
NY 10019, at 10:00 a.m. (local time) or by exchange of the required documents by facsimile or
email on the date that is two (2) Business Days following the satisfaction or waiver of all conditions
to Closing set forth in Article VI hereof (other than those that can only be satisfied at Closing), or
at such other time and place as the parties may agree (the “Closing Date”) but subject in any event
to Article VII. All proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed to have been taken and executed simultaneously and no
proceedings shall be deemed to have been taken nor documents executed or delivered until all have
been taken, executed and delivered. The effective date of the Closing shall be October 1, 2017 at
12:01 a.m.
Estimated Closing Statement; Final Closing Statement.
(a) No later than three (3) Business Days prior to the Closing, Seller shall
deliver to Purchaser a statement (the “Estimated Closing Statement”) setting forth its good faith
estimate of the amounts to be paid by and to the parties hereunder at Closing including, without
limitation, the Petroleum Products Inventory Value (subject to Section 2.5(f) hereunder), the
Closing Fees (to the extent not paid to the proper parties other than the parties hereto) and the
Capital Expenditures (the “Closing Amounts”). The Estimated Closing Statement shall quantify
in reasonable detail and with reasonably detailed back-up data to support such estimates set forth
in the Estimated Closing Statement and shall, at Purchaser’s request, be discussed by Sellers in
good faith with Purchaser as promptly as practicable following receipt by Purchaser.
(b) As promptly as possible, but in any event within thirty (30) days after the
Closing Date, Purchaser will deliver to Seller Parent a statement (the “Final Closing Statement”)
setting forth the final Closing Amounts (the “Final Closing Amounts”). The Final Closing
Statement shall quantify in reasonable detail and with reasonably detailed back-up data to support
such Final Closing Amounts. A sample Final Closing Statement is attached hereto as Exhibit C.
For the avoidance of doubt, the line items set forth on Exhibit C (which includes Annex I attached
thereto) may be over or under inclusive and the numbers set forth therein are for illustrative
purposes only, provided, however, the items and numbers set forth on Exhibit C (inclusive of
Annex I) are intended to reflect the items and numbers known to the parties hereto as of the date
hereof and the parties will in good faith agree on a Final Closing Statement as of the Closing Date
in accordance with the procedures set forth in this Section 2.7 and the principles set forth on Exhibit
C.
(c) Seller Parent shall have thirty (30) days from the date Purchaser delivers the
Final Closing Statement to Seller Parent (such period, the “Dispute Period”) to notify Purchaser
in writing as to whether Seller Parent agrees or disagrees with the Final Closing Statement, which
such notice shall identify in reasonable detail those items and amounts to which Seller Parent
objects (such written notice, the “Dispute Notice”). During the Dispute Period, (i) Seller Parent
and its representatives, including accountants, shall be permitted to review (during regular business
hours and upon reasonable prior notice) the working papers of Purchaser and (where applicable)
shall be given access to Purchaser’s accountants to the extent relating to the matters set forth in
the Final Closing Statement and (ii) Purchaser shall cause the personnel of the Companies to
cooperate with Seller Parent in connection with its review of the Final Closing Statement, in each
case as is reasonably requested by Seller Parent. If Seller Parent fails to deliver a Dispute Notice
to Purchaser during the Dispute Period, the Final Closing Statement as prepared by Purchaser shall
be deemed to have been correctly prepared, and Purchaser’s calculation of Final Closing Amounts
shall be deemed to be final and correct and binding upon the parties hereto. If Seller Parent delivers
a Dispute Notice to Purchaser with respect to some, but not all, of the amounts or items included
in the Final Closing Statement during the Dispute Period, then Seller Parent shall be deemed to
have agreed with Purchaser’s calculations of all amounts set forth in such Final Closing Statement
that were not disputed in such duly and timely delivered Dispute Notice.
(d) Resolution Period. If Seller Parent delivers a Dispute Notice to Purchaser
during the Dispute Period, Seller Parent and Purchaser shall, for a period of ten (10) Business Days
from the date the Dispute Notice is delivered to Purchaser (such period, the “Resolution Period”),
negotiate in good faith and use commercially reasonable efforts to amicably resolve the items in
dispute. Any items so resolved shall be deemed to be final and correct as so resolved and shall be
binding upon each of the parties hereto.
(e) Dispute Resolution.
(i) If Seller Parent and Purchaser are unable in good faith to resolve all
of the items in dispute during the Resolution Period, then, upon the expiration of the Resolution
Period or such earlier date as Purchaser and Seller Parent mutually agree, either Purchaser and
Seller Parent shall refer the items remaining in dispute in writing to an independent accounting
firm (other than Purchaser’s or Sellers’ accounting firm) that the parties shall jointly select and
engage (the “Arbiter”) and shall deliver to the Arbiter, at the time of such referral, the Final
Closing Statement and the Dispute Notice. Purchaser and Seller Parent shall also furnish the
Arbiter with such other information and documents as the Arbiter may reasonably request to
resolve the items in dispute. Within ten (10) Business Days of the date the items in dispute are
referred to the Arbiter, Seller Parent and Purchaser shall deliver to the Arbiter and each other a
written notice (a “Position Statement”) describing in reasonable detail their respective positions
on the items in dispute. If either the Purchaser or Seller Parent fail to timely deliver its Position
Statement to the Arbiter, the Arbiter shall resolve the items in dispute solely upon the basis of the
information otherwise provided to them. The Arbiter shall resolve all disputed items in a written
determination to be delivered to Purchaser and Seller Parent within sixty (60) days after such
matter is referred to them (such determination shall be the “Resolved Closing Statement”);
provided, however, that any delay in delivering such determination shall not invalidate such
determination or deprive the Arbiter of jurisdiction to resolve the items in dispute; provided,
further, that in resolving any disputed item, the Arbiter shall adhere to the definitions contained in
this Agreement and the practices and other principles referred to herein. In no event shall the
Arbiter assign a value to any item on the Resolved Closing Statement that is greater than the
highest or less than the lowest calculation thereof proposed by Purchaser in the Final Closing
Statement and Seller Parent in the Dispute Notice. The decision of the Arbiter made in accordance
with this Agreement as to the items in dispute shall be final and binding upon the parties hereto
and shall not be subject to judicial review. If Seller Parents delivers a Dispute Notice, the fees,
costs and expenses of the Arbiter shall be paid (i) by Seller Parent if the items covered thereby are
resolved in favor of Purchaser or (ii) by Purchaser if the items covered thereby are resolved in
favor of the Seller Parent. If the items referred to therein are resolved in part in favor of the Seller
Parent and in part in favor of Purchaser, such fees, costs and expenses shall be shared by Seller
Parent and Purchaser in proportion to the aggregate dollar amount of items resolved in favor of the
Seller Parent compared to the aggregate dollar amount of items resolved in favor of Purchaser.
(ii) Within five (5) Business Days after the final determination of the
Final Closing Amounts (whether through failure of Seller Parent to timely deliver a Dispute
Notice, agreement of Purchaser and Seller Parent, or determination of the Arbiter):
(A) if (1) the sum of the Final Closing Amounts owed by
Purchaser is greater than (2) the sum of Final Closing Amounts owed by Sellers, Purchaser shall
pay Sellers such excess in immediately available funds via wire transfer within two (2) Business
Days; and
(B) if (1) the sum of the Final Closing Amounts owed by
Purchaser is less than (2) the sum of the Final Closing Amounts owed by Sellers (the absolute
value of the difference, the “Sellers Deficit Amount”), Seller Parent shall pay Purchaser the
Sellers Deficit Amount in immediately available funds via wire transfer within two (2) Business
Days.
Earnout. Purchaser shall pay to Sellers the additional cash consideration, if any,
that becomes payable in accordance with the provisions of this Section 2.8. Such additional cash
consideration of up to a maximum amount of $12 million (the “Maximum Earnout Amount”)
will be based on formulas, set forth in Section 2.8(b) below, that compare Actual Gross Profit to
Target Gross Profit over a three year period and will be paid so long as the ratio of the applicable
Actual Gross Profit over the applicable Target Gross Profit is above 0.75 on the relevant Earnout
Determination Date. If the ratio of the applicable Actual Gross Profit over the applicable Target
Gross Profit is below 0.75 on the relevant Earnout Determination Date, Sellers will not be entitled
to any additional cash consideration for the applicable period. In the event that the ratio of the
applicable Actual Gross Profit over the applicable Target Gross Profit is above 1.25 on the relevant
Earnout Determination Date, Sellers will not be entitled to any additional cash consideration,
calculated on a cumulative basis over the course of the three-year period in which Earnout
Amounts are paid, that is above the Maximum Earnout Amount.
(a) Estimated Earnout Statement. No later than ten (10) Business Days
following the first anniversary of the Closing Date, the second anniversary of the Closing Date
and the third anniversary of the Closing Date (each, an “Earnout Determination Date”),
Purchaser shall deliver to Sellers a written statement setting forth in reasonable detail its
calculation, pursuant to Section 2.8(b), of the anticipated Earnout Amount. Such written statement
shall be accompanied by supporting information and back-up calculations as the Purchaser in good
faith believes to be reasonable and relevant for Sellers’ review of such written statement. No later
than five (5) Business Days following receipt of a request by Sellers, the Purchaser shall provide
Sellers with access to all documents, schedules or workpapers used in calculating any Earnout
Amount and reasonable access to Purchaser or its Affiliates’ personnel that calculated any Earnout
Amount.
(b) Calculation of Earnout Amount. Subject to the adjustments set forth in this
Agreement, and the other terms and conditions herein, and calculated in accordance with the
Earnout Amount Calculation Methodology and Illustration set forth on Schedule 2.8(b), Purchaser
and its Affiliates shall make earnout payments (each an “Earnout Amount”) to Sellers, if any, as
set forth below. For purposes of the calculation of each Earnout Amount in this Section 2.8(b), the
Closing Date shall mean the first of the month closest to the actual Closing Date (e.g., if the
Transaction closes on October 10, 2017, then the Closing Date used in Section 2.8(b) shall be
October 1, 2017).
(i) If, on the first anniversary of the Closing Date, the ratio of
(A) Actual Gross Profit for the period beginning on the Closing Date and ending the day
before the first anniversary of the Closing Date over (B) $7.637 million (the “Year 1
Earnout Ratio”) is equal to a number that is 0.75 or greater, Purchaser shall pay Seller
Parent an amount equal to (x) the Year 1 Earnout Ratio minus 0.75, multiplied by (y) $8
million (the “Year 1 Earnout Amount”); provided, that amounts payable pursuant to this
Section 2.8(b)(i) will be capped at a Year 1 Earnout Amount of $2.0 million.
(ii) If, on the second anniversary of the Closing Date, the ratio of
(A) Actual Gross Profit for the period beginning on the first anniversary of the Closing
Date and ending on the day before the second anniversary of the Closing Date over
(B) $7.828 million (the “Year 2 Earnout Ratio”) is equal to a number that is 0.75 or
greater, Purchaser shall pay Seller Parent an amount equal to (x) the Year 2 Earnout Ratio
minus 0.75, multiplied by (y) $8 million (the “Year 2 Earnout Amount”); provided, that
amounts payable pursuant to this Section 2.8(b)(ii) will be capped at a Year 2 Earnout
Amount of $2.0 million.
(iii) If, on the third anniversary of the Closing Date, the ratio of (A) the
three-year cumulative Actual Gross Profit for the period beginning on the Closing Date
and ending on the day before the third anniversary of the Closing Date over (B) $23.489
million (the “Three-Year Cumulative Earnout Ratio”) is equal to a number that is 0.75
or greater, Purchaser shall pay Seller Parent an amount (the “Cumulative Earnout
Amount”) equal to (x) the Three-Year Cumulative Earnout Ratio, minus 0.75, multiplied
by (y) $24 million, (z) minus the sum of the Year 1 Earnout Amount and the Year 2
Earnout Amount.
If the amount of (A) the Year 1 Earnout Amount plus (B) the Year 2 Earnout Amount is greater
than the Cumulative Earnout Amount (the “Excess Earnout Amount”), then Sellers shall refund
any such Excess Earnout Amount to Purchaser, provided, however, Sellers shall not be obligated
to return any amounts to Purchaser pursuant to this clause in excess of 50% of the sum of the Year
1 Earnout Amount and the Year 2 Earnout Amount. Examples of the calculation of the Earnout
Amount is set forth on Schedule 2.8(b) attached hereto and incorporated herein.
(c) Payment of Earnout Amount. Any Earnout Amount due pursuant to
Section 2.8(b), including the Excess Earnout Amount, shall be payable within thirty (30) calendar
days of the applicable Earnout Determination Date to the applicable party in cash by wire transfer
of immediately available funds, to the account or accounts designated by Sellers, in the event of a
payment of an Earnout Amount, or by Purchaser, in the event of a payment of the Excess Earnout
Amount.
(d) Disputes. If Sellers disagree with the determination of the amount of any
Earnout Amount paid by Purchaser pursuant to Section 2.8(b), Sellers shall notify Purchaser in
writing of such disagreement within thirty (30) calendar days after each applicable Earnout
Determination Date (the “Earnout Dispute Period”), which notice shall describe the nature of
any such disagreement in reasonable detail (including the specific items involved and the dollar
amount of each such disagreement) and provide reasonable supporting documentation, to the
extent then available to Sellers, for each such disagreement (the “Seller Notice of Dispute”). If
Sellers fail to deliver a Seller Notice of Dispute during the Earnout Dispute Period, Purchaser’s
calculation of the applicable Earnout Amount shall be deemed to be final, correct and binding on
the parties. If the parties do not reach agreement in resolving any and all such disputes described
in a Seller Notice of Dispute within thirty (30) calendar days after the Seller Notice of Dispute is
given by Sellers to Purchaser, the parties shall refer the items remaining in dispute in writing to
the Arbiter to resolve any remaining disputes regarding such disputed Earnout Amount(s)
described in a Seller Notice of Dispute. If the parties cannot agree on the selection of an
independent accounting firm to act as Arbiter, the parties shall promptly request the American
Arbitration Association to appoint such a firm, and such appointment shall be conclusive and
binding on the parties. Promptly, but no later than twenty (20) calendar days after acceptance of
its appointment as Arbiter, the Arbiter shall determine (it being understood that in making such
determination, the Arbiter shall be functioning as an expert and not as an arbitrator), based solely
on written submissions by Purchaser and Sellers, each containing a computation of the Earnout
Amount(s) in dispute (the final submission made by Purchaser and Sellers to the Arbiter being
referred to herein as such party’s “Final Submission”), and not by independent review, only those
issues in dispute and shall render a written report as to the resolution of the disputes and the
resulting computation of the Earnout Amount(s) in dispute. To the extent the Earnout Amount as
so computed by the Arbiter exceeds the amount thereof previously paid by Purchaser to Sellers,
such excess shall be paid by Purchaser to the Sellers within five (5) Business Days after delivery
of the Arbiter’s written report, and to the extent the Earnout Amount as so computed by the Arbiter
is less than the amount thereof previously paid by Purchaser to Sellers, such shortfall shall be paid
by the Sellers to Purchaser within five (5) Business Days after delivery of the Arbiter’s written
report. Such written report shall be conclusive and binding on the parties. All proceedings
conducted by the Arbiter shall take place in New York, New York. In resolving any disputed item,
the Arbiter (i) shall be bound by the provisions of this Section 2.8, and (ii) may not assign a value
to any item greater than the greatest value for such item claimed by either party or less than the
smallest value for such item claimed by either party. The fees, costs and expenses of the Arbiter
shall be borne solely by the party whose calculation of Earnout Amount(s), as reflected in such
party’s Final Submission, is furthest in amount, whether positive or negative, from the Earnout
Amount(s) as determined by the Arbiter.
(e) The Purchaser’s Right to Operate the Business. Sellers acknowledge and
agree that from and after the Closing, except as expressly set forth in Sections 2.8(f) and Section
2.8(i) and as otherwise expressly provided to the contrary in this Agreement, (i) Purchaser has the
right to operate the Business (and all components thereof) in any way that it deems appropriate in
its sole discretion, (ii) Purchaser is under no obligation to operate the Business in a manner
consistent with the manner in which the Sellers operated the Business prior to the Closing and
(iii) Purchaser is under no obligation to continue to serve any existing client of the Business after
the Closing (subject to any obligations in client Contracts assumed in connection with this
Agreement or entered into (or amended) after the Closing); provided, however, that nothing
contained in this Section 2.8(e) shall be deemed a waiver or disclaimer of any express or implied
duty or covenant of good faith and fair dealing.
(f) Assignment of Earnout Obligations; Acceleration of Payment.
(i) Until the expiration of the period beginning on the Closing Date and
ending on the day before the third anniversary of the Closing Date (the “Earnout Period”),
Purchaser shall (A) require any purchaser in a Sales Event to assume the payment and other
obligations of Purchaser under this Section 2.8 without releasing Purchaser from any obligation
under this Agreement, and (B) not take any action or omit to take any action, or engage in any
transaction or scheme (1) with the intent to minimize or decrease the amounts payable to Sellers
or that would be payable to Sellers under this Section 2.8, or (2) to intentionally avoid or reduce
the Purchaser’s obligations under this Section 2.8.
(ii) In the event of a Sales Event and the Earnout obligations are not
assumed by a purchaser in accordance with Section 2.8(f)(i)(A), the payment of any Earnout
Amount will be accelerated. Such accelerated Earnout Amount will be calculated using the
methodology described in Section 2.8(b), but modifying the approach of deriving the Earnout
Ratio by taking the cumulative Actual Gross Profit from the Closing Date up to the date of the
Sales Event, divided by the three year cumulative Target Gross Profit adjusted by the pro rata time
elapsed from the Closing Date to the date of the Sales Event. This Earnout Ratio will be used to
determine the Earnout Amount as if the Earnout Period were the full three years and Sellers will
be paid such Earnout Amount less any Earnout Amount paid to Sellers up to the date of the Sales
Event. By way of example, if the cumulative to date Actual Gross Profit is $20 million, and the
Sales Event occurred on day 901 of the total 1096 days of the Earnout Period, then the Earnout
Ratio would be $20 million / ($23.489 million times 900/1096) = 1.0369. This implies that the
Earnout Amount would be $6.8854 million. Any final payment resulting from this acceleration
would be $6.8854 million less any previously paid Earnout Amount paid up the date of the Sales
Event. For the avoidance of doubt, the Maximum Earnout Amount to be paid in this acceleration
scenario will remain $12 million and the Excess Earnout Amount provisions set forth in Section
2.8(b) will remain in effect.
(g) Subsequent Acquisitions. During the Earnout Period, if Purchaser or its
Affiliates acquires any Acquisition Entity, Purchaser will provide Seller Parent with a fee equal to
the lesser of: (i) 1% of the acquisition price, or (ii) $250,000. For the purposes of this Section
2.8(g), an “Acquisition Entity” shall mean, as determined in good faith by Purchaser, any entity
acquired by Purchaser or its Affiliates, the acquisition of which the Founders were integral in
facilitating and/or the Founders provided information or assistance relative to such entity
reasonably requested by Purchaser.
(h) Actual Gross Profit of Subsequent Acquisitions. During the Earnout Period,
if Purchaser or its Affiliates acquires a business that has Energy Sector Customers, the ongoing
calculation of Actual Gross Profit will be adjusted for purposes of the Earnout Amount from the
closing of such acquisition based on the following principles: (i) for Energy Sector Customers that
the Companies and the acquired business have in common, Actual Gross Profit attributable to such
common Energy Sector Customers shall be proportionate to the Companies’ Actual Gross Profit
for the most recent twelve months at the time of the Closing of any such acquisition, as compared
to the combined gross profit of the Companies and the acquired business derived from such
common Energy Sector Customer for the same period and (ii) for new Energy Sector Customers
obtained following the closing of such acquisition, the Companies’ Actual Gross Profit shall be
50% of the Actual Gross Profit attributable to such new Energy Sector Customers.
(i) Standards Used in Operating the Energy Sector Business. During the
Earnout Period, Purchaser shall cause the Energy Sector Business to be operated and managed in
a manner consistent with reasonable business practices and in accordance with the following
principles:
(i) Purchaser will act in good faith, consistent with reasonable business
practices, during the Earnout Period and will not undertake any actions during the Earnout
Period if a purpose of any of such actions is to impede the ability of Sellers to earn the
Earnout Amount.
(ii) For purposes of the calculation of the Earnout Amount, the
performance of the Energy Sector Business shall be measured on a stand-alone basis.
(iii) Purchaser will use commercially reasonable efforts to promote,
support and continue the operations of the Energy Sector Business.
(iv) The Companies will maintain sufficient staff during the Earnout
Period, in its reasonable good faith judgment, in an effort to assure (a) maintenance of the
Energy Sector Business (including any Acquisition Entity contributed to the Companies
pursuant to Section 2.8(g)) of accounting, tax, legal, human resources and information
technology services at a level at least comparable to the pre-closing level and (b)
appropriate flows of reasonable and necessary information between the Companies (e.g.,
financial and other information related to the operation of the Energy Sector Business).
(v) Purchaser shall not (and shall cause each of its Subsidiaries to not)
actively promote any business that competes with the Energy Sector Business.
(vi) Purchaser shall not start (and shall prohibit its Subsidiaries from
starting) any business that competes with the Energy Sector Business other than through
the Companies.
(vii) Purchaser shall not take any actions or pursue any strategies or
tactics that are principally intended in whole or in part to limit the Earnout Amount during
the Earnout Period; provided, however, all funding requests for growth or expansion capital
or otherwise shall be processed by Purchaser in accordance with its standard practices for
such requests.
(j) Treatment of Payments under Earnout. Any payment made pursuant to this
Section 2.8 shall be treated as an adjustment to the Purchase Price for Tax purposes.
(k) Nature of Earnout Payments. Sellers acknowledge and agree that (i) any
Earnout Payment is speculative and subject to numerous factors outside the control of Purchaser
and its Affiliates, (ii) there is no assurance that Sellers will receive any Earnout Payments, (iii)
Purchaser has not promised or projected any Earnout Payments, and (iv) Purchaser does not and
will not owe Sellers any fiduciary or similar duty in respect of this Section 2.8.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth on the Disclosure Schedule, Sellers, jointly and severally, represent and
warrant to Purchaser as follows:
Organization of Seller; Authority and Binding Effect. Sellers are each duly
organized, validly existing and in good standing under the laws of the jurisdiction in which each
is organized, and have all requisite corporate and limited liability company power and authority,
as applicable, to enter into this Agreement and the agreements contemplated by this Agreement to
be entered into by each at Closing (collectively, “Seller Transaction Agreements”) and to
consummate the transactions contemplated hereby and thereby. The execution, delivery and
performance by Sellers of this Agreement and the other Seller Transaction Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate or limited liability company action, as applicable, on the part of Sellers.
This Agreement has been duly executed and delivered by Sellers (assuming due authorization,
execution and delivery by the other Persons party hereto) and constitutes a valid and binding
obligation of Sellers, enforceable against each in accordance with its terms except as such
enforceability may be limited by (a) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors’ rights generally, or (b) applicable equity
principles (whether considered in a proceeding at law or in equity). At or prior to the Closing,
each Seller Transaction Agreement (assuming due authorization, execution and delivery by the
other Persons party hereto) will be duly executed and delivered by Sellers, to the extent applicable,
and will constitute a valid and binding obligation of such party enforceable against them in
accordance with its terms except as such enforceability may be limited by (a) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’
rights generally, or (b) applicable equity principles (whether considered in a proceeding at law or
in equity).
Organization of the Companies. Each of the Companies is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which each is organized, and
each of the Companies has the limited liability company power and authority to own, lease and
operate its properties and to conduct the Business as presently conducted. Each of the Companies
is duly qualified or licensed to do business as a foreign entity and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to obtain such
qualification or license would not, individually or in the aggregate, have a Material Adverse Effect.
Capitalization. Seller Parent owns all of the Company Interests free and clear of
any Liens other than Liens set forth in Section 3.3 of the Disclosure Schedule. Upon consummation
of the transactions contemplated by this Agreement, Purchaser shall own all of the Company
Interests, free and clear of all Liens, adverse claims, proxies and Sellers’ agreements, other than
those created by Purchaser. The Company Interests have been duly authorized, legally and validly
issued and are fully paid and non-assessable. None of the Company Interests have been issued or
disposed of in violation of any preemptive rights or rights of first refusal. Except for the Company
Interests, there are no other equity securities of either of the Companies issued, reserved for
issuance or outstanding and no outstanding options, warrants, convertible or exchangeable
securities, subscriptions, rights (including any preemptive rights), equity appreciation rights, calls
or commitments of any character whatsoever to which either of the Companies are a party or are
bound requiring the issuance or sale of any security interest in either of the Companies.
Subsidiaries. Except as set forth in Section 3.4 of the Disclosure Schedule, the
Companies do not own of record or beneficially any equity ownership interest in any other Person,
nor are they a partner or member of any partnership, limited liability company or joint venture.
No Violation; Consents and Approvals. Except as set forth in Section 3.5 of the
Disclosure Schedule, the execution and delivery by Sellers of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the terms hereof will
not, (a) conflict with, or result in any violation of or default (or an event which, with notice or
lapse of time or both, would constitute a default) under (i) any provision of the organizational
documents of any of the Sellers or of either of the Companies (ii) any judgment, order, injunction
or decree (an “Order”) applicable to Sellers, either of the Companies or their respective properties
or assets, or (iii) any statute, law, ordinance, rule or regulation in any relevant jurisdiction
(“Applicable Law”) applicable to Sellers, either of the Companies or their respective properties
or assets or (b) give rise to any right of termination, cancellation or acceleration under, or result in
the creation of any Lien upon the Transferred Assets or the Company Interests under, any Material
Contract to which any of the Sellers are a party as of the date hereof. Except as set forth in
Section 3.5 of the Disclosure Schedule, no consent, approval, order or authorization of, or
registration, declaration or filing with (“Governmental Approval”), any court, administrative
agency, regulatory body, bureau, or commission or other governmental entity, authority or
instrumentality, domestic or foreign (“Governmental Authority”), is required to be obtained or
made by or with respect to the Companies or with respect to the Transferred Assets in order to
consummate the transactions contemplated hereby that, if not obtained or made, individually or in
the aggregate, would be material.
Financial Reports. Purchaser has heretofore received copies of (a) the internal
financial reports of the Companies for the years ended December 31, 2014, 2015 and 2016, (b) the
internal financial reports of the Companies for the seven (7) months ended July 31, 2017, and (c)
page 52 of the Sellers’ Management Presentation, dated as of April 2017, made by Sellers to
Purchaser (collectively, the “Financial Reports”). The Financial Reports are set forth in
Section 3.6 of the Disclosure Schedule and have been prepared from the books and records of the
Companies, respectively, and fairly present the operating results of the Business (inclusive of the
Companies and the Transferred Assets) as of the dates they were prepared for the periods indicated.
For the avoidance of doubt, the Financial Reports have not been prepared in accordance with
GAAP.
Personal Property.
(a) Except for the Retained Company Assets and except as set forth in Section
3.7(a) of the Disclosure Schedule or as would not be material, (i) the Companies have good and
valid title to all items of personal property, and (ii) Coen Markets has good and valid title to all
items of personal property in the Transferred Assets, whether tangible or intangible, owned by it,
and has valid and enforceable rights to use all tangible items of personal property leased by or
licensed to it (collectively, the “Personal Property”), in each case, free and clear of all Liens,
other than Permitted Liens.
(b) Except for the Retained Company Assets and except as set forth in
Section 3.7(b) of the Disclosure Schedule, all Personal Property necessary for the operation or
conduct of the Business and all Personal Property in the Transferred Assets is, in the aggregate, in
adequate operating condition and repair, normal wear and tear excepted, other than machinery and
equipment under repair or out of service, in the ordinary course of business.
Real Property.
(a) As used in this Agreement, the term “Real Property” means the
Transferred Real Property owned by Coen Markets and Thomaston Land, and any real property
leased to the Companies in connection with its operation of the Business. None of the Companies
own any Real Property. Each of Coen Markets and Thomaston Land have fee simple title to the
Real Property owned by them, free and clear of all Liens, except for Permitted Liens. With respect
to owned Real Property, Coen Markets and Thomaston Land have delivered or made available or
delivered to Purchaser copies of the recorded deeds and any other recorded instruments by which
they acquired such Real Property, and copies of all title insurance policies, opinions, abstracts and
surveys in the possession of Coen Markets or Thomaston Land and relating to the Real Property
owned by either of them.
(b) Section 3.8(b) of the Disclosure Schedule lists each lease (“Leases”) with
respect to any Real Property leased to the Companies, and, as applicable, to or by Coen Markets
and Thomaston Land (the “Leased Real Property”). The Companies, Coen Markets and
Thomaston Land, as applicable, have valid leasehold interests (together with all rights, title and
interest in and to leasehold improvements owned by the Companies, Coen Markets or Thomas
Land, as applicable, relating thereto) in all Leased Real Property leased to or by them, in each case,
free and clear of all Liens, except for Permitted Liens. With respect to Real Property, Sellers have
made available or delivered to Purchaser complete and correct copies of any Leases affecting the
Real Property. Except as set forth in Section 3.8(b) of the Disclosure Schedule, none of the
Companies, Coen Markets or Thomaston Land has leased or subleased, as applicable, any parcel
or any portion of any parcel of Real Property to any other Person. None of the Companies, Coen
Markets, Thomaston Land, or to Sellers’ Knowledge, any other party is in default under the Leases,
and Seller has received no notice of defaults (whether or not subsequently cured) by the
Companies, Coen Markets, Thomaston Land or, to Sellers’ Knowledge, any other party
thereunder. No Person other than the Companies has a right to acquire the Companies’ leasehold
interests in the Leased Real Property. To Sellers’ Knowledge, no Person other than the Companies’
counterparty to each Lease has a right to acquire such counterparties’ leasehold interests in the
Leased Real Property.
(c) The Companies, Coen Markets and Thomaston Land, as applicable, are in
peaceful and undisturbed possession of each parcel of applicable Real Property and, to Sellers’
Knowledge, there are no contractual or legal restrictions that preclude or restrict the ability to use
the Real Property for the purposes for which it is currently being used, subject to any Applicable
Law. All buildings, fixtures and other improvements located on the Real Property are in good
operating condition and repair, ordinary wear and tear excepted. None of the Companies, Coen
Markets or Thomaston Land has received notice of any pending condemnation proceedings or
eminent domain proceedings of any kind or, to Sellers’ Knowledge, any condemnation
proceedings or eminent domain proceedings of any kind threatened with respect to the Real
Property owned by or leased to or by any of the Companies, Coen Markets or Thomaston Land,
as applicable. To Sellers’ Knowledge, certificates of occupancy are in full force and effect for the
Real Property, and none of the Companies, Coen Markets or Thomaston Land has received notice
that the uses thereof being made by the Companies, Coen Markets or Thomaston Land violate any
applicable zoning, subdivision, land use, or other Applicable Laws.
Intellectual Property.
(a) The Companies do not own any registered, nor have they applied to register,
any Intellectual Property in each case, which are material to the operation of the Business.
(b) As used in this Section 3.9(b), “Third Party Intellectual Property” means
all Intellectual Property owned by a third party. There is no claim pending or to Sellers’
Knowledge, threatened, alleging that either of the Companies is misappropriating or infringing
any Third Party Intellectual Property.
(c) Section 3.9(c) of the Disclosure Schedule sets forth a true and correct list of
all Intellectual Property (including Information Technology) used in connection with or necessary
for the conduct of the Business and identifies whether such Intellectual Property is owned or
licensed and, if licensed, the name of the licensor. To Sellers’ Knowledge, the Companies have
all sufficient and necessary rights to use all materials Intellectual Property (including Information
Technology) in connection with the Business.
(d) The representations and warranties in this Section 3.9 are the sole and
exclusive representations and warranties with respect to Intellectual Property and Information
Technology matters.
Litigation. Except as set forth in Section 3.10 of the Disclosure Schedule, and
except for ordinary course customer complaints, there are no claims, actions, suits or proceedings
pending, or to Sellers’ Knowledge, investigations pending or claims, actions, suits, proceedings or
investigations threatened in writing against the Companies, their respective assets or the
Transferred Assets, at law or in equity, by or before any Governmental Authority, or by or on
behalf of any third party. Except as set forth in Section 3.10 of the Disclosure Schedule, since
January 1, 2014, neither of the Companies has, received any notice in writing that it or any of its
assets, is subject to any decree, order or judgment, and neither of Coen Markets or Thomaston
Land has received any notice in writing that any of the Transferred Assets are subject to any decree,
order or judgment.
Employee Benefit Plans.
(a) For purposes of this Agreement, the term “Plans” means (i) all employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder (collectively, “ERISA”); and (ii) all other
pension, retirement, group insurance, severance pay, deferred compensation, excess or
supplemental benefit, vacation, stock, stock option, equity-based compensation, phantom stock,
fringe benefit and incentive plans, programs, or arrangements which pertain to any employee,
director or officer of the Companies and to which either of the Companies is a sponsor or a party,
by which either of the Companies is bound or to which either of the Companies contributes. All
Plans that are sponsored by either of the Companies are hereinafter referred to as “Company
Plans.” All Plans that are sponsored by Sellers or their Affiliates (other than the Companies) are
hereinafter referred to as “Seller Plans.” All Company Plans and all applicable Seller Plans are
listed in Section 3.11(a) of the Disclosure Schedule.
(b) Seller Parent has made available or delivered to Purchaser accurate, current
and complete copies of each of the following, if and as applicable,: (i) where a Plan has been
reduced to writing, the plan document together with all amendments; (ii) where a Plan has not been
reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of
any trust agreements or other funding arrangements, custodial agreements, insurance policies and
contracts and administration agreements for each Company Plan; (iv) copies of any summary plan
descriptions for each Company Plan and (v) in the case of any Plan that is intended to be qualified
under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory
letter from the Internal Revenue Service.
(c) Each Company Plan has, since January 1, 2014, been and is in compliance
in all material respects with its terms and with ERISA and other Applicable Laws. There are no
actions, suits, or claims (other than routine, non-contested claims for benefits) pending, or, to
Sellers’ Knowledge, threatened, against the Company Plans.
(d) All amounts owed by either of the Companies, including any required
contributions, if any, under the terms of any Plan have been or will be paid in full.
(e) Neither of the Companies maintains, contributes to, or sponsors any pension
plan (as defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA.
Taxes. Except as set forth in Section 3.12 of the Disclosure Schedule:
(a) Since their date of organization, each of the Companies has been a
disregarded entity for income tax purposes.
(b) Sellers or the Companies, as applicable, have timely filed (after giving
effect to applicable extensions) with the appropriate taxing authorities all Tax Returns required to
be filed pursuant to the laws of any Governmental Authority with taxing power over the
Companies or their respective assets or Businesses, on or prior to the Closing Date, and such Tax
Returns were correct and complete in all material respects when filed;
(c) Sellers or the Companies, as applicable, have timely paid all Taxes of the
Companies whether or not shown to be due on such Tax Returns;
(d) No waivers of statutes of limitation have been given by Sellers or the
Companies, as applicable, in connection with any material Tax Returns filed by Sellers or the
Companies, as applicable;
(e) All Taxes with respect to the Transferred Assets have been paid;
(f) There are no Liens, other than Permitted Liens, with respect to Taxes upon
any assets of the Companies or upon any of the Transferred Assets;
(g) All Taxes that Sellers, with respect to the Companies, or the Companies, as
applicable, have been obligated to withhold from amounts paid or owed to any Governmental
Authority, employee, independent contractor, creditor, Seller Parent or other third party have been
withheld and timely paid;
(h) Neither the Sellers nor the Companies have received any written notice of
deficiency or assessment, and there is no written proposed deficiency or assessment, from any
federal, state, local or other taxing authority with respect to any material tax liability for which the
Sellers with respect to the Transferred Assets or either of the Companies may be liable; and
(i) Notwithstanding anything to the contrary in this Agreement, the Companies
make no representations or warranties in respect of the existence, amount or usability of the Tax
attributes of the respective company for Tax periods (or portions thereof) beginning on or after the
Closing Date, including, without limitation, net operating losses, capital loss carry forwards,
foreign tax credit carry forwards, asset bases, research and development credits and depreciation
periods.
Contracts and Commitments. Section 3.13 of the Disclosure Schedule sets forth a
list of all of the following agreements, contracts and commitments (each, a “Contract”) to which
either of the Companies are a party or by which either of the Companies or their respective assets
or the Transferred Assets, to the extent applicable, are bound and, in each case, where there are
still remaining obligations on the part of any party thereto (each, a “Material Contract”):
(a) employment agreements or severance agreements or employee termination
arrangements, in any such case, with respect to the senior executive officers of the Companies and
employees, that are not terminable at will by the respective company;
(b) any change of control agreements with employees of either of the
Companies;
(c) all Contracts that require the Company to purchase its total requirements of
any product or service from a third party or that contain “take or pay” provisions;
(d) all Contracts outside the ordinary course of business that provide for the
indemnification by the Company of any Person or the assumption of any Tax, environmental or
other Liability of any Person;
(e) Contracts containing any covenant materially limiting the ability of the
either of the Companies to engage in any material line of business or to compete with any business
or Person (excluding in each case confidentiality agreements entered into between either of the
Companies and prospective purchasers of the Business);
(f) Contracts (other than Plans) with (i) Seller Parent, its Affiliates, or their
unitholders, (ii) either of the Companies, or (iii) any officer, director or employee of Seller Parent,
its Affiliates or either of the Companies, that are not terminable at will, or that cannot be terminated
without material penalty;
(g) Contracts under which either of the Companies has borrowed or loaned
money, or any note, bond, indenture, mortgage, installment obligation or other evidence of
indebtedness for borrowed or loaned money or any guarantee of such indebtedness, in each case,
relating to amounts in excess of $150,000;
(h) (i) Leases and (ii) personal property leased to or from either of the
Companies (and to or from Coen Markets and Thomaston Land, as it relates solely to the
Transferred Assets) for amounts in excess of $15,000 over any twelve-month period;
(i) guaranties of the Companies involving underlying obligations;
(j) Contracts relating to capital expenditures with respect to the Companies and
involving future payments which exceed $10,000;
(k) all Contracts with any Governmental Authority to which either Company is
a party;
(l) Contracts entered into since January 1, 2014 relating to the acquisition or
disposition of material assets (other than in the ordinary course of business) or a material portion
of the capital stock of any business enterprise;
(m) Contracts with a Material Customer or Material Supplier;
(n) Contracts contributing to the Companies’ or the Business’s revenue, which
are not being transferred as part of the Transaction;
(o) Contracts (other than those covered by clause (a) through (n) above)
pursuant to which either of the Companies will receive or pay in excess of $100,000 over any
twelve-month period.
Seller Parent, Coen Markets and Thomaston Land, to the extent applicable, have made
available or delivered to Purchaser a copy of each written Material Contract. Each Material
Contract is in full force and effect, and is valid and enforceable in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights
generally or the availability of equitable remedies. As of the date hereof, with respect to all
Material Contracts, none of the Companies, Coen Markets, Thomaston Land or, to Sellers’
Knowledge, any other party to any such contract is in material breach thereof or material default
thereunder and, to Sellers’ Knowledge, there does not exist any event which, with the giving of
notice or the lapse of time, would constitute such a material breach or material default, except for
such breaches, defaults and events as to which requisite waivers or consents have been obtained.
Compliance with Laws. Except as set forth in Section 3.14 of the Disclosure
Schedule, the Companies and, as it relates solely to the Transferred Assets, Coen Markets and
Thomaston Land, have been, since January 1, 2014, and are in compliance in all material respects
with all Applicable Laws and all Orders of, and agreements with, any Governmental Authority
applicable to them or the Business. Except as set forth in Section 3.14 of the Disclosure Schedule,
the Companies have all permits, certificates, licenses, approvals and other authorizations
(“Permits”) required under Applicable Law or necessary in connection with the conduct of the
Business as currently conducted, except where the failure to have any such Permits, individually
or in the aggregate, would not be material.
Labor Matters.
(a) Except as set forth in Section 3.15(a) of the Disclosure Schedule, there are
no actions, grievances, investigations, suits, claims, charges or administrative matters pending, or,
to Sellers’ Knowledge, threatened against either of the Companies by or before a Governmental
Authority relating to any employee, leased employee or employment issue.
(b) Neither of the Companies is party to or bound by any collective bargaining
agreement. There is no labor dispute, grievance or unfair labor practice charge, or, to Sellers’
Knowledge, union organizational activity pending with respect to either of the Companies, nor, to
Sellers’ Knowledge, is any material labor dispute, grievance or unfair labor practice charge
threatened against either of the Companies.
(c) Except as set forth in Section 3.15(c) of the Disclosure Schedule, the
Companies have, since January 1, 2014, been and are in compliance in all material respects with
all Applicable Laws relating to labor, labor relations, employment, employment practices, terms,
conditions and classifications of employment, employee safety and health, immigration status and
wages and hours, and in each case with respect to employees, leased employees and independent
contractors (i) are not liable in for any arrears of wages, severance pay or any Taxes or any penalty
for failure to comply with any of the foregoing (other than any arrearages in wages for the current
payment cycle for employees), and (ii) are not liable for any past due payment to any trust or other
fund governed by or maintained by or on behalf of any Governmental Authority, with respect to
unemployment compensation benefits, social security or other benefits or obligations for Current
Employees.
(d) Section 3.15(d) of the Disclosure Schedules sets forth, as of a date no earlier
than five (5) Business Days prior to the date hereof, with respect to any individual who is employed
or engaged by either of the Companies as an employee or leased employee (individually, a
“Current Employee” and collectively, the “Current Employees”), such individual’s (i) name,
(ii) employer, (iii) location, (iv) title, (v) date of hire, (vi) active or inactive status (including type
of leave, if any), (vii) employment status (i.e., full-time, part-time or temporary), (viii) current
annual base salary or hourly wage compensation, (ix) any bonuses or other commission, targets or
rates for the current calendar year and (x) days of accrued but unpaid vacation and sick leave.
(e) Except as set forth on Section 3.15(e) of the Disclosure Schedules: (i) no
Current Employee will receive additional vested employment rights or acquired rights (including
the additional protection of existing employment terms and conditions) by virtue of the
Transactions, and (ii) the employment of each Current Employee is terminable at will, except
where prohibited by law, and the employment of each such Current Employee can be terminated
at any time for any lawful reason without any amounts being owed to such individual other than
with respect to wages and benefits accrued before the termination.
(f) Except as set forth on Section 3.15(f) of the Disclosure Schedules, to
Sellers’ Knowledge, no Current Employee (i) has provided written notice of an intention to
terminate his or her employment with either of the Companies and (ii) is a party to or bound by
any confidentiality agreement, noncompetition agreement or similar Contract (with any other
Person) that would reasonable be expected to have a Material Adverse Effect on (A) the
performance by such Current Employee of any of his or her duties or responsibilities as an
employee of either of the Companies, or (B) the Business or operations of either of the Companies.
(g) To Sellers’ Knowledge, no Current Employee is in violation of any material
term of any employment agreement, patent disclosure agreement, non-competition agreement, or
any restrictive covenant to a former employer relating to the right of any such Current Employee
to be employed by either of the Companies because of the nature of the business conducted by the
Companies or proposed to be conducted by the Companies or to the use of trade secrets or
proprietary information of others.
Environmental Matters. The representations and warranties in this Section 3.16 are
the sole and exclusive representations and warranties with respect to Environmental Laws.
(a) Except as set forth in Section 3.16(a) of the Disclosure Schedule, (i) none
of the Companies or, as it relates solely to the Transferred Assets, Coen Markets or Thomaston
Land has received any notice in writing alleging any material violation of or any material liability
or obligation pursuant to Environmental Laws, which alleged violation, liability or obligation
remains unresolved, (ii) the Companies and, as it relates solely to the Transferred Assets, Coen
Markets and Thomaston Land are, and since January 1, 2014 have been, in compliance in all
material respects with Environmental Laws, (iii) the Companies and, as it relates solely to the
Transferred Assets, Coen Markets and Thomaston Land, as applicable, have obtained or applied
for and are and, since January 1, 2014 have been, in compliance in all material respects with all
material governmental permits, licenses, consents, registrations and authorizations required under
Environment Laws for the operation of the Business and the Transferred Assets. Sellers have
made available or delivered to Purchaser copies of all material governmental permits, licenses,
consents, registrations and authorizations required under Environmental Laws for the operation of
the Business and the Transferred Assets.
(b) Except as set forth in Section 3.16(b) of the Disclosure Schedule, none of
the Companies or, as it relates solely to the Transferred Assets, Coen Markets or Thomaston Land
is subject to any Order, settlement agreement or consent agreement pursuant to Environmental
Laws under which there are any remaining obligations or liabilities.
(c) Except as set forth in Section 3.16(c) of the Disclosure Schedule, there are
no pending or, to Sellers’ Knowledge, threatened claims or any Liens, in each case pursuant to
Environmental Laws and with respect to or affecting any of the Transferred Assets, either of the
Companies or, as it relates solely to the Transferred Assets, Coen Markets or Thomaston Land.
(d) Except as set forth in Section 3.16(d) of the Disclosure Schedule, none of
the Companies or, as it relates solely to the Transferred Assets, Coen Markets or Thomaston Land
has, since January 1, 2014, disposed of or arranged for disposal of Hazardous Materials at any
property listed or proposed for listing on the National Priorities List or any analogous state list of
contaminated properties.
(e) Except as set forth in Section 3.16(e) of the Disclosure Schedule, to Sellers’
Knowledge, none of the Real Property contains any (i) underground storage tanks or (ii) Hazardous
Materials landfills, surface impoundments, or disposal areas.
(f) Sellers have made available or delivered to Purchaser copies of all material
environmental reports, studies, analyses, or tests conducted by or on behalf of or that are within
the custody or control of Sellers or any of their Affiliates with respect to the environmental
condition of the Real Property and compliance with Environmental Laws by the Companies and,
as it relates solely to the Transferred Assets, Coen Markets and Thomaston Land.
Customers and Suppliers.
(a) Customers. Section 3.17(a) of the Disclosure Schedule sets forth customers
from whom the Companies, taken as a whole, have received revenues in the aggregate of $100,000
during the twelve-month period ended December 31, 2016 (each, a “Material Customer”).
Except as set forth in Section 3.17(a) of the Disclosure Schedule, no such customer has notified
either of the Companies in writing that it has cancelled, or intends to cancel, its relationship with
either of the Companies.
(b) Suppliers. Section 3.17(b) of the Disclosure Schedule sets forth the
suppliers to whom the Companies, taken as a whole, incurred expenses in the aggregate of
$100,000 during the twelve-month period ended December 31, 2016 (each, a “Material
Supplier”). Except as set forth in Section 3.17(b) of the Disclosure Schedule, no such supplier
has notified either of the Companies or Seller Parent in writing that it has cancelled, or intends to
cancel, its relationship with either of the Companies.
Brokers. No broker, finder or financial advisor or other Person is entitled to any
brokerage fees, commissions, finders’ fees or financial advisory fees in connection with the
transactions contemplated hereby by reason of any action taken by Sellers or the Companies, or
any of their respective Representatives, except for Delancey Street Partners, LLC, the fees and
expenses of which shall be treated hereunder as a Transaction Expense.
Affiliate Transactions. Except as set forth in Section 3.19 of the Disclosure
Schedule, no unitholder, officer or director of Seller Parent or either of the Companies is a party
to any transaction with either of the Companies other than transactions in the ordinary course of
business consistent with past practice between any such Person and the applicable Company
relating to such Person’s employment.
Undisclosed Liabilities; Payables; Receivables.
(a) Except as set forth in Section 3.20(a) of the Disclosure Schedule, there is
no liability, debt or obligation of or claim against either of the Companies of a type which is
required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP,
except for liabilities and obligations (a) reflected or reserved for in the Financial Reports, (b) that
have arisen since May 31, 2017, in the ordinary course of the operation of the Business, (c) which
would not reasonably be expected to have a Material Adverse Effect, (d) relating to matters
disclosed on the Disclosure Schedule, or (e) incurred in connection with the transactions
contemplated by this Agreement.
(b) Section 3.20(b) of the Disclosure Schedules sets forth, as of the date hereof
and, when available, a date that is three (3) Business Days prior to the Closing, a complete and
accurate list of all accounts payable of the Companies and the aging thereof.
(c) Section 3.20(c) of the Disclosure Schedules, as of the date hereof and, when
available, a date that is three (3) Business Days prior to the Closing, sets forth a complete and
accurate list of the Accounts Receivable, showing the aging thereof.
Insurance. Section 3.21 of the Disclosure Schedule contains a description of each
insurance policy maintained by the Companies with respect to their properties, assets, business
and personnel, as of the date hereof. All such policies are legal, valid, binding and in full force
and effect, and neither of the Companies has received written notice of cancellation, non-renewal,
disallowance or material reduction in coverage with respect to any such policy. Neither of the
Companies is in material default with respect to any of their obligations under any such insurance
policy.
Company Debt and Transaction Expenses. As of the Closing, the Companies will
have no Company Debt created by or on behalf of the Companies and all Sellers’ Transaction
Expenses will have been paid. For the avoidance of doubt Company Debt does not include debt
created by or on behalf of the Companies under the control of the Purchaser on or after the Closing
Date.
Inventory. All Inventory and Petroleum Products Inventory, whether or not
reflected in the Financial Reports, consists of a quality usable and salable in the ordinary course
of business, except for obsolete or damaged items that have been written off or written down to
fair market value or for which adequate reserves have been established. All Inventory and
Petroleum Products Inventory, is owned by the Companies free and clear of all Liens (other than
Permitted Liens), and no Inventory or Petroleum Products Inventory, is held on a consignment
basis.
Absence of Certain Changes, Events and Conditions. Except as set forth in Section
3.24 of the Disclosure Schedule, since June 30, 2017, as of the date hereof and other than in the
ordinary course of business consistent with past practice, there has not been, with respect to the
Company, any:
(a) event, occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) material change in any method of accounting or accounting practice of the
Company, or as disclosed in the Financial Reports;
(c) acceptance of customer deposits;
(d) entry, modification or termination of any Contract that would constitute a
Material Contract;
(e) transfer, assignment, sale or other disposition of any of material assets
shown or reflected in the Financial Reports, except in connection with the Transaction and as
agreed between Sellers and Purchaser;
(f) material damage, destruction or loss (whether or not covered by insurance)
to the Transferred Assets or any material asset of either of the Companies;
(g) making or deferring of any material capital expenditures;
(h) (i) grant of any bonuses, whether monetary or otherwise, or increase in any
wages, salary, severance, pension or other compensation or benefits in respect of its current or
former employees, officers, directors or directors, other than as provided for in any written
agreements or required by Applicable Law or (ii) action to accelerate the vesting or payment of
any compensation or benefit for any current or former employee, officer or director, except, in
either case, in connection with the Transaction and as agreed between Sellers and Purchaser;
(i) adoption, modification or termination of any: (A) employment, severance,
retention or change in control agreement with any current or former employee, officer, director,
independent contractor or consultant, (B) Plans or (C) collective bargaining or other agreement
with a Union, in each case whether written or oral; or
(j) any agreement or arrangement to do any of the foregoing, or any action or
omission that would result in any of the foregoing.
Exclusivity of Representations. The representations and warranties made by
Sellers in Article III of this Agreement are the exclusive representations and warranties made by
Sellers. Except for the representations and warranties contained in this Article III (including the
related portions of the Disclosure Schedule), none of Sellers, Sellers’ unitholders, the Companies
or any other Person has made or makes any other express or implied representation or warranty,
either written or oral, on behalf of Sellers, including any representation or warranty as to the future
revenue, profitability or success of the Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
Organization; Authority and Binding Effect. Sprague Operating Resources LLC is
a limited liability company duly organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser has all requisite power and authority, and all approvals of
Governmental Authorities, licenses and Permits necessary, to enter into this Agreement and the
agreements contemplated by this Agreement to be entered into by it at Closing (collectively,
“Purchaser Transaction Agreements”), and to consummate the transactions contemplated
hereby and thereby. Purchaser is duly qualified or licensed to do business as a foreign limited
liability company and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such qualification necessary,
except where the failure to obtain such qualification or license would not, individually or in the
aggregate, materially impair Purchaser’s abilities to consummate the transactions contemplated
hereby and by the Purchaser Transaction Agreements. The execution, delivery and performance
by the Purchaser of this Agreement and the other Purchaser Transaction Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly authorized by
all necessary action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and (assuming due authorization, execution and delivery by the other
Persons party hereto) constitutes a valid and binding obligation of the Purchaser, enforceable the
Purchaser in accordance with its terms, except as such enforceability may be limited by
(i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting
creditors’ rights generally or (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity). Each other Purchaser Transaction Agreement (assuming due
authorization, execution and delivery by the other Persons party thereto) will be duly executed and
delivered by the applicable Purchaser at or prior to Closing, and will constitute a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by (x) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors’ rights generally or (y) applicable equitable
principles (whether considered in a proceeding at law or in equity).
No Violation; Consents and Approvals. The execution and delivery by Purchaser
of this Agreement and each Purchaser Transaction Agreement do not, and the consummation of
the transactions contemplated hereby and thereby, and compliance with the terms hereof and
thereof will not conflict with, or result in any violation of or default under, (a) any provision of the
organizational documents of any of the Purchaser, (b) any Order or Applicable Law applicable to
Purchaser, or the property or assets of Purchaser or (c) any contracts to which Purchaser are a
party, or by which Purchaser, or their respective assets may be bound. Except as set forth in
Schedule 4.2, no Governmental Approval is required to be obtained or made by or with respect to
Purchaser or their Affiliates in connection with the execution and delivery of this Agreement and
each Purchaser Transaction Agreement, or the consummation by Purchaser of the transactions
contemplated hereby and thereby.
Litigation. There are no Actions pending or, to Purchaser’s Knowledge, threatened
against or affecting Purchaser or their respective properties or assets, at law or in equity, by or
before any Governmental Authority, or by or on behalf of any third party, which, if adversely
determined, would materially impair Purchaser’s ability to consummate the transactions
contemplated hereby, and there are no outstanding Orders, affecting Purchaser, or their respective
properties or assets, at law or in equity, which would materially impair Purchaser’s ability to
consummate the transactions contemplated hereby.
Investment Intent. Purchaser are acquiring the Company Interests and the
Transferred Assets for investment purposes only and not with a view toward, or for sale in
connection with, any distribution thereof in violation of federal, state or other securities laws.
Purchaser agree that it will not sell, transfer, offer for sale, pledge, hypothecate or otherwise
dispose of the Company Interests or the Transferred Assets in violation of any federal, state or
other securities laws. Purchaser is an “accredited investor” (as defined under Regulation D
promulgated under the Securities Act of 1933, as amended).
Funding. Purchaser have the necessary funding to meet all of its obligations under
this Agreement and the Purchaser Transaction Agreements, including, without limitation, the
Purchase Price, any adjustments thereto and all of its fees and expenses in order to consummate
the transactions contemplated by this Agreement and the Purchaser Transaction Agreements.
Purchaser acknowledges that the obtaining of any financing is not a condition precedent to the
obligations of Purchaser to consummate the transactions contemplated hereby.
Purchaser’s Reliance.
(a) Purchaser has conducted its own independent investigation, verification,
review and analysis of the business, operations, assets, liabilities, results of operations, financial
condition, technology and prospects of the Companies and the Transferred Assets, which
investigation, review and analysis was conducted by Purchaser and its Affiliates and, to the extent
Purchaser deemed appropriate, by Purchaser’s Representatives. In entering into this Agreement,
Purchaser acknowledges that it has relied solely upon the aforementioned investigation, review
and analysis and not on any factual representations or opinions of the Companies or any of the
Companies’ Representatives or, as it relates to the Transferred Assets, any of Coen Markets or
Thomaston Land’s Representatives (except the specific representations and warranties set forth in
Article III).
(b) Purchaser acknowledge that, except for the representations and warranties
of Sellers contained in Article III, none of Sellers, Sellers’ unitholders or the Companies nor any
other Person, has made, and Purchaser have not relied on any other express or implied
representation or warranty by or on behalf of any of Sellers, Sellers’ unitholders or the Companies,
and that none of Sellers, Sellers’ unitholders, the Companies or any other Person, directly or
indirectly, has made, and Purchaser have not relied on, any representation or warranty regarding
any financial projections or other forward-looking statements of Sellers or the Companies and
Purchaser will make no claim with respect thereto.
(c) In connection with Purchaser’s investigation of the Companies and the
Transferred Assets, Purchaser acknowledge that Purchaser or Purchaser’s Representatives have
received from or on behalf of the Companies and, to the extent applicable, Coen Markets and
Thomaston Land, certain pro forma financial information, financial projections and other forward-
looking statements. Purchaser further acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections and other forecasts and plans, that Purchaser are
familiar with such uncertainties, that Purchaser is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans
so furnished to it (including the reasonableness of the assumptions underlying such estimates,
projections and forecasts), and that Purchaser shall have no claim against Sellers or any other
Person with respect thereto.
Brokers. No broker, finder or financial advisor or other Person is entitled to any
brokerage fees, commissions, finders’ fees or financial advisory fees in connection with the
transactions contemplated hereby by reason of any action taken by Purchaser or any of its
Representatives, except for Height LLC.
Solvency. Purchaser is not entering into this Agreement or the transactions
contemplated hereby with the actual intent to hinder, delay or defraud either present or future
creditors. Assuming that the representations and warranties of Sellers contained in this Agreement
are true and correct in all material respects, and after giving effect to the Transaction, at and
immediately after the Closing, Purchaser and the Companies (a) will be solvent (in that both the
fair value of each of their assets will not be less than the sum of their respective debts and that the
present fair saleable value of each of their assets will not be less than the amount required to pay
their respective probable liability on its recourse debts as they mature or become due); (b) will
have adequate capital and liquidity with which to engage in the Business; and (c) will not have
incurred and does not plan to incur debts beyond its ability to pay as they mature or become due.
R&W Policy. As of the Closing, Purchaser shall have acquired a transaction
representations and warranties insurance policy that includes a waiver of subrogation rights
substantially in the form attached hereto as Exhibit D (the “R&W Policy”), which shall not be
amended after the Closing other than in accordance with the provisions of Section 5.14.
ARTICLE V
COVENANTS OF THE PARTIES
Conduct of Business. Except (i) as otherwise required, permitted or contemplated
by this Agreement, including Section 5.15, (ii) as set forth in Section 5.1 of the Disclosure
Schedule, (iii) as approved by Purchaser (which approval shall not be unreasonably withheld,
conditioned or delayed) or (iv) as required by Applicable Law, during the period from the date
hereof to the Closing Date, Seller Parent shall use commercially reasonable efforts to cause the
Companies to conduct the Business in the ordinary course of business consistent with past practice,
which, for the avoidance of doubt shall include the Company’s ability to utilize and/or distribute
Cash. Without limiting the generality of the foregoing, Seller shall cause the Companies not to
increase in any material respect the rate of compensation or benefits of, or pay or agree to pay any
benefit to, managers, directors or officers, except as may be required by any existing Plan and
except to pay Stay Bonuses to certain Continuing Employees as agreed by the parties.
Access to Information Prior to the Closing; Confidentiality.
(a) During the period commencing on the date hereof and ending on the earlier
of (i) the Closing Date and (ii) the date on which this Agreement is terminated pursuant to
Section 7.1, Sellers shall cause the Companies, upon reasonable notice, to afford Purchaser and its
Representatives reasonable access during normal business hours to the officers, directors,
employees, accountants, properties, books and records of each of the Companies, and during such
period, shall furnish to Purchaser all information concerning the Business as Purchaser may
reasonably request; provided, that Sellers may restrict the foregoing access to the extent that in
their reasonable judgment, any Applicable Law requires them to restrict access to the Business,
the properties, information or personnel of the Companies; and provided, further, that such access
shall not unreasonably disrupt the operations of the Companies. Notwithstanding anything to the
contrary contained in this Agreement, Sellers shall not be required to provide any information or
access that Sellers reasonably believe could violate Applicable Law, including Antitrust Laws,
rules or regulations or the terms of any confidentiality agreement or cause forfeiture of
attorney/client privilege.
(b) Nothing contained in this Agreement shall be construed to give to
Purchaser, directly or indirectly, rights to control or direct the operations of the Companies prior
to the Closing. Prior to the Closing, the Companies shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of their respective operations.
(c) Purchaser hereby agrees that it is not authorized to and shall not (and shall
not permit any of its employees, counsel, accountants, consultants, financing sources and other
Representatives to) contact any competitor, supplier, distributor, customer, agent or representative
of either of the Companies, Coen Markets or Thomaston Land prior to the Closing without the
prior written consent of such company.
(d) Any information provided to or obtained by Purchaser pursuant to
paragraph (a) above shall be “Confidential Information” as defined in the Confidentiality
Agreement dated, March 7, 2017, between Seller Parent and Purchaser (the “Confidentiality
Agreement”), and shall be held by Purchaser in accordance with, and shall be subject to the terms
of, the Confidentiality Agreement. Notwithstanding anything to the contrary herein, the terms and
provisions of the Confidentiality Agreement shall survive the termination of this Agreement and
continue in full force and effect thereafter. In the event of the termination of this Agreement for
any reason, Purchaser shall comply with the terms and provisions of the Confidentiality
Agreement, including returning or destroying all Confidential Information and not soliciting or
employing employees of the Companies, Coen Markets or Thomaston Land. None of the
Companies, Coen Markets or Thomaston Land will have or be subject to any liability or
indemnification obligation to Purchaser or any other Person pursuant to this Agreement resulting
from the distribution to Purchaser or its Affiliates and Representatives of any “Confidential
Information” (as defined in the Confidentiality Agreement) or the use thereof by Purchaser or its
Affiliates and Representatives, including pursuant to the first sentence of this Section 5.2(d).
(e) In addition to the limitations set forth in the Confidentiality Agreement:
(i) Purchaser shall not disclose any Confidential Information of Sellers,
their unitholders or any of their respective Affiliates without the prior written consent of
the applicable party.
(ii) Purchaser shall, with respect to all of such Confidential Information:
(x) use such Confidential Information solely in connection with the negotiation of the terms
of this Agreement and the transactions contemplated hereby; (y) not disclose such
Confidential Information to any third party (other than the receiving party’s employees
and/or professional advisors on a need-to-know basis who are bound by obligations of
nondisclosure and limited use at least as stringent as those contained herein); and (z) use
the same standard of care it uses to protect its own Confidential Information to protect such
Confidential Information; provided, that in no event will such standard of care be less than
a reasonable degree of care.
(iii) Purchaser shall take commercially reasonable measures necessary
to avoid any disclosure prohibited or restrained hereunder by any Representative or
Affiliate of such party. Purchaser agrees that any action by any Representative or Affiliate
of such party that, if such Representative or Affiliate were a party to this Agreement, would
violate the terms of the Confidentiality Agreement or this Section 5.2, shall be deemed a
breach of this Agreement by Purchaser and such party.
(f) From the Closing Date forward, Sellers shall hold in confidence and not use
or disclose any non-public or Confidential Information of or relating to the Companies, its
Business or any Transferred Asset in violation of this Section 5.2(f), and in each case shall use
commercially reasonable efforts to prevent the unauthorized use, dissemination or disclosure of
such Confidential Information in violation of this Section 5.2(f); provided, however, that (i) this
Section 5.2(f) shall not apply to any information that (A) is or becomes generally available to the
public other than as a result of disclosure on or after the Closing Date, directly or indirectly, by
Sellers or (B) is or becomes available to Sellers from a Third Party on a non-confidential basis,
provided that the source of such information was not known and could not reasonably have been
known by the recipient party to be bound by a confidentiality obligation to Purchaser or its
Affiliates, and (ii) Sellers shall be permitted to disclose any such Confidential Information if (I)
such disclosure is required by Applicable Law or an Order, (II) the disclosing Person has given
reasonable advance written notice to Purchaser of such prospective disclosure and an opportunity
to procure a protective order or confidential treatment thereof at Purchaser’s expense, (III) in the
event required by Applicable Law or an Order to disclose notwithstanding the preceding clause
(II), the disclosing Person discloses only that portion of the confidential information that it is
required by Applicable Law or by Order to disclose.
(g) Notwithstanding anything to the contrary contained in this Agreement, a
disclosing party shall be entitled to equitable relief, including injunction and specific performance,
as a remedy for any breach or threatened breach of this Section 5.2.
Commercially Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate the transactions contemplated by this
Agreement, including the satisfaction of the conditions set forth in this Article V and Article VI at
the earliest practicable date.
Consents. Each of the parties hereto will use its reasonable best efforts to obtain
all licenses, permits, authorizations, consents and approvals of all third parties and Governmental
Authorities necessary in connection with the consummation of the transactions contemplated by
this Agreement prior to the Closing. Each of the parties hereto will make or cause to be made all
filings and submissions under laws and regulations applicable to it as may be required for the
consummation of the transactions contemplated by this Agreement. The parties hereto will
coordinate and cooperate with each other in exchanging such information and assistance as any of
the parties hereto may reasonably request in connection with the foregoing. All costs in respect of
obtaining any third party authorizations, consents or approvals in connection with the
consummation of the transactions contemplated by this Agreement shall be borne by the Sellers.
Public Announcements. Neither party may issue any press release or make any
public statement or announcement concerning the subject matter or nature of this Agreement or
the transactions contemplated hereby without the prior written consent of the other party. In the
case of any such release or public statement, the parties shall first consult and agree as to the
specific contents and the manner or timing of presentation or publication thereof. The foregoing
does not apply to any announcement by a party required in order to comply with Applicable Law,
but only if such party consults with the other party before making any such announcement and
gives due consideration to the views of the other party with respect thereto. Notwithstanding the
foregoing, in no event shall the provision of this Section 5.5 be deemed to restrict or otherwise
limit the ability of the parties to disclose information regarding this Agreement and the transactions
contemplated hereby to its direct and indirect investors and prospective investors. The foregoing
does not apply to any filing required by the Securities Exchange Act of 1934, as amended, or any
other applicable securities law, provided that, notwithstanding anything herein, no such filings
shall include the Disclosure Schedule.
Notice of Events.
(a) During the period from the date hereof to the Closing Date or the earlier
termination of this Agreement, Purchaser shall promptly notify Seller Parent in writing if
Purchaser becomes aware of (i) the occurrence or non-occurrence of any event or the existence of
any fact or condition that would cause or constitute a breach of any Purchaser representations or
warranties contained herein had any such representation or warranty been made as of the time of
Purchaser’s discovery of such event, fact or condition, and (ii) any material failure on Purchaser’s
part to comply with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
(b) During the period from the date hereof to the Closing Date or the earlier
termination of this Agreement, Seller Parent shall promptly notify Purchaser in writing if Sellers
become aware of (i) the occurrence or non-occurrence of any event or the existence of any fact or
condition that would cause or constitute a breach of any of Sellers’ representations or warranties
contained herein had such representation or warranty been made as of the time of Sellers’
discovery of such event, fact or condition, and (ii) any material failure on Sellers’ part to comply
with or satisfy any covenant, condition or agreement to be complied with or satisfied by it
hereunder. Should any such event, fact or condition require any change to the Disclosure Schedule
(including the section or sections of the Disclosure Schedule set forth in the Side Letter), Sellers
shall promptly deliver to Purchaser a supplement to the Disclosure Schedule (and the Side Letter,
if applicable) specifying such change.
(c) In the event that Sellers deliver one or more supplements to the Disclosure
Schedule (and the Side Letter, if applicable) pursuant to Section 5.6(b), whether or not reflecting
events, facts or conditions which individually or in the aggregate could cause the conditions set
forth in Sections 6.2(a) or 6.2(b) not to be satisfied, and Purchaser does not exercise their right to
terminate this Agreement on the basis of such supplemented Disclosure Schedule (and Side
Letter), if such updates would cause such conditions to fail, within five (5) Business Days of
Purchaser’s receipt of any supplement to the Disclosure Schedule (and Side Letter) in accordance
with Section 7.1(g), Purchaser will be deemed to have accepted such supplemented Disclosure
Schedule (and Side Letter), the delivery of any such supplement will be deemed to have cured any
misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of
such events, facts or conditions and, from and after the Closing Date, Purchaser will not have any
claim for indemnification for any such events, facts or conditions.
Officer and Director Indemnification and Insurance. (a) Purchaser agrees that all
rights to indemnification and exculpation from liability for acts or omissions occurring on or prior
to the Closing Date now existing in favor of the current or former directors, managers, officers or
employees of the Companies (each, a “D&O Indemnified Person”), as provided in the respective
limited liability company agreements, operating agreements, certificates of incorporation, by-laws
or similar organizational documents or in indemnification agreements, shall survive the Closing
Date and shall continue in full force and effect in accordance with their respective terms, and on
terms with respect to coverage and amount no less favorable than those of such policy or agreement
in effect on the date hereof. Purchaser shall not, and shall cause the Companies (after the Closing)
not to, settle, compromise or consent to the entry of judgment in any Action or investigation or
threatened Action or investigation without the written consent of such D&O Indemnified Person.
(b) Effective as of the Closing, Purchaser shall cause the Companies to obtain,
at Purchaser’s expense, a non-cancelable run-off insurance policy, for a period of six (6) years
after the Closing Date, which shall include “side A” liability coverage, to provide insurance
coverage on terms with respect to coverage and amount no less favorable than those of such policy
in effect on the date hereof for events, acts or omissions occurring on or prior to the Closing Date
for all Persons who were directors, managers or officers of the Companies on or prior to the
Closing Date.
(c) If, after the Closing, Purchaser, either of the Companies or any of their
respective successors or assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to any Person, then, and in
each such case, to the extent necessary, proper provision shall be made so that the successors and
assigns of Purchaser or the applicable Company, as the case may be, shall assume the obligations
set forth in this Section 5.7.
(d) The rights of each D&O Indemnified Person under this Section 5.7 shall be
in addition to any rights such Person may have under the certificate of formation, operating
agreement or similar organizational documents of the Companies, or under the any other
Applicable Law or under any agreement of any D&O Indemnified Person with either of the
Companies. These rights shall survive consummation of the Transaction, shall not be terminated
or modified in such a manner as to affect adversely any D&O Indemnified Person to whom this
Section 5.7 applies without the consent of such affected D&O Indemnified Person and are intended
to benefit, and shall be enforceable by, each D&O Indemnified Person (it being expressly agreed
that the D&O Indemnified Persons to whom this Section 5.7 applies shall be third-party
beneficiaries of this Section 5.7, each of whom may enforce the provisions of this Section 5.7).
No Solicitation or Negotiation. Sellers agree that between the date of this
Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement in
accordance with its terms, neither Sellers nor the Companies, as applicable, will (i) solicit, initiate,
consider, encourage or accept any other proposals or offers from any other Person (A) relating to
any acquisition or purchase of all of the equity of the Companies or all or a substantial portion of
the assets of the Companies or relating to the acquisition or purchase of the Transferred Assets or
(B) to enter into any merger, consolidation or other business combination with Sellers or either of
the Companies or (ii) participate in any discussions, conversations, negotiations and other
communications regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt
by any other Person to seek to do any of the foregoing. Sellers shall, and Seller Parent shall cause
the Companies to, immediately cease and cause to be terminated all existing discussions,
conversations, negotiations and other communications with any Persons conducted heretofore with
respect to any of the foregoing, other than the Purchaser.
Tax Matters.
(a) Purchase Price Allocation. Purchaser and Sellers acknowledge and agree
that for U.S. federal income tax purposes the sale of Company Interests shall be treated as a sale
of all of the assets of the Companies, less the Retained Company Assets, subject to the Assumed
Liabilities. Purchaser and Sellers agree that the Purchase Price (plus other relevant items) shall be
allocated among the assets of the Companies and the Transferred Assets as set forth on Schedule
5.9(a) subject to such changes that may be required post-closing for reconciliation of inventory,
earn out payments, capital expenditures, pre-closing or post-closing true-ups, and such other
adjustments as may be necessary for class V assets. The allocation shall be revised from time to
time in a manner consistent with the residual method under Section 1060 of the Code to take into
account any increase or decrease in the aggregate amounts paid to Sellers hereunder. Sellers and
Purchaser agree to consistently report this transaction for tax purposes in accordance with (i) the
allocation herein (subject to such changes referenced above); (ii) the provisions of Section 1060
of the Code; and (iii) on IRS Form 8594.
(b) Responsibility for Filing Tax Returns. Seller Parent shall prepare or cause
to be prepared (and the Companies shall timely file or cause to be timely filed) all Tax Returns for
all taxable periods ending on or prior to the Closing Date the due date (including extensions of
time to file) of which is after the Closing Date (the “Seller Returns”). All such Seller Returns
shall be prepared and filed in a manner consistent with the past practice of the Companies unless
otherwise required by a change in Applicable Law. To the extent necessary under applicable law,
Purchaser shall (or cause the Companies to) sign any such Seller Returns. The Seller Returns will
be prepared at the sole cost and expense of Seller. Any information obtained under this
Section 5.9(b) shall be kept confidential, except as the parties agree is otherwise necessary in
connection with the filing of Tax Returns or Claims in respect of Taxes.
(c) Pre-Closing Tax Matters. Following the Closing, Purchaser shall not, and
shall not permit the Companies to, (a) file or amend or otherwise modify any Tax Return relating
to a Pre-Closing Tax Period, (b) extend or waive, or cause to be extended or waived, any statute
of limitations or other period for the assessment of any Tax or deficiency related to a Pre-Closing
Tax Period, (c) make or change any Tax election or accounting method or practice with respect to,
or that has retroactive effect to, any Pre-Closing Tax Period, or (d) initiate any voluntary contact
with a Tax authority regarding any Pre-Closing Tax Period.
(d) Tax Refunds. Any refund, rebate, abatement, reduction of Taxes or other
cash recovery of Taxes of either of the Companies or with respect to the Transferred Assets and
the amount of any credit taken in lieu thereof (calculated, for this purpose as if the Closing Date
were the last day of the taxable year regardless of whether in fact it does) and any interest thereon
paid by the applicable taxing authority to either of the Companies or to Purchaser with respect to
a Pre-Closing Tax Period, shall be for the account of Sellers and shall be paid by the applicable
Company to Sellers within ten (10) days following receipt thereof.
(e) Allocation of Straddle Period Taxes. In any case where Applicable Law
does not permit the Companies to treat the Closing Date as the last day of the Taxable period, the
amount of Taxes that are allocable to the portion of the Straddle Period ending on and including
the Closing Date shall be: (i) in the case of Taxes imposed on a periodic basis with respect to the
Business or assets of the Companies the amount of such Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of calendar days in the portion of
the Straddle Period ending on and including the Closing Date, and the denominator of which is the
number of calendar days in the entire Straddle Period; and (ii) in the case of Taxes that are based
upon or related to income or receipts (including any Income Taxes), deemed equal to the amount
that would be payable if the taxable period ended on the Closing Date. Notwithstanding the
foregoing, any Taxes relating to any transactions not in the ordinary course of business that occur
after the Closing Date shall be treated as occurring on the day after the Closing Date.
(f) Cooperation on Tax Matters. Purchaser, the Companies and Sellers shall
cooperate fully, as and to the extent reasonably requested by the other party, in connection with
the preparation, execution and filing of Tax Returns pursuant to this Section 5.9(f), any audit,
litigation or other proceeding with respect to Taxes and the computation and verification of any
amounts paid or payable under this Section 5.9(f) (including any supporting workpapers, schedules
and documents). Such cooperation shall include the retention and (upon the other party’s request)
the provision of records and information which are reasonably relevant to any such audit, litigation
or other proceeding and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
(g) Tax Proceedings. In the event of any audit, assessment, examination, claim
or other controversy or proceeding relating to Taxes or Tax Returns (a “Tax Proceeding”) with
respect to any Pre-Closing Tax Period (other than a Straddle Period), or which could otherwise
result in an indemnification obligation of Seller pursuant to this Agreement to Purchaser, Purchaser
shall inform Seller Parent of such Tax Proceeding promptly (and vice versa). The failure of a party
to give reasonably prompt notice of any Tax Proceeding shall not release, waive or otherwise affect
the other party’s obligations with respect thereto except to the extent that the indemnifying party
is prejudiced as a result of such failure. Except for Tax Proceedings in respect of a Straddle Period,
Seller Parent shall have the right to control, at Seller Parent’s expense, the conduct of any Tax
Proceeding that is with respect to the Pre-Closing Tax Period, with counsel of its own choosing
but that is reasonably acceptable to Purchaser. Seller Parent shall be entitled to settle or otherwise
resolve any such Tax Proceeding in such manner as Seller Parent may deem appropriate, provided,
however, that Seller Parent shall consult with Purchaser regarding any such Tax Proceeding and
shall allow Purchaser to participate in any such proceeding.
(h) Straddle Period Tax Proceedings. In the case of any Tax Proceeding with
respect to a Straddle Period, Purchaser and Seller Parent shall jointly represent their interests
therein, shall employ counsel and/or accountants of their mutual choice and shall cooperate with
each other and their representatives in a prompt and timely manner in connection therewith. The
parties shall mutually agree on any settlement or other disposition of the Tax Proceeding. In the
event Purchaser and Seller Parent are unable to agree regarding any aspect of the conduct of any
such Tax Proceeding, the decision shall be made by the counsel employed to pursue such Tax
Proceeding on the basis of counsel’s good faith judgment regarding the course of action that would
produce the overall lowest present value of Tax and litigation cost to the parties. Any such Tax
Proceeding expenses shall be borne by Purchaser and Seller Parent in the same proportion as such
related Taxes are borne by Purchaser and Seller Parent in accordance with this Agreement.
Employees.
(a) On or before the Closing, Sellers or their Affiliates (other than the
Companies) shall not make offers of employment to any Current Employee, without the
Purchaser’s prior written approval other than Current Employees listed on Schedule 5.10(a)(i).
Each Current Employee who, with the prior approval of the Purchaser, becomes an employee of
Sellers or their Affiliates (other than the Companies) shall be listed on Schedule 5.10(a)(ii), as
updated from time to time.
(b) During the period from the date hereof to the Closing Date, Sellers agree to
use commercially reasonable efforts to facilitate reasonable information requests and
communications from Purchaser with respect to Purchaser’s on-boarding process for the
Continuing Employees. In addition, Sellers agree to cooperate with Purchaser with respect to
Purchaser’s on-boarding process for Current Employees, including Purchaser’s drug testing of
Current Employees, if required.
(c) Subject to Section 5.10(f), Purchaser agrees that, after the Closing, with
respect to the Continuing Employees, Purchaser will, or will cause their Affiliates to, for a period
of at least twelve (12) months following the Closing Date, provide such Continuing Employees
with (i) a rate of base salary or wages and bonus opportunity that is not less favorable than the rate
of base salary or wages and bonus opportunity paid by the Companies and their Affiliates to such
Continuing Employees immediately prior to the Closing Date, and (ii) other benefits (including
vehicle and cell phone benefits or reimbursements) that are substantially similar in the aggregate
to the benefits provided (x) by the Companies and their Affiliates to such Continuing Employees
immediately prior to the Closing Date (excluding equity compensation for purposes of the
comparison) or (y) to similarly situated employees of Purchaser and its Affiliates (excluding the
Continuing Employees).
(d) With respect to each benefit plan, program, practice, policy or arrangement
maintained by Purchaser or any of its Affiliates (including the Companies) following the Closing
Date and in which any of the Continuing Employees participate (the “Purchaser Plans”), for
purposes of determining eligibility to participate and vesting purposes (but not for accrual of
benefits other than determining the level of vacation pay accrual), service with either of the
Companies or their Affiliates (or predecessor employers to the extent the Plans provide past service
credit) shall be treated as service with Purchaser and/or the applicable company, except to the
extent such service credit would result in any duplication of benefits. Each applicable Purchaser
Plan shall waive eligibility waiting periods, evidence of insurability requirements and pre-existing
condition limitations. To the extent applicable in the plan year that contains the Closing Date,
Purchaser shall use commercially reasonable efforts to provide the Continuing Employees shall be
given credit under the applicable Purchaser Plan for amounts paid prior to the Closing Date during
the calendar year in which the Closing Date occurs under a corresponding Plan for purposes of
applying deductibles, co-payments and out of pocket maximums, as though such amounts had been
paid in accordance with the terms and conditions of the Purchaser Plan.
(e) Purchaser shall use commercially reasonable efforts to permit each
Continuing Employee who has received an eligible rollover distribution (as defined in
Section 402(c)(4) of the Code) from Seller Parent’s 401(k) plan, if any, to roll over such eligible
rollover distribution, including any associated loans, as part of any lump sum distribution to a
defined contribution employee benefit plan sponsored by Purchaser or its Affiliates.
(f) Nothing in this Agreement (i) shall require Purchaser to continue to employ
any particular Continuing Employee following the Closing Date for any particular period of time,
(ii) shall be construed to prohibit Purchaser from amending or terminating any Company Plan or
Purchaser Plan, (iii) shall constitute or be construed as an amendment of any Plan or Purchaser
Plan, or (iv) shall create or be intended to create any third-party beneficiary rights.
Preservation of Records.
(a) For a period of seven (7) years after the Closing Date or such other longer
period required by Applicable Law, Purchaser shall preserve and retain (or cause each of the
Companies to preserve and retain), all corporate, accounting, tax, legal, auditing, human resources
and other books and records of the Companies (including (i) any documents relating to any
governmental or non-governmental claims, actions, suits, proceedings or investigations and (ii) all
Tax Returns, schedules, work papers and other material records or other documents relating to
Taxes of the Companies) relating to the conduct of the business and operations of the Companies
prior to the Closing Date. Notwithstanding any other provisions hereof, the obligations of
Purchaser contained in this Section 5.11 shall be binding upon the successors and assigns of
Purchaser and the Companies. In the event Purchaser or either of the Companies, or any of their
respective successors or assigns, (i) consolidates with or merges into any other Person or
(ii) transfers all or substantially all of its properties or assets to any Person, then, and in each case,
proper provision shall be made so that the successors and assigns of Purchaser or of the Companies,
as the case may be, honor the indemnification and other obligations set forth in this Section 5.11.
(b) In the event and for so long as Purchaser or either of the Companies are/is
actively contesting or defending against any Action in connection with any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date involving either of the Companies, each of the
other parties shall cooperate with it and its counsel in the defense or contest, make available their
personnel, and provide such testimony and access to their books and records as shall be necessary
or reasonably requested in connection with the defense or contest, all at the sole cost and expense
of the contesting or defending party.
Conflicts; Privileges. It is acknowledged by each of the parties hereto that Sellers
have retained Arnold & Porter Kaye Scholer LLP (“APKS”) and Babst Calland Clements &
Zomner (“Babst”) to act as its counsel in connection with the transactions contemplated hereby
and that neither APKS nor Babst have acted as counsel for Purchaser in connection with the
transactions contemplated hereby, and that no other party to this Agreement has the status of a
client of APKS or Babst for conflict of interest or any other purposes as a result thereof. Purchaser
hereby agrees that, in the event that a dispute arises between Purchaser or any of its Affiliates
(including, after the Closing, either of the Companies and any of their respective Affiliates) and
Sellers, any unitholder of Sellers or any of their respective Affiliates (including, prior to the
Closing, either of the Companies), that relates to the transactions contemplated by this Agreement,
APKS and/or Babst may represent Sellers, such unitholder or any such Affiliate in such dispute
even though the interests of Sellers, such unitholder or such Affiliate may be directly adverse to
Purchaser or any of its Affiliates (including, after the Closing, either of the Companies), and even
though APKS and/or Babst may have represented either of the Companies in a matter substantially
related to such dispute, or may be handling ongoing matters for any of the Purchaser or either of
the Companies, the Purchaser hereby, on behalf of itself and its Affiliates (including, after the
Closing, the Companies), (i) waives any claim they have or may have that APKS and/or Babst has
a conflict of interest in connection with or is otherwise prohibited from engaging in such
representation, (ii) agrees that, in the event that a dispute arises after the Closing between
Purchaser or any of its Affiliates (including either of the Companies) and Sellers, any unitholder
of Sellers or their respective Affiliates, APKS and/or Babst may represent any of Sellers, such
unitholder and/or such Affiliate in such dispute even though the interest of any such party may be
directly adverse to Purchaser or any of their Affiliates (including, after the Closing, either of the
Companies), and even though APKS and/or Babst may have represented either of the Companies
in a matter substantially related to such dispute, or may be handling ongoing matters for Purchaser
or either of the Companies. Notwithstanding the foregoing, in no event shall the foregoing waive
the obligation of APKS or Babst to comply with applicable Rules of Professional Conduct as it
relates to the protection of current or former client confidential information and the limitations on
the use of such information. Purchaser further agrees that, as to all communications among APKS,
Babst, Sellers, either of the Companies, any unitholder of Sellers and their respective Affiliates
that relate in any way to the transactions contemplated by this Agreement, the attorney-client
privilege, the expectation of client confidence and all other rights to any evidentiary privilege
relating to the transactions belong to such unitholder, Sellers and/or such Affiliates and may be
controlled by such unitholder, Sellers and/or such Affiliates and shall not pass to or be claimed by
Purchaser or, after the Closing, either of the Companies. Purchaser agrees to take, and to cause
their Affiliates to take, all steps necessary to implement the intent of this Section 5.12. Purchaser
and Sellers further agree that APKS, Babst and their respective partners and employees are third-
party beneficiaries of this Section 5.12.
Resignation of Officers and Directors. At the Closing, Seller Parent shall deliver
to Purchaser evidence of the resignation of all officers and directors, to the extent applicable, of
the Companies (other than those designated by Purchaser in writing at least two (2) Business Days
prior to the Closing), such resignations to be effective as of the Closing.
No Modification of R&W Policy. The parties acknowledge that, as of the date
hereof, Purchaser has obtained a conditional binder to the R&W Policy, and that a true and correct
copy of such conditional binder has been provided to Sellers and contains a waiver of subrogation
rights (excepting from such waiver, claims based on Seller’s Fraud). Purchaser shall not and shall
cause their Affiliates not to, amend, modify or otherwise change, terminate or waive any provision
of the R&W Policy, (i) with respect to the waiver of subrogation set forth therein, (ii) in any
manner that would be reasonably likely to increase or expand the ability or rights of the insurer
thereunder to bring an Action against, or otherwise seek recourse from Sellers, (iii) in any manner
that would be reasonably likely to reduce Purchaser’s (or its Affiliate’s) access to the R&W
Policy’s coverage or cause any coverage provided under the R&W Policy to be more difficult for
Purchaser (or its Affiliates) to access or (iv) that would result in an increased retention or
deductible under the R&W Policy, in each case without the prior written consent of Sellers.
Pre-Closing Reorganization.
(a) Immediately prior to the Closing, the Retained Company Assets will be
transferred to a separate entity (or entities) formed by Sellers. Nothing in this Agreement shall be
deemed to contribute, transfer, assign or convey the Retained Company Assets to Purchaser and
Seller Parent will retain all right, title and interest in and under the Retained Company Assets. All
Liabilities related to the Retained Company Assets will, in the Seller Parent’s discretion, be
transferred to (i) a separate entity (or entities) formed by Sellers, or (ii) Seller Parent.
(b) Immediately prior to the Closing, the Leases listed on Schedule 5.15(b)
between Coen Energy and each of Coen Markets and Thomaston Land will be terminated.
Transition License Agreement. At or prior to the Closing, Seller Parent and
Purchaser will enter into a Transition License Agreement in the form attached hereto as Exhibit E
(the “Transition License Agreement”), pursuant to which Seller Parent will grant Purchaser a
limited license to use the Seller Parent IP after the Closing solely for use in connection with the
Business for a period of thirty six (36) months. Except as set forth in the Transition License
Agreement, nothing in this Agreement shall be deemed to grant Purchaser the right to use the
Seller Parent IP. Furthermore, nothing in this Agreement shall be deemed to contribute, transfer,
assign or convey the Seller Parent IP to Purchaser and Seller Parent will retain all right, title and
interest in and under the Seller Parent IP. Purchaser acknowledges Seller Parent’s (or its
Affiliates’) right, title and interest in and under the Seller Parent IP and agree that it shall not do
or cause to be done any act that in any manner might infringe, or impair the validity, scope, or title
in the Seller Parent IP. Purchaser shall not acquire nor claim any title to the Seller Parent IP
adverse to Seller Parent (or its Affiliates) by virtue of this Agreement.
Transition Services Agreement. In order to ensure an orderly transition of the
Business to Purchaser, at or prior to the Closing, Seller Parent and Purchaser will enter into a
Transition Services Agreement substantially in the form attached hereto as Exhibit F (the
“Transition Services Agreement”), pursuant to which Seller Parent will provide, or cause its
Affiliates to provide, Purchaser with certain services, for a period not to exceed twelve (12) months
and subject to the terms and conditions set forth in the Transition Services Agreement.
Non-Competition.
(a) Sellers and Purchaser acknowledge the highly competitive nature of the
Business and that the Business would be irreparably damaged if either of the Founders were to
directly or indirectly provide services to any Person competing with the Business or engage in a
business similar to the Business and that any such direct or indirect competition by either of the
Founders could result in significant losses by the Business. In further consideration of payment of
consideration to the Sellers pursuant to this Agreement, and in order to protect the value of the
Business acquired by Purchaser hereunder (including the goodwill inherent in the Business as of
the date hereof), each of the Founders severally agrees that, during the Restricted Period, he will
not, directly or indirectly, on his own behalf or on behalf of any Person, own, manage, operate,
join, control, participate in, invest in or otherwise be connected or associated with, in any manner,
including as an officer, director, employee, independent contractor, stockholder, member, partner,
consultant, advisor, agent, proprietor, trustee or investor, any business or venture, which, directly
or indirectly, engages in a business competitive with the Business; provided, however, that the
restrictions contained in this Section 5.18 shall not (i) restrict the Founders from entering into
sourcing arrangements with any Person for fuel, compressed natural gas or similar product or (ii)
restrict the Founders from sourcing and transporting fuel, compressed natural gas or similar
product to any customers for use in their retail businesses.
(b) Purchaser acknowledge that Sellers have engaged in, and will continue to
engage in, an acquisitive retail business, and that Sellers may acquire entities or businesses that
engage in retail operations which include dealer operations (i.e., distribution of fuel to other retail
operations), and commercial fuel distribution operations (i.e., fuel distribution to non-retail
businesses). Notwithstanding anything to the contrary in this Agreement, Sellers shall not be
prohibited from continuing to pursue its strategy of acquisition of such entities or businesses in
connection with its retail operations.
(c) In the event that Sellers acquire an entity or business that is engaged in
commercial fuel distribution operations, Seller Parent shall provide notice to Purchaser (the
“Acquisition Notice”) within thirty (30) calendar days of such acquisition indicating the nature of
the commercial fuel distribution operations if such operations are primarily conducted within the
geographic markets in which the Companies currently engage in the Business. Purchaser shall
have the right to elect to purchase the commercial fuel distribution operations of such acquired
entity or business (the “Target Operations”). At any time within fifteen (15) calendar days
following the delivery of the Acquisition Notice by Seller Parent, Purchaser may exercise or
decline its right to purchase the Target Operations by delivering notice to Seller Parent exercising
or declining such right (“Exercise Notice”). For the avoidance of doubt, if Purchaser wishes to
decline its right to purchase the Target Operations, an Exercise Notice indicating so shall be
delivered within the time period prescribed above. In the event that Seller Parent and Purchaser
are unable to agree on a fair market value of the Target Operations within such time period, each
of Seller Parent and Purchaser shall, within fifteen (15) calendar days, choose a third party
appraisal firm with credible qualifications to perform a valuation of the Target Operations, and
each such appraisal firm shall be approved by each of Seller Parent and Purchaser, which approval
shall not be unreasonably withheld. Each appraisal firm shall perform a business valuation of the
Target Operations and present its findings to each of Seller Parent and Purchaser within thirty (30)
calendar days of the date such appraisal firm is selected (assuming the appraisal firm has the
information necessary to perform the valuation). If after presentation of such findings, Seller
Parent and Purchaser still do not agree on a price for the Target Operations, then a third appraisal
firm with credible qualifications approved by each of Seller Parent and Purchaser (such approval
not to be unreasonably withheld) shall be appointed to choose between the two appraisals received
from the prior appraisal firms. Such appraised value of the Target Operations shall determine the
amount that Purchaser pays to the applicable Seller for the Target Operations. Each party shall
use its best efforts and good faith to complete the purchase of the Target Operations by Purchaser.
(d) In the event that Purchaser does not exercise its right to purchase the Target
Operations and delivers an Exercise Notice indicating so, the applicable Seller shall divest or cease
operations of the Target Operations within eighteen (18) months of the Exercise Notice. From the
time of the acquisition of the Target Operations until the earlier of (i) the sale of the Target
Operations to Purchaser and (ii) the divestiture or cessation of the Target Operations, Sellers shall
have the right to operate the acquired entity or business, including the Target Operations, in the
ordinary course, and shall not be deemed to be in violation of this Section 5.18 for any reason.
(e) All notices provided pursuant to this Section 5.18 shall be provided in
accordance with the provisions of Section 9.2 of this Agreement.
Receivables and Administrative Support.
(a) From and after the Closing, if Purchaser or any of its Affiliates receives or
collects any funds clearly intended as payment of any Accounts Receivable, Purchaser or its
Affiliate shall remit such funds to Sellers on a monthly basis. If Sellers receive or collects any
funds clearly intended as payment of any accounts receivable of Purchaser, Sellers or their
Affiliates shall remit such funds to Purchaser on a monthly basis. To the extent Purchaser or any
of its Affiliates receives or collects any funds which are not so clearly intended, Purchaser or its
Affiliate shall remit such funds to Sellers on a monthly basis, and such funds shall be applied to
the oldest outstanding invoices until such pre-Closing balances are paid in full. For a period of up
to twelve (12) months following the Closing, Purchaser will (i) provide Sellers with a monthly
report reflecting the status of all Accounts Receivable that have been collected by Purchaser and
all invoices that remain outstanding and (ii) use reasonable efforts to (A) assist Sellers with the
receipt and processing of the Accounts Receivable to the extent such assistance is necessary and
desired by Sellers, and (B) facilitate such collections in accordance with the terms hereof. Without
limiting the foregoing, the Purchaser shall permit Sellers to utilize their credit group to process
such collections in a manner customary for transactions such as the transactions contemplated by
this Agreement and in a manner consistent with the policies and practices of the Sellers in effect
prior to Closing (inclusive of deeming any amounts uncollectable), provided, however, that (i) in
no event shall Purchaser be responsible for any third-party costs, fees or expenses required to
commence litigation or other collection processes on Sellers’ behalf (which costs, fees and
expenses shall be borne by Sellers if such actions are requested of Purchaser) and (ii) such
personnel shall give equal priority to processing such collections on behalf of the Sellers, giving
due account to the non-collection responsibilities of such personnel. Purchaser and Sellers will
cooperate in good faith regarding the proper application and payment of all funds received.
(b) For a period of twelve (12) months after the Closing, Purchaser shall make
Continuing Employees available, at no cost to Sellers and as Sellers may reasonably request, but
subject to such Continuing Employees’ obligations to Purchaser, to assist Sellers in complying
with regulatory, administrative and similar filings relating to the Business, including, but not
limited to, environmental compliance, licensing and permitting compliance as may be required
under Applicable Law or that are otherwise necessary and consistent with the policies and practices
of the Sellers in effect prior to Closing.
(c) The parties shall cooperate to produce and deliver to each other, as soon as
reasonably practicable following the Closing, a complete and accurate list of (i) all accounts
payable of the Companies and the aging thereof and (ii) the Accounts Receivable, showing the
aging thereof, in each case, as of the Closing.
Change of Name. To be consistent with the Earnout Period, within three (3) years
of the Closing Date, Purchaser shall change the name of each of the Companies to a name that
does not include the word “Coen.” If, after the three (3) year period, Purchaser wishes to continue
to use the name “Coen,” the parties agree to negotiate, in good faith, an economic arrangement for
the Purchaser’s continued use of the name “Coen.”
Estoppel Certificate. Sellers will use commercially reasonable efforts to deliver to
Purchaser at the Closing an estoppel certificate from PPC Lubricants, Inc. in accordance with that
certain Amended and Restated Lease, dated as of January 1, 2012, by and between Thomaston
Land and PPC Lubricants, Inc.
Title Insurance Proforma and Land Title Survey. Purchaser will use commercially
reasonable efforts to obtain the Title Insurance Proformas and the Land Title Surveys no later than
September 29, 2017. Seller shall cooperate in respect of the preparation of the Title Insurance
Proformas by delivering such affidavits, releases and other information required by any applicable
municipality and the nationally recognized title insurance company reasonable acceptable to
Purchaser, which are necessary for the preparation of the Title Insurance Policies. Sellers shall
also provide access to the Real Property for purposes of preparation of the Land Title Survey.
Joseph Action. Sellers agree to defend the Joseph Action in accordance with the
provisions of Section 8.3, as if it were an Indemnification Claim. Purchaser will use commercially
reasonable efforts to cause Coen Transport to deliver to Sellers and its Affiliates all records and
documentation relating to the Joseph Action that come into its possession and that may arise after
the Closing and shall permit Sellers to contact Purchaser’s employees during normal business
hours, to the extent reasonable, to assist Sellers in its defense of the Joseph Action; provided,
however, in no event shall Purchaser be required to incur any cost or expense in connection with
such assistance to Sellers. Sellers will not approve of the entry of any judgment or enter into any
settlement or compromise with respect to the Joseph Action without Purchaser’s prior written
approval (which shall not be unreasonably withheld or delayed), unless the terms of such
settlement provide for a complete release of the claims that are the subject of the Joseph Action in
favor of the Companies.
ARTICLE VI
CONDITIONS TO CLOSING
Conditions to Sellers’ Obligations. The obligations of Sellers to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Closing
of each of the following conditions (any or all of which may be waived in whole or in part by
Sellers):
(a) Representations and Warranties. The representations and warranties of
Purchaser in this Agreement which is qualified as to materiality shall be true and correct in all
respects and all other representations and warranties of Purchaser in this Agreement shall be true
and correct in all material respects as at the date when made and at and as of the Closing Date as
though such representations and warranties were made at and as of the Closing Date.
(b) Performance. Purchaser shall have, in all material respects, performed and
complied with all agreements, obligations, covenants and conditions required by this Agreement
to be so performed or complied with by Purchaser at or prior to the Closing.
(c) Officer’s Certificate. Purchaser shall have delivered to Sellers a certificate,
dated as of the Closing Date, executed by an officer of Purchaser, certifying the fulfillment of the
conditions specified in Section 6.1(a) and Section 6.1(b) hereof.
(d) Escrow Agreement. Purchaser, Seller Parent and the Escrow Agent shall
have entered into the Escrow Agreement.
(e) Purchaser Transaction Agreements. The Purchaser Transaction Agreements
shall have been executed and delivered by the parties thereto and true and complete copies thereof
shall have been delivered to Sellers.
(f) Injunctions; Illegality. No court or other Governmental Authority shall
have issued, enacted, entered, promulgated or enforced any Applicable Law or Order (that is final
and non-appealable and that has not been vacated, withdrawn or overturned) restraining, enjoining
or otherwise prohibiting the Transaction.
(g) R&W Policy. Purchaser shall have delivered to Sellers a fully executed and
copy of the R&W conditional binder.
(h) Other Documents. Sellers shall have received such documents as Sellers or
its counsel may reasonably request to evidence the Transaction.
Conditions to Purchaser’s Obligations. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions (any or all of which may be waived in
whole or in part by Purchaser):
(a) Representations and Warranties. The representations and warranties of
Sellers in this Agreement shall be true and correct on and as of the Closing Date as though such
representations and warranties were made at and as of the Closing (except for representations and
warranties expressly stated to relate to a specific date, in which case such representation and
warranties shall be true and correct as of such earlier date) with only such exceptions as would not
in the aggregate reasonably be expected to have a Material Adverse Effect.
(b) Performance. Sellers shall have, in all material respects, performed and
complied with all agreements, obligations, covenants and conditions required by this Agreement
to be so performed or complied with by Sellers at or prior to the Closing.
(c) Officer’s Certificate. Seller Parent shall have delivered to Purchaser a
certificate, dated as of the Closing Date, executed by an officer of such entity, certifying the
fulfillment of the conditions specified in Sections 6.2(a) and 6.2(b) hereof.
(d) Escrow Agreement. Purchaser, Seller Parent and the Escrow Agent shall
have entered into the Escrow Agreement.
(e) Seller Transaction Agreements. The Seller Transaction Agreements shall
have been executed and delivered by the parties thereto and true and complete copies thereof shall
have been delivered to Purchaser.
(f) Injunctions; Illegality. No court or other Governmental Authority shall
have issued, enacted, entered, promulgated or enforced any Applicable Law or Order (that is final
and non-appealable and that has not been vacated, withdrawn or overturned) restraining, enjoining
or otherwise prohibiting the Transaction.
(g) FIRPTA Certificate. Purchaser shall have received from each of the Sellers
a certificate executed by an executive officers of each of the Sellers on behalf of each of the Sellers,
dated as of the Closing Date, prepared in accordance with Treasury Regulations promulgated under
Sections 897 and 1445 of the Code, certifying that each of the Sellers is not a foreign person, in
the form attached hereto as Exhibit G.
(h) Closing Certificate. Coen Energy shall have delivered to the Purchaser a
certified copy of the calculation of the Petroleum Products Inventory and the Petroleum Products
Inventory Value in a form acceptable to Purchaser (the “Closing Certificate”).
(i) Good Standing Certificates. Sellers shall have delivered to Purchaser a
good standing certificate (or its equivalent) for the Companies from the secretary of state or similar
Governmental Authority of the jurisdiction under the Laws in which the Companies were
organized
(j) Sellers’ Certificate. Purchaser shall have received a certificate of the
Secretary or an Assistant Secretary (or equivalent officer) of each Seller certifying that attached
thereto are true and complete copies of all resolutions adopted by the board of directors or
managers of Sellers authorizing the execution, delivery and performance of this Agreement and
the Seller Transaction Agreements and the consummation of the transactions contemplated hereby
and thereby, and that all such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated hereby and thereby. In addition,
Purchaser shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of Sellers certifying the names and signatures of the officers of Sellers authorized to sign
this Agreement, the Seller Transaction Agreements and the other documents to be delivered
hereunder and thereunder.
(k) Company Debt. Effective upon the Closing, the Companies shall have no
Company Debt created by or on behalf of the Companies under the control of Seller Parent.
(l) Title Insurance Policy and Land Title Survey. Purchaser shall have received
a title insurance policy(ies)( “Title Insurance Policy”) with respect to each parcel of Transferred
Real Property, issued by a nationally recognized title insurance company reasonably acceptable to
Purchaser, written as of the Closing Date, in such amounts and together with such endorsements
and affirmative coverage, insuring Purchaser’s fee interest in the Real Property as of the Closing
Date free and clear of all Liens other than Permitted Liens in the form of the respective Title
Insurance Proformas. Purchaser shall have received an appropriately certified ALTA/ACSM Land
Title Survey (“Land Title Survey”) showing no Liens other than Permitted Liens, and otherwise
in form and substance reasonably satisfactory to Purchaser.
(m) Other Documents. Purchaser shall have received such documents as
Purchaser or its counsel may reasonably request to evidence the Transaction.
Frustration of Closing Conditions. Neither Purchaser nor Sellers may rely on the
failure of any condition set forth in this Article VI to be satisfied if such failure was caused by
such party’s failure to act in good faith or such party’s failure to use its reasonable best efforts to
cause the Closing to occur, as required by Section 5.3.
ARTICLE VII
TERMINATION
Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, at any time prior to the Closing:
(a) at any time, by mutual written agreement of Sellers and Purchaser;
(b) at any time after sixty (60) calendar days from the date hereof (the
“Termination Date”), by Sellers upon written notice to Purchaser, if the Closing shall not have
occurred for any reason other than a breach of this Agreement by Sellers; provided, that Sellers
may not terminate this Agreement pursuant to this Section 7.1(b) if it is in material breach of this
Agreement;
(c) at any time after the Termination Date, by Purchaser upon written notice to
Sellers, if the Closing shall not have occurred for any reason other than a breach of this Agreement
by Purchaser; provided, that Purchaser may not terminate this Agreement pursuant to this
Section 7.1(c) if Purchaser is in material breach of this Agreement;
(d) by Sellers if there shall have been a breach by Purchaser of any
representation, warranty, covenant or agreement set forth in this Agreement, which breach
(i) would give rise to the failure of a condition to the Closing hereunder in favor of Sellers and
(ii) cannot be cured, or has not been cured within twenty (20) calendar days following receipt by
Purchaser of written notice of such breach; provided, however, that the right to terminate this
Agreement under this Section 7.1(d) shall not be available if Sellers are then in material breach of
any of its representations, warranties, covenants, obligations or other agreements contained in this
Agreement;
(e) by Purchaser if there shall have been a breach by Sellers of any
representation, warranty, covenant or agreement set forth in this Agreement, which breach
(i) would give rise to the failure of a condition to the Closing hereunder in favor of Purchaser and
(ii) cannot be cured, or has not been cured within twenty (20) calendar days following receipt by
Sellers of written notice of such breach; provided, however, that the right to terminate this
Agreement under this Section 7.1(e) shall not be available if Purchaser is then in material breach
of any of its representations, warranties, covenants, obligations or other agreements contained in
this Agreement;
(f) by either Purchaser or Sellers if a court of competent jurisdiction shall have
issued an Order permanently restraining or prohibiting the transactions contemplated by this
Agreement, and such Order shall have become final and nonappealable; provided, that the party
seeking to terminate pursuant to this Section 7.1(f) shall have complied with its obligations, if any,
under Section 5.3 in connection with such law or Order; or
(g) by Purchaser within five (5) Business Days of receipt by Purchaser of a
supplement to the Disclosure Schedule pursuant to Section 5.6(c), which supplement relates to any
matter that has had a Material Adverse Effect.
Procedure and Effect of Termination. In the event of the termination of this
Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 7.1
hereof, this Agreement shall become void and there shall be no liability on the part of any party
hereto except (a) this Section 7.2 and the obligations set forth in Section 5.2(d), Section 5.2(e) and
Article IX hereof shall survive any such termination of this Agreement and (b) nothing herein shall
relieve any party from liability for breach of this Agreement or impair the right of any party to
seek specific performance by the other party of its obligations hereunder.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION
Survival of Representations, Warranties and Covenants. The representations and
warranties in this Agreement shall survive the Closing Date and continue in full force and effect
from the Closing Date until August 1, 2018, except that the representations and warranties
contained in Sections 3.1, 3.2, 3.3 and 3.18 (together with Section 3.12, the “Fundamental
Representations”) shall survive for a period of five (5) years from the Closing Date and the
representations and warranties contained in Section 3.12 shall survive for the applicable statute of
limitations (as applicable, the “Survival Expiration Date”). No Purchaser Claim for
indemnification relating to the representations, warranties, covenants and agreements contained in
this Agreement may be asserted pursuant to this Agreement unless (a) such claim is asserted in
writing on or before the applicable Survival Expiration Date or survival period, and (b) such claim
is made in respect of Damages incurred prior to the applicable Survival Expiration Date or survival
period or, to the extent arising out of a third party claim (including any claim by any Governmental
Authority) asserted in writing prior to the applicable Survival Expiration Date or survival period,
such claim is made in respect of Damages reasonably expected to arise in connection with such
claim. No Seller Claim for indemnification relating to the representations, warranties, covenants
and agreements contained in this Agreement may be asserted pursuant to this Agreement unless
(a) such claim is asserted in writing on or before the applicable Survival Expiration Date or survival
period and (b) such claim is made in respect of Damages incurred prior to the applicable Survival
Expiration Date or survival period or, to the extent arising out of a third party claim (including any
claim by any Governmental Authority) asserted in writing prior to the applicable Survival
Expiration Date or survival period, such claim is made in respect of Damages reasonably expected
to arise in connection with such claim. Except for covenants or agreements set forth in this
Agreement that by their terms require performance following the Closing Date (which covenants
and agreements shall survive the Closing until the later of the applicable survival period or until
fully performed), the covenants set forth in this Agreement shall not survive the Closing Date.
Indemnification.
(a) Subject to the terms, conditions and limitations set forth in this Article VIII,
Sellers shall jointly and severally indemnify and hold Purchaser and its Affiliates and each of their
respective officers, directors, partners, employees, and agents (collectively, the “Purchaser
Indemnified Parties”) harmless for any and all Damages to the extent attributable to (i) any
breach of any representation or warranty that Sellers have made in this Agreement, (ii) any breach,
non-fulfillment, violation or default by Sellers of any covenant, agreement or obligation of Sellers
in this Agreement; or (iii) the Excluded Liabilities (claims made under the immediately preceding
clauses (i) though (iii), collectively, “Purchaser Claims”). For the avoidance of doubt, the
Founders shall under no circumstances be held liable, whether jointly and severally or otherwise,
for Damages to the extent attributable to clauses (i) through (iii) of this Section 8.2(a) and shall
only be held individually liable for any breach, non-fulfillment, violation or default of Section
5.18.
(b) Subject to Section 8.4, Purchaser shall indemnify and hold Sellers and their
Affiliates and each of their respective officers, directors, partners, employees, and agents
(collectively, the “Seller Indemnified Parties”) harmless for any and all Damages to the extent
attributable to (i) any breach of any representation or warranty Purchaser have made in this
Agreement, (ii) any breach, violation or default by Purchaser of any covenant, agreement or
obligation of Purchaser in this Agreement, (iii) the Transferred Assets or (iv) the Assumed
Liabilities (claims made under the immediately preceding clauses (i) through (iv), collectively,
“Seller Claims”).
Indemnification Claim Procedures. If any Action is commenced or threatened or
Damages incurred that may give rise to a claim for indemnification (an “Indemnification Claim”)
by any Person entitled to indemnification under this Agreement (each, an “Indemnified Party”),
then such Indemnified Party will promptly give notice to the Indemnitor. Failure to notify the
Indemnitor will not relieve the Indemnitor of any liability that it may have to the Indemnified
Party, except to the extent the defense of any such Action is materially prejudiced by the
Indemnified Party’s failure to give such notice. An Indemnitor may elect at any time to assume
and thereafter conduct the defense of any Action subject to any such Indemnification Claim with
counsel of the Indemnitor’s choice and to settle or compromise any such Action, and each
Indemnified Party shall cooperate in all respects with the conduct of such defense by the
Indemnitor and/or the settlement of such Action by the Indemnitor; provided, however, that the
Indemnitor will not approve of the entry of any judgment or enter into any settlement or
compromise with respect to the Indemnification Claim without the Indemnified Party’s prior
written approval (which shall not be unreasonably withheld or delayed), unless the terms of such
settlement provide for a complete release of the claims that are the subject of such Action in favor
of the Indemnified Party. If the Indemnified Party gives an Indemnitor notice of an
Indemnification Claim and the Indemnitor does not, within sixty (60) days after such notice is
given, give notice to the Indemnified Party of its election to assume the defense of the Action or
Actions subject to such Indemnification Claim, then the Indemnified Party may conduct the
defense of such Action; provided, however, that the Indemnified Party will not agree to the entry
of any judgment or enter into any settlement or compromise with respect to the Action or Actions
subject to any such Indemnification Claim without the prior written consent of the Indemnitor. A
claim for any matter not involving a third party may be asserted by written notice to the party from
whom indemnification is sought; provided, however, that any assertion of an Indemnification
Claim shall be subject to the limitations as to time set forth in this Agreement. To the extent the
defense of any Action, subject to any Indemnification Claim is assumed by Seller Parent as the
Indemnitor, at the election of the Indemnitor, the costs and expenses of such defense of such, and
any payment in respect of, any settlement of such Action, shall be paid from the Indemnity Escrow
Funds, and Purchaser and Seller Parent shall instruct the Escrow Agent to disburse such portion
of the Indemnity Escrow Funds as is reasonably requested in writing by Seller Parent to pay such
costs and expenses or other amounts.
Limitations on Indemnification Liability. Any claims an Indemnified Party makes
under this Article VIII will be limited as follows:
(a) Indemnification Cap. Notwithstanding any provision hereof to the contrary,
the aggregate amount of Damages for which Purchaser Indemnified Parties shall be entitled to
indemnification pursuant to this Article VIII will not exceed the Indemnity Escrow Amount (the
“Cap”), provided, however, the Cap shall not apply to Damages attributable to (i) any breach or
inaccuracy of any of the Fundamental Representations, (ii) any breach or non-fulfillment of any
post-closing covenant or (iii) the Excluded Liabilities, provided, further, that the aggregate amount
of Damages for which Purchaser Indemnified Parties shall be entitled to indemnification pursuant
to the foregoing clauses (i), (ii) and (iii) will not exceed the Purchase Price. Except as otherwise
provided herein, the Indemnity Escrow Amount and the R&W Policy shall serve as the sole and
exclusive sources of payment of any claim for indemnification pursuant to Section 8.2(a). Claims
related to the Fundamental Representations and the post-closing covenants shall first be satisfied
out of the Indemnity Escrow Amount and the R&W Policy. For the avoidance of doubt, any
Damages attributed to the Joseph Action shall not be satisfied out of the Indemnity Escrow
Amount, but shall be the sole responsibility of the Sellers.
(b) Claims Basket. Notwithstanding any provision hereof to the contrary,
except as provided in the last sentence of this Section 8.4(b), Purchaser Indemnified Parties shall
only be entitled to recover Damages pursuant to this Article VIII to the extent the aggregate amount
of all such Damages incurred by Purchaser Indemnified Parties for which Purchaser Indemnified
Parties are entitled to indemnification pursuant to this Article VIII exceeds $337,500.00 (the
“Basket Amount”) in which event the Purchaser Indemnified Parties shall only be entitled to
indemnification for the amount of such Damages in excess of the Basket Amount. Notwithstanding
the foregoing, in no event shall the Basket Amount apply to any Excluded Liability or Section
8.2(a)(ii). Further, Damages for breach of Section 3.16 or for remediation costs in respect of
environmental issues shall not be counted against the Basket Amount, nor be obligations of the
Sellers under this Agreement, or otherwise.
(c) Damages Net of Insurance Proceeds, Tax Benefits and Other Third-Party
Recoveries. Notwithstanding any provision in this Agreement to the contrary, all Damages for
which any Indemnified Party would otherwise be entitled to indemnification under this Article
VIII shall be reduced by the amount of insurance proceeds, Tax benefits, indemnification payments
and other third-party recoveries to which any Indemnified Party is entitled in respect of any
Damages incurred by such Indemnified Party (net of any reasonable out-of-pocket costs of
recovery of such amounts). In the event any Indemnified Party is entitled to any insurance
proceeds, Tax benefits, indemnity payments or any third-party recoveries in respect of any
Damages for which such Indemnified Party is entitled to indemnification pursuant to this Article
VIII, such Indemnified Party shall use commercially reasonable efforts to obtain, receive or realize
such proceeds, benefits, payments or recoveries. In the event that any such insurance proceeds,
Tax benefits, indemnity payments or other third-party recoveries are realized by an Indemnified
Party subsequent to receipt by such Indemnified Party of any indemnification payment hereunder
in respect of the claims to which such insurance proceeds, Tax benefits, indemnity payments or
other third-party recoveries relate, appropriate refunds shall be made promptly by the relevant
Indemnified Parties of all or the relevant portion of such indemnification payment.
(d) Assignment of Claims. If any Indemnified Party receives any
indemnification payment pursuant to this Article VIII, at the election of the Indemnitor, such
Indemnified Party shall assign to the Indemnitor all of its claims for recovery against third party
as to such Damages, whether by insurance coverage, contribution claims, subrogation or
otherwise.
(e) Other Limitations. No Indemnified Party shall be entitled to receive an
indemnification payment in respect of any contingent liability unless and until such liability
becomes due and payable. Notwithstanding anything in this Agreement to the contrary, no
Purchaser Indemnified Party shall be indemnified or reimbursed for any (i) Damages arising or
resulting from any change in Applicable Law or GAAP from and after the Closing Date,
(ii) Damages to the extent that such Damages are attributable to: (A) any voluntary act, omission,
transaction, or arrangement carried out at the request of, or with the written consent of, Purchaser
or one of their Affiliates (the “Purchaser Group”) before, on or after the Closing Date or under
the terms of this Agreement; and (B) any voluntary act, omission, transaction, or arrangement
carried out by any member of the Purchaser Group on or after the Closing Date which is outside
the ordinary course of business of such member of the Purchaser Group, and/or which such
member of the Purchaser Group knew, or ought reasonably to have known (after reasonable
inquiry), would, or was reasonably likely to, result in a claim or (iii) Damages to the extent
(y) arising from a matter taken into account in determining the Purchase Price or (z) reflected in
the Financial Reports.
(f) Environmental Claims. No Purchaser Indemnified Party shall be entitled to
receive Damages with respect to a breach of any representation or warranty in Section 3.16.
(g) Expenses. In the event that Seller Parent assumes any defense of any Action
which a Purchaser Indemnified Party has sought indemnification, reasonable expenses incurred by
any Seller Indemnified Party in connection therewith, including legal costs and expenses, shall
constitute Damages for purposes of determining the maximum aggregate amount to which
Purchaser Indemnified Parties shall be entitled pursuant to Section 8.4(a).
Mitigation of Damages. An Indemnified Party shall use its commercially
reasonable efforts to mitigate any Damages for which it is entitled to indemnification pursuant to
this Article VIII. The Indemnitor shall have the right, but not the obligation, and shall be afforded
the opportunity by the Indemnified Party to the extent reasonably possible, to take all available
steps to minimize Damages for which the Indemnified Party is entitled to indemnification before
such Damages actually are incurred by the Indemnified Party.
Order and Manner of Payment. Any Indemnification Claim of the Purchaser
Indemnified Parties pursuant to this Article VIII shall be satisfied: (i) first, through the application
of funds from Underground Storage Tank Indemnification Fund, to the extent available and
applicable, (ii) second, through application of the Basket Amount to the applicable indemnity
claim pursuant to Section 8.4(b), (iii) third, through payment from the Indemnity Escrow Funds
pursuant to the terms of the Escrow Agreement (other than for breach of any representation or
warranty in Section 3.16, which, for the avoidance of doubt, shall not be for the account of Sellers),
and (iv) fourth, through recovery from the R&W Policy, to the extent coverage is applicable and
available to such Purchaser Indemnified Party thereunder, and (v) thereafter from Sellers.
Sole and Exclusive Remedy.
(a) Following the Closing, except in respect of (i) a dispute under Section 2.7
or Section 2.8 (which shall be governed by Section 2.7 and Section 2.8, respectively), (ii) a breach
of Section 5.18(a), (iii) Fraud or (iv) as set forth in Section 9.15, the indemnification provisions
contained in this Article VIII will constitute the sole and exclusive recourse and remedy of the
parties with respect to any claim arising from this Agreement or the transactions contemplated
hereby (including Purchaser Claims and Seller Claims), whether by contract, tort or otherwise,
provided, however, the provisions of this Article VIII will not restrict the right of any party (i) to
seek specific performance or other equitable remedies in connection with any breach of any of the
covenants contained in this Agreement, or (ii) to pursue any remedies for claims specifically
relating to or arising under any agreement or instrument delivered pursuant to this Agreement that
may be available under or pursuant to such agreements and not relating to or arising under this
Agreement. The parties hereto agree that the provisions in this Agreement relating to
indemnification, and the limits imposed on the Purchaser Indemnified Parties’ and the Seller
Indemnified Parties’ remedies with respect to this Agreement and the transactions contemplated
hereby were specifically bargained for between sophisticated parties and were specifically taken
into account in the determination of the amounts to be paid hereunder.
(b) Without limiting the generality of the foregoing and consistent with the
intent of the parties hereto with respect to limiting Purchaser’s remedies as provided in this Section
8.7, effective as of the Closing, the Purchaser releases and forever discharges, and shall cause the
Companies to release and forever discharge, the Sellers and any current or former, as applicable,
equityholders, directors, managers, officers, employees, agents, attorneys, contractors, successors,
assigns, predecessors, heirs, executors, trustees, representatives and administrators of the
Companies (the “Seller Related Persons”) from any and all Damages, claims, demands, Actions,
causes of action of whatever rights, of every kind or character (whether such actions are actions in
law, equity, tort, contract, or otherwise and including actions seeking injunctive or other equitable
relief), whether known or unknown relating to any matter arising or in existence at any time on or
prior to the Closing, whether manifested before or after the Closing (collectively the “Released
Claims”), solely as it relates to the Companies, the Transferred Assets and the Transaction, and
irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand or
commencing, instituting, or causing to be commenced, any Proceeding against the Sellers or their
respective Seller Related Persons, based upon any matter purported to be released hereby (the
“Purchaser’s Release”) solely as it relates to the Companies, the Transferred Assets and the
Transaction. Notwithstanding the foregoing, the Purchaser’s Release shall in no way release or
discharge any Released Claims or rights of the Purchaser against the Companies or any of the
Sellers relating to: (i) any Purchaser’s right to be indemnified, including pursuant to this Article
VIII, or otherwise; or (ii) any rights under this Agreement and any agreement incorporated herein
or contemplated hereby.
Sellers’ and Founders’ Release.
(a) Effective as of the Closing, each of the Sellers releases and forever
discharges (i) the Companies and Purchaser, and (ii) each of the equityholders, directors,
managers, officers, employees, agents, attorneys, contractors, successors, assigns, predecessors,
heirs, executors, trustees, representatives and administrators of such Persons (the Persons
described in this clause (ii), collectively, the “Purchaser Related Persons”) from the Released
Claims solely as it relates to the Companies, the Transferred Assets and the Transaction, and
irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand or
commencing, instituting, or causing to be commenced, any Proceeding against the Companies,
Purchaser, or their respective Purchaser Related Persons, based upon any matter purported to be
released hereby (the “Sellers’ Release”) solely as it relates to the Companies, the Transferred
Assets and the Transaction. Notwithstanding the foregoing, the Sellers’ Release shall in no way
release or discharge any Released Claims or rights of any of the Sellers against the Companies or
Purchaser relating to: (i) any Sellers’ right to be indemnified, including pursuant to this Article
VIII, or otherwise; or (ii) any rights under this Agreement and any agreement incorporated herein
or contemplated hereby.
(b) Notwithstanding anything in Section 5.7 to the contrary, the Founders shall
have no rights to indemnification by the Companies from liability for acts or omissions occurring
on or prior to the Closing Date now existing in favor of the Founders as provided in the limited
liability company agreements, operating agreements, or similar organizational documents of the
Companies solely in respect of claims, whether in contract, tort or otherwise, asserted or brought
by any prior or purported owner of the Companies or the Transferred Assets arising out of any act
or omission of the Founders or the Companies with respect to the acquisition of ownership interests
in the Companies, the Companies’ predecessors or the Transferred Assets.
Release of Indemnity Escrow. The Indemnity Escrow Amount shall be held and
invested by the Escrow Agent in accordance with the terms of the Escrow Agreement, which shall
specify that the Indemnity Escrow Amount (if any) shall be released to Seller Parent on August 1,
2018 (the “Indemnity Escrow Release Date”), without the need for any instructions from
Purchaser; provided, however, that if any claim by an Indemnified Party pursuant to Article VIII
shall have been properly asserted by any Purchaser Indemnified Party pursuant to this Agreement
on or prior to the Indemnity Escrow Release Date and remain pending on the Indemnity Escrow
Release Date (any such claim, a “Pending Claim”), (a) the Indemnity Escrow Funds released to
Seller Parent shall be the amount of Indemnity Escrow Funds then held by the Escrow Agent,
minus the aggregate amount of such Pending Claim and (b) any funds that remain in escrow
following the Indemnity Escrow Release Date in respect of any such Pending Claim shall be
released to Seller Parent upon resolution or (if applicable) satisfaction of such Pending Claim.
Each of Purchaser and Seller Parent shall from time to time submit joint written instructions to the
Escrow Agent instructing the Escrow Agent to distribute the Indemnity Escrow Funds in
accordance with this Section 8.9 and the Escrow Agreement.
Adjustment to Purchase Price. Any payment made pursuant to this Article VIII
shall be considered as an adjustment to the Purchase Price.
ARTICLE IX
MISCELLANEOUS
Further Assurances. From time to time after the Closing Date, at the request of any
party hereto and at the expense of the party so requesting, the other parties hereto shall execute
and deliver to such requesting party such documents and take such other actions as such requesting
party may reasonably request in order to consummate the transactions contemplated hereby.
Notices. All notices, requests, demands, waivers and communications required or
permitted to be given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered (i) by hand (including by reputable overnight courier), (ii) by mail (certified
or registered mail, return receipt requested), or (iii) by electronic mail (subject to non-automated
confirmation of receipt):
(a) If to Purchaser or, after the Closing, the Companies, to:
Sprague Operating Resources LLC
185 International Drive
Portsmouth, NH 03801
Attention: Paul Scoff, General Counsel
Email: pscoff@spragueenergy.com
with a copy to:
Buchanan Ingersoll & Rooney PC
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
Attention: Sean Moran, Esq.
Robin L. Dierbeck, Esq.
Email: sean.moran@bipc.com
robin.dierbeck@bipc.com
(b) If to Sellers to:
Coen Oil Company, LLC
1000 Philadelphia Street
Canonsburg, PA 15317
Attention: Charles C. McIlvaine
Andrew M. McIlvaine
Email: cmcilvaine@coenoil.com
amcilvaine@coenoil.com
Arnold & Porter Kaye Scholer LLP
250 West 55th Street
New York, New York 10019
Attention: Stephen Koval, Esq.
Laurie Abramowitz, Esq.
Email: stephen.koval@apks.com
laurie.abramowitz@apks.com
or to such other Person or address as any party shall specify by notice in writing to the other party.
All such notices, requests, demands, waivers and communications shall be deemed to have been
given (i) on the date on which so hand-delivered, (ii) on the third Business Day following the date
on which so mailed, (iii) on the Business Day after being sent by a reputable overnight courier
service and (iv) on the date on which e-mailed and confirmed.
Exhibits and Schedules. Any matter, information or item disclosed in the
Disclosure Schedule (or supplement to the Disclosure Schedule (including the Side Letter)
pursuant to Section 5.6(b) and Section 5.6(c)) or other schedules delivered by Sellers or in any of
the Exhibits attached hereto, under any specific representation and warranty or schedule number
hereof, is incorporated herein and expressly made a part of this Agreement and shall be deemed to
have been disclosed for all purposes of this Agreement in response to every representation or
warranty in this Agreement in respect of which the relevance of such disclosure is reasonably
apparent. The inclusion of any matter, information or item in any schedule to this Agreement shall
not be deemed to constitute an admission by Sellers of any liability, breach or violation to any
third party or otherwise imply that any such matter, information or item (i) is required by the terms
of this Agreement to be disclosed, (ii) is material or creates a measure for materiality for purposes
of this Agreement, (iii) has resulted in or would result in a Material Adverse Effect or (iv) is
outside the ordinary course of business.
Amendment, Modification and Waiver. This Agreement may be amended,
modified or supplemented at any time by written agreement of all parties hereto. Any failure of
Sellers to comply with any term or provision of this Agreement may be waived by Purchaser, and
any failure of Purchaser to comply with any term or provision of this Agreement may be waived
by Sellers, at any time by an instrument in writing signed by or on behalf of such other party, but
such waiver shall not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply.
Entire Agreement. This Agreement, the Disclosure Schedule, the Confidentiality
Agreement, the Escrow Agreement, the Side Letter and the exhibits, schedules and other
documents referred to herein or contemplated hereby which form a part hereof contain the entire
understanding of the parties hereto with respect to the subject matter hereof. Except as set forth
in Section 5.2(d), this Agreement supersedes all prior agreements and understandings, oral and
written, with respect to its subject matter.
Severability. Should any provision of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the
other provisions of this Agreement, which other provisions shall remain in full force and effect
and the application of such invalid or unenforceable provision to Persons or circumstances other
than those as to which it is held invalid or unenforceable shall be valid and be enforced to the
fullest extent permitted by Applicable Law. If a final judgment of a court of competent jurisdiction
declares that any term or provision of this Agreement is invalid or unenforceable, the parties hereto
agree that the court making such determination shall have the power to limit such term or
provision, to delete specific words or phrases or to replace such term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and that this Agreement shall be valid and enforceable
as so modified.
Binding Effect; Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors,
successors and permitted assigns, but except as contemplated herein, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by any
party without the prior written consent of the other parties hereto, except that Purchaser may assign
all or any portion of its rights hereunder to one or more of their Affiliates, provided, that no such
assignment shall relieve Purchaser of its obligations hereunder.
No Third-Party Beneficiaries. Except as otherwise provided in Article VIII, this
Agreement is not intended and shall not be deemed to confer upon or give any Person except the
parties hereto and their respective successors and permitted assigns any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this Agreement, except (a)
Sellers’ unitholders, which shall be express third party beneficiaries of Sections 4.6 and 5.2(e), (b)
the D&O Indemnified Persons as set forth in Section 5.7 and (c) the parties expressly specified as
third party beneficiaries in Section 5.11.
Fees and Expenses; Transfer Taxes.
(a) Except as set forth herein, whether or not the transactions contemplated
hereby are consummated pursuant hereto, each party hereto shall pay all fees and expenses
incurred by it or on its behalf in connection with this Agreement and the consummation of the
transactions contemplated hereby.
(b) Sellers and Purchaser shall each be liable for and shall each pay fifty percent
of (i) all Stay Bonuses paid to the drivers and fuelers listed on Schedule 1.1(g), provided that
Purchaser shall be liable for and shall pay all Stay Bonuses for the other Continuing Employees
who are subject to Stay Bonuses and listed on Schedule 1.1(g) and (ii) all applicable sales, transfer,
recording, deed, stamp, franchise and other similar taxes, including, without limitation, any real
property transfer taxes (if any) (“Transfer Taxes”), resulting from the consummation of the
transactions contemplated by this Agreement and the other agreements contemplated hereby
(collectively, the “Closing Fees”), and Purchaser shall, with Sellers’ cooperation and/or assistance,
to the extent necessary, file all Tax Returns related hereto and thereto. For the avoidance of doubt,
Sellers and Purchaser shall each be liable for and shall each pay fifty percent of all Transfer Taxes
regardless of whether the applicable transfers are made (i) prior to Closing between entities that
are both Affiliates of Seller Parent (so long as such transfer is made in connection with the
Transaction) or (ii) at Closing by one of the Sellers to Purchaser. Notwithstanding the foregoing,
Sellers shall be responsible for paying all real estate taxes owed on the Transferred Real Property,
to the extent such real estate taxes are the responsibility of Sellers pursuant to the applicable Lease,
if applicable, for all taxable periods ending on or prior to the Closing Date the due date (including
extensions of time to file) of which is after the Closing Date, and Purchaser shall be responsible
for paying all real estate taxes owed on the Transferred Real Property, to the extent such real estate
taxes will be the responsibility of Purchaser pursuant to the applicable Lease, if applicable, for all
taxable periods ending after the Closing Date. Sellers shall be liable for any and all fees, costs and
expenses incurred in connection with obtaining any requisite third party consents and approvals
necessary for the consummation of the transactions contemplated hereby. Purchaser shall be liable
for any and all fees, costs and expenses incurred in connection with procuring (i) the R&W Policy,
(ii) any Title Insurance Proforma or Title Insurance Policy (including the payment of insurance
premiums relating thereto) and (iii) the Land Title Survey.
Counterparts; Facsimile Signatures. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The parties acknowledge and agree that this Agreement and any and
all agreements and instruments executed and delivered in accordance herewith, along with any
amendments hereto or thereto, may be executed via “wet” signature or electronic mark, and that
delivery of any such signature, agreement or instrument by means of a facsimile machine,
electronic transmission, electronic signature or otherwise, shall be treated in all manner and
respects and for all purposes as an original signature, agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original signed version thereof
delivered in person.
Interpretation; Construction.
(a) The article and section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement. As used in this Agreement, the term “Person”
means and includes an individual, a partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization and a government or any department or agency
thereof. As used in this Agreement, the term “Affiliate” has the meaning set forth in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
Unless the context expressly requires otherwise: (a) the words “hereof,” “herein” and “hereunder”
and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; (b) words defined in the singular shall have
a comparable meaning when used in the plural, and vice versa; (c) ”Dollars” and “$” mean U.S.
dollars; (d) references herein to a specific Article, Section or Exhibit shall refer, respectively, to
an Article, a Section or an Exhibit of this Agreement; (e) wherever the word “include,” “includes”
or “including” is used in this Agreement, it shall be deemed to be followed by the words “without
limitation”; (f) references herein to any Applicable Law shall be deemed to refer to such
Applicable Law as amended, reenacted, supplemented or superseded in whole or in part and in
effect from time to time and also to all rules and regulations promulgated thereunder; (g) references
herein to any contract mean such contract as amended, supplemented or modified (including any
waiver thereto) in accordance with the terms thereof; (h) each accounting term not otherwise
defined in this Agreement assigned to it in accordance with GAAP and (i) whenever this
Agreement refers to a number of days, such shall refer to calendar days, unless such reference is
specifically to “Business Days.”
(b) Each of the parties acknowledges that it has been represented by
independent counsel of its choice throughout all negotiations that have preceded the execution of
this Agreement and that it has executed the same with consent and upon the advice of said
independent counsel. The parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise, or
rule of strict construction applied, favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Accordingly, any rule of law or any legal decision that
would require interpretation of any ambiguities in this Agreement against the party that drafted it
is of no application and is hereby expressly waived by the parties hereto.
Forum; Service of Process. Subject to Section 2.8(e), any legal suit, action or
proceeding brought by any party or any of their Affiliates arising out of or based upon this
Agreement shall only be instituted in any federal or state court in New York County, New York,
and each party waives any objection which it may now or hereafter have to the laying of venue of
any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit,
action or proceeding.
Governing Law. This Agreement shall be governed by the laws of the State of New
York, excluding choice of law principles that would require the application of the laws of a
jurisdiction other than the State of New York.
WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES
HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON
THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE
PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS
CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Specific Performance. The parties hereto hereby acknowledge and agree that the
failure of any party (including the Founders) to this Agreement to perform its agreements and
covenants hereunder (including, specifically, Section 5.18) will cause irreparable injury to the
other parties to this Agreement for which monetary damages, even if available, will not be an
adequate remedy. Accordingly, each of the parties hereto hereby consents to the granting of
equitable relief (including specific performance and injunctive relief) by any court of competent
jurisdiction to enforce and party’s obligations hereunder. The parties (including the Founders)
further agree to waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this Section 9.15 is without prejudice to any
other rights that the parties hereto may have for any failure to perform this Agreement.
No Recourse Against Nonparty Affiliates. Except as otherwise provided in
Sections 5.18 and 8.7(a) (solely to permit Purchaser to enforce its rights under Section 5.18(a)
against the Founders), all claims, obligations, liabilities, or causes of action (whether in contract
or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise
under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the
negotiation, execution, or performance of this Agreement (including any representation or
warranty made in, in connection with, or as an inducement to, this Agreement), may be made only
against (and are those solely of) the entities that are expressly identified as parties in the preamble
to this Agreement. Except as otherwise provided in Section 5.18 and 8.7(a) (solely to permit
Purchaser to enforce its rights under Section 5.18(a) against the Founders), no Person who is not
a Contracting Party, including without limitation any director, officer, employee, incorporator,
member, partner, manager, unitholder, stockholder, Affiliate, agent, attorney, or representative of,
and any financial advisor or lender to, any Contracting Party, or any director, officer, employee,
incorporator, member, partner, manager, unitholder, stockholder, Affiliate, agent, attorney, or
representative of, and any financial advisor or lender to, any of the foregoing (“Nonparty
Affiliates”), shall have any liability (whether in contract or in tort, in law or in equity, or granted
by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, in
connection with, or related in any manner to this Agreement or based on, in respect of, or by reason
of this Agreement or its negotiation, execution, performance, or breach; and, to the maximum
extent permitted by law, each Contracting Party hereby waives and releases all such liabilities,
claims, causes of action, and obligations against any such Nonparty Affiliates. Without limiting
the foregoing, to the maximum extent permitted by law, (a) each Contracting Party hereby waives
and releases any and all rights, claims, demands, or causes of action that may otherwise be
available at law or in equity, or granted by statute, to avoid or disregard the entity form of a
Contracting Party or otherwise impose liability of a Contracting Party on any Nonparty Affiliate,
whether granted by statute or based on theories of equity, agency, control, instrumentality, alter
ego, domination, sham, single business enterprise, piercing the veil, unfairness,
undercapitalization, or otherwise; and (b) each Contracting Party disclaims any reliance upon any
Nonparty Affiliates with respect to the performance of this Agreement or any representation or
warranty made in, in connection with, or as an inducement to this Agreement.
Acknowledgment of Purchaser; Disclaimers.
(a) With respect to all materials that are described as having been made
available or delivered to Purchaser, such materials shall be deemed to have been made available
or delivered to Purchaser if Purchaser or any of its representatives or agents have been granted
access to a data room, electronic data room or website in which such materials were available or
by transmitting such materials to Purchaser or its representatives or agents by any other electronic
means.
(b) THE REPRESENTATIONS AND WARRANTIES OF SELLERS
SPECIFICALLY SET FORTH IN ARTICLE III OF THIS AGREEMENT CONSTITUTE THE
SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLERS TO
PURCHASERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY, AND PURCHASERS UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT
ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE,
EXPRESS OR IMPLIED (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE
FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS,
ASSETS OR LIABILITIES OR PROSPECTS OF ANY OF THE COMPANY), ARE
SPECIFICALLY DISCLAIMED BY SELLERS.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COEN OIL COMPANY, LLC
By: /s/ Charles McIlvaine
Name: Charles C. McIlvaine
Title: Chairman
By: /s/ Andrew McIlvaine
Name: Andrew M. McIlvaine
Title: President
COEN MARKETS, INC.
By: /s/ Charles McIlvaine
Name: Charles C. McIlvaine
Title: Chief Executive Officer
By: /s/ Andrew McIlvaine
Name: Andrew M. McIlvaine
Title: President
THE THOMASTON LAND COMPANY, LLC
By: /s/ Andrew McIlvaine
Name: Andrew M. McIlvaine
Title: Manager
By: /s/ Charles McIlvaine
Name: Charles C. McIlvaine
Title: Member
SPRAGUE OPERATING RESOURCES LLC
By: /s/ Gary Rinaldi
Name: Gary Rinaldi
Title: Chief Operating Officer & Chief Financial
Officer
