Exhibit 10.5
 
 
 
MEMBERSHIP INTEREST TRANSFER AGREEMENT
 
by and among
 
SEMMATERIALS, L.P.,
 
and
 
SEMMATERIALS ENERGY PARTNERS, L.L.C.
 

 
effective as of
 
11:59 PM CDT on March 31, 2009
 
 

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MEMBERSHIP INTEREST TRANSFER AGREEMENT
 
This Membership Interest Transfer Agreement (this “Agreement”), dated as April
7, 2009, to be effective as of 11:59 PM CDT on March 31, 2009 (the “Effective
Date”), is by and between SemMaterials Energy Partners, L.L.C., a Delaware
limited liability company (“SMEP”), and SemMaterials, L.P., an Oklahoma limited
partnership (“SemMaterials”).  SemMaterials and SMEP are sometimes herein
referred to individually as a “Party” and collectively as the “Parties.”
 
RECITALS
 
WHEREAS, pursuant to that certain Contribution Agreement (the “Original
Contribution Agreement”) by and among K.C. Asphalt, L.L.C., a Colorado limited
liability company (“K.C. Asphalt”), SemMaterials and SMEP, dated as of January
28, 2008, K.C. Asphalt and SemMaterials contributed and assigned the Prior
Transferred Assets (as defined herein) to SMEP;
 
WHEREAS, pursuant to the Original Contribution Agreement, K.C. Asphalt and
SemMaterials retained and reserved the Prior Retained Assets (as defined herein)
and retained and reserved all of the rights and obligations associated with the
Prior Retained Assets;
 
WHEREAS, pursuant to a Purchase Agreement, dated as of January 14, 2008,
SemMaterials sold and transferred 100% of the limited liability company
membership interests of SMEP to SemGroup Energy Partners Operating, L.L.C. on
February 20, 2008;
 
WHEREAS, commencing on July 22, 2008, SemMaterials and certain of their
Affiliates (as defined herein) filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code (as defined herein), which cases are pending
in the Bankruptcy Court (as defined herein);
 
WHEREAS, SemMaterials is a debtor and debtor in possession in the Bankruptcy
Cases (as defined herein) and is currently authorized to conduct its business
under Sections 1107 and 1108 of the Bankruptcy Code;
 
WHEREAS, as of the Effective Date, K.C. Asphalt and SemMaterials (i) terminated
the Prior Retained Easements (as defined herein), (ii) transferred, conveyed and
assigned the interests previously retained in the Prior Retained Leasehold
Agreements (as defined herein) to SMEP and (iii) contributed the Asphalt
Processing Assets (as defined herein) to SGLP Asphalt, L.L.C., a Texas limited
liability company (“SGLP Asphalt”), each pursuant to a Contribution Agreement
(the “Asphalt Contribution Agreement”);
 
WHEREAS, SemMaterials is the sole member of SGLP Asphalt and owns 100% of the
Equity Interests (as defined herein) of SGLP Asphalt (the “Transferred
Interest”); and
 
WHEREAS, SemMaterials desires to transfer, convey and assign to SMEP the
Transferred Interest, and SMEP desires to have the Transferred Interest
transferred, conveyed and assigned to it, on the terms set forth in this
Agreement.
 
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AGREEMENTS
 
NOW, THEREFORE, for and in consideration of the premises, the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Parties, the
Parties hereby agree as follows:
 
ARTICLE 1
 

 
Certain Definitions
 
1.01 In this Agreement, capitalized terms used but not otherwise defined herein
shall have the meaning assigned such term in the Asphalt Contribution Agreement,
the terms defined in the preamble and the Recitals have the meanings indicated
and the following terms will have the meanings indicated below:
 
“Affiliates” shall have the meaning given such term in Master Agreement.

“Clawback Notice” shall have the meaning given such term in Section 4.01(b).

“Clawback Payment” shall have the meaning given such term in Section 4.01(a).

“Clawback Period” shall have the meaning given such term in Section 4.01(a).

“Clawback Sale” shall have the meaning given such term in Section 4.01(a).

“Dispute Notice” shall have the meaning given such term in Section 4.01(c).

“Disputed Items” shall have the meaning given such term in Section 4.01(c).

“Equity Interests” means all limited liability company interests, units,
participations or equivalents of limited liability company interests of SGLP
Asphalt, however designated.

“GAAP” means United States generally accepted accounting principles as in effect
from time to time.

           “Net Proceeds” means the aggregate cash proceeds received by SMEP or
any of its Affiliates in respect of an asset sale that includes Asphalt
Processing Assets, net of (i) the direct and indirect costs relating to such
asset sale, including, without limitation, legal, accounting and investment
banking fees, (ii) Taxes paid or payable as a result thereof, and (iii) the
value of and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP, including, without
limitation, in respect of sales price adjustments, non-competition agreements
and assumed or retained liabilities associated with the asset or assets disposed
of in such transaction, including, without limitation, liabilities related to
environmental matters or against any indemnification obligations associated with
such asset sale.

 “Referee” shall have the meaning given such term in Section 4.01(c).

“Resolution Period” shall have the meaning given such term in Section 4.01(c).

 
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ARTICLE 2
 

 
 Conveyance, Transfer and Assignment
 
of the Transferred Interests
 
2.01 Conveyance of the Transferred Interests.  For good and valuable
consideration, the sufficiency of which is hereby acknowledged, SemMaterials
hereby transfers, assigns, conveys and delivers to SMEP, the Transferred
Interests free and clear of any and all Liens (other than Permitted Exceptions).
 
2.02 Assumed Liabilities.  As of the Effective Date, SMEP does hereby assume and
thereafter in due course will pay and fully satisfy any Liabilities associated
with the Transferred Interests.
 
ARTICLE 3
 

 
Further Assurances
 
3.01 Further Assurances of SemMaterials to SMEP.  From time to time after the
Effective Date, and without any further consideration, each of SemMaterials and
SMEP shall execute, acknowledge and deliver such additional assignments and
other conveyance documents, and will do all such other acts and things, all in
accordance with Applicable Law, as may be necessary or reasonably appropriate to
more fully and effectively to vest in SMEP and its successors and assigns
beneficial and record title to the Transferred Interests, and/or to more fully
and effectively carry out the purposes and intent of this Agreement.
 
ARTICLE 4
 

 
Covenants
 
4.01 Sale of the Asphalt Processing Assets.
 
(a) If SMEP or any of its Affiliates (as defined in the Master Agreement)
consummates a sale (other than to SMEP or any of its Affiliates), including by
way of merger or consolidation, of any Asphalt Processing Assets (a “Clawback
Sale”) during the period beginning on the Effective Date and ending on December
31, 2009 (the “Clawback Period”), then SMEP will pay SemMaterials 20% of the Net
Proceeds received from each such sale attributable to the sold Asphalt
Processing Assets (the “Clawback Payment”) in accordance with the terms of this
Section 4.01.
 
(b) Within fifteen (15) days after a Clawback Sale consummated during the
Clawback Period, SMEP shall deliver a schedule (the “Clawback Notice”) to
SemMaterials listing the following in reasonable detail: (i) the Asphalt
Processing Assets that were sold in such Clawback Sale, (ii) the assets other
than Asphalt Processing Assets that were sold in such Clawback Sale, if any,
(iii) an allocation of the Net Proceeds from such sale showing the Net Proceeds
attributable to the Asphalt Processing Assets and the Net Proceeds attributable
to assets other than Asphalt Processing Assets, if any, and (iv) the proposed
Clawback Payment.
 
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(c) If SemMaterials disputes the allocation reflected in any Clawback Notice,
then SemMaterials may, within thirty (30) days after receipt of such statement
or invoice, deliver a written notice to SMEP (the “Dispute Notice”) setting
forth the items in dispute in reasonable detail (the “Disputed Items”).  During
the thirty (30) day period following delivery of the Dispute Notice (the
“Resolution Period”), the Parties will use their commercially reasonable efforts
to reach agreement on the Disputed Items set forth in the Dispute Notice.  If
the Parties are unable to reach an agreement during the Resolution Period, then
they will appoint a mutually acceptable independent party to review the Dispute
Notice and determine the final amount of the Disputed Items.  If the Parties are
unable to agree on a single independent party within fifteen (15) days after the
end of the Resolution Period, then the Parties will each appoint one (1)
independent party, who will jointly select a third independent party (singly or
collectively, the “Referee”), within thirty (30) days after the end of the
Resolution Period.  The Referee shall deliver its determination to the Parties
within thirty (30) days from the date of its engagement.  The Referee’s report
shall be final and binding upon the Parties.  The cost of the Referee’s
engagement and report shall be shared fifty percent (50%) by SMEP and fifty
percent (50%) by SemMaterials.
 
(d) If SemMaterials does not deliver a Dispute Notice to SMEP within the time
period indicated in Section 4.01(c), then SMEP shall promptly deliver to
SemMaterials the Clawback Payment indicated in the Clawback Notice.  If
SemMaterials delivers a Dispute Notice to SMEP within the time period indicated
in Section 4.01(c), then, after such Dispute has been resolved, SMEP shall
promptly deliver to SemMaterials the Clawback Payment.
 
ARTICLE 5
 

 
Miscellaneous
 
5.01 Headings;  References;  Interpretation.  All article and section headings
in this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any of the provisions hereof.  The words
“hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole, including without
limitation, all exhibits and schedules attached hereto, and not to any
particular provision of this Agreement.  All references herein to articles,
sections, exhibits and schedules shall, unless the context requires a different
construction, be deemed to be references to the articles, sections, exhibits and
schedules of this Agreement, respectively, and all such exhibits and schedules
attached hereto are hereby incorporated herein and made a part hereof for all
purposes.  All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders, and the
singular shall include the plural and vice versa.  The use herein of the word
“including” following any general statement, term or matter shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not non-limiting language (such as “without limitation,”
“but not limited to,” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter.
 
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5.02 Binding Effect; Successors.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and the respective
successors and assigns of each of the Parties, including, without limitation,
any trustee hereinafter appointed in the Bankruptcy Cases as the representative
of the estates of the SemGroup Parties (as defined in the Master Agreement), or
any other representative of the SemGroup Parties who qualifies in a case under
the Bankruptcy Code or in connection with any other state, provincial, or
federal proceeding.  The terms and conditions of this Agreement shall survive:
 
(a) the entry of any subsequent Order converting any of the Bankruptcy Cases
from chapter 11 of the Bankruptcy Code to chapter 7 of the Bankruptcy Code;
 
(b) the appointment of any trustee in any of the Bankruptcy Cases in any ensuing
chapter 7 cases under the Bankruptcy Code;
 
(c) the confirmation of a plan of reorganization for SemMaterials under the
Bankruptcy Code;
 
(d) the dismissal of any of the Bankruptcy Cases or an Order withdrawing the
reference from the Bankruptcy Court;
 
(e) an Order from the Bankruptcy Court abstaining from handling any of the
SemMaterials’ Bankruptcy Cases; or
 
(f) a sale, assignment or other disposition of all or part of the Seller’s
assets or this Agreement to any third party and/or assignee.
 
5.03 No Third Party Rights.  The provisions of this Agreement are intended to
bind the Parties hereto and their successors and assigns as to each other and
are not intended to and do not create rights in any other person or confer upon
any other person any benefits, rights or remedies and no person is or is
intended to be a third party beneficiary of any of the provisions of this
Agreement.
 
5.04 Counterparts.  This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered (including by
facsimile or electronic mail transmission), will be deemed an original, but all
of which together will constitute one and the same instrument.
 
5.05 Governing Law.  THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE
GOVERNED BY AND INTERPRETED, CONSTRUED, AND DETERMINED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF OKLAHOMA (WITHOUT REGARD TO ANY CONFLICT OF LAWS
PROVISION THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION).
 
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5.06 Submission to Jurisdiction.
 
(a)    Without limiting any Party’s right to appeal any order of the Bankruptcy
Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce
the terms of this Agreement and to decide any claims or disputes which may arise
or result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (ii) any and all actions
related to the foregoing shall be filed and maintained only in the Bankruptcy
Court, and the Parties hereby consent to and submit to the jurisdiction and
venue of the Bankruptcy Court and shall receive notices at such locations as
indicated in Section 5.07; provided, however, that if a plan of reorganization
in the Bankruptcy Cases has become effective, the Parties agree to and hereby
unconditionally and irrevocably submit to the exclusive jurisdiction of the
federal or state courts of the State of Oklahoma and any appellate court from
any thereof, for the resolution of any such claim or dispute.
 
(b) The Parties hereto hereby unconditionally and irrevocably waive, to the
fullest extent permitted by Applicable Law, any objection which they may now or
hereafter have to the laying of venue of any dispute arising out of or relating
to this Agreement or any of the transactions contemplated hereby brought in any
court specified in paragraph (a) above, or any defense of inconvenient forum for
the maintenance of such dispute.  Each of the Parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
 
(c) Each of the Parties hereto hereby consents to process being served by any
Party to this Agreement in any suit, action or proceeding by the mailing of a
copy thereof in accordance with the provisions of Section 5.07.
 
5.07 Notices.  All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be given or made (and shall
be deemed to have been duly given or made upon receipt) by delivery in person,
by overnight courier service, by facsimile or electronic transmission with
receipt confirmed (followed by delivery of an original via overnight courier
service) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective Parties at the following addresses (or at such
other address for a Party as shall be specified in a notice given in accordance
with this Section 5.07):
 
If to Licensor:

SemGroup, L.P.
Two Warren Place
6120 S. Yale Avenue, Suite 700
Tulsa, Oklahoma 74136
Phone:                      (918) 524-8100
Fax:  (918) 524-8290
Attention: Chief Financial Officer
 
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SemMaterials, L.P.
Two Warren Place
6120 S. Yale Avenue, Suite 700
Tulsa, Oklahoma 74136
Phone:                      (918) 524-8100
Fax:  (918) 524-8290
                      Attention: Chief Financial Officer
 
With a copy to:
 
Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, Texas 75201
Phone:                      214-746-7700
Fax:  214-746-7777
Attention:  Michael A. Saslaw, Esq.

If to Licensee:
 
SemGroup Energy Partners, L.P.
Two Warren Place
6120 S. Yale Avenue, Suite 500
Tulsa, Oklahoma 74136
Phone: (918) 524-5500
Fax:  (918) 524-5805
Attention: Chief Financial Officer
 
With a copy to:
 
Baker Botts L.L.P.
2001 Ross Avenue, Suite 700
Dallas, Texas 75201
Phone:                      (214) 953-6500
Fax:  (214) 953-6503
Attention: Doug Rayburn, Esq.
 
5.08 Severability.  If any of the provisions of this Agreement are held by any
court of competent jurisdiction to contravene, or to be invalid under, the laws
of any political body having jurisdiction over the subject matter hereof, such
contravention or invalidity shall not invalidate the entire Agreement.  Instead,
this Agreement shall be construed as if it did not contain the particular
provision or provisions held to be invalid, and an equitable adjustment shall be
made and necessary provisions added so as to give effect to the intention of the
Parties as expressed in this Agreement at the time of execution of this
Agreement.
 
5.09 Amendment or Modification.  This Agreement may be amended or modified from
time to time only by the written agreement of all the Parties hereto.
 
5.10 Integration.  This Agreement (including the schedules and exhibits), the
Master Agreement and the other Transaction Documents (as defined in the Master
Agreement), including the Asphalt Contribution Agreement and Real Property
Transfer Agreement, represent the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; provided, however,
that in the event of any dispute, this Agreement, (including the schedules and
exhibits) shall be interpreted to be consistent with the SGLP Settlement Orders
(as defined in the Master Agreement).
 
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5.11 Representations and Warranties.  SemMaterials represents and warrants to
SMEP hereto as follows: (i) SGLP Asphalt is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Texas; (ii) upon the transfer, assignment, conveyance and delivery of the
Transferred Interests contemplated by this Agreement, SMEP will acquire 100% of
the issued and outstanding Equity Interests; and (iii) as of the date hereof,
except for obligations or Liabilities incurred in connection with its formation
and the transactions contemplated hereby and in the Asphalt Contribution
Agreement, SGLP Asphalt has not incurred, directly or indirectly through any
Affiliate, any obligations or Liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person.
 
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IN WITNESS WHEREOF, each party hereto has executed and delivered this Agreement
as of the date first written above to be effective as of the Effective Date.
 

 
TRANSFEREE:
 
SEMMATERIALS ENERGY PARTNERS, L.L.C.

By:/s/ Alex G.
Stallings                                                                           
Name: Alex G. Stallings
Title:   Chief Financial Officer and Secretary

 

 
TRANSFEROR:
 
SEMMATERIALS, L.P.
 
By: SemOperating G.P., L.L.C., its general partner
 

By:/s/ Terrence Ronan
Name: Terrence Ronan
Title: President and CEO