Document:

sfm-ex102_503.htm

 

Exhibit 10.2

AIRCRAFT PURCHASE AGREEMENT

This AIRCRAFT PURCHASE AGREEMENT (this “Agreement”) is entered into and effective on the 3rd day of November 2015, by and between SPROUTS FARMERS MARKETS HOLDINGS, LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Purchaser”), and CJ LEASING SERVICES LLC, a limited liability company organized and existing under the laws of  California (“Seller”).

W I T N E S S E T H:

WHEREAS, Seller owns the Aircraft described and referred to herein;

WHEREAS, Purchaser desires to purchase the Aircraft from Seller; and

WHEREAS, Purchaser and Seller now desire to enter into this Agreement for the purpose of setting forth all of the terms and conditions pursuant to which Purchaser shall buy and accept and Seller shall cause the sale and delivery of the Aircraft.

NOW, THEREFORE, in consideration of these premises and the mutual covenants and agreements herein contained, the Parties agree as follows:

ARTICLE I.  DEFINITIONS

	
1.1
	
The following terms shall have the following meanings for all purposes of this Agreement:

“Aircraft” means the Airframe, the Engines, the Parts, the Ancillary Items, and the Aircraft Documents.

“Aircraft Documents” means a current and valid United States Standard Airworthiness Certificate, and all logbooks, manuals, and maintenance records pertaining to the Airframe, or the Engines that are in Seller’s possession.

“Airframe” means that certain Cessna 525C aircraft bearing U.S. registration number N601FM, and manufacturer’s serial number 525C0148, together with any and all Parts incorporated or installed in or attached thereto.

“Ancillary Items” means all equipment of whatever nature including without limitation engine covers and loose equipment that is associated with the Airframe or the Engines and that is in Seller’s possession.

“Business Day” means any day of the year in which banks are not authorized or required to close in New York City, New York.

“Cape Town Treaty” means collectively the Convention on International Interests in Mobile Equipment, the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, the Regulations for the International Registry, and the International Registry Procedures, together with all other rules, amendments, supplements, and revisions thereto.

“Closing” means the consummation of the purchase and sale transaction contemplated by this Agreement.

“Closing Date” has the meaning ascribed to the term in Section 3.1.

“Delivery Location” means Scottsdale, Arizona or another mutually agreed-upon location within the 48 contiguous United States.

“Delivery Receipt” means an Aircraft Delivery Receipt in the form of Exhibit A attached hereto.

“Engines” means two (2) Williams FJ44-4A engines bearing manufacturer’s serial numbers 211308 and 211309, together with any and all Parts incorporated or installed in or attached thereto.

“Escrow Agent” means Insured Aircraft Title Service, Inc.

“Escrow and Title Search Fee” means the amount of five thousand, five hundred United States Dollars (USD$5,500), inclusive of International Registry search and registration charges other than fees and charges for a Party to register as a Transacting User Entity which shall be borne by such Party.

“Event of Default” has the meaning ascribed to the term in Section 7.5.1.

“FAA” means the Federal Aviation Administration.

 

 

“FAA Bill of Sale” means an FAA Aeronautical Center Form 8050-2 Aircraft Bill of Sale, a copy of which is attached hereto as Exhibit B.

“FAA Civil Aviation Registry” means the FAA Civil Aviation Registry, Aircraft Registration Branch, Mike Monroney Aeronautical Center, 6500 South MacArthur Boulevard, Oklahoma City, Oklahoma 73169.

“International Registry” means the International Registry of Mobile Assets established pursuant to the Cape Town Treaty.

“Lien” means any lien, mortgage, security interest, lease or other charge or encumbrance or claim or right of others, including, without limitation, rights of others under any engine or parts interchange, loan, lease, or pooling agreement.

“Lien Holder” means any person, corporation, limited liability company or other entity possessing a Lien interest in the Aircraft.

“Lien Release” means a document in form acceptable to Purchaser which, when filed in the records of the FAA Civil Aviation Registry, will cause a recorded Lien affecting the Aircraft to be terminated and released.

“Parties” means Purchaser and Seller collectively.

“Parts” means all appliances, components, parts, avionics, instruments, appurtenances, accessories, furnishings or other equipment of whatever nature (other than a complete Engine or engine) incorporated or installed in or attached to the Airframe or any Engine.

“Party” means a party to this Agreement.

“Professional User” and “Professional User Entity” have the meanings ascribed to the terms in Section 2.1.6 of the Registry Regulations.

“Purchase Price” means the amount of Seven Million Five Hundred Thousand United States Dollars (US$7,500,000.00).

“Registry Regulations” means the Regulations for the International Registry, which may be obtained online through the International Registry’s website at https://www.internationalregistry.aero.

“Transacting User” and “Transacting User Entity” have the meanings ascribed to the terms in Section 2.1.11 of the Registry Regulations.

“Warranty Bill of Sale” means the form of Warranty Bill of Sale attached hereto as Exhibit C.

ARTICLE II.  AGREEMENT TO BUY AND SELL

	
2.1
	
Agreement to Sell and Buy.  For and in consideration of the Purchase Price, and subject to the terms and conditions set forth herein, Seller hereby agrees to sell and deliver the Aircraft to Purchaser, and Purchaser hereby agrees to purchase and accept delivery of the Aircraft from Seller.

	
2.2
	
Escrow Agent.  The Parties hereby agree to appoint Escrow Agent as document holder and stakeholder for the sale and purchase of the Aircraft.  Purchaser and Seller shall each pay one-half (1⁄2) of the Escrow and Title Search Fees.

ARTICLE III.  CLOSING AND CLOSING PROCEDURES

	
3.1
	
Date and Time of Closing.  The Closing shall occur at or about 10:00 a.m. PST on the 3rd Business Day after Purchaser confirms that the pre-closing deliveries specified in Section 3.2 below have been delivered, unless another date and time shall be mutually agreed upon by the Parties (such date being the “Closing Date”).

	
3.2
	
Pre-Closing Deliveries.

	
 
	
3.2.1
	
Prior to the Closing, Escrow Agent shall prepare and deliver to Purchaser and Seller title reports for the Airframe and each Engine, which reports shall include relevant information from both the FAA Civil Aviation Registry and the International Registry.

	
 
	
3.2.2
	
Prior to the Closing, Seller shall deliver to the Escrow Agent an undated, but otherwise fully executed, FAA Bill of Sale, and Warranty Bill of Sale.

	
 
	
3.2.3
	
Prior to the Closing, Seller shall cause each Lien Holder, if any, to deliver each of the following to the Escrow Agent:

	
 
	
3.2.3.1
	
An undated, but otherwise fully executed Lien Release which, when filed in the FAA Civil Aviation Registry, will cause such Lien Holder’s Lien on the Aircraft to be terminated and released.

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3.2.3.2
	
A written statement indicating the total amount in United States Dollars that must be paid to such Lien Holder to secure the release and termination of such Lien Holder’s Lien. 

	
 
	
3.2.3.3
	
Wiring instructions for payment of such amount.

	
 
	
3.2.4
	
Prior to the Closing, Purchaser shall deliver each of the following to the Escrow Agent:

	
 
	
3.2.4.1
	
An undated Delivery Receipt for the Aircraft, undated but otherwise fully executed (except that hours, landings and cycle data may be left blank).

	
 
	
3.2.4.2
	
Funds in an amount equal to the sum of the Purchase Price.

	
 
	
3.2.5
	
Prior to the Closing, Seller shall position the Aircraft at the Delivery Location.

	
 
	
3.2.6
	
If requested by Purchaser under Section 3.6.1, prior to the Closing, Seller and Purchaser shall each register as a Transacting User Entity with the International Registry and shall each appoint an Administrator; and the Administrator for each of Seller and Purchaser shall appoint the Escrow Agent as their Professional User Entity with the International Registry for purposes of registering contracts of sale regarding the Airframe and each Engine in favor of Purchaser, and any other related actions.

	
3.3
	
Conditions Precedent to Seller’s Obligations.  Seller’s obligation to sell and deliver the Aircraft to Purchaser on the Closing Date shall be subject to the following conditions precedent:

	
 
	
3.3.1
	
At the time of Closing, Purchaser shall not be in breach or default of any of Purchaser’s obligations arising under this Agreement.

	
 
	
3.3.2
	
At the time of Closing, all of Purchaser’s representations set forth in Section 4.2 shall be true and accurate.

	
 
	
3.3.3
	
Prior to the Closing, Purchaser shall have delivered to the Escrow Agent an undated, but otherwise fully executed Delivery Receipt (except that hours, landings and cycle data may be left blank), and the Purchase Price.

	
 
	
3.3.4
	
If requested by Purchaser under Section 3.6.1, prior to the Closing, Purchaser shall have registered as a Transacting User Entity with the International Registry and shall have appointed an Administrator; and Purchaser’s Administrator shall have appointed the Escrow Agent as Purchaser’s Professional User Entity with the International Registry.

	
 
	
3.3.5
	
Purchaser shall, at its cost, be permitted to carry out a pre-purchase inspection of the Aircraft , the scope of which shall be limited to an Aircraft and records survey, a borescope of the engines and a test flight (collectively, the “Inspection”) to be conducted at Cessna Citation Service Center, Mesa, Arizona or other mutually acceptable inspection facility (“Inspection Facility”).  All expenses for the Inspection including the direct costs of the test flight (which shall equal the actual fuel cost and direct crew charges subject to the limits on the amount of reimbursements as set forth by FAR 91.501) shall be at the Purchaser’s sole expense.  During any test flight, care, custody, command and control of the Aircraft shall at all times remain with Seller, through Seller’s pilot or a pilot that is acceptable to Seller, in Seller’s sole discretion.  The Inspection shall be completed within 10 business days of the date first above written (unless another date and time shall be mutually agreed upon by the Parties).   Purchaser shall notify Seller of its acceptance or rejection no later than 24 hours following the completion of the Inspection. Provided that Purchaser timely provides its acceptance of the Aircraft (“Technical Acceptance”) then Seller shall be responsible for the cost of the correction of all airworthiness discrepancies identified during the Inspection by the Inspection Facility (“Discrepancies”), unless otherwise agreed upon in writing between the Purchaser and Seller.  The parties hereto agree that any items which are not Discrepancies shall be the sole responsibility of Purchaser.

	
3.4
	
Conditions Precedent to Purchaser’s Obligations.  Purchaser’s obligation to purchase and accept delivery of the Aircraft from Seller on the Closing Date shall be subject to the following conditions precedent:

	
 
	
3.4.1
	
At the time of Closing, Seller shall not be in breach or default of any of Seller’s obligations arising under this Agreement.

	
 
	
3.4.2
	
At the time of Closing, all of Seller’s representations set forth in Section 4.1 shall be true and accurate.

	
 
	
3.4.3
	
Prior to the Closing, Seller shall have delivered to the Escrow Agent an undated, but otherwise fully executed, FAA Bill of Sale, and Warranty Bill of Sale.

	
 
	
3.4.4
	
Prior to the Closing, Seller shall have caused each Lien Holder to deliver to the Escrow Agent an undated, but otherwise fully executed Lien Release, together with a written statement indicating the total amount in United States Dollars that must be paid to such Lien Holder to secure the release and termination of such Lien Holder’s Lien, and wiring instructions for payment of such amount.

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3.4.5
	
If requested by Purchaser under Section 3.6.1, prior to the Closing, Seller shall have registered as a Transacting User Entity with the International Registry and shall have appointed an Administrator; and Seller’s Administrator shall have appointed the Escrow Agent as Seller’s Professional User Entity with the International Registry. 

	
 
	
3.4.6
	
Seller shall repair at its cost, all Discrepancies reported by the Inspection Facility.

	
3.5
	
Closing.  Subject to the condition that all the Conditions Precedent set forth in Section 3.3 and Section 3.4 have been satisfied or waived, at the date and time of the Closing determined in accordance with Section 3.1, the Parties shall perform the following actions, all of which collectively shall constitute the Closing:

	
 
	
3.5.1
	
Seller shall deliver the Aircraft to Purchaser at the Delivery Location at Seller’s expense. The Aircraft shall be in an airworthy condition, with no known damage history other than as disclosed to Purchaser.  All aircraft systems must be functioning within normal limits and current on its maintenance with all airworthiness directives and mandatory service bulletins accomplished at a certified Cessna Aircraft Service Center.  If applicable, Seller shall also deliver assign and transfer any and all manufacture warranty contracts and maintenance and service programs relating to the Aircraft or any equipment applicable thereto to the extent that such warranties and programs are assignable, including, without limitation, any ProParts or TAP Elite account balances.

	
 
	
3.5.2
	
Purchaser shall accept delivery of the Aircraft from Seller at the Delivery Location.

	
 
	
3.5.3
	
Seller and Purchaser shall commence a conference call with Escrow Agent, and each Lien Holder if applicable, during which Seller, Purchaser and such Lien Holder, as applicable, shall instruct the Escrow Agent to perform the following tasks:

	
 
	
3.5.3.1
	
Seller shall instruct the Escrow Agent to date and file the FAA Bill of Sale in the FAA Civil Aviation Registry; to discharge any registration with the International Registry by Seller of any international interest in the Aircraft; and to consent on behalf of Seller to Purchaser’s registration with the International Registry of an international interest in the Aircraft.

	
 
	
3.5.3.2
	
Purchaser shall instruct the Escrow Agent to register an international ownership interest in the Aircraft in favor of Purchaser; to release to any Lien Holder that portion of the Purchase Price necessary to secure the release and termination of each Lien Holder’s Lien in the Aircraft which exists as of the Closing Date; to date (and fill in any missing hours, landings and cycle data with date provided by Purchaser and Seller) and deliver the Delivery Receipt to Seller; and to release to Seller the Purchase Price, less the sum of (i) any amounts paid to any Lien Holders, and (ii) one-half of the Escrow and Title Search Fee which shall be retained by Escrow Agent.

	
 
	
3.5.3.3
	
Lien Holder, if any, shall instruct the Escrow Agent to date and file such Lien Holder’s respective Lien Release; provided, however, that a Lien Holder need not participate in the Closing conference call if such Lien Holder has provided to Escrow Agent written instructions authorizing Escrow Agent to date and file such Lien Holder’s respective Lien Release at the time of the Closing.

	
3.6
	
International Registry Matters.

	
 
	
3.6.1
	
If requested by the Purchaser in writing at least ten (10) Business Days prior to Closing, Seller shall apply to the International Registry for approval as a Transacting User Entity, and at or after the Closing Seller shall either provide its consent, or shall designate Escrow Agent as Seller’s Professional User Entity for the purpose of providing consent, to the registration by Purchaser of a contract of sale evidencing the transfer of title to the Aircraft to Purchaser.

	
 
	
3.6.2
	
Purchaser shall have no right to, and hereby agrees that it will not, register, consent to or allow any third party to register any contract of sale, prospective contract of sale, international interest or prospective international interest under the Cape Town Treaty with respect to the airframe or the Engines on the Aircraft until after the Closing has been completed in accordance with the provisions of Section 3.5 and title to the Aircraft has been conveyed to Purchaser.

	
 
	
3.6.3
	
In the event that any contract of sale, prospective contract of sale, international interest or prospective international interest has been filed or registered against the Aircraft by Purchaser or any person claiming by, through, under or in connection with Purchaser in breach of Section 3.6.2, Purchaser shall discharge or cause the discharge of any such filing or registration immediately after written notice from Seller or the Escrow Agent to Purchaser.  Purchaser agrees that Seller shall have all of the rights available to it under law or in equity, including the right of specific performance, to enforce Purchaser’s performance of its obligations hereunder.  Notwithstanding anything in this Agreement to the contrary, Purchaser agrees to be responsible for and upon demand to indemnify Seller for and to hold Seller harmless from and against any and all claims, demands, liabilities, damages, losses and judgments (including legal fees and all expenses) arising out of any breach by Purchaser of any of its obligations under this Section 3.6.  This indemnity obligation shall survive the termination of this Agreement for any reason.

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ARTICLE IV.  REPRESENTATIONS AND WARRANTIES

	
4.1
	
Seller’s Representations and Warranties.  Seller hereby represents and warrants as follows:

	
 
	
4.1.1
	
Seller is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of California, possessing perpetual existence as a legal entity, having the capacity to sue and be sued in its own name, having full power, legal right and authority to carry on its business as currently conducted, and to execute, deliver and perform the provisions of this Agreement.

	
 
	
4.1.2
	
The execution, delivery, and performance by Seller of its obligations under this Agreement, and the sale of the Aircraft, have been duly authorized by all necessary action on behalf of Seller and do not conflict with or result in any breach of any of the terms or constitute a default under any document, instrument, or agreement to which Seller is a party.

	
 
	
4.1.3
	
The person executing this Agreement on behalf of Seller has full power and authority to do so.

	
 
	
4.1.4
	
This Agreement constitutes the legal, valid and binding obligation of Seller and is enforceable against Seller in accordance with its terms.

	
 
	
4.1.5
	
Seller owns exclusive, legal, beneficial, good, and marketable title to the Aircraft, free and clear of all Liens.

	
 
	
4.1.6
	
At the time of the Closing, Seller shall convey to Purchaser exclusive, legal, beneficial, good, and marketable title to the Aircraft, free and clear of all Liens whatsoever.

	
4.2
	
Purchaser’s Representations and Warranties.  Purchaser hereby represents and warrants as follows:

	
 
	
4.2.1
	
Purchaser is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of Delaware, possessing perpetual existence as a legal entity, having the capacity to sue and be sued in its own name, having full power, legal right and authority to carry on its business as currently conducted, and to execute, deliver and perform the provisions of this Agreement.

	
 
	
4.2.2
	
The execution, delivery, and performance by Purchaser of its obligations under this Agreement, and the acquisition of the Aircraft, have been duly authorized by all necessary action on behalf of Purchaser and do not conflict with or result in any breach of any of the terms or constitute a default under any document, instrument, or agreement to which Purchaser is a party.

	
 
	
4.2.3
	
The person executing this Agreement on behalf of Purchaser has full power and authority to do so.

	
 
	
4.2.4
	
This Agreement constitutes the legal, valid and binding obligation of Purchaser and is enforceable against Purchaser in accordance with its terms.

ARTICLE V. DISCLAIMER AND LIMITATION OF LIABILITY

	
5.1
	
PURCHASER ACKNOWLEDGES THAT THE AIRCRAFT IS BEING SOLD AND DELIVERED TO PURCHASER IN “AS IS, WHERE IS, AND WITH ALL FAULTS” CONDITION, AND THAT ALL DELIVERY CONDITIONS SPECIFIED IN THIS AGREEMENT SHALL EXPIRE AND BE OF NO FURTHER FORCE OR EFFECT AS OF THE CLOSING.  SELLER DOES NOT MAKE, GIVE, OR EXTEND, AND PURCHASER HEREBY DISCLAIMS AND RENOUNCES, ANY AND ALL WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE WHATSOEVER, EXPRESS OR IMPLIED, WHETHER ARISING IN LAW, IN EQUITY, IN CONTRACT, OR IN TORT, AND INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, AIRWORTHINESS, DESIGN, CONDITION, OR FITNESS FOR A PARTICULAR USE.  IN NO EVENT MAY EITHER PARTY BE HELD LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND.

ARTICLE VI.TAXES AND EXPENSES

	
6.1
	
Taxes.  Neither the Purchase Price of the Aircraft nor any other payments to be made by Purchaser under this Agreement includes, and Purchaser shall be responsible for, shall indemnify and hold harmless Seller against, and shall pay promptly when due, or shall provide Seller an appropriate certificate or affidavit in form and substance acceptable to Seller asserting and representing that Purchaser is entitled to an applicable exemption, exception, or exclusion from, any and all sales taxes, use taxes, retail taxes, excise taxes, or other taxes, duties, and fees of any and every kind or nature whatsoever that may be imposed on Purchaser, Seller, or both, by any federal, national, state, county, local, or other governmental authority, as a result of the sale or delivery of the Aircraft to, or the purchase, use, storage or other consumption of the Aircraft by, Purchaser, except solely for any taxes attributed to Seller’s income.  Purchaser’s obligations under this Section 6.1 shall survive delivery and acceptance of the Aircraft.

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6.2
	
Transaction Costs and Expenses. Except as otherwise expressly set forth herein, each Party shall be solely responsible for its own transactions costs and expenses associated with the transactions contemplated by this Agreement. 

ARTICLE VII.  MISCELLANEOUS

	
7.1
	
Termination Without Cause.  This Agreement may be terminated without cause at any time before the Closing only by the mutual written agreement of Seller and Purchaser.  The rights of the Parties upon such termination shall be set forth in the mutual written agreement of Seller and Purchaser.

	
7.2
	
Continuing Obligations.  Each Party shall take, or cause to be taken, such actions, and will execute and deliver, or cause to be executed and delivered, such additional documents and instruments, and will do, or cause to be done, all such actions as are necessary, convenient, proper, or advisable, prior to, in conjunction with, and after the Closing, to effectuate the transactions contemplated in this Agreement.

	
7.3
	
Risk of Loss.  Seller shall bear all risk of loss, damage, or destruction of the Aircraft occurring prior to the Closing.  Purchaser shall bear all risk of loss, damage, or destruction of the Aircraft occurring subsequent to the Closing.  Notwithstanding any contrary provision of this Agreement, if at any time prior to the Closing the Aircraft is destroyed or damaged beyond economic repair, as determined by Seller and Purchaser in their mutual, reasonable discretion, this Agreement shall terminate and neither Party shall have any further obligation to the other.

	
7.4
	
Defaults and Remedies.

	
 
	
7.4.1
	
Events of Default.  If any one or more of the following events of default (each an “Event of Default”) shall occur, then this Agreement may, at the option of the Party not in default, be terminated:

	
 
	
7.4.1.1
	
If Purchaser shall default in the due and punctual payment of any sum due to Seller, which default shall continue for three (3) days after Seller’s delivery of written notice of default.

	
 
	
7.4.1.2
	
If either Party shall default in the performance of any of the provisions contained in this Agreement, which default shall continue for ten (10) days after receipt of written notice of default by the defaulting Party.

	
 
	
7.4.1.3
	
If either Party shall file a voluntary petition in bankruptcy, or shall be adjudicated as bankrupt, or insolvent, or shall file any petition or answer seeking any reorganization, composition, readjustment, liquidation or similar relief for itself under any present or future statutes, law or regulation, or shall seek or consent to or acquiesce in, the appointment of any trustee, or shall make any general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.

	
 
	
7.4.1.4
	
If a petition shall be filed against either Party seeking any reorganization, composition, readjustment, liquidation or similar relief under any present or future statute, law or regulation, and shall remain undismissed or unstayed for an aggregate of sixty (60) days (whether or not consecutive), or if any trustee, receiver or liquidator of either Party is appointed, which appointment shall remain unvacated, or unstayed for an aggregate of sixty (60) days (whether or not consecutive).

	
 
	
7.4.2
	
Purchaser’s Remedies.  Upon the occurrence of an Event of Default by Seller, and provided Purchaser is not then in breach or default of this Agreement, Purchaser shall have the option to terminate this Agreement by written notice to Seller, and Seller shall reimburse Purchaser for its costs directly related to the Inspection.

	
 
	
7.4.3
	
Seller’s Remedies.  Upon the occurrence of an Event of Default by Purchaser, and provided Seller is not then in breach or default of this Agreement, Seller shall have the option to terminate this Agreement by written notice to Purchaser and Escrow Agent.

	
 
	
7.4.4
	
Exclusive Remedies.  Upon an Event of Default, the termination of this Agreement and payment of obligations expressly stated in this Agreement are intended to be exclusive of any other remedy existing at law or in equity or by statute or otherwise. Purchaser shall file no lien or contract of sale for the Aircraft on the International Registry prior to Closing and in no event may either Party bring an action for specific performance or damages in excess of obligations expressly stated in this Agreement, provided this limitation of damages shall not apply to a breach of Seller’s representations set forth in Section 4.1.5, 4.1.6 or the Warranty Bill of Sale.

	
7.5
	
Amendments.  The provisions of this Agreement may not be waived, altered, modified, amended, supplemented or terminated in any manner whatsoever except by written instrument signed by both parties hereto.

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7.6
	
Severability.  Any provision of this Agreement that may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

	
7.7
	
Assignment.  Neither Party may assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other Party; provided that Purchaser may, at any time, assign its rights or delegate its obligations hereunder to a subsidiary of Purchaser.

	
7.8
	
Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon each of the Parties hereto and their respective successors and assigns.

	
7.9
	
Headings and References.  The division of this Agreement into sections, and the insertion of headings, are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

	
7.10
	
Counterparts.  This Agreement may be fully executed in two (2) or more separate counterparts by each of the Parties hereto, both such counterparts together constituting but one and the same instrument.  Such counterparts may be exchanged via facsimile transmission (or similar electronic means) provided that immediately following such transmission, each Party shall forward an executed original copy of the counterpart to the other Party by first class mail or courier.

	
7.11
	
Notices.  All communications, declarations, demands, consents, directions, approvals, instructions, requests and notices required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given or made when delivered personally, or in the case of documented overnight delivery service or registered or certified mail, return receipt requested, delivery charge or postage prepaid, on the date shown on the receipt therefor, in each case at the address set forth below:

 

	
If to Purchaser:
	
Sprouts Farmers Markets Holdings, LLC

	
 
	
c/o Sprouts Famers Market, Inc.

	
 
	
5455 E. High Street #111

	
 
	
Phoenix, AZ 85054

	
 
	
Attn:  General Counsel

	
 
	
Fax:  (480) 339-5997

	
 
	
 

	
If to Seller:
	
CJ LEASING SERVICES LLC

	
 
	
8193 Run of the Knolls

	
 
	
San Diego, CA 92127

	
 
	
Attn:  Mr. Shon Boney

	
 
	
 

	
with a copy to:
	
Procopio, Cory, Hargreaves & Savitch LLP

	
 
	
12544 High Bluff Drive, Suite 300

	
 
	
San Diego, CA 92130

	
 
	
Attn:  Eli Mansour

	
 
	
Tel:  (858) 720-6336

	
 
	
Fax:  (858) 523-4310

	
 
	
 

	
If to Escrow
	
 

	
Agent:
	
Insured Aircraft Title Service, Inc.

	
 
	
4848 S.W. 36th Street

	
 
	
Oklahoma City, OK  73179

	
 
	
Attn:  Kirk Woford

	
 
	
Tel:  (405) 681-6663

Seller shall provide to Purchaser a copy of all communications, declarations, demands, consents, directions, approvals, instructions, requests and notices sent by Seller to Escrow Agent, and Purchaser shall provide to Seller a copy of all communications, declarations, demands, consents, directions, approvals, instructions, requests and notices sent by Purchaser to Escrow Agent.

	
7.12
	
Attorney Fees.  In the event it becomes necessary to enforce the terms of this Agreement by litigation or otherwise, the prevailing Party shall be entitled to recover its reasonable attorney fees and court costs, including any such fees or costs arising from subsequent appeals and efforts to execute on any judgment.

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7.13
	
Non-Waiver.  Any failure at any time of either Party to enforce any provision of this Agreement shall not constitute a waiver of such provision or prejudice the right of such Party to enforce such provision at any subsequent time. 

	
7.14
	
Entire Agreement.  The Parties agree that the terms and conditions of this Agreement constitute the entire agreement between the Parties.  This Agreement supersedes all prior agreements between the Parties, express or implied.

	
7.15
	
Brokers Fees and Expenses.  Seller agrees to indemnify and hold Purchaser harmless from and against any claims made by any broker or other party claiming an interest in the Aircraft or the Purchase Price arising from an actual or alleged relationship or agreement with Seller.  Purchaser agrees to indemnify and hold Seller harmless from and against any claims made by any broker or other party claiming an interest in the Aircraft or the Purchase Price arising from an actual or alleged relationship or agreement with Purchaser.

	
7.16
	
Force Majeure.  Seller shall not be liable for any failure of or delay in the delivery of the Aircraft to Purchaser, for the period that such failure or delay is due to acts of god or the public enemy; war, insurrection or riots; fires, governmental actions; strikes or labor disputes; inability to obtain Aircraft materials, accessories, equipment, or parts from the vendors; or any other cause beyond Seller’s absolute control.  Upon the occurrence of any such event, the time require for performance by Seller of its obligations arising under this Agreement shall be extended by a period equal to the duration of such event.

	
7.17
	
Time is of the Essence.  Time shall be of the essence for all events contemplated hereunder.

	
7.18
	
Agreement Negotiated.  The parties to this Agreement are sophisticated and have been represented or had the opportunity to be represented in connection with the negotiation and performance of this Agreement.  The parties agree that no presumptions relating to the interpretation of contracts against the drafter of any particular clause should or may be applied in this case and, therefore, waive their effects.

	
7.19
	
Confidentiality.  The terms and conditions of this Agreement, and all writings, discussions, and negotiations in connection with the transaction contemplated by this Agreement (including, without limitation, the fact that discussions and negotiations have been conducted by the parties), shall remain strictly confidential and shall not be disclosed by either party, without the prior written consent of the other party, except that (1) each party shall be entitled to disclose the terms and conditions of this Agreement to such party’s attorneys, accountants, consultants, and other advisors performing services for such party with respect to or affected by the transaction contemplated by this Agreement; and (2) Purchaser shall be entitled to publicly disclose the terms and conditions of this Agreement as may be required in its parent company’s filings with the Securities and Exchange Commission, or as otherwise required by applicable laws, rules or regulations.

	
7.20
	
1031 Exchange.  Seller and/or Purchaser may intend to exchange other aircraft of like kind for the Aircraft within the meaning of Section 1031 of the Internal Revenue Code, as amended, and hereby reserve the right to assign their respective rights and interests, but not their obligations, hereunder to a qualified intermediary as provided in Reg. 1.1031 (k)-1(g)(4) on or before the Closing Date and the other party hereby consents to any such assignment. The Parties shall cooperate in order to complete a qualifying like kind exchange, provided that the other Party shall incur no additional liability, cost or expense to do so.

ARTICLE VIII.  GOVERNING LAW AND DISPUTES

	
8.1
	
Governing Law.  This Agreement has been negotiated and delivered in the State of California and shall in all respects be governed by, and construed in accordance with, the laws of the State of California, including all matters of construction, validity and performance, without giving effect to its conflicts of law provisions.

	
8.2
	
Jurisdiction and Venue.  Exclusive jurisdiction and venue over any and all disputes between the Parties arising under this Agreement shall be in, and for such purpose each Party hereby submits to the jurisdiction of, the state and federal courts serving the State of California.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

8

 

IN WITNESS WHEREOF, the undersigned Parties have caused this Aircraft Purchase Agreement to be executed, delivered and effective as of the date first above written.

 

	
 
	
Seller:

	
 
	
 

	
 
	
CJ LEASING SERVICES LLC

	
 
	
 

	
 
	
By:
	
/s/ Shon Boney

	
 
	
Print:
	
Shon Boney

	
 
	
Title:
	
Manager

	
 
	
 
	
 

	
 
	
Purchaser:

	
 
	
 

	
 
	
SPROUTS FARMERS MARKETS HOLDINGS, LLC

	
 
	
 

	
 
	
By:
	
/s/ Amin Maredia

	
 
	
Print:  
	
Amin Maredia

	
 
	
Title:  
	
CEO

[Signature Page to Aircraft Purchase Agreement]

 

CONSENT AND JOINDER

Purchaser and Seller have appointed Escrow Agent as document holder and stakeholder for the sale and purchase of the Aircraft, and the Escrow Agent accepts such appointment for and in consideration of the Escrow and Title Search Fee. The Parties acknowledge that the Escrow Agent is acting as a document holder and stakeholder only, its duties being purely ministerial, at their request and for their convenience, that the Escrow Agent shall not be deemed to be the agent or trustee for either of the Parties, and that the Escrow Agent shall not be liable to either of the Parties for any act or omission unless it involves willful misconduct or gross negligence on its part.  Purchaser and Seller shall each pay one-half (1⁄2) of the Escrow and Title Search Fee.

The undersigned does hereby consent to and join in the foregoing Agreement hereby agreeing to act as Escrow Agent in accordance with the provisions of the Agreement applicable to the Escrow Agent.

 

	
Insured Aircraft Title Service, Inc.
	
 

	
 
	
 

	
By:
	
/s/ Kirk Woford
	
 

	
Print:
	
Kirk Woford
	
 

	
Title:
	
President
	
 

 

[Signature Page to Aircraft Purchase Agreement]Exhibit 10.7

 

FORM OF INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT made and entered into as of                     (“Agreement”), by and between ARCHROCK, INC., a Delaware corporation (“Company”), and                       (“Indemnitee”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, highly skilled and competent persons are becoming more reluctant to serve public corporations as directors or officers unless they are provided with adequate protection through insurance and indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of a corporation; and

 

WHEREAS, uncertainties relating to indemnification have increased the difficulty of attracting and retaining such persons; and

 

WHEREAS, the Board of Directors has determined that the inability to attract and retain such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and

 

WHEREAS, while the Amended and Restated Bylaws of the Company (the “Bylaws”) require indemnification of the officers and directors of the Company, the Bylaws and the General Corporation Law of the State of Delaware (the “DGCL”) expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and its directors, officers and other persons with respect to indemnification; and

 

WHEREAS, Indemnitee does not regard the protection available under the Bylaws and through insurance as adequate in the present circumstances, and may not be willing to serve as an officer, director, employee or agent without adequate protection, and the Company desires Indemnitee to serve in one or more such capacities; and

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify Indemnitee to the fullest extent permitted by applicable law so that Indemnitee will serve or continue to serve the Company free from undue concern that Indemnitee will not be so indemnified; and

 

WHEREAS, Indemnitee is willing to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified; and

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

EXTERRAN HOLDINGS, INC.

INDEMNIFICATION AGREEMENT (REV.   -  -07)

 

1

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                                           Services by Indemnitee.  Indemnitee agrees to serve as a director, officer, employee or agent of the Company.  This Agreement does not create or otherwise establish any right on the part of Indemnitee to be and continue to be nominated to be a director, officer, employee or agent of the Company and does not create an employment contract between the Company and Indemnitee.

 

Section 2.                                           Indemnification.  The Company shall indemnify Indemnitee to the fullest extent permitted by applicable law in effect on the date hereof or as such laws may from time to time be amended.  Without diminishing the scope of the indemnification provided by this Section 2, the rights of indemnification of Indemnitee provided hereunder shall include but shall not be limited to those rights, except to the extent expressly prohibited by applicable law.

 

Section 3.                                           Action or Proceeding Other Than an Action by or in the Right of the Company.  Indemnitee shall be entitled to the indemnification rights provided in this Section 3 if Indemnitee is a party to or participant in or is threatened to be made a party to or participant in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, other than an action by or in the right of the Company to procure a judgment in its favor, by reason of the fact that Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, or fiduciary of any other entity or by reason of anything done or not done by him or her in any such capacity.  Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against expenses (including attorneys’ fees and disbursements), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding (including, but not limited to, the investigation, defense or appeal thereof or any claim, issue or matter therein), if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

 

Section 4.                                           Actions by or in the Right of the Company.  Indemnitee shall be entitled to the indemnification rights provided in this Section 4 if Indemnitee is a person who was or is made a party to or participant in or is threatened to be made a party to or participant in any threatened, pending or completed action or suit brought by or in the right of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee, agent, or fiduciary of the Company or is or was serving at the request of the Company as a director, officer, employee, agent, or fiduciary of any other entity by reason of anything done or not done by Indemnitee in any such capacity.  Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against expenses (including attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee in connection with such action or suit (including, but not limited to, the investigation, defense, settlement or appeal thereof or any claim, issue or matter therein) if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that no such indemnification shall be made in respect of any 

 

ARCHROCK, INC.

INDEMNIFICATION AGREEMENT

 

2

 

claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite such adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses which such court shall deem proper.

 

Section 5.                                           Indemnification for Expenses of Successful Party.  Notwithstanding the other provisions of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 3 or 4 hereof, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all expenses (including attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.  For purposes of this Section and Section 6 below, and without limitation, the termination of any claim, issue or matter in any such action, suit or proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 6.                                           Partial Indemnification.  If Indemnitee is only partially successful in the defense, investigation, settlement or appeal of any action, suit, investigation or proceeding described in Section 4 hereof, and as a result is not entitled under Section 5 hereof to indemnification by the Company for the total amount of the expenses (including attorneys’ fees and disbursements), judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by Indemnitee, the Company shall nevertheless indemnify Indemnitee, as a matter of right pursuant to Section 5 hereof, to the extent Indemnitee has been partially successful.  If the Indemnitee is only partially successful in any such action, suit, investigation or proceeding, the Company shall also indemnify Indemnitee, to the fullest extent permitted by applicable law, against all expenses (including attorneys’ fees and disbursements) reasonably incurred in connection with a claim, issue or matter related to any claim, issue or matter on which the Indemnitee was successful.

 

Section 7.                                           Indemnification for Expenses of a Witness.  To the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status (as hereinafter defined), a witness in any proceeding, Indemnitee shall be indemnified by the Company against all expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

 

Section 8.                                           Additional Indemnification.

 

(a)                                 Notwithstanding any limitation in Sections 3, 4, 5 or 6 hereof, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any action, suit or proceeding (including any action, suit or proceeding by or in the right of the Company to procure a judgment in its favor) against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the action, suit or proceeding.

 

(b)                                 For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

 

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(i)                                     to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

 

(ii)                                  to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

 

Section 9.                                           Exclusions.  Notwithstanding any provision of this Agreement, the Company shall not be obligated under this Agreement to make any indemnity (and, with respect to clause (c) below, advancement of expenses) in connection with any claim made against Indemnitee:

 

(a)                                 for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

 

(b)                                 for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as hereinafter defined) or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), or

 

(c)                                  except as provided in Section 13 of this Agreement, in connection with any action, suit or proceeding (or any part thereof) initiated by Indemnitee, including any action, suit or proceeding (or any part thereof) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors authorized the action, suit or proceeding (or any part thereof) prior to its initiation or (ii) the Company provides the indemnification or advancement of expenses, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

Section 10.                                    Determination of Entitlement to Indemnification.

 

(a)                                 Upon written request by Indemnitee for indemnification pursuant to Section 3 or 4 hereof, the entitlement of the Indemnitee to indemnification pursuant to the terms of this Agreement shall be determined by the following person or persons who shall be empowered to make such determination:  (i) if a Change of Control shall have occurred, by Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors, by a majority vote of the Disinterested Directors (as hereinafter defined) even if less than a quorum; or (B) if there are no such Disinterested Directors or if such Disinterested Directors so direct, by Independent Counsel in a written 

 

4

 

opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (C) if so directed by the Board of Directors, by the stockholders of the Company.  Such determination of entitlement to indemnification shall be made not later than 60 days after receipt by the Company of a written request for indemnification.  Such request shall include documentation or information which is necessary for such determination and which is reasonably available to Indemnitee.  To the fullest extent not prohibited by law, any expenses (including attorneys’ fees) incurred by Indemnitee in connection with Indemnitee’s request for indemnification hereunder shall be borne by the Company, and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom irrespective of the outcome of the determination of Indemnitee’s entitlement to indemnification.  If the person making such determination shall determine that Indemnitee is entitled to indemnification as to part (but not all) of the application for indemnification, such person shall reasonably prorate such partial indemnification among such claims, issues or matters.

 

(b)                                 In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a) hereof, the Independent Counsel shall be selected as provided in this Section 10(b).  If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected.  If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined herein, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof and the final disposition of the action, suit or proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 10(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13 of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

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Section 11.                                    Presumptions and Effect of Certain Proceedings.

 

(a)                                 The Secretary of the Company shall, promptly upon receipt of Indemnitee’s request for indemnification, advise in writing the Board of Directors or such other person or persons empowered to make the determination as provided in Section 10 that Indemnitee has made such request for indemnification.  Upon making such request for indemnification, Indemnitee shall be presumed to be entitled to indemnification hereunder and the Company shall have the burden of proof in the making of any determination contrary to such presumption.  If the person or persons so empowered to make such determination shall have failed to make the requested indemnification within 60 days after receipt by the Company of such request, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, to the fullest extent not prohibited by law and absent actual and material fraud in the request for indemnification; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person or persons so empowered to make the determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 11 shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 10(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a) of this Agreement.  The termination of any action, suit, investigation or proceeding described in Section 3 or 4 hereof by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself:  (x) create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful; or (y) otherwise adversely affect the rights of Indemnitee to indemnification except as may be provided herein or by applicable law.

 

(b)                                 For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Company and/or its affiliates, including financial statements, or on information supplied to Indemnitee by the officers of the Company and/or its affiliates in the course of their duties, or on the advice of legal counsel for the Company and/or its affiliates or on information or records given or reports made to the Company and/or its affiliates by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Company and/or an affiliate thereof.  The provisions of this Section 11(b) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(c)                                  The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or any affiliate thereof shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

6

 

Section 12.                                    Advancement of Expenses.  All reasonable expenses incurred by Indemnitee (including attorneys’ fees, retainers and advances of disbursements required of Indemnitee) in defending or otherwise participating in (including as a witness) any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding, at the request of Indemnitee within twenty days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time (whether prior to or after final disposition of any action, suit or proceeding).  Such statement or statements shall reasonably evidence the expenses incurred by Indemnitee in connection therewith.  The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking by or on behalf of Indemnitee to repay such advances if it is ultimately determined that Indemnitee is not entitled to be indemnified against such expenses and costs by the Company as provided by this Agreement or otherwise.  All advances provided to Indemnitee hereunder shall be unsecured and interest free, and such advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  Indemnitee’s entitlement to such expenses shall include those incurred in connection with any proceeding by Indemnitee seeking an adjudication or award in arbitration pursuant to Section 13 of this Agreement.  The Company shall have the burden of proof in any determination under this Section 12.

 

Section 13.                                    Remedies of Indemnitee in Cases of Determination Not to Indemnify or to Advance Expenses.  In the event that a determination is made that Indemnitee is not entitled to indemnification hereunder or if payment has not been timely made following a determination of entitlement to indemnification pursuant to Section 10 or 11, or if expenses are not advanced pursuant to Section 12, Indemnitee shall be entitled to a final adjudication in the Delaware Court of Chancery.  Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association, such award to be made within sixty days following the filing of the demand for arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration or any other claim.  Such judicial proceeding or arbitration shall be made de novo and Indemnitee shall not be prejudiced by reason of a determination (if so made) that Indemnitee is not entitled to indemnification.  If a determination is made or deemed to have been made pursuant to the terms of Section 10 or 11 hereof that Indemnitee is entitled to indemnification, the Company shall be bound by such determination and is precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding and enforceable.  The Company further agrees to stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.  If the court or arbitrator shall determine that Indemnitee is entitled to any indemnification hereunder, the Company shall, to the fullest extent not prohibited by applicable law, pay all expenses (including attorneys’ fees and disbursements) actually incurred by Indemnitee in connection with such adjudication or award in arbitration (including, but not limited to, any appellate proceedings).

 

Section 14.                                    Other Rights to Indemnification.  The indemnification and advancement of expenses (including attorneys’ fees) provided by this Agreement shall not be

 

7

 

deemed exclusive of any other rights to which Indemnitee may now or in the future be entitled under any provision of the by-laws, agreement, provision of the Certificate of Incorporation, as amended, vote of stockholders or Disinterested Directors, provision of law, or otherwise; provided, however, that this Agreement supersedes any other Agreement that has been entered into between the Company and the Indemnitee which has as its principal purpose the indemnification by the Company of Indemnitee.

 

Section 15.                                    Attorneys’ Fees and Other Expenses To Enforce Agreement.  In the event that Indemnitee is subject to or intervenes in any proceeding in which the validity or enforceability of this Agreement is at issue or seeks an adjudication or award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole or in part in such action, shall be entitled to recover from the Company and shall be indemnified by the Company against, any actual expenses for attorneys’ fees and disbursements reasonably incurred by Indemnitee, provided that in bringing the advancement action, Indemnitee acted in good faith.

 

Section 16.                                    Duration of Agreement.  This Agreement shall continue until and terminate upon the later of: (a) six (6) years after the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or, at the request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust employee benefit plan or other enterprise or (b) one (1) year after the final termination of any proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and of any proceeding commenced by Indemnitee pursuant to this Agreement relating thereto.  This Agreement shall be binding upon the Company and its successors and assigns (including any transferee of all or substantially all of its assets and any successor by merger of operation of law) and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devises, executors, administrators or other legal representatives.

 

Section 17.                                    Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

Section 18.                                    Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

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Section 19.                                    Headings.  The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

Section 20.                                    Definitions.  For purposes of this Agreement:

 

(a)                                 “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(b)                                 “Change of Control” of the Company shall mean:

 

(i)                                     The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), any acquisition by any Person pursuant to a transaction which complies with clause (A) of subsection (iii) of this definition shall not constitute a Change of Control; or

 

(ii)                                  Individuals, who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered for purposes of this definition as though such individual was a member of the Incumbent Board, but excluding, for these purposes, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors; or

 

(iii)                               The consummation of a reorganization, merger or consolidation involving the Company or any of its subsidiaries, or the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole (other than to an entity wholly owned, directly or indirectly, by the Company) (each, a “Corporate Transaction”), in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of 

 

9

 

common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Resulting Corporation in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the board of directors of the Resulting Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Corporate Transaction.  Notwithstanding the foregoing, neither the sale, lease or other disposition of assets by the Company or its subsidiaries to the Partnership or its subsidiaries or their successors nor the sale, lease or other disposition of any interest in the Partnership, its general partner or its subsidiaries or their successors shall, in and of itself, constitute a Change of Control for purposes of this Agreement.

 

(c)                                  “Corporate Status” shall mean the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or any majority-owned subsidiary or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the request of the Company.

 

(d)                                 “Disinterested Director” shall mean a director of the Company who is not or was not a party to the action, suit, investigation or proceeding in respect of which indemnification is being sought by Indemnitee.

 

(e)                                  “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(f)                                   “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(g)                                  “Partnership” shall mean Archrock Partners, L.P. (formerly named Universal Compression Partners, L.P.).

 

(h)                                 “Person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.

 

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(i)                                     “Resulting Corporation” means (1) the Company or its successor, or (2) if as a result of a Corporate Transaction the Company or its successor becomes a subsidiary of another entity, then such entity or the parent of such entity, as applicable, or (3) in the event of a Corporate Transaction involving the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, then the transferee of such assets or the parent of such transferee, as applicable, in such Corporate Transaction.

 

Section 21.                                    Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

Section 22.                                    Notice by Indemnitee.  (a)  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification covered hereunder, either civil, criminal, administrative, investigative or otherwise, provided, however, that the failure to so notify the Company will not relieve the Company from any liability it may have to Indemnitee except to the extent that such failure materially prejudices the Company’s ability to defend such claim.  With respect to any such action, suit, proceeding, inquiry or investigation as to which Indemnitee notifies the Company of the commencement thereof:

 

(i)                                     The Company will be entitled to participate therein at its own expense; and

 

(ii)                                  Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee.  After notice from the Company to Indemnitee of its election so to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below.  Indemnitee shall have the right to employ Indemnitee’s own counsel in such action, suit, proceeding, inquiry or investigation, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee and not subject to indemnification hereunder unless (x) the employment of counsel by Indemnitee has been authorized by the Company; (y) in the reasonable opinion of counsel to Indemnitee there is or may be a conflict of interest between the Company and Indemnitee in the conduct of the defense of such action; or (z) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company.

 

(b)                                 Neither the Company nor the Indemnitee shall settle any claim without the prior written consent of the other (which shall not be unreasonably withheld).

 

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Section 23.                                    Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or if (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(i)                                     If to Indemnitee, to the address set forth below his or her signature.

 

(ii)                                  If to the Company to:

 

Archrock, Inc.

16666 Northchase Drive

Houston, Texas 77060

Attn: Chief Executive Officer

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

Section 24.                                    Contribution.  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action, suit or proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such action, suit or proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

Section 25.                                    Governing Law; Consent to Jurisdiction.  The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant hereto, the Company and Indemnitee hereby irrevocably and unconditionally (i) consent to the exclusive jurisdiction and venue of the federal and state courts located in Houston, Texas, for any action or proceeding arising out of or in connection with this Agreement, and agree that any such action or proceeding shall not be heard in any other state or federal court in the United States of America or any court in any other country, (ii) waive any objection to the laying of venue of any such action or proceeding in any such federal or state court located in Houston, Texas, (iii) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in any such court has been brought in an improper or inconvenient forum, (iv) waive the right to trial by jury in any such action or proceeding, and (v) consent to service of process by first class certified mail, return receipt requested, postage prepaid, to the address at which such party is to receive notice in accordance with Section 23.

 

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Section 26.                                    Enforcement.

 

(a)                                 The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer, employee or agent of the Company (or, at the request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust employee benefit plan or other enterprise), and the Company acknowledges that Indemnitee is relying upon this Agreement in serving the Company in such capacity.

 

(b)                                 This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation of the Company, the Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 27.                                    Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

 

	
 
    	
ARCHROCK, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    

 

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