Document:

Exhibit No. 10.3

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (this “Agreement”),
dated as of August 4, 2010 (the “Effective Date”),
is entered into by and among Sunstone Hotel Investors, Inc., a Maryland
corporation (“Sunstone”),  Sunstone
Hotel Partnership, LLC, a Delaware limited liability company (the “Operating Partnership”),  and Marc A.
Hoffman (the “Executive”).

 

WHEREAS,
Sunstone and the Operating Partnership (collectively, the “Company”)
desire to employ the Executive and to enter into an agreement embodying the
terms of such employment; and

 

WHEREAS,
the Executive desires to accept employment with the Company, subject to the
terms and conditions of this Agreement.

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                       Employment
Period. Subject to the provisions for earlier termination hereinafter
provided, the Executive’s employment hereunder shall be for a term (the “Employment Period”) commencing on the Effective Date and
ending on the third anniversary of the Effective Date (the “Initial  Termination Date”);
provided, however, that this Agreement shall be automatically
extended for three additional years on the Initial Termination Date and on each
subsequent third anniversary of the Initial Termination Date, unless either the
Executive or the Company elects not to so extend the term of the Agreement by
notifying the other party, in writing, of such election not less than ninety
(90) days prior to the last day of the term as then in effect.  For the avoidance of doubt, non-renewal of
the Agreement pursuant to the proviso contained in the preceding sentence shall
not constitute a termination without Cause or for Good Reason (each as defined
below).

 

2.                                       Terms of
Employment.

 

(a)                                  Position and
Duties.

 

(i)                                     During the
Employment Period, the Executive shall serve as Executive Vice President and
Chief Financial Officer of Sunstone and the Operating Partnership and shall
perform such employment duties as are usual and customary for such positions
and such other duties as the Company shall from time to time reasonably assign
to the Executive.  The Executive shall
report directly to the Chief Executive Officer of the Company.

 

(ii)                                  During the
Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his business time, energy, skill and best efforts to the performance of
his duties hereunder in a manner that will faithfully and diligently further
the business and interests of the Company. 
Notwithstanding the foregoing, during the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees consistent with the Company’s
conflicts of interests policies and corporate governance guidelines in effect
from time to time and, with respect to service with a for-profit entity, with
the written consent of the Company’s Chief Executive Officer, (B) deliver
lectures or fulfill speaking engagements or (C) manage his personal
investments, so long as such activities do not interfere with the performance
of the Executive’s responsibilities as an executive officer of the Company.

 

 

(iii)                               The Executive
agrees that he will not take personal advantage of any business opportunity
that arises during his employment by the Company and which may be of benefit to
the Company.

 

(b)                                 Compensation.

 

(i)                                     Base Salary.  During the Employment Period, the Executive
shall receive a base salary (the “Base Salary”)
of Three Hundred Fifty Thousand Dollars ($350,000) per annum.  The Base Salary shall be paid in installments
at such intervals as the Company pays executive salaries generally, but not
less often than monthly.  During the
Employment Period, the Base Salary shall be reviewed at least annually for
possible increase (but not decrease) in the Company’s sole discretion, as
determined by the compensation committee (the “Compensation
Committee”) of the Board of Directors of the Company (the “Board”).  The term “Base
Salary” as utilized in this Agreement shall refer to Base Salary as so
adjusted.  Any increase in Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement.

 

(ii)                                  Annual Bonus.  In addition to the Base Salary, the Executive
shall be eligible to earn, for each calendar year ending during the Employment
Period, an annual cash performance bonus (an “Annual Bonus”)
under the Company’s bonus plan or plans applicable to senior executives.  The amount of any Annual Bonus and the
performance goals applicable to such Annual Bonus for the relevant year shall
be determined in accordance with the terms and conditions of said bonus plan as
in effect from time to time with the following targets: (1) threshold
target equal to 50% of Base Salary; (2) mid-point target equal to 75% of
Base Salary ( “Target Annual Bonus”);
(3) high target equal to 125% of Base Salary; and (4) superior
(maximum) target equal to 150% of Base Salary; provided, however,
that no minimum bonus is guaranteed and any bonus may equal zero in any given year.  The Annual Bonus payable, if any, in respect
of any calendar year performance period shall be paid no later than the March 15
immediately following such calendar year performance period.  The terms and conditions of any such bonus
plan shall be determined by the Compensation Committee in its sole discretion.

 

(iii)                               Equity Awards. During the
Employment Period, the Executive shall be eligible to earn equity awards under
the Company’s long-term incentive plan, subject to vesting and other conditions
determined by the Compensation Committee, in its sole discretion.  The form, amount and terms of equity awards,
if any, shall be determined by the Compensation Committee in accordance with
the terms and conditions of plans as in effect from time to time with the
following targets: (1) threshold target equal to 100% of Base Salary;
(2) mid-point target equal to 150% of Base Salary; (3) high target
equal to 200% of Base Salary; and (4) superior (maximum) target equal to
250% of Base Salary; provided, however, that no minimum equity
award is guaranteed and any award may equal zero in any given year.

 

(iv)                              Incentive,
Savings and Retirement Plans.  During the Employment Period, the Executive
shall be eligible to participate in all other incentive plans, practices, policies
and programs, and all savings and retirement plans, policies and programs, in
each case that are applicable generally to senior executives of the Company.

 

(v)                                 Welfare Benefit
Plans.  During the Employment Period,
the Executive and the Executive’s eligible family members shall be eligible for
participation in the welfare benefit plans, practices, policies and programs
(including, if applicable, medical, dental, 

 

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vision, disability, employee
life, group life and accidental death insurance plans and programs) maintained
by the Company for its senior executives.

 

(vi)                              Business
Expenses.  During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company provided
to senior executives of the Company.

 

(vii)                           Fringe Benefits.  During the Employment Period, the Executive
shall be entitled to such fringe benefits and perquisites as are provided by
the Company to its senior executives from time to time, in accordance with the
policies, practices and procedures of the Company.

 

(viii)                        Vacation.  During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company applicable to its senior executives.

 

3.                                       Termination of
Employment.

 

(a)                                  Death or
Disability.  The
Executive’s employment shall terminate upon the Executive’s death or Disability
during the Employment Period.  For
purposes of this Agreement, “Disability”
means the Executive’s inability by reason of permanent physical or mental
illness to fulfill his obligations hereunder for 120 consecutive days or on a
total of 180 days in any 12-month period which, in the reasonable opinion of an
independent physician selected by the Company or its insurers and reasonably
acceptable to the Executive or the Executive’s legal representative, renders
the Executive unable to perform the essential functions of his job, even after
reasonable accommodations are made by the Company.  The Company is not, however, required to make
unreasonable accommodations for the Executive or accommodations that would
create an undue hardship on the Company. 
For purposes of clarity, this provision is not intended to, and does
not, alter or affect any and all rights the Executive has to avail himself of
leaves of absence in accordance with Company policies applicable to senior
executives and/or his rights under applicable disability and leave of absences
laws, including, without limitation, the Americans with Disabilities Act, the
Family and Medical Leave Act, the California Fair Employment and Housing Act,
and the California Family Rights Act.

 

(b)                                 Cause.  The Company may terminate the Executive’s
employment during the Employment Period for Cause or without Cause.  For purposes of this Agreement, “Cause” shall mean the occurrence of one or more of the
following events:

 

(i)                                     The Executive’s
continued and willful failure to perform or gross negligence in performing his
duties owed to the Company, which is not cured within fifteen (15) days
following a written notice being delivered to the Executive, which notice
specifies such failure or negligence;

 

(ii)                                  The Executive’s
willful commission of an act of fraud or material dishonesty in the performance
of his duties, the nature of which, and the support for which, shall be
provided to the Executive in writing;

 

(iii)                               The indictment
of the Executive, conviction of the Executive, or entry by the Executive of a
guilty or no contest plea to any felony or any other felony or misdemeanor
involving moral turpitude;

 

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(iv)                              Any material
breach by the Executive of his fiduciary duty or duty of loyalty to the
Company; or

 

(v)                                 The Executive’s
material breach of any of the provisions of this Agreement, or any other
written agreement between the Executive and the Company, which is not cured
within fifteen (15) days following written notice thereof from the Company.

 

(c)                                  Good Reason.  The Executive’s employment may be terminated
by the Executive for Good Reason or by the Executive without Good Reason.  For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of
the following events without the Executive’s prior written consent:

 

(i)                                     A material
reduction in the Executive’s title, duties, authority, responsibilities,
reporting relationships, or the assignment to the Executive of any duties materially
inconsistent with the Executive’s position, title, authority, duties, or
responsibilities;

 

(ii)                                  The Company’s
reduction of the Executive’s annual Base Salary, bonus opportunity, or equity
award opportunity as in effect or as may be increased from time to time;

 

(iii)                               The relocation
of the Company’s headquarters to a location more than thirty five (35) miles
from the Company’s current headquarters in San Clemente, California; provided,
however, if the Company moves to Aliso Viejo, California, within 12 months from
the Effective Date, then such relocation of the Company’s headquarters must be
more than thirty five (35) miles from such location in Aliso Viejo, California,
in order to constitute Good Reason; or

 

(iv)                              The Company’s
material breach of its obligations under this Agreement.

 

For
purposes of this Agreement, a termination of employment by the Executive shall
not be deemed to be for Good Reason unless (A) the Executive gives the
Company written notice describing the event or events which are the basis for
such termination within 90 days after the event or events occur, (B) such
grounds for termination (if susceptible to correction) are not corrected by the
Company within 30 days of the Company’s receipt of such notice, and (C) the
Executive terminates his employment no later than 30 days after the Executive
provides notice to the Company in accordance with clause (A) of this
paragraph.

 

(d)                                 Notice of
Termination.  Any
termination other than due to death shall be communicated by Notice of Termination
to the other parties hereto given in accordance with Section 10(c) of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination date (which date shall be
not more than thirty (30) days after the giving of such notice).  The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

 

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(e)                                  Date of
Termination.  “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company other than due to the Executive’s death
or Disability, the date of receipt of the Notice of Termination or any later
date specified therein (which date shall not be more than thirty (30) days
after the giving of such notice), as the case may be, (ii) if the
Executive’s employment is terminated by the Executive other than due to the
Executive’s death or Disability, the Date of Termination shall be the thirtieth
day after the date on which the Executive notifies the Company of such
termination, unless otherwise agreed by the Company and the Executive, and (iii) if
the Executive’s employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death or Disability of the Executive
is determined as described in Section 3(a) of this Agreement, as the
case may be.  Notwithstanding the
foregoing, with respect to any payments that become payable to the Executive in
connection with his termination of employment with the Company, including
without limitation any Severance Payments, Date of Termination means the date
on which the Executive experiences a “separation from service” within the
meaning of Section 409A (as defined below).

 

4.                                       Obligations of
the Company Upon Termination.

 

(a)                                  Without Cause
or For Good Reason.  If, during
the Employment Period, the Company shall terminate the Executive’s employment
without Cause or the Executive shall terminate his employment for Good Reason
(whether or not in connection with a Change in Control (as defined below)):

 

(i)                                     The Executive
shall be paid in two lump sum payments the amounts set forth in (A) and (B) below
(other than vested benefits, which shall be paid as and when due under the
terms of the applicable plan or program) and outstanding equity awards shall
vest as set forth in (C) below: (A) the Executive’s earned but unpaid
Base Salary, accrued but unpaid vacation pay through the Date of Termination,
any vested amounts due to the Executive under any plan, program or policy of
the Company and any Annual Bonus required to be paid to the Executive pursuant to
Section 2(b)(ii) above for any fiscal year of the Company that ends
on or before the Date of Termination, to the extent not previously paid (if
any), plus an amount equal to a pro rata share of the Target Annual Bonus
determined by multiplying the Target Annual Bonus by a fraction the numerator
of which is the number of days elapsed in the year through the Date of
Termination and the denominator of which is 365 (together, the “Accrued Obligations”), (B) an amount (the “Severance Amount”) equal to two (2) times the sum of (x) the
Base Salary in effect on the Date of Termination (but in no event less than the
Base Salary set forth in Section 2(b)(i) above) plus (y) the
greater of (xx) the Target Annual Bonus and (yy) the actual Annual Bonus
paid to the Executive in respect of the last full calendar year immediately
preceding the Date of Termination, and (C) all outstanding stock options,
restricted stock units and other equity awards granted to the Executive under
any of the Company’s equity incentive plans (or awards substituted therefor
covering the securities of a successor company) shall become immediately vested
and, as applicable, exercisable in full (the “Vesting
Acceleration”). The Accrued Obligations shall be paid when due under
applicable law and, subject to Section 10(e) below, the
Severance Amount shall be paid on the sixtieth (60th) day after the Date of Termination (or, if not a
business day, on the first business day following such sixtieth (60th) day).

 

(ii)                                  For a period of
eighteen (18) months following the Termination Date, the Company shall, at the
Company’s sole expense, continue to provide the Executive and the Executive’s
eligible family members with group health insurance coverage at least equal to
that which would have been provided to them if the Executive’s employment 

 

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had not been terminated,
based on the Executive’s applicable elections in effect on the Termination Date
(or at the Company’s election, pay the applicable COBRA premium for such
coverage) (the “Continuation Benefits”); provided,
however, that if the Executive becomes re-employed with another employer
and is eligible to receive group health insurance coverage under another
employer’s plans, the Company’s obligations under this Section 4(a)(ii) shall
be reduced to the extent comparable coverage is actually available to the
Executive and the Executive’s eligible family members, and any such eligibility
shall be reported promptly by the Executive to the Company, but in any event
within fifteen (15) days after such eligibility begins.  Notwithstanding the foregoing, if during the
period of Continuation Benefits, any plan pursuant to which such benefits are
to be provided ceases to be exempt from the application of Section 409A under
Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each
such remaining premium shall thereafter be paid to the Executive as currently
taxable compensation in substantially equal monthly installments over the
remainder of the Continuation Benefits period.

 

(iii)                               Notwithstanding
anything herein to the contrary, it shall be a condition to the Executive’s
right to receive any of the Severance Amount, the Vesting Acceleration and/or
the Continuation Benefits that the Executive timely execute, deliver to the
Company and not revoke a release of claims in substantially the form attached
hereto as Exhibit A.

 

(b)                                 Death or
Disability. If the Executive’s employment is terminated by
reason of the Executive’s death or Disability during the Employment Period:

 

(i) The Accrued Obligations shall be paid to
the Executive’s estate or beneficiaries or to the Executive, as applicable, in
cash within 30 days of the Date of Termination;

 

(ii) 100% of the Executive’s annual Base
Salary, as in effect on the Date of Termination, shall be paid to the Executive’s
estate or beneficiaries or to the Executive, as applicable, in cash within 30
days of the Date of Termination;

 

(iii) Notwithstanding anything to the contrary
in any award agreement, outstanding stock options, restricted stock units and
other equity awards granted to the Executive under any of the Company’s equity
incentive plans (or awards substituted therefor covering the securities of a
successor company) shall immediately vest, but only to the extent such
outstanding awards were scheduled to vest within the twelve (12) month period
immediately following the Date of Termination; and

 

(iv) For a period of eighteen (18) months
following the Date of Termination, the Executive and the Executive’s eligible
family members shall continue to be provided, at the Company’s sole expense,
with group health insurance coverage at least equal to that which would have
been provided to them if the Executive’s employment had not been terminated (or
at the Company’s election, pay the applicable COBRA premium for such coverage);
provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive group health insurance coverage
under another employer’s plans, the Company’s obligations under this Section 4(c)(iv) shall
be reduced to the extent comparable coverage is actually available to the
Executive and the Executive’s eligible family members, and any such coverage
shall be reported by the Executive to the Company.

 

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(c)                                  Other Terminations.  If the Executive’s employment with the
Company terminates for any reason other than those described in Sections 4(a) and
(b) above, the Company shall pay to the Executive the Accrued
Obligations in accordance with Section 4(a) above and shall
have no further obligations to the Executive under this Agreement.

 

5.                                       Change in
Control.  For purposes of this
Agreement, “Change in Control” shall mean the
occurrence of any of the following events:

 

(i)                                     Any transaction
or event resulting in the beneficial ownership of voting securities, directly
or indirectly, by any “person” or “group” (as those terms are defined in Sections
3(a)(9), 13(d), and 14(d) of the Securities Exchange Act
of 1934 (“Exchange Act”) and the rules thereunder)
having “beneficial ownership “ (as determined pursuant to Rule 13d-3 under
the Exchange Act) of securities entitled to vote generally in the election of
directors (“voting securities”) of Sunstone
that represent greater than 50% of the combined voting power of Sunstone’s then
outstanding voting securities (unless the Executive has beneficial ownership of
at least 50% of such voting securities), other than any transaction or event
resulting in the beneficial ownership of securities:

 

(A)                              By a trustee or
other fiduciary holding securities under any employee benefit plan (or related
trust) sponsored or maintained by Sunstone or any person controlled by Sunstone
or by any employee benefit plan (or related trust) sponsored or maintained by Sunstone
or any person controlled by Sunstone, or

 

(B)                                By Sunstone or
a corporation owned, directly or indirectly, by the stockholders of Sunstone in
substantially the same proportions as their ownership of the stock of Sunstone,
or

 

(C)                                Pursuant to a
transaction described in clause (iii) below that would not be a Change in
Control under clause (iii);

 

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

 

(iii)                               The
consummation by Sunstone (whether directly involving Sunstone or indirectly
involving Sunstone through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of Sunstone’s assets or (z) the
acquisition of assets or stock of another entity, in each case, other than a transaction,

 

(A)                              which results
in Sunstone’s voting securities outstanding immediately before the transaction
continuing to represent (either by remaining outstanding or by being converted
into voting securities of Sunstone or the person that, as a result of the
transaction, controls, directly or indirectly, 

 

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Sunstone or owns, directly
or indirectly, all or substantially all of Sunstone’s assets or otherwise
succeeds to the business of Sunstone (Sunstone or such person, the “Successor Entity”)) directly or indirectly, greater than 50%
of the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

 

(B)                                after which no
person or group beneficially owns voting securities representing greater than
50% of the combined voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of this clause (B) as
beneficially owning greater than 50% of the combined voting power of the
Successor Entity solely as a result of the voting power held in Sunstone prior
to the consummation of the transaction; or

 

(iv)                              The approval by
Sunstone’s stockholders of a liquidation or dissolution of Sunstone.

 

For
purposes of clause (i) above, the calculation of voting power shall be
made as if the date of the acquisition were a record date for a vote of
Sunstone’s stockholders, and for purposes of clause (iii) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction were a record date for a vote of Sunstone’s stockholders.

 

6.                                       Full Settlement.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others.  In no event shall
the Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and except as expressly provided, such amounts
shall not be reduced whether or not the Executive obtains other
employment.  If any party to this
Agreement institutes any action, suit, counterclaim, appeal, arbitration or
mediation for any relief against another party, declaratory or otherwise
(collectively, an “Action”), to
enforce the terms hereof or to declare rights hereunder, then the Prevailing
Party in such Action shall be entitled to recover from the other party all
costs and expenses of the Action, including reasonable attorneys’ fees and
costs (at the Prevailing Party’s attorneys’ then-prevailing rates) incurred in
bringing and prosecuting or defending such Action and/or enforcing any
judgment, order, ruling or award (collectively, a “Decision”)
granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid whether or not such Action is
prosecuted to a Decision.  Any Decision
entered in such Action shall contain a specific provision providing for the
recovery of attorneys’ fees and costs incurred in enforcing such Decision.  A court or arbitrator shall fix the amount of
reasonable attorneys’ fees and costs upon the request of either party.  Any judgment or order entered in any final
judgment shall contain a specific provision providing for the recovery of all
costs and expenses of suit, including reasonable attorneys’ fees and expert
fees and costs incurred in enforcing, perfecting and executing such
judgment.  For the purposes of this
paragraph, costs shall include, without limitation, in addition to costs
incurred in prosecution or defense of the underlying action, reasonable
attorneys’ fees, costs, expenses and expert fees and costs incurred in the
following:  (a) post-judgment
motions and collection actions; (b) contempt proceedings; (c) garnishment,
levy, debtor and third party examinations; (d) discovery; (e) bankruptcy
litigation; and (f) appeals of any order or judgment.  “Prevailing Party”
within the meaning of this Section includes, without limitation, a party
who agrees to dismiss an Action (excluding an Action instituted in
contravention of the requirements of Section 10(b) below) in
consideration for the other party’s payment of the amounts allegedly due or
performance of the covenants allegedly breached, or obtains substantially the
relief sought by such party.  If the
Executive is the Prevailing Party, the 

 

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Company shall provide payment of such costs and
expenses to the Executive by December 31 of the year in which the right to
payment is established.

 

7.                                       Successors.

 

(a)                                  This Agreement
is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

 

(b)                                 This Agreement
shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

 

(c)                                  The Company
will require any successor (whether direct or indirect, by purchase merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. 
As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

8.                                       Payment of
Financial Obligations.  The
payment or provision to the Executive by the Company of any remuneration,
benefits or other financial obligations pursuant to this Agreement shall be
allocated to the Operating Partnership, Sunstone, Sunstone Hotel TRS Lessee, Inc.
and, if applicable, any of their respective subsidiaries and/or affiliates in
accordance with any employee sharing and expense allocation agreement, by and
between Sunstone and the Operating Partnership, as in effect from time to time.

 

9.                                       Indemnification
Agreement.  The Company
and the Executive agree to execute, concurrently herewith, the Indemnification
Agreement attached hereto as Exhibit B (the “Indemnification
Agreement).

 

10.                                 Miscellaneous.

 

(a)                                  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
reference to principles of conflict of laws. 
The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.  This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

 

(b)                                 Arbitration.  To the fullest extent allowed by law, any
controversy, claim or dispute between the Executive and the Company (and/or any
of its owners, directors, officers, employees, affiliates, or agents) relating
to or arising out of the Executive’s employment or the cessation of that
employment will be submitted to final and binding arbitration in the county in
which the Executive worked for determination by one arbitrator with hotel
industry experience in accordance with the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment
Disputes, as the exclusive remedy for such controversy, claim or dispute.  In any such arbitration, the parties may
conduct discovery in accordance with the applicable rules of the
arbitration forum, except that the arbitrator shall have the authority to order
and permit discovery as the arbitrator may deem necessary and appropriate in
accordance with applicable state or federal discovery statutes.  The arbitrator shall issue a 

 

9

 

reasoned, written decision, and shall have full
authority to award all remedies which would be available in court.  The parties shall share the filing fees
required for the arbitration, provided that the Executive shall not be required
to pay an amount in excess of the lesser of the filing fees required by a
federal or state court with jurisdiction. 
The Company shall pay the arbitrator’s fees and any AAA administrative
expenses.  Any judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.  Possible disputes
covered by the above include (but are not limited to) unpaid wages, breach of
contract, torts, violation of public policy, discrimination, harassment, or any
other employment-related claims under laws including but not limited to, Title
VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the
Age Discrimination in Employment Act, the California Fair Employment and
Housing Act, the California Labor Code, and any other statutes or laws relating
to an employee’s relationship with his/her employer, regardless of whether such
dispute is initiated by the Executive or the Company.  Thus, this bilateral arbitration agreement
applies to any and all claims that the Company may have against the Executive,
including but not limited to, claims for misappropriation of Company property,
disclosure of proprietary information or trade secrets, interference with
contract, trade libel, gross negligence, or any other claim for alleged
wrongful conduct or breach of the duty of loyalty by the Executive.  However, notwithstanding anything to the
contrary contained herein, Company and the Executive shall have their
respective rights to seek and obtain injunctive relief with respect to any
controversy, claim or dispute to the extent permitted by law.  Claims for workers’ compensation benefits and
unemployment insurance (or any other claims where mandatory arbitration is
prohibited by law) are not covered by this arbitration agreement, and such
claims may be presented by either the Executive or the Company to the
appropriate court or government agency. 
BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH THE EXECUTIVE
AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY JURY.  This arbitration agreement is to be construed
as broadly as is permissible under applicable law.

 

(c)                                  Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

If
to the Executive:  at the
Executive’s most recent address on the records of the Company.

 

If
to Sunstone or the Operating Partnership:

 

Sunstone
Hotel Investors, Inc.

903 Calle Amanecer, Suite 100

San Clemente, CA 92673

Attn:  Corporate Secretary

 

with
a copy to:

 

Latham &
Watkins

335 South Grand Ave.

Los Angeles, California 90071

Attn:  Steven Stokdyk, Esq.

 

or
to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice
and communications shall be effective when actually received by the addressee.

 

10

 

(d)           Sarbanes-Oxley Act of 2002.  Notwithstanding anything herein to the
contrary, if the Company determines, in its good faith judgment, that any
transfer or deemed transfer of funds hereunder is likely to be construed as a
personal loan prohibited by Section 13(k) of the Exchange Act and the
rules and regulations promulgated thereunder, then such transfer or deemed
transfer shall not be made to the extent necessary or appropriate so as not to
violate the Exchange Act and the rules and regulations promulgated
thereunder.

 

(e)           Section 409A. 
The parties agree that this Agreement is intended to comply with the
requirements of Section 409A of the Code and the regulations promulgated
thereunder (“Section 409A”) or an
exemption from Section 409A.  In the
event that after execution of this Agreement, the Company or the Executive
determines that any compensation or benefits provided hereunder may not be
exempt from or compliant with Section 409A, such party shall promptly
notify the other party of the basis for its determination.  The parties agree to renegotiate in good
faith the terms of this Agreement if it is mutually determined that this
Agreement as structured would have adverse tax consequences to the Executive.  For purposes of this Agreement, each amount
to be paid or benefit to be provided hereunder shall be construed as a separate
identified payment for purposes of Section 409A.  With respect to any reimbursement of expenses
of, or any provision of in-kind benefits to, the Executive, as specified under
this Agreement, such reimbursement of expenses or provision of in-kind benefits
shall be subject to the following conditions: 
(i) the expenses eligible for reimbursement or the amount of
in-kind benefits provided in one taxable year shall not affect the expenses
eligible for reimbursement or the amount of in-kind benefits provided in any
other taxable year, except for any medical reimbursement arrangement providing
for the reimbursement of expenses referred to in Section 105(b) of
the Code; (ii) the reimbursement of an eligible expense shall be made no
later than the end of the year after the year in which such expense was
incurred; and (iii) the right to reimbursement or in-kind benefits shall
not be subject to liquidation or exchange for another benefit.  Notwithstanding anything to the contrary in
this Agreement,  no compensation or
benefits payable in connection with a “separation from service” (within the
meaning of Section 409A), including without limitation any Severance  Payments, shall be paid to the Executive
during the 6-month period following his “separation from service” to the extent
that the Company reasonably determines that the Executive is a “specified
employee” at the time of such “separation from service” and that paying such
amounts at the time or times indicated in this Agreement would be a prohibited
distribution under Internal Revenue Code Section 409A(a)(2)(b)(i).  If the payment of any such amounts is delayed
as a result of the previous sentence, then on the first business day following the
end of such 6-month period (or such earlier date upon which such amount can be
paid under Section 409A without being subject to such additional taxes,
including as a result of the Executive’s death), the Company shall pay to the
Executive a lump-sum amount equal to the cumulative amount that would have
otherwise been payable to the Executive during such 6-month period, without
interest thereon.

 

(f)            Severability. 
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.  If any provision or term
hereof is deemed to have exceeded applicable legal authority or shall be in
conflict with applicable legal limitations, such provision shall be reformed
and rewritten as necessary to achieve consistency with such applicable law.

 

(g)           Withholding. 
The Company may withhold from any amounts payable under this Agreement
such federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

11

 

(h)           No Waiver.  The Executive’s or the Company’s failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

 

(i)            Employment At-Will.  The Executive acknowledges that his
employment with the Company is “at-will” for all purposes and, subject to the
termination and severance obligations contained in Sections 3 and 4 above, the
Executive hereby agrees that the Company may dismiss him and terminate his
employment with the Company at any time, with or without Cause.  Inclusion under any benefit plan or
compensation arrangement will not give the Executive any right or claim to any
benefit hereunder except to the extent such right has become fixed under the
express terms of this Agreement.

 

(j)            Entire
Agreement.  As of the Effective Date,
this Agreement, together with the Indemnification Agreement, constitutes the
final, complete and exclusive agreement between the Executive and the Company
with respect to the subject matter hereof and replaces and supersedes any and
all other agreements, offers or promises, whether oral or written, made to the
Executive by the Company, including without limitation, the Employment Offer
Letter by and among Sunstone Hotel Investors, Inc. and the Executive,
dated April 19, 2006.

 

(k)           Representations
and Warranties.  The Executive
represents and warrants to the Company that (i) this Agreement is valid
and binding upon and enforceable against him in accordance with its terms, (ii) the
Executive is not bound by or subject to any contractual or other obligation
that would be violated by his execution or performance of this Agreement,
including, but not limited to, any non-competition agreement presently in
effect, and (iii) the Executive is not subject to any pending or, to the
Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that could adversely affect his ability to perform his
obligations under this Agreement or the business reputation of the
Company.  The Executive has not entered
into, and agrees that he will not enter into, any agreement either written or
oral in conflict herewith.

 

(l)            Consultation
with Counsel.  The Executive
acknowledges that he has had a full and complete opportunity to consult with
counsel and other advisors of his own choosing concerning the terms,
enforceability and implications of this Agreement, and that the Company has not
made any representations or warranties to the Executive concerning the terms,
enforceability or implications of this Agreement other than as reflected in
this Agreement.

 

(m)          Counterparts.  This Agreement may be executed simultaneously
in two counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.

 

[signatures follow next page]

 

12

 

IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

 

 

	
  EXECUTIVE:

  	
  SUNSTONE
  HOTEL INVESTORS, INC.,  

  a
  Maryland corporation

  
	
   

  	
   

  	
   

  
	
  /s/
  Marc A. Hoffman 

  	
   

  	
  By:
  

  	
  /s/
  Arthur L. Buser, Jr. 

  
	
  Marc
  A. Hoffman

  	
   

  	
  Name:

  	
  Arthur
  L. Buser, Jr. 

  
	
   

  	
   

  	
  Its:

  	
  President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  SUNSTONE
  HOTEL PARTNERSHIP, LLC, 

  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Sunstone
  Hotel Investors, Inc.  

  
	
   

  	
   

  	
  Its:
   Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Arthur L. Buser, Jr. 

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Arthur
  L. Buser, Jr. 

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President
  and CEO

  
						

 

13

 

EXHIBIT A

 

TO EMPLOYMENT AGREEMENT

 

GENERAL RELEASE

 

For
a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Sunstone Hotel Investors, Inc.,
a Maryland corporation, Sunstone Operating Partnership, LLC, a Delaware limited
liability company and each of their partners, subsidiaries, associates,
affiliates, successors, heirs, assigns, agents, directors, officers, employees,
representatives, lawyers, insurers, and all persons acting by, through, under
or in concert with them, or any of them, of and from any and all manner of
action or actions, cause or causes of action, in law or in equity, suits,
debts, liens, contracts, agreements, promises, liability, claims, demands,
damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever,
known or unknown, fixed or contingent (hereinafter called “Claims”),
which the undersigned now has or may have against the Releasees, or any of
them, by reason of any matter, cause, or thing whatsoever from the beginning of
time to the date hereof.  The Claims
released herein include, without limiting the generality of the foregoing, any
Claims in any way arising out of, based upon, or related to the employment or
termination of employment of the undersigned by the Releasees, or any of them;
any alleged breach of any express or implied contract of employment; any
alleged torts or other alleged legal restrictions on Releasee’s right to terminate
the employment of the undersigned; and any alleged violation of any federal,
state or local statute or ordinance including, without limitation, Title VII of
the Civil Rights Act of 1964, the Age Discrimination In Employment Act, the
Americans With Disabilities Act, and the California Fair Employment and Housing
Act.

 

THE
UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.”

 

THE
UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR
COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

IN
ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED
IS HEREBY ADVISED AS FOLLOWS:

 

(A)          HE
HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;

 

(B)           HE
HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND

 

A-1

 

(C)           HE
HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND
THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION
PERIOD.

 

The
undersigned represents and warrants that there has been no assignment or other
transfer of any interest in any Claim which he may have against Releasees, or
any of them, and the undersigned agrees to indemnify and hold Releasees, and
each of them, harmless from any liability, Claims, demands, damages, costs,
expenses and attorneys’ fees incurred by Releasees, or any of them, as the
result of any such assignment or transfer or any rights or Claims under any
such assignment or transfer.  It is the
intention of the parties that this indemnity does not require payment as a
condition precedent to recovery by the Releasees against the undersigned under
this indemnity.

 

The
undersigned agrees that if he hereafter commences any suit arising out of,
based upon, or relating to any of the Claims released hereunder or in any
manner asserts against Releasees, or any of them, any of the Claims released
hereunder, then the undersigned agrees to pay to Releasees, and each of them,
in addition to any other damages caused to Releasees thereby, all attorneys’
fees incurred by Releasees in defending or otherwise responding to said suit or
Claim.

 

The
undersigned further understands and agrees that neither the payment of any sum
of money nor the execution of this Release shall constitute or be construed as
an admission of any liability whatsoever by the Releasees, or any of them, who
have consistently taken the position that they have no liability whatsoever to
the undersigned.

 

IN
WITNESS WHEREOF, the undersigned has executed this Release this 4th day of August, 2010.

 

 

	
   

  	
   

  	
  /s/
  Marc A. Hoffman

  
	
   

  	
   

  	
  Marc
  A. Hoffman

  

 

A-2

 

EXHIBIT B

 

INDEMNIFICATION AGREEMENT

 

THIS
INDEMNIFICATION AGREEMENT is made and entered into this 4th day of August, 2010 (the “Agreement”),
by and between Sunstone Hotel Investors, Inc., a Maryland corporation (the
“Company”), and Marc A. Hoffman (“Indemnitee”).

 

WHEREAS,
at the request of the Company, Indemnitee currently serves as an officer
of the Company and may, therefore, be subjected to claims, suits or proceedings
arising as a result of his service; and

 

WHEREAS,
as an inducement to Indemnitee to continue to serve as an officer, the Company
has agreed to indemnify and to advance expenses and costs incurred by
Indemnitee in connection with any such claims, suits or proceedings, to the
maximum extent permitted by law; and

 

WHEREAS,
the parties by this Agreement desire to set forth their agreement regarding
indemnification and advance of expenses;

 

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.
Definitions. For purposes of this Agreement:

 

(a)                                  “Change in Control”
means a Change in Control as defined in the Employment Agreement attached to
this Agreement.

 

(b)                                 “Corporate Status”
means the status of a person who is or was a director, trustee, officer,
employee or agent of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise (each, an “Enterprise”)
for which such person is or was serving at the request of the Company.

 

(c)                                  “Disinterested Director”
means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification or advance of Expenses is sought
by Indemnitee.

 

(d)                                 “Effective Date”
means the date set forth in the first paragraph of this Agreement.

 

(e)                                  “Expenses” shall
include all reasonable and out-of-pocket attorneys’ fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in
a  Proceeding. Expenses shall also
include Expenses incurred in connection with any appeal resulting from any
Proceeding, including without limitation the premiums, security for, and other
costs relating to any cost bond, supersede as bond or other appeal bond or its
equivalent.

 

B-1

 

(f)                                    “Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither 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 Indemnitee
under this Agreement or of other indemnitees under similar agreements), or
(ii) any other party to or witness in 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. If a Change of Control has not
occurred, Independent Counsel shall be selected by the Board of Directors,
with the approval of Indemnitee, which approval will not be unreasonably
withheld. If a Change of Control has occurred, Independent Counsel shall
be selected by Indemnitee.

 

(g)                                 “Proceeding” includes
any threatened, pending or completed action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding, whether civil, criminal, administrative or investigative
(including on appeal), except one pending or completed on or before the
Effective Date, unless otherwise specifically agreed in writing by the Company
and Indemnitee.

 

(h)                                 Reference to “fines” shall
include any excise tax assessed with respect to any employee benefit plan
(other than excise taxes imposed under Internal Revenue Code Section 4999);
references to “serving at the request of the Company” shall include any service
as an officer, director, committee member or official which imposes duties on,
or involves services by, such officer, with respect to an employee benefit
plan, its participants or beneficiaries; and action taken or omitted to be
taken by Indemnitee with respect to an employer benefit plan in the performance
of Indemnitee’s duties for a purpose reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to be a purpose that is” “not opposed to the best interests of
the Company” as referred to in this Agreement.

 

Section 2.
Services by Indemnitee. Indemnitee will serve as an officer of the
Company. However, this Agreement shall not impose any obligation on Indemnitee
or the Company to continue Indemnitee’s service to the Company beyond any
period otherwise required by law or by other agreements or commitments of the
parties, if any, provided that this Agreement shall continue in force after
such time as Indemnitee has ceased to serve as an officer of the Company and
Indemnitee will retain all rights provided under this Agreement after such
time.

 

Section 3.
Indemnification - General. The Company shall indemnify, and advance
Expenses to, Indemnitee (a) as provided in this Agreement and
(b) otherwise to the maximum extent permitted by Maryland law in effect on
the date hereof and as amended from time to time; provided, however, that no
change in Maryland law shall have the effect of reducing the benefits available
to Indemnitee hereunder based on Maryland law as in effect on the date hereof.
The rights of Indemnitee provided in this Section 3 shall include, without
limitation, the rights set forth in the other sections of this Agreement,
including any additional indemnification permitted by Section 2-418 of the
Maryland General Corporation Law (“MGCL”), the charter or bylaws of the
Company, a resolution of stockholders or directors, another agreement or
otherwise.

 

Section 4.
Proceedings Other Than Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened
to be, made a party to or a witness in any threatened, 

 

B-2

 

pending,
or completed Proceeding, other than a Proceeding by or in the right of the
Company. Pursuant to this Section 4, Indemnitee shall be indemnified
against all judgments, penalties, fines and amounts paid in settlement and all
Expenses actually and reasonably incurred by him or on his behalf in connection
with a Proceeding by reason of his Corporate Status unless it is established
that (i) the act or omission of Indemnitee was material to the matter
giving rise to the Proceeding and (a) was committed in bad faith or
(b) was the result of active and deliberate dishonesty,
(ii) Indemnitee actually received an improper personal benefit in money, property
or services, or (iii) in the case of any criminal Proceeding, Indemnitee
had reasonable cause to believe that his conduct was unlawful.

 

Section 5.
Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 5 if,
by reason of his Corporate Status, he is, or is threatened to be, made a party
to or a witness in any threatened, pending or completed Proceeding brought by
or in the right of the Company to procure a judgment in its favor. Pursuant to
this Section 5, Indemnitee shall be indemnified against all amounts
paid in settlement and all Expenses actually and reasonably incurred by him or
on his behalf in connection with such Proceeding unless it is established that
(i) the act or omission of Indemnitee was material to the matter giving
rise to such a Proceeding and (a) was committed in bad faith or
(b) was the result of active and deliberate dishonesty or
(ii) Indemnitee actually received an improper personal benefit in money,
property or services.

 

Section 6.
Court-Ordered Indemnification. Notwithstanding any other provision of
this Agreement, a court of appropriate jurisdiction, upon application of
Indemnitee and such notice as the court shall require, may order indemnification
in the following circumstances:

 

(a)                                  if it determines Indemnitee
is entitled to reimbursement under Section 2-418(d)(1) of the MGCL,
the court shall order indemnification, in which case Indemnitee shall be
entitled to recover the expenses of securing such reimbursement; or

 

(b)                                 if it determines that
Indemnitee is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not Indemnitee (i) has met the
standards of conduct set forth in Section 2-418(b) of the MGCL or
(ii) has been adjudged liable for receipt of an improper personal benefit
under Section 2-418(c) of the MGCL, the court may order such
indemnification as the court shall deem proper. However, indemnification with
respect to any Proceeding by or in the right of the Company or in which
liability shall have been adjudged in the circumstances described in
Section 2-418(c) of the MGCL shall be limited to Expenses actually
and reasonably incurred by him or on his behalf in connection with a
Proceeding.

 

Section 7.
Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, and without limiting any
such provision, to the extent that Indemnitee is, by reason of his Corporate
Status, made a party to and is successful, on the merits or otherwise, in the
defense of any Proceeding, he shall be indemnified for all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee under this
Section 7 for all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter, allocated on a reasonable and proportionate basis. For purposes of this
Section and without limitation, the termination of any claim, issue or
matter 

 

B-3

 

in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to
be a successful result as to such claim, issue or matter.

 

Section 8.
Advance of Expenses. Notwithstanding any provision herein to the
contrary, the Company shall advance all Expenses actually and reasonably
incurred by or on behalf of Indemnitee in connection with any Proceeding (other
than a Proceeding brought to enforce indemnification under this Agreement,
applicable law, the Charter or Bylaws of the Company, any agreement or a
resolution of the stockholders entitled to vote generally in the election of
directors or of the Board of Directors) to which Indemnitee is, or is
threatened to be, made a party or a witness, within ten 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 such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded
or accompanied by a written affirmation by Indemnitee of Indemnitee’s good
faith belief that the standard of conduct necessary for indemnification by the
Company as authorized by law and by this Agreement has been met and a written
undertaking by or on behalf of Indemnitee, in substantially the form attached
hereto as Exhibit B-1 or in such form as may be required under
applicable law as in effect at the time of the execution thereof, to reimburse
the portion of any Expenses advanced to Indemnitee relating to claims, issues
or matters in the Proceeding as to which it shall ultimately be established
that the standard of conduct has not been met. To the extent that Expenses
advanced to Indemnitee do not relate to a specific claim, issue or matter in
the Proceeding, such Expenses shall be allocated on a reasonable and  proportionate basis. The undertaking required
by this Section 8 shall be an unlimited general obligation by or on behalf
of Indemnitee and shall be accepted without reference to Indemnitee’s financial
ability to repay such advanced Expenses and without any requirement to post
security therefor. Advances shall be unsecured and interest free.

 

Section 9.
Procedure for Determination of Entitlement to Indemnification.

 

(a)                                  To obtain indemnification
under this Agreement, Indemnitee shall submit to the Company a written
request, including therein or therewith such documentation and information as
is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
omission to notify the Company will not relieve the Company from any liability
that it may have to Indemnitee other than under this Agreement. The Secretary
of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee has
requested indemnification.

 

(b)                                 Upon written request by
Indemnitee for indemnification pursuant to the first sentence of Section 9(a) hereof,
a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall promptly be made in the specific case: (i) if a
Change in Control shall have occurred, by Independent Counsel 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 (or a duly authorized committee thereof) by
a majority vote of a quorum consisting of Disinterested Directors (as herein
defined), or (B) if a quorum of the Board of Directors consisting of
Disinterested Directors is not obtainable or, even if obtainable, such quorum
of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) if so directed by a majority of the members of the
Board of Directors, by the stockholders of the Company. If it is so determined
that Indemnitee is entitled to indemnification, payment to 

 

B-4

 

Indemnitee
shall be made within ten days after such determination. Indemnitee shall
cooperate with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination in the discretion of the Board of Directors or
Independent Counsel if retained pursuant to clause (ii)(B) of this
Section 9. Any Expenses actually and reasonably incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Company shall indemnify
and hold Indemnitee harmless therefrom.

 

Section 10.
Presumptions and Effect of Certain Proceedings.

 

(a)                                  In making a determination
with respect to entitlement to indemnification hereunder, the person or persons
or entity making such determination shall presume that Indemnitee is entitled
to indemnification under this Agreement if Indemnitee has submitted a request
for indemnification in accordance with Section 9(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making of any determination contrary to that
presumption. Neither the failure of the Company (including by its directors or
independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Company (including by its
directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                                 The termination of any
Proceeding by judgment, order, settlement, conviction, a plea of nolo  contendere
or its equivalent, or an entry of an order of probation prior to judgment, does
not create a presumption that Indemnitee did not meet the requisite standard of
conduct described herein for indemnification.

 

(c)                                  Unless Indemnitee has reason
to believe otherwise, 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 Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for
the Enterprise or on information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or other
expert selected with reasonable care by the Enterprise. The provisions of this
Section 10(d) 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.

 

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

 

B-5

 

Section 11.
Remedies of Indemnitee.

 

(a)                                  If (i) a determination
is made pursuant to Section 9 of this Agreement that Indemnitee is not
entitled to indemnification under this Agreement, (ii) advance of Expenses
is not timely made pursuant to Section 8 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant
to Section 9(b) of this Agreement within 30 days after receipt by the
Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Section 7 of this Agreement within
ten days after receipt by the Company of a written request therefor, or
(v) payment of indemnification is not made within ten days after a
determination has been made that Indemnitee is entitled to indemnification, Indemnitee
shall be entitled to an adjudication in an appropriate court located in the
State of Maryland, or in any other court of competent jurisdiction, of his
entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee,
at his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the commercial Arbitration Rules of the American
Arbitration Association. Indemnitee shall commence such proceeding seeking an
adjudication or an award in arbitration within 180 days following the date on
which Indemnitee first has the right to commence such proceeding pursuant to
this Section 11(a); provided, however, that the foregoing clause shall not
apply to a proceeding brought by Indemnitee to enforce his rights under
Section 7 of this Agreement.

 

(b)                                 In any judicial proceeding
or arbitration commenced pursuant to this Section 11 the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification
or advance of Expenses, as the case may be.

 

(c)                                  If a determination shall
have been made pursuant to Section 9(b) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 11, absent a misstatement by Indemnitee of a material fact,
or an omission of a material fact necessary to make Indemnitee’s statement not
materially misleading, in connection with the request for indemnification.

 

(d)                                 In the event that
Indemnitee, pursuant to this Section 11, seeks a judicial adjudication of
or an award in arbitration to enforce his rights under, or to recover damages
for breach of, this Agreement, Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company for, any and all
Expenses actually and reasonably incurred by him in such judicial adjudication
or arbitration. If it shall be determined in such judicial adjudication or
arbitration that Indemnitee is entitled to receive part but not all of the
indemnification or advance of Expenses sought, the Expenses incurred by
Indemnitee in connection with such judicial adjudication or arbitration shall
be appropriately prorated.

 

Section 12.
Defense of the Underlying Proceeding.

 

(a)                                  Indemnitee shall notify the
Company promptly upon being served with or receiving any summons, citation,
subpoena, complaint, indictment, information, notice, request or other document
relating to any Proceeding which may result in the right to indemnification or
the advance of Expenses hereunder; provided, however, that the failure to give
any such notice shall not disqualify Indemnitee from the right, or otherwise
affect in any manner any right of Indemnitee, to indemnification or the advance
of 

 

B-6

 

Expenses
under this Agreement unless the  Company’s
ability to defend in such Proceeding or to obtain proceeds under any insurance
policy is materially and adversely prejudiced thereby, and then only to the
extent the Company is thereby actually so prejudiced.

 

(b)                                 Subject to the provisions of
the last sentence of this Section 12(b) and of Section 12(c) below,
the Company shall have the right to defend Indemnitee in any Proceeding which
may give rise to indemnification hereunder; provided, however, that the Company
shall notify Indemnitee of any such decision to defend within 15 calendar days
following receipt of notice of any such Proceeding under Section 12(a) above.
The Company shall not, without the prior written consent of Indemnitee, which
shall not be unreasonably withheld or delayed, consent to the entry of any
judgment against Indemnitee or enter into any settlement or compromise which
(i) includes an admission of fault of Indemnitee or (ii) does not
include, as an unconditional term thereof, the full release of Indemnitee from
all liability in respect of such Proceeding, which release shall be in form and
substance reasonably satisfactory to Indemnitee. This Section 12(b) shall
not apply to a Proceeding brought by Indemnitee under Section 11 above or
Section 18 below.

 

(c)                                  Notwithstanding the
provisions of Section 12(b) above, if in a Proceeding to which
Indemnitee is a party by reason of Indemnitee’s Corporate Status,
(i) Indemnitee reasonably concludes, based upon an opinion of counsel to
Indemnitee, that he may have separate defenses or counterclaims to assert with
respect to any issue which may not be consistent with other defendants in such
Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of
counsel to Indemnitee, that an actual or apparent conflict of interest or
potential conflict of interest exists between Indemnitee and the Company, or
(iii) if the Company fails to assume the defense of such Proceeding in a
timely manner, Indemnitee shall be entitled to be represented by separate
legal counsel of Indemnitee’s choice, at the expense of the Company. In
addition, if the Company fails to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any Proceeding
to deny or to recover from Indemnitee the benefits intended to be provided to
Indemnitee hereunder, Indemnitee shall have the right to retain counsel of
Indemnitee’s choice, at the expense of the Company (subject to
Section 11(d)), to represent Indemnitee in connection with any such
matter.

 

Section 13.
Non-Exclusivity; Survival of Rights; Subrogation; Insurance.

 

(a)                                  The rights of
indemnification and advance of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Charter or Bylaws of the Company, any
agreement or a resolution of the stockholders entitled to vote generally in the
election of directors or of the Board of Directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to
such amendment, alteration or repeal. To the extent that a change in Maryland
law, whether by statute or judicial decision, permits greater indemnification
or advancement of Expenses than would be afforded currently under the Company’s
charter or bylaws or this Agreement, except with respect to suits against the
Company relating to this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and 

 

B-7

 

every
other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.

 

(b)                                 In the event of any payment
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall execute all
papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring
suit to enforce such rights.

 

(c)                                  The Company shall not be
liable under this Agreement to make any payment of amounts otherwise indemnifiable
or payable or reimbursable as Expenses hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

 

(d)                                 Notwithstanding any other
provision of this Agreement to the contrary, the Company shall not be liable
for indemnification or advance of Expenses in connection with any settlement or
judgment for insider trading or for disgorgement of profits pursuant to
Section 16(b) of the Securities Exchange Act of 1934.

 

Section 14.
Insurance. The Company will use its reasonable best efforts to acquire
directors and officers liability insurance, on terms and conditions deemed
appropriate by the Board of Directors of the Company, with the advice of
counsel, covering Indemnitee or any claim made against Indemnitee for service
as a director or officer of the Company and covering the Company for any
indemnification or advance of Expenses made by the Company to Indemnitee for
any claims made against Indemnitee for service as a director or officer of the
Company. Without in any way limiting any other obligation under this Agreement,
the Company shall indemnify Indemnitee for any payment by Indemnitee arising
out of the amount of any deductible or retention and the amount of any excess
of the aggregate of all judgments, penalties, fines, settlements and reasonable
Expenses actually and reasonably incurred by Indemnitee in connection with a
Proceeding over the coverage of any insurance referred to in the previous
sentence.

 

Section 15.
Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is or may be, by
reason of his Corporate Status, a witness in any Proceeding, whether instituted
by the Company or any other party, and to which Indemnitee is not a party but
in which the Indemnitee receives a subpoena to testify, he shall be advanced
all reasonable Expenses and indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.

 

Section 16.
Duration of Agreement; Binding Effect.

 

(a)                                  This Agreement shall
continue until and terminate ten years after the date that Indemnitee’s
Corporate Status shall have ceased; provided, that the rights of Indemnitee
hereunder shall continue until the final termination of any Proceeding then
pending in respect of which Indemnitee is granted rights of indemnification or
advance of Expenses hereunder and of any proceeding commenced by Indemnitee
pursuant to Section 11 of this Agreement relating thereto.

 

B-8

 

(b)                                 The indemnification and
advance of Expenses provided by, or granted pursuant to, this Agreement shall
be binding upon and be enforceable by the parties hereto and their respective
successors and assigns (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), shall continue as to an Indemnitee who has ceased to
be a director, trustee, officer, employee or agent of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the written request of
the Company, and shall inure to the benefit of Indemnitee and his spouse,
assigns, heirs, devisees, executors and administrators and other legal
representatives.

 

(c)                                  The Company shall require
and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all or a substantial part, of
the business and/or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.

 

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, each portion of any section
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable that is not itself 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, each
portion of any section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
thereby.

 

Section 18.
Exception to Right of Indemnification or Advance of Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall
not be entitled to indemnification or advance of Expenses under this Agreement
with respect to any Proceeding brought by Indemnitee, unless (a) the
Proceeding is brought to enforce indemnification under this Agreement, and then
only to the extent in accordance with and as authorized by Sections 8 and 11 of
this Agreement, or (b) the Company’s Bylaws, as amended, the Charter, a
resolution of the stockholders entitled to vote generally in the election of
directors or of the Board of Directors or an agreement approved by the Board of
Directors to which the Company is a party expressly provide otherwise.

 

Section 19.
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. One such
counterpart signed by the party against whom enforceability is sought shall be
sufficient to evidence the existence of this Agreement.

 

Section 20.
Headings. 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.

 

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 

 

B-9

 

other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.

 

Section 22.
Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice
or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

 

(a)                                  If to Indemnitee, to: The
Indemnitee’s address on the books and records of the Company.

 

(b)                                 If to the Company, to:

 

Sunstone
Hotel Investors, Inc. 

903 Calle Amanecer, Suite 100 

San Clemente, California 92673 

Attn: Secretary

 

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 23.
Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Maryland, without regard to its conflicts of laws rules.

 

Section 24.
Miscellaneous. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate.

 

[SIGNATURE PAGE FOLLOWS]

 

B-10

 

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

 

	
  ATTEST:

  	
   

  	
  SUNSTONE
  HOTEL INVESTORS, INC.

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  David R. Sloan

  	
   

  	
  /s/
  Arthur L. Buser, Jr.

  	
   

  
	
   

  	
   

  	
  Name:
  Arthur L. Buser, Jr.

  	
   

  
	
   

  	
   

  	
  Title:
  President and CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  INDEMNITEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Lynnae Stoehr

  	
   

  	
  /s/
  Marc A. Hoffman

  	
   

  
	
   

  	
   

  	
  Name:
  Marc A. Hoffman

  	
   

  

 

B-11Exhibit 10.4

	
   

  

 

 

SALE AND PURCHASE AGREEMENT

 

 

RETAIL MARKETING ASSETS

 

 

MASSACHUSETTS, NEW HAMPSHIRE AND
RHODE ISLAND

 

 

May 24, 2010

 

	
   

  

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  DEFINITIONS

  	
  3

  
	
   

  	
   

  
	
  ARTICLE II TRANSFER AND SALE BY SELLER

  	
  11

  
	
   

  	
   

  
	
  ARTICLE III PURCHASE PRICE

  	
  17

  
	
   

  	
   

  
	
  ARTICLE IV FUTURE
  BUSINESS

  	
  21

  
	
   

  	
   

  
	
  ARTICLE V SURVEY, TITLE AND CERTAIN DILIGENCE MATTERS

  	
  23

  
	
   

  	
   

  
	
  ARTICLE VI CLOSING

  	
  25

  
	
   

  	
   

  
	
  ARTICLE VII ENVIRONMENTAL MATTERS

  	
  28

  
	
   

  	
   

  
	
  ARTICLE VIII REPRESENTATIONS AND WARRANTIES

  	
  37

  
	
   

  	
   

  
	
  ARTICLE IX LIABILITIES

  	
  39

  
	
   

  	
   

  
	
  ARTICLE X INDEMNITIES

  	
  40

  
	
   

  	
   

  
	
  ARTICLE XI CONFIDENTIALITY

  	
  44

  
	
   

  	
   

  
	
  ARTICLE XII CONDITIONS PRECEDENT

  	
  44

  
	
   

  	
   

  
	
  ARTICLE XIII EARLY TERMINATION; REMEDIES

  	
  45

  
	
   

  	
   

  
	
  ARTICLE XIV PROPERTY LOSS

  	
  48

  
	
   

  	
   

  
	
  ARTICLE XV TANK TESTING

  	
  48

  
	
   

  	
   

  
	
  ARTICLE XVI RIGHT OF ENTRY AND INSPECTION; EQUIPMENT

  	
  49

  
	
   

  	
   

  
	
  ARTICLE XVII EXCUSED DELAY

  	
  50

  
	
   

  	
   

  
	
  ARTICLE XVIII JOINT PUBLICITY

  	
  51

  
	
   

  	
   

  
	
  ARTICLE XIX EMPLOYEES

  	
  51

  
	
   

  	
   

  
	
  ARTICLE XX
  INSURANCE

  	
  52

  
	
   

  	
   

  
	
  ARTICLE XXI MISCELLANEOUS

  	
  53

  

 

i

 

SALE AND PURCHASE AGREEMENT

 

THIS SALE AND PURCHASE AGREEMENT
(this “Agreement”) is made and entered into as of the Effective Date
among EXXONMOBIL OIL CORPORATION, a New York corporation (“EMOC”) and
EXXON MOBIL CORPORATION, a New Jersey corporation (“EMC” and, together
severally with EMOC, “Seller”), and GLOBAL COMPANIES LLC, a Delaware
limited liability company that is existing and authorized to conduct business
in the Commonwealth of Massachusetts, and the States of New Hampshire and Rhode
Island (“Purchaser”), upon the terms and conditions set forth
herein.  When provisions herein apply to
both or either Seller or Purchaser, they sometimes are referred to as “Parties”
or “Party.”

 

RECITALS

 

WHEREAS, Seller owns and/or leases
certain service station properties located in Massachusetts, New Hampshire and
Rhode Island and identified on Exhibits A-1 and A-2 which it
intends to sell or assign to Purchaser, and Purchaser intends to purchase or
assume from Seller, in accordance with the terms of this Agreement; and

 

WHEREAS, Seller is party to certain
supply agreements and/or franchise agreements with dealers at the service
stations owned and/or leased by Seller and with dealers operating at dealer
owned and operated service stations identified on Exhibit A-3,
which agreements Seller intends to assign to Purchaser, and Purchaser intends
to assume from Seller, in accordance with the terms of this Agreement; and

 

WHEREAS, Seller owns certain assets
associated with the marketing operations of the service station properties,
including contract rights, equipment, improvements and other personal property,
which it intends to assign or sell incident to this transaction, and Purchaser
intends to assume or purchase the same from Seller in accordance with the terms
of this Agreement; and

 

WHEREAS, in accordance with the
terms of this Agreement, Purchaser is acquiring the Purchased Assets, including
the Properties, in their “AS-IS, WHERE-IS” condition; and

 

WHEREAS, Seller will transfer and
assign to Purchaser, and Purchaser shall accept and assume from Seller,
responsibility for any and all environmental liabilities associated with the
Properties; and

 

WHEREAS, Purchaser shall enter into
a Brand Fee Agreement for use in the sale and distribution of certain Branded
Fuels at the service station properties as more fully described in this
Agreement and the Brand Fee Agreement.

 

NOW, THEREFORE, in consideration of
the Recitals and the mutual covenants, conditions and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are mutually acknowledged, the Parties, intending
to be legally bound, agree as follows:

 

2

 

TERMS AND CONDITIONS

 

ARTICLE I

DEFINITIONS

 

1.1              Access
Agreements has the meaning set forth in Section 2.5.5.

 

1.2              Affiliate

 

1.2.1           With respect to Seller means:

 

(a)           any parent of Seller;

 

(b)           any company or
partnership in which Seller or any parent of Seller now or hereafter owns or
controls, directly or indirectly, more than fifty percent (50%) of the
ownership interest having the right to vote or appoint its directors or
functional equivalents (“Affiliated Company”);

 

(c)           any joint venture in
which Seller, any parent of Seller, or an Affiliated Company has an ownership
interest and/or is the operator; or

 

(d)           any successor in
interest to (a) through (c) above.

 

1.2.2           With respect to Purchaser means:
any Person directly or indirectly controlling, controlled by, or under common
control with Purchaser, including any other Person directly or indirectly
controlling, controlled by, or under common control with such Person.  For purposes of this definition, the term “control”
(including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Person, whether through the ownership of
voting securities or by contract or otherwise. 
For the purposes of this Agreement, Alliance Energy LLC, a Massachusetts
limited liability company (“Alliance”) and AE Holdings Corp., a Massachusetts
corporation and the managing member of Alliance shall not be considered
Affiliates of Purchaser.

 

1.3              Agreement means this
Agreement, including all recitals, schedules and exhibits.

 

1.4              ALTA Land Title Survey
means a boundary survey prepared to a set of minimum standards that have been
jointly prepared and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping, which surveys include improvements,
easements, rights-of-way, and other elements that impact land ownership.

 

1.5              Assignment and Assumption
Agreement means an Assignment and Assumption Agreement, in the form
attached as Exhibit Z, pursuant to which Seller will assign and
convey to Purchaser and Purchaser shall assume from Seller certain Contracts,
permits (if any), and the Assumed Liabilities.

 

1.6              Assignment of Leases has
the meaning set forth in Section 2.2.2.

 

1.7              Assignment of PMPA Franchise
Agreements has the meaning set forth in Section 2.5.1.

 

3

 

1.8              Assumed Liabilities means
all Claims, debts, liabilities and obligations of any kind and nature of Seller
or any Seller Affiliate arising out of or related to the Purchased Assets, whether
arising before or after Closing, including, without limitation, (a) all
Environmental Liabilities; (b) all obligations of Seller pursuant to any
contract or agreement assumed by Purchaser in accordance with this Agreement;
and (c) all debts, liabilities and obligations arising out of or related
to the ownership or operation of the Purchased Assets before and after Closing;
provided, however, that Assumed Liabilities shall not include any liability to
the extent it is an Excluded Liability.

 

1.9              Back Office System or BOS
has the meaning set forth in Section 2.8.1.

 

1.10            Baseline Report has the
meaning set forth in Section 7.1.1.

 

1.11            Benefits means the benefit
programs currently in effect for all Employees, which benefits are detailed in Schedules
V-4 and V-5 of Exhibit V.

 

1.12            Bill of Sale has the meaning
set forth in Section 2.3.1.

 

1.13            Brand Fee Agreement means the
Brand Fee Agreement, substantially in the form and substance set forth as Exhibit EE
attached hereto, by and between Purchaser and EMOC, which provides for the use
of certain Exxon and Mobil-related trademarks in the sale and distribution of
certain Branded Fuels at, and the operation of, the service station properties
after Closing.

 

1.14            Branded Fuel means motor fuel
branded with those trademarks owned or controlled by Seller, specifically
identified in Exhibits 13-A and 14-A to the Brand Fee Agreement.

 

1.15            Business Day means any day
other than Saturday, Sunday, or any other day that commercial banks in Fairfax,
Virginia are generally authorized to close.

 

1.16            Claim or Claims means
any pending or threatened suit, claim, loss, cost, obligation, damage,
liability, payment, fine, penalty, cause of action, litigation, judgment
(including, but not limited to, expert fees and attorneys’ fees awarded as part
of a judgment), lien or expense (including, but not limited to, reasonable
attorneys’ fees and other litigation expenses), whether known or unknown, that
may be alleged or brought by any person, Governmental Authority or governmental
entity, or any administrative, arbitration, or governmental proceeding,
investigation or inquiry affecting or arising out of any asset or right that is
a subject of this Agreement.

 

1.17            Closing means the act of
transferring Seller’s interests in the Purchased Assets and all Assumed
Liabilities to Purchaser in accordance with the terms of this Agreement.

 

1.18            Closing Date means the date
on which the Closing occurs.

 

1.19            Company-Operated Retail
Properties means the EMC Company-Operated Retail Properties and the EMOC
Company-Operated Retail Properties.

 

1.20            Company-Owned Dealer-Operated
Properties means the EMC Company-Owned Dealer-Operated Properties and the
EMOC Company-Owned Dealer-Operated Properties.

 

1.21            Conditions Precedent means
the conditions set out in Article XII.

 

4

 

1.22            Confidential Information has
the meaning set forth in Section 11.1.

 

1.23            Confidentiality Agreement
shall mean the confidentiality agreement dated December 8, 2009 between
Seller and/or its Affiliates and Purchaser covering the sale and purchase of
the Purchased Assets.

 

1.24            Contamination has the meaning
set forth in Section 7.1.2.

 

1.25            Contracts means all
contracts, agreements, licenses, relationships and commitments, written or
oral, relating to the Purchased Assets described on Exhibit BB.

 

1.26            Dealer-Owned Service Station
means a dealer owned and operated service station, as identified on Exhibit A-3,
whose dealer has entered into a Dealer Supply Agreement with EMOC.

 

1.27            Dealer Supply Agreements
means those agreements governing the supply of Branded Fuel to the Dealer-Owned
Service Stations.

 

1.28            Deed has the meaning set
forth in Section 2.2.1.

 

1.29            Default means the
non-performance, default, or breach by either Purchaser or Seller of an
obligation, covenant, or undertaking required of such Party under this
Agreement.

 

1.30            Deposit means money deposited
with the Title Company in escrow, including each of the Signing Deposit,
Earnest Money Deposit and Extension Period Deposit.  Unless otherwise expressly stated, wherever
the term “Deposit” is used in this Agreement, the term shall include any
interest earned on such deposit.

 

1.31            Disputes has the meaning set
forth in Section 10.5.

 

1.32            Earnest Money Deposit means
the Initial Earnest Money Deposit and the Final Earnest Money Deposit, to the
extent deposited into the Escrow Account or secured by an acceptable letter of
credit in accordance with Section 3.3.3.

 

1.33            Effective Date means the date
this Agreement is fully executed by Seller and Purchaser.

 

1.34            EMC Company-Operated Retail
Properties means service station properties identified on Exhibits A-1
and A-2 as “CORS” and as owned or leased by EMC.

 

1.35            EMC Company-Owned Dealer-Operated
Properties means service station properties identified on Exhibits A-1
and A-2 as “CODO” and as owned and/or leased by EMC that are operated by
a dealer.

 

1.36            EMC Fee Properties means the
service station properties identified on Exhibit A-1 as being owned
by EMC, including the land, the buildings, and all other improvements or
appurtenances located on, under or over the Properties owned by EMC.

 

5

 

1.37            EMC Lease Properties means
the service station properties identified on Exhibit A-2 as being
leased by EMC, including the land, the buildings, and all other improvements or
appurtenances located on, under or over the Properties leased by EMC.

 

1.38            EMC Properties means the EMC
Fee Properties and the EMC Lease Properties.

 

1.39            EMOC Company-Operated Retail
Properties means service station properties identified on Exhibits A-1
and A-2 as “CORS” and as owned or leased by EMOC.

 

1.40            EMOC Company-Owned
Dealer-Operated Properties means the service station properties identified
on Exhibits A-1 and A-2 as “CODO” and as owned and/or leased by
EMOC that are operated by a dealer.

 

1.41            EMOC Fee Properties means the
service station properties identified on Exhibit A-1 as being owned
by EMOC, including the land, the buildings, and all other improvements or
appurtenances located on, under or over the Properties owned by EMOC.

 

1.42            EMOC Lease Properties means
the service station properties identified on Exhibit A-2 as being
leased by EMOC, including the land, the buildings, and all other improvements
or appurtenances located on, under or over the Properties that are leased by
EMOC.

 

1.43            EMOC Properties means the
EMOC Fee Properties and the EMOC Lease Properties.

 

1.44            Employees means all employees
identified on Exhibit V thirty (30) days before Closing.

 

1.45            Engineering and Institutional
Controls has the meaning set forth in Section 7.1.3.

 

1.46            Environmental Law or Environmental
Laws has the meaning set forth in Section 7.1.4.

 

1.47            Environmental Liabilities has
the meaning set forth in Section 7.1.5.

 

1.48            Equipment means all Seller
owned assets, other than land, buildings, and Inventory, located at the
Properties or any Dealer-Owned Service Station as of Closing.  Equipment shall include product dispensers,
pumps, air compressors, lifts and convenience store coolers, to the extent such
assets are owned by Seller and located at the Properties or any Dealer-Owned
Service Station as of Closing.  For the
avoidance of doubt, “Equipment” shall not include any Intellectual Property of
Seller.

 

1.49            Escrow Account has the meaning
set forth in Section 3.2.

 

1.50            Escrow Agreement has the
meaning set forth in Section 3.3.1.

 

1.51            Excluded Liabilities means (a) Claims
for unpaid trade payables or notes payable with respect to the Purchased Assets
solely to the extent attributable to periods before the Closing; (b) third
party personal injury and property damage Claims arising from an occurrence
before the Closing; (c) employment Claims raised by Seller’s exempt and
non-exempt employees who were employed by Seller prior to or as of the Closing
and where the cause of action arose before the Closing; (d) Claims based
on EMOC’s failure to discharge or perform any obligation, covenant or
agreement, made by EMOC under 

 

6

 

any PMPA Franchise
Agreement required to be performed by EMOC prior to the Closing Date; and (e) the
Listed Claims.  Purchaser acknowledges
and agrees that (i) any liabilities or Claims arising out of, in
connection with, or related to Seller’s compliance with the terms of this
Agreement, including EMOC’s assignment of the PMPA Franchise Agreements (except
for Listed Claims), shall not be asserted or deemed to be “Excluded Liabilities”
and are expressly assumed by Purchaser pursuant hereto; and (ii) any
liabilities or Claims, including, without limitation, any third party personal
injury and property damage Claims, arising out of, in connection with, or
related to the environmental condition of the Properties, Contamination, or any
Remediation Activities or Environmental Liabilities, whether or not identified
in the Baseline Report (except for Listed Claims) shall not be asserted or
deemed to be an “Excluded Liability,” and are expressly assumed by Purchaser
pursuant hereto.

 

1.52            Extension Period Deposit
means a deposit equal to the lesser of (a) one percent (1%) of the
unadjusted Purchase Price set forth in Section 3.1 and (b) five
hundred thousand dollars ($500,000), paid by Purchaser to Seller to extend the
Inspection Period for an additional thirty (30) days.

 

1.53            ExxonMobil Captive Insurers
has the meaning set forth in Section 20.1.

 

1.54            ExxonMobil Policies has the
meaning set forth in Section 20.1.

 

1.55            Fee Properties means the EMC
Fee Properties and the EMOC Fee Properties.

 

1.56            Final Closing Date means the
date that is forty-five (45) days after the end of the Inspection Period.

 

1.57            Final Earnest Money Deposit
means the applicable sum set forth on Exhibit A-5.

 

1.58            Government Reimbursement Fund
has the meaning set forth in Section 7.1.6.

 

1.59            Governmental Authority has
the meaning set forth in Section 7.1.7.

 

1.60            Guarantor means Global
Partners LP, a Delaware limited partnership.

 

1.61            Guaranty means the guaranty
executed by the Guarantor to guarantee the obligations of Purchaser, and any
successor or assignee of Purchaser, under this Agreement and under any other
document delivered to Seller at or before Closing.

 

1.62            Hart-Scott-Rodino Act means
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
relevant rules and regulations thereunder.

 

1.63            Index has the meaning set
forth in Section 4.1.2.

 

1.64            Initial Earnest Money Deposit
means the applicable sum set forth on Exhibit A-5.

 

1.65            Inspection Period has the
meaning set forth in Section 5.3, as the same may be extended pursuant to Section 5.3.

 

1.66            Intellectual Property means: (a) all
registered trademarks, service marks, trade dress, logos and trade names,
including all goodwill associated therewith and all active applications, 

 

7

 

registrations and
renewals in connection therewith; (b) all trade secrets and confidential
business information (including know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, and business and marketing plans
and proposals); and (c) all copies and tangible embodiments thereof (in
whatever form or medium).

 

1.67            Interest Credit has the
meaning set forth in Section 3.2.1.

 

1.68            Inventory means all inventories
of refined petroleum products in bulk storage owned by Seller, if any, at any
Company-Operated Retail Property as of the Closing; all convenience store
merchandise for resale owned by Seller, if any, at any Company-Operated Retail
Property as of the Closing; and any car-wash chemicals owned by Seller, if any,
at any Company-Operated Retail Property as of the Closing; provided, that, Inventory
shall not include any consigned inventory; and provided, further, that, absent
agreement prior to the date that is thirty (30) days after the end of the
Inspection Period between Purchaser and the then current On the Run franchisor providing for
Purchaser’s use of the On the Run
trademarks and other intellectual property, Inventory shall not include
any On the Run branded
merchandise.

 

1.69            Lease Properties means the
EMC Lease Properties and the EMOC Lease Properties.

 

1.70            LIBOR has the meaning set
forth in Section 3.2.1.

 

1.71            Listed Claims means those
Claims set forth on Exhibit P.

 

1.72            Market Withdrawal has the
meaning set forth in Section 3.3.4(B)(v).

 

1.73            No Further Action Status or NFA
Status has the meaning set forth in Section 7.1.8.

 

1.74            NPL has the meaning set forth
in Section 2.5.3.

 

1.75            Objections has the meaning
set forth in Section 5.3.2.

 

1.76            On
the Run CORS Properties means those Company-Operated
Retail Properties at which Seller operates an On
the Run convenience store.

 

1.77            Orphaned Tank means a Tank,
whether maintained or unmaintained, that is located at, on or under a Property
at the time of Closing and is no longer in service and/or is not listed on the
Bill of Sale.

 

1.78            Permitted Encumbrances has
the meaning set forth in Section 5.5.

 

1.79            Person means an individual,
partnership (whether general or limited), limited liability company,
corporation, trust, estate, unincorporated association, nominee, joint venture
or other entity that is given, or is recognized as having, legal personality by
the law of any jurisdiction, country, state or territory.  “Person” includes any emanation of a
sovereign state or government, whether national, provincial, local or
otherwise, any international organization or body (whether or not having legal
personality), and any other juridical entity, in each case wherever resident,
domiciled, incorporated or formed.

 

8

 

1.80            Personal Property means all
personal property, other than Inventory, owned by Seller and located at the
Properties or any Dealer-Owned Service Station as of Closing and/or any
interest of Seller in such property, including, but not limited to, leasehold
improvements subject to any rights reserved under any lease agreement (and
excluding all proprietary equipment, back office computer systems, software
containing proprietary information and other equipment to be removed by Seller
from the Properties no later than the Closing Date pursuant to this Agreement);
provided, however, that “Personal Property” shall not include any Intellectual
Property of Seller.  For the avoidance of
doubt, “Personal Property” shall include all remediation equipment, monitoring
wells, and Tanks.

 

1.81            PMPA means the Petroleum
Marketing Practices Act, 15 U.S.C., Section 2801, et seq.

 

1.82            PMPA Franchise Agreements
means, collectively, lease or sublease agreements, franchise agreements, motor
fuels sales agreements, including Dealer Supply Agreements and other agreements
between EMOC and its franchise dealers establishing a “franchise relationship,”
as that term is defined in the PMPA.

 

1.83            Point of Sale or POS
has the meaning set forth in Section 2.3.2.

 

1.84            Property or Properties
means the EMC Properties and the EMOC Properties.

 

1.85            Purchase Price means the
amount of monetary consideration to be paid in U.S. Dollars by Purchaser to
Seller, as set forth in Section 3.1, as may be adjusted in accordance with
the terms of this Agreement.

 

1.86            Purchased Assets means,
collectively, the Properties (including the leases for all Lease Properties),
the PMPA Franchise Agreements, the Personal Property, the Equipment, the Contracts,
and Inventory to be transferred to Purchaser pursuant to the terms of this
Agreement.

 

1.87            Purchaser Indemnified Parties
has the meaning set forth in Section 10.2.1.

 

1.88            Purchaser-Related Parties
means Purchaser, Purchaser’s parent, subsidiaries, and Affiliates and their
respective owners, officers, directors, employees, agents, divisions,
contractors, invitees, servants, representatives, successors and assigns (and,
if Purchaser is a natural person, its heirs and legal representatives).

 

1.89            Remediation Activities has
the meaning set forth in Section 7.1.9.

 

1.90            Remediation Consultant has
the meaning set forth in Section 7.1.10.

 

1.91            Remediation Contractor or
Remediation Contractors has the meaning set forth in Section 7.1.11.

 

1.92            Seller Indemnified Parties
has the meaning set forth in Section 10.1.1.

 

1.93            Seller-Related Parties means
Seller, Seller’s subsidiaries and Affiliates and their respective owners,
officers, directors, employees, agents, divisions, contractors, invitees,
servants, representatives, successors and assigns.

 

9

 

1.94            Signing Deposit means Two
Hundred and Fifty Thousand U.S. Dollars ($250,000.00 USD) deposited by
Purchaser with the Title Company upon Purchaser’s submission of its binding
bid.

 

1.95            Survey means a current ALTA
Land Title Survey of each Property, prepared by a duly licensed land surveyor
and registered professional engineer satisfactory to the Title Company and to
Seller.

 

1.96            Tank or Tanks means
and refers to the storage tanks and associated lines and piping used for the
storage of petroleum products or other products or materials and located at, on
or under a Property, including all Orphaned Tanks and tanks previously used,
currently used or intended to be used in the operation of a service station.

 

1.97            Tax or Taxes means any
past, present, or future tax, including, without limitation, “green” or
environmental tax, income tax, value added tax, and all other transactional or
turnover tax, levy, excise, and other duty, contribution, charge, fee,
deduction or withholding of any nature by any tax agency or other emanation of
a sovereign state or government, whether national, federal, regional,
provincial, local or otherwise, and wherever imposed, levied, collected,
withheld or assumed, including any interest, penalty, fine or surcharge payable
in connection with any of the above, which
Taxes shall include, without limiting the generality of the foregoing, all
income or profits taxes, capital gain taxes, unemployment insurance taxes,
payroll and employee withholding taxes, and social security taxes.

 

1.98            Tightness Testing means
pressure or other tests that are performed on the operating Tanks for the
purpose of testing tank integrity.

 

1.99            Title Company means Stewart
Title and Guaranty Company or any other title company chosen by Seller by
written notice to Purchaser.

 

1.100          Trademarks means
petroleum-related service marks, trademarks, logos, emblems, trade dress,
applications for registration of marks, mark registrations, and other indicia
of origin, including, without limitation, the names and marks EXXON,
EXXONMOBIL, ESSO, the Tiger Design, the Pegasus Design, MOBIL, and such other
names, domain names, marks, logos, emblems, trade dress, and other indicia of
origin as Seller and its Affiliates may from time to time own in connection
with the marketing and or sale of petroleum products and associated services.

 

1.101          Upgrades has the meaning set
forth in Section 4.3.

 

1.102          U.S. Dollars, Dollars, USD
or $ means the U.S. Dollar, the lawful currency of the United States of
America.

 

1.103          Virtual Data Room means
the web-based portal or portals where documents related to the contemplated
transaction are delivered by Seller for review by Purchaser.  Seller will use two (2) such portals,
one (1) operated by IntraLinks for all documents other than environmental
information, and the other operated by Faulkner & Flynn for
environmental information, as more fully described in Article VII.

 

1.104          Willful Misconduct means a
conscious, voluntary act or an omission in intentional disregard of legal duty
and/or good and prudent standards of performance.

 

10

 

ARTICLE II

TRANSFER AND SALE BY SELLER

 

2.1              Sale and Purchase; Assignment
and Assumption.  At Closing, and
subject to the terms and conditions of this Agreement: (a) Seller will
sell, assign, convey and transfer to Purchaser, and Purchaser shall purchase,
assume and accept from Seller all of Seller’s assignable and transferable
rights, title and interest in the Purchased Assets; (b) Seller will assign
to Purchaser and Purchaser shall assume from Seller and discharge the Assumed
Liabilities; and (c) Seller will transfer and assign to Purchaser and
Purchaser shall accept and assume from Seller any and all Environmental
Liabilities, as further described in Article VII.

 

2.2              Transfer of Properties.

 

2.2.1           Transfer
of Fee Properties.  The sale and
transfer of the Fee Properties will be accomplished by Seller’s conveyance at
Closing of a quitclaim deed(s) substantially in the form attached as Exhibit J
(each a “Deed” and together the “Deeds”).  Seller will have no obligation to sell or
transfer any Fee Property that is subject to a right of first refusal.  If a Fee Property to be sold and transferred
to Purchaser pursuant to this Agreement is subject to a right of first refusal
in favor of any third party holder, then Seller, during the Inspection Period,
will, at Seller’s option, (a) request such holder’s waiver of its right of
first refusal in writing; and/or (b) offer the right of first refusal to
the third party holder and, provided that the third party holder declines such
right of first refusal, proceed with the sale of such Fee Property to
Purchaser.  If Seller obtains the waiver
described in clause (a) above, Seller shall provide notice to
Purchaser.  If by the date which is
thirty (30) days after the end of the Inspection Period Seller has not obtained
such waiver and/or Seller has elected not to offer the right of first refusal
to the third party holder, Seller will notify Purchaser and Purchaser may: (i) after
notice to and consent of Seller, which consent may be withheld for any reason
whatsoever, use its own efforts to obtain such third party’s waiver to the
extent such efforts do not create any additional liability to Seller; (ii) with
Seller’s consent, which consent may be withheld for any reason whatsoever,
elect to enter into a lease between Seller and Purchaser for such Fee Property,
so long as such lease does not violate the applicable right of first refusal or
require the affirmative consent of the holder thereof; or (iii) remove
such Fee Property from this Agreement and reduce the Purchase Price by the
amount of the allocated Purchase Price for such Fee Property set forth on Exhibit A-4.  If Seller elects to offer the right of first
refusal to the third party holder pursuant to (b) above and such right of
first refusal is exercised by the holder thereof, such Fee Property shall be
removed from this Agreement and the Purchase Price shall be reduced by the
amount of the allocated Purchase Price for such Fee Property set forth on Exhibit A-4.  Without making any representation or warranty
as to the enforceability or validity of any right of first refusal or to the
existence or non-existence of other rights of first refusal, Seller discloses
to Purchaser that the documentation for certain of the Sites set forth on Exhibit A-1
may contain a right of first refusal provision. 
Notwithstanding anything contained in this Agreement to the contrary,
Seller’s sole obligation with respect to obtaining any waiver of a right of first
refusal, if it elects to do so, shall be limited to Seller sending a written
request to the holder thereof; Seller shall have no obligation to incur any
expense or to take any other action whatsoever with respect to obtaining any
waiver.

 

2.2.2           Transfer
of Lease Properties.  The assignment
and transfer of the Lease Properties will be accomplished by the Parties’
execution at Closing (or, if any lease expressly requires delivery of an
executed assignment in order to obtain a landlord’s consent, on such earlier
date as will allow delivery of such assignment document with a consent request,
to be effective as of Closing) of an 

 

11

 

Assignment and Assumption of Lease Agreements in the form attached as Exhibit H
(the “Assignment of Leases”). 
Seller will have no obligation to obtain any consent required in
connection with the assignment of any of the leases for the Lease
Properties.  If a lease to be assigned to
Purchaser pursuant to this Agreement requires, either expressly or by law, the
affirmative consent of the landlord under the lease to legally effectuate an
assignment, then Seller, during the Inspection Period, will request such
landlord’s consent to the assignment in writing.  If Seller obtains such consent, Seller shall
provide notice to Purchaser.  If Seller
has not obtained such consent by the date which is thirty (30) days after the
end of the Inspection Period, Seller will notify Purchaser and Purchaser may: (a) after
notice to and consent of Seller, which consent may be withheld for any reason
whatsoever, use its own efforts to obtain such landlord’s consent to the extent
such efforts do not create any additional liability to the Seller; (b) enter
into a new lease with such landlord effective as of Closing so long as such
landlord agrees to terminate the existing lease between Seller and such
landlord releases Seller from any liability under such existing lease; (c) with
Seller’s consent, which consent may be withheld for any reason whatsoever, elect
to enter into a sublease between Seller and Purchaser, so long as such sublease
does not require the affirmative consent of such landlord; or (d) remove
such Lease Property from this Agreement and reduce the Purchase Price by the
amount of the allocated Purchase Price for such Lease Property set forth on Exhibit A-4.  Notwithstanding anything contained in this
Agreement to the contrary, Seller’s sole obligation with respect to obtaining
any consent from any landlord shall be limited to Seller sending a written
request to such landlord; Seller shall have no obligation to incur any expense
or to take any other action whatsoever with respect to obtaining any consent.

 

2.2.3           Permitted
Encumbrances.  The transfers of the
Properties shall be subject to the Permitted Encumbrances and shall include all
transferable easements and other rights appurtenant to the Properties, as well
as all buildings and improvements owned by Seller, located on, over or under
the Properties.

 

2.2.4           On The Run CORS Properties.  In the event that Purchaser fails to provide
Seller, no later than thirty (30) days after the end of the Inspection Period,
with proof of its agreement with the then current On the Run
franchisor providing for Purchaser’s use of the On the Run
trademark and other intellectual property at the Company-Operated Retail
Properties from and after the Closing Date, then Seller shall, prior to
Closing, remove from or otherwise discontinue the use of all signage, property
and products bearing the On the Run
trademark, or any related trademarks, tradenames or other intellectual
property, and the On the Run CORS Properties will
be transferred at Closing without the On the Run
brand.  In such event, the On the Run CORS Properties will be debranded by Seller
before Closing.  Seller shall have no
obligation to rebrand any On the Run CORS
Property to any other brand or re-image any such Property.  Such Properties will be transferred without
branding (provided that Seller will replace any On the Run
tiles or boxes with plain white panels). 
Seller shall have the right to access the On the Run
CORS Properties, at no charge to Seller, to complete any debranding required
after Closing.

 

2.3              Personal Property and Equipment.

 

2.3.1           Transfer
of Personal Property and Equipment. 
Seller’s conveyance and assignment of its interests in the Purchased
Assets pursuant to this Agreement will include all of Seller’s Personal
Property and Equipment, except as otherwise specified within this
Agreement.  The owned Personal Property
and Equipment will be identified on a Bill of Sale in the form attached as Exhibit K
(the “Bill of Sale”) and additional Tank documents will be provided
pursuant to Section 15.1.4.  To the 

 

12

 

extent such information is available, Tanks will be identified on a Bill
of Sale for each Property by number and size; provided that any Orphaned Tanks,
whether or not specifically identified, shall convey with the Property.  Purchaser is solely responsible for
identifying and obtaining all requisite authorizations to effectuate transfer
of Tanks, provided, however, Seller shall cooperate in good faith with
Purchaser with regard to execution of necessary documents.  Seller does not assume or retain any
liability or responsibility related to any Tanks that exist or may be
discovered on the Properties following Closing, and such responsibility and
liability shall be transferred to and assumed by Purchaser as of Closing,
including, without limitation, any Environmental Liabilities arising from said
Tanks.

 

2.3.2           Point of Sale Software. 
Purchaser
acknowledges that Seller’s point of sale equipment (“Point of Sale” or “POS”)
operates on software that records or provides access to certain protected
proprietary data, including, but not limited to, consumer credit card and
accounting information.  Although the POS
hardware will transfer as Personal Property pursuant to this Agreement,
Purchaser agrees and acknowledges that prior to or as of the Closing Date, Seller
will take such steps as Seller may deem necessary or advisable to prevent
Purchaser’s access to such proprietary data, including disabling software
features, locking out access and/or erasing such information (e.g., Seller will
disable Purchaser’s ability to generate certain credit card transactional
reports and/or modify the dry-stock price book in the POS database).  From and after Closing, Purchaser shall
establish its own inventory and pricing independent of, and without reference
to, Seller’s pricing information including, without limitation, entering into a
third-party license for all necessary point of sale software and related
maintenance agreements.  Seller will
provide Purchaser with access to Seller’s POS system as modified by Seller for
a period of up to forty-five (45) days following the Closing Date to permit the
continued sale of merchandise at the Properties between Closing and until such
time as Purchaser has removed the existing data and software from the POS and
replaced it with new operating software obtained by license from the POS
manufacturer and its own dry-stock price book, or replaced the existing POS
with its own POS system.  At any time
after the expiration of the foregoing forty-five (45) day period, Seller shall
have the right to further limit, or terminate Purchaser’s access to Seller’s
credit card network.  In addition, if
Purchaser fails to reload the POS with updated software (and, as a result,
remove all of Seller’s proprietary data) within the forty-five (45) day period,
Purchaser shall allow Seller access to the Properties, at no charge to Seller
and at Seller’s discretion, to remove any of Seller’s proprietary data,
including information related to consumer credit card transactions.

 

2.4              Inventory.  In addition to the Purchase Price, in
consideration of Seller’s sale, conveyance and transfer of the Inventory, at
the Closing Purchaser shall pay to Seller, by wire transfer of immediately
available funds, the amount calculated pursuant to the payment schedule set
forth in Exhibit Y.  The
price and payment terms for petroleum products inventory, convenience store
merchandise and car-wash chemicals shall be as set forth in Exhibit Y
attached hereto and made a part hereof. 
Additionally, at the Closing Purchaser shall pay to Seller the petty
cash estimated to be on hand at any of the Company-Operated Retail Properties
as of the Closing, as determined in accordance with Exhibit Y.  Within forty-five (45) days following the
Closing Date, (i) Seller shall reconcile the foregoing estimated amounts
in accordance with the procedures set forth in Exhibit Y, and (ii) Seller
or Purchaser, as applicable, will make any necessary payments to the other.

 

2.5              Assignment of Agreements and
Liabilities.

 

2.5.1           PMPA
Franchise Agreements.  At Closing,
Seller will assign and convey to Purchaser, and Purchaser shall assume and
purchase from Seller, all of Seller’s assignable and 

 

13

 

transferable rights, title and interest in the PMPA Franchise Agreements
by the Parties’ execution at Closing of an Assignment of PMPA Franchise
Agreements in the form attached as Exhibit T (the “Assignment of PMPA
Franchise Agreements”). 
Notwithstanding the foregoing, Seller hereby reserves the right to
remove from the Assignment of PMPA Franchise Agreements any of the Dealer
Supply Agreements (along with all associated Contracts) at any time prior to
Closing by written notice to Purchaser of such removal.  Purchaser acknowledges and agrees that upon
receipt of any such notice, (i) the Dealer Supply Agreement governing the
supply of Branded Fuel to the Dealer-Owned Service Station(s) identified
in such notice shall not be assigned pursuant to this Agreement and (ii) such
Dealer-Owned Service Station shall be removed from the transaction contemplated
by this Agreement and the Purchase Price shall be reduced by the amount of the
allocated Purchase Price for such Dealer-Owned Service Station set forth on Exhibit A-4.

 

In the event that litigation is
initiated prior to the Closing arising out of (a) Seller’s attempted assignment
of any PMPA Franchise Agreement under this Section 2.5.1 or (b) the
contemplated execution of the Brand Fee Agreement, Purchaser and Seller shall
reasonably cooperate in connection with such proceedings; provided, however,
that in the event that any such litigation extends beyond two hundred and
seventy (270) days after the Effective Date, either Party may terminate this
Agreement upon ten (10) days prior written notice to the other Party.  In the event of such termination, the Deposit
shall be released in accordance with Section 3.3.4.

 

2.5.2           Equipment
Leases.  Any Personal Property or
Equipment leased by Seller at the time of Closing and the agreements covering
the lease of such Personal Property or Equipment will be assigned by Seller to
Purchaser to the extent permissible by law and the agreements covering the
lease of such Personal Property or Equipment. 
At Closing, Seller will assign and convey to Purchaser, and Purchaser
shall assume and accept from Seller, all of Seller’s assignable and transferable
rights, title and interest in such leases of Personal Property or Equipment.

 

2.5.3           Non-Petroleum Leases. 
Certain Properties are subject to non-petroleum leases (each such
non-petroleum lease, an “NPL”). 
At Closing, Seller will assign to Purchaser and Purchaser shall assume
from Seller all rights and obligations of Seller under any NPL as such rights
and obligations relate to Properties transferred pursuant to the terms of this
Agreement.  Seller will retain all rights
and obligations pertaining to the portion of any NPL that relates to service
station properties not included in this sale, if any.  A copy of the Assignment of Non-Petroleum
Lease is attached as Exhibit U. 
Seller will have no obligation to obtain any consent required in
connection with the assignment of any NPL. 
If an NPL to be assigned to Purchaser pursuant to this Agreement
requires, either expressly or by law, the affirmative consent of the tenant
under the NPL to legally effectuate an assignment, then Seller, during the
Inspection Period, will request such tenant’s consent to the assignment by
providing such tenant written notice from Seller. If Seller obtains such
consent, Seller shall provide notice to Purchaser. If Seller has not obtained
such consent by the date which is thirty (30) days after the end of the
Inspection Period, Seller will notify Purchaser and Purchaser may: (a) after
notice to and consent of Seller, which consent may be withheld for any reason
whatsoever, use its own efforts to obtain such tenant’s consent to the extent
such efforts do not create any additional liability to Seller; (b) enter
into a new lease with such tenant effective as of Closing so long as such
tenant agrees to provide Seller with a termination of the existing lease
containing a release of Seller from any liability under such lease; or (c) remove
the Property subject to such NPL from this Agreement and reduce the Purchase
Price by the amount of the allocated Purchase Price for such Property set forth
on Exhibit A-4. 
Notwithstanding anything contained in this Agreement to the contrary,
Seller’s sole obligation with respect to obtaining 

 

14

 

any consent from the tenant under any NPL shall be limited to Seller
sending a written request to such tenant; Seller shall have no obligation to
incur any expense or to take any other action whatsoever with respect to
obtaining any consent.  Seller discloses
to Purchaser that there is an NPL on a portion of Sites 11814, 11680 and 13098
set forth on Exhibit A-1 which may require the consent of the
tenant to assign such NPL.

 

2.5.4           Reimbursement
Agreements.  Seller has entered into
Reimbursement Agreements with certain Dealer-Owned Service Station
dealers.  Purchaser shall pay Seller, at
Closing, the then current balance due under each of these Reimbursement
Agreements related to any Dealer Supply Agreement actually assigned to
Purchaser pursuant to Section 2.5.1, and Seller will assign to Purchaser
its rights under each such Reimbursement Agreement along with any notes
evidencing or collateral securing the reimbursement obligations under such
Dealer Supply Agreements.  Copies of the
Assignment of Reimbursement Agreement for each Dealer-Owned Service Station
will be attached as Exhibit X, together with copies of each
respective Reimbursement Agreement not otherwise already provided to Purchaser
prior to the Effective Date.  This
payment shall be in addition to the Purchase Price.

 

2.5.5           Access
Agreements.  At Closing, Seller will
assign to Purchaser, and Purchaser shall assume from Seller, all of Seller’s
assignable and transferable rights, representations, responsibilities and
obligations, including, without limitation, access payments and indemnification
obligations, in any access agreement relating to any Property, including,
without limitation, any agreement with surrounding property owners related to
Remediation Activities (collectively, “Access Agreements”).  Purchaser acknowledges that it is solely
responsible for renegotiating access to Properties and surrounding properties
as needed for Remediation Activities if agreements granting such access are not
assignable or transferable.  A
non-exhaustive list of such Access Agreements is provided as Exhibit D.

 

2.5.6           Statement
of Environmental Responsibilities.  Purchaser
agrees to assume and abide by all representations, responsibilities and
obligations including, without limitation indemnification obligations, of
Seller set forth in any Statement of Environmental Responsibility relating to
any Property.  A non-exhaustive list of
such Statements is provided as Exhibit W.

 

2.5.7           Other Agreements and Liabilities. 
At Closing, Seller will assign and convey to Purchaser, and Purchaser shall assume
and purchase from Seller, (a) the Assumed Liabilities and (b) all of Seller’s assignable and
transferable rights, title and interest in the transferred permits and the
Contracts.

 

2.5.8           Environmental
Liabilities.  For the avoidance of
doubt, as described in Article VII, Purchaser agrees to assume any and all
liabilities or Claims arising out of, in connection with, or related to the
environmental condition of the Properties, whether or not identified in the
Baseline Report, Contamination or any Remediation Activities or Environmental
Liabilities.

 

2.6              Compliance with Regulatory
Approvals.  Promptly following the
Effective Date, Purchaser agrees to determine any and all regulatory approvals
required, including, but not limited to, compliance with the Hart-Scott-Rodino
Act and the transfer of any Tanks as described in Article XV and/or
responsibility for any Remediation Activities as described in Section 7.3.1.  Purchaser shall promptly initiate contact
with any applicable authority, including, but not limited to the Federal Trade 

 

15

 

Commission, and
promptly complete any necessary applications and pay any required fees or
deposits associated with review and or filing requirements of such authorities
at its sole cost.  If required, within
fifteen (15) days after the Effective Date, Seller and Purchaser shall file or
cause to be filed with the Federal Trade Commission and the United States
Department of Justice any notifications required to be filed under the
Hart-Scott-Rodino Act with respect to the transactions contemplated herein.  Purchaser shall pay the filing fees under the
Hart-Scott-Rodino Act, and shall receive a credit of fifty percent (50%) of
such filing fees against the Purchase Price at the Closing pursuant to Section 3.2.  Seller and Purchaser shall reasonably
cooperate in connection with a Hart-Scott-Rodino Act review.  Seller and Purchaser shall diligently
progress their respective applications so as to obtain any necessary approvals
or bring to completion any required review process.  In the event that the applicable Governmental
Authority issues a decision prohibiting the transactions contemplated by this
Agreement prior to the end of the Inspection Period, either Party may terminate
this Agreement upon ten (10) days prior written notice to the other
Party.  In the event that the applicable
Governmental Authority requires Purchaser to divest sixty (60) or more
Properties as a condition of obtaining approval of the consummation of the
transactions contemplated by this Agreement, Purchaser may terminate this
Agreement upon ten (10) days prior written notice to Seller.  In the event that (x) the applicable
Governmental Authority has issued a second request pursuant to the
Hart-Scott-Rodino Act, and (y) any necessary approvals under the
Hart-Scott-Rodino Act have not been received within one hundred and twenty
(120) days after the Effective Date (such period, the “HSR Second Request
Period”), then either Party may terminate this Agreement upon ten (10) days
prior written notice to the other Party. 
In the event of any such termination, the Deposit shall be released in
accordance with Section 3.3.4. 
Thereafter, neither Party shall have any obligation under this Agreement
except for those obligations which expressly survive termination.  Until such time as the transactions contemplated
hereby are expressly prohibited by the applicable Governmental Authority or
either Party elects to terminate this Agreement in accordance with this Section 2.6,
then Purchaser and Seller shall continue to diligently progress their
respective applications and approvals as required under this Section 2.6.

 

2.7              Business Licenses and Permits.  Purchaser is solely responsible for
identifying and obtaining any and all certificates, permits, variances and/or
licenses related to the use, occupancy and/or operation of the Properties.  Closing shall not be delayed due to the
absence of any certificate, permit, variance or license.  Nor shall Closing be delayed to process any
state or local background checks, or resolve any pending regulatory permitting
issues, including, but not limited to, any Governmental Authority violation
notices.  Purchaser promptly shall file
for all applicable and necessary licenses, certificates, variances and/or
permits for the operation of the Properties, including, but not limited to,
permits related to the transfer of beer and wine inventories (and the sale of
the same to the general public), any state license(s) required to operate
the Properties as service stations selling motor fuels, as well as, insure that
its intended source of fuel possesses all necessary current and valid licenses
to operate a fuel distribution business. 
Before the end of the Inspection Period, Purchaser shall obtain and
confirm to Seller that it possesses all necessary licenses, certificates,
variances and permits.  Seller makes no
express or implied representation about the ability of Purchaser to obtain
certificates, permits, licenses and/or variances needed to use, occupy or
operate any of the Properties.

 

2.7.1           Pending Permit Applications.  Various permits for renovation
and/or improvement of certain Properties may be pending as of Closing.  Seller shall initiate discussions with
Purchaser during the Inspection Period and may, subject to mutually agreeable
terms, assign to Purchaser whatever rights to such permits and/or plans and
applications Seller may be able to assign.

 

16

 

2.7.2           Ongoing Projects. 
Certain service stations may be under construction as of Closing.  These service stations shall be identified by
Purchaser within five (5) days after the Effective Date. 
Seller
may, but is not required to, assign to Purchaser and allow Purchaser to assume
Seller’s rights in these projects upon mutually agreeable terms.

 

2.8              Exclusions from Transfer.  Notwithstanding the other provisions of this Article II,
the Purchased Assets shall not include any of Seller’s proprietary equipment,
intangible property, accounts receivable or notes receivable (other than with
respect to notes evidencing or collateral securing Reimbursement Agreements
assigned to Purchaser pursuant to Section 2.5.4), including without
limitation, the following:

 

2.8.1           Back Office System. 
Seller’s back office computer systems and software (“Back Office
System” or “BOS”) contain proprietary information and are not
included in the real and personal property subject to transfer under this
Agreement.  Seller’s BOS will be removed
from the Company-Operated Retail Properties by Closing.  Purchaser shall arrange for Purchaser’s own
computer hardware and software, as needed, to replace Seller’s BOS.  Except as set forth in Section 16.2, installation of Purchaser’s computer hardware and
software shall occur after Closing.

 

2.8.2           Intellectual
Property.  Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not transfer
or license any right, title or interest in any Trademark, other Intellectual
Property, or any related rights held, licensed or used by Seller or its
Affiliates.  Seller makes no
representation as to Purchaser’s right to operate under the Intellectual
Property rights of others, and this Agreement will in no way be construed as,
or deemed to be, an inducement to Purchaser to infringe any such Intellectual
Property rights.  Seller will not be
required to obtain licenses for Purchaser relating to any third party
Intellectual Property.  Any agreement
between the Parties with respect to any Seller intellectual property rights
shall be set forth only in the Brand Fee Agreement.

 

2.8.3           Leased
Equipment.  Purchaser acknowledges that, unless
transferred to Purchaser pursuant to Section 2.5.2 and absent an agreement
with Seller’s vendor to the contrary, this transaction does not include the
sale or use of any leased equipment at the Properties and agrees to allow
Seller’s vendors up to thirty (30) days’ access after the Closing Date to
remove any such equipment.

 

ARTICLE III

PURCHASE PRICE

 

3.1              Amount.  The Purchase Price to be paid by Purchaser
for the transfer and sale by Seller of the Purchased Assets (other than Inventory
and cash on hand, payments for which are addressed separately in this
Agreement) is Two Hundred Million U.S. Dollars ($200,000,000.00 USD), payable
in accordance with Sections 3.2 and 3.3. 
Purchaser’s apportionment of the Purchase Price among and for each
Property and Dealer-Owned Service Station is reflected in the attached Exhibit A-4.

 

3.1.1           Seller’s
Allocation of Apportioned Purchase Price. 
Seller will establish the allocation of Purchaser’s apportioned Purchase
Price for each Property no later than ten (10) days after the Effective
Date.  Seller’s allocation will include
all Personal Property and Equipment under this Agreement.  Purchaser’s apportionment and Seller’s
allocation will be used to:

 

(i)        establish
insurance amounts for the title insurance commitments and owner’s policies
(using only the apportioned Purchase Price allocated to land);

 

17

 

(ii)       prepare
the Closing statements and escrow instructions;

 

(iii)      prepare
affidavits of value and transfer tax returns (to the extent permitted by
applicable law, using only the apportioned Purchase Price allocated to land,
with respect to real estate transfer tax returns); and

 

(iv)      calculate
recordation taxes and recordation fees, if applicable (to the extent permitted
by applicable law, using only the apportioned Purchase Price allocated land).

 

Such allocation shall be (a) used to establish
any reduction in the Purchase Price due to the removal of any Property or
Dealer-Owned Service Station from the contemplated transaction pursuant to the
provisions of this Agreement, and (b) shall be in the form of Exhibit A-4.  Seller and Purchaser agree that none of the
apportioned Purchase Price or allocation figures that may be set forth in Exhibit A-4
are established necessarily for tax purposes or for financial or accounting
purposes but rather to establish Purchaser’s apportionment of the Purchase
Price for each Property and Dealer-Owned Service Station and Seller’s
allocation thereof among land, improvements and equipment.  For federal income tax purposes, the Purchase
Price of the Purchased Assets shall be allocated among the Purchased Assets in
accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended.  Not later than 30 days after
the Inventory Reconciliation, Purchaser will provide EMC and EMOC with
completed Forms 8594 prepared in a manner consistent with the apportioned
Purchase Price set forth in Exhibit A-4 and the Purchase Price allocable
to the inventory and cash on hand. 
Seller acknowledges that Purchaser will report for federal income tax
purposes and file federal income tax returns in a manner consistent with the
allocations shown on the Forms 8594 provided to Seller.

 

3.2              Method of Payment.  No later than three (3) Business Days before
the Final Closing Date (or such other date as may be agreed to by Seller),
Purchaser shall pay into escrow, or shall cause to be paid into escrow, the
Purchase Price minus (a) the principal amount of Deposit actually held in
the Escrow Account or secured by an acceptable letter of credit as of the date
of Purchaser’s payment into escrow of the balance of the Purchase Price, and (b) an
amount equal to fifty percent (50%) of the filing fees under the
Hart-Scott-Rodino Act actually paid by Purchaser pursuant to Section 2.6.  This payment shall include both Purchaser’s
non-financed and financed portions of the Purchase Price and shall be made at
the office of the Title Company by wire transfer of immediately available funds
to an interest bearing account designated by the Title Company (the “Escrow
Account”).

 

3.2.1           Interest Credit. 
Provided Purchaser causes the Purchase Price to be paid into the Escrow
Account in the manner described in Section 3.2, and Closing is not delayed by Purchaser or its
lender beyond the Final Closing Date, then Purchaser will receive at Closing
from the Escrow Account an interest credit on the balance of the Purchase Price
paid into the Escrow Account pursuant to Section 3.2 for the three (3) days
of deposit into escrow (the “Interest Credit”).  The Interest Credit is to be calculated by
using the London Interbank Offered Rate (“LIBOR”) for three (3) months
as published by the Wall Street Journal on the fourth (4th)
Business Day before the Closing Date.

 

3.2.2           Closing.  At Closing
and before the documents to be recorded have, in fact, been recorded, the Title
Company shall release to Seller all funds within the Escrow Account, minus
(subject to the final sentence of this Section 3.2.2) (a) the
aggregate amount of interest earned on the funds within the Escrow Account as
of the Closing Date, and (b) an amount equal to the Interest Credit, and
Seller shall draw down on any letters of credit to the extent securing any
Deposit.  After Seller 

 

18

 

confirms to the Title Company its receipt of funds from the Escrow
Account and all other amounts due from Purchaser pursuant to the terms of this
Agreement (including, without limitation, payments for Inventory), the
remaining funds within the Escrow Account shall be released to Purchaser.  Notwithstanding the foregoing, if the Closing
is delayed beyond the Final Closing Date due to actions or inactions
attributable to Purchaser, then neither the actual interest earned nor the
Interest Credit will be due to Purchaser, and at Closing all amounts within the
Escrow Account will be released to Seller.

 

3.3              Deposits.

 

3.3.1           Escrow Account. 
All deposits referenced in this Section 3.3 and the Extension Period Deposit referenced in Section 5.3
shall be delivered by wire transfer in immediately available funds to the
Escrow Account or pursuant to an irrevocable and unconditional letter of credit
securing the Deposits in favor of Seller as beneficiary from a banking
institution and in a form and substance, acceptable to Seller in its sole
discretion.  Any such letter of credit will: (a) be
payable to Seller on sight in partial or full draws; (b) be assignable by
Seller to a beneficiary other than Seller, at Seller’s request, without any
cost to Seller; and (c) have an initial expiration date no sooner than one
(1) year after the Closing Date.  At
least thirty (30) days prior to any expiration or cancellation of the letter of
credit, Purchaser shall deliver a renewal or replacement letter of credit to
Seller.  For the avoidance of doubt,
Purchaser’s failure to deliver a renewal or replacement letter of credit to
Seller shall constitute a Default under this Agreement.  Any and all fees or costs charged by the
issuer in connection with any such letter of credit shall be paid by
Purchaser.  Any funds delivered by wire
transfer shall be held and disbursed pursuant to the escrow agreement among the
Title Company, Seller and Purchaser, a copy of which is attached as Exhibit G
(the “Escrow Agreement”).  This
Agreement and the Escrow Agreement shall be signed simultaneously by Purchaser
and returned to Seller.  Seller will
execute the Escrow Agreement upon receipt thereof and will forward the same to
the Title Company for its execution.

 

3.3.2           Signing Deposit. 
Upon Purchaser’s execution of this Agreement, Purchaser shall deposit
Two Hundred and Fifty Thousand U.S. Dollars ($250,000.00 USD) into the Escrow
Account as the Signing Deposit or provide an acceptable letter of credit
securing such amount.  If this Agreement
is terminated prior to Closing, the Signing Deposit shall be released in
accordance with Section 3.3.4.  If
Purchaser proceeds to Closing, the Signing Deposit shall be released in
accordance with Section 3.2.2.

 

3.3.3           Earnest Money Deposit. 
Within five (5) Business Days after the Effective Date, Purchaser
shall deposit the Initial Earnest Money Deposit into the Escrow Account or
provide an acceptable letter of credit securing such amount.  On the first Business Day following the end
of the Inspection Period, Purchaser shall deposit the Final Earnest Money
Deposit into the Escrow Account or provide an acceptable letter of credit
securing such amount.  If this Agreement
is terminated prior to Closing, the Earnest Money Deposit shall be released in
accordance with Section 3.3.4.  If
Purchaser proceeds to Closing, the Earnest Money Deposit shall be released in
accordance with Section 3.2.2.

 

3.3.4           Release of Deposit upon Termination. 
If this Agreement is terminated prior to Closing, the Deposit (including
through any necessary letter of credit draws), or the Signing Deposit portion
thereof, shall be released as set forth below. 
In the event that the Deposit, or relevant portion thereof, is released
to Purchaser pursuant to paragraphs (v), (viii), (ix), (x), (xi), or (xii) below,
in addition to such release, Seller shall pay to Purchaser an amount equal to fifty percent
(50%) of the filing fees under the Hart-Scott-Rodino Act actually paid by
Purchaser pursuant to Section 2.6.

 

19

 

(i)        Upon Seller’s termination of this
Agreement pursuant to Section 13.1.2(a), due to Purchaser’s Default under
this Agreement, the Deposit shall be released to Seller;

 

(ii)       Upon Seller’s termination of this
Agreement pursuant to Section 13.1.2(d), resulting from the failure of any
of the Conditions Precedent contained in Article XII to have been satisfied, the
Deposit shall be released to Seller;

 

(iii)      Upon Seller’s termination of this
Agreement pursuant to Section 5.3.3 or Section 7.2.1, due to Purchaser’s
failure to close on all of the Properties, the Deposit shall be released to
Seller;

 

(iv)      Upon Purchaser’s termination of this
Agreement pursuant to Section 3.4, in relation to Purchaser’s financing,
the Deposit shall be released to Seller;

 

(v)       Upon either
Party’s termination of this Agreement pursuant to Section 2.6, due to a
failure to receive any required approval under the Hart-Scott-Rodino Act, or
pursuant to Section 2.5.1, due to the existence of litigation arising out
of the attempted assignment of the PMPA Franchise Agreements or the
contemplated execution of the Brand Fee Agreement, the Signing Deposit shall be
released to Seller and the balance of the Deposit shall be released to
Purchaser;

 

(vi)      Upon Purchaser’s termination of this
Agreement pursuant to Section 13.1.3(a) during the Inspection Period,
the Deposit shall be released to Seller;

 

(vii)     Upon Seller’s termination of this
Agreement pursuant to Article VII due to Purchaser’s failure to execute
required documentation prior to Closing, the Deposit shall be released to
Seller;

 

(viii)    Upon the Parties’ mutual agreement to
terminate this Agreement pursuant to Section 13.1.1, the Deposit shall be
released to Purchaser;

 

(ix)      Upon Seller’s termination of this
Agreement pursuant to Section 13.1.2(b), due to a change in law or
circumstances after the Effective Date that results in a material impairment of
the benefit of this Agreement to Seller, the Deposit shall be released to
Purchaser;

 

(x)       Upon Seller’s termination of this
Agreement pursuant to Section 13.1.2(c), due to the prevention or
prohibition of the contemplated transaction due to any law, injunction,
judgment or ruling enacted, promulgated, issued, entered, amended or enforced
by any Governmental Authority  (other
than any such law, injunction, judgment or ruling enacted pursuant to the Hart-Scott-Rodino Act), the
Deposit shall be released to Purchaser;

 

(xi)      Upon Purchaser’s termination of this
Agreement pursuant to Section 13.1.3(b), resulting from the failure of any
of the Conditions Precedent contained in Article XII to have been satisfied, the Deposit shall be released to
Purchaser; or

 

(xii)     Upon Seller’s termination of this
Agreement pursuant to Section 17.2, due to Seller’s determination to
withdraw the marketing of Branded Fuels in any geographic area in which a
Property is located (a “Market Withdrawal”), the Deposit shall be
released to Purchaser.

 

20

 

3.4              Financing.  The transaction contemplated by this
Agreement is contingent on Purchaser obtaining a binding, unconditional
financing commitment satisfactory to Purchaser prior to the end of the
Inspection Period.  In the event that
Purchaser is unable to obtain a binding, unconditional financing commitment by
such date, Purchaser shall promptly notify Seller and Purchaser may terminate
this Agreement upon three (3) days written notice, whereupon the Deposit
shall be released in accordance with Section 3.3.4.  Purchaser shall deliver to Seller a true and
complete copy of its financing commitment prior to the end of the Inspection
Period.

 

ARTICLE IV

FUTURE BUSINESS

 

4.1              Motor Fuel Volume.

 

4.1.1           Branded Fuel. 
Purchaser shall sell certain Branded Fuel from the Properties for at
least fifteen (15) years after the Closing Date.  Purchaser shall enter into the Brand Fee
Agreement for the sale of Branded Fuel at the Properties, with such agreement
having an initial period of fifteen (15) years after the Closing Date.  Purchaser acknowledges that from and after
the Closing Date Seller, in its sole discretion, may execute other brand fee
agreements substantially similar to the Brand Fee Agreement with third-parties
in the same market or geographic area as Purchaser.

 

4.1.2           Liquidated Damages. 
Purchaser agrees that it and its franchise dealers shall sell from the
Properties certain Branded Fuel during the 15-year obligation described
above.  Purchaser acknowledges that (a) such
sale expectation is reasonably based on historical sales from the Properties
and its expected development of the markets covered by the Brand Fee Agreement;
and (b) in the event that the Brand Fee Agreement is terminated, Purchaser
shall pay to EMOC, as liquidated damages, the amount calculated pursuant to Exhibit FF.

 

4.1.3           Market Withdrawal. 
Notwithstanding the forgoing, Purchaser will not be subject to
liquidated damages for any termination of the Brand Fee Agreement if such
termination is a result of a Market Withdrawal. 
While Seller has no current marketing plan to cease marketing Branded
Fuels in the areas in which the Properties are located, Purchaser acknowledges
that Seller continually reviews its areas of operation and therefore, Seller
cannot and does not by this Agreement make any representation or warranty that
Seller will continue in the future to market Branded Fuels in any or all of the
geographic areas in which the Properties are located.  A Market Withdrawal will be effective only
with respect to the Properties in the geographic area(s) in which Seller
has determined to withdraw the marketing of Branded Fuels.

 

4.2              Convenience Store Branding.

 

4.2.1           CODO
and DOSS Properties.  Some of the
Company-Owned Dealer-Operated Properties and Dealer-Owned Service Stations to
be listed on Exhibit L include convenience stores operated under
the On the Run brand and are subject to On the Run Franchise Agreements executed by the related
dealers which agreements were assigned to TMC Franchise Corporation by
Seller.  Purchaser shall have no rights
to On the Run franchise revenues or any
obligations to satisfy any On the Run
franchisor requirements.

 

21

 

4.2.2           On the Run CORS Properties.  Purchaser hereby acknowledges that Seller
will, after the Effective Date, provide TMC Franchise Corporation or an
affiliate thereof, in its capacity as owner of the On the Run
franchise and related rights, with Purchaser’s contact information.  Such information is provided to allow TMC
Franchise Corporation the opportunity to initiate discussions with Purchaser
regarding On the Run branding and franchise
opportunities at the On the Run CORS
Properties.

 

4.3              Tank Upgrades.  Purchaser agrees to the complete the upgrade
of the existing underground tank system at the Properties described on Exhibit CC
within the time periods set forth on such Exhibit.  Purchaser shall perform all work required to
ensure that the systems at the identified Properties meet or exceed applicable
laws and regulations, including, (a) with respect to Site 11814 and Site
12005 listed on Exhibit CC, at a minimum, the complete removal of
all existing Tanks and lines and replacement with (i) double wall tanks
and double wall product piping, (ii) secondary containment for the
submersible pumps and island dispensers, and (iii) double wall spill
buckets for fill and vapor connections, and (b) with respect to Site 15965
listed on Exhibit CC, at a minimum, the removal of all single wall
product lines, sumps and spill buckets and replacement with (i) double
wall product piping, (ii) secondary containment for submersible pumps and island
dispensers, and (iii) double wall spill buckets for fill and vapor
connections (collectively, the “Upgrades”). 
At Closing, Seller shall put in escrow with the Title Company from the
Purchase Price the aggregate of all the individual sums shown on Exhibit CC
for the Properties listed (the “Upgrade Amount”) to be held by the Title
Company pursuant to an Upgrade Escrow Agreement, a form of which is attached as
Exhibit DD hereto, executed at Closing until such time as the
Upgrades at a Property have been completed to Seller’s satisfaction. Upon
completion of the required Upgrades for a Property, Purchaser shall deliver to
Seller notice that the Upgrades have been completed at such Property together
with a copy of the registration for new tanks for the Property required under
applicable law. Seller shall have the right to inspect any such Property to
confirm to its satisfaction that the Upgrades have been successfully
completed.  In the event that Seller
confirms to its satisfaction that such Upgrades have been completed by
Purchaser, Seller shall notify the Title Company of the same and the Title
Company shall release to Purchaser the Upgrade Amount applicable to such
Property as shown on Exhibit CC. 
In the event that Purchaser fails to timely complete the Upgrades at a
Property, Seller, to the extent permitted by applicable law, shall have the
right, but not the obligation, upon thirty (30) days notice to access such
Property in order, to the extent permitted by applicable law, to (1) demolish
any tanks and lines at such Property and backfill any resulting hole with pea
gravel, or (2) perform the work required under this Section 4.3. In
the event that Seller elects to take any action set forth in clauses (1) or
(2) above, then upon completion of said work, Seller shall have the right
to request that the Title Company release to Seller from escrow the Upgrade
Amount for such Property.  Purchaser
shall not assign, convey or transfer, whether directly or indirectly, any Property
identified on Exhibit CC prior to the completion of the Upgrades
for such Property.  If Purchaser
determines to replace or upgrade the underground system at any Property not
listed on Exhibit CC following the Closing Date, Purchaser shall,
at a minimum, perform such replacement or upgrade to meet or exceed applicable
laws and regulations, including performing all Upgrades at such Property.

 

4.4              Purchaser’s PMPA Obligations.

 

4.4.1           Obligations
at Closing.  Subject to Section 2.5.1
hereof, at Closing EMOC will assign to Purchaser the PMPA Franchise
Agreements.  Purchaser will assume all of
EMOC’s rights and obligations arising from and after the Closing Date under the
PMPA Franchise Agreements assigned by EMOC to Purchaser, the PMPA, and any
other applicable law, as the same relate to such PMPA 

 

22

 

Franchise Agreements.  EMOC makes
no representation or warranty regarding EMOC’s compliance with PMPA matters or
the accuracy, enforceability, or completeness of any franchise document or
information.

 

4.4.2           Obligations
following Closing.  Before the stated
expiration date of each PMPA Franchise Agreement assigned by EMOC to Purchaser,
Purchaser will, in good faith and in the normal course of business, offer each
franchisee an agreement for the supply of Branded Fuel, unless such franchisee
previously has been properly terminated or non renewed for any reason permitted
by the PMPA or properly non renewed pursuant to 15 USC 2802(b)(3)(A).  Franchise agreements offered by Purchaser to
the franchisees will be offered in accordance with the PMPA and will comply in
all respects with all applicable provisions of the PMPA, the Brand Fee
Agreement and any applicable state law.

 

4.4.3           Seller’s
Market Withdrawal.  For the avoidance
of doubt, nothing in this Agreement shall be construed to limit Seller’s right
to implement a Market Withdrawal in accordance with the provisions of the PMPA
and all such rights are expressly reserved.

 

ARTICLE V

SURVEY, TITLE AND CERTAIN DILIGENCE MATTERS

 

5.1              Surveys.  Within ten (10) days after the Effective
Date, Seller shall deliver three (3) sets of completed Surveys to
Purchaser and one (1) set of completed Surveys to the Title Company.  Purchaser shall reimburse all fees, costs and
expenses incurred by Seller in connection with the Surveys pursuant to Section 6.4.2.  Simultaneous with delivery of the completed
Surveys, the surveyor’s legal descriptions will be provided to Seller and the
Title Company as a Microsoft Word document.

 

The Survey for any Property will
incorporate the location of all highways, streets, roads, railroads, rivers,
creeks or other water courses, fences, easements, rights-of-way and other
encumbrances or encroachments on or adjacent to the Property, including all of
the title matters shown on the title commitments provided for in Section 5.2.  The Survey will: (a) define the Property
in square feet; (b) provide a legal description of the Property; (c) contain
the North directional arrow at the top of the Survey; and (d) include
certification of the Survey’s accuracy in the form required by the Title
Company for issuance of the ALTA owner’s title insurance policy, as provided
for in Section 5.4.

 

Any survey agreement entered into pursuant to Section 5.1
will provide that, at no cost to Seller, the Survey will remain the property of
Seller in the event Closing does not occur and, in such event, Purchaser shall
forfeit any and all rights to the Survey.

 

5.2              Title Commitments.  On or before the Effective Date, Seller will
post preliminary title commitments for each of the Properties to the Virtual
Data Room, and within five (5) days after the Effective Date, will deliver
or cause the Title Company to deliver to Purchaser electronic copies of the
preliminary title commitments together with copies of all exception documents
noted therein for each of the Properties.

 

5.3              Inspection Period.  Purchaser shall have a period commencing on
the Effective Date and ending sixty (60) days after the Effective Date (the “Inspection
Period”), within which to inspect and perform its due diligence with
respect to the transactions described in this Agreement, including all
environmental due diligence as set forth in Section 7.2.  At the end of the Inspection Period,
Purchaser 

 

23

 

may, at its option,
extend the Inspection Period for an additional thirty (30) days by paying
Seller, by wire transfer and in immediately available funds, the Extension
Period Deposit.

 

5.3.1           Disclaimer of Documentation. 
Notwithstanding any documents Seller may provide Purchaser pursuant to
the terms of this Agreement, Purchaser is advised to conduct such due
diligence, including all environmental due diligence as set forth in Section 7.2,
as it deems appropriate during the Inspection Period.  Any such documentation, including, without
limitation, the Baseline Report, is provided by Seller as a convenience only
without representation or warranty and not in substitution for Purchaser’s own
due diligence review.

 

5.3.2           Objections. 
Subject to Section 5.3.3, if Purchaser has any objections to matters shown
on the Surveys or the preliminary title commitments provided pursuant to Section 5.2, which matters materially impair the operation or
use of a Property in a manner that is not consistent with Seller’s current operations
of the Properties (“Objections”), Purchaser shall, prior to the end of
the Inspection Period, notify Seller of its Objections.  Purchaser shall be deemed to have waived (a) any
Objections not asserted by Purchaser prior to the end of the Inspection Period;
and (b) any and all claims and/or causes of action against Seller for
damages or any other remedies related in any manner, directly or indirectly, to
any and all defects in and/or exceptions to title to the Properties that are
not otherwise the subject of any Objection.

 

5.3.3           Attempt to Cure. 
If Purchaser notifies Seller of Objections in accordance with Section 5.3.2, Seller will have the option, in its sole
discretion, to cure such Objections prior to Closing.  If Seller elects to cure such Objections,
Seller will use commercially reasonable efforts in this regard; provided,
however, that Seller shall have no obligation to expend any money in order to
cure an Objection.  If Seller elects not
to cure an Objection, or if Seller undertakes to cure an Objection but then
determines that cure is not reasonably achievable, then Seller will give notice
of the same to Purchaser not later than thirty (30) days after the end of the
Inspection Period.  Upon such notice from
Seller, Purchaser will have ten (10) days to either (a) waive the
Objection and accept title to the Property subject to such Objection, and Purchaser shall be deemed to have waived any
and all claims and/or causes of action against Seller for damages or any other
remedies related in any manner, directly or indirectly, to any and all defects
in and/or exceptions to title to the Property; or (b) terminate this
Agreement as to the Property in question by providing Seller with written
notice.

 

If Purchaser elects to terminate this
Agreement as to a Property in question, the transaction will proceed and the
Purchase Price will be adjusted accordingly based on the allocations identified
on Exhibit A-4.  If notice of
termination under this Section is given for more than five (5) Properties,
Seller may give notice of termination of this transaction as to all Properties
whereupon Purchaser shall have five (5) days to waive the Objections
involved or this transaction shall automatically terminate and the Deposit will
be distributed in accordance with Section 3.3.4.

 

5.4              Title Insurance Policies.  At Closing, Purchaser shall obtain a title
insurance policy from the Title Company for each Property conveyed and
transferred to Purchaser under this Agreement. 
Each title insurance policy will insure marketable title to such
Property, subject only to the Permitted Encumbrances, and be in the amount
determined pursuant to Section 3.1 (solely with respect to the land value
therein).

 

24

 

5.5              Conveyance of Title.  At Closing, Seller will convey title to the
Fee Properties by Deed to Purchaser. 
Purchaser and Seller agree that title to each Property will be
transferred subject to the following (collectively, the “Permitted
Encumbrances”):

 

(i)               The lien for real property taxes for the
current year provided the same are not due and payable prior to or as of the
Closing Date, and any liens for special assessments which as of the Closing
Date are not due and payable;

 

(ii)              all matters disclosed in the title
commitments or Surveys delivered pursuant to Sections 5.1 and 5.2 that are
approved, accepted, waived, or otherwise not objected to by Purchaser in
accordance with Section 5.3;

 

(iii)             all laws, ordinances, statutes, orders
and regulations to which the Property is subject, including, without
limitation, all building, and zoning ordinances, laws and regulations and all
Environmental Laws, including, but not limited to, any notices of violations or non-compliance
citations;

 

(iv)             any matters or circumstances that a new
or updated survey or physical inspection of the Property might disclose;
provided, however, that Seller shall not permit any new encumbrances, liens or
easements to be recorded after the expiration of the Inspection Period;

 

(v)              all
existing leases and/or rights of any subtenant or licensee of Seller occupying
any Property on the Closing Date; and

 

(vi)             all
Engineering and Institutional Controls.

 

ARTICLE VI

CLOSING

 

6.1              Closing; Closing Date.  The Closing, consisting of the Parties’
execution and delivery of all the documents referred to in this Agreement,
including, but not limited to, Seller’s delivery of the Deeds, the Assignment
of Leases, the Assignment of PMPA Franchise Agreements, the Assignment and  Assumption Agreement, and the Bills of Sale,
will take place at Seller’s offices located at 3225 Gallows Road, Fairfax,
Virginia 22037, or at another mutually agreed upon location.  Closing will occur on the Final Closing Date
or, if earlier, on the date that is three (3) Business Days following the
satisfaction or waiver of all of Conditions Precedent; provided that, if all of
the Conditions Precedent have not been satisfied or waived as of the Final
Closing Date, Seller may, but is not obligated to, extend the Final Closing
Date to such date as it may deem appropriate. 
Purchaser and Seller agree to conduct a pre-closing seven (7) days
before Closing with the Title Company in Fairfax, Virginia, or another mutually
agreed upon location.  The pre-closing is
intended to ensure that all documents and other closing items required under
this Agreement have been delivered, or will be delivered, to the Title Company
so that Closing may occur as scheduled. 
Notwithstanding the foregoing, the Parties agree that Closing may be
conducted in whole or in part through the Title Company serving as escrow agent
and by overnight mail and federal funds wires, in which case the pre-closing
may be conducted in the same manner.

 

25

 

6.2              Seller’s Responsibilities at
Closing.

 

6.2.1           Fee Properties. 
At Closing, Seller will deliver to the Title Company and Purchaser a
Deed duly executed and acknowledged by Seller for each of the Fee
Properties.  The Deed for each Fee Property
will contain the legal description of the respective Property provided by the
Survey.

 

6.2.2           Lease Properties. 
At Closing, Seller will deliver to the Title Company and Purchaser an
Assignment of Leases duly executed by Seller for the Lease Properties.

 

6.2.3           Personal Property and Equipment. 
At Closing, Seller will deliver to the Title Company and Purchaser Bills
of Sale duly executed by Seller for all Personal Property and Equipment sold as
part of this transaction.

 

6.2.4           PMPA
Franchise Agreements.  At Closing,
EMOC will deliver to the Title Company and Purchaser an executed Assignment of
PMPA Franchise Agreements.

 

6.2.5           Other
Agreements and Liabilities.  At
Closing, Seller will deliver to the Title Company and Purchaser an executed
Assignment and Assumption Agreement.

 

6.2.6           Corporate Authority. 
At Closing, Seller will deliver to the Title Company and Purchaser
certificates of incumbency and evidence of corporate authority with respect to
the execution of this Agreement and all documents required by this Agreement,
in such form and content as the Title Company reasonably may require.

 

6.2.7           Brand
Fee Agreement.  At Closing, EMOC will
deliver to the Title Company and Purchaser an executed Brand Fee Agreement.

 

6.2.8           Other Closing Documents. 
At Closing, Seller will deliver all other standard closing documents as
may be required by state, federal or local authorities, including W-9 forms,
and a certificate of non-foreign status.

 

6.3              Purchaser’s Responsibilities at
Closing.

 

6.3.1           Purchase Price. 
At Closing, Purchaser shall pay the Purchase Price by causing it to be
released from the Escrow Account (or authorizing Seller to draw down any letter
of credit securing a Deposit) in accordance with the terms of this Agreement
and will pay or cause to be paid any other amounts owed to Seller under this
Agreement, including, without limitation, those amounts contemplated by
Sections 2.4, 2.5.4, and 2.6.

 

6.3.2           Fee Properties. 
At Closing, Purchaser will deliver to the Title Company and Seller a
Deed, duly executed and acknowledged by Purchaser, for each of the Fee
Properties.

 

6.3.3           Lease Properties. 
At Closing, Purchaser will deliver to the Title Company and Seller an
Assignment of Leases duly executed by Purchaser for the Lease Properties.

 

6.3.4           Personal Property and Equipment. 
At Closing, Purchaser will deliver to the Title Company and Seller
executed Bills of Sale duly executed by Purchaser.

 

26

 

6.3.5           PMPA
Franchise Agreements.  At Closing,
Purchaser will deliver to the Title Company and EMOC an executed Assignment of
PMPA Franchise Agreements duly executed by Purchaser.

 

6.3.6           Other
Agreements and Liabilities.   At Closing, Purchaser will deliver to the
Title Company and Seller an executed Assignment and Assumption Agreement.

 

6.3.7           Environmental and Tank Transfer
Documents.  At Closing, Purchaser will
deliver or will have delivered to the Title Company and Seller: (a) documentation
required by Governmental Authorities necessary to transfer Tanks in accordance
with Article XV and Remediation Activities in accordance with Section 7.3.1
duly executed by Purchaser; (b) a release of liability for the
environmental condition of the Properties in the form of Exhibit Q;
and (c) a notification letter directed to the appropriate Governmental
Authority advising such Governmental Authority of the transfer of
responsibility for the environmental condition of the Properties in the form of
Exhibit R, all as set forth in Article VII.

 

6.3.8           Corporate Authority. 
At Closing, Purchaser will deliver to the Title Company and Seller
certificates of incumbency and evidence of corporate authority, for the
execution and delivery of this Agreement and all documents required by this
Agreement, in such form and content as the Title Company reasonably may
require.

 

6.3.9           Business
Licenses and Permits.  Purchaser will
deliver to Seller a duly executed certificate confirming that it possesses all
necessary licenses, certificates, variances and permits necessary to use,
occupy or operate any of the Properties.

 

6.3.10         Tax
Exemption Certificates.  Purchaser
will provide Seller with properly completed exemption certificates or current
license numbers for any tax from which Purchaser claims exemption.  If Purchaser fails to provide the appropriate
exemption certificate or license numbers, Seller shall invoice Purchaser for
the tax, and Purchaser shall pay the tax as invoiced.

 

6.3.11         Brand
Fee Agreement.  At Closing, Purchaser
will deliver to the Title Company and Seller an executed Brand Fee Agreement.

 

6.3.12         Other Closing Documents. 
Purchaser will deliver all other standard closing documents as may be
required by the Title Company or state, federal or local authorities.

 

6.4              Closing Costs.

 

6.4.1           Property Taxes; Rents; Assessments;
Utilities.  Any general real estate or
personal property taxes, rents, and special taxes or assessments for the then
current year relating to the Properties will be prorated as of the Closing Date and adjusted at Closing.  If Closing occurs before taxes are finalized
for the then current year, the tax apportionment at Closing will be based on
the latest tax rate as applied to the latest assessed valuation of the
Properties.  The Title Company and Seller
will collect from Purchaser at Closing, and the Title Company shall pay out of
the collected funds, all sales taxes applicable to the Personal Property and
Equipment transferred to Purchaser under this Agreement.  All utilities and other pre-paid expenses,
customarily adjusted for commercial real estate closings conducted in the
Property’s jurisdiction, will be adjusted as of the Closing Date.  In the event that collected funds are
insufficient to pay all such expenses, Purchaser promptly shall pay the same
and 

 

27

 

provide proof of payment to the Title Company and Seller.  If a balance remains with the Title Company
after all amounts due under this Section 6.4.1 are paid by the Title Company, the Title Company
shall refund the balance to Purchaser.

 

6.4.2           Surveys; Title Insurance; Taxes. 
Seller will pay for the cost of the title commitments (subject to the
following sentence) as well as recording fees and transfer taxes customarily
due from a seller on the transfer of property in the Property’s jurisdiction as
of the Closing Date, exclusive of any transfer taxes imposed with respect to
any mortgage or deed of trust placed on the Properties as part of Purchaser’s
financing of the acquisition of the Properties and other traditional purchaser
costs.  Purchaser shall pay for any
additional costs, fees or expenses of the Title Company to issue any extended
coverage, the costs of any title endorsements requested by Purchaser, any
lender coverage, the Survey for each Property as well as all costs associated
with title insurance premiums and/or with any mortgage(s) and transfer of
Personal Property and Equipment including, but not limited to, transfer taxes, and recording fees customarily due
from a transferee, and any and all sales taxes, excise taxes, UCC search fees
and UCC filing fees.  Each Party shall
pay fifty (50%) percent of any costs charged by the Title Company for escrow
services.

 

6.4.3           Other Closing Costs. 
Each Party will bear its own fees, costs and expenses associated with
the contemplated transaction, including attorneys’ fees, appraisal, brokerage,
consulting and/or due diligence costs, and any other related fees and expenses.

 

6.4.4           Bulk Sales Compliance. 
For Properties located in jurisdictions imposing a bulk transfer law on
the transfer of Inventory, Purchaser and Seller will cooperate with each other
so as to allow Seller or Purchaser, as applicable, to submit and complete in a
timely fashion all Bulk Sale notices and filings, to the extent necessary to
comply with such law.

 

ARTICLE VII

ENVIRONMENTAL MATTERS

 

7.1              Definitions.

 

7.1.1           Baseline
Report  means collectively those  environmental documents or reports for the Properties that have been posted
by the Seller to the Virtual Data Room on the thirtieth (30th) day
after the end of the Inspection Period at 12 noon Eastern Standard Time.

 

7.1.2           Contamination  means the presence, whether known or
unknown, at, on, under, originating or migrating from any Property of any
chemical, compound, material, substance or other matter that: (a) is a
flammable, corrosive, explosive, hazardous, toxic or regulated material,
substance or waste, or other injurious or potentially injurious material,
whether injurious or potentially injurious by itself or in combination with
other materials; or (b) is controlled, designated in, regulated or
governed by any Environmental Law. “Contamination” also shall include any
increase in Contamination.

 

7.1.3           Engineering
and Institutional Controls means those restrictions and requirements
imposed or permitted by Seller or any Governmental Authority with respect to
activities on and/or the use of the Properties, including, without limitation,
easements, paving caps, engineered barriers, groundwater restrictions, activity
and use limitations or restrictions pursuant to applicable state law including,
without limitation, M.G.L. c. 21E, § 6 and 310 C.M.R. 40.1000; 40.1012 et seq.
in Massachusetts, N.H. Rev. Stat. Ann. Section 147-F:15 and N.H. Code
Admin. R. Ann. Env-Or 601.01, 

 

28

 

602.01 and 608 et seq. in New Hampshire, and Rhode Island Gen. Laws Title
23, Chap. 19.1 and Rhode Island Department of Environmental Management Rules and
Regulations for the Investigation and Remediation of Hazardous Material
Releases, § 8.09; Appendix G in Rhode Island, environmental land use controls,
restrictive covenants, well drilling prohibitions, zoning restrictions, special
building permit requirements, deed notices, and registration of sites
containing Contamination.

 

7.1.4           Environmental
Law or Environmental Laws means any and all federal, state, or local
laws, statutes, ordinances, rules, decrees, orders, or regulations relating to
the environment, hazardous substances, materials, or waste, toxic substances,
pollutants, or words of similar import, or environmental conditions at, on,
under, or originating or migrating from any Property, or soil, water and
groundwater conditions, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. § 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901, et seq.,
the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq., the Clean Air Act, as amended, 42 U.S.C. § 1857, et seq., the Federal Water Pollution Control Act, as
amended, 42 U.S.C. § 1251, et seq., the Federal Hazardous Materials Transportation
Act, 49 U.S.C. § 1801, et seq., any
amendments to the foregoing, and any similar federal, state or local laws,
statutes, ordinances, rules, decrees, orders or regulations.  To the reasonable knowledge of Seller, Seller
has provided Purchaser with all consent decrees applicable to the Properties
currently in its possession.

 

7.1.5           Environmental
Liabilities means any and all obligations, responsibilities, Claims and
liabilities, whether under any Environmental Law or otherwise, with respect to
Contamination or Seller’s or Purchaser’s compliance with Environmental Laws at
the Properties.

 

7.1.6           Government
Reimbursement Fund means a fund administered by a Governmental Authority
responsible for considering and issuing reimbursement for certain eligible
Remediation Activities at the Properties.

 

7.1.7           Governmental Authority  means any governmental (federal, state, local or
other), regulatory, judicial, or other competent authority, including without
limitation, an authority responsible for the administration or collection of
any tax; a body or self-regulating entity responsible for the administration of
Environmental Laws, including, with respect to remediation, Remediation
Activities, and determining NFA Status in Massachusetts, a Licensed Site
Professional licensed under M.G.L. c. 21A, § 19 et seq.; a body or
self-regulating entity responsible for any or all parts of the energy sector;
and a body or self-regulating entity responsible for planning and related
legislative activities. “Governmental Authority” includes any person appointed
by any of the foregoing to carry out an investigation or an inquiry.

 

7.1.8           No Further Action Status or NFA Status means either (i) a
written determination received from the Governmental Authority having
jurisdiction over the Properties or Remediation Activities that no further
remedial activities are required to meet applicable industrial/commercial
clean-up standards (excluding periodic monitoring) under applicable
Environmental Laws; or (ii) when all necessary remedial activities have
been completed to meet applicable industrial/commercial clean-up standards
pursuant to a remedial investigation, remediation or other environmental
response workplan approved by the appropriate Governmental Authority if the
applicable Environmental Laws do not provide for such a  written determination.  If Purchaser is unable to achieve (i) or
(ii) above, only then No Further Action Status or NFA Status means when
all necessary

 

29

 

remedial activities have been completed under applicable Environmental
Laws to meet applicable 
industrial/commercial clean-up standards pursuant to a remedial
investigation, remediation, or other environmental response workplan approved
by the appropriate Governmental Authority if the Governmental Authority has
unreasonably delayed or refused to provide such a written determination.

 

7.1.9           Remediation
Activities means any site investigation, study, assessment, testing,
monitoring, containment, removal, disposal, closure, corrective action,
remediation (whether active or passive), natural attenuation, bioremediation,
response, treatment, cleanup or abatement work, and operations and maintenance,
whether on-site or off-site, of Contamination required to achieve NFA Status.

 

7.1.10         Remediation
Consultant means one or more third-party consultants responsible for
undertaking environmental assessments at the Properties prior to Closing,
including without limitation, investigation of the Properties’ environmental condition.

 

7.1.11         Remediation
Contractor or Remediation Contractors means one or more
environmental engineering firms engaged by Purchaser to perform Remediation
Activities.

 

7.2              Environmental Due Diligence.

 

7.2.1           Environmental Assessment. Seller has contracted for Phase I evaluations of the
Properties, which will be made available to Purchaser in the Virtual Data Room upon
completion.    Phase I protocols
generally follow the ASTM E-1527-05 Standard. 
Seller will provide Purchaser access to relevant environmental reports
currently maintained by Seller’s third-party environmental consultants,
including, but not limited to, soil and water studies for Properties with
active environmental cases.  Seller will
make information available through the Virtual Data Room.  Purchaser also may supplement the Seller’s
Remediation Consultants’ efforts with additional environmental due diligence at
Purchaser’s expense as provided in Section 7.2.2.

 

Seller reserves the right to
undertake additional environmental testing and compliance examinations of the
Properties, as Seller may desire, and undertake any work or corrective
measures, at its option, prior to Closing. If Seller so elects, Seller will
notify Purchaser, to the extent practicable, and provide Purchaser with a copy
of any additional environmental assessments or other documentation concerning
such work or corrective measures. Seller shall post a copy of the same to the
Virtual Data Room.

 

In addition, Seller may, at its
sole discretion, elect to remove any Property or Properties from this Agreement
for environmental reasons, in which case the Purchase Price shall be adjusted
in accordance with the allocations indentified on Exhibit A-4 for those
individual Properties removed from the Agreement.

 

Prior to the expiration of the
Inspection Period, Purchaser may elect to remove up to five percent (5%) of the
Properties from this Agreement for environmental reasons, in which case the
Purchase Price shall be adjusted in accordance with the allocations identified
on Exhibit A-4 for those individual Properties removed from the
Agreement.  If Purchaser provides notice
of termination under this Section for more than five percent (5%) of the
Properties, Seller may give notice of termination of this transaction as to all
Properties whereupon Purchaser shall have five (5) days to identify no
more

 

30

 

than five percent (5%) of the Properties
to remove from this Agreement or this transaction shall automatically terminate
and the Deposit will be distributed in accordance with Section 3.3.4.

 

Seller and Purchaser each shall be
responsible for paying their respective costs and expenses, including attorney’s
fees and outside consultants’ fees, incurred during the described environmental
investigation, testing and due diligence, as well as related activities, prior
to Closing.

 

7.2.2           Environmental
Due Diligence.  Purchaser will have
access to the documents comprising the Baseline Report posted to the Virtual
Data Room.  Seller may provide Purchaser
various documentation prior to the execution of this Agreement, including, but
not limited to environmental reports and any such documentation is provided as
a convenience only without representation or warranty and not in substitution
for Purchaser’s own due diligence review. 
In addition, Purchaser may perform additional environmental testing at
the Properties at its own expense during the Inspection Period.  If Purchaser elects to perform any additional
environmental testing at the Properties, Purchaser shall notify Seller in
writing and execute Seller’s Right of Access Agreement (set forth on Exhibit E-1)
at least five (5) days in advance of the date that such additional
environmental testing is to occur.  Any
additional testing performed by Purchaser shall be completed, with results
forwarded to Seller, not later than the end of the Inspection Period.

 

Purchaser’s entry upon the
Properties for the purposes of any environmental assessment or testing shall be
done at Purchaser’s sole risk and expense and shall be pursuant to the terms of
Seller’s Right of Access Agreement and in strict compliance with Seller’s
Subsurface Clearance “Drilling” Protocol (set forth on Exhibit E).  Purchaser also shall comply with any other
legal requirements such as obtaining licenses, drilling permits, and other
authorizations that may be necessary to conduct the desired activities.  Purchaser will obtain and provide to Seller
the executed Notification of Consultant for Site Access Agreement, attached
hereto as Schedule E-1B to Exhibit E-1, from all of Purchaser’s
Remediation Consultants prior to such Remediation Consultants’ commencement of
any work on the Properties.  Purchaser’s
data may be added to the Virtual Data Room at Seller’s discretion.

 

7.2.3           Delivery
of Data. Seller or its designee(s) will deliver the documents
comprising the Baseline Report to the Virtual Data Room as such
information is developed and becomes available. 
A schedule of the contents available on the Virtual Data Room on
the thirtieth (30th) day after the end of the Inspection
Period at 12 noon Eastern Standard Time shall be attached to this Agreement as
Schedule Q to Exhibit Q, and as of that date and time shall be
deemed for all purposes to constitute the final Baseline Report.  The documents posted to the Virtual Data Room will
be downloaded to electronic media for distribution to the Parties within thirty
(30) days after the Effective Date and within thirty (30) days after the Closing Date.

 

7.2.4           No
Warranty of Baseline Report. Purchaser understands and agrees that the
Baseline Report does not include all of Seller’s files that may relate to the
Properties, nor does Seller make any representation or warranty as to the
accuracy or completeness of the documents comprising the Baseline Report.

 

7.2.5           Independent
Verification of Baseline Report. At Closing, Purchaser shall acknowledge by
its execution of Exhibit Q that it had an opportunity to conduct
its own independent investigation regarding the environmental condition of the
Properties and also had the opportunity for 

 

31

 

independent verification of the Phase I evaluations, the environmental
condition of the Properties, and any other environmental-related information
comprising the Baseline Report.

 

7.2.6           Acknowledgements
and Assumption of Risk. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT IT
UNDERSTANDS THE PROPERTIES HAVE BEEN USED FOR COMMERCIAL PURPOSES INCLUDING THE
STORAGE, DISTRIBUTION AND MARKETING OF MOTOR FUELS, PETROLEUM, PETROLEUM-BASED
PRODUCTS AND OTHER CHEMICALS, AND THAT THE ENVIRONMENT, INCLUDING BUT NOT
LIMITED TO, THE SOIL AND SUB-SOIL OF THE PROPERTIES AND THE SOIL, AIR, LAND,
GROUNDWATER AND WATER ON, UNDER, NEAR OR ADJACENT  THERETO AND DRAINS, SEWERS, PIPES, WATER
COURSES AND WATER TABLES AT, ON, UNDER OR IN THE VICINITY OF THE PROPERTIES MAY HAVE
BEEN CONTAMINATED OR IMPACTED BY OIL OR OTHER CONTAMINATION. PURCHASER
EXPRESSLY ACCEPTS AND ASSUMES ALL RISKS, WHETHER KNOWN OR UNKNOWN, ASSOCIATED
WITH THE FOREGOING.

 

PURCHASER ACKNOWLEDGES THAT PURCHASER IS
BEING GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTIES AND TO OBTAIN
SATISFACTORY EVIDENCE OF THE CONDITION OF THE PROPERTIES FROM SOURCES OTHER
THAN SELLER AND ITS AGENTS OR CONTRACTORS AND THAT PURCHASER WILL CONDUCT SUCH
INSPECTIONS OF THE PROPERTIES AND REVIEW ALL MATTERS DETERMINED BY PURCHASER
NECESSARY OR APPROPRIATE IN ORDER TO DETERMINE WHETHER THE PROPERTIES ARE
SUITABLE FOR PURCHASER’S INTENDED USE.

 

PURCHASER EXPRESSLY ACKNOWLEDGES,
AGREES, AND UNDERSTANDS THAT PURCHASER IS ACQUIRING RESPONSIBILITY FOR THESE
PROPERTIES IN AN “AS IS, WHERE IS” NATURE, WITH ALL FAULTS AND DEFECTS, LATENT
OR OTHERWISE, WITHOUT LIMITING THE “AS IS, WHERE IS” NATURE OF THE TRANSFER OF
THE PROPERTIES.  IT IS UNDERSTOOD AND
AGREED THAT SELLER IS MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, OF ANY KIND OR NATURE WITH RESPECT TO THE PROPERTIES, INCLUDING,
BUT NOT LIMITED TO, THE PROPERTIES’ HABITABILITY, SUITABILITY, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, THE PRESENCE OR ABSENCE OF CONDITIONS ON
THE PROPERTIES THAT COULD GIVE RISE TO A CLAIM FOR PERSONAL INJURY, PROPERTY OR
NATURAL RESOURCE DAMAGES, THE PRESENCE OF HAZARDOUS OR TOXIC SUBSTANCES,
CONTAMINANTS OR POLLUTANTS AT, ON, UNDER, OR ORIGINATING OR MIGRATING FROM THE
PROPERTIES, THE INCOME OR EXPENSES FROM OR OF THE PROPERTIES, THE STATUS OF THE
REGISTRATION OF THE TANKS, FIXTURES, STRUCTURES, AND ALL OTHER PERSONAL
PROPERTY, EQUIPMENT AND DISPENSERS, OR THE CONDITION OF, THE MERCHANTABILITY OR
THE FITNESS FOR ANY PARTICULAR PURPOSE OF ANY OF THE AFOREMENTIONED.

 

7.3              Transfer of Remediation
Activities.  Promptly following the
Effective Date and prior to Closing, Purchaser agrees to determine any and all
regulatory approvals required to effectuate the transfer of responsibility for
existing Remediation Activities with respect to any Property including, without
limitation, pursuant to 310 C.M.R. 40.0000; 40.0560; 40.0720 in Massachusetts,
N.H. Code of Admin. R. Ann. Env-Or 607 in New Hampshire, and Rhode Island
Remediation Regulations, DEM-DSR-01-93, § 10.03 in Rhode Island.  Purchaser shall be solely responsible for
compliance with all 

 

32

 

applicable Environmental Laws necessary to
transfer responsibility for Remediation Activities, if allowed by law, from
Seller to Purchaser effective no later than thirty (30) days after Closing,
provided, however, Seller shall cooperate in good faith with Purchaser with
regard to execution of necessary documents.

 

7.4              Environmental Responsibility
Following Closing.

 

7.4.1           Purchaser’s
Remediation Responsibility.  From and
after Closing, Purchaser shall be solely responsible, at no expense to Seller,
for any and all environmental issues and Remediation Activities (whether arising
prior to or after Closing), including Contamination, at, on, under or
originating from the Properties.  Seller
will transfer Environmental Liabilities to Purchaser for the Properties at
Closing.

 

7.4.2           Seller’s
Remediation Responsibility.  From and
after Closing, Seller shall have no responsibility for Contamination at the
Properties, including, but not limited to, any obligation to remediate any of
the Properties.

 

7.4.3           Purchaser’s
Express Assumption of All Environmental Liabilities. Purchaser specifically
acknowledges and agrees that it is solely responsible at its sole expense for,
and assumes all liabilities and risk associated with, any and all Contamination
and Environmental Liabilities.

 

If Purchaser transfers or assigns
in part or all of its interests in the Properties, Purchaser agrees that such
transfer or assignment will not release Purchaser from its assumption of
Environmental Liabilities including its obligation to complete all Remediation
Activities and Engineering and Institutional Controls necessary to achieve NFA
Status.

 

Purchaser acknowledges that no
liability or Claim arising out of, in connection with, or related to the
environmental condition of the Properties, Contamination or any Remediation
Activities or Environmental Liabilities (all of which are expressly assumed by
Purchaser pursuant to this Agreement) will be asserted as or deemed to be an “Excluded
Liability.”

 

Seller shall have no liability or
responsibility whatsoever to investigate and/or remediate Contamination, except
for Contamination first caused solely by activities of Seller or its employees,
agents or contractors after the Closing Date. 
The sale of petroleum products by Seller to Purchaser or its suppliers
in and of itself shall not constitute a basis for a claim that Seller or its
employees, agents or contractors caused Contamination after the Closing Date.

 

In accordance with Section 2.5.5, at
Closing, Purchaser shall assume all liabilities and obligations associated with
or related to the Access Agreements.

 

In accordance with Section 2.5.6, at
Closing, Purchaser shall assume all liabilities and obligations associated with
or related to Statements of Environmental Responsibilities.

 

7.4.4           Documents
Executed at or Prior to Closing.  At
or prior to Closing, Purchaser shall execute and submit to Seller all documents
identified in this Article VII and Section 6.3.7.  Purchaser also shall send or cause to have
sent the Notification Letter (Exhibit R) and such other
documentation as required under Section 7.3.4 to all applicable
Governmental Authorities in connection 

 

33

 

with the Properties and promptly provide copies of such Notification
Letter(s) and documentation to Seller.

 

Pursuant to Environmental Law or
other applicable law, no later than thirty (30) days after the Closing Date or
within such shorter time period as may be required, including without
limitation, prior to Closing, Purchaser shall enter into any other necessary
agreements or submit necessary documentation that is required to transfer from
Seller to Purchaser, agreements or obligations regarding the Properties and
Personal Property and Equipment. 
Purchaser shall take all necessary actions to substitute itself as the responsible
party for any actions or activities relating to Remediation Activities or
Contamination at, on, under, or originating or migrating from the Properties,
including, but not limited to, the assumption of Seller’s obligations under any
Access Agreements or Statements of Environmental Responsibility, as provided
for in Sections 2.5.5 and 2.5.6, as well as environmental compliance.  This shall also include, without limitation,
the execution or assumption of all agreements or consent orders containing terms
and conditions required by any Governmental Authority for Purchaser to fulfill
its obligations under this Agreement.

 

Purchaser further agrees to
undertake, at its sole expense, from and after the Closing Date, all other
reporting and notification required under the Environmental Laws for Contamination
and/or Remediation Activities and shall undertake, in good faith and with due
diligence, all Remediation Activities of Contamination required by the relevant
Governmental Authorities and in compliance with the Environmental Laws.

 

Failure to execute the foregoing
documents and any other documents required in Article VII constitutes a
breach and Default by Purchaser of this Agreement.  Thereafter, Seller may terminate this
Agreement, in which event the Deposits will be distributed in accordance with Section 3.3.4.

 

7.5              Government Reimbursement Fund.

 

7.5.1           Seller’s
Assignment.  Subject to Section 7.5.2,
as of Closing, Seller transfers to Purchaser all rights (if any) to payment
from the Government Reimbursement Fund relating to each of the Properties.
Seller, however, makes no warranties or representations concerning Purchaser’s
ability to recover against any Government Reimbursement Fund.  Purchaser specifically acknowledges that its
right to make or recover on a claim from a Government Reimbursement Fund for
eligible costs may be impaired as a consequence of the specific circumstances
described in the letter from ExxonMobil to the applicable Governmental
Reimbursement Fund, attached as Exhibit AA.

 

7.5.2           Seller’s
Incurred Costs.  Notwithstanding Section 7.5.1,
to the extent that any Seller has made a request or claim for reimbursement
from any Governmental Authority as of the Closing Date, Purchaser will agree to
authorize (and execute appropriate documentation to facilitate) such Seller’s
right to receive any outstanding reimbursement request. Purchaser acknowledges
that it has no rights to such claims or reimbursements. Purchaser releases any
claims against past or future reimbursements for Remediation Activities
undertaken prior to the Closing.  A
non-exhaustive list of such pending claims for reimbursement from any
Government Reimbursement Fund is provided as Exhibit O.

 

7.6              Release.  Purchaser expressly understands and agrees to
accept the conveyance of the Properties, in their “AS IS, WHERE IS” condition
as of Closing, Purchaser shall make no Claim against 

 

34

 

the Seller-Related
Parties with respect to: (a) Contamination; (b) the Baseline Report,
any Remediation Consultant, Remediation Activities, Engineering and
Institutional Controls, and Government Reimbursement Funds; (c) all
contracts and agreements between the Purchaser and any Remediation Contractors;
(d) the environmental condition of the Properties; (e) the Seller’s
ownership or operation of the Properties; and (f) any Environmental
Liabilities.  The Purchaser shall release
the Seller-Related Parties from ANY AND ALL CLAIMS, INCLUDING, BUT NOT
LIMITED TO, THOSE ARISING FROM THE NEGLIGENCE (INCLUDING GROSS NEGLIGENCE AND
STRICT LIABILITY) AND WILLFUL MISCONDUCT, OF THE SELLER-RELATED PARTIES PRIOR
TO CLOSING, whether such claims are now existing or arising in the future,
foreseen or unforeseen, known or unknown, at law or in equity, including those
which arise out of or relate to or result in any way from, allegedly or in
fact, the matters set forth in (a) through (f) above including,
without limitation, the condition of the Properties, any Contamination, or the
ownership or operation of the Properties by Seller. This release shall include,
but is not limited to: (x) any and all Claims under the Environmental
Laws; (y) any and all Claims for injury, death, destruction, loss or
damage to the person or property of the Purchaser arising out of the
environmental condition of the Properties and the improvements and the
Equipment on the Properties and/or the existence of Contamination at, on,
under, or migrating or originating from the Properties; and (z) any and
all obligation and liability for further assessment, cleanup and remediation of
any and all Contamination at the Properties. Purchaser expressly assumes all
such liability and obligations related to the foregoing. To evidence Purchaser’s
release of the Seller-Related Parties as aforesaid, Purchaser shall execute at
Closing and as a condition of Closing the environmental release attached hereto
as Exhibit Q and the Notification Letter attached hereto as Exhibit R,
as well as such other documents as may be required by the Governmental
Authority to evidence the transfer of Environmental Liabilities to Purchaser.

 

7.7              Post Closing Access.  Upon request by Seller in connection with any
written request or demand from any Governmental Authority or in connection with
any Listed Claim, Purchaser shall provide for and permit post-Closing access to
the Properties, at no cost to Seller, as any of the Seller-Related Parties may
require, to undertake any environmental assessment, investigation, testing,
Remediation Activities, and Engineering and Institutional Controls that Seller
deems necessary in its sole discretion. 
Such access shall include, but is not limited to, the right but not the
obligation to conduct such tests, take such groundwater or soil samples,
excavate, remove, dispose of Tanks and soil, and treat the soil and
groundwater, conduct and/or continue environmental investigation, testing and
Remediation Activities, and undertake such other actions as are reasonably
necessary pursuant to such request. Seller shall use commercially reasonable
efforts to minimize disruption of the Purchaser’s business activities during
any demolition, Tank removal, remediation, soil removal and other activities.
Notwithstanding anything to the contrary in this Agreement or its Exhibits,
Purchaser shall provide Seller with exclusive access rights to the Properties to
observe and/or confirm Purchaser’s timely discharge of Purchaser’s Upgrade
obligations with respect to Tanks and/or any Remediation Activities undertaken
by or on behalf of Purchaser. The applicable Seller-Related Party shall provide
Purchaser as much advance notice as reasonably practical of all potentially
disruptive or intrusive activities to be undertaken on the Properties; such
notice may be in the form of a periodic written schedule of activities
delivered from time to time. No advance notice shall be required for
non-disruptive activities such as periodic monitoring of wells on the
Properties, if any.  Seller shall provide
Purchaser copies of analytical or other data collected concerning the
environmental condition of the Properties obtained by Seller within a
reasonable time after any environmental assessment, investigation, testing,
Remediation Activities, and/or Engineering and Institutional Controls
undertaken by Seller.

 

35

 

7.8              Engineering and Institutional
Controls. Purchaser and Seller acknowledge that the Properties are and will
be subject to Engineering and Institutional Controls imposed in connection with
previous, ongoing and future Remediation Activities at the Properties
including, without limitation, as specifically set forth in the Deed(s).
Purchaser further acknowledges and agrees that in conducting Remediation
Activities, Purchaser shall, at its sole cost and expense, adopt and use all
engineering and related technical assistance available and standard to the
industry and any required by the Governmental Authorities or Seller pursuant to
this Agreement or Exhibits thereto to protect the health and safety of persons.
Purchaser agrees to obtain all necessary approvals for any Engineering and
Institutional Controls required to achieve NFA Status at the Properties.
Purchaser may need to consider the use of engineering controls to prevent the
migration of vapors and/or liquids containing Contamination into any buildings,
underground utilities or storm water retention/detention ponds, including
without limitation, vapor extraction systems, vapor barriers, sealed sumps and
storm pond liners. Purchaser hereby agrees to maintain, preserve, and comply
with all Engineering and Institutional Controls that are or may be in the
future imposed on the Properties in connection with the Remediation Activities
or corrective action activities conducted prior to the Closing Date. The
Engineering and Institutional Controls shall run with the land for the benefit of
the Seller-Related Parties and shall bind the Purchaser, subsequent owners,
users and occupiers of the Properties, including any successors, lessees,
assignees and licensees, and shall continue until released by the applicable
Governmental Authority.

 

7.9              Subsequent Transfers. The
provisions of Sections 7.7, 7.8, 7.9.1 and 15.4 will run with the land and be
included in the Deed from Seller to Purchaser or, in the case of Engineering
and Institutional Controls, such other recordable instrument as provided by
applicable Environmental Law and/or Governmental Authority. Purchaser agrees
that it will not complete any sale, transfer or assignment of any of its
interests in the Properties or any part thereof, or enter into any lease,
license or right to occupy or use the Properties or any part thereof without
first obtaining from Purchaser, subsequent owners, users, and occupiers of the
Properties, including all successors, lessees, assignees, and licensees,
obligations identical to Purchaser’s obligation pursuant to Sections 7.7, 7.8,
7.9.1 and 15.4. Purchaser shall include provisions in all such documents,
giving Seller, and Seller’s successors and assignees, the right, but not the
obligation, to enforce such obligations against Purchaser, subsequent owners,
users, and occupiers of the Properties, including any successors, lessees,
assignees, and licensees. Seller also may enforce any such obligations by all
lawful means including specific performance, injunctive relief, any other legal
or equitable remedy allowed by law against Purchaser, notwithstanding the
subsequent transfer, lease, or mortgage of the Properties or part thereof, and,
in any event, Purchaser shall remain liable to Seller for any breach of this Section 7.9.
Any transferee, assignee or successor owner, lessee, licensee, occupier or user
of the Properties shall only take title to the Properties subject to the terms
of Sections 7.7, 7.8, 7.9.1 and 15.4. The rights and benefits of Sections 7.7,
7.8, 7.9.1 and 15.4 will inure not only to Seller, but also to the benefit of
the Seller-Related Parties.  Neither
Purchaser, nor any party acquiring any right, interest or title through or
after Purchaser will be permitted to vacate, waive, eliminate, or in any way
modify the rights and benefits that the Seller-Related Parties have pursuant to
Sections 7.7, 7.8, 7.9.1 and 15.4. Any subsequent transfer of any Property will
not alter Purchaser’s responsibilities and obligations to Seller under this
Agreement.

 

7.9.1           Deed
Restrictions. The Parties agree that, at Closing, each Property will be
subject to deed restrictions as described in Exhibit J. The deed
restrictions must be filed in a format also provided in Exhibit J
as required by State standards.

 

36

 

7.10            Purchaser’s Indemnity for
Environmental Obligations. Purchaser shall defend, indemnify and hold
harmless the Seller Indemnified Parties for, from and against, without
limitation, all Claims, liability, losses, expenses and costs incurred by
Seller in connection with, resulting from, related to, arising out of, or
attributable in any way to any Claim based on, arising out of or related to: (1) Environmental
Liabilities; (2) Purchaser’s breach or Default of its obligations,
liabilities or covenants under Article VII and/or the related Exhibits; (3) Purchaser’s
performance of Remediation Activities, Engineering and Institutional Controls,
or due diligence activities, including any and all third-party Claims relating
to, arising out of, or incurred in connection with Purchaser’s Remediation
Consultants, Purchaser’s Remediation Contractors, or other Persons in the
performance of Remediation Activities, Engineering and Institutional Controls
or Purchaser’s due diligence activities; (4) the presence of Contamination
at, on, under, or originating or migrating from the Properties; (5) the
actions or inactions of Purchaser; (6) the actions or inactions of all
parties acquiring title or an interest in the Properties through Purchaser or
after Purchaser no longer owns or operates the 
Properties; (7) Seller’s or Purchaser’s non-compliance with
Environmental Laws relating to the 
Properties; (8) all claims by Governmental Authorities including
without limitation resulting from the failure of the Purchaser to enter into
such documentation as may be required by the Governmental Authority regarding
the transfer of the  Properties from
Seller to Purchaser, the transfer of Personal Property and Equipment and/or the
transfer of Remediation Activities, or the failure of the Governmental
Authority to approve or transfer such documentation; (9) changes in,
modifications to, or amendments of the Environmental Laws, irrespective of
whether the events giving rise to such Claims or liabilities occurred prior to,
on, or after the Closing Date; (10) the condition of the Properties, the
improvements, and the Personal Property and Equipment on the  Properties; (11) Purchaser’s failure to
provide post-Closing access to the Properties as required by Section 7.7;
and (12) Purchaser’s failure to comply with Section 7.9 regarding
subsequent transfers.

 

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

 

8.1              Seller’s Representations and
Warranties.  Seller makes no
representation or warranty whatsoever, except as otherwise may be expressly
provided in this Agreement.  Without
limiting the foregoing, Seller makes no express or implied representation or
warranty that the Properties, or Seller’s use thereof, comply or have complied
with any federal, state or local law, rule, regulation, or ordinance including,
but not limited to, the Americans with Disabilities Act, the Environmental
Laws, as well as any zoning, use, occupancy or other regulatory matter.  Seller makes no representation or warranty
regarding the accuracy or completeness of any information Purchaser may receive
from Seller.

 

8.1.1           EMOC represents and warrants to
Purchaser as of the Effective Date and as of the Closing Date:

 

(a)           EMOC is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation and is duly qualified to do business as a foreign
corporation in the Commonwealth of Massachusetts, and the States of New
Hampshire and Rhode Island.  EMOC has
full power and authority to enter into this Agreement and to perform its
requisite obligations.

 

37

 

(b)           EMOC has obtained all
requisite corporate and other authorizations required for the execution,
delivery, and performance of this Agreement.

 

(c)           This Agreement
constitutes EMOC’s legal, valid, and binding obligation and is enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by federal or other bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or affecting the enforcement of creditors’ rights
generally, now or hereinafter in effect.

 

(d)           To the reasonable
knowledge of EMOC, EMOC is not in default under any lease agreement with
respect to any EMOC Lease Property.

 

8.1.2           EMC represents and warrants to Purchaser
as of the Effective Date and as of the Closing Date:

 

(a)           EMC is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation and is duly qualified to do business as a foreign
corporation in the Commonwealth of Massachusetts, and the States of New
Hampshire and Rhode Island.  EMC has full
power and authority to enter into this Agreement and to perform its requisite
obligations.

 

(b)           EMC has obtained all
requisite corporate and other authorizations required for the execution,
delivery, and performance of this Agreement.

 

(c)           This Agreement
constitutes EMC’s legal, valid, and binding obligation and is enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by federal or other bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or affecting the enforcement of creditors’ rights
generally, now or hereinafter in effect.

 

(d)           To the reasonable
knowledge of EMC, EMC is not in default under any lease agreement with respect
to any EMC Lease Property.

 

8.2              Purchaser’s Representations and
Warranties.  Purchaser represents and warrants
to, and covenants and agrees with, Seller that as of the date of the execution
of this Agreement by Purchaser and as of the Closing Date:

 

(a)           Purchaser is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the state of its organization and is authorized to do business in
the Commonwealth of Massachusetts, and the States of New Hampshire and Rhode
Island.  Purchaser has full power and
authority to enter into this Agreement and to perform its obligations
hereunder.

 

(b)           Neither its execution
of this Agreement nor its performance or satisfaction of any agreement or
condition contained in this Agreement and to be performed or satisfied by
Purchaser has or will: (a) violate any provision of Purchaser’s
certificate of formation or limited liability company agreement; (b) violate
any provision of, or give any Person the right to declare a default or exercise
any remedy under any agreement, instrument or understanding to which it or its
Affiliates is bound; or (c) contravene, conflict with or result in the
violation of any of the terms of any order, writ, injunction, decree, statute, rule or
regulation applicable to Purchaser.

 

38

 

(c)           Purchaser has obtained
all required authorizations for the execution, delivery, and performance of
this Agreement.

 

(d)           No consent or approval
of any governmental or regulatory authority is required, except as expressly
noted herein, for the due authorization, execution, or delivery by Purchaser of
this Agreement.

 

(e)           Purchaser does not
have any outstanding tax or other financial obligations to the state of its
organization or to the Commonwealth of Massachusetts, or the States of New
Hampshire or Rhode Island other than those taxes or other financial obligations
for the current tax year.

 

(f)            Purchaser has
received from Seller various documentation related to the Purchased Assets,
including information regarding the underground storage tank systems and the
environmental conditions at the Properties, and Purchaser acknowledges that: (i) it
had an opportunity to independently verify the documentation provided by Seller
and the Properties’ environmental condition; and (ii) all documentation
provided by Seller to Purchaser was provided for Purchaser’s convenience only
and was not to be relied upon by Purchaser in substitution for Purchaser’s own
due diligence.

 

ARTICLE IX

LIABILITIES

 

9.1              No Express or Implied Warranty.  WITHOUT LIMITING PURCHASER’S OTHER
OBLIGATIONS OR ACKNOWLEDGMENTS, AND EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, ALL OF THE PURCHASED ASSETS CONVEYED PURSUANT TO THIS AGREEMENT ARE
SOLD BY SELLER AND ACCEPTED BY PURCHASER IN THEIR “AS-IS, WHERE-IS” CONDITION
AS OF THE EFFECTIVE DATE.  SELLER
DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR
A PARTICULAR PURPOSE CONCERNING ANY PURCHASED ASSET CONVEYED UNDER THIS
AGREEMENT.  PURCHASER ACKNOWLEDGES ITS
RESPONSIBILITY TO INSPECT ALL PROPERTY (REAL AND PERSONAL), INVENTORY AND
EQUIPMENT AND TANKS FOR PATENT OR LATENT DEFECTS THAT MAY EXIST AT THE
TIME OF CLOSING IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS NOT BEEN INDUCED
BY, AND HAS NOT RELIED UPON, ANY REPRESENTATIONS, WARRANTIES OR STATEMENTS,
WHETHER EXPRESS OR IMPLIED, MADE BY THE SELLER OR ANY AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF THE SELLER THAT ARE NOT EXPRESSLY SET FORTH HEREIN.  INSTEAD, PURCHASER’S DECISION TO PURCHASE THE
PROPERTIES AND OTHER PURCHASED ASSETS IS BASED SOLELY UPON PURCHASER’S OWN
EXAMINATION, INSPECTION AND ANALYSIS OF THE PURCHASED ASSETS.

 

9.2              Purchaser’s Assumption of
Assumed Liabilities.

 

9.2.1           Assumed
Liabilities.  At Closing, Purchaser
acknowledges that it shall assume all of the Assumed Liabilities, including,
without limitation, all obligations and liabilities associated with, related
to, incurred in connection with, or otherwise affecting, the ownership and
operation of the Purchased Assets, and Purchaser’s environmental undertakings
set forth in Article VII.  This
assumption

 

39

 

shall include, but is not limited to, franchisor’s and/or lessee’s
maintenance and repair obligations under any assigned franchise or lease
agreement, whether outstanding as of Closing or arising thereafter.

 

9.2.2           Tank
Related Obligations and Liabilities. 
Purchaser acknowledges that certain Tanks contain or have contained
explosive gases and have been used for the storage of petroleum products and
are unfit for the storage of water or any other article or commodity intended
for human or animal contact or consumption. 
Purchaser expressly agrees not to use or permit the use of any Tank for
such storage.

 

ARTICLE X

INDEMNITIES

 

10.1            Purchaser Indemnification
Obligations.

 

10.1.1         Purchaser’s
Indemnification.  Purchaser shall
defend, indemnify and hold harmless Seller, its Affiliates, their respective
successors, assigns, directors, officers, employees, subsidiaries, affiliates
and agents (the “Seller Indemnified Parties”) for, from and against,
without limitation, all Claims, liability, losses, expenses and costs incurred
by Seller in connection with, resulting from, related to, arising out of, or
attributable in any way to any of the following:

 

(a)           Assumed Liabilities.  Any Assumed Liability, including without
limitation, all liabilities related to or arising from the ownership,
possession, operation, use or maintenance of the Purchased Assets arising
before or after Closing;

 

(b)           Brokers’ Fees.  Brokers’, finders’ and/or agents’ fees and
commissions, in connection with the contemplated transaction, asserted by any
person on the basis of any statement, instrument, action, inaction or agreement
alleged to have been made by the Purchaser;

 

(c)           Entry.  Purchaser’s entry onto or activities on the
Properties pursuant to the terms of this Agreement;

 

(d)           Misrepresentation.  Any representation or warranty, made by
Purchaser in this Agreement or in any of the documents it made available to
Seller or delivered before or at Closing, that is misleading or untrue in any
material respect;

 

(e)           Breach.  Purchaser’s failure to discharge or perform
any obligation, covenant or agreement made in this Agreement.  A breach will include, but will not be
limited to, any claim related to Purchaser’s non compliance with its PMPA
obligations defined in Section 4.4, including:  (a) the terms and conditions of the
franchise agreements offered by Purchaser or any action taken by Purchaser,
specifically including any termination or non renewal action, under or pursuant
to the franchise agreements; (b) Purchaser’s offer or failure to offer franchise
agreements as required by Section 4.4; (c) Purchaser’s failure to
fulfill its obligations under the PMPA or any state franchising law; or (d) Purchaser’s
failure to fulfill any obligations contained in the PMPA Franchise Agreements
assigned to Purchaser by Seller;

 

(f)            Intellectual
Property.  Purchaser’s alleged
infringement of any intellectual property right; or

 

40

 

(g)           Environmental
Obligations.  Any environmental
obligations, as more fully set forth in Article VII.

 

10.1.2         Notice.  In the event a claim against any Seller
Indemnified Party arises that may be covered by the indemnity provisions of Section 10.1.1
of this Agreement, notice will be given by such Seller Indemnified Party to
Purchaser.  The failure to give notice as
required by this Section 10.1.2, however, will not result in a waiver or
any diminishment of any right to indemnification provided by this Agreement.

 

10.1.3         Purchaser’s
Acknowledgment of Duty to Indemnify. 
If Purchaser agrees in writing to the Seller Indemnified Party that a
claim is covered by the indemnity provisions of Section 10.1.1, and
Purchaser agrees in that writing to indemnify the Seller Indemnified Party in
the event of any liability, losses, expenses, settlement and/or costs incurred
by any Seller Indemnified Party, Purchaser will have the right to contest and
defend by all appropriate legal proceedings such claim and to select lead
counsel to defend any and all such claims; provided that prior to any assumption
of defense by Purchaser, Purchaser shall have received the written consent of
Seller to such assumption, which consent may be withheld in the sole discretion
of Seller.  In order to consummate any
settlement, however, Purchaser must first obtain the written consent of Seller,
which consent may be withheld in the sole discretion of Seller.  The Seller Indemnified Party may select
counsel, at its sole cost and expense, to participate in any defense assumed by
Purchaser.

 

10.1.4         Purchaser’s
Failure to Indemnify.  In the event
that Purchaser fails or refuses to assume the defense or indemnify any Seller
Indemnified Party within thirty (30) days of the notice described in Section 10.1.2,
then the Seller Indemnified Party will have the right to select and retain its
own counsel who will serve in Seller’s discretion until the matter
concludes.  All costs and expenses
incurred as a result of said legal counsel’s work shall be paid by Purchaser in
a timely manner.  In exercising its right
to select counsel pursuant to this Section 10.1.4, Seller (or any Seller
Indemnified Party) does not waive its right to compel Purchaser to undertake
its indemnity obligations through other legal proceedings or otherwise.

 

10.2            Seller Indemnification
Obligations.

 

10.2.1         EMOC
Indemnification Obligations.

 

EMOC will indemnify and hold harmless
Purchaser and its Affiliates and their respective successors, assigns,
directors, officers, employees, subsidiaries, affiliates and agents (the “Purchaser
Indemnified Parties”), from and against each and every Claim, directly
resulting from or arising out of any of the following:

 

(a)           Excluded
Liabilities.  To the extent arising
from any Excluded Liability with respect to an EMOC Property;

 

(b)           Brokers’ Fees.  Brokers’, finders’ and agents’ fees and
commissions, in connection with the contemplated transaction, asserted by any
person on the basis of any statement, instrument, action, inaction or agreement
alleged to have been made by EMOC; or

 

(c)           Breach.  EMOC’s failure to discharge or perform any obligation,
covenant or agreement made by EMOC in this Agreement.

 

41

 

(d)           Exceptions.  For the avoidance of doubt, EMOC specifically
disclaims any indemnification obligations for any Claim resulting from the use
of the Properties in violation of this Agreement and/or in violation of the
Deed, the Deed restrictions referenced in Section 7.9.1, and/or the
Engineering and Institutional Controls referenced in Section 7.8 by
Purchaser-Related Parties, subsequent owners, users, and occupiers.  EMOC’s obligations to indemnify also will not
be applicable to any Claim (i) arising out of any third-party contractual
obligations that Purchaser, or any person or entity acquiring any interest or
title through Purchaser, including Purchaser’s lender, may create and/or
assume; or (ii) brought by or on behalf of Alliance Energy LLC or AE
Holdings Corp.

 

10.2.2         EMC’s
Indemnification Obligations.

 

EMC will indemnify and hold harmless the
Purchaser Indemnified Parties, from and against each and every Claim, directly
resulting from or arising out of any of the following:

 

(a)           Excluded
Liabilities.  To the extent arising
from any Excluded Liability with respect to an EMC Property;

 

(b)           Brokers’ Fees.  Brokers’, finders’ and agents’ fees and
commissions, in connection with the contemplated transaction, asserted by any
person on the basis of any statement, instrument, action, inaction or agreement
alleged to have been made by EMC; or

 

(c)           Breach.  EMC’s failure to discharge or perform any
obligation, covenant or agreement made by EMC in this Agreement.

 

(d)           Exceptions.  For the avoidance of doubt, EMC specifically
disclaims any indemnification obligations for any Claim resulting from the use
of the Properties in violation of this Agreement and/or in violation of the
Deed, the Deed restrictions referenced in Section 7.9.1, and/or the
Engineering and Institutional Controls referenced in Section 7.8 by
Purchaser-Related Parties, subsequent owners, users, and occupiers.  EMC’s obligations to indemnify also will not
be applicable to any Claim (i) arising out of any third-party contractual
obligations that Purchaser, or any person or entity acquiring any interest or
title through Purchaser, including Purchaser’s lender, may create and/or
assume; or (ii) brought by or on behalf of Alliance Energy LLC or AE
Holdings Corp.

 

10.2.3         Amount
of Liability.  The amounts for which
any Seller shall be liable under Sections 10.2.1 and 10.2.2 of this Agreement
shall be net of any insurance proceeds received by any Purchaser Indemnified
Party in connection with the facts giving rise to the right of indemnification.

 

10.2.4         Notice.  In the event a claim against any Purchaser
Indemnified Party arises that is covered by the indemnity provisions of
Sections 10.2.1 and 10.2.2 of this Agreement, notice shall be promptly given by
such Purchaser Indemnified Party to Seller. 
Seller will have the right to contest and defend by all appropriate
legal proceedings such claim and to control all settlements and to select lead
counsel to defend any and all such claims at the sole cost and expense of
Seller.  The Purchaser Indemnified Party
may select counsel to participate in any defense assumed by Seller pursuant to
this Section 10.2.4, in which event such counsel will be at the sole cost
and expense of such Purchaser Indemnified Party.

 

42

 

This Section 10.2 shall be the
sole and exclusive remedy of the Purchaser Indemnified Parties against Seller
and its Affiliates after Closing for any Claim or loss arising in connection
with or relating, directly or indirectly, to the Purchased Assets, this
Agreement or the contemplated transactions.

 

10.2.5         Indemnities not Assignable or
Transferable.  The foregoing indemnities from
EMOC and EMC shall not be assignable or otherwise transferable by Purchaser.

 

10.3            Cooperation Between Purchaser and
Seller.  The Parties and their
successors will cooperate and cause their respective Affiliates and
subsidiaries, any permitted assignees, and the respective employees, agents and
contractors to cooperate in connection with these indemnity obligations,
including, without limitation: (a) providing reasonable access to
Purchaser’s or Seller’s employees, consultants, agents, attorneys, accountants
and files to the extent necessary or appropriate to defend the matter; (b) participating
in any legal proceeding as a witness; (c) providing access to the
Properties as may be required by Purchaser or Seller; and (d) providing
reasonable assistance with permit transfers, if any.  A joint defense privilege will be maintained
for post-Closing indemnification or defense communications for any matter in
which either Party has an indemnification or defense obligation under this
Agreement.  Any Party seeking
indemnification under this Article X will comply with the notice
provisions of Sections 10.1.2 and 10.2.4.

 

10.4            Enforceability.  In the event the indemnities set forth in
this Agreement are found to be unenforceable, the Parties agree to negotiate,
in good faith, a substitute indemnity provision that embodies the intent of the
original indemnity without the objectionable provisions that made it
unenforceable.

 

10.5            Dispute Resolution.  The Parties agree that all controversies,
Claims or disputes between them arising out of this Agreement, including, but
not limited to, all contractual, tortious, common law, statutory, legal or
equitable Claims or any other Claims or disputes concerning the terms, the
meaning of the terms’ implementation, and/or the provisions of this Agreement
(collectively, “Disputes”) shall be resolved in accordance with the
following provisions:

 

(a)           After reasonable
notice of such Dispute, the Parties shall, in good faith, use commercially
reasonable efforts to resolve the Dispute by meeting and conferring;

 

(b)           In the event that the
Parties are unable to resolve any Dispute by negotiation, pursuant to paragraph
(a) above, within twenty (20) Business Days after receipt of the written
notice of Dispute, the Parties shall engage in a binding arbitration.  Any fees and costs incurred by or payable to
the arbitrators shall be paid by the non-prevailing Party, as determined by
arbitration.  The Parties shall make
commercially reasonable efforts and take all necessary steps to successfully
resolve their Dispute by arbitration within ninety (90) Business Days from the
submission of the Dispute to the arbitrator.

 

(c)           Arbitration shall be
by a three (3) person panel using the American Arbitration Association’s rules for
commercial disputes.  Each Party shall
select one (1) arbitrator and the two (2) shall jointly select the
third.  In the event that an arbitration
panel will be asked to rule on any environmental issue, each arbitrator on
such panel shall have at least ten (10) years of recent experience in
environmental remediation.

 

43

 

ARTICLE XI

CONFIDENTIALITY

 

11.1            Confidential Treatment of Seller’s
Confidential Information.  Purchaser
acknowledges and agrees that the proposed conveyance of the Purchased Assets, the
terms and provisions of this Agreement and any and all related details shall be
considered “Confidential Information” (as defined in the Confidentiality
Agreement) and shall be treated as such. 
To the extent that Purchaser’s Affiliate, but not Purchaser, has entered
into the Confidentiality Agreement, Purchaser agrees to be bound by all of the
obligations of its Affiliate under the Confidentiality Agreement as if
Purchaser was an original party to that agreement.  Confidential Information shall include, but
is not limited to, all environmental assessments and test results of the Tanks
performed on behalf of Seller.  Purchaser
shall not disclose or permit others (such as its Affiliates, employees, agents,
representatives or contractors) to disclose, to any third party, any
correlation that may exist between Seller’s Confidential Information and other
information obtained from another source.

 

ARTICLE XII

CONDITIONS PRECEDENT

 

12.1            Conditions Precedent to the
Obligations of Seller.  Each and
every obligation of Seller to be performed on the Closing Date will be subject
to the satisfaction, or waiver by Seller, prior to or at the Closing of the
following express conditions precedent:

 

(a)           Representations and
Warranties.  The representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date
(except as to any representation or warranty that specifically relates to an
earlier date, which representation or warranty shall be true and correct as of
such earlier date);

 

(b)           Performance.  Purchaser shall have performed and complied
in all material respects with all of its obligations under this Agreement that
are to be performed or complied with by it prior to or at Closing;

 

(c)           Guaranty.  Guarantor shall have duly executed and
delivered the Guaranty to guarantee the obligations of Purchaser, and any
successor or assignee of Purchaser, under this Agreement and under any other
document delivered to Seller at or before Closing.  Before the end of the Inspection Period,
Purchaser shall provide Seller with a fully executed Guaranty in the form and
substance as is attached to this Agreement as Exhibit I.  The Guaranty shall survive Closing and
continue until each and every obligation of Purchaser under this Agreement is
satisfied or otherwise terminated in accordance with its terms;

 

(d)           Release.  Purchaser shall have duly executed and delivered
the environmental release attached to this Agreement as Exhibit Q;

 

(e)           Brand Fee Agreement.  Purchaser and EMOC shall have executed in
accordance with this Agreement the Brand Fee Agreement for use in the sale and
distribution of certain Branded Fuels at the service station properties;

 

44

 

(f)            Assignment and
Assumption of Lease Agreements. 
Purchaser shall have executed the Assignment of Leases; and

 

(g)           Compliance with
Regulatory Approvals.  Purchaser shall
have obtained and complied with, as applicable, any and all required
governmental and regulatory approvals and consents, including, but not limited
to, the Hart-Scott Rodino Act pursuant to Section 2.6.

 

12.2            Conditions Precedent to the
Obligations of Purchaser.  Each and
every obligation of Purchaser to be performed on the Closing Date will be
subject to the satisfaction, or waiver by Purchaser, prior to or at the Closing
of the following express conditions precedent:

 

(a)           Representations and
Warranties.  The representations and
warranties made by Seller in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date
(except to any representation or warranty that specifically relates to an
earlier date, which representation or warranty shall be true and correct as of
such earlier date);

 

(b)           Performance.  Seller shall have performed and complied in
all material respects with all of its obligations under this Agreement that are
to be performed or complied with by it prior to or at Closing;

 

(c)           Assignment and
Assumption of Lease Agreements. 
Seller shall have executed the Assignment of Leases;

 

(d)           Compliance with
Regulatory Approvals.  Seller shall
have complied with any and all required governmental and regulatory approvals
and consents, including, but not limited to, the Hart-Scott-Rodino Act pursuant
to Section 2.6;

 

(e)           Brand Fee Agreement.  EMOC shall have executed in accordance with
this Agreement the Brand Fee Agreement, for use in the sale and distribution of
certain Branded Fuels at the service station properties.

 

12.3            Waiver of Conditions.  Either Party shall have the right, but not
the obligation, at any time, by notice in writing to the other Party, to waive,
in whole or in part, satisfaction of all or any of the Conditions Precedent to
the extent not legally required to be satisfied.

 

12.4            Termination.  If the Conditions Precedent have not been
satisfied or waived in accordance with this Article XII on or before the
Final Closing Date, this Agreement may be terminated (a) by Seller in
accordance with Section 13.1.2, or (b) by Purchaser in accordance
with Section 13.1.3.

 

ARTICLE XIII

EARLY TERMINATION; REMEDIES

 

13.1            Early Termination.  This Agreement may be terminated and the
contemplated transactions abandoned prior to Closing under the following
circumstances:

 

13.1.1         Mutual
Agreement.  Upon the mutual agreement
of the Parties, which termination will be effective on the date agreed to by
the Parties.

 

45

 

13.1.2         Seller’s
Termination Notice.  Upon the date
specified in the termination notice from Seller to Purchaser pursuant to any
applicable termination provision provided herein, or under the following
circumstances:

 

(a)           in the event of a
Default by Purchaser of (i) any material obligation, covenant, or
undertaking under this Agreement, including, without limitation, the payment of
any Deposit, the payment of the balance of the Purchase Price, or the Closing
of the transactions contemplated herein, or (ii) any other obligation,
covenant, or undertaking under this Agreement, provided, in the case of this
clause (ii) that Seller has provided notice of such Default to Purchaser
and Purchaser has failed to remedy its Default within a reasonable time period
after receipt of such notice;

 

(b)           if a change in law or
circumstances (including the existence of any third-party initiated litigation)
after the Effective Date exists that is of such a nature as to frustrate the
purpose of this Agreement or the Seller’s objectives hereunder;

 

(c)           if any law,
injunction, judgment or ruling enacted, promulgated, issued, entered, amended
or enforced by any Governmental Authority enjoining, preventing or prohibiting
consummation of the contemplated transaction or making the consummation of the
contemplated transaction illegal is in effect (other than any such law,
injunction, judgment or ruling enacted pursuant to the Hart-Scott-Rodino Act);
or

 

(d)           if any of the
Conditions Precedent contained in Section 12.1 are not satisfied or waived
in accordance with Article XII as of the Final Closing Date; provided,
however, that Seller shall not have the right to terminate this Agreement
pursuant to this Section 13.1.2(d) based on Purchaser’s failure to
comply with the Hart-Scott-Rodino Act in Section 12.1(g) during the
HSR Second Request Period, if applicable.

 

13.1.3         Purchaser’s
Termination Notice.  Upon the date
specified in a notice of termination from Purchaser to Seller pursuant to any
applicable termination provision provided herein, or under the following
circumstances:

 

(a)           if Purchaser provides
Seller with such notice of termination prior to the end of the Inspection
Period; or

 

(b)           if any of the
Conditions Precedent contained in Section 12.2 are not satisfied or waived
in accordance with Article XII as of the Final Closing Date; provided,
however, that Purchaser shall not have the right to terminate this Agreement
pursuant to this Section 13.1.3(b) based on Seller’s failure to
comply with the Hart-Scott-Rodino Act in Section 12.2(d) during the
HSR Second Request Period, if applicable.

 

13.2            Seller’s Remedies.  All remedies provided to Seller under this Section 13.2
will be cumulative and not exclusive.

 

13.2.1         Before Closing. 
In
the event of a Default by Purchaser before Closing, Seller will be entitled (a) to
terminate this Agreement in accordance with Section 13.1; and (b) to
the release of the Deposit pursuant to Section 3.3.4.  The remedies set forth in this Section 13.2.1
shall constitute Seller’s sole and exclusive remedy for Purchaser’s Default
before Closing, at law or in equity.

 

46

 

13.2.2         Post
Closing.  In the event of a Default by
Purchaser under this Agreement after Closing, Seller may enforce every remedy,
whether public or private, available at law or in equity, in addition to all of
its rights and remedies under this Agreement. 
Available remedies include, but are not limited to, injunctive relief
and/or specific performance, against Purchaser, or any other person or entity
having the right to use or occupy any of the Properties.

 

13.2.3         Recoupment;
Set-off.  If Purchaser fails to
timely pay any amount due to Seller under this Agreement, then, to the extent
permitted by the Brand Fee Agreement, or any other agreement between Seller and
Purchaser or its Affiliate, Seller may elect to recoup or set-off the amounts
from any credit or payment Seller owes Purchaser or its Affiliate under the
Brand Fee Agreement or any other agreement between Purchaser and Seller.  Seller’s election to recoup or set-off is in
addition to any other rights Seller may have at law or in equity.  Seller further will have the right to draft
any accounts receivable, letters of credit, or other accounts Purchaser or its
Affiliates may have established for the benefit of Seller’s election under this
Section 13.2.3.

 

13.3            Purchaser’s Remedies.

 

13.3.1         Before
Closing.  In the event that this
Agreement is terminated by Purchaser pursuant to Section 13.1.3(b) Seller
will pay Purchaser’s actual out-of-pocket third party due diligence costs
incurred to investigate the Properties as of the termination date, provided
Purchaser gives Seller written evidence of the actual costs.  The recoupment of Purchaser’s due diligence
costs shall be limited to an aggregate amount not greater than Five Thousand
U.S. Dollars ($5,000.00 USD) multiplied by the number of Properties included in
the contemplated transaction, but in no event will such amount exceed Two
Hundred and Fifty Thousand U.S. Dollars ($250,000.00 USD).  If Purchaser Defaults under this Agreement,
Seller will have no obligation to reimburse Purchaser for actual out-of-pocket
due diligence expenses.

 

Upon such termination, and following
reimbursement of Purchaser’s due diligence costs, if applicable, Seller will
have no further obligation or liability to Purchaser under this Agreement.  In no event will Purchaser have the right of
specific performance to compel conveyance of any of the Properties.

 

13.3.2         Post
Closing.  Subject to Sections 10.2
and 13.4, in the event of a Default by Seller under this Agreement after the
Closing (which Default is not cured by Seller within thirty (30) days after
receipt of Purchaser’s written notice), Purchaser shall have the right to
enforce its remedies under Section 10.2 of this Agreement.

 

13.4            Consequential Damages.  Notwithstanding anything to the contrary in
this Agreement, Seller will have no liability to anyone for business disruption,
lost profits, incidental, punitive, or consequential damages arising from or
related to this Agreement or the contemplated transaction.  This limitation will be imposed on, but is
not limited to, all Purchaser-Related Parties, or other parties directly or
indirectly acquiring any Property-related interest, right, or title through any
Purchaser-Related Party.

 

47

 

ARTICLE XIV

PROPERTY LOSS

 

14.1            Notice.  Seller will give Purchaser notice of: (a) any
casualty affecting any of the Properties between the Effective Date and the
Closing Date; (b) any actual taking or condemnation of all or any portion
of any of the Properties; or (c) any planned or pending condemnation for
which Seller has received written notice from the condemning authority.

 

14.2            Casualty.  If any Property suffers damage or destruction
between the Effective Date and the Closing Date, Seller will: (a) repair
or make adequate provision for the repair of the subject Property before
Closing; or (b) reimburse Purchaser at Closing by an agreed upon amount to
represent the reduction in the real estate value of the affected Property
caused by the casualty.  If Seller elects
to reimburse Purchaser for the damages, but Seller and Purchaser are unable to
agree upon the reimbursement amount, the amount will be established by an
independent appraisal performed by an experienced and licensed insurance
adjuster located in the state where the affected Property is located.  Such insurance adjuster will be selected by
Purchaser and Seller or, failing their agreement, by an adjuster selected by
each of the adjusters selected by Purchaser and Seller.

 

14.3            Condemnation.  Purchaser recognizes that condemnations may
commence and/or proceed at any time.  A
list of pending condemnation actions is attached as Exhibit S.  This list is not intended to be a
representation or warranty as to the actions of the various authorities with
condemnation authority, and is not intended, nor does it constitute, any
substitute for Purchaser’s due diligence.

 

If between the Effective Date and the
Closing Date, transfer of title or possession of all or any part of any of the
Properties by condemnation occurs, or if Seller receives written notice of a
planned or threatened condemnation of all or part of any of the Properties
before the Closing Date, the Closing will take place without abatement of the
Purchase Price.  At Closing, Seller will
assign to Purchaser all of Seller’s interest in any award that may be payable
to it on account of the condemnation.

 

ARTICLE XV

TANK TRANSFER

 

15.1            Tank System Testing.

 

15.1.1         Tightness
Testing.  Seller, at Seller’s
expense, will cause Tightness Testing to be conducted by Seller’s tightness
testing contractor.  A precision
tightness test will be used for operating Tanks that are used for fuel storage
on operating Properties, and a pressure decay test will be used on all Stage II
vapor recovery lines.  Tightness Testing
will be conducted to detect the presence of leaks in any Tank and will be
completed in compliance with the requirements of the applicable Governmental
Authority and all applicable laws and regulations.  Purchaser acknowledges on its behalf, and on
behalf of Purchaser-Related Parties, that Seller’s tightness testing is not a
substitute for testing that Purchaser may wish to perform as part of its due
diligence or be required to perform by Governmental Authorities after Closing
and as part of its registration of the Tanks and prior to operation of the
Tanks by Purchaser.

 

15.1.2         Failing
Tanks or Lines.  If the tightness
testing results do not meet the applicable Governmental Authority’s standards,
then Seller may elect, in its sole discretion, to: (a) terminate this
Agreement with respect to the affected Property; or (b) repair the Tanks
(or the entire 

 

48

 

Tank field), as appropriate under Seller’s engineering standards, before
Closing.  If Seller elects to terminate
this Agreement with respect to the affected Property, the Purchase Price will
be reduced by the amount attributable to such Property, as established by Exhibit A-4,
which Exhibit will be amended to reflect the affected Property’s
withdrawal from this Agreement’s contemplated transaction.  Seller will have the right to delay Closing
for each Property on which it will remove or repair Tanks.

 

15.1.3         Dispensers.  Seller advises Purchaser, and Purchaser
acknowledges, that Seller will conduct no tests with respect to the
dispensers.  After Closing, Purchaser is
responsible and assumes the obligation for the calibration of the dispensers
and for compliance with all applicable laws, including, but not limited to, all
Environmental Laws and applicable registration and testing requirements,
including, but not limited to, calibration of weights and measures.

 

15.1.4         Tank
Data.  Purchaser acknowledges that it
has received and is familiar with all documentation related to Tanks including
without limitation the tank deflection data and other Tank documents such as
Tank registrations or permits posted in the Virtual Data Room.

 

15.2            Purchaser’s Notices and
Obligations to Effectuate Transfer. 
Within thirty (30) days after the Closing Date or within such shorter
time period, including prior to Closing, as may be required by law, including,
without limitation, any Environmental Law, Purchaser shall take all required
actions to effectuate transfer of the Tanks (including registrations, permits,
operational compliance and liabilities) including, without limitation,
notification of the appropriate state and/or local agencies that Seller’s
interest in the Tanks was conveyed to Purchaser and that Purchaser is the owner
of any Tanks included in this Agreement as of the Closing Date.  Seller will cooperate with Purchaser in
providing such notices if and to the extent Seller’s cooperation is required by
the appropriate state and/or local agencies.

 

15.3            No Warranty of Tests.  Purchaser acknowledges that Seller makes no
warranty as to the accuracy or completeness of the tightness testing
results.  Without limiting the “AS IS,
WHERE IS” nature of the sale of the Properties, Seller makes no representation
or warranty whatsoever, express or implied, of any kind or nature as to the
status of the registration of the Personal Property, Equipment or Inventory,
including, without limitation, any Tanks, fixtures, structures, and all other
equipment and dispensers, or the condition of, the merchantability of or the
fitness for any particular purpose of any of the aforementioned.

 

15.4            Maintenance of Records.  After Closing, Purchaser shall maintain daily
inventory and Tank maintenance records for the Properties, as required to
comply with all applicable laws, rules and regulations.  Purchaser shall deliver legible copies of
such records to Seller within two (2) days of Seller’s request for such
records.  Seller will have the right to
review these records as Seller deems necessary. 
Following Closing, Purchaser agrees to continue to use, maintain, repair
and keep in good order the existing remote monitoring system (e.g., a
Veeder-Root system) or a comparable monitoring system for the Tanks located on
the Properties.

 

ARTICLE XVI

RIGHT OF ENTRY AND INSPECTION; EQUIPMENT

 

16.1            Entry and Inspection.  During the Inspection Period, Purchaser may
inspect the Properties at a time mutually agreed upon by the Parties, at
Purchaser’s expense, to ensure that the

 

49

 

Properties’
Equipment necessary for the operation of the Properties consistent with Seller’s
past practices is present and in working order. 
Purchaser may inspect the Properties personally or through agents,
employees, contractors, or subcontractors and shall assume all risks involved
in entering the Properties pursuant to this Section 16.1.  Seller’s representatives may attend all
inspections.

 

Purchaser and its agents, employees,
contractors, or subcontractors shall not visit any of the Properties without
Seller’s written consent, nor shall they engage in conversations with employees
working at the Properties.

 

16.2            Purchaser’s Equipment
Installation.  Purchaser may enter
the Properties to install point of sale equipment, telephone lines and other
equipment needed to effect an orderly post-Closing transition of the
operations.  Such entry and installation
shall be: (a) at Purchaser’s sole risk and expense; (b) at a
reasonable time occurring after the end of the Inspection Period as selected by
Purchaser; and may be (c) conducted by Purchaser personally or through its
agents, employees, contractors, or subcontractors.  Purchaser’s right to install equipment under
this Section 16.2 is subject to prior written notice to and consent by
Seller, which consent will not be unreasonably withheld.  Purchaser shall make reasonable efforts not
to disrupt existing operations on the Properties and shall keep the Properties
free from any liens or claims arising out of any work performed, materials
furnished, or obligations incurred by or on behalf of Purchaser.  If any mechanic’s or other lien is recorded
against the Properties, Purchaser shall pay the lien or post any bond necessary
to discharge the lien of record within thirty (30) days after receiving notice
of the lien’s recording.

 

16.2.1         Failure to Close after Installation of
Equipment.  If the contemplated transaction
is not consummated for any reason, and Purchaser has installed equipment on the
Properties in accordance with Section 16.2, Purchaser shall, at Seller’s option: (a) remove
the equipment installed by Purchaser and restore the Properties to their
original condition upon ten (10) days notice from Seller; or (b) transfer
title to any equipment installed by Purchaser to Seller, at no cost and without
any express or implied warranty, after which Seller will be solely responsible
for such equipment.  In removing
equipment and restoring the Properties to their original condition, Purchaser
shall make reasonable efforts not to disrupt existing operations on the Properties
and shall assume all risks involved in entering the Properties in connection
therewith.

 

ARTICLE XVII

EXCUSED DELAY

 

17.1            Force Majeure.  No Party’s performance of its obligations
under this Agreement will be deemed untimely if any late performance is due to
acts of God, war, terrorism, civil disturbance, or government (including, but
not limited to, governmental or court orders), or strikes or other labor
disputes (the settlement of which will be totally within the discretion of the
affected Party), or any other act or event beyond the reasonable control of the
affected Party; provided, however, that the affected Party must take all
reasonable steps to perform and must promptly notify the other Party of the
event before such delay will be excused.  The time for performance of any undertaking
will not be extended and no failure to perform will be excused, for more than
sixty (60) days pursuant to this Section 17.1 without the mutual consent
of the Parties.  Neither will the
foregoing be construed to excuse any delay in the performance of either Party’s
monetary obligations, including, but not limited to, Purchaser’s payment of the
Purchase Price.

 

50

 

17.2            Market Withdrawal Before Closing.  Seller reserves its right to invoke the PMPA
market withdrawal provisions at any time before Closing by providing written
notice to Purchaser.  This Agreement
shall terminate in accordance with the terms set forth in Seller’s notice, the
Deposit will be released in accordance with Section 3.3.4, and Purchaser
shall return all Confidential Information to Seller upon termination of this
Agreement.  Thereafter, neither Party
will have any obligation to the other under this Agreement.

 

ARTICLE XVIII

JOINT PUBLICITY

 

18.1            Press Release and Release of
Other Information.  Publicity and
other releases concerning the contemplated transaction shall be jointly planned
and coordinated between the Parties. 
Neither Party will act unilaterally in this regard without the other
Party’s prior approval; provided, however, that such approval will not be
unreasonably withheld.  Subject to the
Confidentiality Agreement referenced in Article XI, nothing contained in
this Agreement will prevent either Party from furnishing information to any
governmental agency or from furnishing information to comply with applicable
laws or regulations.

 

18.2            Internal Communications and
Termination.  Communications by
either Party to its employees, consultants or third parties involved in the
transaction, while subject to the Confidentiality Agreement referenced in Article XI,
will not be deemed to require joint planning or coordination between the
Parties, nor will such communication be subject to the other Party’s review and
consent.  If this Agreement is terminated,
either Party may communicate internally and to interested third parties (that
have been previously been made aware of this transaction) that the transaction
has been terminated without joint planning or the consent of the other Party.

 

ARTICLE XIX

EMPLOYEES

 

19.1            Employees.  Seller will provide Purchaser with a list of
Employees within twenty (20) days following the Effective Date.  Seller will update the list and attach it,
along with all benefit information, as Exhibit V within thirty (30)
days of Closing.  At least twenty (20)
days before the Final Closing Date, and contingent upon Closing, Purchaser
shall offer employment to the Employees or, in the event an Employee’s
employment with Seller-Related Parties terminates prior to Closing, to their
replacement.  Employment with Purchaser
shall become effective at the time of Closing. 
At Closing, Purchaser shall provide Seller with: (a) a list of
Employees who were offered and have accepted positions with Purchaser; and (b) a
list of Employees who were offered, but have not accepted positions, with
Purchaser.  Purchaser shall comply with
the employment and benefit obligations as set forth in Exhibit V.  Purchaser agrees to refrain from soliciting
or employing any of Seller-Related Parties’ employees other than those
appearing on Exhibit V.

 

Notwithstanding the foregoing,
Purchaser may designate a Seller approved third party management company to
satisfy Purchaser’s obligations with respect to Employees set forth in this
Agreement (including, without limitation, those obligations set forth in Exhibit V
and the schedules thereto); provided, that, no such designation shall relieve
Purchaser of its obligations with respect to Employees.

 

51

 

19.2            Schedules.  Schedules V-1, V-2, V-3, V-4 and V-5 are set
forth as attachments to Exhibit V and are incorporated herein by
reference.

 

ARTICLE XX

INSURANCE

 

20.1            Seller Insurance.  Seller and Purchaser acknowledge that Exxon
Mobil Corporation maintains a worldwide program of property and liability
insurance coverage for itself and its Affiliates, including Seller.  This program has been designed to achieve a
coordinated risk-management package for the entire Exxon Mobil corporate group.

 

The program consists principally of
three types of policies:

 

(a)           policies issued to
Exxon Mobil Corporation or its predecessors;

 

(b)           policies issued
directly to affiliates by one of ExxonMobil’s wholly-owned insurance companies,
i.e., Ancon Insurance Company, Inc., Bluefield International Insurance
Inc., et. al. (herein referred to collectively as “ExxonMobil Captive
Insurers”); and

 

(c)           policies issued to
affiliates by locally admitted insurers which are reinsured by one of the
ExxonMobil Captive Insurers.

 

All of the insurance policies
through which the worldwide program of coverage is presently or has previously
been provided by or to Exxon Mobil Corporation, its predecessors or Affiliates
are herein referred to collectively as the “ExxonMobil Policies.”

 

20.2            No Continuing Coverage.  It is understood and agreed by Purchaser that
from and after the Closing:

 

(a)           no insurance coverage
shall be provided under the ExxonMobil Policies to Purchaser;

 

(b)           any and all policies
insured or reinsured by any of the ExxonMobil Captive Insurers which, but for
this provision, would have insured any assets transferred pursuant to this
Agreement, shall be deemed terminated, commuted and cancelled ab initio; and

 

(c)           no Claims regarding
any matter whatsoever, whether or not arising from events occurring prior to
Closing, shall be made by Purchaser or its Affiliates and/or subsidiaries,
against Seller and/or its Affiliates or any other member of the Exxon Mobil
corporate group, or any of their respective employees or former employees
and/or with respect to any of the ExxonMobil Policies regardless of their date
of issuance.

 

20.3            Insurance Indemnity.  In addition to any indemnification
obligations set forth herein, Purchaser shall indemnify and defend Seller, its
parents and Affiliates against, and shall hold them harmless for, from, and
against any and all Claims made after Closing against any of the ExxonMobil
Policies, by Purchaser and its Affiliates and/or subsidiaries or any company or
Person claiming to be subrogated to Purchaser’s or its Affiliate’s and/or
subsidiaries’ rights, including all costs and expenses (including attorneys’
fees), related thereto.  Such indemnity
shall cover, without limitation, any claim by 

 

52

 

an insurer for
reinsurance, retrospective premium payments or prospective premium increases
attributable to any such claim.

 

Notwithstanding any provision of
this Agreement to the contrary, Purchaser’s insurance policy(ies) shall: (a) cover
Seller and its Affiliates as additional insureds for liabilities arising from
or assumed under this Agreement, including, without limitation, Environmental
Liabilities; and (b) be primary as to all other policies (including any
deductibles or self-insured retentions). 
It is further agreed that Purchaser and its insurer(s) providing
coverage shall waive all rights of subrogation and/or contribution against
Seller and its Affiliates to the extent liabilities are assumed by Purchaser.

 

ARTICLE XXI

MISCELLANEOUS

 

21.1            Entire Agreement.  This Agreement and the documents referred to
herein (including the Confidentiality Agreement) constitute the entire
agreement between the Parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the Parties in connection herewith, except as
specifically set forth herein.  No
amendment, supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by both Parties.  If the terms and conditions of this Agreement
conflict with the terms and conditions of the Brand Fee Agreement with respect
to the contemplated transactions, the terms and conditions of this Agreement
shall govern.

 

21.2            Notices.  Any notice, demand, request, consent, approval,
or other communication that a Party is required or desires to give, make, or
communicate to the other will be effective and valid only when in writing.  Such notice will be deemed duly given when
received, if it is mailed by registered or certified mail, return receipt
requested, or sent by personal delivery, facsimile, or a nationally recognized
overnight carrier, return receipt requested, all charges prepaid, addressed in
the case of Seller to:

 

Exxon Mobil Corporation

3225 Gallows Road

Fairfax, VA 22037

Attention: Distributor Business Manager

Facsimile: (703) 846-4511

 

Exxon Mobil Corporation

3225 Gallows Road

Fairfax, VA 22037

Attention: Real Estate Manager

Facsimile: (703) 846 - 4546

 

ExxonMobil Environmental Services

3225 Gallows Road

Fairfax, VA 22037

Attention: Environmental Claims Manager

Facsimile: (703) 846 - 5257

 

and in the case of Purchaser to:

 

53

 

Global Companies LLC

800 South Street

Suite 200

Waltham, MA 02453

Attention: 
President and Chief Executive Officer

Facsimile: (781) 398-4165

 

With a copy to:

 

Global Companies LLC

800 South Street

Suite 200

Waltham, MA 02453

Attention: General Counsel

Facsimile: (781) 398-9211

 

Or, in either case, at the last address provided by a
Party and given by notice as provided by this Section 21.2.

 

21.3            Construction.  Unless the context of this Agreement
otherwise requires: (a) words of either gender include the other gender; (b) words
using the singular or plural also include the plural or singular, respectively;
(c) the terms “hereof,” “herein,” “hereby,” “hereto” and similar words
refer to this entire Agreement and not any particular Article, Section, Clause
or Exhibit or any other subdivision of this Agreement; (d) references
to “Article,” “Section,” “Exhibit,” or “Schedule” are to the Articles,
Sections, Exhibits and Schedules, respectively, of this Agreement; (e) the
words “include” or “including” will be deemed to be followed by “without
limitation” or “but not limited to” whether or not they are followed by such
phrases or words of like import; and (f) references to “this Agreement” or
any other agreement or document will be construed as a reference to such
agreement or document, including any Exhibits and Schedules thereto, as
amended, modified or supplemented and in effect from time to time and will
include a reference to any document that amends, modifies or supplements it, or
is entered into, made or given pursuant to or in accordance with its
terms.  Whenever this Agreement refers to
a number of days, such number will refer to calendar days unless Business Days
are specified.

 

21.4            Captions.  Captions used in connection with the Articles
and Sections of this Agreement are for convenience only and will not be deemed
to enlarge, limit or otherwise modify the meaning or interpretation of this
Agreement

 

21.5            Survival.  The provisions of Article II, Article IV,
Articles VI through XIII inclusive, Articles XV through XXI inclusive, will not
merge and will survive Closing and any subsequent transfer of any right title
or interest by Purchaser.  All other
provisions not included or incorporated in any document to be executed and
delivered at Closing will not survive Closing.

 

21.6            Further Assurances.  Following the Effective Date or the Closing
Date, as the case may be, and for no further consideration, Seller and
Purchaser will perform any acts and execute, acknowledge and deliver any
additional documents reasonably requested by the other Party to: (a) vest
Purchaser with all of Seller’s right, title, and interest in the Purchased
Assets and other rights conveyed 

 

54

 

under this
Agreement; (b) carry out the transactions contemplated by this Agreement;
and (c) protect each Party’s rights under this Agreement.

 

21.7            Expenses.  Except as otherwise specifically provided,
each Party will bear all expenses it incurs in connection with this Agreement
and/or any related disputes.  Expenses
include, but are not limited to, fees charged by counsel, accountants, consultants,
and other experts.

 

21.8            Time is of the Essence.  Purchaser acknowledges that significant
coordination is required for a closing, such as separating personnel,
accounting for and transferring existing and new fuels, dry goods, and
utilities, and other related activities. 
Accordingly, unless otherwise expressly provided, TIME IS OF THE ESSENCE
IN THE PERFORMANCE OF ALL OF PURCHASER’S OBLIGATIONS SET FORTH IN THIS
AGREEMENT.  Purchaser further understands
and acknowledges that Closing and consummation of the contemplated transaction
are subject to and conditioned upon Purchaser’s due and timely performance of
its obligations set forth in Article XII, including, but not limited to,
payment of the Purchase Price.

 

21.9            Assignment.  Purchaser may not assign this Agreement
without Seller’s prior written consent, which consent may be withheld for any
reason.  This Agreement will bind and
inure to the benefit of the Parties and their respective successors and
assigns.

 

21.10          Counterparts.  This Agreement may be executed by the Parties
in counterpart, each of which will be deemed an original.  Such counterparts together will constitute
one and the same instrument.

 

21.11          Governing Law.  This Agreement and the transactions
contemplated herein and all disputes between the Parties under or related to
this Agreement or the facts and circumstances leading to its execution or
performance, whether in contract, tort or otherwise, will be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
giving effect to its conflicts of law rules, except that with respect to any
dispute involving compliance with Environmental Laws, the Parties agree that it
is the Environmental Laws applicable to the Property in dispute that apply with
respect to such compliance.  Each Party: (a)
irrevocably submits itself to the personal jurisdiction of the federal court
for the Eastern District of Virginia in Alexandria, Virginia or, if federal
jurisdiction is not available, to the jurisdiction of the Fairfax County
Circuit Courts, as well as to the jurisdiction of all courts to which an appeal
may be taken from such courts, in any suit, action or proceeding arising out of
or relating to this Agreement, any of the transactions contemplated by this
Agreement or any facts and circumstances leading to its execution or
performance; (b) agrees that all claims in respect of such suit, action or
proceeding must be brought, heard and determined exclusively in such courts; (c)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from such courts; (d) agrees not to bring any
suit, action or proceeding arising out of our relating to this Agreement or any
of the transactions contemplated by this Agreement in any other court; and (e) waives
any defense of inconvenient forum to the maintenance of any suit, action or
proceeding so brought.

 

21.12          No Third Party Beneficiary.  Other than with respect to any Seller or
Purchaser Indemnified Parties, the Parties agree that no third party
beneficiary rights in favor of any person or entity are, nor are they intended
to be, created by this Agreement.

 

55

 

21.13          No Recording of this Agreement.  Before
Closing, neither Party will record this Agreement among any land or clerk’s
records or with any other governmental office. 
If either Party records this Agreement, it will be deemed, at the option
of the other Party: (a) ipso facto null and void and of no further force;
or (b) a material Default and serve as a basis for termination or other
remedies as provided by this Agreement.

 

21.14          1031 Exchange.  Seller may require Purchaser, pursuant to Section 1031
of the Internal Revenue Code of 1986, as amended, to pay the Purchase Price to
a trust or intermediary party designated by Seller, so Seller may participate
in a tax-deferred exchange of like-kind property.  Such election will be made, if at all, by
notice to Purchaser at least ten (10) days before the Closing Date.  The Parties agree to execute any necessary
agreements and/or other documents to effectuate Seller’s tax-deferred exchange,
provided: (a) Purchaser’s obligations under this Agreement will not be
increased; (b) such documents will not modify Purchaser’s representations,
warranties or obligations under this Agreement; (c) the Purchase Price
paid by Purchaser will not be different from that which Purchaser would have
paid pursuant to Article III; (d) Purchaser will incur no additional
cost, expense or liability as a result of its cooperation in the exchange; and (e) Seller
will indemnify and hold harmless Purchaser for additional expenses, including,
but not limited to, taxes and closing costs, and any cost or expense (including
reasonable counsel fees) that Purchaser may suffer, sustain or become subject
to as a result of the Purchase Price being paid to a trust or intermediary
party, rather than to Seller, and the trust’s or intermediary’s subsequent use
of the Purchase Price.

 

21.15          Severability.  If any provision in this Agreement is
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
the judgment will not affect, impair or invalidate the remainder of this
Agreement and will be confined in its operation to the provision of this
Agreement directly involved in the controversy.

 

21.16          Waiver.  Either Party may waive at any time and from
time to time the terms and conditions of this Agreement under which it is
entitled to a benefit.  However, except
as otherwise specifically provided, a Party’s failure or delay in exercising
its respective rights upon the other Party’s failure to perform or observe any
condition, covenant or provision of this Agreement will not operate as a
waiver.  Nor will any single or partial
exercise of any right preclude the other Party from exercising its rights under
this Agreement.  No waiver or release of
any of the terms, conditions, or provisions of this Agreement will be valid or
asserted or relied upon by either Party or offered in any judicial proceeding
or otherwise, unless the same is in writing and duly executed by the waiving or
releasing Party.

 

21.17          Rules of Construction.  The provisions of this Agreement are to be
construed as a whole according to their common meaning to achieve the
objectives and purposes of this Agreement. 
Each Party represents that it and its respective counsel have reviewed
this Agreement.  The rule of
construction that any ambiguities are to be resolved against the drafting party
will not be employed in interpreting this Agreement as both Purchaser and
Seller are considered to have equal bargaining power.

 

21.18          Seller’s Self-Help Rights.  If Purchaser fails to discharge its
obligations under this Agreement, Seller may provide Purchaser notice of the
required action and a reasonable period (not less than thirty (30) days) to
cure the failure.  If, notwithstanding
such notice and opportunity to cure, the failure persists, then Seller may, by
separate notice to Purchaser, specify the action required and a deadline.  If Purchaser fails to cure by such deadline,
then in addition to, and without limiting other 

 

56

 

rights and remedies
available to Seller pursuant to the law and under this Agreement, Seller may
take curative action at Purchaser’s cost and expense.

 

21.19          Material Inducement.  Purchaser’s obligations under this Agreement
including, but not limited to, Article VII, were in each instance a
material inducement to Seller to sell each Property to Purchaser.

 

21.20          Time Periods.  If Seller fails to deliver any notice or
document to Purchaser within a time period set forth in this Agreement,
specifically including, but not limited to, Article VII, then Purchaser’s
sole remedy after providing Seller with written notice will be to extend any
permissible or required due date for any relevant subsequent action by one (1) day
for each day that the notice or document was late.

 

21.21          Waiver of Jury Trial.  SELLER AND PURCHASER EXPRESSLY AGREE THAT TO
INDUCE THE CONSUMMATION OF THE CONTEMPLATED TRANSACTIONS, AND FOR OTHER GOOD
AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE
ACKNOWLEDGED, THE PARTIES KNOWINGLY, VOLUNTARILY, INTELLIGENTLY,
EXPRESSLY, AND IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVE,
AND WILL WAIVE, TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR CONNECTED WITH THIS AGREEMENT, INCLUDING THE ENFORCEMENT OF ANY
REMEDY AUTHORIZED BY THIS AGREEMENT.

 

21.22          Exhibits.  The Parties agree that a number of the
Exhibits attached hereto are not in final form. 
Seller shall attach the final form of each Exhibit not later than
five (5) days before the Final Closing Date, or by such other time period
as may be provided in this Agreement or the Exhibits, and shall notify
Purchaser of Seller’s attachment of any new or changed form of Exhibit to
this Agreement.

 

21.23          Binding Offer.  This Agreement shall constitute a binding
and, except as set forth below, irrevocable offer by Purchaser to buy the
Purchased Assets, which offer may be accepted by Seller by execution of this
agreement within ninety (90) days of its submission to Seller.  By his or her signature below, the person
executing this Agreement on behalf of the Purchaser warrants that he or she has
authority to bind the Purchaser to this Agreement.  If Seller does not execute this Agreement
within ninety (90) days after Purchaser’s submission, Purchaser may thereafter
revoke its offer.  In the event of such a
revocation, the Signing Deposit shall be released to Purchaser, along with any
interest thereon.

 

[Signatures
appear on the following page.]

 

57

 

IN WITNESS WHEREOF, this Agreement has
been executed by Seller and Purchaser on the dates set forth below, and is made
effective as of the Effective Date.

 

	
  EXXONMOBIL OIL CORPORATION,

  a New York corporation

  	
   

  	
  GLOBAL COMPANIES LLC, a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark Pagano

  	
   

  	
  By:

  	
  /s/ Eric Slifka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark Pagano

  	
   

  	
  Name:

  	
  Eric Slifka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Agent and Attorney in Fact

  	
   

  	
  Title:

  	
  President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  May 24, 2010

  	
   

  	
  Date:

  	
  May 24, 2010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXXON MOBIL CORPORATION, a

  	
   

  	
   

  	
   

  
	
  New Jersey corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark Pagano

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Mark Pagano

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Agent and Attorney in Fact

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  May 24, 2010

  	
   

  	
   

  	
   

  

 

58

 

APPENDIX OF EXHIBITS

 

	
  Exhibit A-1

  	
  Fee Properties

  
	
  Exhibit A-2

  	
  Lease Properties

  
	
  Exhibit A-3

  	
  Dealer Owned Service Stations

  
	
  Exhibit A-4

  	
  Allocation of Purchase Price

  
	
  Exhibit A-5

  	
  Earnest Money Deposits

  
	
  Exhibit B

  	
  Intentionally Omitted

  
	
  Exhibit C

  	
  Intentionally Omitted

  
	
  Exhibit D

  	
  Access Agreements

  
	
  Exhibit E

  	
  Subsurface Clearance “Drilling” Protocol

  
	
  Exhibit E-1

  	
  Right of Access Agreement

  
	
  Exhibit F

  	
  Intentionally Omitted

  
	
  Exhibit G

  	
  Escrow Agreement

  
	
  Exhibit H

  	
  Assignment and Assumption of Lease
  Agreements

  
	
  Exhibit I

  	
  Unconditional Guaranty of Performance
  and Payment

  
	
  Exhibit J

  	
  Quitclaim Deeds

  
	
  Exhibit K

  	
  Bill of Sale

  
	
  Exhibit L

  	
  Existing On the Run
  Convenience Stores

  
	
  Exhibit M

  	
  Intentionally Omitted

  
	
  Exhibit N

  	
  Intentionally Omitted

  
	
  Exhibit O

  	
  Governmental Reimbursement Fund Schedule
  of Seller’s Prior Claims

  
	
  Exhibit P

  	
  Listed Claims

  
	
  Exhibit Q

  	
  Environmental Release

  
	
  Exhibit R

  	
  Notification Letter

  
	
  Exhibit S

  	
  List of Condemnations

  
	
  Exhibit T

  	
  Assignment of PMPA Franchise Agreements

  
	
  Exhibit U

  	
  Assignment of Non-Petroleum Lease

  
	
  Exhibit V

  	
  Employees and Benefits

  
	
  Exhibit W

  	
  Statements of Environmental
  Responsibility

  
	
  Exhibit X

  	
  Assignment of Reimbursement Agreement

  
	
  Exhibit Y

  	
  Inventory

  
	
  Exhibit Z

  	
  Assignment and Assumption Agreement

  
	
  Exhibit AA

  	
  Reimbursement Fund Letter

  
	
  Exhibit BB

  	
  Contracts

  
	
  Exhibit CC

  	
  Underground Storage Tank Upgrades

  
	
  Exhibit DD

  	
  Upgrade Escrow Agreement

  
	
  Exhibit EE

  	
  Brand Fee Agreement

  
	
  Exhibit FF

  	
  Liquidated Damages

  

 

59

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