Document:

IEX-2013.11.08-EX10.1

 EXHIBIT 10.1

EMPLOYMENT AGREEMENT
This AGREEMENT, dated as of November 8, 2013, is between IDEX Corporation, a Delaware corporation with its executive offices at 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045-4824 (the “Corporation”), IDEX Service Corporation, a Delaware corporation with its headquarters at 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045 (the “Company”), and Andrew K. Silvernail, an individual (the “Executive”).
RECITALS:
A.    The Executive has been employed by the Company and has been serving as Chief Executive Officer of the Corporation.  
B.    The Corporation, the Company, and the Executive desire to set forth the terms upon which the Executive will continue be employed by the Company and serve as Chief Executive Officer of the Corporation.
NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation, the Company and the Executive agree as follows:
1.Definitions.  The following definitions apply for purposes of this Agreement.
(a)“Board of Directors” or “Board” means the Board of Directors of the Corporation.
(b)“Cause” means that any of the following conditions exist:
(i)The Executive’s failure to perform his material duties under this Agreement (other than as a result of his Disability) if such failure, if curable, is not cured within 30 days after written notice is provided to the Executive.
(ii)The Executive’s breach of his fiduciary duty to the Corporation.
(iii)The Executive’s indictment under the laws of the United States, or any state thereof, for a (i) civil offense which is injurious to the business reputation of the Corporation or (ii) criminal offense.
(iv)Breach by the Executive of any material provision of this Agreement or of any policy of the Corporation if such breach, if curable, is not cured within 30 days after written notice is provided to the Executive.
(c)A “Change in Control” means the occurrence of (i) any transaction or series of transactions which within a 12-month period constitute a change of management or control where (A) at least 51 percent of the then outstanding shares of common stock are (for cash, property (including, without limitation, stock in any corporation), or indebtedness, or any combination thereof) redeemed by the Corporation or purchased by any person(s), firm(s) or entity(ies), or exchanged for shares in any other corporation whether or not affiliated with the Corporation, or any combination of such redemption, purchase or exchange, or (B) at least 51 percent of the Corporation’s assets are purchased by any person(s), firm(s) or entity(ies) whether or not affiliated with the Corporation for cash, property (including, without limitation, stock in any corporation) or indebtedness or any combination thereof, or (C) the Corporation is merged or consolidated with another corporation regardless of whether the Corporation is the survivor (except any such transaction solely for the purpose of changing the Corporation’s domicile or which does not change the ultimate beneficial ownership of the equity interests in the Corporation), or (ii) any substantial equivalent of any such redemption, purchase, exchange, change, transaction or series of transactions, acquisition, merger or consolidation constituting such a change of management or control.  For purposes hereof, the term “control” shall have the meaning ascribed thereto under the Securities Exchange Act of 1934, as amended and the regulations thereunder, and the term “management” shall mean the chief executive officer of the Corporation.  For purposes of clause (i)(B) above or as appropriate for purposes of clause (ii) above, the Corporation shall be deemed to include on a consolidated basis all subsidiaries and other affiliated corporations or other entities with the same effect as if they were divisions.  Notwithstanding the foregoing, and only to the extent necessary to comply with Section 409A, a “Change of Control” will have occurred only if, in addition to the requirements set above, the event constitutes a change in the ownership or effective control of IDEX Corporation, or in the ownership of a substantial portion of the assets of IDEX Corporation, within the meaning of guidance issued by the Secretary of the Treasury under Section 409A of the Code.
(d)“Code” means the Internal Revenue Code of 1986, as amended.
(e)“Company” means IDEX Service Corporation.
(f)“Corporation” means IDEX Corporation.

(g)“Disability” means a disability that has existed for a period of 6 consecutive months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as Chief Executive Officer of the Corporation. Notwithstanding the foregoing, and only to the extent necessary to comply with Section 409A of the Code, Executive will have suffered a “Disability” only if, in addition to the requirements set above, it represents a disability within the meaning of guidance issued by the Secretary of the Treasury under Section 409A of the Code. 
(h)“Effective Date” means November 8, 2013.
(i)“Good Reason” means:
(i)There has been a material diminution in the Executive’s responsibilities, duties, title, reporting responsibilities within the business organization, status, role or authority.
(ii)Removal of the Executive from the position of Chief Executive Officer, other than elevation to a higher ranking executive officer position with the Corporation.
(iii)A required relocation of more than 75 miles from the location of  Executive’s principal job location or office immediately prior to the Change In Control.
(iv)A material breach by the Company for the Corporation of any of the material terms of this Agreement.

A condition will not be considered “Good Reason” unless Executive gives the Corporation written notice of the condition within 90 days after the condition comes into existence and the Corporation fails to substantially remedy the condition within 30 days after receiving Executive’s written notice

2.Employment; Duties.  Subject to the terms and conditions set forth in this Agreement, the Corporation and the Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts continued employment as the Chief Executive Officer of the Corporation and will perform and execute the duties and responsibilities assigned to the Executive from time to time by the Board of Directors.  The Executive will perform those duties and discharge those responsibilities as are commensurate with his position.  The Executive agrees to perform his duties and discharge his responsibilities in a faithful manner and to the best of his ability and to use all reasonable efforts to promote the interests of the Corporation.  The Executive may not accept other gainful employment except with the prior consent of the Board of Directors of the Corporation.  With the prior consent of the Board of Directors of the Corporation, the Executive may become a director, trustee or other fiduciary of other corporations, trusts or entities.  Notwithstanding the foregoing, the Executive may manage his passive investments and be involved in charitable, civic and religious interests so long as they do not materially interfere with the performance of the Executive’s duties hereunder.

3.Compensation.
(a)During the term of the Executive’s employment under this Agreement, the Executive will receive a base salary at the rate of $870,000 per year, payable in accordance with the Company’s regular payroll practices.  On an annual basis, the Board of Directors will, in good faith, review the base salary of the Executive to consider appropriate increases (but not decreases) in the base salary.  If the Executive dies during the period of time of his service under this Agreement, service for any part of the payroll period of his death will be considered service for the entire payroll period.  
(b)During the term of the Executive’s employment under this Agreement, the Executive will be entitled to receive an annual cash bonus from the Corporation calculated pursuant to the Corporation’s Incentive Award Plan (the “IAP”) in effect from time to time.  
(c)Executive will be annually considered for long-term equity incentive awards under the Corporation’s I A P.
(d)The Company will deduct or withhold from all salary and bonus payments, and from all other payments made to the Executive, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement. 

4.Other Benefits and Terms.  During the term of the Executive’s employment under this Agreement, the Executive will be entitled to the following other benefits and terms:
(a)The Executive will be entitled to participate in, the Company’s health and medical benefit plans, any profit sharing and retirement plans, and any insurance policies or programs from time to time generally offered to all or substantially all executive employees who are employed by the Company.  These plans, policies and programs are subject to change at the sole discretion of the Corporation.  
(b)The Executive will be entitled to any other benefit from time to time generally offered to all or substantially all senior executive employees who are employed by the Company.

(c)The Company will provide the Executive with the use of an automobile or with an auto use allowance that is commensurate with his position in accordance with the Corporation’s policy.
(d)The Executive will be entitled to limited use (up to 25 hours per year) of the Corporation's aircraft for non-business purposes subject to the terms of the Corporation's Aircraft Use Guidelines.  The provision of this benefit is subject to future modification by the Company in its discretion, in exchange for benefits of substantially equivalent value, as it shall determine in its discretion and such modification will not be deemed to be a breach of a material term of this Agreement.
(e)Except as specifically provided in Sections 9(a)(i) and 9(e)(i), or as required by law, the Executive acknowledges that he, his spouse and dependents will not receive health and medical benefits following any termination of his employment.
(f)The Executive represents and warrants to the Corporation that the Executive’s continued employment and performance of the duties contemplated under this Agreement will not, to his knowledge, be in violation of any non-competition or confidentiality agreements to which the Executive is a party or is bound.

5.Vacations.  The Executive will be entitled to paid vacation each year each year in accordance with the Company’s policy for corporate officers.

6.Reimbursement for Expenses.  The Company will reimburse the Executive for expenses which the Executive may from time to time reasonably incur on behalf of the Corporation in the performance of his responsibilities and duties; provided however, that Executive shall be required to account to the Company for such expenses in the manner prescribed by the Company.

7.Period of Employment.  Subject to the provisions of this Section, the period of employment of the Executive governed under the terms of this Agreement will begin on the Effective Date and continue until November 7, 2015 (the “Expiration Date”).  
Notwithstanding the foregoing:
(a)The Executive’s employment will automatically terminate upon the death or Disability of the Executive.  The foregoing is subject to the duty of the Corporation to provide reasonable accommodation under the Americans with Disabilities Act.
(b)The Corporation may, at its sole option, terminate the Executive’s employment at any time and for any reason by delivering written notice to the Executive.  
(c)The Executive, at his sole option, may terminate his employment by providing written notice to the Corporation at least 90 days prior to the effective date of the termination of employment specified in the notice.
Any notice of termination of employment given by a party must specify the particular termination provision of this Agreement relied upon by the party and must set forth in reasonable detail the facts and circumstances that provide a basis for the termination.
Following the Expiration Date, and except as otherwise specifically provided, the employment of the Executive will become at-will employment unless the parties subsequently enter into a further contract of employment.
8.Indemnification.  The Corporation shall, to the maximum extent permitted by law, indemnify and hold Executive harmless for any acts or decisions made by Executive if Executive acted in good faith and in a manner Executive reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

9.Benefits Upon Termination.  The Company or Corporation will provide the following benefits upon the termination of the Executive’s employment with the Company and Corporation.
(a)Upon Termination by the Corporation Other Than For Cause.  Upon the Corporation’s termination of the Executive’s employment for other than Cause, the Corporation will provide the following:
(i)Salary and Benefits. The Executive will receive his full salary and benefits through the effective date of termination together with any unpaid bonus for a prior period.  Additionally, the Corporation will (i) pay to Executive continued payment of base salary, as in effect at the time of termination, for a period of twenty four (24) months following the date of termination (beginning with the first payroll period following 30 days after the date on which his employment terminates) and (ii) provide continuation of medical coverage (on either an insured or a self-insured basis, in the sole discretion of the Corporation) for 

Executive and Executive’s eligible dependents (as determined under the terms of the Corporation’s medical plans), on substantially the same terms of such coverage that are in existence immediately prior to the Executive’s termination (subject to commercial availability of such coverage), for a period of twenty four (24) months; provided, however, that such coverage shall run concurrently with any coverage available to Executive and his eligible dependents under COBRA; and provided further, however, that the Executive and his eligible dependents shall immediately notify the Corporation if they become covered under Medicare or another employer’s group health plan, and, if such coverage results in Executive or his dependents loss of continuation coverage rights, then, at such time the Corporation’s provision of medical coverage for Executive and his eligible dependents will cease.  
(ii)Bonus. The Executive will receive a bonus amount equal to the 200% of his base salary in effect in the year of the termination of his employment.  This amount will be paid in 24 equal monthly payments beginning with the first payroll period following 60 days after the date on which his employment terminates.  Additionally, the Executive will receive a bonus amount equal to the amount determined by multiplying the bonus amount determined under the IAP by a fraction the numerator of which is the number of full and partial calendar months of service in the calendar year that includes the date of the termination of his employment and the denominator of which is 12.  This amount will be paid at the time payment is customarily made under the IAP.
(iii)Equity Compensation.  All options, restricted stock and other forms of equity based compensation will vest and will be exercisable in the manner provided under the terms of the plans and award agreements under which they were granted.
(iv)Release.  The payment of the foregoing amounts under this Section 9(a) shall be contingent in all respects on Executive’s signing (following his termination of employment) and not revoking, and the Corporation’s receipt of, a Release, substantially in the form attached hereto as Exhibit 1, within 45 days of his termination of employment releasing the Corporation, related companies, and their respective directors, officers, employees and agents (“Indemnitees”) from any and all claims and liabilities respecting or relating to his employment, and promising never to sue any of the Indemnitees for such matters.  
(v)Payments Post-Death.  If the Executive dies during the 24 month period, the balance of the salary payments will be paid as provided in Section 17 and any dependent health or medical coverage will be provided for the balance of the 24 month period.
(vi)Continuing Applicability.  Notwithstanding any other provision to the contrary, the provisions of this Section 9(a) are applicable to the Corporation’s termination of the Executive’s employment for other than Cause that occurs prior to, on, or subsequent to the Expiration Date.
(b)Upon Termination by the Executive or by the Corporation For Cause.  Upon the Executive’s termination of employment or by the Corporation for Cause, the Corporation will provide the following:
(i)Salary and Benefits.  The Executive will receive his full salary and benefits through the effective date of termination together with any unpaid bonus for a prior period.
(c)Upon Termination for Disability.  Upon termination of the Executive’s employment because of Disability, the Corporation will provide the following:
(i)Salary and Benefits.  The Executive will receive his full salary and benefits through the effective date of termination together with any unpaid bonus for a prior period.  
(ii)Bonus.  The Executive will receive a bonus amount equal to the amount determined by multiplying the bonus amount determined under the IAP by a fraction the numerator of which is the number of full and partial calendar months of service in the calendar year that includes the date of the termination of his employment and the denominator of which is 12.  This amount will be paid at the time payment is customarily made under the IAP.
(iii)Equity Compensation.  All options, restricted stock and other forms of equity based compensation will vest and will be exercisable in the manner provided under the terms of the plans and award agreements under which they were granted.
(d)Upon Termination for Death.  Upon termination of the Executive’s employment because of his death, the Corporation will provide the following:
(i)Salary and Benefits.  The (i) Executive’s full salary and benefits through the effective date of termination and (ii) any unpaid bonus for a prior period.
(ii)Bonus.  The Executive will receive a bonus amount equal to the amount determined by multiplying the bonus amount determined under the IAP by a fraction the numerator of which is the number of full and partial calendar months of service in the calendar year that includes the date of the termination of his employment and the denominator of which is 12.  This amount will be paid at the time payment is customarily made under the IAP.

(iii)Equity Compensation.  All options, restricted stock and other forms of equity based compensation will vest and will be exercisable in the manner provided under the terms of the plans and award agreements under which they were granted.
(e)Upon Termination Following a Change in Control.  Upon the Executive’s termination of employment by the Corporation without Cause or the Executive’s termination with Good Reason which, in either case, occurs in contemplation of or within the 24 month period following a Change in Control, the Corporation will provide the following:
(i)Salary and Benefits.  The Executive will receive his full salary and benefits through the effective date of termination together with any unpaid bonus for a prior period.  Additionally, the Corporation will (i) pay to Executive continued payment of base salary, as in effect at the time of termination, for a period of thirty six (36) months following the date of termination (beginning with the first payroll period following 30 days after the date on which his employment terminates) and (ii) provide continuation of medical coverage (on either an insured or a self-insured basis, in the sole discretion of the Corporation) for Executive and Executive’s eligible dependents (as determined under the terms of the Corporation’s medical plans), on substantially the same terms of such coverage that are in existence immediately prior to the Executive’s termination (subject to commercial availability of such coverage), for a period of thirty six (36) months; provided, however, that such coverage shall run concurrently with any coverage available to Executive and his eligible dependents under COBRA; and provided further, however, that the Executive and his eligible dependents shall immediately notify the Corporation if they become covered under Medicare or another employer’s group health plan, and, if such coverage results in Executive or his dependents loss of continuation coverage rights, then, at such time the Corporation’s provision of medical coverage for Executive and his eligible dependents will cease.  
(ii)Bonus.  The Executive will receive a bonus amount equal to the 300% of his base salary in effect in the year of the termination of his employment.  This amount will be paid in 36 equal monthly payments beginning with the first payroll period following 60 days after the date on which his employment terminates.  Additionally, the Executive will receive a bonus amount equal to the amount determined by multiplying the bonus amount determined under the IAP by a fraction the numerator of which is the number of full and partial calendar months of service in the calendar year that includes the date of the termination of his employment and the denominator of which is 12.  This amount will be paid at the time payment is customarily made under the IAP.
(iii)Equity Compensation.  All options, restricted stock and other forms of equity based compensation will vest and will be exercisable in the manner provided under the terms of the plans and award agreements under which they were granted.
(iv)Release.  The payment of the foregoing amounts under this Section 9(e) shall be contingent in all respects on Executive’s signing (following his termination of employment) and not revoking, and the Corporation’s receipt of, a Release, substantially in the form attached hereto as Exhibit 1, within 45 days of his termination of employment releasing the Corporation, related companies, and their respective directors, officers, employees and agents (“Indemnitees”) from any and all claims and liabilities respecting or relating to his employment, and promising never to sue any of the Indemnitees for such matters.  
(v)Payments Post-Death.  If the Executive dies during the 36 month period, the balance of the salary payments will be paid as provided in Section 17 and any dependent health or medical will be provided for the balance of the 36 month period
(f)Reduction in Benefits.  Medical and health benefits under this Section will be reduced to the extent of any medical and health benefits provided by and available to the Executive from any subsequent employer.
(g)Determination of Disability.  Any question as to the existence of a physical or mental condition which would give rise to the Disability of the Executive upon which the Executive and the Corporation cannot agree will be determined by a qualified independent physician selected by the Executive and reasonably acceptable to the Corporation (or, if the Executive is unable to make a selection, the selection of the physician will be made by any adult member of his immediate family).  The physician’s written determination to the Corporation and to the Executive will be final and conclusive for all purposes of this Agreement.

10.Non-exclusivity of Rights.  Except as otherwise specifically provided, nothing in this Agreement will prevent or limit the Executive’s continued or future participation in any benefit, incentive, or other plan, practice, or program provided by the Corporation or Company and for which the Executive may qualify.  Any amount of vested benefit or any amount to which the Executive is otherwise entitled under any plan, practice, or program of the Corporation or Company will be payable in accordance with the plan, practice, or program, except as specifically modified by this Agreement.

11.No Obligation to Seek Other Employment.  The Executive will not be obligated to seek other employment or to take other action to mitigate any amount payable to him under this Agreement and, except as provided in Section 9(f), amounts owed to him hereunder shall not be reduced by amounts he may receive from another employer.

12.Confidentiality and Standards of Conduct.  During the course of his employment, the Executive will have access to confidential information relating to the lines of business of the Corporation, its trade secrets, marketing techniques, technical and cost data, information concerning customers and suppliers, information relating to product lines, and other valuable and confidential information relating to the business operations of the Corporation not generally available to the public (the “Confidential Information”).  The parties hereby acknowledge that any unauthorized disclosure or misuse of the Confidential Information could cause irreparable damage to the Corporation.  The parties also agree that covenants by the Executive not to make unauthorized use or disclosures of the Confidential Information are essential to the growth and stability of the business of the Corporation.  Accordingly, the Executive agrees to the confidentiality covenants set forth in this Section.
The Executive agrees that, except as required by his duties with the Corporation or as authorized by the Corporation in writing, he will not use or disclose to anyone at any time, regardless of whether before or after the Executive ceases to be employed by the Corporation, any of the Confidential Information obtained by him in the course of his employment with the Corporation.  The Executive shall not be deemed to have violated this Section 12 by disclosure of Confidential Information that at the time of disclosure (a) is publicly available or becomes publicly available through no act or omission of the Executive, or (b) is disclosed as required by court order or as otherwise required by law, on the condition that notice of the requirement for such disclosure is given to the Corporation prior to make any disclosure.
In addition, the Executive will (i) continue to be bound by the terms of the Employee Confidential Information, Work Product and Non-Solicitation Agreement, previously executed by Executive, (ii) comply with the IDEX Corporation Code of Business Conduct as it may be amended from time to time, (iii) comply with Corporation policies which prohibit employees from engaging in any transaction in which they may profit from short-term speculative swings in the value of the Corporation’s securities (“hedging”) and agrees not to engage in any hedging transactions, and (iv) agrees to be subject to any policies or agreements to recover from current and/or former employees any wrongfully earned performance-based compensation, including stock-based awards.  
13.Non-competition.  In consideration of the compensation and other benefits to be paid to the Executive under and in connection with this Agreement, the Executive agrees that, beginning on the date of this Agreement and continuing until the Covenant Expiration Date (as defined in Subsection (b) below), he will not, directly or indirectly, for his own account or as agent, employee, officer, director, trustee, consultant, partner, stockholder or equity owner of any corporation or any other entity (except that he may passively own securities constituting less than 1% of any class of securities of a public company), or member of any firm or otherwise, (i) engage or attempt to engage, in the Restricted Territory (as defined in Subsection (d) below), in any business activity which is directly or indirectly competitive with the business conducted by the Corporation or any Affiliate at the Reference Date (as defined in Subsection (c) below), (ii) employ or solicit the employment of any person who is employed by the Corporation or any Affiliate at the Reference Date or at any time during the six-month period preceding the Reference Date, except that the Executive will be free to employ or solicit the employment of any such person whose employment with the Corporation or any Affiliate has terminated for any reason (without any interference from the Executive) and who has not been employed by the Corporation or any Affiliate for at least 6 months, (iii) canvass or solicit business in competition with any business conducted by the Corporation or any Affiliate at the Reference Date from any person or entity who during the six-month period preceding the Reference Date was a customer of the Corporation or any Affiliate or from any person or entity which the Executive has reason to believe might in the future become a customer of the Corporation or any Affiliate as a result of marketing efforts, contacts or other facts and circumstances of which the Executive is aware, (iv) willfully dissuade or discourage any person or entity from using, employing or conducting business with the Corporation or any Affiliate or (v) intentionally disrupt or interfere with, or seek to disrupt or interfere with, the business or contractual relationship between the Corporation or any Affiliate and any supplier who during the six-month period preceding the Reference Date shall have supplied components, materials or services to the Corporation or any Affiliate.
Notwithstanding the foregoing, the restrictions imposed by this Section shall not in any manner be construed to prohibit, directly or indirectly, the Executive from serving as an employee or consultant of the Corporation or any Affiliate.
For purposes of this Agreement, the following terms have the meanings given to them below:
(a)“Affiliate” means any joint venture, partnership or subsidiary now or hereafter directly or indirectly owned or controlled by the Corporation.  For purposes of clarification, an entity shall not be deemed to be indirectly or directly owned or controlled by the Corporation solely by reason of the ownership or control of such entity by shareholders of the Corporation.

(b)“Covenant Expiration Date” means the date which is two (2) years after the Termination Date (as defined in this Section).
(c)“Reference Date” means (A) for purposes of applying the covenants set forth in this Section at any time prior to the Termination Date, the then current date, or (B) for purposes of applying the covenants set forth in this Section at any time on or after the Termination Date, the Termination Date.
(d)“Restricted Territory” means anywhere in the world where the Corporation or any Affiliate conducts its business activities at the Reference Date, or plans to begin conducting business activities as evidenced in written strategic business plans existing on the Reference Date.
(e)“Termination Date” means the date of termination of the Executive’s employment with the Corporation; provided however that the Executive’s employment will not be deemed to have terminated so long as the Executive continues to be employed or engaged as an employee or consultant of the Corporation or any Affiliate, even if such employment or engagement continues after the expiration of the term of this Agreement, whether pursuant to this Agreement or otherwise.

		
	14.
	Equitable Remedies; Availability of Other Remedies; Obligations Absolute.

(a)Executive represents and warrants that Executive has had an opportunity to consult with an attorney regarding this Agreement, has thoroughly and completely reviewed this Agreement with an attorney, and fully understands the contents hereof.  
(b)Executive acknowledges that (i) the provisions of Sections 12 and 13 are reasonable and necessary to protect the legitimate interests of the Corporation and its Affiliates, and (ii) any violation of Sections 12 or 13 will result in irreparable injury to the Corporation, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such violation would not be reasonable or adequate compensation to the Corporation and its Affiliates for such a violation.  Accordingly, Executive agrees that if Executive violates the provisions of Sections 12 or 13, in addition to any other remedy which may be available at law or in equity, the Company and its Affiliates shall be entitled to specific performance and injunctive relief, without posting bond or other security, and without the necessity of proving actual damages.
(c)The rights and remedies of the Corporation and its Affiliates under this Agreement are not exclusive of or limited by any other rights or remedies that it may have, whether at law, in equity, by contract or otherwise, all of which shall be cumulative (and not alternative).  Without limiting the generality of the foregoing, the rights and remedies of the Corporation and its Affiliates under this Agreement, and the obligations and liabilities of Executive under this Agreement, are in addition to their respective rights, remedies, obligations and liabilities under the law of unfair competition, under laws relating to misappropriation of trade secrets, under other laws and common law requirements and under all applicable rules and regulations.  
(d)Executive’s obligations under this Agreement are absolute and shall not be terminated or otherwise limited by virtue of any breach (on the part of the Corporation or any other person) of any provision of any other agreement, or by virtue of any failure to perform or other breach of any obligation of the Corporation, the Company, or any other person.
(e)Executive acknowledges that the provisions of Sections 12 and 13 are fully applicable to Executive no matter whether the Termination Date occurs prior to, on, or subsequent to the Expiration Date and regardless of the reason for Executive’s termination.

15.Section 409A.  Notwithstanding anything to the contrary in Section 9 hereof, and to the maximum extent permitted by law, this Agreement shall be interpreted in such a manner that all payments to Executive under this Agreement are either exempt from, or comply with, Section 409A of the Code and the regulations and other interpretive guidance issued thereunder (collectively, “Section 409A”), including without limitation any such regulations or other guidance that may be issued after the Effective Date.  It is intended that payments under this Agreement will be exempt from Section 409A, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions, so as not to subject the Executive to payment of interest or any additional tax under Section 409A.  To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Section 409A, such reimbursements and in-kind benefit payments shall be made in accordance with Treasury Regulation §1.409A-3(i)(1)(iv) (or any similar or successor provisions).  In furtherance thereof, if the provision of any reimbursement or in-kind benefit payment hereunder that is subject to Section 409A at the time specified herein would subject such amount to any additional tax under Section 409A, the provision of such reimbursement or in-kind benefit payment shall be postponed to the earliest commencement date on which the provision of such amount could be made without incurring such additional tax.  In addition, to the extent that any regulations or other guidance issued under Section 409A (after application of the previous provisions of this Section 15) would result in the Executive’s being subject to the payment of interest or any additional tax under Section 409A, the parties agree, to the extent reasonably possible, to amend this Agreement to the extent necessary (including retroactively) in order to avoid the imposition of any such interest or additional tax under Section 409A, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by the Corporation and the Executive.  Executive acknowledges and agrees that the Corporation has made no representation to Executive as to the tax treatment of the compensation and 

benefits provided pursuant to this Agreement and that Executive is solely responsible for all taxes due with respect to such compensation and benefits.

16.Parachute Payments.    If any payment or benefit Executive would receive from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order:  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock awards.

17.Successors.  This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution.  This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest.  Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death.  If he has not designated a successor in interest, payment of benefits under this Agreement will be made to his wife, if surviving, and if not surviving, to his estate.  A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Corporation pursuant to Section 20.  Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate.  This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Corporation.
This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns.
The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place.  As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.
18.Failure, Delay or Waiver.  No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

19.Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.  In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

20.Notice.  All written communications to a party required hereunder shall be in writing and (a) delivered in person (to be effective when so delivered), (b) mailed by registered or certified mail, return receipt requested (to be effective four days after the date it is deposited in the U.S. Mail), (c) deposited with a reputable overnight courier service (to be effective two business days after the delivery to such courier service), or (d) sent by facsimile transmission (to be effective upon receipt by the sender of electronic confirmation of delivery of the facsimile), with confirmation sent by way of one of the 

above methods, to the party at the address given below for such party (or to such other address as such party shall designate in a writing complying with this Section 20, delivered to the other party):

If to the Corporation:
IDEX Corporation
1925 West Field Court, Suite 200
Lake Forest, Illinois 60045-4824
Attention:    Vice President - General Counsel
Telephone:     847-498-7070
Telecopier:    847-498-9123
with a copy to:
Hodgson Russ LLP
Guaranty Building
140 Pearl Street, Suite 100
Buffalo, NY  14202-4040
Attention:    Richard F. Campbell, Esq. and Richard W. Kaiser, Esq.
Telephone:    716-856-4000
Telecopier:    716-849-0349
If to the Executive:
To the address then currently on file with the Corporation.
with a copy to:
Winston & Strawn LLP
35 W. Wacker Drive
Chicago, Illinois  60601-9703
Attention:    Mark S. Weisberg, Esq.
Telephone:    312-558-8070
Telecopier:    312-558-5700

		
	21.
	Waiver of Jury Trial.

THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, IRREVOCABLE AND BARGAINED FOR AGREEMENT AMONG THE PARTIES TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER AMONG THEM RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY WILL INSTEAD BE TRIED BY A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
22.Consent to Jurisdiction and Venue.  Each of the Corporation, the Company, and Executive hereby (a) consents to the jurisdiction of the United States District Court for the Northern District of Illinois or, if such court does not have jurisdiction over such matter, the applicable Circuit Court, Lake County, State of Illinois, and (b) irrevocably agrees that all actions or proceedings arising out of or relating to this Agreement shall be litigated in such court.  

23.Attorney Review.  Executive acknowledges that he first received a proposed draft of this Agreement on the 8th of November, 2013, and has had an opportunity to consult an attorney before signing it.  Executive acknowledges that in signing this Agreement, he has relied only on the promises written in this Agreement and not on any other promise made by the Corporation or any related company.  Executive shall be reimbursed by the Corporation for reasonable attorney's fees and expenses incurred in the preparation and negotiation of the terms of this Agreement in an amount not to exceed $25,000.

24.Miscellaneous.  This Agreement (a) may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive, (b) is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his rights or obligations pursuant to this Agreement, (c) except as provided in Sections 4 and 10 of this Agreement, constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter, and (d) will be governed by, and interpreted and construed in accordance with, the laws of the State of Illinois, without regard to principles of conflicts of law.

25.Continuation of Certain Terms of this Agreement.  Following the Expiration Date or the earlier termination of this Agreement, the provisions contained under Sections 8, 9(a), 12, 13, 14, and 15 of this Agreement will continue to apply to Executive and will remain in full force and effect. 

26.Multiple Counterparts.  This Agreement may be executed in one or more counter parts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any party may execute this Agreement by facsimile signature and the other party shall be entitled to rely on such facsimile signature as evidence that this Agreement has been duly executed by such party.  Any party executing this Agreement by facsimile signature shall immediately forward to the other party an original page by overnight mail.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
CORPORATION:
IDEX CORPORATION

By_______________________________________
Name: Frank J. Notaro
Title: Vice President - General Counsel and Secretary

COMPANY:
IDEX SERVICE CORPORATION

By_______________________________________
Name: Frank J. Notaro 
Title:  Vice President - Secretary

EXECUTIVE:
_______________________________________
Andrew K. Silvernail
EXHIBIT 1
to
Employment Agreement dated as of November8, 2013
between Andrew K. Silvernail
and
IDEX Corporation and IDEX Service Corporation
The language in this Release may change based on legal developments and evolving best practices; this form is provided as an example of what will be included in the final Release document.

GENERAL RELEASE
This General Release (this “Release”) is executed by Andrew K. Silvernail (“Executive”) pursuant to Paragraph [Insert 9(a) or 9(e) depending on the manner of termination] of the Employment Agreement between IDEX Corporation and IDEX Service Corporation dated November 1, 2011 (the “Employment Agreement”).
WHEREAS, Executive’s employment with the Company and Corporation has terminated;
WHEREAS, the Company, Corporation and Executive intend that the terms and conditions of the Employment Agreement and this Release shall govern all issues relating to Executive’s employment and termination of employment with the Company and Corporation;
WHEREAS, Executive has had 21 days to consider the form of this Release;
WHEREAS, the Corporation advised Executive in writing to consult with an attorney before signing this Release;
WHEREAS, Executive acknowledges that the consideration to be provided to Executive under the Employment Agreement is sufficient to support this Release; and
WHEREAS, Executive understands that the Corporation regards the representations by Executive in the Employment Agreement and this Release as material and that the Corporation is relying upon such representations in paying amounts to Executive pursuant to the Employment Agreement.
EXECUTIVE THEREFORE AGREES AS FOLLOWS:

1.    Executive’s employment with the Company and Corporation terminated on __________________, and Executive has and will receive the payments and benefits set forth in Paragraph [Insert 9(a) or 9(e) depending on the manner of termination] of the Employment Agreement in accordance with the terms and subject to the conditions thereof.
2.    Executive, on behalf of himself and anyone claiming through him, hereby agrees not to sue the Company, the Corporation, or any of its divisions, subsidiaries, affiliates or other related entities (whether or not such entities are wholly owned) or any of the past, present or future directors, officers, administrators, trustees, fiduciaries, employees, or agents of the Company or any of such other entities, or the predecessors, successors or assigns of any of them (hereinafter referred to as the “Released Parties”), and agrees to release and discharge, fully, finally and forever, the Released Parties from any and all claims, causes of action, lawsuits, liabilities, debts, accounts, covenants, contracts, controversies, agreements, promises, sums of money, damages, judgments and demands of any nature whatsoever, in law or in equity, both known and unknown, asserted or not asserted, foreseen or unforeseen, which Executive ever had or may presently have against any of the Released Parties arising from the beginning of time up to and including the effective date of this Release, including, without limitation, all matters in any way related to the Employment Agreement, Executive’s employment by the Company or any of its subsidiaries or affiliates, the terms and conditions thereof, any failure to promote Executive and the termination or cessation of Executive’s employment with the Company or any of its subsidiaries or affiliates, and including, without limitation, (i) any and all claims arising under the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Family and Medical Leave Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act of 1974, the Equal Pay Act, the Fair Labor Standards Act, the Sarbanes-Oxley Act of 2002, the Illinois Human Rights Act, or any other federal, state, local or foreign statute, regulation, ordinance or order, or pursuant to any common law doctrine, (ii) any and all claims for lost wages, bonuses, back pay, front pay, severance pay, or for damages or injury of any type whatsoever, including, but not limited to, defamation, injury to reputation, intentional or negligent infliction of emotional distress, (whether arising by virtue of statute or common law, and whether based upon negligent or willful actions or omissions); and (iii) any and all claims for compensatory or punitive damages, attorneys’ fees, costs and disbursements; provided, however, that nothing contained in this Release shall apply to, or release the Company from, any obligation of the Company contained in [Sections 9 through 25] of the Employment Agreement, any vested benefit pursuant to any employee benefit plan of the Company.  The consideration offered in the Employment Agreement is accepted by Executive as being in full accord, satisfaction, compromise and settlement of any and all claims or potential claims, and Executive expressly agrees that he is not entitled to, and shall not receive, any further recovery of any kind from the Company or any of the other Released Parties, and that in the event of any further proceedings whatsoever based upon any matter released herein, neither the Company nor any of the other Released Parties shall have any further monetary or other obligation of any kind to Executive, including any obligation for any costs, expenses or attorneys’ fees incurred by or on behalf of Executive.  Executive agrees that he has no present or future right to employment with the Company or any of the other Released Parties and that he will not apply for or otherwise seek employment with any of them.
3.    Executive expressly represents and warrants that he is the sole owner of the actual and alleged claims, demands, rights, causes of action and other matters that are released herein; that the same have not been transferred or assigned or caused to be transferred or assigned to any other person, firm, corporation or other legal entity; and that he has the full right and power to grant, execute and deliver the general release, undertakings and agreements contained herein.
4.    ACKNOWLEDGMENT BY EXECUTIVE.  BY EXECUTING THIS RELEASE, EXECUTIVE EXPRESSLY ACKNOWLEDGES THAT HE HAS READ THIS RELEASE CAREFULLY, THAT HE FULLY UNDERSTANDS ITS TERMS AND CONDITIONS, THAT HE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE, THAT HE HAS BEEN ADVISED THAT HE HAS 21 DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE THIS RELEASE AND THAT HE INTENDS TO BE LEGALLY BOUND BY IT.  DURING A PERIOD OF SEVEN DAYS FOLLOWING THE DATE OF HIS EXECUTION OF THIS RELEASE, EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE RELEASE OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING WITHIN SUCH PERIOD WRITTEN NOTICE OF REVOCATION IN THE MANNER PROVIDED IN SECTION 20 OF THE EMPLOYMENT AGREEMENT.  IF EXECUTIVE EXERCISES HIS RIGHTS UNDER THE PRECEDING SENTENCE, HE SHALL NOT BE ENTITLED TO RECEIVE THE AMOUNT PAYABLE TO HIM PURSUANT TO PARAGRAPH [Insert 9(a) or 9(e) depending on the manner of termination] OF THE EMPLOYMENT AGREEMENT.
5.    The Employment Agreement and this Release constitute the entire understanding between the parties.  Executive has not relied on any oral statements that are not included in the Employment Agreement or this Release.
6.    This Release shall be construed, interpreted and applied in accordance with the internal laws of the State of Illinois without regard to the principle of conflicts of laws.

7.    Any term or provision of this Release that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Executive agrees that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Release shall be enforceable as so modified.  In the event such court does not exercise the power granted to it in the prior sentence, the Executive agrees to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.
8.    This Release inures to the benefit of the Corporation and its successors and assigns.

9.    In the event of any dispute or controversy arising under this Release, Section 22 of the Employment Agreement shall be applicable.
	
		
	Date:  __________________, 20__.
	EXECUTIVE
______________________________________
Andrew K. Silvernailex1016.htm

Exhibit 10.16

Execution Copy

ENVIRONMENTAL AGREEMENT

 

 

THIS ENVIRONMENTAL AGREEMENT (this “Environmental Agreement”) is entered into as of September 25, 2013 (the “Execution Date”), by and among TESORO CORPORATION, a Delaware corporation (“Seller”), HAWAII PACIFIC ENERGY, LLC, a Delaware limited liability company (“Buyer”), and TESORO HAWAII, LLC, a Hawaii limited liability company (the “Company”). Seller, Buyer and the Company may be referred to herein individually as a “Party,” and collectively as the “Parties.”

 

W I T N E S S E T H:

 

WHEREAS, the Parties have entered into that certain Membership Interest Purchase Agreement dated June 17, 2013 for the sale of all of the issued and outstanding units representing membership interests in the Company (as such agreement may hereafter be amended, restated, supplemented or otherwise revised) (the “Purchase Agreement”); and,

 

WHEREAS, in connection with the Closing, the Parties have agreed to enter into this Environmental Agreement in relation to their respective obligations arising under Environmental Laws and certain matters relating thereto.

 

NOW, THEREFORE, in consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, and subject to the conditions hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATIONS

 

1.01                 Definitions; Usage.  Unless the context shall otherwise require, capitalized terms used and not defined herein shall have the meanings assigned thereto in the Purchase Agreement and all rules as to interpretation and usage set forth therein shall apply hereto except that all references herein to Articles, Sections, Exhibits and Schedules are to Articles and Sections of and Exhibits and Schedules attached to and forming part of this Environmental Agreement, unless the contrary is specifically stated. As used in this Environmental Agreement, the following terms shall have the meanings set forth below, unless the context otherwise requires:

 

“Acceptable Corrective Action Method” means the minimum method using a demonstrated and acceptable technology or techniques to Remediate at the minimum required expense allowable under, and which satisfies the requirements of, all Environmental Laws in effect and as interpreted as of the Closing Date for the type of property affected consistent with its use on the Closing Date (i.e., industrial). For the avoidance of doubt, Acceptable Corrective Action Method may include (a) risk assessment or risk reduction principles or programs, (b) natural attenuation of contamination in appropriate circumstances, (c) capping in place, or (d) acceptance of perpetual land use or institutional use restrictions or engineering controls.

 

“Acquired Subsidiary” means Smiley’s Super Service, Inc., a Hawaii corporation.

 

“Asbestos” means any asbestos containing material, the management, maintenance, removal, abatement or disposal of which is regulated under Environmental Laws.

 

  

  

  

“BHP Environmental Agreement” means that certain Environmental Agreement dated as of May 29, 1998, by and among BHP Hawaii Inc., BHP Petroleum Pacific Islands Inc., and Tesoro Petroleum Corporation.

 

“BHP Hawaii” means BHP Hawaii Inc. and its successors and assigns.

 

“BHP Pacific” means BHP Petroleum Pacific Islands Inc. and its successors and assigns.

 

“Breach Notice” has the meaning set forth in Section 2.02.

 

“Buyer” has the meaning given such term in the preamble of this Environmental Agreement.

 

“Capital Projects” has the meaning given such term in Section 3.03(c).

 

“Change in Control” means, and shall be deemed to have occurred upon one or more of the following events:

 

(A)                 any transaction, or series of related transactions, that results or would result in the transfer of fifty percent (50%) or more of the Equity Interests in Buyer or its subsidiaries (or fifty percent (50%) or more of the Equity Interest in any business entity that owns or controls, directly or indirectly, fifty percent (50%) or more of the Equity Interests of Buyer (the “Buyer Parent”)) to a single transferee or multiple transferees under common control (other than transferred to the Buyer Parent or any of its subsidiaries but in such event the Buyer Parent or such subsidiary shall thereafter be subject to the definition of Change in Control);

 

(B)      any transaction that would result in the Company or its subsidiaries (or Buyer or the Buyer Parent) merging, directly or indirectly, with one or more other entities, provided, that a merger as a result of which the holders of Equity Interests of the Company, such subsidiary or Buyer or the Buyer Parent, as applicable, immediately prior to such merger possess fifty percent (50%) or more of the voting power, directly or indirectly, of the business entity surviving such merger (or other business entity which is the issuer of the Equity Interest into which the Equity Interest of the Company, such subsidiary or Buyer or the Buyer Parent, as applicable, is converted or exchanged in such merger) shall not be treated as a Change in Control but such surviving entity shall thereafter be subject to the definition of Change in Control; or

 

(C)       any transaction (or series of related transactions) not in the ordinary course of business of the Company, its subsidiaries, Buyer or the Buyer Parent that results in the direct or indirect sale, purchase or other transfer or exchange of assets, including manufacturing facilities and ownership interests in other business entities, representing fifty percent (50%) or more of the fair market value of the assets of Buyer and its subsidiaries, on a consolidated basis, to any Person other than the Buyer Parent or any of its subsidiaries but in such event the Buyer Parent or such subsidiary shall thereafter be subject to the definition of Change in Control.

 

“Claim” means any demand, claim, complaint, notice of violation or any other assertion of an Obligation, whether written or oral, for any Loss, specific performance, injunctive relief, remediation or other equitable relief whether or not ultimately determined to be valid.

 

“Closure” means achieving compliance with the commercial and industrial cleanup standards established by the applicable Governmental Authority such that the Refinery and the other Assets may be

 

  

2

  

used to the same extent as Seller has operated them on a recent historical basis prior to the Closing Date. Compliance shall be established by (i) receipt of a “No Further Action Letter” or similar communication from the applicable Governmental Authority that no further action is required or that the action taken by Seller has been completed (a “Closure Letter”); (ii) except for the Refinery Groundwater Remediation, three (3) years after the date Seller has submitted written notice and supporting documentation to such applicable Governmental Authority indicating that Seller considers its action to be complete and in compliance with all applicable Environmental Laws in effect and as interpreted as of the Closing Date (provided that the Governmental Authority has failed to respond during such period and that no adverse status changes attributable solely to Seller occur during the three-year period, which changes would materially alter the conclusion that the action was complete and compliant with Environmental Laws in effect and as interpreted as of the Closing Date); or (iii) except for the Refinery Groundwater Remediation, five (5) years following the date that the applicable Government Authority directs Seller to “monitor only" at the particular location, regardless of whether Seller has submitted a written notice described in subparagraph (ii) above; provided, however the time period will terminate after three (3) years if levels of all Hazardous Materials remain constant or are showing a negative downward trend over such three (3) year time period.

 

“Company” has the meaning given such term in the preamble of this Environmental Agreement.

 

“Company Assumption” has the meaning given such term in Section 4.01(a).

 

“Company Environmental Liabilities” means any and all Orders, Claims, Losses or Obligations, including required capital expenditures, arising from or related to Environmental Laws or the Hawaii Consent Decree, whether known or unknown, of the Companies or the Business, whether arising before or after the Closing, including those related to Third Party Claims, actual or threatened Releases of Hazardous Materials, off-site treatment, storage, recycling, or disposal and off-site migrations of Hazardous Materials or any fine, penalty or other cost assessed in connection with any alleged or actual violation(s) of Environmental Laws.

 

“Companies” means the Company and the Acquired Subsidiary.

 

“Construction Activity” has the meaning set forth in Section 4.01(d).

 

“Corrective Action” means all Remediation Activities, whether undertaken pursuant to judicial or administrative Order or otherwise, reasonably necessary to comply with applicable Environmental Laws in effect and as interpreted as of the Closing Date to investigate, monitor and, if required, clean up, remove, treat, cover and protect from human or environmental exposure.

 

“De Minimis Amount” has the meaning given such term in Section 5.02(c).

 

“Environmental Authorization” means any Authorization of any applicable Governmental Authority required by Environmental Laws in effect and as interpreted as of the Closing Date for the ownership, operation or use of the Assets as they are operated by the Company as of the Closing Date.

 

“Environmental Cap” has the meaning given such term in Section 5.02(e).

 

“Environmental Claim” shall mean any administrative, regulatory or judicial action, suit, Order, demand, directive, claim, lien, governmental investigation, proceeding or written or oral notice of noncompliance or violation by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, Corrective Action, governmental response, natural resources damages, property damages, personal injuries, medical monitoring, penalties,

 

  

3

  

contribution, indemnification and injunctive relief) arising out of, based on or resulting from (i) the presence or Release of, or exposure to, any Hazardous Materials; or (ii) the failure to comply with any Environmental Laws in effect and as interpreted as of the Closing Date.

 

“Environmental Condition” means any condition at, on, under, within or migrating from any tangible Assets, in each case arising out of the presence or Release of any Hazardous Materials on, at or underlying the Real Property Interests or the Pipeline ROW Interests.

 

“Environmental Deductible” has the meaning given such term in Section 5.02(d).

 

“Environmental Law” means any Law pertaining to public or employee exposure to Hazardous Materials, pollution, the environment or the protection of fish, wildlife or natural resources. For the avoidance of doubt, due to the inclusion of the word “applicable” in the definition of “Law” incorporated into this definition, any references in this Environmental Agreement to “any Environmental Law” or “any applicable Environmental Law” shall have the same meaning.

 

“Environmental Testing” means any environmental site assessment, test, inspection or investigation of the Assets that could reasonably be expected to lead to the discovery, investigation or assessment of an Environmental Condition.

 

“EPA Attestations” means the procedures applicable to the Refinery described in 40 CFR § 80.

 

“Hawaii Consent Decree” has the meaning given such term in Section 3.03(a).

 

“Hazardous Materials” means (i) any chemicals, materials or substances in any form, whether solid, liquid, gaseous, semisolid, or any combination thereof, whether waste materials, raw materials, chemicals, finished products, by-products, degradation products or any other materials or articles, which are listed, defined or otherwise designated as hazardous, toxic or dangerous and as such are regulated under any Environmental Law, including asbestos, and lead-containing paints or coatings, (ii) any petroleum (including crude oil), petroleum derivatives, petroleum products or by-products of petroleum refining or any oxygenate (including degradation products) in any fuel, and (iii) any other chemical, substance or waste that is regulated by any Environmental Law.

 

“Indemnified Party” has the meaning set forth in Section 5.04.

 

“Indemnifying Party” has the meaning set forth in Section 5.04.

 

“Lead-Based Paint” means any intact paint or other surface coating containing lead or lead-based materials, the application, management, maintenance, removal, abatement or disposal of which is regulated under Environmental Laws.

 

“NORM” has the meaning given such term in Section 3.01.

 

“Order” means any order, writ, ruling, decision, verdict, decree, assessment, award (including arbitration awards), judgment, stipulation, injunction, or other determination, decision or finding by, before or under the supervision of any Governmental Authority, including the Hawaii Consent Decree.

 

“PCBs” has the meaning given such term in Section 3.01.

 

“Pre-Existing Environmental Condition” means any Environmental Condition (whether known or unknown) at, on, under, or within the Real Property Interests or any Pipeline ROW Interest or any

 

  

4

  

improvements thereon or therein existing as of the Closing Date; provided, however, that Pre-Existing Environmental Conditions shall not include Lead-Based Paint, NORM, PCB’s or non-friable Asbestos on or within the buildings or other improvements included in the Assets or migration of Hazardous Materials onto or into the Real Property Interests or any Pipeline ROW from outside sources or locations.

 

“Purchase Agreement” has the meaning given such term in the Recitals of this Environmental Agreement.

 

“Refinery Groundwater Remediation” means the Remediation of groundwater contamination currently being conducted by the Company at the Refinery.

 

“Release” means any spilling, leaking, seeping, pumping, pouring, emitting, emptying, injecting, discharging, escaping, leaching, dumping, disposing or releasing of a Hazardous Material into the environment (including the air, soil, surface water, groundwater, sewer, septic system, or waste treatment, storage, or disposal systems) of any kind whatsoever, including the abandonment or discarding of barrels, containers, tanks or other receptacles containing or previously containing a Hazardous Material.

 

“Remediate,” “Remediation” or “Remediation Activities” means testing, investigation, assessment, study, design, monitoring, cleanup, treatment, removal, response, remediation, corrective action, reporting or other similar activities in each case undertaken pursuant to Environmental Laws to address any Environmental Condition or any Release, including any such temporary, interim, emergency or permanent activities involving investigation, study, design, assessment, testing, monitoring, containment, removal, disposal, Closure, corrective action, passive remediation, natural attenuation or bioremediation, the installation and operation of remediation systems, or reporting of released Hazardous Materials to applicable Governmental Authorities.

 

“Seller” has the meaning given such term in the preamble of this Environmental Agreement.

 

“Seller Remediation Activities” has the meaning given such term in Section 4.01.

 

“Tank Replacements” has the meaning given such term in Section 3.04.

 

ARTICLE II

 

SELLER’S ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES

 

2.01                 Representations and Warranties. Except as set forth in Schedule 2.01, Seller represents and warrants to Buyer to Seller’s Knowledge, as follows:

 

(a)           Except as would not reasonably be expected to have a Material Adverse Effect, the Companies, the Business and the Assets are, and for the five (5) years prior to the Execution Date, have been operated in compliance with all applicable Environmental Laws (in each case, as in effect and interpreted at the respective times within such five-year period);

 

(b)           Except as would not reasonably be expected to have a Material Adverse Effect, all Environmental Authorizations required to be obtained, filed or applied for by the Companies under any Environmental Law in connection with the Business or their respective Assets as normally operated prior to the Execution Date have been duly obtained, filed or applied for by the Companies, as applicable, and each of the Companies is and, for the five (5) years prior to the Execution Date, has been in compliance with the terms and conditions of such Environmental Authorizations, as applicable;

 

  

5

  

(c)           Except as would not reasonably be expected to have a material  effect, (i) there are no Claims, Proceedings or Orders (including any alleging criminal violations or liability) pending or threatened by or before any Governmental Authority arising under any Environmental Law relating to the Companies, the Assets or the Business, and (ii) neither of the  Companies has received written notice of any potential violation of, or liability under, any Environmental Law;

 

(d)           Except as would not reasonably be expected to have a Material Adverse Effect, neither the operations of the Companies nor the operations of the Business prior to the Effective Time has resulted in a Release at concentrations in excess of those allowed for under applicable Environmental Laws or Environmental Authorizations;

 

(e)           Except as would not reasonably be expected to have a Material Adverse Effect, neither of the Companies has assumed by contract any liabilities arising under Environmental Laws of any other Person; and

 

(f)           Seller has prior to the Execution Date provided or made available to Buyer (i) in the Data Room, copies of all material non-privileged environmental site assessments, audits, investigations and studies prepared by third parties that are in the possession, custody or control of Seller or its Affiliates relating to the Companies, the Business, the Assets or properties or assets formerly owned, leased, operated or used by the Companies or the Business, or (ii) by examination of all files in the possession of the Company located at any of its company facilities, copies of material non-privileged environmental site assessments, audits, investigations and studies relating to the Companies, the Business, the Assets or properties or assets formerly owned, leased, operated or used by the Companies or the Business.

 

2.02                 Breach Notice.  If, prior to the Closing Date, Buyer obtains Knowledge of a breach of any of Seller’s representations, warranties or covenants contained in this Environmental Agreement, Buyer shall notify Seller in writing of such information (the “Breach Notice”) within three (3) Business Days of such discovery or on the day prior to the Closing Date, whichever is earlier. The Breach Notice shall contain reasonable details regarding the alleged breach and Buyer’s good faith estimate of the potential Losses associated with such breach.

 

ARTICLE III

 

ENVIRONMENTAL PROVISIONS

 

3.01                 Incidental Contamination and NORM.  Buyer acknowledges that the Assets may contain inter alia Asbestos in pipe coating, undisplaced petroleum hydrocarbon compounds in pipelines, coats of Lead-Based Paints, polychlorinated biphenyls (“PCBs”) in transformers or rectifiers, mercury in electrical switches, and Naturally Occurring Radioactive Material (“NORM”) in various potential forms. Buyer also expressly understands that special procedures may be required for the Remediation, removal, transportation and disposal of such contained, affixed or attached materials. Notwithstanding any provision to the contrary contained in this Environmental Agreement, Buyer expressly assumes liability for or in connection with the future abandonment and removal of NORM, Lead-Based Paint, undisplaced petroleum hydrocarbon compounds, mercury, Asbestos or PCBs to the extent contained, affixed or attached in or on the Assets; provided, however, that nothing in this Section 3.01 shall in any way affect Seller’s liability for NORM, Lead-Based Paint, petroleum hydrocarbon compounds, mercury, Asbestos or PCBs that have been Released into the environment prior to Closing.

 

3.02                 Reports and Submittals.  For any reports or submittals required by any Governmental Authority that cover periods of both Seller’s and the Company’s ownership or use of the Assets or operation of the Refinery, the Company shall prepare such reports to the extent it is able to do

  

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so, segregated to the extent feasible based on the Closing Date, and send Seller’s portion to Seller for its completion, review, approval and signature (if a separate report from Seller is required by the Governmental Authority or if such report or submittal could reasonably impact Seller’s Obligations under this Environmental Agreement, Seller’s liability under Environmental Laws or Seller’s Obligations to third parties). The Company’s preparation of such report shall not modify, change, alter or diminish any other provision in this Environmental Agreement as applied to the subject matter of such report and the rights, liabilities, responsibilities, obligations and indemnities for any matters contained in such reports shall be as set forth elsewhere herein.  Seller agrees to prepare reports responsive to the Hawaii Consent Decree until such time that the Parties agree this should become the Company’s responsibility.  Notwithstanding the foregoing, each of Seller and Buyer shall prepare and file the EPA Attestations relating to the ownership and operation of the Assets in 2013 for such Party’s period of ownership of the Assets during such year.

 

3.03                 Hawaii Consent Decree.  

 

(a)           Seller anticipates entering into final binding settlement(s) whether by judicial decree, judgment, agreement or otherwise, memorializing Seller’s settlement with the United States Environmental Protection Agency and the United States Department of Justice and other applicable entities or agencies, if any, regarding alleged violations of the Clean Air Act related to the ownership and operation of multiple facilities owned by Seller and its Affiliates, including the Refinery. Buyer hereby irrevocably authorizes Seller (i) to finalize the negotiations for such settlement related to the ownership and operation of the Refinery even if such negotiations extend beyond the Closing Date and (ii) to cause the Company (prior to Closing) or, if applicable, to have Buyer to cause the Company (after the Closing) to enter into such settlement (the “Hawaii Consent Decree”) provided that the terms and conditions of the Hawaii Consent Decree solely relate to air emissions originating from the Refinery and such terms and conditions, as they relate to the Company or the Refinery, are reasonably consistent with the proposed terms as described on Schedule 3.03(a). The Hawaii Consent Decree may be evidenced in a separate agreement between the Company and the applicable Governing Authorities or included in a multi-refinery consent decree between Seller and its Affiliates (including the Company) and the applicable Governing Authorities. To the extent such Hawaii settlement is included in a multi-refinery consent decree then the term “Hawaii Consent Decree” shall refer to the provisions of such multi-refinery consent decree that are applicable to the Company or the Refinery from or after the Closing Date.

 

(b)           The Company shall cooperate with and assist Seller as Seller shall reasonably request in finalizing and executing the Hawaii Consent Decree. Seller shall provide Buyer with monthly oral reports regarding the status of the negotiations and execution of the Hawaii Consent Decree. Seller shall provide Buyer the opportunity, with reasonable advance notice, to attend meetings with, or hearings before, any Governmental Authority regarding the Hawaii Consent Decree to the extent such meetings and hearings relate to the Refinery (Buyer shall not participate in such meetings or hearings to the extent such meetings or hearings do not involve the Company or the Refinery). Seller shall, following any such meeting or hearing with such Governmental Authority, advise Buyer of the substance of any action or position taken by such Governmental Authority during any such meeting or hearing with regards to the Company or the Refinery. Notwithstanding the preceding, Buyer’s decision to attend or not any such meeting or hearing shall not delay or postpone such meetings or hearings with a Governmental Authority. Seller shall promptly provide Buyer with copies of significant reports, plans, correspondence and other substantive communications received by or on behalf of Seller from or submitted by or on behalf of Seller to a Governmental Authority with respect to the negotiation or execution of the Hawaii Consent Decree.

 

(c)           Provided that the Startup Criteria have been met in all material respects as of the Execution Date, Seller shall (or shall cause its Affiliates to) reimburse the Company for reasonable third party capital expenditures incurred by the Company for the construction, installation and

 

  

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commissioning of capital projects at the Refinery as and when and to the extent required pursuant to the Hawaii Consent Decree (collectively, the “Capital Projects”).  Seller and Buyer agree to communicate, consult and reasonably cooperate with one another in the design, engineering, procurement, construction, installation and commissioning of the Capital Projects, provided such consultation and cooperation are consistent with the terms of this section.  Seller and Buyer (and their Affiliates) shall minimize the capital expenditures for the Capital Projects to the extent necessary to satisfy the obligations of the Hawaii Consent Decree. Seller and the Company agree to use Commercially Reasonable Efforts to work together during the design, engineering, procurement and construction of the Capital Projects to minimize the potential for disruption of Refinery operations during implementation of the Capital Projects. Between Seller and the Company, Seller shall have the primary responsibility, at Seller’s expense, for the design and engineering of the Capital Projects. Buyer shall cause the Company to permit Seller and its Affiliates and their respective representatives (including Seller’s engineering contractors) to have reasonable access to the Refinery (subject to appropriate safety and security standards of the Company) and applicable books and records and reasonable access to and inquiry of employees and other personnel who are employed, retained or controlled by the Company who have relevant information necessary for the designing and engineering of the Capital Projects. Seller and the Company agree to use Commercially Reasonable Efforts to work together to develop the Capital Projects in a cost effective manner while meeting the requirements of the Hawaii Consent Decree and also minimizing the anticipated impact on the Refinery’s operating expenses following implementation. NOTWITHSTANDING ANY OTHER PROVISIONS IN THIS AGREEMENT TO THE CONTRARY, NEITHER SELLER NOR ANY AFFILIATE, AGENT, OR REPRESENTATIVE OF SELLER HAS MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS (BOTH GENERALLY AND FOR A PARTICULAR PURPOSE), OR CONFORMITY TO MODELS, DESIGNS OR SAMPLES OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR  IMPLIED,  RELATING TO THE CAPITAL PROJECTS.

 

(d)           Seller shall retain sole responsibility for the payment of any fines or penalties imposed on the Company arising from the Hawaii Consent Decree to the extent related to acts or omissions of Seller or the Company prior to the Closing Date.

 

(e)           The Company shall be responsible for compliance with the Hawaii Consent Decree except to the extent provided above in this Section 3.03.

 

3.04                 Tank Replacements.  Seller shall cause (or shall cause its Affiliates to cause), at Seller’s expense, the replacement of existing underground storage tanks at the Retail Assets listed on Schedule 3.04, including any Corrective Action relating to Pre-Existing Environmental Conditions identified at the time of such tank replacements (the “Tank Replacements”).  The Company shall provide reasonable assistance and cooperation in order for Seller (or its Affiliates) to complete the Tank Replacements in an efficient and timely manner.  The Company shall permit Seller and its Affiliates and their respective representatives (including Seller’s contractors) to have reasonable access to the Retail Assets listed on Schedule 3.04 (subject to appropriate safety and security standards of the Company) to complete the Tank Replacements.

 

3.05                 Company Environmental Liabilities. Except as otherwise provided herein, Buyer and the Company acknowledge and agree that after the Closing, the Company will continue to retain all Company Environmental Liabilities.

 

  

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ARTICLE IV

 

CORRECTIVE ACTION AND ENVIRONMENTAL TESTING

 

4.01                 Conduct of Corrective Action.

 

(a)           In the event Corrective Action is necessary after the Closing to Remediate  a Pre-Existing Environmental Condition (whether known or unknown as of the Closing Date) and for which Seller has agreed to indemnify, defend and hold Buyer harmless pursuant to Section 5.02, then Seller (or its Affiliates) shall control such Corrective Action (the “Seller Remediation Activities”) until (i) Seller’s indemnification obligation terminates pursuant to Section 5.02 or (ii) a Claim is made against Buyer or the Company by a Governmental Authority after the Closing with respect to such Pre-Existing Environmental Condition and Buyer or the Company elects, by providing written notice to Seller, to assume control of such Corrective Action (a “Company Assumption”); provided, however, that if Buyer or the Company elects to assume control of any Corrective Action, Seller shall have no further obligation to indemnify, defend or hold Buyer harmless for such Corrective Action pursuant to Section 5.02. Seller (and its Affiliates) shall take (and shall only be required to take) all actions and make all expenditures reasonably required by applicable Environmental Laws in effect and as interpreted as of the Closing Date in order to Remediate such Pre-Existing Environmental Condition consistent with the Acceptable Corrective Action Method. In determining the Acceptable Corrective Action Method, Seller shall consult with Buyer, consider in good faith any reasonable recommendations or proposals made by Buyer, and take into account the intended usage of the relevant property.

 

(b)           In connection with any Seller Remediation Activities:

 

(i)           The Company shall provide reasonable assistance and cooperation in order for Seller to complete the Seller Remediation Activities in an efficient and timely manner; provided, that any third party costs or expenses incurred by or on behalf of Buyer or the Company in connection with such assistance and cooperation shall be borne by Seller to the extent approved by Seller in writing in advance and subject to the limitations of Section 5.02;

 

(ii)           Seller shall provide the Company the opportunity, with reasonable advance notice, to attend meetings with, or hearings before, any Governmental Authority regarding such Seller Remediation Activities. Seller shall, following any such meeting or hearing with such Governmental Authority, advise the Company of the substance of any action or position taken by such Governmental Authority during any such meeting or hearing. Notwithstanding the preceding, the Company’s decision to attend or not any such meeting or hearing shall not delay or postpone such meetings or hearings with a Governmental Authority;

 

(iii)           Seller will coordinate the schedule of on-site Seller Remediation Activities with the Company so that disruptions of the Company’s operations of the Assets will be minimized;

 

(iv)           The Company shall permit Seller and its Affiliates and their respective representatives (including Seller’s environmental contractors) to have reasonable access to the Assets (subject to appropriate safety and security standards of the Company) and applicable books and records and reasonable access to and inquiry of employees and other personnel who are employed, retained or controlled by the Company who have relevant information regarding the Assets related to the obligations of Seller for Corrective Action. The Company shall provide Seller, without additional charge, reasonable access to utilities

 

  

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and available equipment and operations (including wastewater treatment units) used in connection with Seller Remediation Activities;

 

(v)           Seller shall provide the Company with copies of third party reports and studies, notices and filings received or prepared on behalf of Seller prior to the delivery of such submissions to any Governmental Authority and shall allow the Company a reasonable opportunity (which shall not be fewer than ten (10) days to review such filings in advance of any such submission and, if requested, shall consider in good faith all reasonable comments to such submissions made by the Company prior to submitting such materials to such Governmental Authority. The Company shall respond promptly to requests for information by a Governmental Authority with respect to Seller Remediation Activities. The Company shall respond promptly and without unreasonable conditions to reasonable requests by Seller for execution and delivery of any submissions or applications reasonably requested by Seller that are required to be filed by or on behalf of the Company with respect to the Seller Remediation Activities;

 

(vi)           Seller shall promptly provide the Company with copies of significant reports, plans, correspondence and other substantive communications received by or on behalf of Seller from or submitted by or on behalf of Seller to a Governmental Authority with respect to the Seller Remediation Activities;

 

(vii)           The Company shall promptly provide Seller with copies of all reports, plans, correspondence and other substantive communications received by or on behalf of the Company from or submitted by or on behalf of the Company to a Governmental Authority with respect to the Seller Remediation Activities;

 

(viii)           Seller shall be responsible for transportation and offsite disposition of solid wastes generated in connection with Seller Remediation Activities and required to be managed offsite; and

 

(ix)           To the extent that Seller Remediation Activities include land use or institutional use restrictions or engineering controls consistent with an Acceptable Corrective Action Method, the Company shall (at Seller’s cost and expense) execute such commercially reasonable agreements embodying such restrictions as may be required by a Governmental Authority in order to bind the Company and any subsequent owners of any of the Assets to such land use or institutional use restrictions or engineering controls.

 

(c)           In the event of a Company Assumption, Seller shall coordinate with the Company to transition responsibility for such Corrective Action to the Company.  Seller shall promptly provide the Company with copies of all reports, studies, plans, data, correspondence and notices relating to the assumed Corrective Action. For the avoidance of doubt, Seller’s indemnification obligations pursuant to Section 5.02 shall terminate with respect to any Corrective Action that is the subject of a Company Assumption, and Seller shall have no further obligation to indemnify, defend or hold Buyer harmless for such Corrective Action pursuant to Section 5.02.

 

(d)           In the event the Company plans after the Closing to conduct construction activity which will or may cause disturbance of soils, sediment or other media containing Hazardous Materials (“Construction Activity”) for which Seller may be obligated to conduct Seller Remediation Activities, the Company shall consult with Seller prior to such construction activity and to consider in good faith Seller’s requests and comments with respect to Remediation methods and location of construction, all to the extent reasonably practicable and consistent with an Acceptable Corrective Action

  

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Method and that do not unreasonably interfere with the Company’s proposed construction activity. Notwithstanding anything in this Environmental Agreement to the contrary, Seller shall not have any liability to indemnify, defend or hold Buyer Indemnified Parties harmless pursuant to Section 5.02 for Corrective Action (or other Losses related thereto) required or incurred as a result of Construction Activity to the extent such Corrective Action would not be required (or related Losses incurred) in the event the Construction Activity did not occur.

 

(e)           If a Release shall occur or is continuing after the Closing at a location or in an amount not readily distinguishable from an Environmental Condition existing prior to the Closing for which Seller is required to indemnify, defend and hold harmless a Buyer Indemnified Party pursuant to Section 5.02, then the Company shall be responsible for the incremental costs incurred for the Remediation of the post-Closing Release as compared to the costs that would otherwise have been incurred to Remediate such pre-Closing Environmental Condition. The Company and Seller shall negotiate in good faith to allocate all respective obligations arising out of such pre-Closing Environmental Condition and post-Closing Release in question in an equitable manner, which allocation shall take into consideration and reflect all pertinent facts, which pertinent facts may include:  (i) the quantity or volume of Hazardous Materials present immediately prior to such post-Closing Release, and present as a result of the post-Closing Release; (ii) differences, if any, in the composition of the Hazardous Materials present immediately prior to such post-Closing Release, and present as a result of the post-Closing Release; and (iii) if and to what extent the post-Closing Release has impacted geographical areas not impacted by the pre-Closing Environmental Condition prior to the post-Closing Release. Seller shall control the Remediation of such commingled Environmental Conditions until Seller’s obligation to indemnify, defend and hold harmless for the pre-Closing Environmental Condition terminates.

 

(f)           The Company shall not cause, suffer or permit the waiver, modification, suspension or termination of any obligation of BHP Hawaii or BHP Pacific to conduct and pay for Remediation Activities at, on, under or within the Real Property Interests or the Pipeline ROW Interests pursuant to the BHP Environmental Agreement and the Company shall use Commercially Reasonable Efforts to assist Seller to enforce BHP Hawaii’s and BHP Pacific’s obligations to conduct and pay for such Remediation Activities under the BHP Environmental Agreement to the extent that such obligations exist as of the date of this Environmental Agreement.

 

(g)           Simultaneously with the execution hereof, Seller will provide Buyer with a list of all third parties currently conducting any Corrective Action at any Asset.

 

(h)           In the event the Company is required pursuant to Environmental Laws to continue Remediation Activities beyond or subsequent to the conclusion of any Seller Remediation Activities, then Seller shall coordinate with the Company to transition responsibility for such Remediation Activities to the Company. Seller shall promptly provide the Company with copies of all reports, studies, plans, data, correspondence and notices relating to the assumed Remediation Activities.

 

4.02                 Closure and Anticipated Use.

 

(a)           With respect to any Corrective Action that Seller is responsible for under this Environmental Agreement, Seller (and its Affiliates) shall only be obligated to implement and complete such Corrective Action as is necessary to obtain Closure, subject to the limitations of Section 5.02. Unless terminated earlier, Seller’s obligations to perform such Corrective Action shall be deemed satisfied and shall terminate once Closure is obtained, and Seller shall have no obligation to perform further Corrective Action with respect to the Environmental Condition or Release to which the Corrective Action relates, provided that receipt of Closure shall not impact any other Obligations as between Buyer and Seller, even if such Obligations arise out of such Environmental Condition or Release.

  

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(b)           Seller shall not be required to address contamination beyond the Acceptable Corrective Action Method. The Company shall be responsible for any incremental cost associated with changes in Environmental Laws or a more restrictive ongoing use of the Refinery or the other Assets (i.e. commercial or residential use).

 

4.03                 Environmental Testing.

 

(a)           Until the expiration of Seller’s obligation to conduct Seller Remediation Activities, or until the Company provides notice of a Company Assumption pursuant to Section 4.01(a) (but only to the extent necessary to conduct the Corrective Action that is subject to the Company Assumption), the Company shall not directly or indirectly, initiate or conduct Environmental Testing of the Assets. Notwithstanding the preceding sentence, the Company may conduct Environmental Testing of the Assets in the event (i) such Environmental Testing is performed in the ordinary course of business of the Company such as geophysical studies of building foundations or in connection with construction, remodeling or demolition and rebuild work on Assets, (ii) the Company or its Affiliates are ordered or directed to conduct such Environmental Testing by any Governmental Authority having jurisdiction thereof, (iii) such Environmental Testing is conducted as a result of and reasonably necessary to respond to a Release that occurs after the Closing, (iv) there is reasonable evidence that such Environmental Testing is required by applicable Environmental Laws then in effect and interpreted, or (v) such Environmental Testing is conducted as a result of any written Claim by a Person other than a Buyer Indemnified Party. For the avoidance of doubt, the Company may at any time(s) conduct non-intrusive investigations of Environmental Conditions of the Assets, including Phase I environmental site assessments.

 

(b)           Prior to engaging in any Environmental Testing, the Company shall provide Seller with reasonable advance written notice so that Seller may, at its own expense, observe such activities and obtain any split samples it may desire. The Company shall provide Seller with copies of all written, non-privileged reports prepared by third parties related to Environmental Testing.  In the event that exigent circumstances (such as responding to a Release) do not allow for reasonable advance written notice of Environmental Testing, the Company will make a good faith attempt to orally advise Seller of such Environmental Testing and shall, within a reasonable time thereafter, provide written notice to Seller describing the Environmental Testing that was conducted.

 

ARTICLE V

 

INDEMNIFICATION; SURVIVAL

 

5.01                 Survival.  Subject to the limitations and other provisions of this Environmental Agreement, (a) Seller’s representations and warranties contained in Article II shall survive the Closing and shall remain in full force and effect for a period of eighteen (18) months after the Closing Date, and until the resolution of the indemnification Claims received by the Indemnifying Party in accordance with the provisions hereof prior to the expiration of the relevant time period, and (b) each covenant and agreement of the Parties contained in this Environmental Agreement which by its terms requires performance after the Closing Date shall survive the Closing Date and shall remain in full force and effect until such covenant or agreement is fully performed.

 

5.02                 Indemnification Provisions for the Benefit of Buyer.

 

(a)           Subject to the other provisions of this Article V, Seller shall indemnify, defend, save and hold the Buyer Indemnitees harmless from and against any Claims and Losses actually suffered or incurred by them to the extent arising out of or related to:

 

  

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(i)           the breach of any representation or warranty of Seller contained in this Environmental Agreement;

 

(ii)           all Corrective Action relating to Pre-Existing Environmental Conditions other than a Company Assumption (except to the extent addressed specifically in Sections 5.02(a)(v) or 5.02(a)(vi)), to the extent and pursuant to the procedures described in Section 4.01; provided that if the Company causes or permits a change in the use of Assets from industrial use after the Closing, then Seller shall not be required to incur any cost or make any expenditure with respect to Seller Remediation Activities related to such property greater than that which would have been required if such property had continued in its current use as of the Closing Date (i.e., industrial);

 

(iii)           Third Party Claims arising under Environmental Laws (as in effect and as interpreted as of the Closing Date) for personal injury or property damage to the extent arising out of or relating to Releases of Hazardous Materials that occur from the ownership, operation or use of the Assets by the Company prior to the Closing Date;

 

(iv)           except with respect to the Hawaii Consent Decree (which is addressed specifically in Section 3.03), any fine, penalty or other cost assessed by a Government Authority in connection with violations of Environmental Laws by the Company prior to the Closing Date;

 

(v)           the Refinery Groundwater Remediation to the extent and pursuant to the procedures described in Section 4.01;

 

(vi)           the replacement of underground storage tanks at the Retail Assets listed on Schedule 3.04, including Corrective Action relating to Pre-Existing Environmental Conditions identified at the time of such tank replacements other than a Company Assumption;

 

(vii)           any fines or penalties imposed on the Company arising from the Hawaii Consent Decree to the extent related to the acts or omissions of Seller or the Company prior to the Closing Date; and

 

(viii)           the Pearl City Superfund Site, including the presence or removal of any equipment located thereon, including any storage tanks or associated piping.

 

(b)           No Claim may be asserted nor may any Proceeding be commenced against Seller pursuant to this Section 5.02 unless written notice of such Claim or Proceeding is received by Seller describing in reasonable detail the facts and circumstances with respect to the subject matter of such Claim or Proceeding, and with respect to Claims or Proceedings based on the breach of any representation or warranty, on or prior to the date such representation or warranty ceases to survive as set forth in Section 5.01; provided, however, that no Claim may be asserted nor may any Proceeding be commenced by Buyer against Seller arising out of or related to a breach of any representation or warranty of which Buyer had Knowledge on or prior to the Closing Date and for which Buyer failed to deliver a Breach Notice in accordance with Section 2.02. If a Buyer Indemnitee has recovered any Losses pursuant to one subsection of this Section 5.02(a), such Buyer Indemnitee shall not be entitled to recover the same Losses under another subsection of this Section 5.02(a).

 

(c)           No Claim may be made against Seller for indemnification pursuant to Section 5.02(a)(i-iv) with respect to any individual action, occurrence or event subject to the indemnifications thereunder (or group of related actions, occurrences or events) unless such individual action, occurrence or event exceeds $5,000 for a Retail Asset, $25,000 for a Logistics Asset and $100,000 for the Refinery (individually, each as applicable, the “De Minimis Amount”) (nor shall any Loss below such De Minimis Amounts be applied to or considered for purposes of calculating the aggregate amount of the Buyer Indemnitees’ Losses).

 

 

  

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(d)           No Claim may be made against Seller for indemnification pursuant to Section 5.02(a)(i-iv) unless the aggregate amount of all Losses of the Buyer Indemnitees with respect to Section 5.02(a)(i-iv) (excluding individual Losses less than the De Minimis Amounts) shall exceed an amount equal to $1,000,000 (the “Environmental Deductible”), after which point Seller shall be obligated only to indemnify the Buyer Indemnitees from and against such aggregate Losses (excluding individual Losses less than the De Minimis Amounts) in excess of the Environmental Deductible.

 

(e)           The maximum amount that Seller shall be required to pay pursuant to Section 5.02(a)(i)-(v) and for Corrective Actions relating to Pre-Existing Environmental Conditions pursuant to 5.02(a)(vi) in respect of all Losses by all Buyer Indemnitees shall equal $15,000,000 (the “Environmental Cap”), after which point Seller will have no Obligation to indemnify the Buyer Indemnitees from and against further such Losses; provided, however, that Seller’s obligations to pay pursuant to Section 5.02(a)(vii)-(viii) shall be excluded from the Environmental Cap. In addition, Seller shall have as an affirmative defense to any claim for indemnity under Section 5.02(a)(i) arising out of or related to a breach of any representation or warranty of Seller that Buyer had Knowledge of such breach on or prior to the Closing Date and Buyer failed to deliver a Breach Notice in accordance with Section 2.02.

 

(f)           All Claims made against Seller for indemnification pursuant to clauses (ii)- (viii) of Section 5.02(a), other than Claims for reasonable third party capital expenditures incurred by the Company for the construction, installation and commissioning of the Capital Projects pursuant to Section 3.03(c), must be made to Seller on or before the third (3rd) annual anniversary of the Closing Date and to the extent such Claims are made on or before such date, then Seller’s obligation to indemnify for such Claims shall remain in effect beyond such date.

 

(g)           For avoidance of doubt, Section 5.02(a)(iii) shall not apply to Third Party Claims arising out of a post-Closing Date fire, explosion or catastrophic incident allegedly occurring as a result of any pre-Closing non-compliance with Environmental Laws.

 

(h)           Seller’s indemnification obligations pursuant to Section 5.02(a) shall automatically terminate and be of no further force or effect in the event and to the extent (i) the Company sells, transfers, leases to a third party or exchanges any of the Assets (in which case such indemnification obligations shall terminate only with respect to those Assets that are sold, transferred, leased or exchanged and shall otherwise remain in full force and effect) or (ii) there is a Change in Control after the Closing; provided, however, that such limitations on indemnification would not apply to (A) transfers to a wholly owned subsidiary of the Company or (B) transfers of Owned Real Property parcels lying within the boundary fence line of the Refinery provided such Owned Real Property parcels are subject to deed restrictions reasonably acceptable to Seller that restrict the use of such parcels to industrial uses.

 

(i)           Seller’s indemnification obligations pursuant to this Environmental Agreement shall be reduced in the event and to the extent amounts for such indemnified obligations are taken into account as a liability for purposes of the Final Net Working Capital.

 

(j)           Amounts paid by Seller that are counted against or applied toward the Indemnification Deductible or the Indemnification Cap (as such terms are defined in the Purchase Agreement) shall not count against and be applied toward the Environmental Deductible and the Indemnification Cap and vice versa, amounts paid by Seller that are counted against or applied toward the Environmental Deductible or the Environmental Cap shall not count against and be applied toward the Indemnification Deductible and the Indemnification Cap.

 

 

  

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5.03                 Indemnification Provisions for the Benefit of Seller.

 

(a)           Subject to the other provisions of this Article V, Buyer and the Company agree, jointly and severally, to indemnify, defend, save and hold the Seller Indemnitees harmless from and against any Claims and Losses actually suffered or incurred by them to the extent arising out of or related to:

 

(i)           the breach of any covenants or agreements of Buyer contained in this Environmental Agreement;

 

(ii)           the Company Environmental Liabilities to the extent not indemnified by Seller pursuant to Section 5.02; and

 

(iii)           any Claims or Losses under Environmental Laws arising out of or related to the ownership of the TH Interest, the Company, the Acquired Subsidiary, or the Assets after the Closing Date, or the operation of the Business after the Closing Date.

 

(b)           No Claim may be asserted nor may any Proceeding be commenced against Buyer or the Company pursuant to this Section 5.03 unless written notice of such Claim or Proceeding is received by Buyer or the Company describing in reasonable detail the facts and circumstances with respect to the subject matter of such Claim or Proceeding. If a Seller Indemnitee has recovered any Losses pursuant to one subsection of this Section 5.03(a), such Seller Indemnitee shall not be entitled to recover the same Losses under another subsection of this Section 5.03(a).

 

(c)           No Claim may be made against Buyer or the Company for indemnification pursuant to clause (i) of Section 5.03(a): (i) with respect to any individual action, occurrence or event subject to the indemnifications thereunder (or group of related actions, occurrences or events) unless the such individual action, occurrence or event exceeds the respective De Minimis Amounts (nor shall any Claim or Loss below such threshold be applied to or considered for purposes of calculating the aggregate amount of Seller Indemnitees’ Losses) and (ii) unless the aggregate amount of all Claims and Losses of Seller Indemnitees with respect to clause (i) of Section 5.03(a) shall exceed the Indemnification Deductible (after which Buyer and the Company shall be obligated only to indemnify Seller Indemnitees from and against aggregate Losses in excess of the Indemnification Deductible). The maximum amount that Buyer and the Company shall be required to pay pursuant to clauses (i) of Section 5.03(a) in respect of all Claims and Losses by all Seller Indemnitees shall equal $15 million, after which point Buyer and the Company will have no Obligation to indemnify Seller Indemnitees from and against further such Claims or Losses.  For the avoidance of doubt, any Claims or Losses to be paid by Buyer or the Company pursuant to Section 5.03(a)(ii) is not subject to the limitations of this Section 5.03(c).

 

5.04                 Indemnification Procedures; Matters Involving Third Parties.

 

(a)           A Seller Indemnitee or Buyer Indemnitee, as the case may be (for purposes of this Section 5.04, an “Indemnified Party”), shall give the indemnifying party under Section 5.02 and Section 5.03, as applicable (for purposes of this Section 5.04, an “Indemnifying Party”), prompt written notice of any matter which it has determined has given or could give rise to a right of indemnification under this Environmental Agreement stating the nature of the Claim and an estimated or actual amount of the Loss, if known, and method of computation thereof, containing a reference to the provisions of this Environmental Agreement in respect of which such right of indemnification is claimed or arises; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from its Obligations under this Article V except to the extent, and only to the extent, the Indemnifying Party is prejudiced by such failure or to the extent the survival period, if applicable, expires pursuant to Section 5.01 prior to the giving of such notice.

 

 

  

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(b)           If any third party shall notify an Indemnified Party with respect to any matter (a “Third-Party Claim”) that may give rise to a claim for indemnification against the Indemnifying Party under this Article V, then the Indemnified Party shall promptly (and in any event within five (5) Business Days after receiving notice of the Third-Party Claim) notify the Indemnifying Party thereof in writing; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from its Obligations under this Article V except to the extent, and only to the extent, the Indemnifying Party is prejudiced by such failure.

 

(c)           The Indemnifying Party will have the right to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party; provided, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party or would reasonably be expected to have a material adverse effect on the Indemnified Party.

 

(d)           Unless and until the Indemnifying Party assumes the defense of the Third Party Claim as provided in Section 5.04(c), the Indemnified Party may defend against the Third- Party Claim in any manner it may reasonably deem appropriate.

 

(e)           In no event will the Indemnified Party consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably withheld).

 

(f)           If the Parties are unable to agree as to issues related to Seller’s environmental indemnification, then an independent and experienced third party environmental consulting firm that is mutually agreeable to Seller and Buyer shall evaluate and determine the non-legal issues that are in dispute.

 

5.05                 Determination of Losses.

 

(a)           The Losses giving rise to any indemnification Obligation hereunder shall be reduced by any insurance proceeds actually received by the Indemnified Party as a result of the events giving rise to the claim for indemnification, net of any expenses related to the receipt of such proceeds, including retrospective premium adjustments, if any. The amount of the indemnity payment shall be computed by taking into account the timing of the loss or payment, as applicable, at the Applicable Rate from the date the Indemnified Party provides notice of the Loss to the Indemnifying Party until the date paid. Upon the request of the Indemnifying Party, the Indemnified Party shall provide the Indemnifying Party with information sufficient to allow the Indemnifying Party to calculate the amount of the indemnity payment in accordance with this Section 5.05.

 

(b)           An Indemnified Party shall take all reasonable steps to mitigate damages in respect of any claim for which it is seeking indemnification and shall use reasonable efforts to avoid any costs or expenses associated with such claim and, if such costs and expenses cannot be avoided, to minimize the amount thereof; provided, that an Indemnified Party shall have no Obligation to make a claim for recovery against any insurer of such Indemnified Party with respect to any such Losses.

 

 

  

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(c)           For purposes of determining whether a breach has occurred and calculating a Loss in connection with a claim for indemnification under this Article V, each of the representations and warranties that contains any qualifications as to materiality or “Material Adverse Effect” will be determined with regard to such materiality or “Material Adverse Effect” qualifier contained in the terms of such representation and warranty; provided, however, that if the representation or warranty is breached (after taking into consideration such materiality or “Material Adverse Effect” qualifier) then the amount of Losses arising out of such breach will be determined without regards to such materiality or “Material Adverse Effect” qualifier.

 

5.06                 No Multiple Recoveries.  Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty or covenant.

 

5.07                 Limitations on Liability/Exclusive Remedies.

 

(a)           NOTWITHSTANDING  ANYTHING  TO  THE  CONTRARY CONTAINED IN THIS ENVIRONMENTAL AGREEMENT, NO PARTY HERETO SHALL BE ENTITLED TO RECOVER FROM ANY OTHER PARTY HERETO OR ANY OF SUCH PARTY’S AFFILIATES ANY AMOUNT IN RESPECT OF EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT  OR  CONSEQUENTIAL  DAMAGES,  INCLUDING  LOST  PROFITS; EXCEPT, HOWEVER, WITH RESPECT TO ANY OF THE FOREGOING PAID OR OWING TO A THIRD PARTY WITH RESPECT TO A THIRD PARTY CLAIM, WHICH DAMAGES SHALL BE CONSIDERED PART OF LOSSES AND SHALL BE COVERED BY THE INDEMNIFICATIONS SET FORTH IN THIS ARTICLE V.

 

(b)           ALL  RELEASES, DISCLAIMERS,  LIMITATIONS  ON  LIABILITY  AND  INDEMNITIES  IN  THIS ENVIRONMENTAL AGREEMENT, INCLUDING THOSE IN THIS ARTICLE V, SHALL APPLY EVEN IN THE EVENT OF THE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE,  STRICT  LIABILITY  OR  FAULT  OF  THE  PARTY  WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED OR INDEMNIFIED.

 

5.08                 Governing Law.  This Environmental Agreement shall be construed (both as to validity and performance), interpreted and enforced in accordance with, and governed by, the Laws of the State of Texas, without regard to conflicts of laws rules or principles as applied in Texas.

 

5.09                 Jurisdiction; Consent to Service of Process; Waiver.  Each of the Parties agrees that it shall bring any Proceeding in respect of any claim arising out of or related to this Environmental Agreement, whether in tort or contract or at law or in equity, exclusively in any Federal or state court in Harris County, Texas and solely in connection with claims arising under such agreement or instrument or the transactions contained in or contemplated by such agreement or instrument, (i) irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives any objection to laying venue in any such Proceeding in such courts, (iii) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over it and (iv) agrees that service of process upon it may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address specified in Section 6.02. The foregoing consents to jurisdiction and service of process shall not constitute general consents to service of process in the State of Texas for any purpose except as provided herein and shall not be deemed to confer rights on any Person other than the Parties. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY DISPUTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS ENVIRONMENTAL AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS ENVIRONMENTAL AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS ENVIRONMENTAL AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS  SECTION 5.09.

 

 

  

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ARTICLE VI

 

MISCELLANEOUS PROVISIONS

 

6.01                 Amendment.  This Environmental Agreement (including this Section 6.01) may not be amended except by an instrument in writing executed and delivered by the Parties. The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by any Party of any condition, or of any breach of any term, covenant, representation or warranty contained in this Environmental Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty.  No course of dealing between or among any Persons having any interest in this Environmental Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Environmental Agreement.

 

6.02                 Notices.  All notices and other communications that are required to be or may be given pursuant to this Environmental Agreement shall be delivered in accordance with the notice provisions set forth in Section 12.2 of the Purchase Agreement.

 

6.03                 Expenses.  Except as otherwise expressly provided herein, all costs and expenses incurred by Seller or its Affiliates in connection with this Environmental Agreement and the transactions contemplated hereby shall be paid by Seller, and all costs and expenses incurred by Buyer or its Affiliates in connection with this Environmental Agreement and the transactions contemplated hereby shall be paid by Buyer.

 

6.04                 Headings.  The headings contained in this Environmental Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Environmental Agreement.

 

6.05                 No Strict Construction.  The Parties acknowledge that each of them has been represented by counsel in connection with this Environmental Agreement and the transactions contemplated hereby.  Notwithstanding the fact that this Environmental Agreement has been drafted or prepared by one of the Parties, the Parties confirm that they and their respective counsel have reviewed, negotiated and adopted this Environmental Agreement as the joint agreement and understanding of the Parties, and the language used in this Environmental Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Person and any rule of Law that would require interpretation of any claimed ambiguities in this Environmental Agreement against the Party that drafted it has no application and is expressly waived.

 

 

  

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6.06                 Severability.  If any term or other provision of this Environmental Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Environmental Agreement shall nevertheless remain in full force and effect, and the invalid, illegal or unenforceable provision shall be reformed to the minimum extent required to render such provision valid, legal and enforceable and in a manner so as to preserve the economic and legal substance of the transactions contemplated hereby to the fullest extent permitted by Law. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Environmental Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

6.07                 Assignment.  This Environmental Agreement shall not be assigned by any Party (including by operation of Law or otherwise) except with the prior written consent of the other Party. Any purported assignment of this Environmental Agreement in violation of this Section 6.07 shall be null and void.

 

6.08                 Parties in Interest.  This Environmental Agreement shall be binding upon and inure solely to the benefit of each Party and its permitted successors and assigns, and nothing in this Environmental Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Environmental Agreement.

 

6.09                 Failure or Indulgence Not Waiver.  No failure or delay on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

 

6.10                 Disclosure Schedules.  Any matter disclosed by Seller in the Schedules pursuant to any Section of this Environmental Agreement shall be deemed to have been disclosed by Seller for purposes of each other Section of this Environmental Agreement to which such disclosure is relevant as and to the extent that the relevance of such matter to such other Section is readily apparent on the face of such disclosure. The listing (or inclusion of a copy) of a document or other item in the Schedules shall be adequate to disclose an exception to a representation or warranty made herein if the nature and relevance of such exception is readily apparent from the listing (or inclusion of a copy) of such document.

 

6.11                 Time of the Essence.  Time is of the essence in this Environmental Agreement. If the date specified in this Environmental Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.

 

6.12                 Entire Agreement.  This Environmental Agreement, the Purchase Agreement and the Related Agreements (together with the Exhibits, the Disclosure Schedules and the other Schedules hereto and thereto) constitute the entire agreement of the parties hereto and thereto, and supersede all prior agreements and undertakings, both written and oral, among the Parties, with respect to the subject matter hereof (other than the Confidentiality Agreement, which shall continue in full force and effect).

 

 

  

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6.13                 Specific Performance.  Each Party acknowledges that the breach of this Environmental Agreement by the other Party would cause irreparable damage to such Party and that money damages or other legal remedies would not be an adequate remedy for any such damages. Therefore, the obligations of each Party under this Environmental Agreement shall be enforceable by a decree of specific performance and appropriate injunctive relief may be applied for and granted in connection therewith, without the requirement to post any bond or security in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Environmental Agreement or otherwise.

 

6.14                 Counterparts.  This Environmental Agreement may be executed in multiple counterparts and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Signed counterparts of this Environmental Agreement may be delivered by facsimile and by scanned pdf image; provided that each Party uses Commercially Reasonable Efforts to deliver to each other Party original signed counterparts as soon as possible thereafter.

 

 

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The Parties have executed and delivered this Environmental Agreement as of the date first written above.

 

	  	
TESORO CORPORATION

 

 

 

By: /s/ Gregory J. Goff             

Gregory J. Goff

President and Chief Executive Officer

	  	
 

 

HAWAII PACIFIC ENERGY, LLC (on behalf of itself and on behalf of the Company)

 

 

 

By: /s/ Brice Tarzwell                                

Brice Tarzwell

Vice President and Secretary

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