Document:

Exhibit 10.2

 

CHANGE IN CONTROL AGREEMENT

 

This CHANGE IN CONTROL AGREEMENT (“Agreement”), effective as of September 19, 2012 (the “Effective Date”), by and between CONSOLIDATED GRAPHICS, INC., a Texas corporation (the “Company”), and JON C. BIRO (the “Executive”), evidences that;

 

WHEREAS, the Executive is currently a senior executive of the Company and has made and is expected to make significant contributions to the profitability, growth and financial strength of the Company;

 

WHEREAS, the Company and the Executive are parties to that certain Amended and Restated Change in Control Agreement, dated effective January 14, 2008 (the “Prior Change in Control Agreement”);

 

WHEREAS, the Company and the Executive entered into the Prior Change in Control Agreement to ensure that the Executive is not practically disabled from discharging his duties upon a Change in Control (as defined hereafter);

 

WHEREAS, the terms of the Prior Change in Control Agreement are superseded by this Agreement;

 

WHEREAS, this Agreement is not intended to alter materially the compensation and benefits which the Executive could reasonably expect to receive from the Company absent a Change in Control and, accordingly, although effective and binding as of the Effective Date, this Agreement shall become operative only upon the occurrence of a Change in Control; and

 

WHEREAS, the Executive is willing to render services to the Company on the terms and subject to the conditions set forth in this Agreement;

 

NOW, THEREFORE, the Company and the Executive agree as follows:

 

1.                                    Operation of Agreement:

 

(a)                                 Sections 1 and 8 through 21 of this Agreement shall be effective and binding as of the Effective Date, but, anything in this Agreement to the contrary notwithstanding, Sections 2, 3, 4, 5, 6 and 7 of this Agreement shall not be effective and binding unless and until there shall have occurred a Change in Control.  For purposes of this Agreement, a “Change in Control” will be deemed to have occurred if at any time during the Term (as hereinafter defined) any of the following events shall occur:

 

(i)                                     The Company is merged, consolidated, converted or reorganized into or with another corporation or other legal entity, and as a result of such merger, consolidation, conversion or reorganization less than a majority of the combined voting power of the then outstanding securities of the Company or such corporation or other legal entity immediately after such transaction are held in the aggregate by the holders of Voting Stock (as hereinafter defined) of the Company

 

 

immediately prior to such transaction and/or such voting power is not held by substantially all of such holders in substantially the same proportions relative to each other;

 

(ii)                                  The Company sells (directly or indirectly) all or substantially all of its assets (including, without limitation, by means of the sale of the capital stock or assets of one or more direct or indirect subsidiaries of the Company) to any other corporation or other legal entity, of which less than a majority of the combined voting power of the then outstanding voting securities (entitled to vote generally in the election of directors or persons performing similar functions on behalf of such other corporation or legal entity) of such other corporation or legal entity is held in the aggregate by the holders of Voting Stock of the Company immediately prior to such sale and/or such voting power is not held by substantially all of such holders in substantially the same proportions relative to each other;

 

(iii)                               Any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes (subsequent to the Effective Date) the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing fifty percent (50%) or more of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the Company (“Voting Stock”);

 

(iv)                              The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K, Schedule 14A or Schedule 14C (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred;

 

(v)                                   If during any one (1)-year period, individuals who at the beginning of any such period constitute the directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s shareholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of (i) the directors of the Company then still in office who were directors of the Company at the beginning of any such period or (ii) directors referenced in clause (i) immediately preceding plus directors of the Company whose nomination and/or election was approved by the directors referenced in clause (i) immediately preceding; or

 

(vi)                              The shareholders of the Company approve a plan contemplating the liquidation or dissolution of the Company.

 

Notwithstanding the foregoing provisions of Subsection 1(a)(iii) or 1(a)(iv) hereof, a “Change in Control” shall not be deemed to have occurred for purposes of this Agreement solely because (i) the Company, (ii) a corporation or other legal entity in which the Company directly or

 

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indirectly beneficially owns 100% of the voting securities of such entity, or (iii) any employee stock ownership plan or any other employee benefit plan of the Company or any wholly-owned subsidiary of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K, Schedule 14A or Schedule 14C (or any successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock, or because the Company reports that a change in control of the Company has occurred by reason of such beneficial ownership.

 

(b)                                 Upon occurrence of a Change in Control at any time during the Term, Sections 2, 3, 4, 5, 6 and 7 of this Agreement shall become immediately binding and effective.

 

(c)                                  The period during which this Agreement shall be in effect (the “Term”) shall commence as of the date hereof and shall expire as of the later of (i) the close of business on the third anniversary of the date hereof, or (ii) the expiration of the Period of Employment (as hereinafter defined); provided, however, that (A) subject to Section 9 hereof, if, prior to a Change in Control, the Executive ceases for any reason to be an employee of the Company (or a parent or subsidiary thereof), thereupon the Term shall be deemed to have expired and this Agreement shall immediately terminate and be of no further effect and (B) commencing on the first anniversary of the date hereof and each anniversary thereafter, the Term of this Agreement shall automatically be extended for an additional year.

 

2.                                    Employment; Period of Employment:

 

(a)                                 Subject to the terms and conditions of this Agreement, upon the occurrence of a Change in Control, the Company shall continue the Executive in its employ and the Executive shall remain in the employ of the Company for the period set forth in Subsection 2(b) hereof (the “Period of Employment”), in the position and with substantially the same duties and responsibilities that the Executive had immediately prior to the Change in Control, or to which the Company and the Executive may hereafter mutually agree in writing.  Throughout the Period of Employment, the Executive shall devote substantially all of the Executive’s time during normal business hours (subject to vacations, sick leave and other absences in accordance with the policies of the Company as in effect for senior executives immediately prior to the Change in Control) to the business and affairs of the Company, but nothing in this Agreement shall preclude the Executive from devoting reasonable periods of time during normal business hours to (i) serving as a director, trustee or member of or participant in any organization or business so long as such activity would not constitute Competitive Activity (as hereinafter defined) if conducted by the Executive after the Executive’s Termination Date (as hereinafter defined), (ii) engaging in charitable and community activities, or (iii) managing the Executive’s personal investments.

 

(b)                                 The Period of Employment shall commence on the date on which a Change in Control occurs and, subject only to the provisions of Section 4 hereof, shall

 

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continue until the expiration of the second anniversary of the occurrence of the Change in Control.

 

3.                                    Compensation During Period of Employment:

 

(a)                                 During the Period of Employment, the Executive shall receive (i) annual base salary at a rate not less than the Executive’s highest annual fixed or base compensation paid during or payable with respect to any calendar year during the three calendar years immediately preceding the year in which the Change in Control occurred, or such higher rate as may be determined from time to time by the Board of Directors of the Company (the “Board”) or the Compensation Committee thereof (the “Committee”) (which base salary at such rate is herein referred to as “Base Pay”) and (ii) an annual amount equal to not less than the highest aggregate annual bonus, incentive or other payments of cash compensation paid to the Executive in addition to the amounts referred to in clause (i) above made or to be made in or with respect to any calendar year during the three calendar years immediately preceding the year in which the Change in Control occurred pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar policy, plan, program or arrangement of the Company (“Incentive Pay”) which contemplates cash payments other than Employee Benefits (as hereinafter defined); provided, however, that in no event shall any increase in the Executive’s aggregate cash compensation or any portion thereof in any way diminish any other obligation of the Company under this Agreement.  The Executive’s Base Pay shall be payable monthly.  The Executive’s Incentive Pay shall be paid annually as soon as reasonably practicable following determination of the amount payable but in no event later than the date which is two and one-half months following the last day of the fiscal year during which such Incentive Pay is deemed no longer subject to a substantial risk of forfeiture.

 

(b)                                 During the Period of Employment the Executive shall, on the same basis as the Executive participated therein immediately prior to the Change in Control, be a full participant in, and shall be entitled to the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which senior executives of the Company and/or any parent or subsidiary participate generally, including without limitation any stock option, stock purchase, stock appreciation, savings, pension, supplemental executive retirement or other retirement income or welfare benefit, deferred compensation, incentive compensation, group and/or executive life, accident, health, dental, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may exist immediately prior to the Change in Control or any equivalent successor policies, plans, programs or arrangements that may be adopted thereafter by the Company and/or any parent or subsidiary (collectively, “Employee Benefits”); provided, however, that, except as set forth in Section 5(a)(ii) hereof, the Executive’s rights thereunder shall be governed by the terms thereof and shall not be enlarged hereunder or otherwise affected hereby.  Subject to the proviso in the immediately preceding sentence, if and to the extent such perquisites, benefits or service credit for benefits are not payable or provided under any such policy, plan, program or arrangement as a result of the amendment or termination

 

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thereof subsequent to or after a Change in Control, then the Company shall itself pay or provide such Employee Benefits.  Nothing in this Agreement shall preclude improvement or enhancement of any such Employee Benefits, provided that no such improvement shall in any way diminish any other obligation of the Company under this Agreement.

 

4.                                    Termination Following a Change in Control:

 

(a)                                 In the event of the occurrence of a Change in Control, this Agreement may be terminated by the Company during the Period of Employment only upon the occurrence of one or more of the following events:

 

(i)                                     If the Executive is unable to perform the essential functions of the Executive’s job (with or without reasonable accommodation) because the Executive has become permanently disabled within the meaning of, and actually begins to receive disability benefits pursuant to, a long-term disability plan maintained by or on behalf of the Company for senior executives generally or, if applicable, employees of the Company immediately prior to the Change in Control; or

 

(ii)                                  For “Cause,” which for purposes of this Agreement shall mean that, prior to any termination pursuant to Subsection 4(b) hereof, the Executive shall have committed:

 

(A)                           an intentional act of material fraud, embezzlement or theft in connection with the Executive’s duties or in the course of the Executive’s employment with the Company;

 

(B)                               intentional, wrongful damage to material property of the Company;

 

(C)                               intentional, wrongful disclosure of material secret processes or confidential information of the Company; or

 

(D)                               intentional wrongful engagement in any Competitive Activity;

 

and any such act shall have been materially harmful to the Company.  For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be deemed “intentional” only if done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.  Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board then in office at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive has committed an act set forth above in this Subsection 4(a)(ii) and specifying the particulars thereof

 

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in detail.  Nothing herein shall limit the right of the Executive or the Executive’s beneficiaries to contest the validity or propriety of any such determination.

 

(b)                                 In the event of the occurrence of a Change in Control, this Agreement may be terminated by the Executive during the Period of Employment with the right to benefits as provided in Section 5 hereof upon the occurrence of one or more of the following events as determined by the Executive in the sole discretion of the Executive:

 

(i)                                     Any termination by the Company of the employment of the Executive for any reason other than for Cause or as a result of the death of the Executive or by reason of the Executive’s disability and the actual receipt of disability benefits in accordance with Subsection 4(a)(i) hereof; or

 

(ii)                                  Termination by the Executive of the Executive’s employment with the Company (or any successor to or affiliate thereof) during the Period of Employment upon the occurrence of any of the following events:

 

(A)                               Failure to elect or reelect the Executive to the office(s) which the Executive held immediately prior to a Change in Control, or failure to elect or reelect the Executive as a director of the Company (or any successor to parent entity thereof) or the removal of the Executive as a director of the Company (or any successor thereto), if the Executive shall have been a director of the Company immediately prior to the Change in Control;

 

(B)                               An adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position(s) which the Executive held immediately prior to the Change in Control; a reduction in the Executive’s Base Pay and/or Incentive Pay received from the Company; or the termination of the Executive’s rights to any Employee Benefits to which the Executive was entitled immediately prior to the Change in Control or a reduction in scope or value thereof without the prior written consent of the Executive, any of which is not remedied within ten (10) calendar days after receipt by the Company of written notice from the Executive of such change, reduction or termination, as the case may be;

 

(C)                               A determination by the Executive that, following a Change in Control, as a result of a change in circumstances significantly affecting the Executive’s position(s), including without limitation, a change in the scope of the business or other activities for which the Executive was responsible immediately prior to a Change in Control, the Executive has been rendered substantially unable to carry out, has been substantially hindered in the performance of, or has suffered a substantial reduction in any of the authorities, powers, functions, responsibilities or duties attached to the position(s) held by the Executive immediately prior to the Change in Control, which situation is not remedied within ten (10) calendar days

 

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after written notice to the Company from the Executive of such determination;

 

(D)                               The liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of all or a significant portion of its business and/or assets (including, without limitation, by means of the sale of the capital stock or assets of one or more direct or indirect subsidiaries of the Company), unless the successor (by liquidation, merger, consolidation, reorganization or otherwise) to which all or a significant portion of its business and/or assets have been transferred (directly or by operation of law) shall have assumed all duties and obligations of the Company under this Agreement pursuant to Section 11 hereof (in which case, such entity shall be deemed to be the “Company” hereunder);

 

(E)                                The Company shall require (I) that the principal place of work of the Executive or the appropriate principal executive office of the Company or the Company’s operating division or subsidiary for which the Executive performed the majority of his services during the twelve (12)-month period preceding the Change in Control be changed to any location which is in excess of forty (40) miles from the location thereof immediately prior to the Change in Control or (II) that the Executive travel away from the Executive’s office in the course of discharging the Executive’s responsibilities or duties hereunder more (in terms of either consecutive days or aggregate days in any calendar year) than was required of the Executive prior to the Change in Control, without, in either case, the Executive’s prior consent; or

 

(F)                                 Any material breach of this Agreement by the Company or any successor thereto.

 

(c)                                  A termination by the Company pursuant to Subsection 4(a) hereof or by the Executive pursuant to Subsection 4(b) hereof shall not affect any rights which the Executive may have pursuant to any agreement, policy, plan, program or arrangement of the Company providing Employee Benefits, which rights shall be governed by the terms thereof.  If this Agreement or the employment of the Executive is terminated under circumstances in which the Executive is not entitled to any payments under Sections 3 or 5 hereof, then notwithstanding anything herein to the contrary, the Executive shall have no further obligation or liability to the Company hereunder with respect to the Executive’s prior or any future employment by the Company.

 

5.                                    Severance Compensation:

 

(a)                                 If, following the occurrence of a Change in Control, (x) the Company shall terminate the Executive’s employment during the Period of Employment other than pursuant to Subsection 4(a) hereof, or (y) the Executive shall terminate the Executive’s employment during the Period of Employment pursuant to Subsection 4(b) hereof, or

 

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(z) the Executive dies during the Period of Employment, the Company shall pay to the Executive (or the Executive’s estate, as applicable) the amount specified in Subsection 5(a)(i) hereof within five business days after the date (the “Termination Date”) that the Executive’s employment is terminated (the effective date of which shall be the date of termination or death or, in the case of any payment or benefit subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the date the Executive incurs a “separation from service” within the meaning of Section 409A(2)(A)(i) of the Code):

 

(i)                                     In lieu of any further payments under Subsection 3(a) to the Executive for periods subsequent to the Termination Date, but without affecting the rights of the Executive referred to in Subsection 5(b) hereof, a lump sum payment in an amount equal to a multiple of two (2) times (A) the Executive’s Base Pay (at the highest rate in effect during the Term prior to the Termination Date) plus (B) the highest Incentive Pay amount paid to the Executive during his employment with the Company (which contemplates cash payments other than Employee Benefits).

 

(ii)                                  (A) For the remainder of the Period of Employment the Company shall arrange to provide the Executive with Employee Benefits identical to those which the Executive was receiving or entitled to receive immediately prior to the Termination Date (and if and to the extent that such benefits shall not or cannot be paid or provided under any policy, plan, program or arrangement of the Company solely due to the fact that the Executive is no longer an officer or employee of the Company, then the Company shall itself pay to the Executive and/or the Executive’s dependents and beneficiaries, such Employee Benefits) and (B) without limiting the generality of the foregoing, the remainder of the Period of Employment shall be considered service with the Company for the purpose of service credits under the Company’s retirement income, supplemental executive retirement and other benefit plans applicable to the Executive and/or the Executive’s dependents and beneficiaries immediately prior to the Termination Date.  Without otherwise limiting the purposes or effect of Section 6 hereof, Employee Benefits payable to the Executive pursuant to this Subsection 5(a)(ii) by reason of any “welfare benefit plan” of the Company (as the term “welfare benefit plan” is defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) shall be reduced to the extent comparable welfare benefits are actually received by the Executive from another employer during such period following the Executive’s Termination Date until the expiration of the Period of Employment.

 

(iii)                               In addition to all other compensation due to the Executive hereunder, the following shall occur immediately prior to the occurrence of a Change in Control:

 

(A)                               all Company stock options held by the Executive prior to a Change in Control shall become exercisable, regardless of whether or not

 

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the vesting/performance conditions set forth in the relevant agreements shall have been satisfied in full;

 

(B)                               all restrictions on any restricted securities granted by the Company to the Executive prior to a Change in Control shall be removed and the securities shall become fully vested and freely transferable, regardless of whether the vesting/performance conditions set forth in the relevant agreements shall have been satisfied in full;

 

(C)                               the Executive shall have an immediate right to receive all performance shares or bonuses granted prior to a Change in Control, and such performance shares and bonuses shall become fully vested and freely transferable or payable without restrictions, regardless of whether or not specific performance goals set forth in the relevant agreements shall have been attained; and

 

(D)                               all performance units granted to the Executive prior to a Change in Control shall become immediately payable in cash or Common Stock, at the Executive’s sole option, regardless of whether or not the relevant performance cycle has been completed, and regardless of whether any other terms and conditions of the relevant agreements shall have been satisfied in full;

 

provided, that if the terms of any plan or agreement providing for such options, restricted securities, performance shares or bonuses, or performance units do not allow such acceleration or payment as described above, the Company shall take or cause to be taken any action required to allow such acceleration or payment or to separately pay the value of such benefits.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, in the event that any severance and other benefits provided to or for the benefit of the Executive or his legal representatives and dependents pursuant to this Agreement and any other agreement, benefit, plan, or policy of the Company (this Agreement and such other agreements, benefits, plans, and policies collectively being referred to herein as the “Change of Control Arrangements”) constitute “parachute payments” within the meaning of Section 280G(b)(2) of the Code (such severance and other benefits being referred to herein as the “Change of Control Payments”) that would be subject to the excise tax imposed by Section 4999 of the Code (such excise tax referred to in this Agreement as the “Excise Tax”), then the Company will provide the Executive with a computation of (A) the maximum amount of Change of Control Payments that could be made under the Change of Control Arrangements, without the imposition of the Excise Tax (said maximum amount being referred to as the “Capped Amount”); (B) the value of all Change of Control Payments that could be made pursuant to the terms of the Change in Control Arrangements (all said payments, distributions and benefits being referred to as the “Uncapped Payments”); (C) the dollar amount of Excise Tax which the Executive would become obligated to pay pursuant to Section 4999 of the Code as a result of receipt of the Uncapped Payments; and (D) the net value of the Uncapped Payments after reduction by (1) the amount of the Excise Tax, (2) the estimated income taxes payable by

 

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the Executive on the difference between the Uncapped Payments and the Capped Amount, assuming that the Executive is paying the highest marginal tax rate for state, local and federal income taxes, and (3) the estimated hospital insurance taxes payable by the Executive on the difference between the Uncapped Payments and the Capped Amount based on the hospital insurance tax rate under Section 3101(b) of the Code (the “Net Uncapped Amount”).  If the Capped Amount is greater than the Net Uncapped Amount, the Executive shall be entitled to receive or commence to receive the Change of Control Payments equal to the Capped Amount; or if the Net Uncapped Amount is greater than the Capped Amount, the Executive shall be entitled to receive or commence to receive the Change of Control Payments equal to the Uncapped Payments.  If the Executive receives the Uncapped Payments, then the Executive shall be solely responsible for the payment of the Excise Tax due from the Executive and attributable to such Uncapped Payments, with no right of additional payment from any of the Company as reimbursement for such taxes.  Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 5(b) shall be made in writing by tax counsel or by an independent public accounting firm agreed to by the Company and the Executive (the “Auditor”), whose determination shall be conclusive and binding upon the Company and the Executive.  For purposes of making the calculations required by this Section 5(b), the Auditor may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Executive shall furnish to the Auditor such information and documents as the Auditor may reasonably request in order to make a determination under this Section 5(b).  The Company shall bear all costs the Auditor may reasonably incur in connection with any calculations contemplated by this Section 5(b).

 

(c)                                  There shall be no right of set-off or counterclaim in respect of any claim, debt or obligation against any payment to or benefit (including Employee Benefits) of the Executive provided for in this Agreement.

 

(d)                                 Without limiting the rights of the Executive at law or in equity, if the Company fails to make any payment required to be made hereunder on a timely basis, the Company shall pay interest on the amount thereof (and on any interest accrued hereunder) at an annualized rate of interest equal to the Highest Lawful Rate as hereafter defined.  “Highest Lawful Rate” means, at any time and with respect to the Executive, the maximum rate of interest under applicable law that the Executive may charge the Company.  The Highest Lawful Rate shall be calculated in a manner that takes into account any and all fees, payments, and other charges in respect of this Agreement that constitute interest under applicable law.  Each change in any interest rate provided for herein based upon the Highest Lawful Rate resulting from a change in the Highest Lawful Rate shall take effect without notice to the Company at the time of such change in the Highest Lawful Rate.  For purposes of determining the Highest Lawful Rate under Texas law, the applicable rate ceiling shall be the indicated rate ceiling described in, and computed in accordance with the Texas Finance Code.  Notwithstanding anything to the contrary contained herein, no provisions of this Agreement shall require the payment or permit the collection of interest in excess of the Highest Lawful Rate.  If any excess of interest in such respect is herein provided for, or shall be adjudicated to be so provided, in

 

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this Agreement, the provisions of this paragraph shall govern and prevail, and neither the Company nor the sureties, guarantors, successors or assigns of the Company shall be obligated to pay the excess amount of such interest, or any other excess sum paid for the use, forbearance or detention of indebtedness pursuant hereto.  If for any reason interest in excess of the Highest Lawful Rate shall be deemed charged, required or permitted by any court of competent jurisdiction, any such excess shall be applied as a payment and reduction of the principal of indebtedness evidenced by this Agreement; and, if the principal amount hereof has been paid in full, any remaining excess shall forthwith be paid to the Company.  In determining whether or not the interest paid or payable exceeds the Highest Lawful Rate, the Company and the Executive shall, to the extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the indebtedness evidenced by this Agreement so that the interest for the entire term does not exceed the Highest Lawful Rate.

 

(e)                                  Notwithstanding any provision of this Agreement to the contrary, if the Executive incurs a separation from service with the Company (other than by reason of death) and is deemed on his date of separation from service to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then, to the extent required under Section 409A(a)(2)(B)(i) of the Code, the payments and benefits under this Agreement shall commence or be made or provided as soon as practicable but not prior to the later of (A) the payment date set forth in this Agreement with respect to such payment or benefit or (B) the date that is the earliest of (i) the expiration of the six-month period measured from the date of separation from service or (ii) the date of the Executive’s death, in either case without interest for such delay.

 

(f)                                   To the extent any reimbursements or in-kind benefits provided to the Executive pursuant to this Agreement are subject to Section 409A of the Code, including without limitation any health plan benefits subject to Section 409A of the Code or legal fees and expenses paid or reimbursed pursuant to Section 8, then in accordance with Section 409A of the Code: (A) the amount of expenses eligible for reimbursement or in-kind benefits provided during the Executive’s taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits provided in any other taxable year; (B) the reimbursement must be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; and (C) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

6.                                    No Mitigation Obligation:  The Company hereby acknowledges that it will be difficult, and may be impossible, for the Executive to find reasonably comparable employment following the Termination Date and that the noncompetition covenant contained in Section 7 hereof will further limit the employment opportunities for the Executive.  Accordingly, the parties hereto expressly agree that the payment of the severance compensation and benefits by the Company to the Executive in accordance with the terms of this Agreement will be liquidated damages, and that the Executive shall not be required to mitigate the amount of any payment

 

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provided for in this Agreement by seeking other employment or otherwise, nor shall any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise, except as expressly provided in Subsection 5(a)(ii) hereof.

 

7.                                    Competitive Activity:  During a period ending one year following the Termination Date (or, if less, a period equal to the remaining Period of Employment and beginning on the Termination Date), if the Executive shall have received or shall be receiving benefits under Subsection 5(a) hereof, the Executive shall not, without the prior written consent by the Company, directly or indirectly engage in any “Competitive Business” (as hereinafter defined) within any metropolitan area served by the Company during the twelve (12)-month period immediately preceding termination of the Executive’s employment with the Company nor will the Executive engage, within such geographical area(s), in the design, development, distribution, manufacture, assembly or sale of a product or service in competition with any product or service marketed or planned by the Company immediately prior to the Termination Date, the plans, designs or specifications of which have been revealed to the Executive (“Competitive Activity”).  The Executive acknowledges that these limited prohibitions are reasonable as to time, geographical area and scope of activities to be restrained and that the limited prohibitions do not impose a greater restraint than is necessary to protect the Company’s goodwill, proprietary information and other business interests.  “Competitive Activity” shall not include (i) the mere ownership of a de  minimis amount of securities in any such enterprise and exercise of rights appurtenant thereto or (ii) participation in management of any such enterprise or business operation thereof other than in connection with the competitive operation of such enterprise.  For purposes of this Section 7, the term “Competitive Business” means any person or entity engaged in a business that produces any of the following products or performs any of the following services: general commercial printing services, including digital imaging and printing, off-set lithography (sheet fed and web), composition, electronic prepress, binding, kitting and finishing services, fulfillment of printed materials, and direct mail services, including any other products or services manufactured, developed, or distributed during the Term and the Term of Employment by the Company and/or its affiliates, predecessors, or successors.

 

8.                                    Legal Fees and Expenses:  It is the intent of the Company that the Executive not be required to incur the expenses associated with the enforcement of the Executive’s rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder.  Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the expense of the Company as hereafter provided, to represent the Executive in connection with the litigation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, shareholder or other person affiliated with the Company, in any jurisdiction.  Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in connection therewith the Company and the Executive agree that a

 

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confidential relationship shall exist between the Executive and such counsel.  The Company shall pay or cause to be paid and shall be solely responsible for any and all attorneys” and related fees and expenses incurred by the Executive as a result of the Company’s failure to perform this Agreement or any provision thereof or as a result of the Company or any person contesting the validity or enforceability of this Agreement or any provision thereof as aforesaid.

 

9.                                    Employment Rights:  Nothing expressed or implied in this Agreement shall create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company prior to any Change in Control; provided, however, that any actual or constructive termination of employment of the Executive or removal of the Executive as an officer of the Company following the commencement of any discussion with or receipt of an offer from a third person that ultimately results in a Change in Control shall be deemed to be a termination or removal of the Executive after a Change in Control for purposes of this Agreement.

 

10.                             Withholding of Taxes:  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

 

11.                             Successors and Binding Agreement:

 

(a)                                 The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company, to expressly assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement).  This Agreement shall not otherwise be assignable, transferable or delegable by the Company.

 

(b)                                 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees.

 

(c)                                  This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Subsection 11(a) hereof.  Without limiting the generality of the foregoing, the Executive’s right to receive payments hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Subsection 11(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

 

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(d)                                 The Company and the Executive recognize that each Party will have no adequate remedy at law for breach by the other of any of the agreements contained herein and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to a decree of specific performance, mandamus or other appropriate remedy to enforce performance of this Agreement.

 

12.                             Applicable Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW PRINCIPLES OF ANY STATE) AND THE LAWS OF THE UNITED STATES OF AMERICA AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO CALL FOR PERFORMANCE IN HARRIS COUNTY, TEXAS.  COURTS WITHIN THE STATE OF TEXAS WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT.  THE PARTIES CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.  VENUE IN ANY SUCH DISPUTE, WHETHER IN FEDERAL OR STATE COURT, WILL BE LAID IN HARRIS COUNTY, TEXAS. EACH OF THE PARTIES HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (ii) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

 

13.                             Notices.  All notices, demands, requests or other communications that may be or are required to be given, served or sent by either party to the other party pursuant to this Agreement will be in writing and will be mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by hand delivery, telegram or facsimile transmission addressed as follows:

 

	
(a)                                 If to the   Company:
    	
Consolidated   Graphics, Inc.
   5858 Westheimer, Suite 200
   Houston, Texas 77057
   Facsimile No.: (713) 787-0974
   Attn: Joe R. Davis
    
	
 
    	
 
    
	
with a copy (which will
    	
 
    
	
not constitute notice) to:
    	
Ricardo   Garcia-Moreno
   Haynes and Boone LLP
   1221 McKinney Ave, Suite 2100
   Houston, Texas 77010
   Facsimile No. (713) 236-5432
    

 

14

 

	
If to the Executive:
    	
Jon   C. Biro
   c/o Consolidated Graphics, Inc.
   5858 Westheimer, Suite 200
   Houston, Texas 77057
    

 

Either party may designate by written notice a new address to which any notice, demand, request or communication may thereafter be given, served or sent.  Each notice, demand, request or communication that is mailed, delivered or transmitted in the manner described above will be deemed sufficiently given, served, sent and received for all purposes at such time as it is delivered to the addressee with the return receipt, the delivery receipt, the affidavit of messenger or (with respect to a facsimile transmission) the answer back being deemed conclusive evidence of such delivery or at such time as delivery is refused by the addressee upon presentation.

 

14.                             Gender.  Words of any gender used in this Agreement will be held and construed to include any other gender, and words in the singular number will be held to include the plural, unless the context otherwise requires.

 

15.                             Amendment.  This Agreement may not be amended or supplemented except pursuant to a written instrument signed by the parties hereto.  Nothing contained in this Agreement will be deemed to create any agency, joint venture, partnership or similar relationship between the parties to this Agreement.  Nothing contained in this Agreement will be deemed to authorize either party to this Agreement to bind or obligate the other party.

 

16.                             Counterparts.  This Agreement may be executed in multiple counterparts, each of which will be deemed to be an original and all of which will be deemed to be a single agreement.  This Agreement will be considered fully executed when all parties have executed an identical counterpart, notwithstanding that all signatures may not appear on the same counterpart.

 

17.                             Severability.  If any of the provisions of this Agreement are determined to be invalid or unenforceable, such invalidity or unenforceability will not invalidate or render unenforceable the remainder of this Agreement, but rather the entire Agreement will be construed as if not containing the particular invalid or unenforceable provision or provisions, and the rights and obligations of the parties will be construed and enforced accordingly.  The parties acknowledge that if any provision of this Agreement is determined to be invalid or unenforceable, it is their desire and intention that such provision be reformed and construed in such manner that it will, to the maximum extent practicable, be deemed to be valid and enforceable.

 

18.                             Third Parties.  Except as expressly set forth or referred to in this Agreement, nothing in this Agreement is intended or will be construed to confer upon or give to any party other than the parties to this Agreement and their successors and permitted assigns, if any, any rights or remedies under or by reason of this Agreement.

 

19.                             Waiver.  No failure or delay in exercising any right hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise or the exercise of any other right.

 

15

 

20.                             Prior Agreements:  This Agreement is voluntarily entered into and upon the occurrence of a Change in Control will supersede and take the place of any prior change in control agreements between the parties hereto, including the Prior Change in Control Agreement.  The parties hereto expressly agree and hereby declare that any and all prior change in control agreements between the parties are terminated and of no force or effect, including the Prior Change in Control Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

16

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
CONSOLIDATED   GRAPHICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joe R. Davis
    
	
 
    	
 
    	
Joe R. Davis,
    
	
 
    	
 
    	
Chairman and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Jon C. Biro
    
	
 
    	
Jon C. Biro
    

 

17Exhibit 10.1

 

Execution Version

 

OMNIBUS AGREEMENT

 

among

 

SUSSER PETROLEUM PARTNERS LP,

 

SUSSER PETROLEUM PARTNERS GP LLC

 

and

 

SUSSER HOLDINGS CORPORATION

 

 

OMNIBUS AGREEMENT

 

This OMNIBUS AGREEMENT (“Agreement”) is entered into on, and effective as of, the Closing Date (as defined herein), among Susser Holdings Corporation, a Delaware corporation (“SHC”), Susser Petroleum Partners GP LLC, a Delaware limited liability company (the “General Partner”), and Susser Petroleum Partners LP, a Delaware limited partnership (the “Partnership”).  The above-named entities are sometimes referred to in this Agreement each as a “Party” and collectively as the “Parties.”

 

R E C I T A L S:

 

1.                                      The Parties desire by their execution of this Agreement to evidence their agreement, as more fully set forth in Article II, with respect to certain business opportunities to be offered to the Partnership by the SHC Entities (as defined herein) and certain obligations of the Partnership to the SHC Entities.

 

2.                                      The Parties desire by their execution of this Agreement to evidence their agreement, as more fully set forth in Article III, with respect to certain indemnification obligations of the Parties.

 

3.                                      The Parties desire by their execution of this Agreement to evidence their agreement, as more fully set forth in Article IV, with respect to the amount to be paid by the Partnership for certain general and administrative services to be performed by SHC and its Affiliates (as defined herein) as well as direct expenses, including operating expenses, incurred by SHC and its Affiliates for and on behalf of the Partnership Entities (as defined herein) and other services to be provided to the Partnership.

 

4.                                      The Parties desire by their execution of this Agreement to evidence their agreement, as more fully set forth in Article V, with respect to the granting of a license from SHC to the Partnership Entities.

 

In consideration of the premises and the covenants, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I
 Definitions

 

1.1                               Definitions

 

As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

“Affiliate” has the meaning given such term in the Partnership Agreement.

 

“Agreement” means this Omnibus Agreement, as it may be amended, modified or supplemented from time to time in accordance with the terms hereof.

 

 

“Alternate Fuel Sales Rate” means the per gallon fee that the Partnership will receive for certain motor fuel volumes distributed to SHC under the certain circumstances outlined in Article II hereto.  The Alternate Fuel Sales Rate, at any given time, is equal to the Partnership Prior-Year Distribution Cost, excluding the Partnership’s cost to purchase the motor fuel, plus a profit margin equal to 30% of the Partnership Prior-Year Distribution Cost.  The Alternate Fuel Sales Rate shall be recalculated annually on April 1 of each year based upon the audited financials statements of the Partnership for the prior fiscal year.  The Alternate Fuel Sales Rate shall become effective immediately upon recalculation on April 1 of each year and will remain effective for twelve months.  Notwithstanding the foregoing, other than in the event of a Large Acquisition, the Alternate Fuel Sales Rate in effect for the year in which an SHC Site becomes subject to the SHC Distribution Contract shall remain in effect, without adjustment or recalculation, with respect to such SHC Site for the balance of the term under the SHC Distribution Contract.  If SHC completes a Large Acquisition and does not otherwise mutually agree with the Partnership on distribution terms for volumes acquired in the Large Acquisition pursuant to Section 2.1(b)(i) or Section 2.4 of this Agreement, the Alternate Fuel Sales Rate in effect for the year in which the Large Acquisition is completed shall be recalculated on a pro forma basis to be a per gallon fee equal to (x) the Partnership’s Motor Fuel Distribution Costs for the last twelve months plus the estimated additional Motor Fuel Distribution Costs that will be incurred over the twelve-month period immediately following such Large Acquisition to distribute the additional volumes added as a result of the Large Acquisition, divided by (y) the total number of gallons sold by the Partnership during the last twelve months plus the estimated additional annual volumes resulting from the Large Acquisition (“Pro Forma Motor Fuel Distribution Costs”), plus a profit margin equal to 30% of the Pro Forma Motor Fuel Distribution Costs (the “Pro Forma AFSR”).  The Pro Forma ASFR will apply to volumes from SHC Sites acquired in the Large Acquisition, as well as any volumes from SHC Sites acquired after the Large Acquisition from the time such SHC Sites are added until the Alternate Fuel Sales Rate is recalculated on April 1 of the following year (collectively, “Large Acquisition Period SHC Sites”).  The Alternate Fuel Sale Rate for any year following a year in which a Large Acquisition was completed shall be calculated on a pro forma basis by giving effect to the Large Acquisition as though it was completed on January 1 of the applicable year when calculating the Partnership Prior-Year Distribution Cost.   The Alternate Fuel Sales Rate in effect for the second year following the Large Acquisition shall remain in effect, without adjustment or recalculation, with respect to such Large Acquisition Period SHC Sites for the balance of the term under the SHC Distribution Contract.

 

“Annual Construction Plan” has the meaning given such term in Section 2.3 of this Agreement.

 

“Cause” has the meaning given such term in the Partnership Agreement.

 

“Certificate of Cost” has the meaning given such term in Section 2.2(d) of this Agreement.

 

“Closing Date” means the date of the closing of the Partnership’s initial public offering of Common Units.

 

“Common Units” has the meaning given such term in the Partnership Agreement.

 

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“Conflicts Committee” has the meaning given such term in the Partnership Agreement.

 

“Contribution Agreement” means that certain Contribution, Conveyance and Assumption Agreement, dated as of the Closing Date, by and among the General Partner, the Partnership, Susser Petroleum Company LLC, SHC and certain other parties, together with the additional conveyance documents and instruments contemplated or referenced thereunder.

 

“Covered Environmental Losses” means all Losses arising out of or under or related to Environmental Laws including costs and expenses of any Environmental Activity, court costs and reasonable attorney’s and experts’ fees or other measures required or necessary under Environmental Laws, and the cost and expense of any environmental or toxic tort pre-trial, trial or appellate legal or litigation support work of any and every kind or character, fixed or contingent, by reason of or arising out of:

 

(i)                                     any violation or correction of violation of Environmental Laws, including performance of any Environmental Activity associated in any way with the ownership or operation of Partnership Assets; or

 

(ii)                                  any event, circumstance, action, omission or condition associated in any way with ownership or operation of the Partnership Assets (including the exposure to or presence of Hazardous Substances on, under, about, Releasing or threatening to be Released to or from the Partnership Assets or the exposure to or Release or threatened Release of Hazardous Substances arising out of operation of the Partnership Assets at non-Partnership Asset locations).

 

“Environmental Activity” shall mean any investigation, study, assessment, evaluation, sampling, testing, monitoring, containment, removal, disposal, closure, corrective action, remediation (regardless of whether active or passive), natural attenuation, restoration, bioremediation, response, repair, corrective measure, cleanup or abatement that is required, necessary or conducted under any applicable Environmental Law, including institutional or engineering controls or participation in a governmental voluntary cleanup program to conduct voluntary investigatory and remedial actions for the clean-up, removal or remediation of Hazardous Substances that exceed actionable levels established pursuant to Environmental Laws, or participation in a supplemental environmental project in partial or whole mitigation of a fine or penalty.

 

“Environmental Laws” means all federal, state, regional and local laws, statutes, rules, regulations, orders, judgments, settlements, ordinances, codes, injunctions, decrees, Environmental Permits and other legally enforceable requirements and rules of common law relating to (a) pollution or protection of human health and safety, the environment or natural resources, including the federal Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, the federal Hazardous Materials Transportation Act, the Marine Mammal Protection Act, the Endangered Species Act, the National Environmental Policy Act, the federal Occupational Safety and Health Act and other environmental conservation and protection laws, each as amended through the Closing Date,

 

3

 

(b) any Release or threatened Release of, or any exposure of any Person or property to, any Hazardous Substances or (c) the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport, arrangement for disposal or transport, handling or Release of any Hazardous Substances.

 

“Environmental Permit” means any permit, approval, identification number, license, registration, certification, filing, notice, consent, exemption, variance or other authorization required under or issued pursuant to any applicable Environmental Law.

 

“Estimated Option Purchase Price” has the meaning given such term in Section 2.2(d) of this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exercise Notice” has the meaning given such term in Section 2.2(c) of this Agreement.

 

“Existing SHC Store” has the meaning given such term in Section 2.2(b) of this Agreement.

 

“Financial Administration Functions” has the meaning given such term in Section 4.3(c) of this Agreement.

 

“First Year Option Period” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“First Year Option Stores” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Future SHC Store” has the meaning given such term in Section 2.2(b) of this Agreement.

 

“General Partner” has the meaning given such term in the introduction to this Agreement.

 

“Hazardous Substance” means (a) any substance that is designated, defined or classified as a hazardous waste, solid waste, hazardous material, pollutant, contaminant, toxic or hazardous substance, or terms of similar meaning, or that is otherwise regulated by, or as to which liability may attach under any Environmental Law, including any hazardous substance as defined under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, (b) oil as defined in the Oil Pollution Act of 1990, as amended, including oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and petroleum products, or any components, fractions or derivatives thereof, and (c) radioactive materials, asbestos containing materials, polychlorinated biphenyls or radon.

 

“Indemnified Party” means each Partnership Group Member or each SHC Entity, as the case may be, in their capacities as parties entitled to indemnification in accordance with Article III.

 

4

 

“Indemnifying Party” means each of the Partnership or SHC, as the case may be, in their capacity as the parties from whom indemnification may be required in accordance with Article III.

 

“Large Acquisition” means any acquisition that collectively represents estimated additional annual volumes greater than 15% of SHC’s volumes for the prior quarter on an annualized basis.

 

“Lease” has the meaning given such term in Section 2.2(e) of this Agreement.

 

“License” has the meaning given such term in Section 5.1 of this Agreement.

 

“Losses” means all losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including court costs and reasonable attorney’s and experts’ fees) of any and every kind or character, fixed or contingent.

 

“Mark” has the meaning given such term in Section 5.1 of this Agreement.

 

“Motor Fuel Distribution Cost” means the sum of the Partnership’s general and administrative expense (excluding non-cash stock or unit compensation expense), other operating expenses and net Texas margin tax expense (other than any Texas margin taxes related to rental income received by the Partnership) and maintenance capital expenditures.

 

“Name” has the meaning given such term in Section 5.1 of this Agreement.

 

“Option Closing Date” has the meaning given such term in Section 2.2(c) of this Agreement.

 

“Option Purchase Price” has the meaning given such term in Section 2.2(d) of this Agreement.

 

“Option Stores” means the First Year Option Stores, the Second Year Option Stores and the Third Year Option Stores.

 

“Option Periods” means the First Year Option Period, the Second Year Option Period and the Third Year Option Period.

 

“Partnership” has the meaning given such term in the introduction to this Agreement.

 

“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of Susser Petroleum Partners LP, dated as of the Closing Date, as such agreement is in effect on the Closing Date immediately following the completion of the initial public offering of the Common Units.

 

“Partnership Assets” means the wholesale motor fuel distribution assets, properties and associated infrastructure and equity interests owned directly or indirectly by the Partnership upon completion of the initial public offering described in the Registration Statement.

 

5

 

“Partnership Entities” means the General Partner and each Partnership Group Member.

 

“Partnership Group” means the Partnership and its Subsidiaries.

 

“Partnership Group Member” means any member of the Partnership Group.

 

“Partnership Indemnitee” means any Person who is an Indemnitee as defined in the Partnership Agreement; provided, however, that for purposes of this definition, the term “Indemnitee” shall exclude SHC and any Affiliate of SHC that is not a Partnership Group Member.

 

“Partnership Prior-Year Distribution Cost” means, for purposes of determining the Alternate Fuel Sales Rate, at any given time, a per gallon amount equal to the Partnership’s Motor Fuel Distribution Cost for the prior year, calculated based on the Partnership’s audited financial statements for such year, divided by the total number of gallons sold by the Partnership during such fiscal year.  The Partnership Prior-Year Distribution Cost shall be recalculated annually on April 1 of each year based upon the audited financials statements of the Partnership for the prior fiscal year.

 

“Party” and “Parties” are defined in the introduction to this Agreement.

 

“Permitted Liens” means those matters set forth on any survey of the SHC Stores and all easements conditions and restrictions, if any, relating to the SHC Stores, to the extent and only to the extent that the same may still be in force and effect, shown of record in the office of the County in which the SHC Stores are located, and zoning, building and other laws, regulations and ordinances of any and all municipal, governmental and quasi-governmental bodies and agencies having jurisdiction over the SHC Stores or any part thereof, statutory liens for ad valorem taxes and standby fees on the SHC Stores which are not yet delinquent, license or access agreements (including cross or reciprocal access agreements), utility easements, leases, and purchase money security interests in equipment or fixtures located on the SHC Stores after the date of conveyance.

 

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, business trust, employee benefit plan, unincorporated organization, association, government body or agency or political subdivision thereof or other entity.

 

“Pre-Existing Distribution Contract” has the meaning given such term in Section 2.1(b) of this Agreement.

 

“Preliminary Option Store List” has the meaning given such term in Section 2.2(b) of this Agreement.

 

“Preliminary Purchase Notice” has the meaning given such term in Section 2.2(b) of this Agreement.

 

“Proposed Acquisition” has the meaning given such term in Section 2.4 of this Agreement.

 

6

 

“Proposed Acquisition Notice” has the meaning given such term in Section 2.4 of this Agreement.

 

“Registration Statement” means the Registration Statement on Form S-1 (File No. 333-182276), as amended, filed with the Securities and Exchange Commission with respect to the proposed initial public offering of Common Units by the Partnership.

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping or disposing into the environment.

 

“Retained Assets” means the equipment, properties, equity interests and other assets owned by any of the SHC Entities that were not conveyed, contributed or otherwise transferred to the Partnership Group pursuant to the Contribution Agreement or any other documents relating to the transactions referred to in the Contribution Agreement.

 

“Sale and Leaseback Option” has the meaning given such term in Section 2.2 of this Agreement.

 

“Second Year Option Period” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Second Year Option Stores” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Services” has the meaning given such term in Section 4.1 of this Agreement.

 

“SHC” has the meaning given such term in the introduction to this Agreement.

 

“SHC Consignment Contract” means any contract between SHC and a third party that provides that SHC will sell motor fuel on a consignment basis at a convenience store or retail fuel outlet owned or leased by the third party.

 

“SHC Distribution Contract” means that certain Fuel Distribution Agreement, dated as of September 25, 2012, by and among Susser Petroleum Operating Company LLC, SHC, Susser Petroleum Company LLC and Stripes LLC, providing for the wholesale distribution of motor fuel by the Partnership Entities to the SHC Stores (or any location at which the SHC Entities sell fuel pursuant to any SHC Consignment Contract).

 

“SHC Entities” means SHC and any Person controlled, directly or indirectly, by SHC other than the General Partner or a member of the Partnership Group; and “SHC Entity” means any of the SHC Entities.

 

“SHC Site” means any SHC Store or SHC Consignment Contract.

 

“SHC Store” means any retail convenience store operated by the SHC Entities at which SHC sells motor fuel.

 

7

 

“Subsidiary” has the meaning given such term in the Partnership Agreement.

 

“Third Year Option Period” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Third Year Option Stores” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Voting Stock” means securities of any class of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.

 

ARTICLE II
 Business Opportunities Offered to the Partnership

 

2.1                               Exclusive Right and Obligation to Distribute Motor Fuel Volumes Sold by SHC.

 

(a)                                 Exclusive Motor Fuel Distribution.  Except as permitted by Section 2.1(c), for a period of ten year following the Closing Date,

 

(i)                                     Each SHC Entity is required to purchase all motor fuel volumes that it sells for its own account from a Partnership Group Member; and

 

(ii)                                  The Partnership shall cause one or more of the Partnership Group Members to distribute all motor fuel volumes that SHC may desire to purchase from the Partnership Group.

 

(b)                                 Determination of Distribution Terms.  All motor fuel volumes required by SHC for its own account will be provided to SHC pursuant to the terms of the SHC Distribution Contract. Any motor fuel volumes required by SHC for its own account for Future SHC Stores or SHC Consignment Contracts that are not subject to the SHC Distribution Contract as of the date of Closing (and which do not become subject to the SHC Distribution Contract in accordance with Section 2.2(c)(3) following an exercise of the Partnership’s Sale and Leaseback Option) shall be provided by the Partnership to SHC (i) pursuant to such terms as they may mutually agree to following good faith negotiations or, (ii) in the event that the Partnership and SHC do not reach agreement following such negotiations, at the Partnership’s cost per gallon (as defined in the commodity schedule attached to the SHC Distribution Contract) (the “Partnership’s Cost Per Gallon”) plus the Alternate Fuel Sales Rate.

 

(c)                                  Permitted Exceptions.

 

(i)                                     Notwithstanding any provision of Section 2.1(a) to the contrary, any SHC Entity may purchase motor fuel from a third party in the event that such SHC Entity acquires a retail convenience store or other retail fuel outlet that is subject to an existing motor fuel wholesale distribution agreement (“Pre-Existing Distribution Contract”) at the time of its acquisition by SHC; provided that SHC shall be required to purchase its motor fuel requirements for any such store from the Partnership Group as soon as reasonably possible and, in any case, no

 

8

 

later than the expiration of the remaining initial term of the applicable Pre-Existing Distribution Contract.

 

(ii)                                  Any SHC Entity shall be permitted to contract with any third party to sell motor fuel on a consignment basis (where the third party, as consignor, holds title to the motor fuel until it is sold to the retail customer) as permitted pursuant to Section 3 of the SHC Distribution Contract.

 

(iii)                               SHC may purchase motor fuel pursuant to bulk sales contracts until the earlier of (a) the date the Partnership Group Members obtains the necessary permits to purchase motor fuel pursuant to bulk sales contracts or (b) 60 days following the Closing Date; provided, however, that SHC will sell any volumes purchased pursuant to this Section 2.1(c)(iii) to the Partnership at cost to SHC for such motor fuels.

 

(iv)                              If during any period of this Agreement, the amount of any motor fuel volumes that Partnership is required to deliver to SHC is prescribed by government rules, regulations or orders, or if for any reason the Partnership’s supplies of motor fuel are inadequate to meet the needs of SHC and its other customers, the Partnership, in its sole discretion, may allocate motor fuel to SHC and its other customers and any shortfall in volumes requested by SHC pursuant to Section 2.1(a)(ii) of this agreement shall not be deemed to be a breach of this Agreement.  In the event that the Partnership is unable to distribute all motor fuel volumes that SHC desires to purchase from the Partnership, SHC may purchase from third parties its requirements of any motor fuel volumes in excess of the amounts of such motor fuel supplied by the Partnership Group Members.

 

2.2                               Sale and Leaseback Option. SHC, on behalf of itself and the other SHC Entities, hereby grants to the Partnership Group Members the option (the “Sale and Leaseback Option”) to purchase SHC Stores and simultaneously lease such stores back to SHC, subject to the provisions of this Section 2.2.

 

(a)                                 Exercise Period and Scope of Sale and Leaseback Option.

 

(i)                                     The Sale and Leaseback Option will include up to 75 SHC Stores and extend for three years after the Closing Date as follows:

 

(A)                               during the period beginning on the Closing Date and ending on the first anniversary of the Closing Date (the “First Year Option Period”), the Partnership Group Members shall have the right to purchase no fewer than 15 SHC Stores (the “First Year Option Stores”), to be selected in accordance with the provisions of Section 2.2(b) herein, and the Partnership may exercise from time to time and at its sole discretion the Sale and Leaseback Option with respect to any or all of the First Year Option Stores during the First Year Option Period;

 

(B)                               during the period beginning on the day after the first anniversary of the Closing Date and ending on the second anniversary of the Closing Date (the “Second Year Option Period”), the Partnership Group Members shall have the right to purchase no fewer than 25 SHC Stores (the “Second Year Option Stores”), to be selected in accordance with the provisions of Section 2.2(b) herein, and the Partnership may exercise from time to time

 

9

 

and at its sole discretion the Sale and Leaseback Option with respect to any or all of the Second Year Option Stores during the Second Year Option Period; and

 

(C)                               during the period beginning on the day after the second anniversary of the Closing Date and ending on the third anniversary of the Closing Date (the “Third Year Option Period”), the Partnership Group Members shall have the right to purchase no fewer than 35 SHC Stores (the “Third Year Option Stores”), to be selected in accordance with the provisions of Section 2.2(b) herein, and the Partnership may exercise from time to time and at its sole discretion the Sale and Leaseback Option with respect to any or all of the Third Year Option Stores during the Third Year Option Period.

 

(ii)                                  Notwithstanding any provision of Section 2.2(a)(i) to the contrary, the Parties may mutually agree to accelerate the identification and designation of Option Stores and the exercise of the Sale and Leaseback Option.

 

(b)                                 Determination of Option Stores.

 

(i)                                     Option Stores may consist of any SHC Stores existing prior to the Closing (each, an “Existing SHC Store”) or any SHC Stores constructed or acquired by SHC after the Closing (each, a “Future SHC Store”), in either case, that are owned by SHC or will be owned by SHC at the time of any exercise of the Sale and Leaseback Option; provided, however, that SHC may not designate any Existing SHC Stores as Option Stores unless there are no Future SHC Stores identified on any Annual Construction Plan delivered during the Option Periods that have not previously been designated as Option Stores.  Each SHC Store designated as an Option Store shall continue to be deemed an Option Store for any subsequent Option Periods until and unless such Option Store is purchased pursuant to the Sale and Leaseback Option or removed in accordance with Section 2.2(b)(iii).

 

(ii)                                  Within ten (10) days following the Closing Date, SHC shall provide a preliminary list to the Partnership of the Future SHC Stores that SHC anticipates opening prior to the end of fiscal year 2012, indicating those Future Stores that will be included as Option Stores for the First Year Option Period (the “Preliminary Option Store List”).  Thereafter, Option Stores shall be identified on the Annual Construction Plan provided pursuant to Section 2.3 and may be identified by SHC in any Proposed Acquisition Notice provided pursuant to Section 2.4.

 

(iii)                               No later than fifteen (15) days after the Partnership’s receipt of a Preliminary Option Store List and any Annual Construction Plan, the Partnership will give SHC a preliminary indication of the Option Stores the Partnership intends to purchase during the current Option Period (each, a “Preliminary Purchase Notice”).  For avoidance of doubt, the Preliminary Purchase Notices will not be binding on SHC or the Partnership but will be provided in good faith to assist with each Party’s planning and budgetary processes.  Subject to the provisions of Section 2.2(b)(i), prior to the delivery of a definitive Exercise Notice as to any Option Store pursuant to Section 2.2(c) below, SHC may revise the Preliminary Option Store List and any Annual Construction Plan at any time to effect a substitution of any Option Store and the Partnership will similarly retain the right to revise any Preliminary Purchase Notice to

 

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remove or substitute any Option Store.  Written notice of any such substitution or revision shall be delivered in accordance with the provisions of Section 6.2.

 

(c)                                  Exercise Notice. In order to exercise the Sale and Leaseback Option, the Partnership will provide written notice to SHC of its desire to exercise the Sale and Leaseback Option (each such notice, an “Exercise Notice”), indicating one or more Option Stores that the Partnership would like to purchase and the proposed date of the closing of such purchase (each, an “Option Closing Date”).  Such Exercise Notice must be sent prior to the expiration of the applicable Option Period; provided, however, that if the Exercise Notice has been sent by the Partnership prior to the expiration of the applicable Option Period, the Option Period shall automatically be extended until the Option Closing Date set forth in the applicable Exercise Notice.  The exercise of any Sale and Leaseback Option pursuant to this Section 2.2(c) will not require the approval of the Conflicts Committee.

 

(d)                                 Purchase Price; Adjustment of Purchase Price.

 

(i)                                     Within thirty (30) days of receipt of an Exercise Notice, SHC shall provide the Partnership with the purchase price of each Option Store identified in such Exercise Notice (each, an “Option Purchase Price”), which purchase price shall be equal to (i) SHC’s actual cost to construct such Option Store, including real estate and construction costs, calculated consistently with SHC’s prior practices when engaging in sale and leaseback transaction with third parties or (ii) SHC’s actual cost to acquire such Option Store if acquired from a third party, in either case, as indicated on a worksheet showing the calculation of such cost, certified in writing by an appropriate officer of SHC (each, a “Certificate of Cost”).  As to any Future SHC Store purchased pursuant to the Sale and Leaseback Option prior to the date the final cost of such store has been conclusively determined, the estimated cost (the “Estimated Option Purchase Price”) may be provided in lieu of actual cost.

 

(ii)                                  With respect to any New SHC Store purchased by the Partnership prior to the date the final cost to SHC to construct the store has been determined, within one hundred twenty (120) days after the Option Closing Date, SHC shall deliver an amended Certificate of Cost reflecting the actual cost to construct the store, together with a worksheet, certified in writing by an appropriate officer of SHC, showing the difference, if any, between the Estimated Option Purchase Price and the Option Purchase Price.  Within five (5) days after the Partnership’s receipt of the Certificate of Cost:

 

(A)                               if the Option Purchase Price exceeds the Estimated Option Purchase Price, the Partnership shall promptly deliver to SHC, by wire transfer of immediately available funds to the account designated by SHC, an amount equal to such excess;

 

(B)                               if the Estimated Option Purchase Price exceeds the Option Purchase Price, SHC shall promptly deliver to the Partnership, by wire transfer of immediately available funds to the account designated by the Partnership, an amount equal to such excess; and

 

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(C)                               if the Estimated Option Purchase Price is equal to the Estimated Option Purchase Price, neither SHC nor the Partnership shall have any further obligation under this Section 2.2(c).

 

(e)                                  Sale and Leaseback Transaction Closing.

 

(i)                                     Option Store Sale Closing.  On the Option Closing Date, SHC shall transfer indefeasible title to the applicable Option Stores to the Partnership or such other member of the Partnership Group designated by the Partnership, free and clear of any liens other than Permitted Liens, and, in exchange therefore, the Partnership shall pay to SHC the Option Purchase Price or the Estimated Option Purchase Price, as applicable.

 

(ii)                                  Lease Agreement.  Simultaneously with the purchase of an Option Store by a member of the Partnership Group, the applicable SHC Entity, as lessee, and the applicable Partnership Group Member, as lessor, will enter into a lease agreement (“Lease”) with respect to the purchased Option Store, the form of which is attached hereto as Exhibit B. The Lease will provide for an initial annual rental rate of 8% of the Option Purchase Price and an initial term of 15 years from the date of execution, renewable at SHC’s option for five consecutive five-year renewal terms.  If SHC exercises its renewal option under a Lease, the annual rental rate will increase by 15% for the first five-year renewal period, and by an additional 5% for each subsequent five-year renewal period.

 

(iii)                               Addition of Purchased Option Stores to SHC Distribution Contract.  To the extent not already included in the SHC Distribution Contract, each Option Store purchased by the Partnership will be added to the SHC Distribution Contract for a term of ten years from the Option Closing Date and motor fuel supplied to such Option Store location shall be sold by the Partnership, on a per-gallon basis, at a margin of $0.03 above the Partnership’s Cost Per Gallon.

 

2.3                               Annual Construction Plan.  Within fifteen (15) days prior to the end of each fiscal year, beginning with the first fiscal year ending after the Closing Date, SHC shall provide a construction plan to the Partnership (“Annual Construction Plan”) which shall reflect, among other things:

 

(a)                                 The Future SHC Stores that SHC expects to construct and open during the following fiscal year including the location, anticipated date of opening or acquisition and, if available, estimated annual volumes of fuel expected to be sold at such locations, and whether each such Future SHC Store is being designated as an Option Store, or if such Future SHC Store is not so designated, the terms upon which SHC proposes to offer the Partnership the right to distribute fuel to such Future SHC Store;

 

(b)                                 Any locations at which SHC expects to execute or acquire SHC Consignment Contracts in the ordinary course of business during the next following year, including the location, anticipated date of opening and/or acquisition and, if available, estimated annual volumes of fuel expected to be sold at such locations, and the proposed terms upon which SHC proposes to offer the Partnership the right to distribute fuel to such location; and

 

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(c)                                  The proposed terms for any sale and leaseback transactions with respect to any SHC Store that SHC intends to offer for sale to the Partnership (“Additional Sale Leaseback Stores”), outside of the Sale and Leaseback Option granted hereunder.

 

2.4                               Right to Participate in Acquisitions.  In the event that any SHC Entity proposes to acquire from a third party any convenience stores, wholesale motor fuel distribution agreements, convenience store sites, independently operated consignment locations, or any other retail or wholesale fuel distribution assets, contracts or operations or any entity that owns the same, on a stand-along basis or as part of a larger acquisition (in any such case, a “Proposed Acquisition”), SHC shall promptly provide notice to the Partnership (“Proposed Acquisition Notice”) of the Proposed Acquisition and offer the Partnership the opportunity to (a) acquire any wholesale fuel distribution assets, contracts or operations included in such Proposed Acquisition and (b) to negotiate the fuel supply terms for distributing fuel to any retail stores or consignment locations included in such Proposed Acquisition, subject to the exceptions provided in Section 2.1(c). The Partnership may elect not to participate in such Proposed Acquisition or negotiate with SHC in good faith to determine the terms upon which to jointly pursue the Proposed Acquisition. If within seven (7) days after the Partnership’s receipt of the Proposed Acquisition Notice, the Partnership has not elected to participate in such Proposed Acquisition or if SHC and the Partnership have not otherwise reached an agreement on the acquisition terms within 30 days after the Partnership’s receipt of the Proposed Acquisition Notice or such shorter period of time as may be specified in any process or by the seller (provided such shorter period is at least 15 days) , SHC may proceed with the Proposed Acquisition without the Partnership’s participation.

 

ARTICLE III
 Indemnification

 

3.1                               Environmental Indemnification.

 

(a)                                 Subject to the provisions of Section 3.3, SHC shall indemnify, defend and hold harmless the Partnership Group and the Partnership Indemnitees from and against any Covered Environmental Losses suffered or incurred by the Partnership Group or any Partnership Indemnitee relating to:

 

(i)                                     the Partnership Assets, but only to the extent the violations, events, omissions or conditions giving rise to such Covered Environmental Losses occurred or existed on or before the Closing Date, even if such liability does not accrue until after the Closing Date; and

 

(ii)                                  the Retained Assets.

 

(b)                                 Subject to the provisions of Section 3.3, the Partnership shall indemnify, defend and hold harmless the SHC Entities from and against any Covered Environmental Losses suffered or incurred by the SHC Entities relating to the Partnership Assets, but only to the extent the violations, events, omissions or conditions giving rise to such Covered Environmental Losses first occurred after the Closing Date; provided however, that the SHC Entities shall not be entitled to the indemnity in this Section 3.1(b) for Covered Environmental Losses to the extent caused by gross negligence, bad faith or fraud or willful misconduct of any SHC Entity.

 

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(c)                                  The aggregate liability of SHC under Section 3.1(a)(i) shall not exceed $15 million and such indemnification obligation shall survive for three years from the Closing Date; provided, however, that any such indemnification obligation with respect to any Covered Environmental Losses shall survive the time at which it would otherwise expire pursuant to this Section 3.1(c) if notice of any such Covered Environmental Losses is properly given to SHC prior to such time.  The aggregate liability of the Partnership under Section 3.1(b) shall not exceed $15 million and such indemnification obligation shall survive for three years from the Closing Date; provided, however, that any such indemnification obligation with respect to any Covered Environmental Losses shall survive the time at which it would otherwise expire pursuant to this Section 3.1(c) if notice of any such Covered Environmental Losses is properly given to the Partnership prior to such time.

 

(d)                                 No claims may be made for indemnification pursuant to Section 3.1 unless and until, and no Party shall be liable to provide indemnification pursuant to this Section 3.1 unless and until, the aggregate dollar amount of the Losses suffered or incurred by the Indemnified Party exceeds $250,000 and then only for Losses in excess of $250,000, subject to the limitations of Section 3.1(c).

 

(e)                                  Notwithstanding anything herein to the contrary, in no event shall SHC or the Partnership have any indemnification obligations under this Agreement for Losses that arise solely as a result of additions to or modifications of Environmental Laws promulgated after the Closing Date.

 

3.2                               Additional Indemnification.

 

(a)                                 Subject to the provisions of Section 3.3, SHC shall indemnify, defend and hold harmless the Partnership Group and the Partnership Indemnitees from and against any Losses suffered or incurred by the Partnership Group or any Partnership Indemnitee resulting from or arising out of:

 

(i)                                     the failure of the Partnership Group to have good and marketable title to the Partnership Assets, to the extent that such failure renders the Partnership Group liable or unable to use or operate the Partnership Assets in substantially the same manner that the Partnership Assets were used and operated by the SHC Entities immediately prior to the Closing Date as generally described in the Registration Statement;

 

(ii)                                  the failure of the Partnership Group to have on the Closing Date any consent, license, permit or approval necessary to allow the Partnership Group to own or operate the Partnership Assets in substantially the same manner that the Partnership Assets were owned or operated by the SHC Entities immediately prior to the Closing Date;

 

(iii)                               the cost of curing any failure or condition set forth in clause (i) or clause (ii) of this Section 3.2(a) that does not allow any Partnership Asset to be operated in substantially the same manner that the Partnership Assets were owned and operated immediately prior to the Closing Date;

 

(iv)                              all federal, state and local income tax liabilities attributable to the ownership or operation of the Partnership Assets prior to the Closing Date, including (A) any 

 

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such income tax liabilities of the Partnership Group that may result from the consummation of the formation transactions for the Partnership Group occurring on or prior to the Closing Date and (B) any income tax liabilities arising under Treasury Regulation Section 1.1502-6 and any similar provisions from applicable state, local or foreign law, by contract, as successor, transferee or otherwise and which income tax is attributable to having been a member of any consolidated combined or unitary group prior to the Closing Date; and

 

(v)                                 (A) the assets or operations of the SHC Entities and (B) the Partnership Assets and the operations of any Partnership Group Member prior to the Closing Date, except to the extent that SHC is indemnified with respect to the Losses described under Section 3.1(b);

 

provided; however, that in the case of clauses (i), (ii), (iii) and (v) above, such indemnification obligations shall survive for three years from the Closing Date; and that in the case of clause (iv) above, such indemnification obligations shall survive until sixty (60) days after termination of any applicable statute of limitations; provided, further, however, that any such indemnification obligations provided for in this Section 3.2(a) shall survive the time at which they would otherwise expire pursuant to this Section 3.2(a) if notice of any such Losses is properly given to SHC prior to such time.

 

(b)                                 Subject to the provisions of Section 3.3, in addition to and not in limitation of the indemnification provided under this Article III, the Partnership shall indemnify, defend and hold harmless the SHC Entities from and against any Losses suffered or incurred by the SHC Entities by reason of or arising out of events and conditions associated with the operation of the Partnership Assets that occur on or after the Closing Date (other than Covered Environmental Losses, which are covered by Section 3.1).

 

(c)                                  Notwithstanding anything herein to the contrary, in no event will the Indemnifying Party be obligated to indemnify the Indemnified Party for any claims, losses or expenses or income taxes referred to in Section 3.1(a) and Section 3.2(a)(i)-(iv), if, and to the extent that such claims, losses or expenses or income taxes were either (i) reserved for in the Indemnified Party’s financial statements as of the Closing Date, or (ii) are recovered under available insurance coverage, from contractual rights or other recoveries against any third party.

 

3.3                               Indemnification Procedures.

 

(a)                                 The Indemnified Party agrees that within a reasonable period of time after it becomes aware of facts giving rise to a claim for indemnification pursuant to this Article III, it will provide notice thereof in writing to the Indemnifying Party specifying the nature of and specific basis for such claim; provided, however, that the Indemnified Party shall not submit claims more frequently than once a calendar quarter (or twice in the case of the last calendar quarter prior to the expiration of the applicable indemnity coverage under this Agreement).  Notwithstanding the foregoing, the Indemnified Party’s failure to provide notice under this Section 3.3 will not relieve the Indemnifying Party from liability hereunder with respect to such matter except in the event and only to the extent that the Indemnifying Party is materially prejudiced by such failure or delay or the Indemnifying Party does not receive notice of the claim prior to the expiration of the applicable indemnity survival period in Sections 3.1 and 3.2.

 

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(b)                                 The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification set forth in this Article III, including the selection of counsel (provided that if such claim involves Covered Environmental Losses, such counsel shall be reasonably acceptable to the Indemnified Party), determination of whether to appeal any decision of any court or similar authority, performance of any Environmental Activity associated with any Covered Environmental Losses and the settling of any matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld, conditioned or delayed) of the Indemnified Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be, and does not include the admission of fault, culpability of failure to act, by or on behalf of such Indemnified Party.

 

(c)                                  The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect to all aspects of the defense of any claims covered by the indemnification set forth in this Article III, including the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the names of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records and other information furnished by the Indemnified Party pursuant to this Section 3.3. In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article III; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party reasonably informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.

 

(d)                                 In determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such correlative insurance benefit shall be net of any incremental insurance premium that becomes due and payable by the Indemnified Party as a result of such claim, (ii) all amounts recovered by the Indemnified Party under contractual indemnities from third parties and (iii) any correlative tax benefit.

 

(e)                                  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY’S INDEMNIFICATION OBLIGATION HEREUNDER COVER OR INCLUDE CONSEQUENTIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR SIMILAR DAMAGES OR LOST PROFITS SUFFERED BY ANY OTHER PARTY ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.

 

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ARTICLE IV
 Provision of Services; Reimbursement

 

4.1                               Agreement to Provide Services.  Until such time as this Agreement is terminated as provided in Section 6.4, SHC hereby agrees to provide the Partnership Group with such general and administrative services and management and operating services as may be necessary to manage and operate the business and affairs of the Partnership Group, including accounting, audit, business development, corporate record keeping, treasury services (including cash management), real property/land, legal, operations/engineering, investor relations, risk management, commercial/marketing, information technology, insurance, government relations/compliance, tax, payroll, human resources and environmental, health and safety (collectively, “Services”).  The Services shall be consistent in nature and quality to the services of such type previously provided by SHC or its Affiliates in connection with the management and operation of the Partnership Assets prior to the Closing Date.

 

4.2                               Reimbursement by Partnership.  Subject to and in accordance with the terms and provisions of this Article IV and such reasonable allocation and other procedures as may be agreed upon by SHC and the General Partner from time to time, the Partnership hereby agrees to reimburse SHC for all reasonable direct and indirect costs and expenses incurred by SHC or its Affiliates (other than the Partnership Group) in connection with the provision of the Services to the Partnership Group, including the following:

 

(a)                                 any payments or expenses incurred for insurance coverage and negotiated instruments (including surety bonds and performance bonds) provided by underwriters with respect to the Partnership Assets or the business of the Partnership Group;

 

(b)                                 any costs incurred in connection with the provision of information technology services;

 

(c)                                  salaries and related benefits and expenses of personnel employed by SHC or its Affiliates (other than the Partnership Group) who render Services to the Partnership Group, plus general and administrative expenses associated with such personnel; it being agreed, however, that such allocation shall not include any costs or expenses attributable to SHC equity compensation awards;

 

(d)                                 any taxes or other direct expenses paid by SHC or its Affiliates for the benefit of the Partnership Group; and

 

(e)                                  all expenses and expenditures incurred by SHC or its Affiliates as a result of the Partnership becoming and continuing as a publicly traded entity, including costs associated with annual and quarterly reports, tax return and Schedule K-1 preparation and distribution, independent auditor fees, partnership governance and compliance, registrar and transfer agent fees, legal fees and independent director compensation;

 

it being agreed, however, that to the extent any reimbursable costs or expenses incurred by SHC or its Affiliates consist of an allocated portion of costs and expenses incurred by SHC or its Affiliates for the benefit of both the Partnership Group and the other Affiliates of SHC, such allocation shall be made on a reasonable cost reimbursement basis as determined by SHC.

 

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4.3                               Agency Designation and Powers.

 

(a)                                 Designation of Partnership as Agent.  SHC hereby appoints the Partnership as its agent to perform certain Financial Administration Functions (as defined herein) for the benefit of SHC during the term of this Agreement and to exercise such powers and perform such duties as are expressly delegated to SHC by the terms of this Agreement, together with such powers as are reasonably incidental thereto.  Partnership hereby accepts such appointment and agrees to perform such Financial Administration Functions as required by SHC.  Except for the duties and responsibilities expressly set forth in this Agreement, Partnership shall not have or be deemed to have any fiduciary relationship with SHC, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement, or otherwise exist against Partnership.  Further, it is acknowledged and agreed that Partnership shall not be obligated to follow any such direction of SHC under this Agreement, if Partnership, in its sole discretion, determines complying with such direction could expose Partnership to any material liability or violation of law, regardless of whether Partnership is indemnified therefor.

 

(b)                                 Designation of SHC as Agent.  Partnership hereby appoints the SHC as its agent to perform certain Financial Administration Functions for the benefit of Partnership during the term of this Agreement and to exercise such powers and perform such duties as are expressly delegated to Partnership by the terms of this Agreement, together with such powers as are reasonably incidental thereto.  SHC hereby accepts such appointment and agrees to perform such Financial Administration Functions as required by the Partnership.  Except for the duties and responsibilities expressly set forth in this Agreement, SHC shall not have or be deemed to have any fiduciary relationship with Partnership, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement, or otherwise exist against SHC.  Further, it is acknowledged and agreed that SHC shall not be obligated to follow any such direction of Partnership under this Agreement, if SHC, in its sole discretion, determines complying with such direction could expose SHC to any material liability or violation of law, regardless of whether SHC is indemnified therefor.  The term “Agent” as used in this Agreement shall refer to each of the Partnership in its capacity as agent to SHC as set forth in Section 4.3(a) and SHC in its capacity as agent to the Partnership as set forth in Section 4.3(b).  The term “Principal” as used in this Agreement shall refer to each of the SHC in its capacity as principal of Partnership as set forth in Section 4.3(a) and Partnership in its capacity as principal of Partnership as set forth in Section 4.3(b).

 

(c)                                  Authorization.  The parties hereto agree that Agent shall have general authority to perform the following functions for the benefit of the Principal (such functions collectively described as “Financial Administration Functions”) :

 

(i)                                     Invoicing;

 

(ii)                                  Collection of accounts receivable;

 

(iii)                               Collection of notes receivable;

 

(iv)                              Credit card processing;

 

(v)                                 Billing and collection of rent and property taxes;

 

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(vi)                              Credit management;

 

(vii)                           Application/posting of payments;

 

(viii)                        Payment of vendors;

 

(ix)                              Employee benefit management;

 

(x)                                 payroll processing;

 

(xi)                              Human resource management;

 

(xii)                           IT/web portal management.

 

(d)                                 Limitation of Liability; Indemnification.  Neither Agent nor any of its representatives shall be liable to Principal or its affiliates (or any Person asserting any claim with respect to any of them) for any action taken or omitted to be taken by it or them hereunder or under this Agreement in good faith and reasonably believed by it or them to be within the discretion or power conferred upon it or them by this Agreement or be responsible for the consequences of any error of judgment, except to the extent arising from its gross negligence, willful misconduct or fraud.  Principal hereby agrees to defend, indemnify and hold Agent harmless from and against all losses, costs or liabilities which Agent may incur with respect to any claim asserted against Agent by reason of its acting under this Agreement.

 

4.4                               Netting of Payments. Agent will promptly transmit to Principal all documents, monies, bills, invoices, correspondence and other communications received by Agent on behalf of Principal from any other party in connection with providing the Financial Administration Functions. If any amounts are payable by each Party to the other, then, on such date, each Party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one Party exceeds the aggregate amount that would otherwise have been payable by the other Party, replaced by an obligation upon the Party by whom the larger aggregate amount would have been payable to pay to the other Party the excess of the larger aggregate amount over the smaller aggregate amount.  Notwithstanding the foregoing, the provisions of the immediately preceding sentence with respect to the netting of payments shall only apply with respect to amounts payable or due, as the case may be, in the ordinary course of business in connection with the provision of the Financial Administration Functions and shall not apply to any amounts payable or due in connection with any transaction or event outside the ordinary course of business.

 

ARTICLE V
 License of Name and Mark

 

5.1                               Grant of License.  Upon the terms and conditions set forth in this Article V, SHC hereby grants and conveys to each of the entities currently or hereafter comprising a part of the Partnership Group a nontransferable, nonexclusive, royalty free right and license (“License”) to use the name “Susser” (the “Name”) and any associated or related marks (the “Mark”).

 

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5.2                               Ownership and Quality.  The Partnership agrees that ownership of the Name and the Mark and the goodwill relating thereto shall remain vested in SHC both during the term of this License and thereafter, and the Partnership further agrees, and agrees to cause the other members of the Partnership Group, never to challenge, contest or question the validity of SHC’s ownership of the Name and Mark or any registration thereto by SHC.  In connection with the use of the Name and the Mark, the Partnership and any other member of the Partnership Group shall not in any manner represent that they have any ownership in the Name and the Mark or registration thereof except as set forth herein, and the Partnership, on behalf of itself and the other members of the Partnership Group, acknowledges that the use of the Name and the Mark shall not create any right, title or interest in or to the Name and the Mark, and all use of the Name and the Mark by the Partnership or any other member of the Partnership Group, shall inure to the benefit of SHC.  The Partnership agrees, and agrees to cause the other members of the Partnership Group, to use the Name and Mark in accordance with such quality standards established by SHC and communicated to the Partnership from time to time, it being understood that the products and services offered by the members of the Partnership Group immediately before the Closing Date are of a quality that is acceptable to SHC and justifies the License.

 

5.3                               Termination.  The License shall terminate upon a termination of this Agreement pursuant to Section 6.4.

 

ARTICLE VI
 Miscellaneous

 

6.1                               Choice of Law; Submission to Jurisdiction.  This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.  Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Delaware and to venue in Delaware.

 

6.2                               Notice.  All notices or requests or consents provided for by, or permitted to be given pursuant to, this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by telecopier or telegram to such Party.  Notice given by personal delivery or mail shall be effective upon actual receipt.  Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient’s normal business hours or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours.  All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such other address as such Party may stipulate to the other Parties in the manner provided in this Section 6.2.

 

For notice to SHC:

 

Susser Holdings Corporation  
  4525 Ayers Street 
 Corpus Christi, Texas 78415

 

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Attention: General Counsel
 Phone: (361) 884-2463

 

For notice to the Partnership Entities:

 

Susser Petroleum Partners GP LLC
 555 East Airtex Drive
 Houston, Texas 77073
 Attention: General Counsel  
 Phone: (832) 234-3600

 

6.3                               Entire Agreement.  This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.  In the event of a conflict between the provisions of this Agreement and the provisions of the Partnership Agreement, the provisions of the Partnership Agreement shall control.

 

6.4                               Termination.

 

(a)                                 Termination by SHC.  Notwithstanding any other provision of this Agreement, if the General Partner is removed as general partner of the Partnership under circumstances where Cause does not exist and the Common Units held by the General Partner, SHC and their Affiliates are not voted in favor of such removal, then this Agreement, other than the provisions set forth in Article III hereof, may be terminated by SHC with 180 days’ prior written notice.

 

(b)                                 Survival of Obligations under Article III.  For the avoidance of doubt, the Parties’ indemnification obligations under Article III shall survive the termination of this Agreement in accordance with their respective terms.

 

6.5                               Effect of Waiver or Consent.  No waiver or consent, express or implied, by any Party to or of any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder.  Failure on the part of a Party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights hereunder until the applicable statute of limitations period has run.

 

6.6                               Amendment or Modification.  This Agreement may be amended or modified from time to time only by the written agreement of all the Parties; provided, however, that the Partnership may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the General Partner, would be adverse in any material respect to the holders of Common Units.  Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.

 

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6.7                               Assignment; Third-Party Beneficiaries.  No Party shall have the right to assign any of its rights or obligations under this Agreement without the consent of the other Parties hereto.  Each of the Parties hereto specifically agrees that each Partnership Group Member, whether or not a Party to this Agreement, shall be entitled to assert rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to any such entity.  Except as contemplated by the preceding sentence, this Agreement does not create any rights or benefits for any entity or individual other than the Parties.

 

6.8                               Successors.  This Agreement shall bind and inure to the benefit of the Parties and to their respective successors and assigns.

 

6.9                               Continuation of Work During Dispute.  Notwithstanding any dispute, it shall be the responsibility of each Party to continue to perform its obligations under this Agreement pending resolution of the dispute.

 

6.10                        Counterparts.  This Agreement may be executed in any number of counterparts, including facsimile counterparts, with the same effect as if all signatory Parties had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.

 

6.11                        Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

 

6.12                        Rules of Construction.  Whenever the context requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural.  All references to Article numbers and Section numbers refer to Articles and Sections of this Agreement.  Unless otherwise specifically indicated or the context otherwise requires, the terms “include,” “includes” and “including” as used in this Agreement shall be deemed to be followed by the words “without limitation.”

 

6.13                        Further Assurances.  In connection with this Agreement and all transactions contemplated by this Agreement, each Party agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

 

6.14                        Withholding or Granting of Consent.  Unless otherwise provided herein, each Party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.

 

6.15                        Laws and Regulations.  Notwithstanding any provision of this Agreement to the contrary, no Party shall take any act, or fail to take any act, under this Agreement which would violate any applicable law, statute, rule or regulation.

 

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6.16                        Negation of Rights of Limited Partners, Assignees and Third Parties.  Except as set forth in Section 6.7, the provisions of this Agreement are enforceable solely by the Parties, and no stockholder, limited partner, member or assignee of SHC, the Partnership or other Person shall have the right, separate and apart from SHC or the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.

 

6.17                        No Recourse Against Officers or Directors.  For the avoidance of doubt, the provisions of this Agreement shall not give rise to any right of recourse against any officer or director of SHC, the General Partner, the Partnership or any Partnership Group Member.

 

6.18                        Legal Compliance.  The Parties acknowledge and agree that this Agreement, and all services provided under this Agreement, are intended to comply with any and all laws and legal obligations and that this Agreement should be construed and interpreted with this purpose in mind.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Closing Date.

 

	
 
    	
SUSSER   HOLDINGS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   E.V. Bonner, Jr.
    
	
 
    	
Name:
    	
E.V.   Bonner, Jr.
    
	
 
    	
Title:
    	
Executive   Vice President, Secretary and General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SUSSER   PETROLEUM PARTNERS LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Susser   Petroleum GP LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   E.V. Bonner, Jr.
    
	
 
    	
Name:
    	
E.V.   Bonner, Jr.
    
	
 
    	
Title:
    	
Executive   Vice President, Secretary and General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SUSSER   PETROLEUM GP LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   E.V. Bonner, Jr.
    
	
 
    	
Name:
    	
E.V.   Bonner, Jr.
    
	
 
    	
Title:
    	
Executive   Vice President, Secretary and General Counsel
    

 

Signature Page to the Omnibus Agreement

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