Exhibit 10
Execution Version
TRANSITIONAL OPERATING AGREEMENT
THIS TRANSITIONAL OPERATING AGREEMENT
(this “Agreement”) is made and entered into as of
February 1, 2008, by and between Cenac Towing Co., Inc., a
Louisiana corporation (“Cenac Towing”), Cenac Offshore,
L.L.C., a Louisiana limited liability company
(“Cenac Offshore” and, together with Cenac Towing,
the “Cenac Companies”), Mr. Arlen B. Cenac,
Jr., a resident of Houma, Louisiana and the owner of all the stock
and equity interests in the Cenac Companies (the
“Stockholder” and, together with the Cenac Companies,
the “Operators”), and TEPPCO Marine Services, LLC,
a Delaware limited liability company
(the “Owner”).
WHEREAS, the Owner, TEPPCO Partners,
L.P., a Delaware limited partnership (the
“Partnership”), and the Operators have entered into
that certain Asset Purchase Agreement dated as of the date hereof
(the “Purchase Agreement”), pursuant to which the
Operators have sold to the Owner certain marine assets and rights
relating to the Operations, as specified and defined in the
Purchase Agreement;
WHEREAS, the Owner desires that the
Operators provide it with certain services relating to the
Purchased Operations, as defined herein; and
WHEREAS, the Owner and the Operators
desire to enter into this Agreement for the purpose of evidencing
the terms and conditions upon which the Owner agrees to purchase
and pay for, and the Operators agree to provide, such
services;
NOW, THEREFORE, in consideration of
the premises and the representations, warranties, covenants and
agreements stated herein, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions . Any
capitalized terms used herein and not defined herein shall have the
meaning defined in the Purchase Agreement. For purposes of this
Agreement, the term:
“ AAA ” has the
meaning set forth in Section 4.2.
“ Accounting Procedures
” shall mean the accounting procedures described in
Exhibit B .
“ Agreement ” has
the meaning set forth in the Preamble.
“ Asphalt Business
Limitation ” means that (a) the marine
transportation of hydrocarbons and hydrocarbon-based products by
Horizon Maritime is limited to the inland marine transportation or
offshore marine transportation of asphalt, No. 6 oil or vacuum
gas oil and (b) Horizon Maritime does not engage in the inland
marine transportation or offshore marine transportation of waste
water, sediment or drilling or disposal fluids resulting from the
exploration or production of hydrocarbons.
“ Cenac Companies
” has the meaning set forth in the Preamble.
“Cenac Company
Plans” means each pension, profit sharing, retirement,
life, health, unemployment, accident, disability, stock option,
stock bonus, stock ownership, severance, employment,
change-in-control, deferred compensation, fringe benefit, bonus or
incentive compensation plan, agreement, program or policy (whether
written or oral, formal or informal) that is currently or has
previously been sponsored, maintained or contributed to by either
of the Cenac Companies or any ERISA Affiliate for the benefit of
any of their present or former directors, officers, employees,
agents, consultants or other similar representatives, including any
“employee benefit plan” as defined in Section 3(3)
of ERISA.
“ Cenac Employer
Policies ” shall mean any workers’ compensation and
employer’s liability insurance held by either of the Cenac
Companies immediately prior to the Closing, including under policy
nos. 25201 and CUL 15082.067.
“ Cenac Marine Policies
” shall mean (a) the following insurance policies held
by either of the Cenac Companies: (i) hull and machinery,
marine liabilities, protection and indemnity and marine general
liability, along with five layers of associated
“bumbershoot” coverage (policy nos. CUL-15082.067 and
07L 1323-01 and associated fifth layer bumbershoot coverage carried
by New York Marine and General Insurance Company and Houston
Casualty Company), (ii) pollution insurance (policy no.
0236413), (iii) open cargo insurance (policy no.
CUL-15082.067) and (iv) excess protection and indemnity,
collision, towers and pollution insurance (policy nos.
UM0001454EL07A, 3H099006006, MMO-18101ML507, GCM21005, MAR
2852863-10, OMH2171618-10, 00945, CUL NY 10513-67) and (b) any
other insurance policies relating to the Purchase Operations held
by either of the Cenac Companies immediately prior to the
Closing.
“ Cenac Offshore ”
has the meaning set forth in the Preamble.
“ Cenac Towing ”
has the meaning set forth in the Preamble.
“ Direct Costs ”
has the meaning set forth in Exhibit B .
“ Dispute ” has
the meaning set forth in Section 10.1(a).
“ Dispute Resolution
Commencement Date ” has the meaning set forth in
Section 10.1(a).
“ Employee ” means
each employee of either of the Cenac Companies; provided, however,
that (i) in no event shall any Employee be considered to be an
employee of the Owner and (ii) nothing in this Agreement shall be
construed as an offer of or contract for employment with any such
Employee.
“ Existing Cenac
Policies ” means the Cenac Employer Policies and the
Cenac Marine Policies.
“ Horizon Maritime
” means Horizon Maritime, L.L.C., a Louisiana limited
liability company.
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“ Indemnified Amounts
” has the meaning set forth in Section 7.1.
“ Indemnified Party
” means a an Owner Indemnified Party or an Operator
Indemnified Party.
“ Indemnifying Party
” means the Person obligated to indemnify under
Article VII.
“ Insurance Cancellation
Date ” means the date on which an insurance policy
provided for in Section 8.2(a)(iv) is to be canceled pursuant
to 30 days (or more) advance notice from the applicable
insurer in accordance with Section 8.2(c).
“ Interim Period ”
means the period beginning the date hereof and ending on
June 30, 2008 or the date on which the Owner places the
insurance provided for in Section 8.2(a), if earlier.
“ Notice ” or
“ Notices ” means all notices, communications or
approvals that are required or may be given under this Agreement in
accordance with Section 10.4.
“ Operator Indemnified
Party ” means the Operators, the Affiliates of either of
the Cenac Companies and each of their respective officers,
directors (or persons performing equivalent functions), employees,
agents and counsel.
“ Operators ” has
the meaning set forth in the Preamble.
“ Overhead Costs ”
has the meaning set forth in Exhibit B .
“ Owner ” has the
meaning set forth in the Preamble.
“ Owner Indemnified
Party ” means the Owner and its Affiliates and each of
their respective officers, directors (or persons performing
equivalent functions), employees, agents and counsel.
“ Partnership ”
has the meaning set forth in the Recitals.
“ Price Protection
Payment ” means the payment to be made by the Partnership
pursuant to the third sentence of Section 1.6(c) of the
Purchase Agreement under the circumstances provided in such
section.
“ Purchase Agreement
” has the meaning set forth in the Recitals.
“ Purchased Operations
” means the Purchased Assets, the Assumed Liabilities, any
other marine vessels and related property, assets or rights
acquired after the date hereof by the Owner from the Operators or
their Affiliates and any property, assets or rights acquired by the
Operators hereunder with Owner funds (or for which they were
reimbursed by the Owner).
“ reasonable efforts
” means a party’s efforts in accordance with reasonable
commercial practice and without incurrence of unreasonable
expense.
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“ Restricted Business
” means the business of the Owner, including the inland
marine transportation and offshore marine transportation of
(A) hydrocarbons and hydrocarbon-based products, including
kerosene, gasoline, feedstocks, lube oils, lube oil base stocks,
refined petroleum products and heavy olefins and (B) waste
water, sediment and drilling or disposal fluids resulting from the
exploration or production of hydrocarbons.
Restricted Territory means:
(a) the commercially navigable inland waterways of the
continental United States located east of the 105° meridian,
including the Mississippi River System and connecting waterways,
(b) the Gulf of Mexico, including the Gulf Intracoastal
Waterway and (c) the jurisdictions set forth on
Exhibit C.
“ Service Fee ”
has the meaning set forth in Exhibit B .
“ Service Providers
” means the Employees, consultants and professionals, service
or other organizations whom a Cenac Company employs or with whom a
Cenac Company contracts in order to provide Services under this
Agreement.
“ Services ” has
the meaning set forth in Section 2.1(a).
“ Stockholder ”
has the meaning set forth in the Preamble.
“ Third Party ”
means any Person that is not a party to this Agreement.
“ WARN Act ” has
the meaning set forth in Section 2.2(e).
1.2 Interpretation.
(a) Except
as this Agreement otherwise specifies, all references herein to any
Law defined or referred to herein are references to that Law or any
successor Law, as the same may have been amended or supplemented
from time to time, and any rules or regulations promulgated
thereunder.
(b) This
Agreement uses the words “herein,” “hereof”
and “hereunder” and words of similar import to refer to
this Agreement as a whole and not to any provision of this
Agreement, and the words “Article,”
“Section” and “Exhibit” refer to Articles
and Sections of and the Exhibits to this Agreement unless it
otherwise specifies.
(c) Whenever
the context so requires, the singular number includes the plural
and vice versa, and a reference to one gender includes the other
gender and the neuter.
(d) As
used in this Agreement, the word “including” (and, with
correlative meaning, the word “include”) means
including, without limiting the generality of any description
preceding that word, and the words “shall” and
“will” are used interchangeably and have the same
meaning; and “or” is used in the inclusive sense of
“and/or” unless the context requires otherwise.
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(e) As
used in this Agreement, the term “business day” means
any day other than a day on which commercial banks are authorized
or required to close in Houston, Texas.
(f) As
used in this Agreement, all references to “dollars” or
“$” mean United States dollars.
ARTICLE II
RESPONSIBILITIES OF THE OPERATORS
2.1 Services to be Provided by the
Operators .
(a) During
the term of this Agreement and subject to and in accordance with
the terms hereof and the standards set forth herein, the Operators
shall provide, at the Owner’s expense as provided herein, or
cause to be provided, all services, utilities, materials,
facilities and access necessary to operate the Purchased
Operations, including the services described in more detail in
Exhibit A (together with any other obligations of the
Operators hereunder, the “Services”).
(b) The
Operators shall have day-to-day control over the operation and
maintenance of the Purchased Operations, subject to the limitations
and requirements of this Agreement. As such, the Operators shall,
for the Owner’s account, in the Owner’s name and at the
Owner’s expense, in each case subject to the terms of and in
accordance with this Agreement, perform all Services hereunder
(i) in accordance with applicable Laws, (ii) with at
least the degree of care, skill and prudence that they exercised in
operating the Operations during the 12 months immediately
preceding the date of this Agreement, (iii) in accordance with
the usual and customary practices in the industry in which the
Operations operate, including the American Waterways Operators
Responsible Carrier Program, (iv) keeping the Vessels,
vehicles and equipment and other assets that are part of the
Purchased Operations or necessary or useful to the provision of
Services seaworthy and in good working condition and repair and
(v) to the maximum extent reasonably possible, using those
Service Providers who are most familiar with such Purchased
Operations.
(c) Notwithstanding
any other provision of this Agreement to the contrary, the
Operators shall not, without the prior written consent of the
Owner:
(i)
enter into, amend, terminate, waive any term of, or otherwise taken
any action with respect to any customer contracts or agreements
relating to the Purchased Operations (other than performing under
the terms of such contracts or agreements), except in the ordinary
course of business consistent with recent past practice and where
the aggregate consideration or liability (including contingent
liabilities) involved does not exceed $500,000;
(ii)
enter into, amend or waive any term of any contract or agreement to
which an Operator is a party or to which any of the Purchased
Operations may be subject and to which any other Operator or any of
its Affiliates or any family member of the Stockholder is also a
party;
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(iii)
enter into any instruments or agreements relating to indebtedness
or leases relating to the Purchased Operations;
(iv)
enter into any collective bargaining agreement covering any
Employee who is a Service Provider;
(v)
make any capital expenditures or financial commitments related to
the Purchased Operations in excess of $500,000 during any
12 month period;
(vi)
incur any operating, maintenance or other cost or expense related
to the Purchased Operations (excluding those described in
Sections 4(a), (b) and (d) of Exhibit B
) in excess of $500,000 individually;
(vii)
sell, lease, assign, distribute, transfer, mortgage, pledge or
subject to any Lien any owned or leased assets constituting
Purchased Operations, except sales of inventory and obsolete or
surplus equipment in the ordinary and usual course of business,
except where the value of such asset does not exceed
$250,000;
(viii)
pay damages occurring as a result of, or settle claims made in
connection with, the Purchased Operations, except as and to the
extent permitted by Section 4 of Exhibit A ;
or
(ix)
enter into any contract or commitment to do or cause to be done any
of the foregoing.
(d) If
the Operators fail to provide any of the Services in accordance
with the standards set forth in Section 2.1(b) in the
Owner’s reasonable judgment, the Owner may elect to arrange
for alternative providers of such Services and will provide the
Operators with reasonable Notice of such election. Upon providing
such Notice, the Owner may deduct any costs and expenses billed by
the Cenac Companies in accordance with Section 3.2 for any
Services that the Operators failed to provide in accordance with
the standards set forth in Section 2.1(b) from any payment
owed to the Operators under this Agreement.
(e) Notwithstanding
any other provision of this Agreement, in the event that an
Operator becomes aware of an emergency, including a release of
materials requiring reporting to a Governmental Body or requiring
an immediate response in order to comply with applicable Laws or to
protect human health or the environment, affecting the Purchased
Operations or any of the Owner’s assets, properties or
business associated therewith, the Operators shall first, in
compliance with the Comprehensive Environmental Response,
Compensation and Liability Act and other applicable Laws, provide
any legally required notice to Governmental Bodies, including
notice to the National Response Center of any reportable release
from a vessel as soon as any person in charge of such vessel has
knowledge of such release. The Operators shall perform all release
response obligations required by Law, including compliance with the
U.S. Coast Guard tank vessel response plan regulations for oil, 33
C.F.R. §§ 155.1050 and 155.1052, regarding equipment and
response resource requirements (containment booms, oil recovery
devices and storage capacity for recovery), within the response
timeframes
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required
by Law and to protect human health or the environment. As soon as
reasonably possible, but in no event more than six (6) hours
after the start of the emergency, the Operators shall notify the
Owner of the emergency and all information related to the
emergency, including any emergency response actions. Thereafter,
the Operators shall provide periodic updates of information related
to the emergency and all emergency response actions, on at least a
daily basis. As soon as reasonably possible after receipt of the
Operator’s Notice related to the emergency and from time to
time thereafter, the Owner shall instruct the Operators as to any
additional actions that the Owner desires the Operators to take in
order to address the emergency. Within five (5) days of the
start of the emergency, the Operators shall provide the Owner with
a cost estimate of emergency response actions, and shall thereafter
update monthly cost estimates to reflect any actual or expected
emergency expenditures. Within five (5) days after receipt of
such cost estimate, the Owner shall acknowledge receipt of such
cost estimate from the Operators and, in such acknowledgement,
shall approve or disapprove such cost estimate update. The
Owner’s acknowledgement shall be effective when transmitted
to the Operators in writing in the manner specified in
Section 10.4. Until the Owner’s acknowledgement becomes
effective, the Operators may incur any expenditure or take any
other actions reasonably necessary under the circumstances to
comply with Law or safeguard lives or property in connection with
the response to emergencies affecting the Purchased Operations or
the associated assets, properties or business of the Owner, the
cost of which will be borne by the Owner.
(f) The
Operators shall meet with the Owner from time to time, at the
Owner’s reasonable request, in order to review the operation
and maintenance of the Purchased Operations.
2.2 Personnel .
(a) The
Stockholder agrees to make himself available to provide personal
services to the Owner as reasonably requested from time to time. In
addition, each of the Cenac Companies shall employ, retain and have
supervision over such Service Providers as such Cenac Company deems
reasonably necessary and appropriate for its performance of
Services in accordance with the standards set forth in
Section 2.1(b). All such Service Providers shall have received
such training as is required by applicable Laws. The Cenac
Companies shall pay all expenses incurred in connection with the
retention of any Service Providers to perform the Services,
including compensation, consulting or other service fees, salaries,
wages and overhead and administrative expenses charged to or
incurred by the Cenac Companies and, if applicable, social security
taxes, workers’ compensation insurance, retirement and
insurance benefits, incentives, bonuses and other similar expenses.
The Cenac Companies shall comply with all Laws relating to the
employment or retention of Service Providers, including Laws
relating to withholding of Taxes, employment discrimination, fair
labor standards and the Cenac Company Plans. Each of the Cenac
Companies represents and warrants that (i) no Employee is
covered by the terms of a collective bargaining agreement with any
union organization and (ii) each such Cenac Company has all
necessary contractual rights to secure the services of the
individuals and entities reasonably necessary to perform the
Services.
(b) The
Cenac Companies shall provide as soon as reasonably practicable to
the Owner a complete list, as of the date hereof, of all Service
Providers, listing the individual’s status, title or position
held, base salary, any commissions or other compensation
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paid or
payable, all employee benefits received by such Service Provider
and any other terms of any oral or written agreement (including a
copy of any such written agreement) with either of the Cenac
Companies or any of their respective Affiliates. Such list shall be
updated from time to time as requested by the Owner on reasonable
Notice. The Owner may direct that either of the Cenac Companies
terminate its use of any Service Provider to provide any of the
Services by providing the Operators with written Notice.
(c) This
Agreement does not and shall not be construed to establish an
employment relationship between the Owner (or its Affiliates) and
any Service Provider. Unless and until otherwise determined by the
Owner, the Employees shall not transfer to or otherwise be employed
by the Owner (or its Affiliates), but shall be retained in the
employ of the applicable Cenac Company. No Service Provider is a
party to this Agreement, nor shall any Operator or such Service
Provider be entitled to assert that such Service Provider has
become an employee of the Owner or its Affiliates through or in
connection with the rendering of Services in accordance with this
Agreement.
(d) Notwithstanding
the foregoing, the Owner, in its sole discretion, may hire any
Person (including any Service Provider) to serve as an employee of
the Owner or its Affiliates or, if applicable, an independent
contractor of the Owner or its Affiliates. The Operators shall
cooperate with the Owner and its Affiliates in providing access to
Service Providers, on reasonable Notice, for purposes of
interviewing and other pre-application screening as the Owner may
reasonably request. Each of the Operators shall not, directly or
indirectly, either for itself or any other Person, discourage any
Service Provider from agreeing to a direct employment or engagement
with the Owner or its Affiliates or otherwise interfere with any
efforts by the Owner or its Affiliates to hire or engage any
Service Provider directly.
(e) Any
notice required under the Federal Workers Adjustment and Retraining
Notification Act (“WARN Act”) that is, has been or
shall be required of the Cenac Companies to their Employees or
former employees by reason of its obligations under the WARN Act
resulting from the transactions contemplated by the Purchase
Agreement (including this Agreement) or any subsequent mass layoff
or plant closing during the term of this Agreement has been or
shall be given by the Cenac Companies. The Cenac Companies shall be
solely responsible for any severance or other costs associated with
the termination of the employment or engagement of any Service
Provider.
(f) The
Owner and the Operators agree that the Owner is a statutory
employer of the Employees solely for purposes of La. Rev. Stat.
23:1061 and not for any other purpose whatsoever. Irrespective of
the Owner’s status as a statutory employer or special
employer (as defined in La. Rev. Stat. 23:1031(C)) of the
Employees, the Cenac Companies shall remain primarily responsible
for the payment of Louisiana Workers’ Compensation benefits
to the Employees and shall not be entitled to seek contribution for
any such payments from the Owner or any of its Affiliates. Further,
the Cenac Companies agree to protect, defend, indemnify and hold
harmless the Owner Indemnified Parties from any and all claims for
compensation benefits by the Employees against any of the Owner
Indemnified Parties and hereby waives any right of the Cenac
Companies’ insurers to seek reimbursement of any compensation
benefits owed or paid.
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2.3 Employee benefit plans
.
(a)
Schedule 2.3 contains a complete list of each Cenac
Company Plan.
(b) The
Cenac Companies have made available to the Owner a true and correct
copy (or, with respect to any unwritten arrangement, an accurate
written description) of each Cenac Company Plan and, to the extent
applicable, copies of any related trusts, insurance policies,
amendments, third-party administration contracts, the most recent
summary plan description, summary of material modifications,
favorable determination letters, actuarial reports, FAS-106 reports
and the three most recently filed Form 5500 annual reports
filed with the Internal Revenue Service and the United States
Department of Labor.
(c) Each
Cenac Company Plan intended to be qualified under
Section 401(a) of the Code is and has been so qualified. Each
Cenac Company Plan is and has been operated and administered in
material compliance with its terms and the provisions of all
applicable laws, rules and regulations, including ERISA and the
Code. There are no pending actions, suits or claims against any
Cenac Company Plan other than routine claims for benefits,
qualified domestic relations orders and medical child support
orders. The Cenac Companies and each ERISA Affiliate have made any
and all required contributions to the Cenac Company Plans and have
satisfied any and all taxes or other obligations related to
employees of the Cenac Companies and the Cenac Company Plans as of
the date of this Agreement and the transactions contemplated by
this Agreement will not, either alone or in combination with any
other event, result in the Owner having any liability under or
related to any Cenac Company Plan. There have been no
“prohibited transactions” (as described in
Section 406 of ERISA or Section 4975 of the Code) with
respect to any of the relevant Cenac Company Plans.
(d) Each
Cenac Company Plan or compensation arrangement that is a
nonqualified deferred compensation plan subject to
Section 409A of the Code has been operated and administered in
compliance with Section 409A of the Code from the period
beginning January 1, 2005 to the date hereof.
(e) Neither
the execution nor the delivery of the Purchase Agreement or this
Agreement nor the consummation of the transactions contemplated
thereby or hereby will (either alone or in conjunction with any
other event): (i) result in any payment (including severance,
unemployment compensation, parachute payments or otherwise)
becoming due to any employee of either of the Cenac Companies or
any ERISA Affiliate; (ii) significantly increase any benefits
otherwise payable under any Cenac Company Plan; or
(iii) result in any acceleration of the time of payment,
funding or vesting of any material benefit to the employees of
either of the Cenac Companies or any ERISA Affiliate.
(f) The
Cenac Companies have provided for and will provide for the full and
complete satisfaction of any and all liabilities of any kind
whatsoever that the Cenac Companies may have or may hereafter incur
with respect to any Service Provider, including all liabilities
under any Cenac Company Plan.
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2.4 Property . All property
(including intangible and intellectual property), equipment,
material and technology acquired by an Operator hereunder with
Owner funds shall be the property of the Owner; provided, however,
that, during the term of this Agreement, the Operators shall have
access to and right of use of such Owner-owned property in order to
provide Services hereunder; and provided, further, that all
evidences of title, books, records, manuals and other similar
information respecting such property (including the Purchased
Operations) shall be delivered to the Owner upon termination of
this Agreement. Any property provided by the Operators or acquired
with the Operators’ funds shall remain the property of the
Operators.
2.5 Citizenship. Each of the
Cenac Companies is a citizen of the United States within the
meaning of Section 50501 of Title 46 of the United States Code
for the purpose of operating vessels in the coastwise trade of the
United States and shall remain such a citizen during the term of
this Agreement.
2.6 Effective Date . The
obligation of the Operators to provide the Services, and the
obligation of the Owner to pay the Operators for the costs of
providing the Services, shall commence on the Closing Date.
ARTICLE III
COMPENSATION
3.1 Payment of Fees and Costs
. The Cenac Companies shall be paid the Service Fee by the Owner
and shall be reimbursed or paid by the Owner for all Direct Costs
and Overhead Costs incurred by the Operators in connection with the
performance of the Services at the rates and in the manner set
forth in the Accounting Procedures. The Cenac Companies shall keep
a full and complete account of all costs and expenses incurred in
connection with the performance of the Services in the manner set
forth in the Accounting Procedures. The Owner shall have no
responsibility for, and shall not reimburse or pay: (i) any
Direct Costs or Overhead Costs related to services performed by a
Service Provider for any period prior to the Closing Date,
including bonuses paid to Service Providers during the term of this
Agreement that relate all or in part to services provided prior to
the Closing Date; or (ii) any costs, expenses, liabilities,
obligations, expenditures or other amounts incurred or made in
violation of this Agreement or for which any Operator is liable or
responsible pursuant to this Agreement or the Purchase
Agreement.
3.2 Billing and Payment . The
Cenac Companies shall submit monthly invoices to the Owner
including itemized statements setting forth, in reasonable detail,
the Service Fee and the Direct Costs and related Overhead Costs
incurred or paid by the Operators in providing the Services for the
preceding calendar month. The Cenac Companies shall provide to the
Owner, at the Owner’s reasonable request, appropriate
documentation supporting the incurrence of Direct Costs and related
Overhead Costs, including receipts, time sheets and similar
documentation. The Owner agrees to pay the Cenac Companies such
Service Fee, Direct Costs and Overhead Costs within ten
(10) days of its receipt of each such monthly invoice. The
Cenac Companies and the Owner may arrange on mutually acceptable
terms for the payment by the Owner of Direct Costs on an “as
incurred” basis, and the invoice for any month in which such
payments have been made need not include such payments (or, if
included, shall reflect
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such
payments as credits to the Direct Costs otherwise due). In no event
shall the Owner directly pay or be deemed to have directly paid any
Direct Costs provided for in Section 4(a), 4(b) or 4(d) of
Exhibit B , it being agreed and acknowledged that the
Owner’s sole responsibility hereunder with respect to any
such costs is to reimburse the Cenac Companies for such costs
incurred by them, to the extent provided herein.
3.3 Billing Disputes . Should
there be a dispute as to the propriety or accuracy of any invoiced
amounts, the Owner shall pay all undisputed amounts shown on each
invoice, but shall be entitled to withhold payment of any amount in
dispute and shall promptly notify the Operators of such disputed
amount. The Operators shall provide the Owner with records relating
to the disputed amounts so as to enable the parties to resolve the
dispute.
ARTICLE IV
COVENANT AGAINST COMPETITION
4.1 As an essential consideration for
the obligations of the Owner under this Agreement, each of the
Operators hereby agrees and covenants that, for a period commencing
on the date of this Agreement and ending on the second anniversary
of the respective dates of the last work performed hereunder:
(a) within
the Restricted Territory, each of the Operators shall not, directly
or indirectly, whether as principal, agent, employee, shareholder
or other equity holder (other than a holding of shares listed on a
United States stock exchange or automated quotation system that
does not exceed five percent of the outstanding shares so listed),
owner, investor, partner or otherwise, individually or in
association with any other Person: (A) carry on or engage in
any manner in the Restricted Business, (B) solicit customers
of the Restricted Business, (C) become the employee of, or
otherwise render services on behalf of, any Person that carries on
or engages in a business similar to the Restricted Business or
(D) induce or attempt to induce any customer, supplier,
licensee or business relation of the Owner or any of its Affiliates
to cease doing business with the Owner or any of its Affiliates, or
in any way interfere with the relationship between any customer,
supplier, licensee or business relation of the Owner or any of its
Affiliates with the Owner or any of its Affiliates, provided that
this Section 4.1(a) shall not prohibit Stockholder’s
equity ownership in Horizon Maritime for so long as the Asphalt
Business Limitation is satisfied; and
(b) each
of the Operators shall not, directly or indirectly, either for
himself or any other Person, (A) solicit or induce or attempt
to solicit or induce any employee of or independent contractor
providing services to the Owner or any of its Affiliates to leave
the employ of or to cease providing services to the Owner or any of
its Affiliates, (B) in any way interfere with the relationship
between the Owner or any of its Affiliates and any employee of or
independent contractor providing services to the Owner or any of
its Affiliates or (C) employ, or otherwise engage as an
employee, independent contractor or otherwise, any employee of the
Owner or any of its Affiliates or any independent contractor of
Owner or any of its Affiliates who had been an employee of any
Operator or its Affiliates.
4.2 Any dispute, controversy or claim
arising out of or in connection with this Article IV,
including the alleged breach of Section 4.1 or a challenge to
its validity or
11
enforceability, shall be settled exclusively by final and binding
arbitration in Tarrant County, Texas, administered by the American
Arbitration Association (“AAA”) in accordance with the
Commercial Arbitration Rules of the AAA; provided, however,
that nothing herein is or shall be deemed to preclude Buyer’s
resort to the interim relief prescribed in Section 4.3, below.
The arbitrator(s) shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon
appointment of arbitrator(s) within thirty days following receipt
by one party of the other party’s Notice of desire to
arbitrate, the arbitrator(s) shall be selected from a panel or
panels of persons submitted by the AAA. The selection process shall
be that which is set forth in the AAA Commercial Arbitration Rules
then prevailing, except that, if the parties fail to select
arbitrator(s) from one or more panels, AAA shall not have the power
to make appointment(s) but shall continue to submit additional
panels until arbitrator(s) have been selected. The jurisdiction of
the arbitrator(s) and the arbitrability of any claim, defense,
issue or objection raised by any party shall be decided by the
arbitrator(s) in the first instance. Judgment on the award entered
by the arbitrator(s) may be entered by any court having
jurisdiction thereof. All aspects of the arbitration and matters
subject thereto shall remain confidential. The parties will each
bear their own attorneys’ fees and costs in connection with
any dispute or controversy, except as provided in Section 4.3,
below.
4.3 In the event of a breach or
threatened breach by any of the Operators of any of the provisions
of this Article IV, the Owner shall have the right to seek
interim relief from AAA pursuant to the Optional Rules for
Emergency Measures of Protection contained in the Commercial
Arbitration Rules of the AAA (including the arbitrator selection
procedures provided for in such Optional Rules for Emergency
Measures of Protection, which shall govern the selection of
arbitrator(s) for purposes of this Section 4.3) or from a
court of competent jurisdiction. The Operators acknowledge that the
Owner will suffer irreparable damage or injury not fully
compensable by money damages, or the exact amount of which may be
impossible to ascertain, and therefore will not have an adequate
legal remedy. Accordingly, the Owner will be entitled to obtain any
interim relief necessary or appropriate to prevent or curtail any
such breach, threatened or actual, without the necessity of posting
security or showing any actual damages or irreparable injury. Such
interim relief may include, but is not limited to,
(i) temporary or permanent injunctive relief for the
enforcement of this Article IV, (ii) a decree for the
specifi
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