Refinery Purchase and Sale Agreement and Indemnity Agreement [Amendment No. 2] - Tyler Holding Co. Inc. and Delek Refining Ltd., Delek Pipeline Texas Inc. and Delek Land Texas Inc.
SECOND AMENDMENT TO
REFINERY PURCHASE AND SALE AGREEMENT
AND INDEMNITY AGREEMENT
This SECOND AMENDMENT TO REFINERY PURCHASE AND SALE AGREEMENT AND INDEMNITY
AGREEMENT dated as of October 10, 2005 (the "Second Amendment") by and among LA
GLORIA OIL AND GAS COMPANY, now known as TYLER HOLDING COMPANY, INC., as
"Seller" and DELEK REFINING, LTD., DELEK PIPELINE TEXAS, INC. and DELEK LAND
TEXAS, INC., as "Buyers".
WITNESSETH:
WHEREAS, Seller and Buyers entered into that certain Refinery Purchase and
Sale Agreement dated as of March 14, 2005 (the "Original Agreement"), pursuant
to which Seller agreed to sell to Buyers and Buyers agreed to purchase from
Seller, among other assets, an oil refinery located in the City of Tyler, Smith
County, Texas; and
WHEREAS, the Original Agreement was amended by that certain Amendment to
Refinery Purchase and Sale Agreement dated as of April 29, 2005, by and among
Seller and Buyers (the "First Amendment"); and
WHEREAS, at the request of Buyers, Crown Central LLC, a Maryland limited
liability company ("Crown"), the direct or indirect parent limited liability
company of Seller, has entered into an Audit Agreement of even date herewith
(the "Audit Agreement") with Delek US Holdings, Inc. pursuant to which Crown has
agreed to cooperate with Delek US Holdings, Inc. in allowing a certain audit of
Crown's financial statements for the calendar year ending December 31, 2002 to
date; and
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WHEREAS, as partial consideration for and as a condition precedent to
entering into such Audit Agreement, Crown has required the execution of this
Second Amendment by the parties hereto. (Capitalized terms otherwise not defined
herein shall have the respective meanings ascribed thereto in the Original
Agreement.)
NOW, THEREFORE, the parties hereto agree as follows:
1. The Original Agreement, as heretofore amended by the First Amendment (as
so amended, the "Amended Agreement") is hereby further amended as follows:
(a) The term "Agreement" as set forth in the preamble to the Original
Agreement is hereby amended to mean the Original Agreement, as amended by
the First Amendment and by this Second Amendment.
The term "Unqualified Audit Opinion" shall mean an opinion from Delek
US Holdings, Inc.'s outside auditor that expresses no material
concerns about the financial information from Crown that relates to
the Assets transferred to the Buyers and that is incorporated into any
financial documents prepared for the initial public offering of Delek
US Holdings, Inc. It is understood by the Parties hereto that the
outside auditor intends to perform a "review" rather than a full audit
of Crown's financial information for the period from January 1, 2005
to March 31, 2005.
The term "Seller's Specifically Retained Liabilities" means: (i) the
Retained Environmental Liabilities other than Retained Remediation
Costs; (ii) the Pre-Closing Liabilities; (iii) claims made by Buyers
arising
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out of a breach of the representations and warranties specified in
Sections 4.1 (a), 4.1(b), 4.1(c), 4.1(m) and 4.1(o); (iv) all Covered
Liabilities arising under or in connection with any Excluded Assets;
and (v) all Taxes to the extent indemnified against under Section
15.1(b).
(b) Section 9.14(a) of the Amended Agreement is hereby deleted and
replaced with the following:
"Subject to the terms and conditions set forth in this Section
9.14, on the Closing Date Buyers shall cause a portion of the
Adjusted Purchase Price in the amount of $5,000,000.00 (the
"Closing Deposit") to be deposited with the Escrow Agent pursuant
to the terms and provisions of an escrow agreement by and among
Buyers, Seller and the Escrow Agent substantially in the form
attached hereto as EXHIBIT 9.14 (the "Closing Deposit Escrow
Agreement"). For income tax purposes, Seller shall include in its
income any interest, dividends and other amounts earned on the
Closing Deposit ("Closing Deposit Escrow Earnings") prior to
disbursement of the Closing Deposit to Seller. The Closing
Deposit shall be held and distributed by the Escrow Agent in
accordance with the terms and provisions of the Closing Deposit
Escrow Agreement. If the Closing occurs, Buyers agree to provide
written notice to Seller of any intent to withdraw from the
Closing Deposit to satisfy any claims of Buyers for
indemnification under Section 15.1 of this Agreement; and if
Seller fails, within thirty
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(30) days following receipt of such notice from Buyers, to
provide joint written instructions to the Escrow Agent to allow
Buyers to withdraw such funds from the Closing Deposit, then
Buyers may submit the dispute to be resolved by dispute
resolution set forth in Section 16.12. On the date of any
distribution to Seller by the Escrow Agent of funds from the
Closing Deposit, the Escrow Agent shall distribute to Seller the
Closing Deposit Escrow Earnings on such distribution. Except for
Seller's Specifically Retained Liabilities (as defined herein),
Seller's liability for indemnification under Section 15.1 and for
any other liability under this Agreement, whether for breach of
contract, breach of warranty, liability for indemnity or any
other liability under this Agreement, is limited to the Closing
Deposit and otherwise shall be non-recourse to Seller.
In addition, if Delek US Holdings, Inc. receives an Unqualified
Audit Opinion (as defined herein), and subject to and in
accordance with the provisions of the Closing Deposit Escrow
Agreement, the Closing Deposit shall be distributed to Seller in
installments at the indicated times, as follows:
(i) upon the date of issuance of an Unqualified Audit
Opinion by Delek US Holdings, Inc.'s external auditor of the
financial statements of Crown pertaining to operation of the
Assets transferred to the Buyers pursuant to the Agreement for
calendar
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year 2002, calendar year 2003, calendar year 2004, and the period
from January 1, 2005 to March 31, 2005 (the "Audit Period") an
amount equal to the positive difference if any, of $3,000,000
minus the sum of (x) all Distributions, if any, made prior to
such date and (y) the aggregate dollar amount of all Unresolved
Buyer Claims, if any, existing as of such date; and
(ii) upon the earlier to occur of (1) April 1, 2006 (or the
date upon which Delek US Holdings, Inc. receives an Unqualified
Audit Opinion if no Unqualified Audit Opinion is received by
April 1, 2006) or (2) the date upon which Delek US Holdings, Inc.
shall issue shares of stock to the public pursuant to an initial
public offering of securities, an amount equal to the positive
difference, if any, of $5,000,000.00 minus the sum of (x) all
Distributions, if any, made prior to such date (including,
without limitation, those made pursuant to subparagraph (i)
above) and (y) the aggregate dollar amount of all Unresolved
Buyer Claims, if any, existing as of such date."
(c) Section 9.15(a) of the Amended Agreement is hereby deleted and
replaced with the following:
"Subject to the terms and conditions set forth in this Section
9.15, on the Closing Date Buyers shall cause the amount of
$5,000,000.00 (the "Buyer Deposit") to be deposited with the
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Escrow Agent pursuant to the terms and provisions of an escrow
agreement by and among Buyers, Seller and the Escrow Agent
substantially in the form attached hereto as Exhibit 9.15 (the
"Buyer Deposit Escrow Agreement"). For income tax purposes,
Refinery Buyer shall include in its income any interest,
dividends and other amounts earned on the Buyer Deposit. The
Buyer Deposit shall be held and distributed by the Escrow Agent
in accordance with the terms and provisions of the Buyer Deposit
Escrow Agreement. If the Closing occurs, Seller agrees to provide
written notice to Buyers of any intent to withdraw from the Buyer
Deposit to satisfy any claims of Seller for indemnification under
Section 15.2 of this Agreement; and if Buyers fail, within thirty
(30) days following receipt of such notice from Seller, to
provide joint written instructions to the Escrow Agent to allow
Seller to withdraw such funds from the Buyer Deposit, then Seller
may submit the dispute to be resolved by dispute resolution set
forth in Section 16.12.
In addition, if Delek US Holdings, Inc. receives an Unqualified
Audit Opinion, and subject to and in accordance with the
provisions of the Buyer Deposit Escrow Agreement, the Buyer
Deposit shall be distributed to Buyers in installments, at the
indicated times, as follows:
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(i) upon the date of issuance of an Unqualified Audit
Opinion by Delek US Holdings, Inc.'s external auditor of the
financial statements of Crown pertaining to operation of the
Assets transferred to Buyers pursuant to the Agreement for the
Audit Period, an amount equal to the positive difference if any,
of $3,000,000.00 minus the sum of (x) all Distributions, if any,
made prior to such date and (y) the aggregate dollar amount of
all Unresolved Seller Claims, if any, existing as of such date;
and
(ii) upon the earlier to occur of (1) April 1, 2006 (or the
date upon which Delek US Holdings, Inc. receives an Unqualified
Audit Opinion if no Unqualified Opinion is received by April 1,
2006) or (2) the date upon which Delek US Holdings, Inc. shall
issue shares of stock to the public pursuant to an initial public
offering of securities, an amount equal the positive difference,
if any, of $5,000,000.00 minus the sum of (x) all Distributions,
if any, made prior to such date (including, without limitation,
those made pursuant to subparagraph (i) above) and (y) the
aggregate dollar amount of all Unresolved Seller Claims, if any,
existing as of such date."
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(d) Section 15.4 is hereby amended by adding new subsection (f) as
follows:
"(f) Notwithstanding anything herein provided to the contrary and
specifically excluding the Seller's Specifically Retained
Liabilities, Seller's liability under this Agreement for breach
of covenant, breach of warranty, liability for indemnity or any
other liability under this Agreement, shall be limited to the
Closing Deposit and Buyers agree to look solely to such Closing
Deposit for satisfaction of all such obligations and liabilities
of Seller under this Agreement (other than the Seller's
Specifically Retained Liabilities). At such time as the Closing
Deposit is fully distributed to Seller pursuant to Section
9.14(a), Seller shall be released from, and have no further
liability to, Buyers for any breach of covenant, breach of
warranty, liability for indemnity or any other liability under
this Agreement except for the Seller's Specifically Retained
Liabilities.
(e) Section 16.12 is hereby amended by adding a subsection (d) at the
end thereof as follows:
"(d) Notwithstanding anything in this Agreement appearing to the
contrary and specifically excluding Seller's Specifically
Retained Liabilities as to which Seller shall be and remain fully
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liable, any arbitration award against Seller for a monetary
amount shall be collectable only from the Closing Deposit.
(f) Incidental to the execution and delivery of this Second Amendment
and payment of the First Installment Fee described in Section 5 of the
Audit Agreement, Seller shall assign to Delek Refining, Ltd. and Delek
Refining Ltd. shall assume all rights and obligations of Seller under the
following:
the portion of Crown's membership status and interest in an
API-sponsored fuel and fuel additives testing consortium
pertaining to La Gloria Oil and Gas Company's Tyler, Texas
refinery governed by "Agreement for the Conduct and Funding of a
Test Program for Fuels and Fuel Additives Under Sections 211(b)
and (e) of the Clean Air Act", "Subscription Agreement for the
Conduct and Funding of a Test Program for the Non-baseline Fuel
Group for Ethyl Tertiary Butyl Ether (ETBE) Under Sections 211(b)
and (e) of the Clean Air Act", "Subscription Agreement for the
Conduct and Funding of a Test Program for the Non-baseline Fuel
Group for Ethanol Under Sections 211(b) and (e) of the Clean Air
Act", "Subscription Agreement for the Conduct and Funding of a
Test Program for the Non-baseline Fuel Group for Methyl Tertiary
Butyl Ether (MTBE) Under Sections 211(b) and (e) of the Clean Air
Act", "Subscription Agreement for the Conduct and Funding of a
Test Program for the Non-baseline Fuel Group for Tertiary Amyl
Methyl Ether (TAME) Under Sections 211(b) and (e) of the
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Clean Air Act", and "Petroleum & Allied Industry Agreement for
the Conduct and Funding of a Voluntary Test Program for Petroleum
High Production Volume Chemicals", insofar and only insofar as
such agreements and memberships relate to the Tyler, Texas
refinery sold by Seller to Buyers pursuant to the Amended
Agreement. Seller represents and warrants to Buyers that: (a) the
foregoing documents, rights and obligations are fully assignable
without consent (or that consent has been obtained) and (b) it
has furnished the Buyers with true and correct copies of each of
the foregoing documents inclusive of any amendments, exhibits,
schedules and consents to assignments thereto.
(g) The Seller and Buyers agree to execute any further documents
including, without limitation, amendments to the Escrow Agreements attached
as Exhibits 9.14 and 9.15 to the Agreement, and do all other acts necessary
to fully effectuate the terms and provisions of this Second Amendment.
2. Except as modified and amended hereby, the Amended Agreement shall
continue in full force and effect and Seller and Buyers ratify and confirm the
Amended Agreement as modified and amended hereby.
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IN WITNESS WHEREOF, this Second Amendment is executed in multiple
counterparts, all of which shall be considered one and the same agreement, as of
the date first above written.
TYLER HOLDING COMPANY, INC., DELEK REFINING, LTD.
FORMERLY KNOWN AS LA GLORIA OIL
AND GAS COMPANY
By: /s/ Paul J. Ebner /s/ Uzi Yemin
--------------------------------- ------------------------------------
Name: Paul J. Ebner By: Uzi Yemin, President & CEO of
Title: President General Partner Delek U.S. Refining
GP, LLC
By: /s/ Assi Ginzburg
------------------------------------
Name: Assi Ginzburg
Title: VP
DELEK PIPELINE TEXAS, INC. DELEK LAND TEXAS, INC.
/s/ Uzi Yemin /s/ Uzi Yemin
--------------------------------- ------------------------------------
By: Uzi Yemin, President & CEO By: Uzi Yemin, President & CEO
By: /s/ Assi Ginzburg By: /s/ Assi Ginzburg
--------------------------------- ------------------------------------
Name: Assi Ginzburg Name: Assi Ginzburg
Title: VP Title: VP
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