EXHIBIT 10.2
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (this "Agreement") is entered into
as of June 28, 2001, between Kaneb Services, Inc., a Delaware corporation
("KSI"), and Kaneb Services LLC, a Delaware limited liability company ("KSL").
W I T N E S S E T H
WHEREAS, KSI and KSL are parties to the Distribution Agreement and other
related agreements; and
WHEREAS, KSI and KSL desire for KSI and its Affiliates to provide certain
services to KSL and its Affiliates;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, KSI and KSL hereby covenant and agree as follows:
DEFINITIONS
All capitalized terms or other defined terms used but not defined in this
Agreement are used in this Agreement with the following meanings:
"Affiliate" means, with respect to KSI or KSL, any Person, that directly or
indirectly, is in control of, is controlled by, controls or is under common
control of KSI or KSL, as the case may be. For purposes of this definition,
control shall include the ownership of 50% or more of the legal or beneficial
interest in any Person or the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. A Person who is an Affiliate shall only be
considered an Affiliate for so long as that Person meets the definition of an
Affiliate. An officer, director, general partner, managing member or trustee of
a Person or Affiliate of such Person shall not be considered to be an Affiliate
unless such Person is under the direct or indirect control or common control of
KSI or KSL, as the case may be. For purposes of clarity, neither KSI nor KSL
shall be considered to be an Affiliate of the other, nor shall Kaneb Pipe Line
Partners, L.P. or its subsidiaries be considered an Affiliate of KSL solely for
the purposes of this Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in Dallas, Texas are authorized or required to
close.
"Closing Date" shall mean June 28, 2001.
"Distribution Agreement" shall mean that certain Distribution Agreement
dated as of June 28, 2001, by and between KSI and KSL, as the same may be
amended and in force and effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Person" shall mean an individual, partnership, corporation, business
trust, limited liability company, limited liability partnership, joint stock
company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Services" shall mean, collectively, the Treasury Services, the Insurance
and Risk Management Services, the Legal Services, the Tax Services, the MIS
Services, the Investor Relations Services, the Facilities Services, the Human
Resources Services and the Accounting Services (each of which, as hereinafter
defined).
KSI SERVICES
Services. KSI shall provide, or cause to be provided, the treasury and cash
management services set forth on Annex A (the "Treasury Services"), the
insurance and risk management services set forth on Annex B (the "Insurance and
Risk Management Services"), the legal services set forth on Annex C ( the "Legal
Services"), the tax services set forth on Annex D (the "Tax Services"), the
management information system services set forth on Annex E (the "MIS
Services"), the investor relations services set forth on Annex F (the "Investor
Relations Services"), the facilities services set forth on Annex G (the
"Facilities Services"), the human resources services set forth on Annex H (the
"Human Resources Services"), the accounting services set forth on Annex I (the
"Accounting Services") and other services related to the Services.
Fees; Expenses. For the provision of the Services, KSL hereby agrees to pay
to KSI $25,000 per month (the "Monthly Fee"). Annually, KSI will determine the
costs of the Services pursuant to this agreement and will reasonably adjust the
Monthly Fee accordingly. KSL hereby agrees to pay KSI the Monthly Fee on the
15th day of each month during the term of this Agreement.
KSL and KSI hereby acknowledge and agree that the Monthly Fee only
reimburses KSI for costs expended in connection with general overhead and other
general business expenses and is not intended to reimburse KSI for out-of-pocket
expenses incurred by KSI solely for the benefit of KSL. Accordingly, KSL hereby
agrees to reimburse KSI any out-of-pocket expenses that KSI incurs solely for
the benefit of KSL, such payment to be made within 30 calendar days after
receipt of written notice of KSI incurring such an expense.
KSL agrees to pay to KSI all overhead and administrative costs and
expenses, except for the salaries and other compensation arrangements (including
amounts expended under benefit plans) of any executive officers of KSL, incurred
by KSI in connection with the provision of general office and other business
services to the executive and administrative departments of KSL, including, but
not limited to, the salaries of support staff and expenses incurred in
connection with telephones, office supplies, office rent, dues and subscriptions
and computer networks and systems.
Term and Termination. The term of this Agreement shall commence on the
Closing Date and shall continue until, and terminate on, December 31, 2005,
provided, however, that, upon one hundred and twenty (120) days notice to the
other party, each party shall have the right to terminate this Agreement. The
termination of this Agreement shall not release (i) either party from its
liability to the other party under this Agreement arising from a breach of this
Agreement, (ii) either party from its rights and obligations under Article III
or (iii) KSL from its payment obligations under Section 2.2.
Allocation of liability; relationship; delegation of duty
WAIVER AND INDEMNIFICATION. KSL HEREBY WAIVES ANY AND ALL CLAIMS AGAINST
KSI, ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS (THE "KSI PARTIES") FOR DAMAGES RESULTING FROM PERFORMANCE OF, ERROR OR
DELAY IN PERFORMANCE, ATTEMPTING TO PERFORM OR FAILING TO PERFORM, ANY
RESPONSIBILITIES HEREUNDER, OR ANY DAMAGES OF ANY KIND RELATED THERETO,
INCLUDING CLAIMS ARISING AS A RESULT OF THE EXPRESS NEGLIGENCE OF SUCH PERSONS
UNLESS SUCH DAMAGES RESULTED FROM THE WILLFUL MISCONDUCT OF SUCH PERSONS.
FURTHER, KSL HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD THE KSI PARTIES
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, CAUSES OF ACTION AND
LEGAL LIABILITIES ARISING OUT OF, IN CONNECTION WITH, OR AS AN INCIDENT TO, THIS
AGREEMENT OR ANY ACT OR OMISSION IN THE PERFORMANCE BY SUCH PERSONS OF THEIR
RESPONSIBILITIES HEREUNDER, INCLUDING DAMAGES, CAUSES OF ACTION AND LEGAL
LIABILITIES ARISING AS A RESULT OF THE NEGLIGENCE OF SUCH PERSONS, UNLESS SUCH
DAMAGES RESULTED FROM THE WILLFUL MISCONDUCT OF SUCH PERSONS SEEKING
INDEMNIFICATION.
LIMITATION ON WARRANTIES AND CONSEQUENTIAL DAMAGES. NONE OF THE KSI PARTIES
MAKES ANY WARRANTIES OR REPRESENTATIONS REGARDING SERVICES PROVIDED PURSUANT TO
THIS AGREEMENT OTHER THAN THOSE EXPRESSED IN THIS AGREEMENT AND NONE OF THE KSI
PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS
FOR A PARTICULAR PURPOSE. SUCH SERVICES ARE FURNISHED ON AN "AS IS" BASIS, AND
NONE OF THE KSI PARTIES ASSUMES ANY RESPONSIBILITY FOR ANY DAMAGE OR LOSS
(INCLUDING, WITHOUT LIMITATION, ANY CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES
OR LOST PROFITS) ARISING OUT OF, RESULTING FROM OR CAUSED BY SERVICES FURNISHED.
EXPRESS NEGLIGENCE. THE INDEMNITIES SET FORTH IN THIS ARTICLE III ARE
INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS
TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY
SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF
THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF ANY OF THE KSI PARTIES.
INDEPENDENT CONTRACTOR. UNLESS OTHERWISE AGREED BY THE PARTIES WITH RESPECT
TO LEGAL SERVICES, IN PERFORMING THE SERVICES HEREUNDER, KSL AND KSI ACKNOWLEDGE
AND AGREE THAT THE KSI PARTIES AND THEIR REPRESENTATIVES SHALL BE CONSIDERED
INDEPENDENT CONTRACTORS WITH RESPECT TO KSL AND SHALL UNDER NO CIRCUMSTANCES BE
DEEMED TO BE EMPLOYEES, AGENTS, PARTNERS OR JOINT VENTURERS OF KSL.
ADDITIONALLY, KSI SHALL HAVE THE AUTHORITY AND RESPONSIBILITY TO SELECT THE
MEANS, MANNER AND METHOD OF PERFORMING THE SERVICES REQUIRED TO BE CAUSED TO BE
PERFORMED BY IT HEREUNDER.
Delegation of Duty. In the performance of their respective obligations
under this Agreement, KSI and its Affiliates may act directly or through agents,
counsel (in-house or outside) or other persons, may delegate the performance of
functions and may consult with agents, counsel (in-house or outside) and other
persons. None of KSI or any of its Affiliates will be liable for the default or
misconduct of any persons employed, consulted or engaged thereby. KSI and its
Affiliates will be entitled to conclusively rely for all purposes upon any
notice, document, correspondence, request or directive received by it from KSL
or its Affiliates, or any officer or director of KSL or its Affiliates, and
shall not be obligated to inquire (a) as to the authority or power of any person
executing or presenting any such notice, document, correspondence, request or
directive, or (b) as to the truthfulness of any statements set forth therein.
MISCELLANEOUS
Complete Agreement; Amendment. This Agreement, including the other writings
referred to herein or delivered pursuant hereto, constitutes the entire
agreement between KSI and KSL with respect to the subject matter hereof and
supersedes all other agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Agreement may not be amended, altered or modified
except by a writing executed by KSI and KSL.
Notices. All notices under this Agreement must be in writing and delivered
by personal service; certified or registered mail, postage prepaid, return
receipt requested; nationally-recognized overnight courier, courier charges
prepaid; or facsimile transmission (followed by telephone confirmation of
receipt), to KSI or KSL, as applicable, at the addresses herein set forth.
The addresses for notices are as follows:
If to KSI:
Kaneb Services, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Vice President Administration
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to KSL:
Kaneb Services LLC
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
All notices, demands and requests will be effective upon actual receipt or, in
the case of delivery by facsimile transmission, the completion of such
transmission during the normal business hours of the recipient. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given as provided herein will be deemed to be receipt of
the notice, demand or request sent. By giving to the other party at least 10
Business Days' written notice thereof, a party and its respective permitted
successors and permitted assigns will have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
for notices and each will have the right to specify as its address for notices
any other address within the United States of America.
Severability. Any provision hereof that is prohibited or unenforceable in
any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.
Assignment; Other Benefits. This Agreement will be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. Neither party to this Agreement may assign its
rights under this Agreement without the prior written consent of the other
party; provided, however, KSI may assign any of its rights and obligations under
this Agreement to any Affiliate of KSI.
Governing Law. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of Texas, without reference to
or the application of the rules of conflicts of laws set forth in such laws.
Waiver. No consent or waiver, express or implied, by a party hereto to or
of any breach or default by the other party hereto in the performance by such
other party of its obligations hereunder will be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligations of such other party
hereunder. Failure on the part of a party to complain of any act or failure to
act of the other party or to declare the other party in default, irrespective of
how long such failure continues, will not constitute a waiver by such party of
its rights hereunder. The giving of consent by a party in any one instance will
not limit or waive the necessity to obtain such party's consent in any future
instance.
Terminology. All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, will include all other genders; and
the singular will include the plural and vice versa. The headings of the
Articles and Sections of this Agreement are included for convenience only and
will not be deemed to constitute part of this Agreement or to affect the
construction hereof or thereof.
Force Majeure. Except for the obligation of KSL to make payments hereunder
when due and the indemnification obligations arising hereunder, neither party
shall be liable for delays in performance or for non-performance, directly
occasioned or caused by Force Majeure. As used in this Agreement, the term
"Force Majeure" means any event beyond the reasonable control of the party
claiming to be affected thereby, including, without limitation, acts of God,
storms, floods, war, fire, strikes, lockouts or differences with workers, acts
of the public enemy, insurrections, riots or rules or regulations of any
Governmental Authority asserting jurisdiction or control, compliance with which
makes continuance of operations impossible. Inability of either party to secure
funds shall not be regarded as Force Majeure. Upon the occurrence of Force
Majeure, the party affected shall give prompt notice thereof to the other party
and shall, at its cost and expense, do all things commercially reasonable to
remove or mitigate its effect.
Counterparts. This Agreement may be executed in two or more counterparts,
each of which will for all purposes be deemed an original, but all of which
together will constitute one and the same agreement.
Further Assurances. Each party hereto agrees to do all acts and things and
to make, execute and deliver such written instruments, as will from time to time
be reasonably required to carry out the terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth in the introduction to this Agreement.
Kaneb Services, Inc.
By: //s//
Xxxxxxx X. Xxxxxxx
Vice President
Kaneb Services LLC
By: //s//
Xxxxxx X. Xxxxxxxxx
Vice President
