EXHIBIT 99.2
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of
this 12 day of January, 2001 by and among WILLIAMS FIELD SERVICES - GULF COAST
COMPANY, L.P. ("Buyer"), BLUE DOLPHIN PIPE LINE COMPANY ("BDPC"), a Delaware
corporation, MCNIC OFFSHORE PIPELINE & PROCESSING COMPANY ("MCNIC"), a Michigan
corporation, WBI SOUTHERN, INC. ("WBI"), a Delaware corporation (MCNIC, WBI and
BDPC are collectively referred to herein as the "Sellers", and individually as a
"Seller"). Sellers, on the one hand, and Buyer, on the other hand, are referred
to collectively herein as the "Parties" and individually as a "Party".
RECITALS
WHEREAS, the Sellers own certain natural gas gathering assets located in
the Gulf of Mexico, offshore Texas;
WHEREAS, the undivided percentage ownership interest of each Seller in the
Assets is set forth on Exhibit "A" attached hereto; and
WHEREAS, the Sellers desire to sell to Buyer, and Buyer desires to acquire
from the Sellers, such assets pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained the Parties hereto
hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. Capitalized terms not otherwise defined herein or in
the recitals to this Agreement used in this Agreement shall have the meanings
ascribed to them in this Section 1.
"AFFILIATE" shall mean with respect to any Person, any Person which
directly or indirectly, controls, is controlled by, or is under a common control
with such Person. The term "control" (including the terms "controlled by" and
"under common control with") as used in the preceding sentence means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise.
"ASSETS" shall have the meaning given such term in Section 2.1.
"BUYER INDEMNIFIED LIABILITIES" shall have the meaning given such term in
Section 8.1.
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"BUYER MATERIAL ADVERSE EFFECT" shall mean any material and adverse effect
on the assets, liabilities, financial condition, business, operations, affairs
or circumstances of Buyer.
"BUYER PARTIES" shall have the meaning given such term in Section 8.1.
"CLAIM" shall mean all demands, claims, actions, investigations, causes of
action, proceedings and arbitrations, whether or not ultimately determined to be
valid.
"CLAIM NOTICE" shall have the meaning given such term in Section 8.5(b).
"CLOSING" shall have the meaning given such term in Section 2.3.
"CLOSING DATE" shall have the meaning given such term in Section 2.3.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" shall have the meaning given such term in
Section 5.1.
"CUSTOMARY POST-CLOSING CONSENTS" shall mean consents and approvals from
Governmental Authorities that are customarily obtained after closing in
connection with a sale of assets similar to the Assets.
"DISCLOSURE SCHEDULE" shall refer to Exhibit "F".
"ELECTION PERIOD" shall have the meaning given such term in Section
8.6(a).
"ENCUMBRANCE" shall mean any lien, pledge, condemnation proceeding, claim,
restriction, security interest, mortgage or similar encumbrance.
"ENVIRONMENTAL LAWS" shall mean any and all federal, state and local laws,
statutes, regulations, rules, orders, ordinances or permits of any governmental
authority pertaining to health, the environment, wildlife or natural resources
in effect in any and all jurisdictions in which the Assets are located,
including, without limitation, the Clean Air Act, as amended, and the Federal
Water Pollution Control Act, as amended, the Rivers and Harbors Act of 1899, as
amended, the Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act, as amended, the Hazardous and Solid Waste
Amendments Act of 1984, as amended, the Toxic Substances Control Act, as
amended, the Occupational Safety and Health Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Natural Gas Pipeline Safety Act of
1968, as amended and the Hazardous Liquid Pipeline Safety Act of 1979, as
amended.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"FERC" shall mean Federal Energy Regulatory Commission.
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"GOVERNMENTAL AUTHORITY" shall mean the United States and any state,
county, city or other political subdivision, agency, court or instrumentality,
including the U. S. Army Corps of Engineers and the Port of Houston Authority.
"INCOME TAXES" shall mean federal income taxes as provided in IRC ss.11,
alternative minimum tax as provided in IRC ss.55, and any state taxes measured
by net income, and any interest and penalties thereon, including, without
limitation, the earned surplus tax component of the Texas Franchise Tax.
"INDEMNIFIED PARTY" shall have the meaning given such term in Section
8.5(a).
"INDEMNIFYING PARTY" shall have the meaning given such term in Section
8.5(a).
"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"LAWS" shall mean any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
applicable Governmental Authority.
"LOSS" shall mean all debts, liabilities, obligations, losses, damages,
costs and expenses (including, without limitation, interest including
prejudgment interest in any litigated matter), penalties, fines, court costs and
reasonable attorneys' fees and expenses, judgments, settlements and assessments.
"NGA" shall mean the Natural Gas Act of 1938, as amended.
"PARTIES" shall have the meaning given in the introductory paragraph of
this Agreement.
"PERMITS" shall have the meaning given such term in Section 2.1.
"PERMITTED ENCUMBRANCE" shall mean any of the following: (i) any liens for
taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith in the ordinary course of business; (ii) any obligations
or duties reserved to or vested in any municipality or other Governmental
Authority to regulate any of the Assets in any manner including all applicable
Laws; (iii) the terms and conditions of all leases, servitudes, contracts for
sale, purchase, exchange, refining or processing of hydrocarbons, operating
agreements, construction agreements, construction and operation agreements,
partnership agreements, processing agreements, conditioning agreements, treating
agreements, plant agreements, pipeline, gathering, exchange and transportation
agreements, disposal agreements, permits, licenses and other agreements set
forth in Exhibits B, C, and E; (iv) Customary Post-Closing Consents; (v) any
required third party consents to assignment and similar agreements and
obligations with respect to which prior to Closing (A) waivers or consents have
been obtained from the appropriate person; (B) the applicable period of time for
asserting such rights has expired without any exercise of such rights, or (C)
arrangements reasonably satisfactory to Buyer have been made by the Parties to
allow Buyer to receive substantially the same economic benefits as if all such
waivers and consents had been obtained; (vi) easements, rights of way,
servitudes, permits, surface leases and other rights with respect to surface
obligations, pipelines, conditions, covenants or other restrictions, so long as
individually or in the aggregate they are not such as are
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reasonably likely to have a material adverse effect on the use, ownership or
operation of the Assets, taken as a whole; and (vii) materialmen's, mechanics',
repairmen's, and other similar liens or charges arising in the ordinary course
of business incidental to construction, maintenance or operation of the Assets
(A) if they have not been filed pursuant to law, (B) if filed, they have not yet
become due and payable or (C) if their validity is being contested in good faith
in the ordinary course of business by appropriate action.
"PERSON" shall mean any natural person, firm, partnership, association,
corporation, limited liability company, trust, entity, public body or
government.
"POST-CLOSING PERIODS" means any period that is not a Pre-Closing Period.
"PRE-CLOSING PERIOD" means any taxable year or period that ends on or
before the Effective Time and with respect to any taxable year or period
beginning before and ending after the Effective Time, the portion of such
taxable year or period ending on and including the Effective Time.
"PURCHASE PRICE" shall have the meaning given such term in Section 2.2.
"RECORDS" shall have the meaning given such term in Section 2.1E.
"SELLER MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect on the use, ownership or operation of the Assets, taken as a whole, other
than conditions affecting the industry as a whole and other than the
transactions contemplated by this Agreement.
"SELLER PARTIES" shall have the meaning given such term in Section 8.2.
"TAX" or "TAXES" shall mean all taxes, however denominated, including any
interest penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, and other
obligations of the same or of a similar nature.
"TAX RETURNS" shall mean all returns and reports of or with respect to any
Tax which are required to be filed with respect to Seller.
"THIRD-PARTY CLAIM" shall mean a Claim asserted against an Indemnified
Party by a Person that is not a Party or an Affiliate of a Party that could give
rise to a right of indemnification under this Agreement.
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ARTICLE 2
PURCHASE AND SALE
2.1 THE TRANSACTION. Subject to and in accordance with the terms and
conditions of this Agreement, on the Closing Date, Buyer agrees to purchase from
the Sellers, the Assets for the Purchase Price. Subject to and in accordance
with the terms and conditions of this Agreement, in exchange for the Purchase
Price, Sellers agree to sell, assign, transfer and deliver to Buyer all of
Sellers' right, title, and interest in and to the following assets and rights
(collectively, the "Assets"):
A. The gathering facilities and all equipment, materials and parts
relating thereto, as set forth in Exhibit "B" - Facilities, attached hereto;
B. All contracts and agreements, as set forth in "Exhibit C" - Contracts
attached hereto;
C. All easements and rights of way as set forth in Exhibit "D" -
Easements;
D. All permits, franchises, licenses or other rights, if any, granted by
any Governmental Authorities in connection with the ownership or operation of
the gathering facilities described in Exhibit "B" ("Permits");
E. All drawings, designs, technical information and any other records,
files and other data in the possession of Sellers relating to the Assets
("Records"); and
F. All other appurtenances, improvements, fixtures and real and personal
property used or held for use in connection with the gathering facilities
described in Exhibit A.
2.2 PURCHASE PRICE. Subject to the terms and conditions of this Agreement,
Buyer agrees to pay to Sellers at the Closing an aggregate amount of
$2,000,000.00 (the "Purchase Price"). The Purchase Price shall be payable by
Buyer by wire transfer or delivery of other immediately available funds to the
accounts of BDPC (Account No. 0010041077 (for the account of Blue Dolphin Energy
Company), at Bank One, Texas, N.A., ABA Routing No.111000614; MCNIC (Account No.
11737-83, at Bank One, ABA Routing No. 072000326), and WBI (Account No.
163095535536, at US Bank Bismarck, ABA Routing No. 091300023), or to such other
bank and account designated in writing by Sellers to Buyer, in accordance with
the allocation set forth in Exhibit "A".
2.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of BDPC, 801 Travis,
Suite 2100, Houston, Texas 77002, commencing at 10:00 a.m., local time, as soon
as reasonably practicable after all conditions set forth in Article 7 have been
satisfied or waived by the appropriate party, or such other date as the Parties
shall agree in writing, and shall be effective as of the Effective Date (the
"Closing Date"). The Parties agree to use their best efforts to cause the
Closing to occur within 7 days of the date that all such conditions have been
satisfied or waived; Closing in any event shall occur within 10 days of the date
such conditions are satisfied or waived.
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2.4 DELIVERIES AT CLOSING. At the Closing, (i) Sellers and Buyer or their
assigns will execute and acknowledge an Assignment and Bill of Sale in the form
attached hereto as Exhibit "D"; (ii) Buyer will deliver to Sellers the Purchase
Price; and (iii) Sellers shall deliver to Purchaser exclusive possession of the
Assets.
2.5 OTHER AGREEMENTS. Sellers and Buyer shall execute, acknowledge and
deliver such other instruments and take such actions as may be necessary to
carry out their respective obligations under this Agreement.
2.6 EFFECTIVE DATE. The effective date of the sale and purchase of the
Assets ("Effective Date") shall be 12:00 a.m. on the Closing Date.
2.7 BLACK MARLIN PIPELINE SYSTEM. In a separate transaction, Black Marlin
Energy Company (an affiliate of BDPC), MCNIC and WBI will transfer their 100%
ownership interest in the companies that own the Black Marlin Pipeline System to
Williams Field Services Group, Inc., an affiliate of Buyer (the "Black Marlin
Pipeline Transaction"). The terms of such transaction shall be governed by a
separate purchase and sale agreement between those parties. However, although
the transactions are separate, the Parties acknowledge that they are contingent
upon one another and the closing of both transactions will occur concurrently or
not at all.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally with respect to itself, its business, and otherwise
as the context dictates, except as set forth in the Disclosure Schedule,
represents and warrants to Buyer as follows:
3.1 ORGANIZATION. Seller is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation as set forth
in the introductory paragraph to this Agreement. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite power and authority to carry on its business
as such business is now being conducted.
3.2 AUTHORIZATIONS AND APPROVALS. The execution and delivery by Seller of
this Agreement and the performance of its obligations hereunder have been duly
and validly authorized by all requisite corporate action. This Agreement has
been duly executed and delivered by Seller, and this Agreement constitutes the
legal, valid and binding obligation of Seller enforceable against it in
accordance with its terms except insofar as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity regardless of
whether such principles are considered in a proceeding at law or in equity.
Seller does not need to give any notice to, make any filing or register with, or
obtain any consent, approval, authorization, waiver, permit, certificate or
order of any third party or Governmental Authority to consummate the
transactions contemplated by this Agreement, except for those the absence of
which are not reasonably likely to have a Seller Material Adverse Effect,
including Customary Post-Closing Consents, and except for consents or waivers to
be obtained by the Sellers prior to the Closing Date.
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3.3 ABSENCE OF CONFLICTS. Neither the execution and delivery of this
Agreement by the Seller, nor the consummation of the transactions contemplated
hereby will: (a) violate or breach the terms of, cause a default under, conflict
with, result in acceleration of, create in any party the right to accelerate,
terminate, modify or cancel or require any notice under (i) any applicable Law,
(ii) the charter or bylaws of Seller or (iii) any contract, agreement, lease,
license or other arrangement to which Seller is a party or by which either of
them, or any of their properties, is bound; (b) result in the creation or
imposition of any Encumbrance (other than a Permitted Encumbrance) on the Assets
or any interest in the Assets; (c) result in the cancellation, forfeiture,
revocation, suspension or adverse modification of any existing consent,
approval, authorization, license, permit, certificate or order of any
Governmental Authority having jurisdiction over Seller; or (d) with the passage
of time or the giving of notice or the taking of any action by any third party
have any of the effects set forth in clauses (a), (b) or (c) of this Section,
except, where such violation, conflict, breach, default, acceleration,
termination, modification, cancellation, claim, encumbrance, forfeiture,
suspension, revocation or lien is not reasonably likely to have a Seller
Material Adverse Effect, including Customary Post-Closing Consents, or
materially impair the ability of Seller to consummate the transactions
contemplated by this Agreement.
3.4 CONTRACTS AND COMMITMENTS. Exhibit B is a list of all material
contracts relating to the continued ownership and operation of the Assets (the
"Contracts"), and each such Contract is in full force and effect. Seller has in
all respects performed all material obligations required to be performed by them
to date under the Contracts, and are not in default under any material
obligation of any such Contracts. To the knowledge of Seller, no other party to
any Contract is in default thereunder. The respective Seller has not assigned to
any other person any of its rights under the Contracts. Seller has not waived
any of its material rights under the Contracts. Except as set forth on the
Disclosure Schedule, there are currently no gas or transportation imbalances
under any of the Contracts (other than the imbalances occurring in the ordinary
course of business that do not have a Seller Material Adverse Effect), and there
are currently no arrangements to sell, transport, or deliver hydrocarbons in the
Assets at some future time without then or thereafter receiving full payment
therefor, or to make payment at some future time for hydrocarbons or the
transportation or the delivery of hydrocarbons previously purchased or
transported.
3.5 ABSENCE OF CHANGES. Except as set forth in the Disclosure Schedule,
since August 1, 2000:
(i) there has not been any Seller Material Adverse Effect;
(ii) to the knowledge of Seller, the Assets have been operated and
maintained in a prudent manner, in the ordinary course of the
business and consistent with past practices, and in compliance with
all laws;
(iii) there has not been any material damage, destruction or loss to any
material portion of the Assets, whether covered by insurance or not;
and
(iv) there has been no actual, pending, or to the knowledge of Seller,
threatened change affecting the Assets with any customers,
licensors, suppliers, distributors or sales
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representatives, except such as has not had, and is not reasonably
expected to have, a Seller Material Adverse Effect.
3.6 LITIGATION. Except as disclosed in the Disclosure Schedule, there are
no actions at law, suits in equity, investigations, proceedings or claims
pending, affecting or, to the knowledge of Seller, threatened against the Assets
before or by any federal, state, foreign or local court, tribunal or
governmental agency or authority.
3.7 COMPLIANCE WITH LAWS. Except as disclosed in the Disclosure Schedule,
Seller has constructed, owned, operated, and maintained the Assets in compliance
with all applicable Laws, except where the failure to be in compliance is not
reasonably likely to have a Seller Material Adverse Effect.
3.8 PERMITS. Except as set forth in the Disclosure Schedule, the Permits
constitute all franchises, licenses, permits, consents, approvals and
authorizations of all Governmental Authorities necessary for the ownership or
operation of the Assets, except for those Permits which the failure to own or
hold are not reasonably likely to have a Seller Material Adverse Effect. Each
Permit is in full force and effect, and Seller is in compliance with all of its
obligations with respect thereto, except where the failure to be in full force
and effect or to be in compliance would not have a Seller Material Adverse
Effect. To the knowledge of Seller, no event has occurred that permits, or upon
the giving of notice or the lapse of time or otherwise would permit, revocation
or termination of any Permit except such as in the aggregate would not have a
Seller Material Adverse Effect.
3.9 TITLE TO THE ASSETS. Seller has good and marketable title to its
respective undivided interest in the Assets, free and clear of all Encumbrances,
other than the Permitted Encumbrances.
3.10 BROKERS FEES. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
3.11 CONDITION OF ASSETS. Except as set forth in the Disclosure Schedule,
to the knowledge of Seller, the Assets (a) are in good condition, (b) have been
constructed and maintained to normal industry standards, (c) are suitable for
the purposes used by Sellers, and (d) are adequate for the normal operation of
the business of Sellers. Except as set forth in the Disclosure Schedule, there
is no imminent repair or replacement pending with respect to the Assets.
3.12 ABSENCE OF LIABILITIES. To the knowledge of Seller, and except as set
forth on the Disclosure Schedule, there are no existing, contingent, or
threatened liabilities, obligations, liens, or claims (absolute, accrued,
contingent or otherwise) that relate to or have been or may be asserted against
the Assets, other than liabilities and obligations which will be paid in full
prior to the Effective Date.
3.13 PREFERENTIAL RIGHTS. Seller represents that no party holds
preferential rights to purchase any of the Assets.
3.14 JURISDICTIONAL STATUS. None of the Assets is certified under Section
7 of the NGA, and none of the Assets are subject to rate regulation or a filed
tariff under Sections 4 or 6 of the NGA.
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3.15 CONTRACTS. Sellers have provided Buyer with true, correct, and
complete copies of all of the contracts listed on Exhibit B.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 CORPORATE ORGANIZATION. Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 QUALIFICATION. Buyer is duly qualified to do business as a limited
partnership and is in good standing in Texas.
4.3 AUTHORIZATIONS; APPROVALS. This Agreement has been duly executed and
delivered by Buyer, and this Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against it in accordance with its terms except
insofar as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity regardless of whether such principles are considered in a
proceeding at law or in equity. Buyer is not required to give any notice to,
make any filing or register with, or obtain any consent, approval,
authorization, waiver, permit, certificate or order of any Governmental
Authority to consummate the transactions contemplated by this Agreement except
for those the absence of which are not reasonably likely to have a Buyer
Material Adverse Effect, including Customary Post-Closing Consents, and except
for consents or waivers to be obtained by Buyer prior to the Closing Date.
4.4 ABSENCE OF CONFLICTS. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will
violate or breach the terms of, cause a default under, conflict with, result in
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel or require any notice under (a) any applicable Law, (b) the charter or
bylaws of Buyer, or (c) any material contract, agreement, lease, license or
other arrangement to which Buyer is a party or by which it, or any of its
properties, is bound, except in each case for those the absence of which are not
reasonably likely to have a Buyer Material Adverse Effect, including Customary
Post-Closing Consents.
4.5 BROKERS' FEES. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
4.6 FINANCING. Buyer has sufficient cash, available lines of credit or
other sources of immediately available funds to enable it to make payment of the
Purchase Price at the Closing.
4.7 LITIGATION. There are no actions, suits, proceedings or governmental
investigations or inquiries pending, or to the knowledge of Buyer, threatened,
against Buyer or any of its properties,
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assets, operations or businesses that might delay, prevent or hinder the
consummation of the transactions contemplated hereby.
ARTICLE 5
COVENANTS OF SELLER AND BUYER
5.1 ACCESS. Upon reasonable notice and at Buyer's sole risk, liability and
expense, and during normal business hours, the Sellers shall afford Buyer and
its representatives reasonable access, from the date hereof until the Closing
Date, to the Assets (including without limitation for the purpose of safety and
environmental inspections, assessments and nondestructive and noninvasive
testing of such Assets by a safety and/or an environmental engineering firm
designated by Buyer and reasonably satisfactory to the Sellers) and the
contracts, books, records and data related to the Assets; provided, such access
shall be subject to the Sellers' obtaining all necessary consents and approvals
from third parties to such access and inspections. The Sellers shall promptly
notify Buyer in each case when such consents are required, and when they have
been obtained or withheld. Buyer's investigation shall be conducted in a manner
that does not unreasonably interfere with the normal operation of the Assets.
Buyer agrees to maintain the confidentiality of all such information pursuant to
the terms of that certain letter agreement regarding confidentiality dated July
24, 2000 between Seller's affiliate Black Marlin Pipeline Company and Buyer (the
"Confidentiality Agreement"). BUYER HEREBY AGREES TO DEFEND, INDEMNIFY, RELEASE,
PROTECT, SAVE AND HOLD HARMLESS THE SELLERS AND THEIR AFFILIATES FROM AND
AGAINST ANY AND ALL LOSSES (INCLUDING REASONABLE ATTORNEYS' FEES AND COURT
COSTS) ARISING OUT OF OR RELATING TO ANY CLAIMS RELATING TO ANY PLANT OR FIELD
VISIT, OR OTHER DUE DILIGENCE ACTIVITY, CONDUCTED BY BUYER OR ITS AGENTS,
REPRESENTATIVES, EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS OR ASSIGNS (FOR
PURPOSES OF THIS SECTION 5.1, A "BUYER PARTY"), TO THE EXTENT SUCH LOSS IS
SUFFERED BY ANY BUYER PARTY, INCLUDING WITHOUT LIMITATION ANY LOSSES RESULTING,
IN WHOLE OR IN PART, FROM THE SOLE, CONCURRENT OR JOINT NEGLIGENCE OR STRICT
LIABILITY OF THE SELLERS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SELLERS.
5.2 CONDUCT OF BUSINESS PENDING THE CLOSING. The Sellers covenant and
agree, that from the date of this Agreement until the Closing Date, unless Buyer
shall otherwise agree or as otherwise contemplated by this Agreement:
(a) Sellers will operate the Assets in all material respects in the same
manner as presently being operated, and will refrain from entering into any
transaction or contract relating directly to any Assets other than in the
ordinary course of business;
(b) Sellers will not mortgage or pledge any of the Assets or create or
suffer to exist any encumbrance thereupon, other than Permitted Encumbrances;
(c) Sellers will not lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets; and
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(d) Insurance will be maintained by the Sellers for the Assets in
accordance with ordinary course established prior to the date of this Agreement.
5.3 CONSENTS. Each of the Parties will use its commercially reasonable
efforts to obtain the authorizations, consents, orders and approvals of
Governmental Authorities and any other third parties that may be or become
necessary or advisable for the performance of its obligations pursuant to this
Agreement and the consummation of the transactions contemplated hereby and will
cooperate in all reasonable respects with each other in promptly seeking to
obtain such authorizations, consents, orders and approvals as may be necessary
or advisable for the performance of their respective obligations pursuant to
this Agreement.
5.4 COMMERCIALLY REASONABLE EFFORTS. Each of the Parties shall use
commercially reasonable efforts to obtain the satisfaction of all conditions of
Closing attributable to such Party in an expeditious manner.
5.5 USE OF NAME. As soon as practicable, but in any event within 180 days
after the Closing Date, Buyer shall remove the names of the Sellers and their
Affiliates, or any words or expressions similar thereto from the Assets.
5.6 DELIVERY OF RECORDS. As soon as practicable, but in any event within
thirty (30) days after the Closing Date, Sellers will deliver or cause to be
delivered to Buyer the Records. Buyer agrees to (a) hold the Records and not to
destroy or dispose of any thereof for the longer of (i) four years from the
Closing Date, or (ii) such longer time as may be required by law, including upon
notice from Sellers for any mandatory or consensual extension of a statutory
limitations period determined by the Internal Revenue Service for tax returns,
provided that, if it desires to destroy or dispose of such Records during such
period, it will first offer in writing at least 60 days prior to such
destruction or disposition to surrender them to the Sellers and if the Sellers
do not accept such offer within 20 days after receipt of such offer, Buyer may
take such action and (b) following the Closing Date to afford Sellers and its
accountants and counsel during normal business hours, upon reasonable request,
at any time, full access to the Records and to Buyer's employees to the extent
that such access may be requested for any legitimate purpose at no cost to
Sellers (other than for reasonable out-of-pocket expenses), provided however,
that such access will not operate to cause the waiver of any attorney-client,
work product or like privilege; provided, further, that in the event of any
litigation nothing herein shall limit any Party's rights of discovery under
applicable law.
5.7 NEW COMMITMENTS. Subject to Section 5.2, the Sellers agree to keep
Buyer advised of, and to consult with Buyer regarding, any commercial
commitments to be entered into by Sellers related to the Assets prior to
Closing. Buyer agrees that it will not contact the Seller's customers on matters
relating to the Assets without the prior written consent of Sellers and in the
event Sellers consent, Buyer will allow a representative of the Sellers to be
present at any meeting.
5.8 AMENDMENTS OF SCHEDULES AND REMEDY.
(a) Sellers may, from time to time, prior to the Closing Date, by written
notice to Buyer, supplement or amend the Disclosure Schedule or other exhibits
attached to this Agreement to correct any matter that would constitute a breach
of any representation or warranty of Sellers herein
54
contained; PROVIDED HOWEVER, except as provided in this Section 5.8, no such
supplement or amendment will affect the rights or obligations of the Parties
(including without limitation Buyer's rights and obligations under Section
7.2(a)) until after the Closing Date. Notwithstanding any other provision
hereof, if the Closing occurs, any such supplement or amendment of any Schedule
will be effective to cure and correct for indemnification purposes (but only for
such purposes) any breach of any representation, warranty or covenant that would
have existed by reason of Sellers not having made such supplement or amendment.
(b) If Buyer terminates this Agreement solely as a result of Sellers'
amendment of the Disclosure Schedule or other exhibits to reflect Material Items
(as defined below) and such Material Items were not made available to Buyer
before the date hereof, Buyer and Sellers agree that in lieu of any other remedy
Buyer may have against Sellers at law, equity or otherwise, Sellers shall owe to
Buyer money damages for Buyer's out-of-pocket costs related directly to due
diligence activities and negotiation of this Agreement in an amount up to
$50,000. As used in this Section 5.8, the term "Material Items" shall mean
matters occurring prior to the date of this Agreement, which would have an
adverse impact of $350,000 or greater individually or in the aggregate on the
Assets. Buyer agrees that if it terminates this Agreement as a result of an
amendment to the Disclosure Schedule or other schedule that does not constitute
a Material Item, Buyer shall not have any recourse against Sellers.
5.9 TRANSFER TAXES. Buyer shall be responsible for the payment of all
state and local transfer, sales, use or other similar taxes resulting from the
transactions contemplated by this Agreement.
5.10 CASUALTY LOSS AND CONDEMNATION. In the event that there exists at and
as of the Closing Date any condemnation proceeding with respect to the Assets,
the Sellers shall assign to Buyer at and as of the Closing Date any rights it
may have to claims against any governmental entity, or third party with respect
to such condemnation proceeding. In the event that there exist at and as of the
Closing Date any casualty loss with respect to the Assets, the Sellers shall
process the claim, if any, with its insurance carrier, and shall promptly turn
over any proceeds received from its insurance carrier with respect to such
casualty loss. Should Sellers not receive any insurance proceeds for such
casualty loss for any reason, Sellers shall repair the damage to Buyer's
reasonable satisfaction unless Sellers and Buyer mutually agree to a reduction
in purchase price or to terminate this Agreement.
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ARTICLE 6
INDEPENDENT INVESTIGATION AND DISCLAIMER
6.1 INDEPENDENT INVESTIGATION AND DISCLAIMER. Buyer acknowledges that: (a)
it has had, and pursuant to this Agreement will have prior to the Closing Date,
access to the Assets and the officers and employees of Sellers, (b) in making
the decision to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer has relied solely on the basis of its own independent
investigation (including review of materials provided to it by Sellers) and upon
the expressed representations, warranties, covenants and agreements set forth in
this Agreement, and (c) it is familiar with investments of the nature of the
Assets, understands that this investment involves substantial risks, has
adequately investigated the Assets and has substantial knowledge and experience
in financial and business matters such that it is capable of evaluating, and has
evaluated, the merits and risks inherent in purchasing the Assets and is able to
bear the economic risks of such investment. Accordingly, except as set forth in
Article 3, Buyer acknowledges that Sellers have not made, AND SELLERS HEREBY
EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATION OR WARRANTY, EXPRESSED,
IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE RELATING TO (i) THE CONDITION
OF THE ASSETS (INCLUDING WITHOUT LIMITATION, ANY IMPLIED OR EXPRESSED WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS, OR ENVIRONMENTAL CONDITION), (ii) ANY INFRINGEMENT BY
THE SELLERS OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, AND (iii) ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR
ON BEHALF OF SELLERS (INCLUDING WITHOUT LIMITATION, IN RESPECT OF THE EXISTENCE
OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES, THE RECOVERABILITY OF OR THE
COST OF RECOVERING ANY SUCH RESERVES OR THE LIKELIHOOD THAT SUCH RESERVES, IF
RECOVERED, WILL BE TRANSPORTED THROUGH THE PIPELINE; AND BUYER WILL HAVE SOLE
RESPONSIBILITY FOR ANY ACTION TAKEN BY BUYER, OR BY OTHERS RELYING ON BUYER'S
ADVICE BASED ON THE GEOLOGICAL MAPS, RECORDS, LOGS, PRODUCTION OR RESERVE
FORECASTS AND OTHER DATA, IF ANY, TRANSFERRED UNDER THIS AGREEMENT.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATION OF EACH PARTY. The respective
obligations of each Party to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) No order shall have been entered and remain in effect in any action or
proceeding before any federal, state, foreign or local court or governmental
agency or other federal, state, foreign or local regulatory or administrative
agency or commission that would prevent or make illegal the consummation of the
transactions contemplated by this Agreement and no action or proceeding that
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has a reasonable likelihood of preventing or materially hindering the
transactions contemplated hereby shall have been instituted, which shall not
have been subsequently dismissed;
(b) Any and all consents of third parties (other than Customary
Post-Closing Consents), necessary in connection with the transactions
contemplated hereby shall have been obtained or arrangements shall have been
made reasonably satisfactory to Buyer to allow Buyer to receive substantially
the same economic benefits as if all such consents had been obtained; and
(c) Each of the parties to the Black Marlin Pipeline Transaction shall
have consummated that transaction.
(d) Vastar Resources, Inc. ("Vastar") shall have consented to the
assignment to the Buyer by BDPC of all of the rights of BDPC under those certain
Gathering Services Agreement and Lease of Offshore Platform Space High Island
A-5 Production Platform, both between Vastar and BDPC and dated August 1, 2000,
as required pursuant to the terms of those agreements.
7.2 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The
obligation of Buyer to consummate the transactions contemplated by this
Agreement are also subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) The representations and warranties contained in Article 3, to the
extent qualified as to materiality shall be accurate in all respects, and, to
the extent not so qualified, shall be accurate in all material respects, as of
the Closing Date as though such representations and warranties had been made at
and as of that time; all of the terms, covenants and conditions of this
Agreement to be complied with and performed by Sellers on or before the Closing
Date shall have been duly complied with and performed in all material respects,
and a certificate to the foregoing effect dated the Closing Date and signed by
an authorized executive officer shall have been delivered by each Seller to
Buyer;
(b) The Assets shall not have been materially damaged requiring repair or
replacement costs exceeding $100,000, and Sellers shall not have received notice
of any condemnation proceeding affecting the Assets;
(c) No Seller Material Adverse Effect shall have occurred and be
continuing; and
(d) Each of the parties to the Black Marlin Pipeline Transaction shall
have consummated that transaction.
7.3 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The
obligation of Sellers to consummate the transactions contemplated by this
Agreement are also subject to the fulfillment at or prior to the Closing Date of
the condition that the representations and warranties of Buyer contained in
Article 4 shall be accurate in all material respect as of the Closing Date as
though such representations and warranties had been made at and as of that time;
all the terms, covenants and conditions of this Agreement to be complied with
and performed by Buyer on or before the Closing Date shall have been duly
complied with and performed in all material respects, and a certificate to the
foregoing effect dated the Closing Date and signed by an authorized executive
officer of Buyer shall have been delivered to Sellers.
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ARTICLE 8
INDEMNIFICATION AND ASSUMPTION
8.1 BY SELLERS. SUBJECT TO THE TERMS AND CONDITIONS OF THIS ARTICLE 8,EACH
SELLER HEREBY AGREES, SEVERALLY AND NOT JOINTLY, TO INDEMNIFY, DEFEND AND HOLD
HARMLESS BUYER AND ITS AFFILIATES AND ITS AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, SHAREHOLDERS AND EMPLOYEES (COLLECTIVELY, THE "BUYER PARTIES"), FROM
AND AGAINST THE FOLLOWING (COLLECTIVELY, THE "BUYER INDEMNIFIED LIABILITIES"):
ANY CLAIM INDIVIDUALLY CONSTITUTING A LOSS IN EXCESS OF $10,000 ASSERTED
AGAINST, IMPOSED UPON, OR INCURRED BY ANY BUYER PARTY, DIRECTLY OR INDIRECTLY,
BY REASON OF, ARISING OUT OF, OR RESULTING FROM (A) THE INACCURACY OR BREACH OF
ANY REPRESENTATION OR WARRANTY MADE BY SUCH SELLER IN ARTICLE 3 OF THIS
AGREEMENT; OR (B) THE BREACH OF ANY COVENANT OR AGREEMENT OF SUCH SELLER
CONTAINED IN THIS AGREEMENT; OR (C) THE OPERATION AND OWNERSHIP OF THE ASSETS
PRIOR TO THE EFFECTIVE DATE, OTHER THAN LITIGATION MATTERS DISCLOSED IN THE
DISCLOSURE SCHEDULE; OR (D) ANY TAXES RELATED TO THE ASSETS FOR PRE-CLOSING
PERIODS; PROVIDED, NONE OF THE BUYER PARTIES SHALL BE ENTITLED TO ASSERT RIGHTS
OF INDEMNIFICATION BY SELLERS UNDER THIS ARTICLE 8 FOR BUYER INDEMNIFIED
LIABILITIES PURSUANT TO CLAUSES (A) OR (B) UNLESS AND UNTIL THE AGGREGATE OF ALL
SUCH BUYER INDEMNIFIED LIABILITIES EXCEEDS $100,000 (IT BEING UNDERSTOOD THAT
SUCH BUYER INDEMNIFIED LIABILITIES SHALL ACCUMULATE UNTIL SUCH TIME OR TIMES AS
THE AGGREGATE OF ALL SUCH BUYER INDEMNIFIED LIABILITIES EXCEEDS $100,000,
WHEREUPON THE BUYER PARTIES SHALL BE ENTITLED TO INDEMNIFICATION BY SELLERS
HEREUNDER TO THE EXTENT OF SUCH EXCESS); PROVIDED, FURTHER, THAT SELLERS'
MAXIMUM INDEMNIFICATION OBLIGATIONS UNDER CLAUSES (A), (B) AND (C) OF THIS
SECTION 8.1 SHALL BE CAPPED AT AN AGGREGATE AMOUNT EQUAL TO TWENTY-FIVE PERCENT
(25%) OF THE PURCHASE PRICE (THE "CAP"), PROVIDED THAT THE CAP FOR A SELLER
SHALL BE INCREASED TO ITS PRO-RATA SHARE OF THE PURCHASE PRICE WITH RESPECT TO
ANY OBLIGATIONS DIRECTLY ARISING FROM THE KNOWING AND INTENTIONAL BREACH BY THAT
SELLER OF A REPRESENTATION OR WARRANTY.
8.2 BY BUYER. SUBJECT TO THE TERMS AND CONDITIONS OF THIS ARTICLE 8, BUYER
HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS SELLERS AND THEIR
AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, SHAREHOLDERS AND EMPLOYEES
(COLLECTIVELY, "SELLER PARTIES"), FROM AND AGAINST THE FOLLOWING (COLLECTIVELY,
THE "SELLER INDEMNIFIED LIABILITIES"): ANY CLAIM INDIVIDUALLY CONSTITUTING A
LOSS ASSERTED AGAINST, IMPOSED UPON OR INCURRED BY ANY OF THE SELLER PARTIES,
DIRECTLY OR INDIRECTLY, BY REASON OF, ARISING OUT OF OR RESULTING FROM (A) THE
INACCURACY OR BREACH OF ANY REPRESENTATION OR WARRANTY OF BUYER IN ARTICLE 4 OF
THIS AGREEMENT; OR (B) THE BREACH OF ANY COVENANT OR
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AGREEMENT OF BUYER CONTAINED IN THIS AGREEMENT; OR (C) THE OPERATION AND
OWNERSHIP OF THE ASSETS ON OR AFTER THE EFFECTIVE DATE; (D) ANY TAXES OF SELLERS
RELATING TO POST-CLOSING PERIODS; OR (E) ANY LITIGATION MATTERS DISCLOSED ON THE
DISCLOSURE SCHEDULE.
8.3 EXPRESS NEGLIGENCE RULE. WITHOUT LIMITING OR ENLARGING THE SCOPE OF
THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED
PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE
TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH
INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE
NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF OR BY SUCH INDEMNIFIED
PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
8.4 EXCEPTIONS AND LIMITATIONS. NOTWITHSTANDING ANYTHING TO THE CONTRARY
SET FORTH IN SECTION 8.1, BUYER INDEMNIFIED LIABILITIES SHALL NOT INCLUDE ANY
AND ALL CLAIMS TO THE EXTENT SAME ARE ATTRIBUTABLE TO A BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF BUYER UNDER THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN SECTION 8.2, SELLER
INDEMNIFIED LIABILITIES SHALL NOT INCLUDE ANY AND ALL CLAIMS TO THE EXTENT SAME
ARE ATTRIBUTABLE TO A BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR
AGREEMENT OF SELLERS UNDER THIS AGREEMENT.
8.5 NOTICE OF CLAIM. (A) FOR PURPOSES OF THIS ARTICLE 8, THE TERM
"INDEMNIFYING PARTY" WHEN USED IN CONNECTION WITH A PARTICULAR CLAIM SHALL MEAN
THE PARTY HAVING AN OBLIGATION TO INDEMNIFY ANOTHER PARTY WITH RESPECT TO SUCH
CLAIM PURSUANT TO THIS ARTICLE 8, AND THE TERM "INDEMNIFIED PARTY" WHEN USED IN
CONNECTION WITH A PARTICULAR CLAIM SHALL MEAN THE PARTY HAVING THE RIGHT TO BE
INDEMNIFIED WITH RESPECT TO SUCH CLAIM BY ANOTHER PARTY PURSUANT TO THIS ARTICLE
8.
(B) PROMPTLY AFTER ANY INDEMNIFIED PARTY BECOMES AWARE OF FACTS GIVING
RISE TO A CLAIM BY IT FOR INDEMNIFICATION PURSUANT TO THIS ARTICLE 8, SUCH
INDEMNIFIED PARTY WILL PROVIDE NOTICE THEREOF IN WRITING TO THE INDEMNIFYING
PARTY (A "CLAIM NOTICE") SPECIFYING THE NATURE AND SPECIFIC BASIS FOR SUCH CLAIM
AND A COPY OF ALL PAPERS SERVED WITH RESPECT TO SUCH CLAIM (IF ANY). FOR
PURPOSES OF THIS SECTION 8.5(B), RECEIPT BY A PARTY OF WRITTEN NOTICE OF ANY
DEMAND, ASSERTION, CLAIM, ACTION OR PROCEEDING (JUDICIAL, ADMINISTRATIVE OR
OTHERWISE) BY OR FROM ANY PERSON OR ENTITY OTHER THAN A PARTY TO THIS AGREEMENT
WHICH GIVES RISE TO A CLAIM ON BEHALF OF SUCH PARTY SHALL CONSTITUTE THE
DISCOVERY OF FACTS GIVING RISE TO A CLAIM BY IT AND SHALL REQUIRE PROMPT NOTICE
OF THE RECEIPT OF SUCH MATTER AS PROVIDED IN THE FIRST SENTENCE OF THIS SECTION
8.5(B). EACH CLAIM NOTICE SHALL SET FORTH A REASONABLE DESCRIPTION OF THE CLAIM
AS THE INDEMNIFIED PARTY SHALL THEN HAVE AND SHALL CONTAIN A
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STATEMENT TO THE EFFECT THAT THE INDEMNIFIED PARTY GIVING THE NOTICE IS MAKING A
CLAIM PURSUANT TO, AND FORMAL DEMAND FOR INDEMNIFICATION UNDER, THIS ARTICLE 8.
THE CLAIM NOTICE MUST SET FORTH THE PARTICULAR PROVISION IN THIS ARTICLE 8 AND
ANY RELATED PROVISION IN THIS AGREEMENT PURSUANT TO WHICH SUCH INDEMNIFICATION
CLAIM IS MADE. FOR EXAMPLE, IF AN INDEMNIFIED PARTY ELECTS TO ASSERT AN
INDEMNIFICATION CLAIM FOR BREACH OF THE INDEMNIFYING PARTY'S REPRESENTATION, THE
INDEMNIFIED PARTY'S CLAIM NOTICE WOULD PROVIDE THAT THE CLAIM IS ASSERTED UNDER
SECTION 8.1(A) OR 8.2(A), AS APPLICABLE, AND THAT THE REPRESENTATION ALLEGEDLY
BREACHED IS, FOR EXAMPLE, THE LITIGATION REPRESENTATION CONTAINED IN SECTION 3.6
OR 4.7, AS APPLICABLE. NOTWITHSTANDING THE FOREGOING HOWEVER, THE FAILURE OF THE
INDEMNIFIED PARTY TO TIMELY PROVIDE A CLAIM NOTICE SHALL NOT EXCUSE THE
INDEMNIFYING PARTY FROM ITS OBLIGATION TO PROVIDE INDEMNIFICATION HEREUNDER
UNLESS SUCH FAILURE MATERIALLY IMPAIRS THE ABILITY OF THE INDEMNIFYING PARTY TO
MITIGATE OR DEFEND SUCH CLAIM.
8.6 THIRD-PARTY CLAIMS. (A) IF AN INDEMNIFIED PARTY SHALL HAVE ANY
THIRD-PARTY CLAIM ASSERTED AGAINST SUCH INDEMNIFIED PARTY, THE INDEMNIFIED PARTY
PROMPTLY SHALL TRANSMIT TO THE INDEMNIFYING PARTY A CLAIM NOTICE RELATING TO
SUCH THIRD PARTY CLAIM. PRIOR TO THE EXPIRATION OF THE 45-DAY PERIOD FOLLOWING
THE INDEMNIFYING PARTY'S RECEIPT OF SUCH NOTICE (THE "ELECTION PERIOD"), THE
INDEMNIFYING PARTY SHALL NOTIFY THE INDEMNIFIED PARTY (1) WHETHER THE
INDEMNIFYING PARTY DISPUTES ITS POTENTIAL LIABILITY TO THE INDEMNIFIED PARTY
UNDER THIS ARTICLE 8 WITH RESPECT TO SUCH THIRD-PARTY CLAIM AND (II) WHETHER THE
INDEMNIFYING PARTY ELECTS, AT THE SOLE COST AND EXPENSE OF SUCH INDEMNIFYING
PARTY, TO DEFEND THE INDEMNIFIED PARTY AGAINST SUCH THIRD-PARTY CLAIM.
(B) IF AN INDEMNIFYING PARTY NOTIFIES AN INDEMNIFIED PARTY WITHIN THE
ELECTION PERIOD THAT THE INDEMNIFYING PARTY DOES NOT DISPUTE ITS POTENTIAL
LIABILITY TO THE INDEMNIFIED PARTY UNDER THIS ARTICLE 8 AND THAT THE
INDEMNIFYING PARTY ELECTS TO ASSUME THE DEFENSE OF THE THIRD-PARTY CLAIM, THEN
THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO DEFEND, AT ITS SOLE COST AND
EXPENSE, SUCH THIRD-PARTY CLAIM BY ALL APPROPRIATE PROCEEDINGS, WHICH
PROCEEDINGS SHALL BE PROSECUTED DILIGENTLY BY THE INDEMNIFYING PARTY TO A FINAL
CONCLUSION OR SETTLED AT THE DISCRETION OF THE INDEMNIFYING PARTY IN ACCORDANCE
WITH THIS SECTION 8.6(B). THE INDEMNIFYING PARTY SHALL HAVE FULL CONTROL OF SUCH
DEFENSE AND PROCEEDINGS, INCLUDING ANY COMPROMISE OR SETTLEMENT THEREOF. IF
REQUESTED BY THE INDEMNIFYING PARTY, THE INDEMNIFIED PARTY AGREES TO COOPERATE
FULLY WITH THE INDEMNIFYING PARTY AND ITS COUNSEL AT THE INDEMNIFYING PARTY'S
EXPENSE IN CONTESTING ANY THIRD-PARTY CLAIM THAT THE INDEMNIFYING PARTY ELECTS
TO CONTEST, INCLUDING, WITHOUT LIMITATION, THE MAKING OF ANY RELATED
COUNTERCLAIM AGAINST THE PERSON ASSERTING THE THIRD-PARTY CLAIM OR ANY
CROSS-COMPLAINT AGAINST ANY
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PERSON. THE INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO PARTICIPATE IN, BUT NOT
CONTROL, ANY DEFENSE OR SETTLEMENT OF ANY THIRD-PARTY CLAIM CONTROLLED BY THE
INDEMNIFYING PARTY PURSUANT TO THIS SECTION 8.6(B) AND SHALL BEAR ITS OWN COSTS
AND EXPENSES WITH RESPECT TO ANY SUCH PARTICIPATION.
8.7 SUBROGATION. IN THE EVENT THAT ANY INDEMNIFIED PARTY HAS A RIGHT
AGAINST A THIRD PARTY WITH RESPECT TO ANY DAMAGES, LOSSES, COSTS OR EXPENSES
PAID TO SUCH INDEMNIFIED PARTY BY AN INDEMNIFYING PARTY, THEN SUCH INDEMNIFYING
PARTY SHALL, TO THE EXTENT OF SUCH PAYMENT, BE SUBROGATED TO THE RIGHT OF SUCH
INDEMNIFIED PARTY.
8.8 EXCLUSIVE REMEDIES; SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
LIMITATION OF CERTAIN LIABILITIES.
(A) BUYER AND SELLERS (I) AGREE THAT ONLY ACTUAL DAMAGES SHALL BE
RECOVERABLE UNDER THIS AGREEMENT AND (II) HEREBY WAIVE ANY RIGHT TO RECOVER
SPECIAL, PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR EXEMPLARY DAMAGES EXCEPT TO THE
EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD-PARTY IN
CONNECTION WITH A THIRD-PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE
RECOVERABLE PURSUANT TO THE TERMS OF THIS ARTICLE. NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS AGREEMENT, THE INDEMNIFICATION PROVISIONS OF THIS ARTICLE 8
SHALL BE THE EXCLUSIVE REMEDIES FOR ANY CLAIM BASED UPON THIS AGREEMENT OR THE
TRANSACTIONS DESCRIBED HEREIN FOLLOWING CLOSING. IN FURTHERANCE OF THE
FOREGOING, ALL OTHER REMEDIES AVAILABLE AT LAW OR IN EQUITY, IN TORT, CONTRACT
OR OTHERWISE ARE HEREBY WAIVED, RELEASED AND DISCHARGED BY SELLERS AND BUYER. NO
CLAIM OF ANY NATURE CAN BE BROUGHT BY ANY BUYER PARTY OR SELLER PARTY UNLESS
WRITTEN NOTICE OF SUCH CLAIM HAS BEEN GIVEN IN ACCORDANCE WITH ARTICLE 8 AS
FOLLOWS: (A) ON OR BEFORE THE SECOND ANNIVERSARY OF THE CLOSING DATE WITH
RESPECT TO ANY BUYER INDEMNIFIED LIABILITIES UNDER SECTION 8.1(A), (B) OR (C),
AND ANY SELLER INDEMNIFIED LIABILITIES UNDER 8.2(A), (B) OR (C); AND (B) WITHIN
THE APPLICABLE STATUTE OF LIMITATIONS, INCLUDING EXTENSIONS, WITH RESPECT TO
BUYER INDEMNIFIED LIABILITIES UNDER SECTION 8.1(D) AND SELLER INDEMNIFIED
LIABILITIES UNDER SECTION 8.2(D). INDEMNITY OBLIGATIONS OF ANY INDEMNIFYING
PARTY SHALL BE REDUCED BY ANY INSURANCE PROCEEDS REALIZED BY ANY INDEMNIFIED
PARTY, EXCEPT ANY PAYMENTS RECEIVED PURSUANT TO AN INSURANCE PROGRAM UNDER WHICH
THE INDEMNIFIED PARTY OR ANY OF ITS AFFILIATES BEARS THE ULTIMATE COST OF SUCH
CLAIM.
(B) NEITHER BUYER PARTIES NOR SELLER PARTIES MAY ASSERT ANY CLAIM UNDER
THIS ARTICLE 8 BASED ON FACTS CONSTITUTING A BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES HEREUNDER TO THE EXTENT SUCH PERSON HAD ACTUAL
KNOWLEDGE OF
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SUCH FACTS PRIOR TO THE CLOSING DATE, PROVIDED THAT A PARTY HERETO
WILL BE DEEMED TO HAVE KNOWLEDGE OF INFORMATION ALLEGEDLY DISCLOSED TO IT BY THE
OTHER PARTY ONLY IF SUCH ALLEGED DISCLOSURE WAS MADE IN WRITING.
8.9 WAIVER OF TEXAS DTPA. IT IS THE INTENT OF THE PARTIES THAT BUYER'S
RIGHTS AND REMEDIES WITH RESPECT TO THIS TRANSACTION AND WITH RESPECT TO ALL
ACTS OR PRACTICES OF SELLERS, PAST, PRESENT OR FUTURE, IN CONNECTION WITH THIS
TRANSACTION SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER THAN THE TEXAS DECEPTIVE
TRADE PRACTICES - CONSUMER PROTECTION ACT, TEX. BUS. & COM. CODE ANN. " 17.41 ET
SEQ. (VERNON 1987 AND SUPP. 1994) (THE "DTPA"). AS SUCH, BUYER HEREBY WAIVES THE
APPLICABILITY OF THE DTPA TO THIS TRANSACTION AND ANY AND ALL DUTIES, RIGHTS OR
REMEDIES THAT MIGHT BE IMPOSED BY THE DTPA, WHETHER SUCH DUTIES, RIGHTS OR
REMEDIES ARE APPLIED DIRECTLY BY THE DTPA ITSELF OR INDIRECTLY IN CONNECTION
WITH OTHER STATUTES: PROVIDED, HOWEVER, BUYER DOES NOT WAIVE SECTION 17.555 OF
THE DTPA. BUYER ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IT IS PURCHASING THE
ASSETS COVERED BY THIS AGREEMENT FOR COMMERCIAL OR BUSINESS USE; THAT BUYER HAS
ASSETS OF FIVE MILLION DOLLARS ($5,000,000) OR MORE ACCORDING TO ITS MOST RECENT
FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES; THAT BUYER HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF A TRANSACTION SUCH AS
THIS; AND THAT IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
SELLERS. BUYER EXPRESSLY RECOGNIZES THAT THE PRICE FOR WHICH THE SELLERS HAVE
AGREED TO SELL THE ASSETS AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT HAS
BEEN PREDICATED UPON THE INAPPLICABILITY OF THE DTPA AND THIS WAIVER OF THE
DTPA. BUYER FURTHER RECOGNIZES THAT SELLERS, IN DETERMINING TO ENTER INTO THIS
AGREEMENT, HAVE EXPRESSLY RELIED ON THIS WAIVER AND THE INAPPLICABILITY OF THE
DTPA.
ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby abandoned as follows:
(a) By the mutual written consent of Buyer and Sellers at any time prior
to the Closing;
(b) By Buyer or Sellers if a final, non-appealable order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered; or
(c) By Buyer or Sellers if the Closing shall not have occurred on or
before March 31, 2001, so long as the terminating party is not in material
breach of any representation, warranty or covenant contained in this Agreement.
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9.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 9.1, (i) Sellers and Buyer shall have no
obligation or liability to each other except that the provisions of Section 5.1
and Section 5.8 shall survive any such termination, (ii) nothing herein and no
termination pursuant hereto will relieve any party from liability for any breach
of this Agreement prior to such termination or, with respect to those provisions
that survive such termination, prior to or following termination, and (iii)
Buyer's sole remedy for termination of this Agreement arising out of amendment
to the Disclosure Schedule and other schedules to reflect Material Items shall
be the remedy set forth in Section 5.8(b).
ARTICLE 10
TAX MATTERS
10.1 GENERAL. All monies, proceeds, receipts, credits and income
attributable to the Assets for the period of time subsequent to the Effective
Date shall be, subject to Closing, the sole property and entitlement of Buyer
and, to the extent received by Seller, Seller shall fully disclose, account for
and transmit same to Purchaser promptly. After the date of Closing, Buyer shall
be responsible for all ordinary operating expenses attributable to periods of
time subsequent to the Effective Date and to the extent any such expenses have
been or are paid by Seller, Buyer shall promptly reimburse Seller for and hold
Seller harmless from and against the same.
10.2 APPORTIONMENT. All taxes, other than sales tax, on the ownership or
operation of the Assets, excluding income or franchise taxes, but including real
estate taxes, personal property taxes and ad valorem taxes, for the tax period
in which closing occurs, shall be apportioned on a pro rata basis for such tax
period as of the Effective Date. Any party which subsequently pays any such
taxes which are the responsibility of the other party shall be entitled to
prompt reimbursement upon issuance to the responsible party or evidence of such
payment.
10.3 ACCESS TO INFORMATION. (a) Sellers shall grant to Buyer (or its
designee) access at all reasonable times to all of the information, books and
records relating to the Assets within the possession of Sellers (including work
papers and correspondence with taxing authorities), and shall afford Buyer (or
its designee) the right (at Buyer's expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities.
(b) Buyer shall grant to Sellers (or their designees) access at all
reasonable times to all of the information, books and records relating to the
Assets within the possession of Buyer (including work papers and correspondence
with taxing authorities), and shall afford Sellers (or their designees) the
right (at Seller's expense) to take extracts therefrom and to make copies
thereof, to the extent reasonably necessary to permit Sellers (or their
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities.
10.5 ASSISTANCE AND COOPERATION. After the Closing Date, in the case of
any audit, examination or other proceeding ("Proceeding") with respect to Taxes
for which Sellers are or may be liable pursuant to this Agreement, Buyer shall
inform Sellers (within 15 days of the receipt of a notice of such Proceeding),
and shall afford Sellers, at Sellers' expense, the opportunity to control the
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conduct of such Proceedings. Buyer shall execute or cause to be executed powers
of attorney or other documents necessary to enable Sellers to take all actions
desired by Sellers with respect to such Proceeding to the extent such Proceeding
may affect either the amount of Taxes for which Sellers are liable pursuant to
this Agreement. Sellers shall have the right to control any such Proceedings,
and, if there is reasonable authority therefor, to initiate any claim for
refund, file any amended return or take any other action which they deem
appropriate with respect to such Taxes. Notwithstanding the foregoing, Sellers
shall not enter into any closing agreement (as defined in Section 7121 of the
Code, or any comparable provisions of state, county, local, or foreign law)
which is binding on Buyer or Buyer's affiliates for any taxable period ending
after the Closing Date, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Further, Sellers shall not agree to
any settlement concerning Taxes for any taxable period ending on or before the
Closing Date, which settlement may result in an increase in Taxes for any
taxable period ending after the Closing Date, without prior written consent of
Buyer. Any proceeding with respect to Taxes for a period which includes but does
not end on the Closing Date shall be controlled jointly by Sellers and Buyer.
ARTICLE 11
MISCELLANEOUS
11.1 EXPENSES. Sellers and Buyer shall bear and pay all of their own costs
and expenses incurred in connection with the transactions contemplated by this
Agreement.
11.2 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the Party that is entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing properly signed on behalf of each Party hereto. The waiver
by any Party hereto of any condition or of a breach of another provision of this
Agreement shall not operate or be construed as a waiver of any other condition
or subsequent breach. The waiver by any Party hereto of any of the conditions
precedent to its obligations under this Agreement shall not preclude it from
seeking redress for breach of this Agreement other than with respect to the
condition so waived.
11.3 PUBLIC STATEMENT. Sellers and Buyer agree to consult with, and obtain
the approval of (which approval will not be unreasonably withheld), each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation and
approval, except as may be required by law.
11.4 ASSIGNMENT. This Agreement shall inure to the benefit of and will be
binding upon the Parties hereto and their respective legal representatives,
successors and permitted assigns.
11.5 NOTICES. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
in person or by courier, (b) sent by telecopy or facsimile transmission, answer
back requested, or (c) mailed by registered or certified mail, postage prepaid,
return receipt requested, to the parties at the following addresses:
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if to BDPC: Blue Dolphin Pipeline Company
801 Travis, Suite 2100
Houston, Texas 77002
Fax: (713) 227-7626
Attention: President
if to WBI: WBI Southern, Inc.
1250 West Century Avenue
Bismarck, North Dakota 58501-5601
Fax: (701) 222-7607
Attention: Darwin Subart
if to MCNIC: MCNIC Offshore Pipeline & Processing Company
150 West Jefferson, Suite 1600
Detroit, Michigan 48226
Fax: (313) 965-0009
Attention: Daniel L. Schiffer
if to Buyer: Williams Field Services - Gulf Coast Company, L.P.
2800 Post Oak Blvd.
P.O. Box 1396
Houston, TX 77251-1396
Fax: (713) 215-3050
Attention: Dan McVay
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 11.5. Such notice shall be
effective, (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, the date of delivery as shown by
the return receipt therefor.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CHOICE OF LAW
RULES THAT MAY DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
11.7 FURTHER ASSURANCES. In case at any time after the Closing Date any
further action is necessary to carry out the purposes of this Agreement
including, without limitation, obtaining all Customary Post-Closing Consents,
Sellers and Buyer will take or cause to be taken such further action (including
the execution and delivery of such further instruments and documents) as the
other party reasonably may request all without further consideration.
11.8 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and
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shall in no way be affected, impaired or invalidated unless such an
interpretation would materially alter the rights and privileges of any party
hereto or materially alter the terms of the transactions contemplated hereby.
11.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
11.10 HEADINGS. The section headings herein are for convenience only and
shall not affect the construction hereof.
11.11 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
including the Exhibits hereto and the Disclosure Schedule, and any other
documents executed and delivered pursuant to this Agreement and the
Confidentiality Agreement constitute the entire agreements and supersede all
other prior agreements and understandings, both oral and written, between the
Parties, with respect to the subject matter hereof. Except as provided in
Article 8 hereof, neither this nor any document delivered in connection with
this Agreement, confers upon any person not a party hereto any rights or
remedies hereunder.
11.12 DISPUTE RESOLUTION. The Parties agree to submit any dispute arising
out of this Agreement to mediation in the city of Houston, Texas in accordance
with the CPR Center for Dispute Resolution Rules for Commercial Mediation, prior
to pursuing their remedies in a court of law.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
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SELLERS:
BLUE DOLPHIN PIPE LINE COMPANY
By:/S/ BRIAN LLOYD
Name: Brian Lloyd
Title: Vice President, Treasurer
WBI SOUTHERN, INC.
By:/S/ DARWIN SUBART
Name: Darwin Subart
Title: Executive Vice President and General
Manager
MCNIC OFFSHORE PIPELINE & PROCESSING COMPANY
By:/S/ JOSEPH L. ROBERTS
Name: Joseph L. Roberts
Title: Vice President
BUYER:
WILLIAMS FIELD SERVICES - GULF COAST
COMPANY, L.P.
By Williams Field Services Company,
its Managing General Partner
By:/S/ DAN MCVAY
Name: Dan McVay
Title: Director Commercial Operation Gulf
Coast
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