EXHIBIT 10.33
ASSET PURCHASE AGREEMENT
This Agreement is made and entered into on the 25th day of February, 1999,
by and among Black Marlin Pipeline Company, a Texas corporation ("Seller"),
Black Marlin Energy Company, a Delaware corporation ("BMEC") and MCNIC Offshore
Pipeline & Processing Company, a Michigan corporation ("Buyer").
WITNESSETH:
WHEREAS, the Seller owns certain natural transmission assets located in
the Gulf of Mexico offshore Texas and onshore in Galveston County, Texas and
related offshore separation storage and dehydration facilities more particularly
described on Exhibit A;
WHEREAS, BMEC has entered into that certain Purchase and Sale Agreement
with Enron Pipeline Company ("Enron") and Blue Dolphin Energy Company ("BDEC")
dated September 28, 1998 (the "Enron Agreement"), pursuant to which BMEC has
agreed to purchase, and Enron has agreed to sell, all of the outstanding stock
of Seller (the "Black Marlin Purchase");
WHEREAS, effective upon the closing of the Black Marlin Purchase (the
"Black Marlin Closing"), BMEC desires for the Seller to sell to Buyer, and Buyer
desires to acquire from Seller, an undivided 1/3 interest in the operating
assets of Seller; and
WHEREAS, effective upon the Black Marlin Closing, BMEC desires for WBI
Southern, Inc., a Delaware corporation ("WBI"), to purchase an undivided 1/6
interest in the operating assets of Seller.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and the benefits to be derived herefrom, the parties hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.01 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and the
conditions set forth in this Agreement, as of the Effective Time (as defined in
Section 1.03) Seller will sell to Buyer, and Buyer will purchase from Seller, an
undivided 1/3 interest in and to:
(a) the Assets, as defined in the Enron Agreement, as amended; and
(b) the High Island Lateral, as defined in the Enron Agreement.
The undivided 1/3 interests to be acquired by Buyer pursuant to this
Section are sometimes referred to herein collectively as the "Purchased
Interests" or singularly as a "Purchased Interest".
1.02 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Purchased Interests shall be (i) the payment of $1,801,423.33 in cash
(the "Payment"), (ii) the assumption by Buyer of the Assumed Obligations (as
defined in Section 5.01) and (iii) the reimbursement by Buyer to Seller of 1/3
of the out of pocket costs incurred by Seller in connection with this
transaction and the Black Marlin Purchase (which share equals approximately
$31,000) (the "Cost Reimbursement"). The Purchase Price shall be allocated to
Class III assets as defined in Temporary Treasury Regulation Section
1.1060-1T(d)(2)(ii) and among the Purchased Interests in the manner set forth in
Schedule 1.02.
1.03 EFFECTIVE TIME. The transfer of the ownership of the Purchased
Interests shall be effective as of 9:00 a.m., Central Daylight Time (the
"Effective Time") on the date of the Black Marlin Closing. All sums owing on
account of the ownership, operation, or use of the Purchased Interests prior to
the Effective Time shall be for the account of and charged to the Seller, and
all sums owing on account of the ownership, operation, or use of the Purchased
Interests on or after the Effective Time shall be charged to and for the account
of Buyer. The Seller shall be entitled to any and all revenues, refunds, sums or
amounts attributable to the ownership, operation, or use of the Purchased
Interests prior to the Effective Time. Buyer shall be entitled to any and all
revenues, refunds, sums or amounts attributable to the ownership, operation, or
use of the Purchased Interests on and after the Effective Time. Nothing set
forth in this Section 1.03 shall be construed, however, to supersede any
agreements made pursuant to the Operating Agreement (as hereafter defined) with
respect to the operation of the Assets subsequent to the Effective Time, which
shall be controlling for all such purposes. For purposes of this Section 1.03,
(i) revenues shall be treated as realized with respect to the storage of crude
oil, condensate, and natural gas liquids prior to the Effective Time to the
extent such liquids were in storage in or on the Assets at the Effective Time
and (ii) such liquids shall be deemed delivered from storage on a "FIFO" basis.
1.04 OTHER AGREEMENTS. Seller, Buyer and WBI are entering into on the date
hereof (i) an operating agreement in the form attached hereto as Exhibit 1.04(i)
(the "Operating Agreement"), and (ii) a Purchase Rights and Participation
Agreement in the form attached hereto as Exhibit 1.04(ii) (the "Purchase Rights
Agreement").
ARTICLE II
CLOSING
2.01 THE CLOSING. The closing of the transactions contemplated by this
Agreement ("Closing") is occurring simultaneously with the execution of this
Agreement. The Buyer and the Seller have entered into and delivered on the date
hereof the instruments and agreements necessary to effect the transaction
contemplated pursuant to Article I, including but not limited to the Operating
Agreement and the Purchase Rights Agreement (the "Closing Documents").
2.02 EFFECT OF CLOSING. The Closing will only be effective on, and is
contingent upon, the Black Marlin Closing. The individual who has executed this
Agreement and the Closing Documents on behalf of Seller has done so in
anticipation of being elected as an officer of the Seller effective as of the
Black Marlin Closing. Regardless of the foregoing, however, Buyer agrees not to
revoke its execution of any of the Closing Documents.
2.03 FUNDING. Immediately upon the Black Marlin Closing, Buyer will wire
transfer the Payment and the Cost Reimbursement in the manner designated by
Seller.
ARTICLE III
ADDITIONAL COVENANTS
3.01 TAX MATTERS.
(a) Buyer shall pay all transfer taxes, including without limitation,
sales, use, excise (including excise taxes on petroleum, products of petroleum,
petrochemicals, chemicals, and other taxable substances), stamp, documentary,
filing, recording, permit, license, authorization, and other similar taxes,
filing fees and similar charges ("Transfer Taxes"), incurred or imposed in
connection with or as a result of the transactions effected pursuant to this
Agreement regardless of upon whom such Transfer Tax is levied or imposed by law.
Buyer shall prepare and file all returns and reports for such Transfer Taxes.
Should any of the Seller be required by law to pay such Transfer Tax, Buyer
shall notify the appropriate Seller of such amount and the due dates thereof and
remit the amount of such Transfer Tax and pre-prepared filings associated
therewith to the Seller for remittance at least ten days before such Transfer
Tax is due.
(b) The Seller and Buyer agree that the Purchase Price shall be allocated
among the Purchased Interests in the manner set forth in Schedule 3.01. Each
party agrees to complete IRS Form 8594 consistently with the agreed allocation
and to furnish the other party with a draft copy of such form within a
reasonable period before the filing due date of such form. Neither the Seller
nor Buyer shall file any return with a tax authority that is inconsistent with
such allocation.
3.02 THIRD PARTY CONSENTS. After the Black Marlin Closing, the Seller and
Buyer shall use their respective reasonable best efforts to obtain all consents,
approvals, orders, authorizations, and waivers of, and to effect all
declarations, filings, and registrations with, all third parties (including
governmental entities) that are necessary or required to enable the Seller to
transfer the Purchased Interests to Buyer as contemplated by this Agreement and
to otherwise consummate the transactions contemplated hereby such as the costs
and expenses of obtaining the approval of the Federal Regulatory Commission
("FERC") of this transaction. All costs and expenses of obtaining or effecting
any and all of the consents, approvals, orders, authorizations, waivers,
declarations, filings, and registrations referred to in this Section shall be
borne by the Seller, provided, however, that the foregoing shall not affect the
obligation of Buyer to pay recording costs and such expenses as required to
comply with regulatory requirements imposed by the Federal Energy Regulatory
Commission and the Minerals Managements Service with respect to this
transaction.
3.03 RIGHTS UNDER THE ENRON AGREEMENT. BMEC and the Seller hereby assigns
to Buyer, effective as of the Black Marlin Closing, an undivided 1/3 interest in
all of the rights of BMEC and Seller under the Enron Agreement, including but
not limited to the right of BMEC and the Seller to receive indemnification from
Enron with respect to certain matters (the "Enron Indemnification Rights") and
Buyer hereby assumes, as of the Closing a proportionate amount of the
obligations of BMEC under the Agreement, including but not limited to the
obligation to
resell up to a 33 1/3% undivided interest in the Purchased Interests to Enron
pursuant to Section 5.13 of the Enron Agreement.
ARTICLE IV
ASSUMPTION AND INDEMNIFICATION
As of the Effective Time, Buyer shall assume and agree to pay, perform,
and discharge or cause to be paid, performed, and discharged all duties,
obligations, and liabilities (the "Assumed Obligations") arising out of, in
connection with, or otherwise in respect of the ownership or operation of the
Purchased Interests, whether primary or secondary, fixed or contingent,
including but not limited to a pro rata portion of the duties, obligations, and
liabilities of the Seller under the contracts and agreements referenced in
schedules and exhibits to the Enron Agreement, subject to the Enron
Indemnification Rights.
ARTICLE V
MISCELLANEOUS
5.01 DUE DILIGENCE REVIEW. Buyer acknowledges that it has assumed the
responsibility for conducting its own due diligence review with respect to the
Assets and the High Island Lateral and the transactions contemplated hereby.
Buyer acknowledges that it has been provided full access to such information as
it has requested with respect to the assets of Seller and the books, records,
facilities, leases, equipment, consultants, and personnel of the Seller and all
other matters and things sought to be examined by Buyer in connection with its
due diligence investigation, and that it has conducted its due diligence review
to its satisfaction. Buyer acknowledges that it has conducted its own
independent evaluation of any forecast or projection provided to it by any of
the Seller or their representatives, and specifically has independently
evaluated the future throughput, revenue, and expenses of the Purchased
Interests.
5.02 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
5.03 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without reference to the
conflicts of law principles thereof.
5.04 ENTIRE AGREEMENT. The Agreements and the Schedules and Exhibits
hereto supersede all prior agreements between the parties (written or oral) and,
except as aforesaid, is intended as a complete and exclusive statement of the
terms of the agreement between the parties. This Agreement may be amended only
by a written instrument duly executed by the parties.
5.05 EXPENSES. Except as expressly set forth in this Agreement, whether
the transactions contemplated hereby are or are not consummated, all legal and
other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
5.06 NOTICES. All notices hereunder shall be sufficiently given (and
deemed made) for all purposes hereunder if in writing and (a) delivered
personally, (b) sent by documented overnight delivery service, (c) to the extent
receipt is confirmed, sent by telecopy, telefax, or other electronic
transmission service to the appropriate address or number as set forth below, or
(d) sent by United States mail, postage prepaid with return receipt requested.
Notices to the Seller shall be transmitted or addressed to:
801 Travis, Suite 2100
Houston, Texas 77002
Attention: President
Telecopier No.: (713) 227-7626
with a copy to:
Doherty, Doherty & Adams, L.L.P.
1717 St. James Place, Suite 520
Houston, Texas 77056
Attention: Mr. Casey W. Doherty
Telecopier No.: (713) 572-1001
or at such other addresses or telefax numbers and to the attention of such other
person as the Seller may designate by written notice to each of the other
parties.
Notices to Buyer shall be transmitted or addressed to:
1360 Post Oak Blvd., Suite 1500
Houston, Texas 77056
Attention: Vice President
Telecopier No.: (713) 585-4860
With a copy to:
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Attention: Daniel L. Schiffer
or at such other addresses or telefax numbers and to the attention of such other
person as Buyer may designate by written notice to each of the other parties.
5.07 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party hereto may assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of each other party hereto.
5.08 HEADINGS. The section and article headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement.
5.09 SEVERABILITY. If any term or provision of this Agreement is invalid,
illegal, or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any material adverse manner
to any party. Upon such determination that any term or other provision is
invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
5.10 CROSS-REFERENCES. References in this Agreement to Articles, Sections,
Exhibits, or Schedules shall be deemed to be references to Articles, Sections,
Exhibits, and Schedules of this Agreement unless the context specifically and
expressly requires otherwise.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of
the parties as of the date first above written.
MCNIC OFFSHORE PIPELINE BLACK MARLIN PIPELINE COMPANY,
& PROCESSING COMPANY, a Texas corporation
a Michigan corporation
By:_________________________ By:___________________________________
Name:_______________________ William Fisher,
Title:________________________ Senior Vice President
BLACK MARLIN ENERGY COMPANY,
a Delaware corporation
By:___________________________________
William Fisher,
Senior Vice President