<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 1996
REGISTRATION NO. 333-11545
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GENESIS ENERGY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 5171 76-0513049
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
JURISDICTION OF CODE NUMBER)
INCORPORATION OR
ORGANIZATION)
---------------
ONE ALLEN CENTER
500 DALLAS, SUITE 3200
HOUSTON, TEXAS 77002
(713) 646-1200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JOHN VONBERG
ONE ALLEN CENTER
500 DALLAS, SUITE 3200
HOUSTON, TEXAS 77002
(713) 646-1200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
Copies to:
ANDREWS & KURTH WAYNE KUBICEK ROBERT T. MOFFETT BAKER & BOTTS,
L.L.P. GENERAL COUNSEL VICE PRESIDENT AND L.L.P.
4200 TEXAS COMMERCE BASIS PETROLEUM, GENERAL COUNSEL ONE SHELL PLAZA
TOWER INC. HOWELL CORPORATION 910 LOUISIANA
HOUSTON, TEXAS 77002 500 DALLAS 1111 FANNIN, SUITE HOUSTON, TEXAS
(713) 220-4200 SUITE 3200 1500 77002
ATTN: DAVID J. GRAHAM HOUSTON, TEXAS HOUSTON, TEXAS (713) 229-1234
77002 77002 ATTN: R. JOEL
SWANSON
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee and the NASD filing fee,
the amounts set forth below are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............ $ 68,287
NASD filing fee................................................ 20,303
NYSE listing fee............................................... 93,350
Printing and engraving expenses................................ 800,000
Legal fees and expenses........................................ 1,225,000
Accounting fees and expenses................................... 215,000
Blue Sky fees and expenses..................................... 15,000
Transfer agent fees and expenses............................... 5,000
Miscellaneous expenses......................................... 58,060
----------
Total........................................................ $2,500,000
==========
</TABLE>
ITEM 14 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Section of the Prospectus entitled "The Partnership Agreement--
Indemnification" is incorporated herein by this reference.
Reference is made to Section 8 of the Form of Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement.
Subject to any terms, conditions or restrictions set forth in the
Partnership Agreements, Section 17-108 of the Delaware Revised Uniform Limited
Partnership Act empowers a Delaware limited partnership to indemnify and hold
harmless any partner or other person from and against all claims and demands
whatsoever.
ITEM 15 RECENT SALES OF UNREGISTERED SECURITIES
There has been no sale of securities of the Partnership within the past
three years.
ITEM 16 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. Exhibits:
<TABLE>
<C> <S>
**1.1 --Form of Underwriting Agreement
*3.1 --Certificate of Limited Partnership of Genesis Energy, L.P.
("Genesis")
*3.2 --Form of Agreement of Limited Partnership of Genesis (included as
Appendix A to the Prospectus)
*3.3 --Certificate of Limited Partnership of Genesis Crude Oil, L.P. (the
"Operating Partnership")
*3.4 --Form of Agreement of Limited Partnership of the Operating Partnership
(included as Appendix B to the Prospectus)
**5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered
*8.1 --Opinion of Andrews & Kurth L.L.P. relating to tax matters
**10.1 --Form of Purchase & Sale and Contribution & Conveyance Agreement dated
as of , 1996 among Basis Petroleum, Inc. ("Basis"), Howell
Corporation ("Howell"), certain subsidiaries of Howell, Genesis, the
Operating Partnership and Genesis Energy, L.L.C.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
**10.2 --Form of Distribution Support Agreement among the Operating Partnership
and Salomon Inc
**10.3 --Form of Master Credit Support Agreement among the Operating
Partnership, Salomon Inc, and Basis
**10.4 --Form of Redemption and Registration Rights Agreement among Basis,
Howell, certain Howell subsidiaries, Genesis and the Operating
Partnership
**10.5 --Form of Corporate Services Agreement between Basis, Genesis and the
Operating Partnership
**10.6 --Non-Competition Agreement among Genesis, the Operating Partnership,
Salomon Inc, Basis and Howell
**10.7 --Form of Employment Agreement between Genesis Energy, L.L.C. and
certain executive officers
*15.1 --Letter of Arthur Andersen LLP
*23.1 --Consent of Arthur Andersen LLP
*23.2 --Consent of Deloitte & Touche llp
*23.3 --Consent of Price Waterhouse LLP
*23.4 --Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1 and
Exhibit 8.1)
*24.1 --Powers of Attorney (included on signature page)
*27.1 --Financial Data Schedule
</TABLE>
- --------
* Previously filed.
** Filed herewith.
b. Financial Statement Schedules
All financial statement schedules are omitted because the information is not
required, is not material or is otherwise included in the financial statements
or related notes thereto.
ITEM 17 UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefor,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF HOUSTON, STATE OF TEXAS, ON NOVEMBER 22, 1996.
GENESIS ENERGY, L.P.
By: Genesis Energy, L.L.C.
as General Partner
/s/ Allyn R. Skelton, II
By:__________________________________
Allyn R. Skelton, II
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED AS OF NOVEMBER 22, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
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<S> <C> <C>
Jeffrey R. Serra* Chairman of the Board of
____________________________________ Directors
Jeffrey R. Serra
John P. vonBerg* President and Director
____________________________________ (Principal Executive
John P. vonBerg Officer)
Mark J. Gorman* Executive Vice President and
____________________________________ Director
Mark J. Gorman
/s/ Allyn R. Skelton, II Chief Financial Officer
____________________________________ (Principal Financial and
Allyn R. Skelton, II Accounting Officer)
Ronald E. Hall* Director
____________________________________
Ronald E. Hall
Paul N. Howell* Director
____________________________________
Paul N. Howell
Thomas W. Jasper* Director
____________________________________
Thomas W. Jasper
</TABLE>
*By: /s/ Allyn R. Skelton, II
_______________________________
Allyn R. Skelton, II
Attorney-in-fact
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
------- ----------- ------------
<C> <S> <C>
**1.1 --Form of Underwriting Agreement
*3.1 --Certificate of Limited Partnership of Genesis Energy,
L.P. ("Genesis")
*3.2 --Form of Agreement of Limited Partnership of Genesis
(included as Appendix A to the Prospectus)
*3.3 --Certificate of Limited Partnership of Genesis Crude
Oil, L.P. (the "Operating Partnership")
*3.4 --Form of Agreement of Limited Partnership of the
Operating Partnership (included as Appendix B to the
Prospectus)
**5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality
of the securities being registered
*8.1 --Opinion of Andrews & Kurth L.L.P. relating to tax
matters
**10.1 --Form of Purchase & Sale and Contribution & Conveyance
Agreement dated as of , 1996 among Basis
Petroleum, Inc. ("Basis"), Howell Corporation
("Howell"), certain subsidiaries of Howell, Genesis,
the Operating Partnership and Genesis Energy, L.L.C.
**10.2 --Form of Distribution Support Agreement among the
Operating Partnership and Salomon Inc
**10.3 --Form of Master Credit Support Agreement among the Operating
Partnership, Salomon Inc and Basis
**10.4 --Form of Redemption and Registration Rights Agreement
among Basis, Howell, certain Howell subsidiaries, Genesis and
the Operating Partnership
**10.5 --Form of Corporate Services Agreement between Basis,
Genesis and the Operating Partnership
**10.6 --Non-Competition Agreement among Genesis, the Operating Partnership,
Salomon Inc, Basis and Howell
**10.7 --Form of Employment Agreement between Genesis Energy,
L.L.C. and certain executive officers
*15.1 --Letter of Arthur Andersen LLP
*23.1 --Consent of Arthur Andersen LLP
*23.2 --Consent of Deloitte & Touche llp
*23.3 --Consent of Price Waterhouse LLP
*23.4 --Consent of Andrews & Kurth L.L.P. (included in
Exhibit 5.1 and Exhibit 8.1)
*24.1 --Powers of Attorney (included on signature page)
*27.1 --Financial Data Schedule
</TABLE>
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* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 1.1
Genesis Energy, L.P.
7,500,000/1/
Common Units
Representing Limited Partner Interests
Form of Underwriting Agreement
November , 1996
Salomon Brothers Inc
Smith Barney Inc.
Dean Witter Reynolds Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
As Representatives of the several Underwriters
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Genesis Energy, L.P., a Delaware limited partnership (the
"Partnership"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you (the "Representatives") are acting as
representatives, 7,500,000 common units (the "Underwritten Units") representing
limited partner interests in the Partnership (the "Common Units"). The
Partnership also proposes to grant to the Underwriters an option to purchase up
to 1,125,000 additional Common Units (the "Option Units"; the Option Units,
together with the Underwritten Units, being hereinafter called the "Units").
It is further understood and agreed to by all parties that the
Partnership was formed to acquire and operate (a) substantially all the crude
oil gathering and marketing business, assets and operations of Basis Petroleum,
Inc., a Texas corporation ("Basis"), as more specifically described in the
Conveyance Agreement (defined below) (the "Basis Transferred Assets"), and (b)
substantially all the crude oil gathering, marketing and pipeline business,
assets and operations
______________________
/1/ Plus an option to purchase from Genesis Energy, L.P. up to 1,125,000
additional Common Units to cover over-allotments.
-1-
<PAGE>
of Howell Corporation, a Delaware corporation ("Howell"), Howell Crude Oil
Company, a Delaware corporation ("Howell Crude"), Howell Pipeline Texas, Inc., a
Delaware corporation ("Howell Texas"), Howell Pipeline U.S.A., Inc., a Delaware
corporation ("Howell Pipeline"), Howell Transportation Services, Inc., a
Delaware corporation ("Howell Transportation"), and Howell Power Systems, Inc.,
a Delaware corporation ("Howell Power," and, collectively with Howell, Howell
Crude, Howell Texas, Howell Pipeline and Howell Transportation, the "Howell
Entities"), as more specifically described in the Conveyance Agreement (the
"Howell Transferred Assets," and together with the Basis Transferred Assets, the
"Transferred Assets"). Genesis Energy, L.L.C., a Delaware limited liability
company (the "General Partner"), will serve as a general partner of both the
Partnership and Genesis Crude Oil, L.P., a Delaware limited partnership (the
"Operating Partnership"). The General Partner is owned 54% by Basis and 46% by
Howell.
It is further understood and agreed to by all parties that
concurrently with the closing of the offering of Units contemplated hereby and
as conditions to such closing, (a) pursuant to the Purchase & Sale and
Contribution & Conveyance Agreement among the General Partner, the Partnership,
the Operating Partnership, Basis and the Howell Entities (the "Conveyance
Agreement"), (i) the Partnership will contribute the net proceeds from the sale
of the Underwritten Units and cash contributed by the General Partner to the
Operating Partnership in exchange for a 69.57% general partner interest in the
Operating Partnership, (ii) Basis will convey the Basis Transferred Assets to
the Operating Partnership in exchange for (A) 54% of the cash contributed to the
Operating Partnership by the Partnership, (B) the issuance of 1,771,200
subordinated limited partner interests in the Operating Partnership
("Subordinated OLP Units") and (C) a .3286% special general partner interest in
the Operating Partnership and (iii) the Howell Entities will transfer the Howell
Transferred Assets to the Operating Partnership in exchange for (A) 46% of the
cash contributed to the Operating Partnership by the Partnership, (B) the
issuance of 1,508,800 Subordinated OLP Units and (C) a .2799% general partner
interest in the Operating Partnership, (b) Basis and Howell Crude will
contribute their general partner interests in the Operating Partnership to the
General Partner, (c) the Operating Partnership and Salomon Inc will enter into
the Distribution Support Agreement (the "Distribution Support Agreement"), (d)
the Operating Partnership, Basis and Salomon Inc will enter into the Master
Credit Support Agreement (the "Master Credit Support Agreement"), (e) the
Partnership, the Operating Partnership, Basis and the Howell Entities will enter
into the Redemption and Registration Rights Agreement (the "Redemption and
Registration Rights Agreement") and (f) the Partnership and Basis will enter
into the Corporate Services Agreement (the "Corporate Services Agreement"). The
transactions described in clauses (a) through (f) above are collectively
referred to as the "Transactions." The Partnership, the Operating Partnership
and the General Partner are collectively referred to herein as the "Genesis
Parties." The Genesis Parties, Basis, the Howell Entities and Salomon Inc are
collectively referred to herein as the "Genesis Entities." In connection with
the consummation of the Transactions, certain of the Genesis Entities will enter
into various bills of sale, conveyances, deeds and other assignments pursuant to
the Conveyance Agreement (the "Conveyances").
-2-
<PAGE>
1. Representations and Warranties
------------------------------
(a) Genesis Parties. The Genesis Parties represent and warrant to,
---------------
and agree with, each Underwriter as set forth below in this Section 1(a).
Certain terms used in this Agreement are defined in paragraph (iii) hereof.
(i) The Partnership has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement (No. 333-11545)
on Form S-1, including a related preliminary prospectus, for the registration of
the offering and sale of the Units in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
thereunder, a copy of which has been delivered to you. The Partnership may
file, or may have filed, one or more amendments thereto, including the related
preliminary prospectus, each of which will be, or previously has been, furnished
to you and each of which when filed will conform or did conform with the Act and
the rules and regulations thereunder. The Partnership will next file with the
Commission either (A) prior to effectiveness of such registration statement, a
first or further amendment to such registration statement (including the form of
final prospectus) or (B) after effectiveness of such registration statement, a
final prospectus in accordance with Rules 430A and 424(b)(1) or (4). In the
case of clause (B), the Partnership has included in such registration statement,
as amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules and regulations thereunder to be
included in the prospectus with respect to the Units and the offering thereof.
As filed, such amendment and form of final prospectus, or such final prospectus,
shall contain all Rule 430A Information, together with all other required
information, with respect to the Units and the offering thereof and, except to
the extent the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus shown to you at the Execution
Time) as the Partnership has advised you, prior to the Execution Time, will be
included or made therein or to which you have otherwise consented.
(ii) The Preliminary Prospectus dated November 15, 1996 (A) complied
or will comply with the applicable requirements of the Act and the rules and
regulations thereunder and (B) did not or will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance with
Rule 424(b), on any subsequent date any supplement is filed with the Commission
and on the Closing Date, the Prospectus (and any supplements thereto) will,
comply with the applicable requirements of the Act and the rules thereunder. On
the Effective Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
and, on the Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), did not or will not, and on the date of any filing pursuant to Rule
424(b), on any subsequent date any supplement is filed with the Commission and
on the Closing
-3-
<PAGE>
Date, the Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the Genesis
-------- -------
Parties make no representations or warranties as to the information contained in
or omitted from the Registration Statement, any Preliminary Prospectus or the
Prospectus (or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Partnership by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or any
supplement thereto). Each of the statements made by the Partnership in the
Registration Statement, any Preliminary Prospectus and the Prospectus within the
coverage of Rule 175(b) of the rules and regulations under the Act, including
(but not limited to) any statements with respect to future available cash or
future cash distributions of the Partnership or the anticipated ratio of taxable
income to distributions, was made or will be made with a reasonable basis and in
good faith. The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus.
(iii) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
paragraph (i) above as amended prior to the date of the Prospectus and any
preliminary prospectus included in the Registration Statement at the Effective
Date that omits Rule 430A Information. "Prospectus" shall mean the prospectus
relating to the Units that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the Units included in the Registration
Statement at the Effective Date. "Registration Statement" shall mean the
registration statement referred to in paragraph (i) above, including exhibits
and financial statements, as amended at the Execution Time (or, if not effective
at the Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto becomes effective prior to the
Option Closing Date (as hereinafter defined), or, if none, the Closing Date (as
hereinafter defined), shall also mean such registration statement as so amended.
Such term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A. If it is contemplated that the
Partnership will file a registration statement to register a portion of the
Units and rely on Rule 462(b) for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to "Registration Statement" herein shall be
deemed to be to both the registration statement referred to above (No. 333-
11545) and the Rule 462 Registration Statement, as each such registration
statement may be amended pursuant to the Act. "Rule 424," "Rule 430A" and "Rule
462(b)" refer to such rules under the Act. "Rule 430A Information" means
information with respect to the Units and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A.
-4-
<PAGE>
(iv) Each of the Partnership and the Operating Partnership is a
limited partnership duly formed and validly existing in good standing under the
Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") with full
partnership power and authority to own or lease its properties to be owned or
leased by it at the Closing Date, to assume the liabilities being assumed by it
pursuant to the Conveyance Agreement and the Conveyances, to act as a general
partner of the Operating Partnership (in the case of the Partnership), and to
conduct its business to be conducted by it at the Closing Date in all material
respects as described in the Registration Statement and the Prospectus, and each
of the Partnership and the Operating Partnership is, or at the Closing Date will
be, duly registered or qualified as a foreign limited partnership for the
transaction of business and is in good standing in each jurisdiction or place
where the nature or location of its properties or the conduct of its business
requires such registration or qualification, except where the failure to so
register or qualify (A) would not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Genesis Parties considered as a whole or (B) would not subject
the limited partners of the Partnership to any material liability or disability.
(v) The General Partner is a limited liability company duly formed
and validly existing in good standing under the laws of the State of Delaware
with full limited liability company power and authority to own or lease its
properties, to conduct its business and to act as general partner of the
Partnership and the Operating Partnership in all material respects as described
in the Registration Statement and the Prospectus, and the General Partner is
duly registered or qualified as a foreign limited liability company for the
transaction of business and is in good standing in each jurisdiction or place
where the nature or location of its properties or the conduct of its business
requires such registration or qualification, except where the failure to so
register or qualify (A) would not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Genesis Parties considered as a whole or (B) would not subject
the limited partners of the Partnership to any material liability or disability.
(vi) None of the General Partner, the Partnership or the Operating
Partnership has any subsidiaries (other than the Partnership and the Operating
Partnership themselves) which, individually or considered as a whole, would be
deemed to be a significant subsidiary (as such term is defined in Section 1-02
of Regulation S-X under the Act).
(vii) The General Partner is the sole general partner of the
Partnership with a 1% general partner interest in the Partnership; at the
Closing Date the General Partner will be the sole general partner of the
Partnership with a 2% general partner interest in the Partnership; such general
partner interest is and will be duly authorized by the Agreement of Limited
Partnership of the Partnership (as the same may be amended and restated at or
prior to the Closing Date, the "Partnership Agreement") between the General
Partner and Wayne Kubicek, as organizational limited partner (the
"Organizational Limited Partner"), and was and will be validly issued to the
General Partner; and the General Partner owns and will own such general partner
interest in the Partnership free and clear of all liens, encumbrances, security
interests, charges or claims.
-5-
<PAGE>
(viii) Partnership and the General Partner are the only two
general partners of the Operating Partnership; at the Closing Date the
Partnership and the General Partner will be the only two general partners of the
Operating Partnership with a 69.57% general partner interest and a .61% general
partner interest in the Operating Partnership, respectively; such general
partner interests are and will be duly authorized by the Agreement of Limited
Partnership of the Operating Partnership (as the same may be amended and
restated at or prior to the Closing Date, the "Operating Partnership Agreement,"
and together with the Partnership Agreement, the "Partnership Agreements")
between the General Partner and the Partnership, and were and will be validly
issued to the Partnership and the General Partner, respectively; each of the
Partnership and the General Partner owns and will own its general partner
interest in the Operating Partnership free and clear of all liens, encumbrances,
security interests, charges or claims.
(ix) At the Closing Date, there will be issued to the Underwriters
all of the Underwritten Units (assuming no purchase by the Underwriters of
Option Units); at the Closing Date or the Option Closing Date, as the case may
be, the Underwritten Units or the Option Units, as the case may be, and the
limited partner interests represented thereby will be duly authorized by the
Partnership Agreement and, when issued and delivered to the Underwriters against
payment therefor as provided herein, will be validly issued, fully paid (to the
extent required under the Partnership Agreement) and nonassessable (except as
such nonassessability may be affected by matters described in the Prospectus
under the caption "The Partnership Agreement--Limited Liability"); and at the
Closing Date or the Option Closing Date, as the case may be, the Underwritten
Units or the Underwritten Units and the Option Units, as the case may be, will
be the only limited partner interests of the Partnership issued and outstanding.
(x) At the Closing Date (assuming no purchase by the Underwriters
of the Option Units), Basis and certain of the Howell Entities will own 16.10%
and 13.72% limited partner interests in the Operating Partnership, respectively,
represented by 1,771,200 and 1,508,800 Subordinated OLP Units, respectively;
such Subordinated OLP Units will be the only limited partner interests in the
Operating Partnership issued and outstanding on the Closing Date; at the Closing
Date, all such Subordinated OLP Units and the limited partner interests
represented thereby will be duly authorized by the Operating Partnership
Agreement, will have been validly issued, fully paid (to the extent required
under the Operating Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in the Prospectus under
the caption "The Partnership Agreement--Limited Liability").
(xi) Basis owns a membership interest of 54% in the General Partner
and Howell owns a membership interest of 46% in the General Partner; such
membership interests are duly authorized by the Limited Liability Company
Agreement of the General Partner (as the same may be amended at or prior to the
Closing Date, the "LLC Agreement") and have been validly issued in accordance
with such LLC Agreement and are fully paid and nonassessable.
(xii) Except as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any
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limited or general partner interests in the Partnership or the Operating
Partnership pursuant to either the Partnership Agreement or the Operating
Partnership Agreement or any agreement or other instrument to which the
Partnership or the Operating Partnership is a party or by which the Partnership
or the Operating Partnership may be bound. Neither the filing of the
Registration Statement nor the offering or sale of the Units as contemplated by
this Agreement gives rise to any rights for or relating to the registration of
any Units or other securities of the Partnership or the Operating Partnership,
except as provided in the Redemption and Registration Rights Agreement. Except
as described in the Prospectus, there are no outstanding options or warrants to
purchase any Common Units, Subordinated OLP Units or common limited partner
interests in the Operating Partnership ("Common OLP Units") or any other
securities of the Partnership or the Operating Partnership. The Units, when
issued and delivered against payment therefor as provided herein, and the
Subordinated OLP Units, when issued and delivered in accordance with the terms
of the Operating Partnership Agreement and the Conveyance Agreement, will
conform in all material respects to the description thereof contained in the
Prospectus. The Partnership has all requisite power and authority to issue,
sell and deliver the Units in accordance with and upon the terms and conditions
set forth in this Agreement, the Conveyance Agreement and the Partnership
Agreement. The Operating Partnership has all requisite power and authority to
issue, sell and deliver the Subordinated OLP Units in accordance with the terms
and conditions set forth in the Conveyance Agreement and the Operating
Partnership Agreement. At the Closing Date and the Option Closing Date,
respectively, all corporate, limited liability company and partnership action,
as the case may be, required to be taken by any of the Genesis Parties or any of
their shareholders, members or partners for the authorization, issuance, sale
and delivery of the Common Units and the Subordinated OLP Units and the
consummation of the transactions (including the Transactions) contemplated by
this Agreement and the Operative Agreements (as defined in Section 1(a)(xiv)
hereof) shall have been validly taken.
(xiii) This Agreement has been duly authorized, executed and
delivered by each of the Genesis Parties and constitutes the valid and legally
binding agreement of each of the Genesis Parties, enforceable against each of
the Genesis Parties in accordance with its terms; provided, that the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as rights to indemnity and contribution thereunder may be limited by
federal and state securities laws.
(xiv) At or before the Closing Date, the Partnership Agreement will
have been duly authorized, executed and delivered by the General Partner and the
Organizational Limited Partner and will be a valid and legally binding agreement
of the General Partner and the Organizational Limited Partner, enforceable
against the General Partner and the Organizational Limited Partner in accordance
with its terms; at or before the Closing Date, the Operating Partnership
Agreement will have been duly authorized, executed and delivered by the General
Partner and the Partnership and will be a valid and legally binding agreement of
the General Partner and the Partnership, enforceable against the General Partner
and the Partnership in accordance with
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its terms; at or before the Closing Date, the Conveyance Agreement and each of
the Conveyances will have been duly authorized, executed and delivered by each
of the Genesis Parties that are parties thereto and will be a valid and legally
binding agreement of such parties, enforceable against such parties in
accordance with its terms; at or before the Closing Date, each of the
Distribution Support Agreement, the Master Credit Support Agreement, the
Redemption and Registration Rights Agreement and the Corporate Services
Agreement will have been duly authorized, executed and delivered by the Genesis
Parties that are parties thereto and will be a valid and legally binding
agreement of each such party, enforceable against each such party in accordance
with its terms; provided, that, with respect to each agreement described in this
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Section 1(a)(xiv), the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Partnership Agreement, the Operating
Partnership Agreement, the LLC Agreement, the Conveyance Agreement, the
Conveyances, the Distribution Support Agreement, the Master Credit Support
Agreement, the Redemption and Registration Rights Agreement and the Corporate
Services Agreement are herein collectively referred to as the "Operative
Agreements."
(xv) None of the offering, issuance and sale by the Partnership of
the Units, the execution, delivery and performance of this Agreement and the
Operative Agreements by any of the Genesis Parties which are parties hereto and
thereto, nor the consummation of the transactions contemplated hereby and
thereby (A) conflicts or will conflict with or constitutes or will constitute a
violation of the certificate of limited partnership, agreement of limited
partnership, articles of organization, agreement of limited liability company or
other organizational documents of any of the Genesis Parties, (B) conflicts or
will conflict with or constitutes or will constitute a breach or violation of,
or a default under (or an event which, with notice or lapse of time or both,
would constitute such an event), any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of the Genesis
Parties is a party or by which any of them or any of their respective properties
may be bound (except for agreements and instruments that will be extinguished on
the Closing Date), (C) violates or will violate any order, judgment, decree or
injunction of any court or governmental agency or body directed to any of them
or any of their properties in a proceeding to which any of them or their
property is a party, (D) violates or will violate any statute, law, regulation
or judgment, injunction, order or decree applicable to any of the Genesis
Parties or any of their respective properties or (E) will result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
any of the Genesis Parties, except for liens created pursuant to the Master
Credit Support Agreement, in the case of clauses (B), (C), (D) or (E) which
conflicts, breaches, violations or defaults would have a material adverse effect
upon the condition (financial or other), business, properties, net worth or
results of operations of the Genesis Parties considered as a whole.
(xvi) No permit, consent, approval, authorization or order of
any court or governmental agency or body is required in connection with the
execution and delivery of, or the consummation by the Genesis Parties of the
transactions contemplated by, this Agreement or the Operative Agreements, except
(A) for such permits, consents, approvals and similar authorizations
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<PAGE>
required under the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the securities or "Blue Sky" laws of certain
jurisdictions, (B) for such permits, consents, approvals and similar
authorizations which have been, or prior to the Closing Date will be, obtained,
(C) for such permits, consents, approvals and similar authorizations which (1)
are of a routine or administrative nature, (2) are not customarily obtained or
made prior to the consummation of transactions such as those contemplated by
this Agreement and by the Operative Agreements and (3) are expected in the
reasonable judgment of the General Partner to be obtained in the ordinary course
of business subsequent to the consummation of the Transactions, (D) for such
permits, consents, approvals and similar authorizations which, if not obtained,
would not, individually or in the aggregate, have a material adverse effect upon
the condition (financial or other), business, properties, net worth or results
of operations of the Genesis Parties considered as a whole and (E) as set forth
or contemplated in the Prospectus.
(xvii) None of the Genesis Parties is in (A) violation of its
certificate of limited partnership, agreement of limited partnership, articles
of organization, agreement of limited liability company or other organizational
documents or of any law, statute, ordinance, administrative or governmental rule
or regulation applicable to it or of any decree of any court or governmental
agency or body having jurisdiction over it or (B) breach, default (and no event
has occurred which, with notice or lapse of time or both, would constitute such
a default) or violation in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument to which
it is a party or by which it or any of its properties may be bound, which
breach, default or violation would, if continued, have a material adverse effect
on the condition (financial or other), business, properties, net worth or
results of operations of the Genesis Parties considered as a whole or could
materially impair the ability of any of the Genesis Parties to perform its
obligations under this Agreement or any of the Operative Agreements. To the
knowledge of the Genesis Parties, no third party to any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which any of
the Genesis Parties is a party or by which any of them is bound or to which any
of their properties are subject, is in default under any such agreement, which
breach, default or violation would, if continued, have a material adverse effect
on the condition (financial or other), business, properties, net worth or
results of operations of the Genesis Parties considered as a whole.
(xviii) Arthur Andersen LLP, who have expressed their opinions on the
pro forma financial statements of the Partnership and the audited financial
statements of the Partnership and the General Partner included in the
Registration Statement and the Prospectus, are independent public accountants
with respect to the Genesis Parties as required by the Act and the rules and
regulations thereunder.
(xix) At September 30, 1996, the Partnership would have had, on the
pro forma basis indicated in the Prospectus (and any supplement thereto), a
capitalization as set forth therein. The financial statements (including the
related notes and supporting schedules) included in the Registration Statement,
the Preliminary Prospectus dated November 15, 1996 and the Prospectus (and any
supplement thereto) present fairly in all material respects the financial
position, results of
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<PAGE>
operations and cash flows of the entities purported to be shown thereby on the
basis stated therein at the respective dates or for the respective periods to
which they apply and have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except to the extent disclosed therein. The selected pro forma financial and
operating information set forth in the Registration Statement, the Preliminary
Prospectus dated November 15, 1996 and the Prospectus (and any supplement
thereto) under the caption "Selected Pro Forma Financial and Operating Data" is
accurately presented in all material respects and prepared on a basis consistent
with the audited and unaudited historical consolidated financial statements and
pro forma financial statements from which it has been derived. The selected
historical financial and operating information set forth in the Registration
Statement, the Preliminary Prospectus dated November 15, 1996 and the Prospectus
(and any supplement thereto) under the caption "Selected Historical Financial
and Operating Data" is accurately presented in all material respects and
prepared on a basis consistent with the audited and unaudited historical
consolidated financial statements from which it has been derived. The pro forma
financial statements of the Partnership included in the Registration Statement,
the Preliminary Prospectus dated November 15, 1996 and the Prospectus (and any
supplement thereto) have been prepared in accordance with the applicable
accounting requirements of Article 11 of Regulation S-X of the Commission; the
assumptions used in the preparation of such pro forma financial statements are,
in the opinion of the management of the General Partner, reasonable; and the pro
forma adjustments reflected in such pro forma financial statements have been
properly applied to the historical amounts in compilation of such pro forma
financial statements.
(xx) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, (A) none of the Genesis Parties
has incurred any liabilities or obligations (indirect, direct or contingent) or
entered into any agreements or other transactions not in the ordinary course of
business that, singly or in the aggregate, could reasonably be expected to be
material to the Genesis Parties considered as a whole or that could reasonably
be expected to result in a material reduction in the earnings of the Genesis
Parties considered as a whole, (B) none of the Genesis Parties has sustained any
loss or interference with its business or properties from strike, fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance), or
from any labor dispute or court or governmental action, order or decree, that,
singly or in the aggregate, could reasonably be expected to be material to the
Genesis Parties considered as a whole, (C) there has been no material change in
the indebtedness of any of the Genesis Parties, no change in the capitalization
of any Genesis Party and no distribution of any kind declared, paid or made by
any of the Genesis Parties, and (D) there has not been any material adverse
change, nor any development that would reasonably be expected, singly or in the
aggregate, to result in a material adverse change in the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole.
(xxi) There are no legal or governmental proceedings pending or,
to the knowledge of the Genesis Parties, threatened, against any Genesis Party,
or to which any Genesis Party is a party, or to which any of their respective
properties is subject, that are required to be
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<PAGE>
described in the Registration Statement, the Preliminary Prospectus dated
November 15, 1996 or the Prospectus (or any supplement thereto) but are not
described as required; and there are no agreements, contracts or other documents
that are required to be described in the Registration Statement, the Preliminary
Prospectus dated November 15, 1996 or the Prospectus (or any supplement thereto)
or to be filed as exhibits to the Registration Statement that are not described
or filed as required by the Act.
(xxii) The Operating Partnership will have good and indefeasible
title to all real property and good title to all personal property described in
the Prospectus to be owned by it, free and clear of all liens, claims, security
interests or other encumbrances except (A) as described in the Prospectus and
(B) such as do not materially interfere with the use of such properties taken as
a whole as they have been used in the past and are proposed to be used in the
future as described in the Prospectus; provided, that, with respect to pipeline
--------
rights of way, the Operating Partnership shall have sufficient title to enable
it to use and occupy the pipeline rights of way as they have been used and
occupied in the past and as they are proposed to be used and occupied in the
future as described in the Prospectus, and any lack of title to the pipeline
rights of way has not had and will not have a material adverse effect on the
ability of the Operating Partnership to use the pipeline rights of way as they
have been used in the past and are proposed to be used in the future as
described in the Prospectus and will not materially increase the cost of such
use; and all real property and buildings held under lease by Basis and the
Howell Entities, collectively, upon consummation of the Transactions on the
Closing Date, will be held by the Operating Partnership, under valid and
subsisting and enforceable leases with such exceptions as do not materially
interfere with the use of such properties considered as a whole as they have
been used in the past and are proposed to be used in the future as described in
the Prospectus. The Conveyance Agreement and the Conveyances will be, as of the
Closing Date, legally sufficient to transfer or convey to the Operating
Partnership all properties that are, individually or in the aggregate, required
to enable the Operating Partnership to conduct its operations (in all material
respects as contemplated by the Prospectus), subject to the conditions,
reservations and limitations contained in the Conveyances and those set forth in
the Prospectus.
(xxiii) None of the Genesis Parties has taken, and none of the Genesis
Parties will take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Common Units, and the Partnership has not distributed and,
prior to the later to occur of (A) the Closing Date and (B) completion of the
distribution of the Units, will not distribute, any prospectus (as defined under
the Act) in connection with the offering and sale of the Units other than the
Registration Statement, any Preliminary Prospectus, the Prospectus or other
materials, if any, permitted by the Act, and the rules and regulations,
including Rule 134, thereunder.
(xxiv) Each of the Genesis Parties has, or at the Closing Date
will have, such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") as are necessary to own its properties and
to conduct its business in the manner described in the Prospectus, subject to
such qualifications as may be set forth in the Prospectus and except for such
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<PAGE>
permits which, if not obtained, would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect upon the ability of
any of the Genesis Parties to conduct its businesses in all material respects as
currently conducted and as contemplated by the Prospectus to be conducted; each
of the Genesis Parties has, or at the Closing Date will have, fulfilled and
performed all its material obligations with respect to such permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any impairment of the rights of
the holder of any such permit, except for such revocations, terminations and
impairments that would not reasonably be expected to have a material adverse
effect upon the ability of such Genesis Party to conduct its businesses in all
material respects as currently conducted and as contemplated by the Prospectus
to be conducted, subject in each case to such qualification as may be set forth
in the Prospectus; and, except as described in the Prospectus, none of such
permits contains any restriction that is materially burdensome to such Genesis
Party.
(xxv) To the knowledge of the Genesis Parties, none of the Genesis
Parties nor any employee or agent of any of the Genesis Parties has made any
payment of funds of any of the Genesis Parties or received or retained any funds
in either case in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.
(xxvi) No transaction has occurred between or among the Genesis
Parties and any of their respective officers, directors, members, partners,
stockholders or affiliates or, to the best knowledge of the Genesis Parties, any
affiliate of any such officer, director, member, partner or stockholder, that is
required to be described in the Registration Statement that is not so described.
(xxvii) Each of the Genesis Parties owns, possesses or has the
right to use, or at the Closing Date will own or possess or have the right to
use, all patents, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights necessary for the conduct of its respective business, and none of the
Genesis Parties is aware of any claim to the contrary or any challenge by any
other person to the rights of the Genesis Parties with respect to the foregoing.
(xxviii) None of the Genesis Parties is now, and after the sale
of the Units to be sold by the Partnership hereunder and the application of the
net proceeds from such sale as described in the Prospectus under the caption
"Use of Proceeds" will be, (A) an "investment company" or a company "controlled
by" an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or (B) (x) a "public utility company," "holding company" or
"subsidiary company" of a "holding company" or an "affiliate" thereof, within
the meaning of the Public Utility Holding Company Act of 1935, as amended, (y) a
"gas utility," "public utility" or "utility" within the meaning of Article 6050
of the Revised Civil Statutes of Texas or (z) a "public utility" or "utility"
within the meaning of the Public Utility Regulatory Act of Texas or under the
applicable laws of any state in which any such Genesis Party does business.
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<PAGE>
(xxix) None of the Genesis Parties has violated any environmental,
safety, health or similar law or regulation applicable to its business relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
or lacks any permits, licenses or other approvals required of them under
applicable Environmental Laws to own, lease or operate their properties and
conduct their business as described in the Prospectus or is violating any terms
and conditions of any such permit, license or approval, which in each case would
reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Genesis Parties considered as a whole.
(xxx) As of the Closing Date, the Genesis Parties will have
insurance covering their properties, operations, personnel and businesses. In
the reasonable judgment of the Genesis Parties, such insurance insures against
losses and risks in such amounts as are reasonably adequate to protect the
Genesis Parties and their businesses. None of the Genesis Parties has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance; all such insurance is outstanding and duly in force on the date
hereof and will be outstanding and duly in force on the Closing Date.
(xxxi) At each of the Closing Date and the Option CloSing Date, as
the case may be, the General Partner will have (excluding its interests in the
Partnership and Operating Partnership) a net worth of at least $7.5 million. For
purposes of this representation, assets will be valued at fair market value, and
the General Partner's interest in the Partnership and Operating Partnership (as
general partner) shall not be taken into account except as an offset to the
Partnership's or the Operating Partnership's liabilities that are taken into
account in computing such net worth.
(xxxii) Except as described in the Prospectus, there is (A) no
action, suit or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to the knowledge
of the Genesis Parties, threatened or contemplated to which any of the Genesis
Parties or any of their respective subsidiaries is or may be a party or to which
the business or property of any of the Genesis Parties is or may be subject, (B)
no statute, rule, regulation or order that has been enacted, adopted or issued
by any governmental agency or that has been proposed by any governmental body
since the date of the most recent financial statements included in the
Prospectus and (C) no injunction, restraining order or order of any nature
issued by a federal or state court or foreign court of competent jurisdiction to
which any of the Genesis Parties, or any of their respective subsidiaries, is or
may be subject, that, in the case of clauses (A), (B) and (C) above, is
reasonably expected to (1) singly or in the aggregate have a material adverse
effect on the condition (financial or other), business, properties, net worth or
results of operations of the Genesis Parties considered as a whole, (2) prevent
or result in the suspension of the offering and issuance of the Units or (3) in
any manner draw into question the validity of this Agreement or any of the
Operative Agreements or the performance by any of the Genesis Parties of their
obligations under this Agreement or any of the Operative Agreements.
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(xxxiii) Except as contemplated by this Agreement, there is no broker,
finder or other party that is entitled to receive from any of the Genesis
Parties any brokerage or finder's fee or any other fee, commission or similar
payment in connection with the Transactions.
(xxxiv) Each of the offer, sale and issuance of the Subordinated OLP
Units to Basis and certain of the Howell Entities pursuant to the Conveyance
Agreement and the Operating Partnership Agreement, and the offer, sale and
issuance of APIs (as defined in the Operating Partnership Agreement) pursuant to
the Distribution Support Agreement and the Operating Partnership Agreement, are
exempt from the registration requirements of the Act and the securities laws of
any state having jurisdiction with respect thereto, and none of the Genesis
Parties has taken or will take any action that would cause the loss of such
exemption.
(xxxv) The Units have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
(b) Basis. Basis represents and warrants to, and agrees with, the
-----
several Underwriters that:
(i) On the Effective Date, the financial and other information
relating to the assets, business operations or management of Basis prior to the
Execution Time included in the Registration Statement (the "Basis Information")
did not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective Date, the
Basis Information included in the Prospectus, if not filed pursuant to Rule
424(b), did not or will not, and on the date of any filing pursuant to Rule
424(b), on any subsequent date any supplement is filed with the Commission and
on the Closing Date, the Basis Information included in the Prospectus (together
with any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that Basis makes no representation or
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warranty as to any statements contained in or omitted from the Registration
Statement, any Preliminary Prospectus or the Prospectus (or any supplement
thereto) other than the Basis Information.
(ii) Basis is a corporation duly organized and validly existing in
good standing under the laws of the State of Texas with full corporate power and
authority to execute and deliver this Agreement and each Operative Agreement to
which it is a party and perform any obligations it may have hereunder and
thereunder.
(iii) At the Closing Date and the Option Closing Date, respectively,
Basis will own its limited partner interest in the Operating Partnership
represented by Subordinated OLP Units and its membership interest in the General
Partner free and clear of all liens, encumbrances, security interests, charges
or claims, except for the pledge of Subordinated OLP Units contemplated in the
Conveyance Agreement.
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<PAGE>
(iv) At the Closing Date and the Option Closing Date, respectively,
all corporate action required to be taken by Basis for the consummation of the
transactions (including the Transactions) contemplated by this Agreement and
each Operative Agreement to which it is a party shall have been validly taken.
(v) The execution and delivery of, and the performance by Basis of
its obligations under, this Agreement and each of the Operative Agreements to
which it is a party have been duly and validly authorized by Basis, and each of
this Agreement and each of the Operative Agreements to which it is a party has
been duly executed and delivered by Basis, and constitutes the valid and legally
binding agreement of Basis, enforceable against Basis in accordance with its
terms; provided, that the enforceability thereof may be limited by bankruptcy,
--------
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and except as rights to indemnity and
contribution thereunder may be limited by federal and state securities laws.
(vi) Neither the execution, delivery and performance by Basis of this
Agreement and the Operative Agreements to which Basis is a party, nor the
consummation by Basis of the transactions contemplated hereby and thereby (A)
conflicts or will conflict with or constitutes or will constitute a violation of
the articles of incorporation or bylaws or other organizational documents of
Basis, (B) conflicts or will conflict with or constitutes or will constitute a
breach or violation of, or a default under (or an event which, with notice or
lapse of time or both, would constitute such an event), any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which
Basis is a party or by which Basis or any of its properties may be bound, (C)
violates or will violate any order, judgment, decree or injunction of any court
or governmental agency or body directed to Basis or any of its properties in a
proceeding to which Basis or its property is a party, (D) violates or will
violate any statute, law, regulation or judgment, injunction, order or decree
applicable to Basis or its properties or (E) will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
Basis, in the case of clauses (B), (C), (D) or (E) which conflicts, breaches,
violations or defaults would reasonably be expected to have a material adverse
effect upon the condition (financial or other), business, properties, net worth
or results of operations of the Genesis Parties considered as a whole or would
reasonably be expected to materially impair the ability of Basis to perform its
obligations under this Agreement or the Operative Agreements.
(vii) No permit, consent, approval, authorization or order of any
court or governmental agency or body is required in connection with the
execution and delivery by Basis of, or the consummation by Basis of the
transactions contemplated by, this Agreement or the Operative Agreements to
which Basis is a party, except (A) for such permits, consents, approvals and
similar authorizations required under the Securities Act, the Exchange Act and
the securities or "Blue Sky" laws of certain jurisdictions, (B) for such
permits, consents, approvals and similar authorizations which have been, or
prior to the Closing Date will be, obtained, (C) for such permits, consents,
approvals and similar authorizations which (1) are of a routine or
administrative nature, (2) are not
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customarily obtained or made prior to the consummation of transactions such as
those contemplated by this Agreement and by the Operative Agreements to which
Basis is a party and (3) are expected in the reasonable judgment of Basis to be
obtained in the ordinary course of business subsequent to the consummation of
the transactions contemplated by this Agreement and the Operative Agreements to
which Basis is a party, (D) for such permits, consents, approvals and similar
authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole and (E) as set forth or contemplated in the
Prospectus.
(viii) Basis is not in (A) violation of its articles of incorporation
or bylaws, or of any law, statute, ordinance, administrative or governmental
rule or regulation applicable to it or of any decree of any court or
governmental agency or body having jurisdiction over it, or (B) breach, default
(and no event has occurred which, with notice or lapse of time or both, would
constitute such a default) or violation in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its properties may be
bound, which breach, default or violation would, if continued, reasonably be
expected to have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole or would reasonably be expected to materially
impair the ability of Basis to perform its obligations under this Agreement or
any of the Operative Agreements to which Basis is a party.
(ix) Arthur Andersen LLP, who have expressed their opinions on the
audited financial statements of Basis Petroleum, Inc. Crude Gathering Division
included in the Registration Statement and the Prospectus, are independent
public accountants with respect to Basis as required by the Act and the rules
and regulations thereunder.
(x) The financial statements of Basis Petroleum, Inc. Crude
Gathering Division (including the related notes and supporting schedules)
included in the Registration Statement, the Preliminary Prospectus dated
November 15, 1996 and the Prospectus (and any supplement thereto) present fairly
in all material respects the financial position, results of operations and cash
flows of the entities purported to be shown thereby on the basis stated therein
at the respective dates or for the respective periods to which they apply and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except to the extent
disclosed therein. The selected historical financial and operating information
with respect to Basis set forth in the Registration Statement, the Preliminary
Prospectus dated November 15, 1996 and the Prospectus (and any supplement
thereto) under the caption "Selected Historical Financial and Operating Data" is
accurately presented in all material respects and prepared on a basis consistent
with the audited and unaudited historical consolidated financial statements from
which it has been derived. The historical information with respect to Basis
included in the pro forma financial statements of the Partnership included in
the Registration Statement, the Preliminary Prospectus dated November 15, 1996
and the Prospectus (and any supplement thereto) is accurately
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<PAGE>
presented in all material respects and prepared on a basis consistent with the
audited and unaudited historical consolidated financial statements from which it
has been derived.
(xi) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, (A) Basis has not incurred any
liabilities or obligations (indirect, direct or contingent) or entered into any
agreements or other transactions not in the ordinary course of business that,
singly or in the aggregate, could reasonably be expected to be material to the
Genesis Parties considered as a whole or that could reasonably be expected to
result in a material reduction in the earnings of the Genesis Parties considered
as a whole, (B) Basis has not sustained any loss or interference with its
business or properties from strike, fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance), or from any labor dispute or
court or governmental action, order or decree, that, singly or in the aggregate,
could reasonably be expected to be material to the Genesis Parties considered as
a whole, (C) there has been no material change in the indebtedness of Basis, no
change in the capitalization of Basis and no distribution of any kind declared,
paid or made by Basis, and (D) there has not been any material adverse change,
nor any development that would reasonably be expected, singly or in the
aggregate, to result in a material adverse change in the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole.
(xii) Basis has good and indefeasible title to all real property and
good title to all personal property described in the Prospectus to be owned by
it, free and clear of all liens, claims, security interests or other
encumbrances except (A) as described in the Prospectus and (B) such as do not
materially interfere with the use of such properties taken as a whole as they
have been used in the past and are proposed to be used in the future as
described in the Prospectus; and all real property and buildings held under
lease by Basis are held by Basis under valid and subsisting and enforceable
leases with such exceptions as do not materially interfere with the use of such
properties considered as a whole as they have been used in the past and are
proposed to be used in the future as described in the Prospectus.
(xiii) Basis has not taken, and Basis will not take, directly or
indirectly, any action designed to or that could reasonably be expected to cause
or result in the stabilization or manipulation of the price of the Common Units.
(xiv) Basis is not now, and after sale of the Units to be sold by
the Partnership hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds" will not be, (A)
an "investment company" or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or (B) (x)
a "public utility company," "holding company" or "subsidiary company" of a
"holding company" or an "affiliate" thereof, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, (y) a "gas utility," "public
utility" or "utility" within the meaning of Article 6050 of the Revised Civil
Statutes of Texas or (z) a "public utility" or "utility"
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<PAGE>
within the meaning of the Public Utility Regulatory Act of Texas or under the
applicable laws of any state in which Basis does business.
(xv) Basis has not violated any Environmental Law, and does not lack
any permits, licenses or other approvals required of it under applicable
Environmental Laws to own, lease or operate its properties and conduct its
business as described in the Prospectus and is not violating any terms and
conditions of any such permit, license or approval, which in each case would
reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Genesis Parties considered as a whole.
(xvi) Except as described in the Prospectus, there is (A) no
action, suit or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to the knowledge
of Basis, threatened or contemplated to which Basis or any of its subsidiaries
is or may be a party or to which the business or property of Basis is or may be
subject, (B) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that has been proposed by any
governmental body and (C) no injunction, restraining order or order of any
nature issued by a federal or state court or foreign court of competent
jurisdiction to which Basis or any of its subsidiaries is or may be subject,
that, in the case of clauses (A), (B) and (C) above, is reasonably expected to
(1) singly or in the aggregate have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Genesis Parties considered as a whole, (2) prevent or result in the
suspension of the offering and issuance of the Units or (3) in any manner draw
into question the validity of this Agreement or any other Operative Agreement to
which Basis is a party.
(xvii) Basis has not taken and will not take any action that would
cause the loss of the exemption from the registration requirements of the Act of
each of the offer, sale and issuance of the Subordinated OLP Units to Basis
pursuant to the Conveyance Agreement and the Operating Partnership Agreement.
(c) Howell. Howell represents and warrants to, and agrees with,
------
the several Underwriters that:
(i) On the Effective Date, the financial and other information
relating to the assets, business, operations or management of any Howell Entity
prior to the Execution Time included in the Registration Statement (the "Howell
Information") did not or will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and, on the
Effective Date, the Howell Information included in the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b), on any subsequent date any supplement is filed with the
Commission and on the Closing Date, the Howell Information included in the
Prospectus (together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that Howell
-------- -------
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<PAGE>
makes no representation or warranty as to any statements contained in or omitted
from the Registration Statement, any Preliminary Prospectus or the Prospectus
(or any supplement thereto) other than the Howell Information.
(ii) Each of the Howell Entities is a corporation duly organized
and validly existing in good standing under the laws of the State of Delaware
with full corporate power and authority to execute and deliver this Agreement
and each Operative Agreement to which it is a party and perform any obligations
it may have hereunder and thereunder.
(iii) At the Closing Date and the Option Closing Date,
respectively, each of the Howell Entities will own its limited partner interest
in the Operating Partnership represented by Subordinated OLP Units or its
membership interest in the General Partner free and clear of all liens,
encumbrances, security interests, charges or claims, except for the pledge of
Subordinated OLP Units contemplated in the Conveyance Agreement and the claim on
the Subordinated OLP Units contemplated in the Ancillary Agreement (as defined
in the Conveyance Agreement).
(iv) At the Closing Date and the Option Closing Date,
respectively, all corporate action required to be taken by any of the Howell
Entities for the consummation of the transactions (including the Transactions)
contemplated by this Agreement and each Operative Agreement to which any Howell
Entity is a party shall have been validly taken.
(v) The execution and delivery of, and the performance by each
of the Howell Entities of its obligations under, this Agreement and each of the
Operative Agreements to which it is a party have been duly and validly
authorized by the Howell Entities, and each of this Agreement and each of the
Operative Agreements to which a Howell Entity is a party has been duly executed
and delivered by each such Howell Entity, and constitutes the valid and legally
binding agreement of each such Howell Entity, enforceable against each such
Howell Entity in accordance with its terms; provided, that the enforceability
--------
thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
rights to indemnity and contribution thereunder may be limited by federal and
state securities laws.
(vi) Neither the execution, delivery and performance by any of
the Howell Entities of this Agreement and the Operative Agreements to which any
such Howell Entity is a party, nor the consummation by the Howell Entities of
the transactions contemplated hereby and thereby (A) conflicts or will conflict
with or constitutes or will constitute a violation of the certificates of
incorporation or bylaws or other organizational documents of the Howell
Entities, (B) conflicts or will conflict with or constitutes or will constitute
a breach or violation of, or a default under (or an event which, with notice or
lapse of time or both, would constitute such an event), any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which
any of the Howell Entities is a party or by which any of the Howell Entities or
any of their respective properties may be bound, (C) violates or will violate
any order, judgment, decree or injunction of any court or
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<PAGE>
governmental agency or body directed to any of the Howell Entities or any of
their respective properties in a proceeding to which any of the Howell Entities
or any of their property is a party, (D) violates or will violate any statute,
law, regulation or judgment, injunction, order or decree applicable to any of
the Howell Entities or any of their respective properties or (E) will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of any of the Howell Entities, in the case of clauses (B), (C), (D) or
(E) which conflicts, breaches, violations or defaults would reasonably be
expected to have a material adverse effect upon the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole or would reasonably be expected to materially
impair the ability of the Howell Entities to perform their obligations under
this Agreement or the Operative Agreements to which any of the Howell Entities
is a party.
(vii) No permit, consent, approval, authorization or order of any
court or governmental agency or body is required in connection with the
execution and delivery by the Howell Entities of, or the consummation by the
Howell Entities of the transactions contemplated by, this Agreement or the
Operative Agreements to which any of the Howell Entities is a party, except (A)
for such permits, consents, approvals and similar authorizations required under
the Securities Act, the Exchange Act and the securities or "Blue Sky" laws of
certain jurisdictions, (B) for such permits, consents, approvals and similar
authorizations which have been, or prior to the Closing Date will be, obtained,
(C) for such permits, consents, approvals and similar authorizations which (1)
are of a routine or administrative nature, (2) are not customarily obtained or
made prior to the consummation of transactions such as those contemplated by
this Agreement and by the Operative Agreements to which any of the Howell
Entities is a party and (3) are expected in the reasonable judgment of Howell to
be obtained in the ordinary course of business subsequent to the consummation of
the transactions contemplated by this Agreement or the Operative Agreements to
which any of the Howell Entities is a party, (D) for such permits, consents,
approvals and similar authorizations which, if not obtained, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect upon the condition (financial or other), business, properties,
net worth or results of operations of the Genesis Parties considered as a whole
and (E) as set forth or contemplated in the Prospectus.
(viii) None of the Howell Entities is in (A) violation of its
certificate of incorporation or bylaws, or of any law, statute, ordinance,
administrative or governmental rule or regulation applicable to it or of any
decree of any court or governmental agency or body having jurisdiction over it
or (B) breach, default (and no event has occurred which, with notice or lapse of
time or both, would constitute such a default) or violation in the performance
of any obligation, agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any agreement, indenture, lease or
other instrument to which it is a party or by which it or any of its properties
may be bound, which breach, default or violation would, if continued, reasonably
be expected to have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole or would reasonably be expected to materially
impair the ability of any of the Howell Entities to perform its obligations
under this Agreement or any of the Operative Agreements to which any of the
Howell
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<PAGE>
Entities is a party. To the knowledge of Howell, each of the Howell Entities
which is subject to regulation as a common carrier is conducting its business
consistent with its common carrier classification in all material respects and
is in material compliance with all applicable federal or state statutes, rules
and regulations pertaining thereto, including but not limited to all tariff and
rate requirements.
(ix) Deloitte & Touche LLP, who have expressed their opinions on
the audited financial statements of Howell Crude Operations included in the
Registration Statement and the Prospectus, are independent public accountants
with respect to Howell as required by the Act and the rules and regulations
thereunder.
(x) Price Waterhouse LLP, who have expressed their opinion on
the audited financial statements of Howell Corporation - Predecessor Operations
of Certain Crude Oil Pipeline Businesses of Exxon Pipeline Company included in
the Registration Statement and the Prospectus, are independent public
accountants with respect to Howell as required by the Act and the rules and
regulations thereunder.
(xi) The financial statements of Howell Crude Operations and
Howell Corporation - Predecessor Operations of Certain Crude Oil Pipeline
Businesses of Exxon Pipeline Company (including the related notes and supporting
schedules) included in the Registration Statement, the Preliminary Prospectus
dated November 15, 1996 and the Prospectus (and any supplement thereto) present
fairly in all material respects the financial position, results of operations
and cash flows of the entities purported to be shown thereby on the basis stated
therein at the respective dates or for the respective periods to which they
apply and have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except to the
extent disclosed therein. The selected historical financial and operating
information with respect to Howell Crude Operations set forth in the
Registration Statement, the Preliminary Prospectus dated November 15, 1996 and
the Prospectus (and any supplement thereto) under the caption "Selected
Historical Financial and Operating Data" is accurately presented in all material
respects and prepared on a basis consistent with the audited and unaudited
historical consolidated financial statements from which it has been derived. The
historical information with respect to Howell Crude Operations included in the
pro forma financial statements of the Partnership included in the Registration
Statement, the Preliminary Prospectus dated November 15, 1996 and the Prospectus
(and any supplement thereto) is accurately presented in all material respects
and prepared on a basis consistent with the audited and unaudited historical
consolidated financial statements from which it has been derived. The purchase
accounting adjustments and the pro forma adjustments related to pipelines
included in the pro forma financial statements of the Partnership are, in the
opinion of Howell, reasonable, and such adjustments have been properly applied
to the historical amounts in compilation of such pro forma financial statements.
(xii) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and
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<PAGE>
Prospectus, (A) none of the Howell Entities has incurred any liabilities or
obligations (indirect, direct or contingent) or entered into any agreements or
other transactions not in the ordinary course of business that, singly or in the
aggregate, could reasonably be expected to be material to the Genesis Parties
considered as a whole or that could reasonably be expected to result in a
material reduction in the earnings of the Genesis Parties considered as a whole,
(B) none of the Howell Entities has sustained any loss or interference with its
business or properties from strike, fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance), or from any labor dispute or
court or governmental action, order or decree, that, singly or in the aggregate,
could reasonably be expected to be material to the Genesis Parties considered as
a whole, (C) there has been no material change in the indebtedness of any of the
Howell Entities, no change in the capitalization of any of the Howell Entities
and no distribution of any kind declared, paid or made by any of the Howell
Entities, and (D) there has not been any material adverse change, nor any
development that would reasonably be expected, singly or in the aggregate, to
result in a material adverse change in the condition (financial or other),
business, properties, net worth or results of operations of the Genesis Parties
considered as a whole.
(xiii) Each of the Howell Entities has good and indefeasible title
to all real property and good title to all personal property described in the
Prospectus to be owned by it, free and clear of all liens, claims, security
interests or other encumbrances except (A) as described in the Prospectus and
(B) such as do not materially interfere with the use of such properties taken as
a whole as they have been used in the past and are proposed to be used in the
future as described in the Prospectus; provided, that, with respect to pipeline
--------
rights of way, each of the Howell Entities has sufficient title to enable it to
use and occupy the pipeline rights of way as they have been used and occupied in
the past and as they are proposed to be used and occupied in the future as
described in the Prospectus, and any lack of title to the pipeline rights of way
has not had and will not have a material adverse effect on the ability of the
Howell Entities or Genesis Parties to use the pipeline rights of way as they
have been used in the past and are proposed to be used in the future as
described in the Prospectus and will not materially increase the cost of such
use; and all real property and buildings held under lease by any Howell Entity
are held by such Howell Entity under valid and subsisting and enforceable leases
with such exceptions as do not materially interfere with the use of such
properties considered as a whole as they have been used in the past and are
proposed to be used in the future as described in the Prospectus.
(xiv) None of the Howell Entities has taken, and none of the
Howell Entities will take, directly or indirectly, any action designed to or
that could reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Units.
(xv) None of the Howell Entities is now, or after sale of the
Units to be sold by the Partnership hereunder and application of the net
proceeds from such sale as described in the Prospectus under the caption "Use of
Proceeds" will be, (A) an "investment company" or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or (B) (x) a "public utility company," "holding company" or
"subsidiary company" of a "holding company" or an "affiliate" thereof, within
the meaning of the Public Utility
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<PAGE>
Holding Company Act of 1935, as amended, (y) a "gas utility," "public utility"
or "utility" within the meaning of Article 6050 of the Revised Civil Statutes of
Texas or (z) a "public utility" or "utility" within the meaning of the Public
Utility Regulatory Act of Texas or under the applicable laws of any state in
which any such Howell Entity does business.
(xvi) None of the Howell Entities has violated any Environmental
Law, or lacks any permits, licenses or other approvals required of them under
applicable Environmental Laws to own, lease or operate their properties and
conduct their business as described in the Prospectus or is violating any terms
and conditions of any such permit, license or approval, which in each case would
reasonably be expected to have a material adverse effect on the condition
(financial or other), business, properties, net worth or results of operations
of the Genesis Parties considered as a whole.
(xvii) Except as described in the Prospectus, there is (A) no
action, suit or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to the knowledge
of the Howell Entities, threatened or contemplated to which any of the Howell
Entities or any of their subsidiaries is or may be a party or to which the
business or property of any of the Howell Entities, is or may be subject, (B) no
statute, rule, regulation or order that has been enacted, adopted or issued by
any governmental agency or that has been proposed by any governmental body and
(C) no injunction, restraining order or order of any nature issued by a federal
or state court or foreign court of competent jurisdiction to which any of the
Howell Entities or any of its subsidiaries is or may be subject, that, in the
case of clauses (A), (B) and (C) above, is reasonably expected to (1) singly or
in the aggregate have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole, (2) prevent or result in the suspension of the
offering and issuance of the Units or (3) in any manner draw into question the
validity of this Agreement or any other Operative Agreement to which any of the
Howell Entities is a party.
(xviii) None of the Howell Entities has taken or will take any
action that would cause the loss of the exemption from the registration
requirements of the Act of each of the offer, sale and issuance of the
Subordinated OLP Units to Howell pursuant to the Conveyance Agreement and the
Operating Partnership Agreement.
(d) Salomon Inc. Salomon Inc also represents and warrants to,
-----------
and agrees with, the several Underwriters that:
(i) The selected financial information of Salomon Inc set forth
in the Registration Statement, the Preliminary Prospectus dated November 15,
1996 and the Prospectus (and any supplement thereto) under the caption "Certain
Information Concerning Salomon Inc" is accurately presented in all material
respects and prepared on a basis consistent with the audited and unaudited
historical financial statements from which it has been derived. On the Effective
Date, the information set forth in the Registration Statement under the caption
"Certain Information Concerning Salomon Inc" was, and on the Closing Date will
be, true and correct in all material respects. Salomon Inc hereby represents,
for purposes of this representation and warranty and
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<PAGE>
Salomon Inc's indemnity obligations under this Agreement, the only information
furnished by Salomon Inc is the information set forth in the Registration
Statement under the caption "Certain Information Concerning Salomon Inc."
(ii) Salomon Inc is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to execute and deliver this Agreement and each
Operative Agreement to which it is a party and perform any obligations it may
have hereunder and thereunder.
(iii) All of the issued shares of capital stock of Basis are
registered on its books in the name of Salomon Inc, and Salomon Inc owns such
shares free and clear of all liens, encumbrances, security interests, charges or
claims.
(iv) At the Closing Date and the Option Closing Date,
respectively, all corporate action required to be taken by Salomon Inc for the
consummation of the transactions contemplated by this Agreement and each
Operative Agreement to which it is a party shall have been validly taken.
(v) The execution and delivery of, and the performance by
Salomon Inc of its obligations under, this Agreement and each of the Operative
Agreements to which it is a party have been duly and validly authorized by
Salomon Inc, and each of this Agreement and each of the Operative Agreements to
which it is a party has been duly executed and delivered by Salomon Inc, and
constitutes the valid and legally binding agreement of Salomon Inc, enforceable
against Salomon Inc in accordance with its terms; provided, that the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and by general principles of equity regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as rights to indemnity and contribution thereunder may be limited by
federal and state securities laws.
(vi) Neither the execution, delivery and performance by Salomon
Inc of this Agreement and the Operative Agreements to which Salomon Inc is a
party, nor the consummation by Salomon Inc of the transactions contemplated
hereby and thereby (A) conflicts or will conflict with or constitutes or will
constitute a violation of the certificate of incorporation or bylaws or other
organizational documents of Salomon Inc, (B) conflicts or will conflict with or
constitutes or will constitute a breach or violation of, or a default under (or
an event which, with notice or lapse of time or both, would constitute such an
event), any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which Salomon Inc is a party or by which Salomon Inc
or any of its properties may be bound, (C) violates or will violate any order,
judgment, decree or injunction of any court or governmental agency or body
directed to Salomon Inc or any of its properties in a proceeding to which
Salomon Inc or its property is a party, (D) violates or will violate any
statute, law, regulation or judgment, injunction, order or decree applicable to
Salomon Inc or its properties or (E) will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of Salomon Inc,
in the case of clauses (B), (C), (D) or (E) which conflicts,
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<PAGE>
breaches, violations or defaults would have a material adverse effect upon the
condition (financial or other), business, properties, net worth or results of
operations of Salomon Inc or could impair the ability of Salomon Inc to perform
its obligations under this Agreement or the Operative Agreements to which
Salomon Inc is a party.
(vii) No permit, consent, approval, authorization or order of any
court or governmental agency or body is required in connection with the
execution and delivery by Salomon Inc of, or the consummation by Salomon Inc of
the transactions contemplated by, this Agreement or the Operative Agreements to
which Salomon Inc is a party, except (A) for such permits, consents, approvals
and similar authorizations which have been, or prior to the Closing Date will
be, obtained, (B) for such permits, consents, approvals and similar
authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the condition (financial or
other), business, properties, net worth or results of operations of Salomon Inc
and (C) as set forth or contemplated in the Prospectus.
(viii) Salomon Inc is not in (A) violation of its certificate of
incorporation or bylaws, or of any law, statute, ordinance, administrative or
governmental rule or regulation applicable to it or of any decree of any court
or governmental agency or body having jurisdiction over it, or (B) breach,
default (and no event has occurred which, with notice or lapse of time or both,
would constitute such a default) or violation in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its properties may be
bound, which breach, default or violation would, if continued, have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of Salomon Inc or could impair the ability of
Salomon Inc to perform its obligations under the Underwriting Agreement or any
of the Operative Agreements to which it is a party.
(ix) Salomon Inc has not taken, and will not take, any action
designed or that could reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Units.
(x) There is (A) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or foreign,
now pending or, to the knowledge of Salomon Inc, threatened or contemplated to
which Salomon Inc or any of its subsidiaries is or may be a party or to which
the business or property of Salomon Inc, is or may be subject and (B) no
injunction, restraining order or order of any nature issued by a federal or
state court or foreign court of competent jurisdiction to which Salomon Inc or
any of its subsidiaries is or may be subject, that, in the case of clauses (A)
and (B) above, is reasonably expected to, in any manner, draw into question the
validity of this Agreement or any other Operative Agreement.
(e) Any certificate signed by an officer of the General Partner
and delivered to the Representatives or counsel for the Underwriters on the
Closing Date or the Option Closing Date
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<PAGE>
shall be deemed a representation and warranty of each of the Genesis Parties to
each Underwriter as to the matters covered thereby.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the
Partnership agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Partnership at a purchase price
of $_____ per Unit, the amount of the Underwritten Units set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Partnership hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of 1,125,000 Option Units, at the same purchase price per Unit
as the Underwriters shall pay for the Underwritten Units. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten Units by
the Underwriters. Said option may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of the
Prospectus upon written or facsimile notice by the Representatives to the
Partnership setting forth the number of Option Units as to which the several
Underwriters are exercising the option and the time for delivery and payment for
the Option Units. Delivery of certificates for the Option Units by the
Partnership, and payment therefor to the Partnership, shall be made as provided
in Section 3 hereof. The number of Option Units to be purchased by each
Underwriter shall be the same percentage of the total number of Option Units to
be purchased by the several Underwriters as such Underwriter is purchasing of
the Underwritten Units, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the Underwritten
--------------------
Units and the Option Units (if the option provided for in Section 2(b) hereof
shall have been exercised on or before the third business day prior to the
Closing Date (defined below)) shall be made at 10:00 AM, New York City time, on
______________, 1996, or such later date (not later than ___________, 1996) as
the Representatives shall designate, which date and time may be postponed by
agreement among the Representatives and the General Partner or as provided in
Section 9 hereof (such date and time of delivery and payment for the Units being
herein called the "Closing Date"). Delivery of the Units shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the aggregate
purchase prices of the Units being sold by the Partnership to or upon the order
of the Partnership by wire transfer of immediately available funds. Delivery of
the Underwritten Units and the Option Units, if applicable, shall be made at
such location as the Representatives shall, at least one business day in advance
of the Closing Date, reasonably designate, and payment for such Units shall be
made at the office of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001, or at such other location as agreed by the Representatives and the
General Partner. Certificates for the Units shall be registered in such names
and in such denominations as the Representatives may request not less than two
full business days in advance of the Closing Date.
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The Partnership agrees to have the Units available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 PM, New York City time, on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Partnership will deliver
(at the expense of the Partnership) to the Representatives, at Smith Barney
Inc., 333 West 34th Street, New York, New York 10001, or at such other location
as agreed by the Representatives and the Partnership, on the date specified by
the Representatives (which shall be within three business days after exercise of
said option or on such date as the Representatives and the Partnership shall
agree) (the "Option Closing Date"), certificates for the Option Units in such
names and denominations as the Representatives shall have requested against
payment of the purchase price thereof to or upon the order of the Partnership by
wire transfer of immediately available funds. If settlement for the Option
Units occurs after the Closing Date, the Partnership will deliver to the
Representatives on the Option Closing Date, and the obligation of the
Underwriters to purchase the Option Units shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
------------------------
Underwriters propose to offer the Units for sale to the public as set forth in
the Prospectus.
5. Agreements.
----------
(a) General. Each of the Genesis Parties jointly and severally
-------
agrees with the several Underwriters that:
(i) The Partnership and the General Partner will each use its
best efforts to cause the Registration Statement and any amendment thereof, if
not effective at the Execution Time, to become effective. Prior to the
termination of the offering of the Units, the Partnership will not file any
amendment of or supplement to the Registration Statement, any Preliminary
Prospectus or the Prospectus which is not in compliance with the Act and the
rules and regulations thereunder and which has not been consented to by the
Representatives. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing of
the Prospectus is otherwise required under Rule 424(b), the Partnership will
cause the Prospectus, properly completed in compliance with the Act and the
rules and regulations thereunder, and any supplement thereto, to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing.
(ii) The Partnership will promptly advise the Representatives (A)
when the Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (B) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (C) when, prior to termination of the
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offering of the Units, any amendment to the Registration Statement shall have
been filed or become effective, (D) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Prospectus or for
any additional information, (E) of any change in the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties, considered as a whole, or of the happening of any event which makes any
statement of a material fact made in the Registration Statement, any Preliminary
Prospectus or the Prospectus (as then supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement, any
Preliminary Prospectus or the Prospectus (as then supplemented) in order to
state a material fact required by the Act or the rules and regulations
thereunder to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading, or of the necessity to amend or supplement the Registration
Statement, any Preliminary Prospectus or the Prospectus (as then supplemented)
to comply with the Act, the rules and regulations thereunder or any other
applicable law, (F) of the receipt by any Genesis Party of any notification with
respect to the suspension of the qualification of the Units for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and (G) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of
any proceeding for that purpose. The Partnership and the General Partner will
each use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Units is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Registration Statement, any Preliminary Prospectus or the Prospectus to comply
with the Act, the rules and regulations thereunder or any other law, the
Partnership promptly will prepare and file with the Commission, subject to the
second sentence of paragraph (a)(i) of this Section 5, an amendment or
supplement in form and substance satisfactory to counsel to the Underwriters,
which will correct such statement or omission or effect such compliance.
(iv) As soon as practicable, the Partnership will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Partnership and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act.
(v) The Partnership will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, if delivery of a
prospectus by an Underwriter or dealer is required prior to nine months after
the time of issue of the Prospectus in connection with the offering and sale of
the Units, as many copies of each Preliminary Prospectus and the Prospectus and
any supplement thereto as the Representatives may reasonably request. At any
time after nine months after the time of issue of the
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<PAGE>
Prospectus, upon request but at your expense, the Partnership will deliver as
many copies of an amended Prospectus complying with Section 10(a)(3) of the Act
as you may reasonably request. The Partnership will furnish or cause to be
furnished to the Representatives copies of all reports on Form SR required by
Rule 463 under the Act. The Partnership will pay the expenses of printing or
other production of all documents relating to the offering.
(vi) The Partnership and the General Partner will arrange for the
qualification of the Units for sale under the laws of such jurisdictions as the
Representatives may designate, and will maintain such qualifications in effect
so long as reasonably required for the distribution of the Units; provided,
--------
however, that in connection therewith, the Partnership and the General Partner
- -------
shall not be required to qualify to do business or to file a general consent to
service of process in any such jurisdiction. The Partnership will pay the fee
of the National Association of Securities Dealers, Inc. ("NASD") in connection
with the NASD's review of the offering.
(vii) Except as provided in this Agreement, the Genesis Parties
will not, for a period of 180 days following the Execution Time, without the
prior written consent of Salomon Brothers Inc and Smith Barney Inc., (i) offer,
sell, contract to sell or otherwise dispose of or announce the offering of any
Common Units or Subordinated OLP Units or any securities that are convertible
into, or exercisable or exchangeable for, Common Units or Subordinated OLP Units
or any securities that are senior to or pari passu with Common Units or
----------
Subordinated OLP Units (other than (A) the issuance of Common Units in
connection with Acquisitions (as defined in the Partnership Agreement) or
Capital Improvements (as defined in the Partnership Agreement) permitted under
the Partnership Agreement (provided the holder of such newly issued Common Units
agrees to be bound by this provision) and (B) the issuance of Common Units
pursuant to the Restricted Unit Plan described in the Registration Statement, or
(ii) grant any options or warrants to purchase Common Units or Subordinated OLP
Units.
(viii) The Partnership will furnish to its Unitholders annual
reports containing financial statements certified by independent public
accountants and shall also furnish or make available, after the end of each of
the first three quarters of each fiscal year, quarterly summary financial
information in reasonable detail which may be unaudited. During the period of
three years from the date hereof, the Partnership will deliver to the
Representatives and, upon request, to each of the other Underwriters, copies of
each annual report of the Partnership and each other report furnished by the
Partnership to each of its Unitholders. For three years after the Closing Date,
the Partnership will deliver to the Representatives, as soon as they are
available, any reports and financial statements furnished to or filed by the
Partnership with the Commission or the NYSE.
(ix) The Partnership will use the net proceeds received by it
from the sale of the Units in the manner specified in the Prospectus under "Use
of Proceeds."
(x) Each of the Genesis Parties will take such steps as shall be
necessary to ensure that none of them shall become an "investment company"
within the meaning of such term
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<PAGE>
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(b) Basis. Basis agrees with the several Underwriters that, Basis
-----
will not, for a period of 180 days following the Execution Time, without the
prior written consent of Salomon Brothers Inc and Smith Barney Inc., offer,
sell, contract to sell or otherwise dispose of or announce the offering of any
Common Units or Subordinated OLP Units or any securities that are convertible
into, or exercisable or exchangeable for, Common Units or Subordinated OLP Units
or any securities that are senior to or pari passu with Common Units or
----------
Subordinated OLP Units (other than the transfer of Subordinated OLP Units to
John vonBerg pursuant to the Performance Payment described in the Registration
Statement under "Certain Relationships and Related Transactions").
(c) Howell. Howell agrees with the several Underwriters that, Howell
------
will not, for a period of 180 days following the Execution Time, without the
prior written consent of Salomon Brothers Inc and Smith Barney Inc., offer,
sell, contract to sell or otherwise dispose of or announce the offering of any
Common Units or Subordinated OLP Units or any securities that are convertible
into, or exercisable or exchangeable for, Common Units or Subordinated OLP Units
or any securities that are senior to or pari passu with Common Units or
----------
Subordinated OLP Units.
6. Conditions to the Obligations of the Underwriters. The obligations of
-------------------------------------------------
the Underwriters to purchase the Underwritten Units and the Option Units, as the
case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Genesis Entities contained herein as of the
Execution Time and the Closing Date or the Option Closing Date, as the case may
be, to the accuracy of the statements of the Genesis Entities made in any
certificates pursuant to the provisions hereof as of the Execution Time and the
Closing Date or the Option Closing Date, as the case may be, to the performance
by the Genesis Entities of their respective obligations hereunder, to the other
provisions herein to be satisfied at or prior to such date and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later time,
the Registration Statement will become effective not later than (i) 6:00 P.M.
New York City time on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 P.M. New York City time on such
date or (ii) 12:00 Noon on the business day following the day on which the
public offering price was determined, if such determination occurred after 3:00
P.M. New York City time on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Representatives shall have received the opinion of
Andrews & Kurth L.L.P., counsel for the Genesis Parties and Basis, dated the
Closing Date and addressed to the
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<PAGE>
Underwriters, in form and substance satisfactory to the Representatives, with
respect to the matters set forth in Exhibit A attached hereto.
---------
(c) The Representatives shall have received the opinion of Wayne
Kubicek, General Counsel of Basis, dated the Closing Date and addressed to the
Underwriters, in form and substance satisfactory to the Representatives, with
respect to the matters set forth in Exhibit B attached hereto.
---------
(d) The Representatives shall have received the opinion of
Robert Moffett, Vice President and General Counsel of Howell Corporation, dated
the Closing Date and addressed to the Underwriters, in form and substance
satisfactory to the Representatives, with respect to the matters set forth in
Exhibit C attached hereto.
- ---------
[(e) The Representatives shall have received the opinion of
Bracewell & Patterson, L.L.P., counsel for Howell Corporation, dated the Closing
Date and addressed to the Underwriters, in form and substance satisfactory to
the Representatives, with respect to the matters set forth in Exhibit D attached
---------
hereto.]
(f) The Representatives shall have received the opinion of
Bradley J. Gans, internal counsel for Salomon Inc, dated the Closing Date and
addressed to the Underwriters, in form and substance satisfactory to the
Representatives, with respect to the matters set forth in Exhibit E attached
---------
hereto.
(g) The Representatives shall have received the opinion of
Cravath, Swaine & Moore, counsel for Salomon Inc, dated the Closing Date and
addressed to the Underwriters, in form and substance satisfactory to the
Representatives, with respect to the matters set forth in Exhibit F attached
---------
hereto.
(h) The Representatives shall have received an opinion or
opinions of special counsel to the Genesis Parties in each of the States of
Alabama, Florida, Mississippi, and Texas dated the Closing Date and addressed to
the Underwriters, in form and substance satisfactory to the Representatives,
with respect to the matters set forth in Exhibit G attached hereto.
---------
(i) The Representatives shall have received from Baker & Botts,
L.L.P., counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Units, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as the Representatives may reasonably require, and the
Genesis Entities shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(j) The General Partner shall have furnished to the
Representatives a certificate of the General Partner, signed by the President or
a Vice President and the Chief Financial Officer of the General Partner, dated
the Closing Date, to the effect that the signers of such certificate have
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<PAGE>
carefully examined the Registration Statement, the Prospectus, any supplements
to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Genesis Parties in
this Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Genesis Parties have complied with
all the agreements and satisfied all the conditions on their part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or, to their knowledge, threatened;
(iii) the Common Units have been duly listed, subject to official
notice of issuance, on the New York Stock Exchange; and
(iv) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in the condition (financial
or other), earnings, business, properties, prospects, net worth or results of
operations of the Genesis Parties considered as a whole, whether or not arising
from transactions in the ordinary course of business.
(k) Basis shall have furnished to the Representatives a
certificate of Basis, signed by the President or a Vice President and the chief
financial officer or Treasurer of Basis, dated the Closing Date, to the effect
that the representations and warranties of Basis in this Agreement are true and
correct on and as of the Closing Date with the same effect as if made on the
Closing Date and Basis has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to the
Closing Date.
(l) Howell shall have furnished to the Representatives a
certificate of the Howell Entities, signed by the President or a Vice President
and the chief financial or accounting officer of Howell, dated the Closing Date,
to the effect that the representations and warranties of the Howell Entities in
this Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Howell Entities have complied with
all the agreements and satisfied all the conditions on their part to be
performed or satisfied at or prior to the Closing Date.
(m) Salomon Inc shall have furnished to the Representatives a
certificate of Salomon Inc, signed by a Managing Director or Vice President of
Salomon Inc, dated the Closing Date, to the effect that the representations and
warranties of Salomon Inc in this Agreement are true and correct on and as of
the Closing Date with the same effect as if made on the Closing Date and Salomon
Inc has complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date.
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<PAGE>
(n) At the Execution Time and at the Closing Date, Arthur
Andersen LLP shall have furnished to the Representatives a letter or letters,
dated respectively as of the Execution Time and as of the Closing Date, in form
and substance previously approved by the Representatives.
(o) At the Execution Time and at the Closing Date, Deloitte &
Touche LLP shall have furnished to the Representatives a letter or letters,
dated respectively as of the Execution Time and as of the Closing Date, in form
and substance previously approved by the Representatives.
(p) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraphs (m) or (n) of this Section 6, or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or other), business, properties, net worth or results of
operations of the Genesis Parties not contemplated by the Prospectus, the effect
of which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the Units
as contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
(q) (i) There shall not have been any change in the partners'
capital or limited liability company interests of the Partnership or the General
Partner, as the case may be, nor any material increase in the short-term or the
long-term debt of the Genesis Parties (other than in the ordinary course of
business) from that set forth or contemplated in the Registration Statement or
the Prospectus (or any amendment or supplement thereto); (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), any material adverse
change in or affecting the condition (financial or other), business, properties,
net worth or results of operations of the Genesis Parties considered as a whole;
(iii) the Genesis Parties shall not have any liabilities or obligations, direct
or contingent (whether or not in the ordinary course of business), that are
material to the Genesis Parties, considered as a whole, other than those
reflected in the Registration Statement or the Prospectus (or any amendment or
supplement thereto); and (iv) all the representations and warranties of the
Genesis Entities contained in this Agreement shall be true and correct on and as
of the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date.
(r) The Units shall have been either listed or approved for
listing upon notice of issuance on the New York Stock Exchange.
(s) On the Closing Date, each of the Conveyance Agreement, the
Distribution Support Agreement, the Master Credit Support Agreement, the
Redemption and Registration Rights Agreement and the Corporate Services
Agreement shall be in full force and effect, enforceable
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<PAGE>
against the parties thereto in accordance with its terms; provided, that the
--------
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as rights to indemnity and contribution thereunder may be limited by
federal and state securities laws.
(t) Prior to the Closing Date, the Genesis Entities shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Partnership in writing, by facsimile or
by telephone confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the Units
---------------------------------------
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied or because of
any refusal, inability or failure on the part of any of the Genesis Entities to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Genesis Entities (other than
Salomon Inc) will jointly and severally be obligated to, and will, reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Units.
8. Indemnification and Contribution.
--------------------------------
(a) Each of the Genesis Parties, jointly and severally, agrees
to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act, against
any and all losses, claims, damages or liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending
same), joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Units as originally filed or
in any amendment thereof, or in any Preliminary Prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with
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<PAGE>
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Genesis Parties will not be liable in any such case
- -------- -------
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Partnership solely by or on behalf of any
Underwriter through the Representatives specifically for inclusion therein, and
provided, further, that none of the Genesis Parties shall be liable to any
- -------- -------
Underwriter under the indemnity agreement in this subsection (i) with respect to
any Preliminary Prospectus to the extent that any such loss, claim, damage or
liability of such Underwriter results solely from the fact that such Underwriter
sold Units to a person as to whom any of the Genesis Parties shall establish
that there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or of the Prospectus as then amended or
supplemented in any case where such delivery is required by the Act, if the
Partnership has previously furnished copies thereof in sufficient quantity to
such Underwriter and the loss, claim, damage or liability of such Underwriter
results from an untrue statement or omission of a material fact contained in the
Preliminary Prospectus that was corrected in the Prospectus or in the Prospectus
as then amended or supplemented. This indemnity agreement will be in addition
to any liability which any Genesis Party may otherwise have.
(b) Basis agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act or the Exchange Act, to the same extent as the indemnity from the Genesis
Parties to each Underwriter set forth in paragraph (a) of this Section 8, but
only with reference to the Basis Information. This indemnity agreement will be
in addition to any liability which Basis may otherwise have.
(c) Each of the Howell Entities agrees to indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act or the Exchange Act, to the same extent as the indemnity from the
Genesis Parties to each Underwriter set forth in paragraph (a) of this Section
8, but only with reference to the Howell Information. This indemnity agreement
will be in addition to any liability which the Howell Entities may otherwise
have.
(d) Salomon Inc agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act of the Exchange Act, against any and all losses, claims, damages or
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same), joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus under the caption "Certain Information Concerning
Salomon Inc." This indemnity agreement will be in addition to any liability
which Salomon Inc may otherwise have.
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<PAGE>
(e) Each Underwriter severally agrees to indemnify and hold harmless
the Genesis Entities, each of their respective directors and each of their
officers who signs the Registration Statement, and each person who controls any
Genesis Party within the meaning of either the Act or the Exchange Act, to the
same extent as the indemnity from the Genesis Entities to each Underwriter set
forth in paragraph (a) of this Section 8, but only with reference to written
information relating to such Underwriter furnished to the Genesis Parties by or
on behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have.
(f) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party or parties
under this Section 8, notify the indemnifying party or parties in writing of the
commencement thereof; but the failure so to notify the indemnifying party or
parties (i) will not relieve it or them from liability under paragraph (a), (b),
(c), (d) or (e) of this Section 8 unless and to the extent it or they did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party or parties of substantial rights and defenses and (ii) will
not, in any event, relieve the indemnifying party or parties from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a), (b), (c), (d) or (e) of this Section 8. If it so
elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action. The indemnifying party or parties shall be
entitled to appoint counsel of the indemnifying party's or parties' choice at
the indemnifying party's or parties' expense to represent the indemnified party
or parties in any action for which indemnification is sought (in which case the
indemnifying party or parties shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
-------- -------
be satisfactory to the indemnified party or parties. Notwithstanding the
indemnifying party's or parties' election to appoint counsel to represent the
indemnified party or parties in an action, the indemnified party or parties
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party or parties shall bear the reasonable fees, costs and
expenses of such separate counsel if (A) the use of counsel chosen by the
indemnifying party or parties to represent the indemnified party or parties
would present such counsel with a conflict of interest, (B) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party or parties and the indemnifying party or parties and the
indemnified party or parties shall have reasonably concluded that there may be
legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party or
parties, (C) the indemnifying party or parties shall not have employed counsel
satisfactory to the indemnified party or parties to represent the indemnified
party or parties within a reasonable time after notice of the institution of
such action or (D) the indemnifying party or parties shall authorize the
indemnified party or parties to employ separate counsel at the expense of the
indemnifying party or parties. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of
-36-
<PAGE>
any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(g) In the event that the indemnity provided in paragraph (a) , (b),
(c), (d) or (e) of this Section 8 is unavailable or insufficient to hold
harmless an indemnified party for any reason, the Genesis Entities and the
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Genesis Entities and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Genesis Entities and by the Underwriters from the offering of the Units;
provided, however, that in no case shall any Underwriter (except as may be
- -------- -------
provided in any agreement among underwriters relating to the offering of the
Units) be responsible for any amount in excess of the underwriting discount or
commission applicable to the Units purchased by such Underwriter hereunder; and
provided, further that the liability of certain Genesis Entities under this
- -------- -------
paragraph (g) shall be limited to the extent set forth in paragraph (h) of this
Section 8. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Genesis Entities and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Genesis Entities and of the
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Genesis Entities shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by each of them,
and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to information
provided by any Genesis Entity or the Underwriters. The Genesis Entities and
the Underwriters agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (g), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Partnership or the Operating Partnership within the meaning of either the
Act or the Exchange Act, each officer of the General Partner who shall have
signed the Registration Statement and each director of the General Partner shall
have the same rights to contribution as the Genesis Entities, subject in each
case to the applicable terms and conditions of this paragraph (g). The Genesis
Entities' obligations to contribute are several and not joint. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations and not joint.
-37-
<PAGE>
(h) Notwithstanding the foregoing, (i) the liability of Basis and the
Howell Entities under paragraphs (b), (c) and (g) of this Section 8 shall be
limited to 54% and 46%, respectively, of the total proceeds (net of underwriting
discounts and commissions but before deducting expenses) received by the
Partnership from the offering of Units under this Agreement, as derived from the
aggregate proceeds to the Partnership set forth in the table on the cover page
of the Prospectus and (ii) Salomon Inc's liability under paragraphs (d) and (g)
of this Section 8 shall be limited to Losses arising solely out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus or the Prospectus under the
caption "Certain Information Concerning Salomon Inc."
9. Default by an Underwriter. If any one or more Underwriters shall fail
-------------------------
to purchase and pay for any of the Underwritten Units agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Underwritten
Units set forth opposite their names in Schedule I hereto bears to the aggregate
amount of Underwritten Units set forth opposite the names of all the remaining
Underwriters) the Underwritten Units which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
-------- -------
that the aggregate amount of Underwritten Units which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Underwritten Units set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Underwritten Units, and if such nondefaulting
Underwriters do not purchase all the Underwritten Units, this Agreement will
terminate without liability to any nondefaulting Underwriter or the Genesis
Entities. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven business days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Genesis Entities, and any nondefaulting Underwriter for damages occasioned
by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Representatives, by notice given to the Partnership
prior to delivery of and payment for the Underwritten Units or the Option Units,
as the case may be, if prior to such time (a) trading in the Partnership's
Common Units shall have been suspended by the Commission or the New York Stock
Exchange or trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been established on
such exchange, (b) a banking moratorium shall have been declared either by
Federal or New York State authorities or (c) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
Underwritten Units or the Option Units, as applicable, as contemplated by the
Prospectus (exclusive of any supplement thereto).
-38-
<PAGE>
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Genesis Entities or their respective officers and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, the
Genesis Entities or any of their respective officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Units. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
12. Information Furnished by the Underwriters. The statements set forth
-----------------------------------------
in the last paragraph on the cover page, the stabilization legend on the inside
cover page and the statements in the first and fifth paragraphs, the third and
fourth sentences of the second paragraph and the third sentence of the sixth
paragraph under the caption "Underwriting" in any Preliminary Prospectus and in
the Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Section 1(a)(ii)
and Section 8 hereof.
13. Notices. All communications hereunder will be in writing and
-------
effective only on receipt. Such communications will be mailed, delivered, or
transmitted by telex or facsimile and confirmed (i) to the Underwriters, care of
Salomon Brothers Inc, at Seven World Trade Center, New York, New York 10048,
Attention: _______ (facsimile number: (212) 783-____) and care of Smith Barney
Inc., 388 Greenwich Street, New York, New York 10013, Attention: Manager,
Investment Banking Division (facsimile number: (212) 816-____), except that
notices given to an Underwriter pursuant to Section 8 hereof shall be sent to
such Underwriter at the address provided to the Representatives, which address
will be supplied to any other party hereto by the Representatives upon request;
(ii) to the Genesis Parties, at One Allen Center, 500 Dallas, Suite 3200,
Houston, Texas 77002, Attention: President (facsimile number (713): 656-____);
(iii) to Basis, at One Allen Center, 500 Dallas, Suite 3200, Houston, Texas
77002, Attention: Wayne Kubicek (facsimile number: (713) 646-5278); (iv) to the
Howell Entities, at 1111 Fannin, Suite 1500, Houston, Texas 77002, Attention:
Robert Moffett (facsimile number: (713) 658-4007); and (v) to Salomon Inc, at
Seven World Trade Center, New York, New York 10048, Attention: Thomas Jasper
(facsimile number: (212) 783-3219).
14. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
15. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.
-39-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Genesis Entities and the several Underwriters.
Very truly yours,
GENESIS ENERGY, L.P.
By: Genesis Energy, L.L.C., its
general partner
By:______________________________
Name:
Title:
GENESIS CRUDE OIL, L.P.
By: Genesis Energy, L.L.C., its
general partner
By:______________________________
Name:
Title:
GENESIS ENERGY, L.L.C.
By:______________________________
Name:
Title:
BASIS PETROLEUM, INC.
By:______________________________
Name:
Title:
-40-
<PAGE>
HOWELL CORPORATION
By:______________________________
Name:
Title:
SALOMON INC
By:______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first
above written.
Salomon Brothers Inc
Smith Barney Inc.
Dean Witter Reynolds Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
By: Salomon Brothers Inc
By:______________________________
Vice President
By: Smith Barney Inc.
By:______________________________
Authorized Representative
For themselves and the other several Underwriters
named in Schedule I to the foregoing Agreement.
-41-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Underwritten Units
Underwriters To Be Purchased
- ------------ ----------------------
<S> <C>
Salomon Brothers Inc. ............................
Smith Barney Inc. ................................
Dean Witter Reynolds Inc. ........................
PaineWebber Incorporated .........................
Prudential Securities Incorporated ...............
---------
Total 7,500,000
=========
</TABLE>
-1-
<PAGE>
EXHIBIT A
OPINION OF ANDREWS & KURTH L.L.P.
(i) Each of the Partnership and the Operating Partnership is a
limited partnership duly formed and validly existing in good standing under the
Delaware Act with all necessary partnership power and authority to own or lease
its properties, to assume the liabilities being assumed by it pursuant to the
Conveyance Agreement and the Conveyances, to act as a general partner of the
Operating Partnership (in the case of the Partnership) and to conduct its
business, in each case in all material respects as described in the Registration
Statement and the Prospectus.
(ii) Each of the Partnership and the Operating Partnership is duly
registered or qualified as a foreign limited partnership for the transaction of
business under the laws of, and is in good standing in each of, the states
listed on Schedule I to this opinion; and, to our knowledge, such jurisdictions
are the only jurisdictions in which the nature or location of the properties of
the Partnership or the Operating Partnership or the conduct of the business of
the Partnership or the Operating Partnership requires such registration or
qualification (except where the failure to so register or so qualify (A) would
not have a material adverse effect on the financial condition, business or
results of operations of the Genesis Parties considered as a whole or (B) would
not subject the limited partners of the Partnership to any material liability or
disability).
(iii) The General Partner is a limited liability company duly
formed and validly existing in good standing under the laws of Delaware with all
necessary limited liability company power and authority to own its properties,
to conduct its business and to act as a general partner of the Partnership and
the Operating Partnership in all material respects as described in the
Registration Statement and the Prospectus.
(iv) The General Partner is duly registered or qualified as a
foreign limited liability company for the transaction of business under the laws
of, and is in good standing in each of, the states listed on Schedule I to this
opinion; and, to our knowledge, such jurisdictions are the only jurisdictions in
which the nature or location of the properties of the General Partner or the
conduct of the business of the General Partner requires such registration or
qualification (except where the failure to so register or so qualify (A) would
not have a material adverse effect on the financial condition, business or
results of operations of the Genesis Parties considered as a whole or (B) would
not subject the limited partners of the Partnership to any material liability or
disability).
(v) The General Partner is the sole general partner of the
Partnership with a 2% general partner interest in the Partnership; such general
partner interest is duly authorized by the Partnership Agreement and was validly
issued to the General Partner; and the General Partner owns such general partner
interest in the Partnership free and clear of all liens, encumbrances, security
interests, charges or claims (A) in respect of which a financing statement under
the Uniform Commercial Code of the States of Delaware or Texas naming the
General Partner as debtor is on file in the office of the Secretary
A-1
<PAGE>
of State of the States of Delaware or Texas or (B) otherwise known to such
counsel, without independent investigation, other than those created by or
arising under the Delaware Act.
(vi) The Partnership and the General Partner are the only two
general partners of the Operating Partnership with a 69.57% general partner
interest and a .61% general partner interest in the Operating Partnership,
respectively; such general partner interests are duly authorized by the
Operating Partnership Agreement and were validly issued to the Partnership and
the General Partner, respectively; each of the Partnership and the General
Partner owns its general partner interest in the Operating Partnership free and
clear of all liens, encumbrances, security interests, charges or claims (A) in
respect of which a financing statement under the Uniform Commercial Code of the
States of Delaware or Texas naming the Partnership or the General Partner as
debtor is on file in the office of the Secretary of State of the States of
Delaware or Texas or (B) otherwise known to such counsel, without independent
investigation, other than those created by or arising under the Delaware Act.
(vii) The 7,500,000 Underwritten Units to be issued and sold to the
Underwriters by the Partnership pursuant to the Underwriting Agreement and the
limited partner interests represented thereby are duly authorized by the
Partnership Agreement and, when issued and delivered to the Underwriters against
payment therefor as provided in the Underwriting Agreement, will be validly
issued, fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by matters
described in the Prospectus under the caption "The Partnership Agreement--
Limited Liability"); and the Underwritten Units will be the only limited partner
interests of the Partnership issued and outstanding as of the Closing Date.
(viii) Upon delivery to the Underwriters of certificates evidencing
the Units issued in the name of the Underwriters and payment by the Underwriters
of the purchase price for the Units, the Underwriters will acquire the Units
free of any adverse claim (as such term is defined in Section 8-302 of the New
York Uniform Commercial Code), assuming that the Underwriters are acting in good
faith and without notice of any adverse claim.
(ix) The 1,771,200 and 1,508,800 Subordinated OLP Units to be
issued to Basis and certain of the Howell Entities, respectively, pursuant to
the Conveyance Agreement and the Operating Partnership Agreement and the limited
partner interests represented thereby are duly authorized by the Operating
Partnership Agreement and, when issued and delivered pursuant to the terms of
the Conveyance Agreement and the Operating Partnership Agreement, will be
validly issued, fully paid (to the extent required under the Operating
Partnership Agreement) and nonassessable (except as such nonassessability may be
affected by matters described in the Prospectus under "The Partnership
Agreement-- Limited Liability"); the 3,280,000 Subordinated OLP Units will be
the only limited partner interests in the Operating Partnership issued and
outstanding on the Closing Date; and Basis will own its limited partner interest
in the Operating Partnership represented by the Subordinated OLP Units free and
clear of all liens, encumbrances, security interests, charges or claims (A) in
respect of which a financing statement under the Uniform Commercial Code of the
States of Delaware or Texas naming Basis as debtor is on file in the office of
the Secretary of State of the States of Delaware or Texas or (B) otherwise known
to such counsel, without independent investigation, other than those created by
or
A-2
<PAGE>
arising under the Delaware Act, except for the pledge of Subordinated OLP Units
contemplated in the Conveyance Agreement.
(x) Basis owns a membership interest of 54% in the General
Partner and Howell owns a membership interest of 46% in the General Partner;
such membership interests are duly authorized by the LLC Agreement and have been
validly issued in accordance with such LLC Agreement and are fully paid and
nonassessable; and Basis owns such membership interest free and clear of all
liens, encumbrances, security interests, charges or claims (A) in respect of
which a financing statement under the Uniform Commercial Code of the States of
Delaware or Texas naming Basis as debtor is on file in the office of the
Secretary of State of the States of Delaware or Texas or (B) otherwise known to
such counsel, without independent investigation, other than those created by or
arising under the Delaware Limited Liability Company Act.
(xi) Except as described in the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any limited or general partner
interests in the Partnership or the Operating Partnership pursuant to either of
the Partnership Agreements or, to our knowledge, any agreement or other
instrument to which the Partnership or the Operating Partnership is a party or
by which the Partnership or the Operating Partnership may be bound. To our
knowledge, neither the filing of the Registration Statement nor the offering or
sale of the Units as contemplated by the Underwriting Agreement gives rise to
any rights for or relating to the registration of any Units or other securities
of the Partnership or the Operating Partnership, except as set forth in the
Redemption and Registration Rights Agreement. To our knowledge, except as
described in the Prospectus, there are no outstanding options or warrants to
purchase any Common Units, Subordinated OLP Units, Common OLP Units or any other
securities of the Partnership or the Operating Partnership. The Partnership has
all requisite power and authority under the Delaware Act and the Partnership
Agreement to issue, sell and deliver the Units in accordance with and upon the
terms and conditions set forth in the Underwriting Agreement, the Conveyance
Agreement and the Partnership Agreement. The Operating Partnership has all
requisite power and authority under the Delaware Act and the Operating
Partnership Agreement to issue, sell and deliver the Subordinated OLP Units in
accordance with and upon the terms and conditions set forth in the Conveyance
Agreement and the Operating Partnership Agreement. All corporate, limited
liability company and partnership action required to be taken by any of the
Genesis Parties or Basis or any of their shareholders, members and partners
(excluding the Howell Entities, as to which such counsel need not express any
opinion) for the authorization, issuance, sale and delivery of the Units and
Subordinated OLP Units and the consummation of the transactions contemplated by
the Underwriting Agreement and the Operative Agreements has been validly taken.
(xii) The Underwriting Agreement has been duly authorized, executed
and delivered by each of the Genesis Parties and Basis.
(xiii) The Partnership Agreement has been duly authorized, executed
and delivered by the General Partner and duly executed and delivered by the
Organizational Limited Partner and constitutes a valid and legally binding
agreement of the General Partner and the Organizational Limited Partner,
enforceable against the General Partner and the Organizational Limited Partner
in accordance with its
A-3
<PAGE>
terms, except as the enforceability thereof may be limited by (A) bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership, moratorium and
similar laws of general application relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (B) public
policy, applicable law relating to fiduciary duties and an implied covenant of
good faith and fair dealing.
(xiv) The Operating Partnership Agreement has been duly authorized,
executed and delivered by the General Partner, the Partnership and Basis, and,
assuming the due authorization, execution and delivery thereof by the Howell
Entities that are parties thereto, constitutes a valid and legally binding
agreement of the General Partner, the Partnership, Basis and the Howell Entities
that are parties thereto, enforceable against the General Partner, the
Partnership, Basis and the Howell Entities that are parties thereto in
accordance with its terms, except as the enforceability thereof may be limited
by (A) bankruptcy, insolvency, fraudulent transfer, reorganization,
receivership, moratorium and similar laws of general application relating to or
affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (B) public policy, applicable law relating to fiduciary
duties and an implied covenant of good faith and fair dealing.
(xv) The LLC Agreement has been duly authorized, executed and
delivered by Basis and, assuming the due authorization, execution and delivery
thereof by Howell, constitutes a valid and legally binding agreement of Basis
and Howell, enforceable against Basis and Howell in accordance with its terms,
except as the enforceability thereof may be limited by (A) bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership, moratorium and
similar laws of general application relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (B) public
policy, applicable law relating to fiduciary duties and an implied covenant of
good faith and fair dealing.
(xvi) Each of the Conveyance Agreement and the Conveyances has been
duly authorized, executed and delivered by each of the Genesis Parties and Basis
that are parties thereto and, assuming the due authorization, execution and
delivery thereof by the Howell Entities that are parties thereto, constitutes a
valid and legally binding agreement of each of the Genesis Parties, Basis and
the Howell Entities that are parties thereto, enforceable against such parties
in accordance with its terms; the Distribution Support Agreement has been duly
authorized, executed and delivered by the Operating Partnership and, assuming
the due authorization, execution and delivery thereof by Salomon Inc,
constitutes a valid and legally binding agreement of the Operating Partnership
and Salomon Inc, enforceable against the Operating Partnership and Salomon Inc
in accordance with its terms; the Master Credit Support Agreement has been duly
authorized, executed and delivered by the Operating Partnership and Basis; the
Redemption and Registration Rights Agreement has been duly authorized, executed
and delivered by the Partnership, the Operating Partnership and Basis and,
assuming the due authorization, execution and delivery thereof by the Howell
Entities that are parties thereto, constitutes a valid and legally binding
agreement of the Partnership, the Operating Partnership, Basis and the Howell
Entities, enforceable against the Partnership, the Operating Partnership, Basis
and the Howell Entities in accordance with its terms; and the Corporate Services
Agreement has been duly authorized,
A-4
<PAGE>
executed and delivered by the Partnership and Basis and constitutes a valid and
legally binding agreement of the Partnership and Basis, enforceable against the
Partnership and Basis in accordance with its terms; provided, that, with respect
--------
to each agreement described in this paragraph (xvi), the enforceability thereof
may be limited by (A) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (B) public
policy, applicable law relating to fiduciary duties and an implied covenant of
good faith and fair dealing.
(xvii) None of the offering, issuance and sale by the Partnership of
the Units, nor the execution, delivery and performance of the Underwriting
Agreement and the Operative Agreements by any of the Genesis Parties which are
parties thereto, nor the consummation of the transactions contemplated thereby
(A) constitutes or will constitute a violation of the certificate of limited
partnership, agreement of limited partnership, articles of organization or
agreement of limited liability company or other organizational documents of any
of the Genesis Parties, (B) constitutes or will constitute a breach or violation
of, or a default under (or an event which, with notice or lapse of time or both,
would constitute such an event), any Operative Agreement or any other agreement
filed as an exhibit to the Registration Statement, (C) violates or will violate,
in any material respect, any order, judgment, decree or injunction of any court
or governmental agency or body known to us directed to any of the Genesis
Parties or any of their properties in a proceeding in which any of the Genesis
Parties or any of their properties is a party, (D) violates or will violate, in
any material respect, any federal, New York or Texas statute, law or regulation,
or the Delaware Act, the Delaware General Corporation Law or the Delaware
Limited Liability Company Act or (E) will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of any of the
Genesis Parties, except for liens created pursuant to the Master Credit Support
Agreement.
(xviii) None of the offering, issuance and sale by the Partnership of
the Units, nor the execution, delivery and performance by Basis of the
Underwriting Agreement and the Operative Agreements to which Basis is a party,
nor the consummation of the transactions contemplated thereby violates or will
violate, in any material respect, any federal, New York or Texas statute, law or
regulation applicable to Basis or its properties.
(xix) No permit, consent, approval, authorization or order of any
federal, New York, Texas or Delaware court or governmental agency or body is
required in connection with the execution and delivery by the Genesis Parties
and Basis of, or the consummation by the Genesis Parties and Basis of the
transactions contemplated by, the Underwriting Agreement or the Operative
Agreements, except (A) for such permits, consents, approvals and similar
authorizations required under the Securities Act, the Exchange Act and the
securities or "Blue Sky" laws of certain jurisdictions, (B) for such permits,
consents, approvals and similar authorizations which have been obtained, (C) for
such permits, consents, approvals and similar authorizations which (1) are of a
routine or administrative nature, (2) are not customarily obtained or made prior
to the consummation of transactions such as those contemplated by the
Underwriting Agreement and by the Operative Agreements and (3) are expected in
the reasonable judgment of the General Partner to be obtained in the ordinary
course of business subsequent to the
A-5
<PAGE>
consummation of the Transactions, (D) for such permits, consents, approvals and
similar authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect upon the condition (financial or
other), business, properties, net worth or results of operations of the Genesis
Parties considered as a whole and (E) as set forth or contemplated in the
Prospectus.
(xx) The consummation of the Transactions is not subject to the
pre- merger notification and waiting period requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976.
(xxi) The statements in the Registration Statement and Prospectus
under the captions "The Transactions," "Credit Support Facilities," "Cash
Distribution Policy," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Genesis--Liquidity and Capital Resources,"
"Business--Title to Properties," "Business--Environmental Matters," "Business--
Regulation," "Certain Relationships and Related Transactions" "Conflicts of
Interest and Fiduciary Responsibilities," "Description of the Common Units,"
"The Partnership Agreement" and "Units Eligible for Future Sale," insofar as
they constitute descriptions of the Operative Agreements, or refer to statements
of law or legal conclusions, are accurate and complete in all material respects,
and the Common Units and the Subordinated OLP Units conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(xxii) To our knowledge, there are no legal or governmental
proceedings pending or threatened against any Genesis Party or to which any
Genesis Party is a party or to which any of their respective properties is
subject that are required to be described in the Registration Statement or the
Prospectus but are not described as required; and, to our knowledge, there are
no agreements, contracts or other documents to which any of the Genesis Parties
is a party that are required to be described in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration Statement that are
not described or filed as required by the Act.
(xxiii) The Registration Statement was declared effective under the
Act on _____________, 1996; the Prospectus was filed with the Commission on
_______, 1996 pursuant to subparagraphs ___ and ___ of Rule 424(b); and to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened by the Commission.
(xxiv) The Registration Statement and the Prospectus and any
amendment or supplement thereto prior to the Closing Date (except for the
financial statements and the notes and the schedules thereto and the other
financial, statistical and accounting information included in the Registration
Statement or the Prospectus, as to which we need not express any opinion) comply
as to form in all material respects with the requirements of the Act and the
rules and regulations promulgated thereunder.
(xxv) The opinion of Andrews & Kurth L.L.P. that is filed as
Exhibit 8.1 to the Registration Statement is confirmed as of the date hereof and
the Underwriters may rely upon such opinion as if it were addressed to them.
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(xxvi) None of the Genesis Parties is (A) an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or (B) (x)
a "public utility company," or "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended, (y) a "gas utility,"
"public utility" or "utility" within the meaning of Article 6050 of the Revised
Civil Statutes of Texas or (z) a "public utility" or "utility" within the
meaning of the Public Utility Regulatory Act of Texas.
(xxvii) The Units have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance.
(xxviii) The offer, sale and issuance of the Subordinated OLP Units
to Basis and Howell, respectively, pursuant to the Conveyance Agreement and the
Operating Partnership Agreement, and the offer, sale and issuance of APIs (as
defined in the Operating Partnership Agreement) pursuant to the Distribution
Support Agreement and the Operating Partnership Agreement, are exempt from the
registration requirements of the Act and the securities laws of any state having
jurisdiction with respect thereto.
(xxviii) Following the conveyance to the Operating Partnership of the
common carrier pipelines included in the Transferred Assets (the Common Carrier
Pipeline Properties"), the Operating Partnership shall be entitled to exercise
the power of eminent domain to secure rights-of-way necessary to operate the
Common Carrier Pipeline Properties.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Genesis Entities and
the independent public accountants of the Genesis Parties and your
representatives, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus (except to the extent specified in the foregoing
opinion), no facts have come to such counsel's attention that lead such counsel
to believe that the Registration Statement (other than (i) the financial
statements included therein, including the notes and schedules thereto and the
auditors' reports thereon, and (ii) the other financial, statistical and
accounting information included therein, as to which such counsel need not
comment), as of its effective date contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
(other than (i) the financial statements included therein, including the notes
and schedules thereto and the auditors' reports thereon, and (ii) the other
financial, statistical and accounting information included therein, as to which
such counsel need not comment), as of its issue date and the Closing Date
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect of
matters of fact upon certificates of officers and employees of the Genesis
Entities and upon information obtained from public officials, (ii) assume that
all documents submitted to them as originals are authentic, that all copies
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submitted to them conform to the originals thereof and that the signatures on
all documents examined by them are genuine, (iii) state that their opinion is
limited to federal laws, the Delaware Act, the Delaware Limited Liability
Company Act, the Delaware General Corporation Law and the laws of the States of
New York and Texas, (iv) state that they express no opinion with respect to the
title of any of the Genesis Entities to any of their respective real or personal
property, (v) state that they express no opinion with respect to state or local
tax statutes to which any of the limited partners of the Partnership may be
subject and (vi) state that they express no opinion with respect to local laws
applicable to the Genesis Parties.
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SCHEDULE I
FOREIGN QUALIFICATION
Genesis Energy, L.P. is duly registered or qualified as a foreign
limited partnership under the laws of the following state:
Texas
Each of Genesis Crude Oil, L.P. and Genesis Energy, L.L.C. is duly
registered or qualified as a foreign limited partnership or as a foreign limited
liability company, as the case may be, under the laws of the following states:
Alabama
Florida
Kansas
Louisiana
Mississippi
Nebraska
New Mexico
New York
Oklahoma
Texas
Wisconsin
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EXHIBIT B
OPINION OF WAYNE KUBICEK
(GENERAL COUNSEL OF BASIS PETROLEUM, INC.)
(i) Basis is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Texas with all necessary
corporate power and authority to execute and deliver the Underwriting Agreement
and each Operative Agreement to which it is a party and perform any obligations
it may have thereunder.
(ii) Neither the execution, delivery and performance by Basis of the
Underwriting Agreement and the Operative Agreements to which Basis is a party,
nor the consummation by Basis of the transactions contemplated thereby (A)
constitutes or will constitute a violation of the articles of incorporation or
bylaws of Basis, (B) constitutes or will constitute a breach or violation of, or
a default under (or an event which, with notice or lapse of time or both, would
constitute such an event), any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument known to me to which Basis
is a party or by which Basis is bound, (C) violates or will violate, in any
material respect, any order, judgment, decree or injunction of any court or
governmental agency or body known to me directed to Basis or any of the Basis
Transferred Assets in a proceeding to which Basis or any of the Basis
Transferred Assets is a party or (D) will result in the creation or imposition
of any lien, charge or encumbrance upon the Basis Transferred Assets, except
pursuant to the Master Credit Support Agreement.
(iii) To my knowledge there is no litigation, proceeding or
governmental investigation pending or threatened against Basis that relates to
any of the transactions contemplated by the Prospectus or which, if adversely
determined to Basis, is reasonably likely to have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Genesis Parties considered as a whole, or would impair or
call into question the validity of the Underwriting Agreement or any of the
Operative Agreements or the performance by Basis of its obligations under the
Underwriting Agreement or any of the Operative Agreements to which Basis is a
party.
(iv) Except as described in the Prospectus, to my knowledge, Basis
or the Genesis Parties possess all certificates, authorities or permits issued
by the appropriate local, state or federal regulatory agencies or bodies
necessary to conduct the business currently operated by Basis and to be operated
by the Genesis Parties, except for such certificates, authorizations or permits
which, if not obtained, would not have, individually or in the aggregate, a
material adverse effect upon the condition (financial or otherwise), results of
operations or business of the Genesis Parties considered as a whole; and, to my
knowledge, Basis has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise), results of
operations or business of the Genesis Parties considered as a whole.
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In addition, such counsel shall state that he has participated in
conferences with officers and other representatives of the Genesis Entities and
the independent public accountants of the Genesis Entities and your
representatives, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus, no facts have come to such counsel's attention
that lead such counsel to believe that the Registration Statement (other than
(i) the financial statements included therein, including the notes and schedules
thereto and the auditors' reports thereon, (ii) the other financial, statistical
and accounting information included therein and (iii) the Howell Information, as
to which such counsel need not comment), as of its effective date contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus (other than (i) the financial statements included
therein, including the notes and schedules thereto and the auditors' reports
thereon, and (ii) the other financial, statistical and accounting information
included therein, as to which such counsel need not comment), as of its issue
date and the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect of
matters of fact upon certificates of officers and employees of Basis and upon
information obtained from public officials, (ii) assume that all documents
submitted to him as originals are authentic, that all copies submitted to him
conform to the originals thereof and that the signatures on all documents
examined by him are genuine and (iii) state that his opinion is limited to
federal laws and the laws of the State of New York.
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EXHIBIT C
OPINION OF ROBERT MOFFETT
(GENERAL COUNSEL OF HOWELL CORPORATION)
(i) Each of the Howell Entities is a corporation duly incorporated
and validly existing in good standing under the laws of the State of Delaware
with full corporate power and authority to execute and deliver each of the
Underwriting Agreement and Operative Agreements to which it is a party and
perform any obligations it may have thereunder.
(ii) Each of the Howell Entities that owns Subordinated OLP Units
will own its limited partner interest in the Operating Partnership represented
by the Subordinated OLP Units free and clear of all liens, encumbrances,
security interests, charges or claims (A) in respect of which a financing
statement under the Uniform Commercial Code of the States of Delaware or Texas
naming any Howell Entity as debtor is on file in the office of the Secretary of
State of the States of Delaware or Texas or (B) otherwise known to such counsel,
without independent investigation, other than those created by or arising under
the Delaware Act, except for the pledge of Subordinated OLP Units contemplated
in the Conveyance Agreement.
(iii) Howell owns its membership interest in the General Partner free
and clear of all liens, encumbrances, security interests, charges or claims (A)
in respect of which a financing statement under the Uniform Commercial Code of
the States of Delaware or Texas naming Howell as debtor is on file in the office
of the Secretary of State of the States of Delaware or Texas or (B) otherwise
known to such counsel, without independent investigation, other than those
created by or arising under the Delaware Limited Liability Company Act.
(iv) All corporate action required to be taken by any of the Howell
Entities or any of their Shareholders for the consummation of the transactions
contemplated by the Underwriting Agreement and the Operative Agreements has been
validly taken.
(v) Each of the Underwriting Agreement, the Operating Partnership
Agreement, the LLC Agreement, the Conveyance Agreement, the Conveyances and the
Redemption and Registration Rights Agreement has been duly authorized, executed
and delivered by each of the Howell Entities that is a party thereto.
(vi) Neither the execution, delivery and performance by any of the
Howell Entities of the Underwriting Agreement and the Operative Agreements to
which any such Howell Entity is a party, nor the consummation by the Howell
Entities of the transactions contemplated thereby (A) constitutes or will
constitute a violation of the certificates of incorporation or bylaws of such
Howell Entities, (B) constitutes or will constitute a breach or violation of, or
a default under (or an event which, with
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notice or lapse of time or both, would constitute such an event), any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument known to me to which any of the Howell Entities is a party or by
which any of the Howell Entities is bound, (C) violates or will violate, in any
material respect, any statute, law or regulation or any order, judgment, decree
or injunction of any court or governmental agency or body known to me directed
to any of the Howell Entities or any of the Howell Transferred Assets in a
proceeding to which any of the Howell Entities or any of the Howell Transferred
Assets is a party or (D) will result in the creation or imposition of any lien,
charge or encumbrance upon the Howell Transferred Assets, except pursuant to the
Master Credit Support Agreement.
(vii) No permit, consent, approval, authorization or order of any
court or governmental agency or body is required in connection with the
execution and delivery by the Howell Entities of, or the consummation by the
Howell Entities of the transactions contemplated by, the Underwriting Agreement
or the Operative Agreements to which any of the Howell Entities is a party,
except (A) for such permits, consents, approvals and similar authorizations
required under the Securities Act, the Exchange Act and the securities or "Blue
Sky" laws of certain jurisdictions, (B) for such permits, consents, approvals
and similar authorizations required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as to which such counsel need not express any opinion,
(C) for such permits, consents, approvals and similar authorizations which have
been obtained, (D) for such permits, consents, approvals and similar
authorizations which (1) are of a routine or administrative nature, (2) are not
customarily obtained or made prior to the consummation of transactions such as
those contemplated by the Underwriting Agreement and by the Operative Agreements
to which any of the Howell Entities is a party, and (3) are expected in the
reasonable judgment of the General Partner to be obtained in the ordinary course
of business subsequent to the consummation of the Transactions, (E) for such
permits, consents, approvals and similar authorizations which, if not obtained,
would not individually or in the aggregate, have a material adverse effect upon
the condition (financial or other), business, properties, net worth or results
of operations of the Howell Entities considered as a whole or of the Genesis
Parties considered as a whole and (F) as set forth or contemplated in the
Prospectus.
(viii) To my knowledge, other than as described or contemplated in the
Prospectus, there is no litigation, proceeding or governmental investigation
pending or overtly threatened against any of the Howell Entities that relates to
any of the transactions contemplated by the Prospectus or which, if adversely
determined to such Howell Entity, is reasonably likely to have a material
adverse effect on the (financial or other), business, properties, net worth or
results of operations of the Genesis Parties considered as a whole, or would
impair or call into question the validity of the Underwriting Agreement or any
of the Operative Agreements or the performance by the Howell Entities of their
obligations under the Underwriting Agreement or any of the Operative Agreements
to which any of the Howell Entities is a party.
(ix) To my knowledge, each of the Howell Entities which is subject
to regulation as a common carrier is conducting its business consistent with its
common carrier classification in all material respects and is in material
compliance with all applicable federal or state statutes, rules and regulations
pertaining thereto, including but not limited to all tariff and rate
requirements.
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(x) Except as described in the Prospectus, to my knowledge, the
Howell Entities or the Genesis Parties possess all certificates, authorities or
permits issued by the appropriate local, state or federal regulatory agencies or
bodies necessary to conduct the business currently operated by the Howell
Entities and to be operated by the Genesis Parties, except for such
certificates, authorizations or permits which, if not obtained, would not have,
individually or in the aggregate, a material adverse effect upon the condition
(financial or otherwise), results of operations or business of the Genesis
Parties considered as a whole; and, to my knowledge, none of the Howell Entities
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would reasonably be expected to have a material adverse
effect upon the condition (financial or otherwise), results of operations or
business of the Genesis Parties considered as a whole.
(xi) None of the Howell Entities is (A) an "investment company" or a
company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or (B) a "public utility company,"
"holding company" or "subsidiary company" of a "holding company" or an
"affiliate" thereof, within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
In addition, such counsel shall state that he has participated
in conferences with officers and other representatives of the Genesis Entities
and the independent public accountants of the Genesis Entities and your
representatives, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon, and is not assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in, the Registration
Statement and the Prospectus, no facts have come to such counsel's attention
that lead such counsel to believe that the Registration Statement (other than
(i) the financial statements included therein, including the notes and schedules
thereto and the auditors' reports thereon, (ii) the other financial, statistical
and accounting information included therein and (iii) the Basis Information, as
to which such counsel need not comment), as of its effective date contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus (other than (i) the financial statements included
therein, including the notes and schedules thereto and the auditors' reports
thereon, and (ii) the other financial, statistical and accounting information
included therein, as to which such counsel need not comment), as of its issue
date and the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect
of matters of fact upon certificates of officers and employees of the Howell
Entities and upon information obtained from public officials, (ii) assume that
all documents submitted to him as originals are authentic, that all copies
submitted to him conform to the originals thereof and that the signatures on all
documents examined by him are genuine and (iii) state that his opinion is
limited to federal laws and the laws of the State of Texas [and Delaware].
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EXHIBIT D
[OPINION OF BRACEWELL & PATTERSON, L.L.P.
(COUNSEL FOR HOWELL CORPORATION)]
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EXHIBIT E
OPINION OF BRADLEY J. GANS
(INTERNAL COUNSEL OF SALOMON INC)
(i) Salomon Inc is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to execute and deliver each of the Underwriting
Agreement, the Distribution Support Agreement and the Master Credit Support
Agreement and perform any obligations it may have thereunder.
(ii) Each of the Underwriting Agreement, the Distribution Support
Agreement and the Master Credit Support Agreement has been duly authorized,
executed and delivered by Salomon Inc.
(iii) Neither the execution, delivery and performance by Salomon Inc
of the Underwriting Agreement, the Distribution Support Agreement and the Master
Credit Support Agreement, nor the consummation by Salomon Inc of the
transactions contemplated thereby (A) constitutes or will constitute a violation
of the certificate of incorporation or bylaws or other organizational documents
of Salomon Inc, (B) constitutes or will constitute a breach or violation of, or
a default under (or an event which, with notice or lapse of time or both, would
constitute such an event), any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument known to me to which Salomon
Inc is a party or by which Salomon Inc or its properties may be bound, (C)
violates or will violate, in any material respect, any statute, law or
regulation or any order, judgment, decree or injunction of any court or
governmental agency or body known to us directed to Salomon Inc or its property
in a proceeding to which Salomon Inc or its property is a party or (D) will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Salomon Inc.
(iv) To my knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against Salomon Inc
that relates to any of the transactions contemplated by the Prospectus or which
would impair or call into question the validity of the Underwriting Agreement or
any of the Operative Agreements to which Salomon Inc is a party or the
performance by Salomon Inc of its obligations under the Underwriting Agreement
or any of the Operative Agreements to which Salomon Inc is a party.
(v) All corporate action required to be taken by Salomon Inc or any
of its shareholders for the consummation by Salomon Inc of the transactions
contemplated by the Underwriting Agreement and the Operative Agreements to which
Salomon Inc is a party has been validly taken.
In rendering such opinion, such counsel may (i) rely in respect
of matters of fact upon certificates of officers and employees of Salomon Inc
and upon information obtained from public officials and (ii) assume that all
documents submitted to him as originals are authentic, that all copies submitted
to him conform to the originals thereof and that the signatures on all documents
examined by him are genuine.
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EXHIBIT F
OPINION OF CRAVATH, SWAINE & MOORE
(COUNSEL TO SALOMON INC)
(i) Assuming the due authorization, execution and delivery of the
Master Credit Support Agreement by the Operating Partnership, Salomon Inc and
Basis, the Master Credit Support Agreement constitutes a valid and legally
binding agreement of the Operating Partnership, Salomon Inc and Basis,
enforceable against the Operating Partnership, Salomon Inc and Basis in
accordance with its terms; provided, that the enforceability of the Master
--------
Credit Support Agreement may be limited by (A) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (B) public policy, applicable law relating to fiduciary
duties and an implied covenant of good faith and fair dealing.
(ii) Neither Basis nor Salomon Inc is (A) an "investment company" or
a company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or (B) a "public utility company,"
"holding company" or "subsidiary company" of a "holding company" or an
"affiliate" thereof, within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
In rendering such opinion, such counsel may (i) rely in respect
of matters of fact upon certificates of officers and employees of Salomon Inc
and upon information obtained from public officials and (ii) assume that all
documents submitted to them as originals are authentic, that all copies
submitted to them conform to the originals thereof and that the signatures on
all documents examined by them are genuine.
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EXHIBIT G
FORM OPINION OF LOCAL COUNSEL
(i) Each of the Partnership, the Operating Partnership and the
General Partner has been duly qualified or registered as a foreign limited
partnership or as a foreign limited liability company, as the case may be, for
the transaction of business under the laws of the State.
(ii) The Operating Partnership has all requisite partnership power
and authority as a limited partnership under the laws of the State to own or
lease its properties and to conduct its business in the State; and upon the
consummation of the Transactions, assuming that the Unitholders will not be
liable under the laws of the State of Delaware for liabilities of the
Partnership or the Operating Partnership, the Unitholders will not be liable
under the laws of the State for the liabilities of the Partnership, except in
each case to the same extent as under the laws of the State of Delaware.
(iii) The execution, delivery and performance of the Conveyance
Agreement and each of the Conveyances relating to the transfer of property in
the State in accordance with the terms thereof will not violate any statute of
the State or any rule, regulation or, to our knowledge, any order of any agency
of the State having jurisdiction over the Partnership, the Operating Partnership
or the General Partner or any of their respective properties, except for any
such violations which, individually or in the aggregate, would not have a
material adverse effect upon the holders of Common Units or upon the operations
conducted, or to be conducted as described in the Prospectus, in the State by
the Genesis Parties considered as a whole.
(iv) The Conveyance Agreement and each of the Conveyances relating
to the transfer of property in the State, assuming the due authorization,
execution and delivery thereof by the parties thereto and assuming such
Conveyance Agreement and Conveyances are governed by the laws of the State
notwithstanding any choice of law provisions thereof, is a valid and legally
binding agreement of the parties thereto under the laws of the State,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); each of the Conveyance Agreement and the
Conveyances is in a form legally sufficient as between the parties thereto to
convey to the transferee thereunder all of the right, title and interest of the
transferor stated therein in and to the properties located in the State, as
described in the Conveyance Agreement and Conveyances, subject to the
conditions, reservations and limitations contained in the Conveyance Agreement
and Conveyances, except motor vehicles or other property requiring conveyance of
certificated title as to which the Conveyance Agreement and the Conveyances are
legally sufficient to compel delivery of such certificated title.
(v) Each of the deeds and assignments (including, without
limitation, the form of the exhibits and schedules thereto) is in a form legally
sufficient for recordation in the appropriate public offices of
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the State, to the extent such recordation is required, and, upon proper
recordation of any of such deeds and assignments in the State, will constitute
notice to all third parties under the recordation statutes of the State
concerning record title to the assets transferred thereby; recordation in the
office of the County Clerk for each county in which the Partnership, the
Operating Partnership or the General Partner owns property is the appropriate
public office in the State for the recordation of deeds and assignments of
interests in real property located in such county.
(vi) No permit, consent, approval or similar authorization,
registration or qualification of or with any governmental agency or body of the
State having jurisdiction over the Partnership, the Operating Partnership or the
General Partner, as the case may be, or any of their respective properties is
required for the issuance and sale of the Units by the Partnership or for the
conveyance of the properties located in the State purported to be conveyed to
the Operating Partnership pursuant to the Conveyance Agreement and the
Conveyances, except such permits, consents, approvals and similar
authorizations (A) which are required under the Act and the securities or "Blue
Sky" laws of the State, (B) which have been obtained, (C) which (i) are of a
routine or administrative nature, (ii) are not customarily obtained or made
prior to the consummation of transactions such as those contemplated by the
Underwriting Agreement and by the Conveyance Agreement and the Conveyances and
(iii) are expected in our reasonable judgment to be obtained in the ordinary
course of business subsequent to the consummation of the Transactions, (D)
which, if not obtained, would not, individually or in the aggregate, have a
material adverse effect upon the operations conducted, or to be conducted as
described in the Prospectus, in the State by the Genesis Parties considered as a
whole or (E) disclosed in the Prospectus.
(vii) Following the conveyance of the common carrier pipelines
included in the Transferred Assets (the "Common Carrier Pipeline Properties")
located in the State to the Operating Partnership, the Operating Partnership
shall be entitled to exercise the power of eminent domain in the State to secure
rights-of-way necessary to operate the Common Carrier Pipeline Properties
located in the State [to the extent the laws of such State are applicable].
In rendering the foregoing opinions, we express no opinion with
respect to the title of any of the real or personal property purported to be
transferred by the Conveyance Agreement and the Conveyances, and we express no
opinion with respect to state or local taxes or tax statutes. We have not made
any review of specific properties or title files relating to any such
properties, and we express no opinion regarding the accuracy of the descriptions
or references to any real or personal property. The opinions set forth above
are limited in all respects to matters of the laws of the State, excepting
therefrom municipal and local ordinances and regulations.
Andrews & Kurth L.L.P. is hereby authorized to rely upon this
opinion letter in connection with the Transactions as if such opinion letter
were addressed and delivered to them on the date hereof. Subject to the
foregoing, this opinion letter may be relied upon only by you and your counsel
in connection with the Transactions and no other use or distribution of this
opinion letter may be made without our prior written consent.
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EXHIBIT 5.1
November 22, 1996
Genesis Energy, L.P.
One Allen Center
500 Dallas, Suite 3200
Houston, Texas 77002
Gentlemen:
We have acted as counsel to Genesis Energy, L.P., a Delaware limited
partnership (the "Partnership"), Genesis Crude Oil, L.P., a Delaware limited
partnership, and Genesis Energy, L.L.C., a Delaware limited liability company,
in connection with the registration under the Securities Act of 1933, as
amended, of the offering and sale of common units representing limited partner
interests in the Partnership.
As the basis for the opinion hereinafter expressed, we have examined such
statutes, regulations, corporate records and documents, certificates of
corporate and public officials, and other instruments as we have deemed
necessary or advisable for the purposes of this opinion. In such examination we
have assumed the authenticity of all documents submitted to us as originals and
the conformity with the original documents of all documents submitted to us as
copies.
Based on the foregoing and on such legal considerations as we deem
relevant, we are of the opinion that:
1. The Partnership has been duly formed and is validly existing as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act.
2. The Common Units will, when issued and paid for as described in the
Partnership's Registration Statement on Form S-1 (File No. 333-11545) relating
to the Common Units, as amended (the "Registration Statement"), be duly
authorized, validly issued, fully paid and nonassessable, except as such
nonassessability may be affected by the matters described in the prospectus
included in the Registration Statement (the "Prospectus") under the caption "The
Partnership Agreement--Limited Liability."
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Validity of
the Common Units" in the Prospectus.
Very truly yours,
ANDREWS & KURTH L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
1146:1203
<PAGE>
EXHIBIT 10.1
FORM OF PURCHASE & SALE
AND
CONTRIBUTION & CONVEYANCE
AGREEMENT
DATED AS OF , 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. DEFINITIONS.......................................................... 2
2. CAPITALIZATION AND CONVEYANCE TRANSACTIONS...........................15
2.1 LLC Funding.....................................................15
2.2 MLP Funding.....................................................15
2.3 Genesis MLP's Contribution to Genesis OLP.......................16
2.4 Asset Purchase and Sale.........................................16
2.5 Basis' and Howell Crude's Contributions to Genesis OLP..........17
2.6 Additional LLC Contributions....................................18
2.7 Clean Up Distributions..........................................18
2.8 Over-Allotment Contributions....................................18
3. REPRESENTATIONS AND WARRANTIES.......................................19
3.1 Basis...........................................................19
3.2 Howell..........................................................30
3.3 Genesis OLP.....................................................41
3.4 Genesis MLP.....................................................42
4. MISCELLANEOUS PROVISIONS RELATING TO TRANSFER OF ASSETS AND BUSINESS.43
4.1 Nonassignability of Assets......................................43
4.2 Direct Transfer to a Genesis OLP Affiliate......................44
4.3 Assumption of Assumed Liabilities by Genesis OLP................44
4.4 Post Signing Covenants and Agreements...........................45
4.5 Satsuma Station Bulk Crude Oil Storage Tanks....................46
4.6 Nontransferability of Subordinated LP Units.....................48
4.7 Environmental Make-Whole Provision..............................48
5. CONDITIONS TO CLOSING................................................48
6. CLOSING..............................................................50
6.1 Date of Closing.................................................50
6.2 Deliveries......................................................50
7. POST-CLOSING MATTERS.................................................50
7.1 Post Closing Adjustment.........................................50
7.2. Survival.......................................................50
7.3. Further Assurances.............................................51
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
8. INDEMNIFICATION................................................... 51
8.1 Indemnification by the Sponsors........................... 51
8.2 Indemnification by Genesis OLP............................ 52
8.3 Specific Indemnification Issues........................... 52
8.4 Notice and Payment of Claims.............................. 54
8.5 Defense of Third Party Claims 55
8.6 Cooperation and Preservation of Records................... 56
9. DISCLAIMERS AND WAIVER............................................ 57
9.1 Disclaimer of Warranties.................................. 57
9.2 Waiver of Bulk Sales Laws................................. 57
10. TRADEMARKS AND TRADENAMES......................................... 57
10.1 Written Materials and Logos............................... 57
10.2 Signs..................................................... 58
11. EMPLOYEE MATTERS.................................................. 58
11.1 Employment................................................ 58
11.2 LLC Plans................................................. 58
11.3 No Third Party Beneficiaries.............................. 59
12. TERMINATION OF AGREEMENT.......................................... 59
12.1 Termination............................................... 59
12.2 Effect of Termination..................................... 59
13. TAX MATTERS....................................................... 59
13.1 Refunds of Taxes.......................................... 59
13.2 Notice of Tax Audits...................................... 59
14. MISCELLANEOUS..................................................... 60
14.1 Costs..................................................... 60
14.2 Notices................................................... 61
14.3 Files and Records......................................... 62
14.4 Headings; References; Interpretation...................... 62
14.5 Successors and Assigns.................................... 62
14.6 No Third Party Rights..................................... 62
14.7 Counterparts.............................................. 63
14.8 Governing Law............................................. 63
14.9 Waiver of Jury Trial...................................... 63
14.10 Severability.............................................. 63
14.11 Deed; Bill of Sale; Assignment............................ 63
14.12 Amendment or Modification................................. 63
14.13 Integration............................................... 63
</TABLE>
-ii-
<PAGE>
EXHIBITS
- --------
A Form of Agency Agreement
B Form of Ancillary Agreement
C Form of Assignment and Assumption Agreement (Tractors and other Assets)
D Form of Assignment Agreement (Pipelines)
E Form of Assignment and Assumption Agreement (Station Sites)
F Form of Corporate Services Agreement
G Form of Credit Support Agreement
H Form of Distribution Support Agreement
I Form of Employment Agreement
J Form of Members Agreement Addendum
K Form of Non-Competition Agreement
L Form of Pledge Agreement
M Form of Refinery Supply Agreement
N Form of Registration and Redemption Rights Agreement
O Form of Supply, Transportation and Purchase Agreement
P Form of Technical Information Assignment
Q Form of Transition Services Agreement
SCHEDULES
- ---------
1.1 Assets
A. Basis Assets
B. Howell Assets
B-1. Howell Crude Assets
B-2. Howell Pipeline Assets
B-3. Howell Texas Assets
B-4. Howell Transportation Assets
B-5. Howell Power Assets
B-6. Howell Corporation Assets
1.2 Assumed Liabilities
1.3 Excluded Assets
1.4 Excluded Liabilities
3.1(c) Basis exceptions to representations regarding noncontravention of
obligations associated with Basis Assets due to execution of Agreement
and consummation of transaction
3.1(g) Basis exceptions to representations regarding balance sheet
-iii-
<PAGE>
3.1(h) Basis exceptions to representations regarding timely
filing of tax returns
3.1(j) Basis exceptions to representation regarding leases to
third parties of Basis Assets to remain in effect
after closing date
3.1(k) Basis exceptions to representation regarding marketing,
distribution, etc. of technology used with respect to Basis Assets
3.1(l) Basis Litigation
3.1(m) Basis Employment Plans;
Basis exceptions to representation regarding payments
to Basis Employees or directors, or increases in benefits
payable under Basis Employee Plan or acceleration of time
of payment or vesting of benefits due
to execution and consummation of Agreement;
Basis exceptions to representations regarding employment
matters contained in Section 3.1(m)(v)
3.1(n) Basis consents required in connection with execution,
delivery or performance of agreements (excepting such
consents the failure to obtain which would not have a
MAE with respect to the Business)
3.1(o) Basis exceptions to representations regarding Basis Assets
and Business contained in Section 3.1(o)(i)-(vii);
Amendments to contracts assigned to OLP listed in
Schedule 3.1(o) other than in ordinary course;
Contracts listed in Schedule 3.1.(o) requiring consent
for assignment;
Cancellations or threats to cancel contracts listed in Schedule 3.1(o)
3.1(q) Basis exceptions to representations regarding Environmental
Matters contained in Section 3.1(q)(i)-(iii)
3.1(s) Basis exceptions to representations regarding compliance
with law and permits contained in Section 3.1(s)(ii)
3.1(u) Basis exceptions to representations regarding third party
rights to Basis Assets
-iv-
<PAGE>
3.2(c) Howell exceptions to representations regarding noncontravention
of obligations associated with Howell Assets due to execution of
Agreement and consummation of transaction
3.2(g) Howell exceptions to representations regarding balance sheet
3.2(h) Howell exceptions to representations regarding timely
filing of tax returns
3.2(j) Howell exceptions to representation regarding leases
to third parties of Howell Assets to remain in effect
after closing date
3.2(k) Howell exceptions to representation regarding marketing,
distribution, etc. of technology used with respect to Howell Assets
3.2(l) Howell Litigation
3.2(m) Howell Employee Plans;
Howell exceptions to representation regarding payments to
Howell Employees or directors, or increases in benefits
payable under Howell Employee Plan or acceleration of time
of payment or vesting of benefits due to execution and
consummation of Agreement;
Howell exceptions to representations regarding employment
matters contained in Section 3.2(m)(v)
3.2(n) Howell consents required in connection with execution,
delivery or performance of agreements (excepting such
consents the failure to obtain which would not have a MAE
with respect to the Business)
3.2(o) Howell exceptions to representations regarding Howell Assets
and Business contained in Section 3.2(o)(i)-(vii);
Amendments to contracts assigned to OLP listed in
Schedule 3.2(o) other than in ordinary course;
Contracts listed in Schedule 3.2(o) requiring consent for assignment;
Cancellations or threats to cancel contracts listed in Schedule 3.2(o)
3.2(q) Howell exceptions to representations regarding Environmental
Matters contained in Section 3.2(q)(i)-(iii)
3.2(s) Howell exceptions to representations regarding compliance
with law and permits contained in Section 3.2(s)(ii)
-v-
<PAGE>
3.2(u) Howell exceptions to representations regarding third party
rights to Howell Assets
7.1 Post-Closing Accounting Adjustment
11.1 List of Business Employees;
Severance Payment Terms
-vi-
<PAGE>
PURCHASE & SALE AND
CONTRIBUTION & CONVEYANCE AGREEMENT
This PURCHASE & SALE AND CONTRIBUTION & CONVEYANCE AGREEMENT, dated as of
_____________, 1996, is entered into by and among GENESIS ENERGY, L.P., a
Delaware limited partnership ("Genesis MLP"), GENESIS CRUDE OIL, L.P., a
-----------
Delaware limited partnership ("Genesis OLP"), BASIS PETROLEUM, INC., a Texas
-----------
corporation ("Basis"), HOWELL CORPORATION, a Delaware corporation ("Howell"),
----- ------
HOWELL CRUDE OIL COMPANY, a Delaware corporation ("Howell Crude"), HOWELL
------------
PIPELINE TEXAS, INC., a Delaware corporation ("Howell Texas"), HOWELL PIPELINE
------------
U.S.A., INC., a Delaware corporation ("Howell Pipeline"), HOWELL TRANSPORTATION
---------------
SERVICES, INC., a Delaware corporation ("Howell Transportation"), HOWELL POWER
---------------------
SYSTEMS, INC., a Delaware corporation ("Howell Power" and, collectively with
------------
Howell Crude, Howell Texas, Howell Pipeline and Howell Transportation, the
"Howell Subsidiaries") and GENESIS ENERGY, L.L.C., a Delaware limited liability
- --------------------
company ("Genesis LLC").
-----------
RECITALS
WHEREAS, each of Basis and Howell (individually a Sponsor and together the
"Sponsors") has heretofore caused the formation of Genesis LLC pursuant to the
--------
Delaware Limited Liability Company Act (the "DLLCA") for the purposes of
-----
serving as the general partner of Genesis MLP and a general partner of Genesis
OLP;
WHEREAS, Basis owns 540 LLC Shares (as defined herein) and Howell owns 460
LLC Shares;
WHEREAS, Genesis LLC, as the general partner, and Wayne Kubicek
("Kubicek"), as the organizational limited partner, have heretofore formed
-------
Genesis MLP pursuant to the Delaware Revised Uniform Limited Partnership Act
(the "Delaware Act") for the purpose, in part, of serving as the organizational
------------
limited partner of Genesis OLP;
WHEREAS, Genesis LLC contributed $10.00 to the capital of Genesis MLP and
received a 1% General Partner Interest (as defined herein) therein; and Kubicek
contributed $990.00 to the capital of Genesis MLP and received a 99% Limited
Partner Interest (as defined herein) therein;
WHEREAS, Genesis LLC, as the general partner, and Genesis MLP, as the
organizational limited partner, have heretofore caused the formation of Genesis
OLP pursuant to the Delaware Act for the purpose of acquiring, owning and
operating the Assets and Business (as hereinafter defined);
WHEREAS, Genesis LLC contributed $10.00 to the capital of Genesis OLP and
received a 1% General Partner Interest therein; and Genesis MLP contributed
$990.00 to the capital of Genesis OLP and received a 99% Limited Partner
Interest therein;
<PAGE>
WHEREAS, Genesis LLC, as the general partner, and Kubicek, as the
organizational limited partner, have entered into that certain Agreement of
Limited Partnership of Genesis MLP (as it may be amended, supplemented or
restated from time to time, the "MLP Agreement");
-------------
WHEREAS, Genesis LLC, as the general partner, and Genesis MLP, as the
organizational limited partner, have entered into that certain Agreement of
Limited Partnership of Genesis OLP (as it may be amended, supplemented or
restated from time to time, the "OLP Agreement"); and
--------------
WHEREAS, Howell Crude has contributed all of its tangible assets to Howell
Power;
NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, and subject to the terms and conditions set forth in this
Agreement, the Parties (as defined herein) hereto undertake and agree as
follows:
ARTICLE 1
DEFINITIONS.
-----------
The following capitalized terms shall have the meanings given below.
"Accounting Firm" has the meaning assigned to such term in Schedule 7.1.
--------------- ------------
"Additional LLC Contributions" has the meaning assigned to such term in
----------------------------
Section 2.6(b).
- --------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
-------
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise. Notwithstanding anything contained in this definition to the
contrary, the term Affiliate, (i) with respect to Genesis MLP and Genesis OLP,
shall not include the Sponsors, the Transferors, Genesis LLC or SI (or their
respective Affiliates determined without regard to Genesis MLP or Genesis OLP),
and (ii) with respect to the Sponsors, the Transferors, Genesis LLC or SI, shall
not include Genesis MLP or Genesis OLP (or their respective Affiliates
determined without regard to the Sponsors, the Transferors, Genesis LLC or SI).
"Agency Agreement" means the Agency Agreement between Genesis OLP and each
----------------
Transferor or its Affiliate, dated as of the Closing Date, relating to the
servicing by Genesis OLP as an agent of such Transferor of certain contracts
that would (but for limitations on assignability or transfer as referred to in
Section 4.1 therein) be part of the Assets, substantially in the form attached
hereto as Exhibit A.
---------
"Aggregate Obligation" has the meaning assigned to such term in Section
-------------------- -------
8.3(c).
- ------
-2-
<PAGE>
"Agreement" means this Purchase & Sale and Contribution & Conveyance
---------
Agreement, as it may be amended, supplemented or restated from time to time.
"Ancillary Agreement" means the Ancillary Agreement between Basis, SI,
-------------------
Howell and the Howell Subsidiaries, dated as of the Closing Date, substantially
in the form attached hereto as Exhibit B.
---------
"Andersen" has the meaning assigned to such term in Section 3.1(d).
-------- --------------
"Annual Obligation" has the meaning assigned to such term in Section
----------------- -------
8.3(c).
- ------
"Asset Purchase and Sale" has the meaning assigned to such term in Section
----------------------- -------
2.4(c).
- ------
"Assets" means the Basis Assets and the Howell Assets, collectively.
------
"Assignment and Assumption Agreement (Tractors and Other Assets)" means a
---------------------------------------------------------------
Bill of Sale, Assignment and Assumption Agreement, dated as of the Closing Date,
between each of the Transferors and Genesis OLP, in substantially the form
attached hereto as Exhibit C.
---------
"Assignment Agreement (Pipelines)" means a Conveyance, Assignment and Bill
--------------------------------
of Sale between certain Howell Subsidiaries and Genesis OLP, substantially in
the form attached hereto as Exhibit D.
---------
"Assignment and Assumption Agreement (Station Sites)" means a Conveyance,
--------------------------------------------------
General Assignment and Bill of Sale, dated as of the Closing Date, between a
Transferor and Genesis OLP, substantially in the form attached hereto as Exhibit
-------
E.
- -
"Assumed Liabilities" means (a) all liabilities and obligations reflected
-------------------
on Schedule 1.2, (b) all liabilities or obligations arising from or relating to
------------
the ownership or operation of the Assets or the Business on or after the Closing
Date, but excluding all liabilities (including those created under CERCLA)
arising from ownership or operation of the Assets or the Business prior to the
Closing Date, (c) all liabilities and obligations with respect to the contracts,
including without limitation, those listed on Schedules 1.1A-1.1B-6, to be paid
---------------------
or performed by Genesis OLP on or after the Closing Date, or which relate to
periods on or after the Closing Date, and (d) all liabilities and obligations in
connection with all funds transferred to Genesis OLP for the account of any
other Person in Suspense Accounts as reflected on Schedule 1.2; excluding,
------------
however, in each case, any Excluded Liabilities.
"Basis" has the meaning assigned to such term in the opening paragraph of
-----
this Agreement.
"Basis and Howell Crude Contributions" has the meaning assigned to such
------------------------------------
term in Section 2.5(b).
--------------
-3-
<PAGE>
"Basis Assets" means the assets referred to in Schedule 1.1A.
------------ -------------
"Basis Employee Plans" has the meaning assigned to such term in Section
-------------------- -------
3.1(m)(ii).
- ----------
"Basis Employees" has the meaning assigned to such term in Section
--------------- -------
3.1(m)(iii).
- -----------
"Basis Final Balance Sheet" has the meaning assigned to such term in
-------------------------
Schedule 7.1.
- ------------
"Basis Financial Statements" has the meaning assigned to such term in
--------------------------
Section 3.1(d).
- --------------
"Basis Purchase Cash" means 54% of the Purchase Cash.
-------------------
"Basis Returns" has the meaning assigned to such term in Section 3.1(h).
------------- --------------
"Basis Taxes" has the meaning assigned to such term in Section 3.1(h).
----------- --------------
"Benefit Plan" has the meaning assigned to such term in Section 11.2.
------------ ------------
"Business" means (i) with respect to Basis, the crude oil gathering and
--------
marketing operations conducted by Basis immediately prior to the Closing Date;
(ii) with respect to the Howell Entities, the crude oil gathering and marketing
operations and pipeline-related operations conducted by the Howell Entities
immediately prior to the Closing Date; and (iii) with respect to Genesis OLP,
the crude oil gathering and marketing operations and pipeline-related operations
to be conducted by Genesis OLP immediately after the Closing Date.
"Business Employees" has the meaning assigned to such term in Section 11.1.
------------------ ------------
"Case Handler" has the meaning assigned to such term in Section 8.5(a).
------------ --------------
"CERCLA" means the Comprehensive Environmental Response, Compensation and
------
Liability Act, 42 U.S.C. (S) 9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986.
"Clean Up Distributions" has the meaning assigned to such term in Section
---------------------- -------
2.7(d).
- ------
"Closing" has the meaning assigned to such term in Section 6.1.
------- -----------
"Closing Date" means the Closing Date as defined in the Underwriting
------------
Agreement or such other date as the Parties may mutually agree.
"Collateral Agent" has the meaning assigned to such term in the Pledge
----------------
Agreement.
"Commitment" has the meaning assigned to such term in Section 4.1(a).
---------- --------------
-4-
<PAGE>
"Common GP Units" means units representing common general partner interests
---------------
in Genesis OLP.
"Common LP Units" means units representing common limited partner interests
---------------
in Genesis OLP.
"Common MLP Units" means units representing limited partner interests in
----------------
Genesis MLP.
"Common Units" means Common GP Units or Common LP Units.
------------
"Corporate Services Agreement" means the Corporate Services Agreement dated
----------------------------
as of the Closing Date, among Genesis MLP, Genesis OLP and Basis, substantially
in the form attached hereto as Exhibit F.
---------
"Credit Support Agreement" means the Master Credit Support Agreement dated
------------------------
as of the Closing Date, by and among Genesis OLP, Basis and SI, substantially in
the form attached hereto as Exhibit G.
---------
"Delaware Act" has the meaning assigned to such term in the Recitals to
------------
this Agreement.
"DGCL" means the Delaware General Corporation Law.
----
"Disputed Items" has the meaning assigned to such term in Schedule 7.1.
-------------- ------------
"Distribution Support Agreement" means the Distribution Support Agreement,
------------------------------
dated as of the Closing Date, among Genesis LLC, Genesis OLP and SI,
substantially in the form attached hereto as Exhibit H.
---------
"DLLCA" has the meaning assigned to such term in the Recitals to this
-----
Agreement.
"Effective Time" has the meaning assigned to such term in Schedule 7.1.
-------------- ------------
"Employment Agreement" means the employment agreements entered into by
--------------------
certain officers of Genesis LLC substantially in the form attached hereto as
Exhibit I.
- ---------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Excess Basis Cash" means an amount equal to the excess of (x) the Basis
-----------------
Purchase Cash over (y) $____ million.
"Excess Howell Cash" means an amount equal to the excess, if any, of (x)
------------------
the Howell Purchase Cash over (y) the Howell Affiliate Cash.
-5-
<PAGE>
"Excess Howell Subordinated LP Units" means a number of Subordinated LP
-----------------------------------
Units equal to the excess of (x) 1,508,800 Subordinated LP Units over (y) the
Howell Affiliate Subordinated LP Units.
"Excluded Assets" means the assets referred to in Schedule 1.3.
--------------- ------------
"Excluded Liabilities" means the respective liabilities and obligations of
--------------------
each Transferor and each of their respective Affiliates: (a) reflected on
Schedule 1.4; (b) accruing or arising from or relating to the ownership or
- ------------
operation of the Assets or the Business prior to the Closing Date by each
Transferor and its Affiliates, including, without limitation, all environmental
matters (including those created under CERCLA) and all ad valorem taxes, real
property taxes, federal, state or other income taxes, sales taxes, personal
property taxes, excise, production, severance, gross receipts and other similar
taxes relating to the Assets and the operation of the Business prior to the
Closing Date, including any such income tax liabilities of the Transferors and
their Affiliates that may result from consummation of the transactions
contemplated by this Agreement; (c) for salary, wages, bonus payments and fringe
benefits for employees of each Transferor or its Affiliates with respect to all
periods ending prior to the Closing Date except as otherwise provided in Section
-------
11 hereto; (d) to third parties for personal injury and/or property damage
- --
occurring prior to the Closing Date or arising out of operation of the Assets or
the Business prior to the Closing Date; (e) to third parties arising from or
attributable to any civil, criminal, administrative, arbitrative or other such
proceedings or government investigations pending against such Transferor or
Affiliate or its Assets prior to the Closing Date or that may be filed against
such Transferor or Affiliate or its Assets on or after the Closing Date that are
attributable to a claim or claims arising prior to the Closing Date or to the
ownership or operation of the Assets or the Business prior to the Closing Date;
(f) any indebtedness of Basis or any of the Howell Entities for borrowed money;
(g) any obligation or liability relating primarily to the Excluded Assets; and
(h) with respect to the Howell Entities the indemnification obligations of
Howell and its Affiliates to Exxon relating to the purchase of Exxon's pipeline
operations pursuant to the Purchase and Sale Agreement dated February 22, 1995,
as amended March 31, 1995.
"Expertise" means all processes, trade secrets, confidential or proprietary
---------
know-how (to the fullest extent that such know-how can be conveyed), design,
manufacturing, engineering and other drawings, technology, intellectual property
rights, agent agreements, technical information, software, engineering data,
design and engineering specifications relating to the Business, including
Transferor's internally developed computer technology related to the Assets and
the Business.
"Exxon" means Exxon Pipeline Company.
-----
"Exxon Pipeline Statement" has the meaning assigned to such term in Section
------------------------ -------
3.2(d).
- ------
"Exxon Satsuma Facilities Lease Agreement" has the meaning assigned to such
----------------------------------------
term in Section 4.5(c).
--------------
-6-
<PAGE>
"Final Division Invested Capital" has the meaning assigned to such term in
-------------------------------
Section 7.1(b).
- --------------
"Final Prospectus" means the prospectus relating to the Common MLP Units
----------------
offered in the Public Offering that is first filed pursuant to Rule 424(b) of
the Securities Act or, if no filing pursuant to Rule 424(b) is required, the
final prospectus included in the Registration Statement.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, in statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be accepted by a significant segment of the accounting
profession, that are applicable to the circumstances as of the date of
determination.
"General Partner Interest" shall mean, with respect to Genesis MLP and
------------------------
Genesis OLP, an interest in the profits, losses and capital of Genesis MLP and
Genesis OLP, respectively, that provides the holder thereof with the rights and
obligations of a general partner in accordance with MLP Agreement and the OLP
Agreement, respectively.
"Genesis LLC" has the meaning assigned to such term in the opening
-----------
paragraph of this Agreement.
"Genesis MLP" has the meaning assigned to such term in the opening
-----------
paragraph of this Agreement.
"Genesis OLP" has the meaning assigned to such term in the opening
-----------
paragraph of this Agreement.
"Howell" has the meaning assigned to such term in the opening paragraph of
------
this Agreement.
"Howell Affiliate Cash" means the aggregate amount of cash to be paid by
---------------------
Genesis OLP to Howell Pipeline, Howell Texas, Howell Transportation and Howell
Power pursuant to Sections 2.4(a)(ii) through (a)(v).
------------------- ------
"Howell Affiliate Subordinated LP Units" means the aggregate number of
--------------------------------------
Subordinated LP Units, if any, issued to Howell Pipeline, Howell Texas, Howell
Transportation and Howell Power pursuant to Section 2.4(b).
--------------
"Howell Assets" means the Howell Corporation Assets, the Howell Crude
-------------
Assets, the Howell Pipeline Assets, the Howell Texas Assets, the Howell
Transportation Assets and the Howell Power Assets.
"Howell Corporation Assets" means the Assets referred to in Schedule 1.1B-
------------------------- -------------
6.
- -
-7-
<PAGE>
"Howell Crude" has the meaning assigned to such term in the opening
------------
paragraph of this Agreement.
"Howell Crude Assets" means the assets referred to in Schedule 1.1B-1.
------------------- ---------------
"Howell Employee Plans" has the meaning assigned to such term in Section
--------------------- -------
3.2(m)(ii).
- ----------
"Howell Employees" has the meaning assigned to such term in Section
---------------- -------
3.2(m)(iii).
- -----------
"Howell Entities" means Howell and the Howell Subsidiaries.
---------------
"Howell Final Balance Sheet" has the meaning assigned to such term in
--------------------------
Schedule 7.1.
- ------------
"Howell Financial Statements" has the meaning assigned to such term in
---------------------------
Section 3.2(d).
- --------------
"Howell Pipeline" has the meaning assigned to such term in the opening
---------------
paragraph of this Agreement.
"Howell Pipeline Assets" means the assets referred to in Schedule 1.1B-2.
---------------------- ---------------
"Howell Power" has the meaning assigned to such term in the opening
------------
paragraph of this Agreement.
"Howell Power Assets" means the assets referred to in Schedule 1.1B-5.
------------------- ---------------
"Howell Purchase Cash" means 46% of the Purchase Cash.
--------------------
"Howell Returns" has the meaning assigned to such term in Section 3.2(h).
-------------- --------------
"Howell Subsidiaries" means Howell Crude, Howell Texas, Howell Pipeline,
-------------------
Howell Transportation and Howell Power.
"Howell Taxes" has the meaning assigned to such term in Section 3.2(h).
------------ --------------
"Howell Texas" has the meaning assigned to such term in the opening
------------
paragraph of this Agreement.
"Howell Texas Assets" means the assets referred to in Schedule 1.1B-3.
------------------- ---------------
"Howell Transportation" has the meaning assigned to such term in the
---------------------
opening paragraph of this Agreement.
"Howell Transportation Assets" means the assets referred to in Schedule
---------------------------- --------
1.1B-4.
- ------
-8-
<PAGE>
"Indemnified Losses" has the meaning assigned to such term in Section 8.1.
------------------ -----------
"Indemnified Party" has the meaning assigned to such term in Section 8.4.
----------------- -----------
"Indemnifying Party" has the meaning assigned to such term in Section 8.4.
------------------ -----------
"Information" has the meaning assigned to such term in Section 14.3.
----------- ------------
"Interest" has the meaning assigned to such term in Section 4.1.
-------- -----------
"JMP" means JM Petroleum Corporation.
---
"Laws" means any and all laws, statutes, common law, ordinances, rules or
----
regulations promulgated by a governmental authority, orders or decrees of a
court or other governmental authority, judicial decisions, decisions of
arbitrators or determinations of any governmental authority or court.
"Liens" means liens, claims, pledges, security interests, charges,
-----
restrictive covenants, easements or encumbrances or title defects of any
nature.
"Limited Partner Interest" shall mean, with respect to Genesis MLP and
------------------------
Genesis OLP, an interest in the profits, losses and capital of Genesis MLP and
Genesis OLP, respectively, that provides the holder thereof with the rights and
obligations of a limited partner in accordance with the MLP Agreement and the
OLP Agreement, respectively.
"Litigation Records" has the meaning assigned to such term in Section
------------------ -------
8.6(b).
- ------
"LLC Agreement" the Limited Liability Company Agreement of Genesis LLC
-------------
entered into by Basis and Howell, as members, dated as of November 14, 1996.
"LLC Contribution Amount" means an amount equal to 2/98ths of the Net
-----------------------
Offering Proceeds.
"LLC Funding" has the meaning assigned to such term in Section 2.1(c).
----------- --------------
"LLC Interest" shall mean, with respect to Genesis LLC, an interest in the
------------
profits, losses and capital of Genesis LLC that provides the holder thereof with
the rights and obligations of a member in accordance with the Members Agreement.
"LLC Over-Allotment Contribution" has the meaning assigned to such term in
-------------------------------
Section 2.8(b).
- --------------
"LLC Plans" has the meaning assigned to such term in Section 11.2.
--------- ------------
-9-
<PAGE>
"LLC Shares" means shares issued pursuant to the LLC Agreement representing
----------
LLC Interests.
"MAE" means a material adverse effect on the business, results of
---
operations, assets, liabilities or financial condition of the applicable Person
or the Business.
"Make-Whole Payment Request" has the meaning assigned to such term in
--------------------------
Section 4.7.
- -----------
"Managing General Partner Interest" shall mean, with respect to Genesis
---------------------------------
OLP, an interest in the profits, losses and capital of Genesis OLP that provides
the holder thereof with the rights and obligations of the managing general
partner in accordance with the OLP Agreement.
"Members Agreement Addendum" means the addendum dated as of the Closing
--------------------------
Date of the LLC Agreement between Howell and Howell Crude regarding the transfer
of interests in Genesis LLC, in the form of Exhibit J hereto.
---------
"MLP Agreement" has the meaning assigned to such term in the Recitals to
-------------
this Agreement.
"MLP Contribution" has the meaning assigned to such term in Section 2.3(b).
---------------- --------------
"MLP Funding" has the meaning assigned to such term in Section 2.2(c).
----------- --------------
"MLP GP Units" means units representing a general partner interest in
------------
Genesis MLP.
"Net MLP Proceeds" means an amount equal to (x) the sum of (i) the Net
----------------
Offering Proceeds, plus (ii) the LLC Contribution Amount, minus (y) the
Nonunderwriting Offering Expenses.
"Net Offering Proceeds" means the Public Offering Proceeds less the
---------------------
Underwriting Discount.
"Net Over-Allotment Proceeds" means the gross proceeds received by Genesis
---------------------------
MLP in connection with the exercise by the Underwriters of the Over-Allotment
Option, less the Over-Allotment UW Discount.
"Non-Competition Agreement" means the agreement, dated as of the Closing
-------------------------
Date, among SI, Basis, Howell, Genesis MLP and Genesis OLP, in substantially the
form attached hereto as Exhibit K.
---------
"Nonunderwriting Offering Expenses" means, any and all fees and other out-
---------------------------------
of-pocket expenses (including, without limitation, all Transfer Expenses, fees
and expenses of accountants, attorneys, printers, consultants or other agents)
incurred, paid, payable or provided by Genesis MLP in connection with the
Public Offering; provided, however, Nonunderwriting Offering Expenses shall
not include the Underwriting Discount or the Over-Allotment UW Discount.
-10-
<PAGE>
"OLP Agreement" has the meaning assigned to such term in the Recitals to
-------------
this Agreement.
"OLP Covered Liabilities" has the meaning assigned to such term in Section
----------------------- -------
4.7.
- ---
"OLP Damages" has the meaning assigned to such term in Section 8.1 of this
----------- -----------
Agreement.
"OLP Parties" means Genesis OLP and any direct or indirect subsidiary or
-----------
Affiliate of Genesis OLP, and any of their respective directors, shareholders,
officers, employees, agents, consultants, customers and representatives.
"Operating General Partner Interest" shall mean, with respect to Genesis
----------------------------------
OLP, an interest in the profits, losses and capital of Genesis OLP that provides
the holder thereof with the rights and obligations of an operating general
partner in accordance with the OLP Agreement.
"Organizational Limited Partner" means, with respect to Genesis MLP, Wayne
------------------------------
Kubicek, and with respect to Genesis OLP, Genesis MLP.
"Over-Allotment Common MLP Units" means the Common MLP Units purchased by
-------------------------------
the Underwriters upon exercise of the Over-Allotment Option.
"Over-Allotment Contributions" has the meaning assigned to such term in
----------------------------
Section 2.8(e).
- --------------
"Over-Allotment Option" means the over-allotment option granted to the
---------------------
Underwriters in the Underwriting Agreement to purchase up to 1,125,000
additional Common MLP Units.
"Over-Allotment UW Discount" means the amount of underwriting discounts and
--------------------------
commissions provided to the Underwriters in connection with the exercise by the
Underwriters of the Over-Allotment Option.
"Party" means each of the Persons who are signatories to this Agreement.
-----
"Per Unit Capital Amount" has the meaning set forth in the OLP Agreement.
-----------------------
"Percentage Interests" has, with respect to Genesis MLP and Genesis OLP,
--------------------
the meaning assigned to such terms in the MLP Agreement and the OLP Agreement,
respectively.
"Permitted Encumbrances" means any claims or Liens which would not result
----------------------
in a loss, liability, cost or expense in excess of $5 million each or which do
not secure monetary obligations.
"Person" means an individual, corporation, limited liability company,
------
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
-11-
<PAGE>
"Phibro" means Phibro Energy USA, Inc. and any other entity containing the
------
name "Phibro".
"Pipeline Assets" means all pipelines for the transmission of crude oil and
---------------
fixtures related thereto included in the Assets, including interests in real
property relating thereto, but expressly excluding all storage terminals,
station sites and improvements located thereon.
"Pledge Agreement" means the Pledge Agreement dated as of the Closing Date
----------------
among Basis, the Howell Entities and Genesis OLP, substantially in the form
attached as Exhibit L.
---------
"Post-Signing Period" means the period beginning on the date hereof and
-------------------
until the Closing Date.
"Prime Rate" means the U.S. annual interest rate published as the "Prime
----------
Rate" in the Wall Street Journal under the column headed "Money Rates" or such
other title as may succeed such heading for the applicable period in effect from
time to time.
"Proportional Share" means with regard to Basis 54% and to Howell 46%.
------------------
"Public Offering" means the initial public offering of Common MLP Units
---------------
(including the Over-Allotment Option) pursuant to the terms of the Underwriting
Agreement.
"Public Offering Expenses" means the Nonunderwriting Offering Expenses plus
------------------------
the Underwriting Discount.
"Public Offering Proceeds" means the gross proceeds received by Genesis MLP
------------------------
in connection with the Public Offering (excluding gross proceeds received by
Genesis MLP in connection with the exercise by the Underwriters of the Over-
Allotment Option).
"Purchase Cash" means the Net MLP Proceeds minus $5 million.
-------------
"Recent Audited Balance Sheet" means (i) with respect to Basis, the balance
----------------------------
sheet as of December 31, 1995 of Basis Petroleum, Inc. Crude Gathering Division
that is included in the Final Prospectus and (ii) with respect to Howell, the
balance sheet as of December 31, 1995 of Howell Crude Operations that is
included in the Final Prospectus.
"Redemption and Registration Rights Agreement" means the Redemption and
--------------------------------------------
Registration Rights Agreement, dated as of the Closing Date, among Genesis LLC,
Genesis MLP, Genesis OLP, Basis and the Howell Entities, substantially in the
form attached hereto as Exhibit M.
---------
"Refinery Supply Agreement" means the Purchase and Sale Agreement for Crude
-------------------------
Oil dated as of the Closing Date, by and among Basis and Genesis OLP,
substantially in the form attached hereto as Exhibit N.
---------
-12-
<PAGE>
"Registration Statement" means the Registration Statement on Form S-1
----------------------
(Registration No. 333-11545) filed with the Securities and Exchange Commission
on behalf of Genesis MLP, as amended or supplemented.
"Representatives" means Salomon Brothers Inc, Smith Barney Inc., Dean
---------------
Witter Reynolds Inc., PaineWebber Incorporated and Prudential Securities
Incorporated, as the representatives of the several Underwriters.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"September Balance Sheet" means (i) with respect to Basis, a balance sheet
-----------------------
of Basis Petroleum, Inc. Crude Gathering Division as of September 30, 1996
prepared in accordance with GAAP and (ii) with respect to Howell, a balance
sheet of Howell Crude Operations as of September 30, 1996 prepared in accordance
with GAAP.
"SI" means Salomon Inc, a Delaware corporation.
--
"Sponsor" means each of Basis and Howell, but does not include any of the
-------
Howell Subsidiaries.
"Subordinated GP Units" means units representing subordinated general
---------------------
partner interests in Genesis OLP.
"Subordinated LP Units" means units representing subordinated limited
---------------------
partner interests in Genesis OLP.
"Subordinated Unit" means a Subordinated LP Unit or a Subordinated GP Unit.
-----------------
"Supply, Transportation and Purchase Agreement" means the Supply,
---------------------------------------------
Transportation and Purchase Agreement dated as of the Closing Date, by and among
Howell and Genesis OLP, substantially in the form attached hereto as Exhibit O.
---------
"Suspense Account" means an account established by a Transferor to hold
----------------
hydrocarbon production revenues where a dispute or question exists as to the
ownership of such revenues.
"Tank Cleaning" means the complete removal and disposal in Howell's name,
-------------
to a location away from the Assets, of all water, tank bottoms, sediments,
sludges and residual materials in any of the following Satsuma Station bulk
crude oil storage tanks and associated piping, in each case in compliance with
all applicable Laws: Tanks 1786, 1788, 1789, 1790, 1912, 1913, 1915, and 1916.
"Technical Information Assignment" means an instrument of transfer with
--------------------------------
respect to the Expertise, including without limitation, computer software
related to the Assets and the Business substantially in the form attached hereto
as Exhibit P.
---------
-13-
<PAGE>
"Transaction Documents" means this Agreement, the Agency Agreement, if
---------------------
applicable, the Ancillary Agreement, each Assignment Agreement (Pipelines), each
Assignment and Assumption Agreement (Station Sites), each Assignment and
Assumption Agreement (Tractors and Other Assets), the Corporate Services
Agreement, the Credit Support Agreement, the Distribution Support Agreement,
Employment Agreements, the Members Agreement Addendum, the restatements of
each of the MLP Agreement and the OLP Agreement in substantially the forms
included in the Final Prospectus, the Non-Competition Agreement, the Pledge
Agreement, the Redemption and Registration Rights Agreement, the Refinery Supply
Agreement, the Supply, Transportation and Purchase Agreement, the Technical
Information Assignment, the Transition Services Agreement and the Underwriting
Agreement.
"Transfer Expenses" means all reasonable out-of-pocket expenses, fees and
-----------------
costs, including, without limitation all sales, use and similar taxes and
documentary, filing, recording, transfer, deed or conveyance fees or taxes, in
each case, that are reasonably incurred or proposed to be reasonably incurred in
connection with the contributions, conveyances and deliveries to be made
hereunder.
"Transferor" means each of Basis, Howell and the Howell Subsidiaries.
----------
"Transferor Damages" has the meaning assigned to such term in Section 8.2.
------------------ -----------
"Transferor Parties" means any Transferor and any Affiliate of such
------------------
Transferor (including, without limitation, Genesis LLC and, with respect to
Basis, SI), and (unless such Persons are OLP Parties) any of their respective
directors, shareholders, partners, members, officers, employees, agents,
consultants, customers, representatives, successors, transferees or assignees.
"Transition Services Agreement" means the Transition Services Agreement
-----------------------------
dated as of the Closing Date, among Genesis LLC, Basis and Howell, substantially
in the form attached hereto as Exhibit Q.
---------
"Underallocated Sponsor" has the meaning assigned to such term in Section
---------------------- -------
4.7.
- ---
"Underground Storage Tanks" has the meaning assigned to such term in the
-------------------------
Resource, Conservation and Recovery Act, 42 U.S.C. (S) 6991, as amended, or any
applicable state law.
"Underwriters" means the several Underwriters to be listed in Schedule I
------------ ----------
to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement of even date
----------------------
herewith relating to the Public Offering by and among Genesis MLP, Genesis OLP,
Genesis LLC, the Sponsors, SI and the Representatives.
-14-
<PAGE>
"Underwriting Discount" means the underwriting discounts and commissions
---------------------
provided to the Underwriters in connection with the Public Offering (excluding
the Over-Allotment UW Discount).
"Usable Tanks" means the following tanks located at the Satsuma Station:
------------
Tanks 1788, 1912, 1913, 1915, and 1916.
ARTICLE 2
CAPITALIZATION AND CONVEYANCE TRANSACTIONS.
------------------------------------------
On the Closing Date, the transactions described in this Section 2 will
occur in the exact order set forth in this Section 2.
SECTION 2.1 LLC Funding. (a) Simultaneously, (i) with respect to its
-----------
540 LLC Shares, Basis shall contribute to Genesis LLC (A) a $ 4.05 million
demand, interest-bearing promissory note and (B) cash in an amount equal to 54%
of the LLC Contribution Amount and (ii) with respect to its 460 LLC Shares,
Howell shall contribute to Genesis LLC (A) a $ 3.45 million demand, interest-
bearing promissory note and (B) cash in an amount equal to 46% of the LLC
Contribution Amount.
(b) Howell shall then contribute its 460 LLC Shares to Howell Crude.
(c) The transactions contemplated by this Section 2.1 shall be collectively
-----------
referred to as the "LLC Funding."
-----------
SECTION 2.2 MLP Funding. (a) Upon the prior consummation of the LLC
-----------
Funding, and simultaneously, (i) Genesis LLC shall contribute to Genesis MLP
cash in an amount equal to the LLC Contribution Amount in exchange for 153,061
MLP GP Units representing a 2% general partner interest in Genesis MLP and (ii)
the Underwriters shall contribute to Genesis MLP cash in an amount equal to the
Net Offering Proceeds in exchange for 7,500,000 Common MLP Units representing a
98% limited partner interest in Genesis MLP.
(b) Genesis MLP shall accept the amounts contributed pursuant to clauses
-------
(a)(i) and (a)(ii) hereof as a contribution to capital.
- ------------------
(c) The transactions contemplated by this Section 2.2 shall be collectively
-----------
referred to as the "MLP Funding."
-----------
SECTION 2.3 Genesis MLP's Contribution to Genesis OLP. (a) Upon the
-----------------------------------------
prior consummation of the MLP Funding, Genesis MLP shall transfer cash in an
amount equal to the Net MLP Proceeds to Genesis OLP in exchange for 7,653,061
Common GP Units representing a 69.57%
-15-
<PAGE>
Managing General Partner Interest in Genesis OLP, and Genesis OLP shall accept
such cash as a contribution to capital.
(b) The transactions contemplated by this Section 2.3 shall be collectively
-----------
referred to as the "MLP Contribution."
----------------
SECTION 2.4 Asset Purchase and Sale. (a) Upon the prior consummation of
-----------------------
the MLP Contribution, and simultaneously,
(i) Basis shall sell, grant, convey, assign, transfer, set over and
deliver to Genesis OLP, its successors and assigns, for its and their own
use forever, all right, title and interest of Basis in and to the tangible
Basis Assets in exchange for cash in the amount of $____ million, the
sufficiency of such consideration which is hereby acknowledged,
(ii) Howell Pipeline shall sell, grant, convey, assign, transfer, set
over and deliver to Genesis OLP, its successors and assigns, for its and
their own use forever, all right, title and interest of Howell Pipeline in
and to the Howell Pipeline Assets in exchange for cash in the amount of
$____ million, the sufficiency of such consideration which is hereby
acknowledged,
(iii) Howell Texas shall sell, grant, convey, assign, transfer, set
over and deliver to Genesis OLP, its successors and assigns, for its and
their own use forever, all right, title and interest of Howell Texas in and
to the Howell Texas Assets in exchange for cash in the amount of $____
million, the sufficiency of such consideration which is hereby
acknowledged,
(iv) Howell Transportation shall sell, grant, convey, assign,
transfer, set over and deliver to Genesis OLP, its successors and assigns,
for its and their own use forever, all right, title and interest of Howell
Transportation in and to the Howell Transportation Assets in exchange for
cash in the amount of $____ million, the sufficiency of such consideration
which is hereby acknowledged, and
(v) Howell Power shall sell, grant, convey, assign, transfer, set
over and deliver to Genesis OLP, its successors and assigns, for its and
their own use forever, all right, title and interest of Howell Power in and
to the Howell Power Assets in exchange for cash in the amount of $____
million, the sufficiency of such consideration which is hereby
acknowledged.
(b) In the event that the Howell Purchase Cash is less than the Howell
Affiliate Cash,
(i) the Howell Purchase Cash shall be paid to Howell Pipeline, Howell
Texas, Howell Transportation and Howell Power in the following percentages:
-16-
<PAGE>
___ % to Howell Pipeline, ___ % to Howell Texas, ___ % to Howell
Transportation and ___ % to Howell Power, and
(ii) Genesis OLP shall issue to each of Howell Pipeline, Howell Texas,
Howell Transportation and Howell Power Subordinated LP Units with an
aggregate Per Unit Capital Amount equal to the difference, in each case,
between the amount to be paid by Genesis OLP to each Howell Subsidiary for
its assets under clause (a) hereof and the amount of Howell Purchase Cash
----------
received by each Howell Subsidiary pursuant to this clause (b).
----------
(c) The transactions contemplated by this Section 2.4 shall be collectively
-----------
referred to as the "Asset Purchase and Sale."
-----------------------
SECTION 2.5 Basis' and Howell Crude's Contributions to Genesis OLP. (a)
------------------------------------------------------
Upon the prior consummation of the Asset Purchase and Sale, and simultaneously,
(i) Basis shall grant, convey, assign, transfer, set over and deliver
to Genesis OLP, its successors and assigns, for its and their own use
forever, all right, title and interest of Basis in and to all of the
intangible assets associated with its crude oil gathering and marketing
business, including all associated goodwill, going concern value and know-
how, in exchange for (A) the distribution of the Excess Basis Cash, (B)
the issuance of 1,771,200 Subordinated LP Units and (C) the issuance of
36,147 Subordinated GP Units representing a .3286% General Partner Interest
in Genesis OLP, the sufficiency of such consideration which is hereby
acknowledged, and Genesis OLP shall accept such assets as a contribution to
the capital of Genesis OLP, and
(ii) Howell Crude shall grant, convey, assign, transfer, set over and
deliver to Genesis OLP, its successors and assigns, for its and their own
use forever, all right, title and interest of Howell Crude in and to all of
the intangible assets associated with its crude oil gathering and marketing
business, including all associated goodwill, going concern value, and
know-how, in exchange for (A) the distribution of the Excess Howell Cash,
(B) the issuance of the Excess Howell Subordinated LP Units and (C) the
issuance of 30,792 Subordinated GP Units representing a .2799% General
Partner Interest in Genesis OLP, the sufficiency of such consideration
which is hereby acknowledged, and Genesis OLP shall accept such assets as a
contribution to the capital of Genesis OLP.
(b) The transactions contemplated by this Section 2.5 shall be collectively
-----------
referred to as the "Basis and Howell Crude Contributions."
------------------------------------
SECTION 2.6 Additional LLC Contributions. (a) Upon the prior
-----------------------------
consummation of the Basis and Howell Crude Contributions, and simultaneously,
(i) with respect to its 540 LLC Shares, Basis shall transfer to Genesis LLC its
36,147 Subordinated GP Units and (ii) with respect to its 460 LLC Shares, Howell
Crude shall transfer to Genesis LLC its 30,792 Subordinated GP Units.
-17-
<PAGE>
Genesis LLC shall accept the contributions made pursuant to clauses (a)(i) and
(a)(ii) of this Section 2.6 as additional contributions to its capital.
-----------
(b) The transactions contemplated by this Section 2.6 shall be collectively
-----------
referred to as the "Additional LLC Contributions."
----------------------------
SECTION 2.7 Clean Up Distributions. (a) Upon the prior consummation of
----------------------
the Additional LLC Contributions, and simultaneously, Genesis OLP shall
distribute (i) cash in the amount of $10.00 to Genesis LLC with respect to its
General Partner Interest in Genesis OLP and (ii) cash in the amount of $990.00
to Genesis MLP with respect to its organizational Limited Partner Interest in
Genesis OLP. Thereafter, Genesis MLP shall cease to be a limited partner of
Genesis OLP.
(b) Genesis MLP shall distribute (i) cash in the amount of $10.00 to
Genesis LLC with respect to its General Partner Interest in Genesis MLP and (ii)
cash in the amount of $990.00 to Kubicek with respect to his Organizational
Limited Partner Interest in Genesis MLP. Thereafter, Kubicek shall cease to be
a limited partner of Genesis MLP.
(c) Genesis LLC shall distribute (i) cash in the amount of $540.00 to
Basis with respect to its 540 LLC Shares and (ii) cash in the amount of $460.00
to Howell Crude with respect to its 460 LLC Shares.
(d) The transactions contemplated by this Section 2.7 shall be collectively
-----------
referred to as the "Clean Up Distributions."
----------------------
SECTION 2.8 Over-Allotment Contributions. (a) In the event the
----------------------------
Underwriters exercise the Over-Allotment Option, in whole or in part, (i) with
respect to its 540 LLC Shares, Basis shall contribute to Genesis LLC cash in an
amount equal to 54% of the LLC Over-Allotment Contribution and (ii) with respect
to its 460 LLC Shares, Howell shall contribute or cause an Affiliate to
contribute to Genesis LLC cash in an amount equal to 46% of the LLC Over-
Allotment Contribution.
(b) Genesis LLC shall then contribute cash to Genesis MLP in an amount
equal to 2/98ths of the Net Over-Allotment Proceeds (the "LLC Over-Allotment
------------------
Contribution") in exchange for an additional number of MLP GP Units equal to
- ------------
2/98ths of the total number of Over-Allotment Common MLP Units.
(c) Genesis MLP shall then contribute to Genesis OLP cash in an amount
equal to the sum of (i) the Net Over-Allotment Proceeds plus (ii) the LLC Over-
Allotment Contribution in exchange for a number of additional Common GP Units
equal to the sum of (x) the total number of Over-Allotment Common MLP Units
plus (y) the number of additional MLP GP Units issued pursuant to the MLP
Agreement as described therein.
-18-
<PAGE>
(d) Genesis OLP shall use the cash received pursuant to clause (b) of this
----------
Section 2.8 to redeem from all the holders of Subordinated Units, based on the
- -----------
relative number of Subordinated Units owned by each such holder, a number of
such Subordinated Units equal to the number of additional Common GP Units issued
to Genesis MLP pursuant to the OLP Agreement as described therein.
(e) The transactions contemplated by this Section 2.8 shall be collectively
-----------
referred to as the "Over-Allotment Contributions."
----------------------------
If and to the extent any of the Parties hereto receive funds in connection with
the transactions contemplated by this Section 2 at a time not contemplated by
---------
this Section 2, then such funds shall be deemed held in escrow to be applied in
accordance with this Section 2.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES.
-------------------------------
SECTION 3.1 Basis hereby represents and warrants to Genesis OLP as
follows:
(a) Corporate Organization and Subsidiaries.
---------------------------------------
(i) Basis is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and is duly qualified or
licensed as a foreign corporation authorized to do business in each
jurisdiction in which the character of the properties and assets now owned
or held by it, including the Basis Assets, or the nature of the business
now conducted by it requires it to be so licensed or qualified, except in
those jurisdictions where the failure to be so qualified or licensed would
not have a MAE on Basis or the Business. Basis is a wholly owned
subsidiary of SI. Basis has full corporate power and authority to own its
properties and carry on its business, including the Business, as now being
conducted. Basis has delivered to Genesis OLP true, complete and correct
copies of the articles of incorporation and all amendments thereto to the
date hereof and the by-laws as presently in effect for Basis.
(ii) Basis does not own, directly or indirectly, interests in any
partnership that is related to the Basis Assets or the Business. Other
than as set forth on Schedule 1.1A and other than the stock of Basis
-------------
Clearing, Inc., Basis does not own, directly or indirectly, any stock or
other equity or profit interest, or have any other investment of any kind,
in any other entity or business, that is necessary to or employed in the
operation of the Basis Assets or the Business.
(b) Authorization. Basis has full corporate power and authority to execute
-------------
and deliver each Transaction Document to which it is a party and to consummate
the transactions contemplated thereby. The execution and delivery by Basis of
each Transaction Document to which it is a party and the consummation by Basis
of the transactions contemplated thereby have been duly authorized
-19-
<PAGE>
by all necessary corporate action on the part of Basis and its stockholder, and
no other corporate action or proceeding on the part of Basis or its stockholder
is necessary to authorize the execution and delivery by Basis of any Transaction
Document to which it is a party or the consummation by Basis of the transactions
contemplated thereby. This Agreement has, and on the Closing Date each other
Transaction Document to which it is a party will have, been duly executed and
delivered by Basis and, assuming each has been duly authorized, executed and
delivered by the other parties thereto, is a legal, valid and binding obligation
of Basis, enforceable against it in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency and similar laws affecting the
rights of creditors generally or as may be limited by the availability of
equitable remedies, including specific performance, subject to the discretion of
the court before which any proceeding therefor may be brought.
(c) Noncontravention. The execution and delivery of each Transaction
----------------
Document, and the consummation of the transactions contemplated hereby and
thereby, will not: (i) violate any provision of the Articles of Incorporation or
By-laws of Basis; (ii) except as set forth on Schedule 3.1(c), violate, or
---------------
result with the giving of notice or the passage of time in a violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or entitle any party to terminate any or all of the provisions
of, or result in the creation or imposition of any Lien upon any of the Basis
Assets pursuant to any provision of, or require the consent or approval of any
other party to, any mortgage, lease, license, loan agreement, indenture or other
agreement, instrument or document to which Basis is a party or to or by which
any of the Basis Assets is subject or bound; or (iii) violate or conflict with
any law, order, rule, regulation, arbitration award, judgment or decree to or by
which Basis or any of the Basis Assets is subject or bound; except, in the case
of (ii) and (iii) above, for such violations, conflicts, breaches, defaults,
Liens or encumbrances the existence of which would not have a MAE with respect
to Basis or the Business.
(d) Financial Statements. Basis has previously delivered to Genesis OLP
--------------------
balance sheets of Basis Petroleum, Inc. Crude Gathering Division as of December
31, 1994, December 31, 1995 and September 30, 1996 and the related statements of
income and cash flows for Basis Petroleum, Inc. Crude Gathering Division for the
years ended 1993, 1994 and 1995 and the nine-month period ended September 30,
1996. All of the financial statements referred to above in this Section 3.1(d)
--------------
are included in the Prospectus and are herein collectively referred to as the
"Basis Financial Statements." Arthur Andersen LLP ("Andersen") has audited the
- --------------------------- --------
Basis Financial Statements other than the September Balance Sheet and the income
and cash flow statements for the nine month period ended September 30, 1996 and
furnished an opinion with respect thereto. The balance sheets included in the
Basis Financial Statements fairly present in all material respects the financial
position of Basis and its subsidiaries as of the respective dates set forth
therein and the income statements and statements of cash flows included in the
Basis Financial Statements fairly present in all material respects the results
of operations and the cash flows of Basis and its subsidiaries for the
respective periods set forth therein, in each case in conformity with GAAP
applied on a consistent basis, except as otherwise noted therein and, in the
case of unaudited statements for the period ended September 30, 1996, for
normally recurring year-end adjustments which are not material.
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<PAGE>
(e) Condition of Assets. The Basis Assets (other than the real property)
-------------------
are in good condition, except for ordinary wear and tear and except for such
defects as would not in the aggregate have a MAE with respect to the Business.
Basis has not received any appraisals or engineering reports nor has Basis
conducted any appraisals or engineering reports relating to the condition of any
of the Basis Assets, other than data or reports the contents of which have been
specifically disclosed to Genesis OLP and to Howell.
(f) Information Included in Registration Statement. The information
----------------------------------------------
supplied or to be supplied by Basis for inclusion in the Registration Statement,
as of the time the Registration Statement becomes effective, does not contain
any untrue statement of a material fact or omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(g) Absence of Certain Changes or Events. Except as reflected in Schedule
------------------------------------ --------
3.1(g)) as specifically set forth herein, or, as expressly permitted or
- ------
described elsewhere in the Transaction Documents or as disclosed in the
Prospectus since the September Balance Sheet, Basis has not:
(i) incurred any material liability whether absolute or contingent,
with respect to the Basis Assets or the Business taken as whole except (a)
trade or business obligations or liabilities incurred in the ordinary
course of business, (b) obligations under any contracts or commitments made
in the ordinary course of business and (c) sales, income, franchise, ad
valorem, severance and windfall profit taxes and assessments accruing or
becoming payable in the ordinary course of business;
(ii) purchased or redeemed any shares from, or declared or made any
payment or distribution to, any stockholders of Basis, except such payments
or distributions consisting of Excluded Assets or as reflected on Schedule
--------
7.1;
---
(iii) issued or authorized the issuance of any securities or any
options, warrants or rights to purchase any securities that relate to the
Basis Assets or the Business;
(iv) disposed of or acquired any material assets or business to be
included in the Basis Assets or Business (other than the Excluded Assets)
or canceled any debts or claims except in the ordinary course of business;
(v) suffered any extraordinary losses or any damage, destruction or
other casualty losses with respect to the Basis Assets, or waived any
rights of substantial value, except as would not have, individually or in
the aggregate, a MAE with respect to the Business;
(vi) entered into any material transaction with respect to the Basis
Assets or the Business other than in the ordinary course of business;
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<PAGE>
(vii) had, individually or in the aggregate, any material adverse
change in its business, assets, liabilities, financial condition or results
of operations with respect to the Basis Assets or the Business or such that
would have a MAE on the Basis Assets or the Business, except for any change
resulting from general economic, market or financial conditions and for any
change resulting from conditions or circumstances generally affecting the
industry in which the Business operates or which have been specifically
disclosed to Genesis OLP and to Howell;
(viii) given any promise, assurance or guaranty of the payment,
discharge or fulfillment of any obligation of any other Person with respect
to the Assumed Liabilities or the Basis Assets or the Business after the
Closing Date except in the ordinary course of business;
(ix) had any actual or, to the knowledge of Basis, threatened
cancellation or nonrenewal of customer agreements or adverse change in the
relationship with any of the significant customers of the Business;
(x) sold or disposed of or otherwise divested itself of the ownership,
possession, custody and control of any corporate books and records of any
nature which, in accordance with past business practices, are retained for
a period of time after their use, creation or receipt with respect to the
Basis Assets or the Business;
(xi) transferred to any stockholder or any Affiliate of any
stockholder any right, property or interest which is necessary in the
operation of the Business other than in the ordinary course of business,
except Excluded Assets and regular cash compensation in accordance with
past practice or pursuant to existing severance agreements with employees
of Basis; or
(xii) engaged in any transaction which gives rise to an intercompany
receivable, payable or loan between Basis and any Affiliate thereof except
in the ordinary course of business.
(h) Taxes. For purposes of this Agreement, "Basis Taxes" shall mean all
----- -----------
federal, state, local and foreign taxes for which Basis is or may be liable.
Basis has taken the position on all tax returns, reports and forms
(collectively, the "Basis Returns") since July 1, 1985 that it is a corporation.
-------------
Except as set forth on Schedule 3.1(h), Basis has filed or caused to be filed in
---------------
a timely manner (within any applicable extension periods) all Basis Returns
required to be filed. All such Basis Returns when filed were true, complete and
accurate in all material respects except to the extent the same would not have a
MAE on the Basis Assets or the Business. The amounts withheld and paid to
governmental authorities for production, windfall profit and other taxes during
the immediately preceding year are correct in all material respects. To the
best of Basis' knowledge, there are no filed or threatened state or federal tax
Liens relating to the Basis Assets that would have a MAE on the Basis Assets or
the Business.
-22
<PAGE>
(i) Title to Properties. Basis has, and will at the Closing have and shall
-------------------
convey by a recordable instrument, (i) good and indefeasible title to all owned
real property related to the Business, excluding Pipeline Assets, to be
transferred to Genesis OLP by Basis or any of its Affiliates pursuant hereto,
(ii) sufficient title to the portion of the Basis Assets constituting the
Pipeline Assets, if any, to enable Genesis OLP to use the Pipeline Assets as
they have been used in the past and as they are proposed to be used in the
Business and any lack of title to the Pipeline Assets has not had and will not
have a MAE on the Business and will not materially increase the cost of such
use, (iii) valid leasehold interests in Basis' leased real property and leased
personal property and vehicles that are the subject of assigned leases included
in the Basis Assets, and (iv) good title to all other assets and properties,
whether real, personal, mixed or fixtures, included in the Basis Assets, in each
case, with respect to clauses (i) - (iv) hereof, free and clear of all Liens,
------------------
except for (a) Liens that are specified as a part of the Assumed Liabilities and
(b) Permitted Encumbrances. Basis enjoys peaceful possession of all its owned
or leased real property, personal property and vehicles relating to the
Business, except as would not have a MAE on the Business, all of which assets
are included on Schedule 1.1A and are reflected on the September Balance Sheet.
-------------
No covenants, easements, restrictions, servitudes or rights of way applicable to
the Basis Assets have or can be reasonably expected to have a MAE with respect
to the Business.
(j) Leased Property. To the best knowledge of Basis, Basis is not in
---------------
default, and no notice of alleged default has been received by Basis, under any
leases under which Basis is lessee of any of the Basis Assets, no lessor is in
default or alleged to be in default thereunder, and there exists no condition or
event which, after notice or lapse of time or both, would constitute a default
by any party thereto, except as would not have a MAE on the Business. Except as
set forth on Schedule 3.1(j), there are no leases or tenancies of third parties
---------------
for any part of the real property, personal property or vehicles included in the
Basis Assets that shall remain in effect at or after the Closing Date, except as
would not have a MAE on the Business.
(k) Patents, Trademarks, Expertise, Etc. There are no patents, trade
------------------------------------
names, copyrights or trademarks relating to the Basis Assets or the Business
that are material to the Business. The consummation of the transactions
contemplated by the Transaction Documents will not result in the loss or
material impairment of any of Basis' Expertise; and no proceedings have been
instituted, are pending or, to the best knowledge of Basis, are threatened which
challenge the rights of Basis in respect to Basis' Expertise. To the best
knowledge of Basis, Basis has adequate patent and trademark rights to the
technology used or useful with respect to the Basis Assets or the Business, and
the use thereof is not infringing any patent, copyright, trademark or similar
right of any person. Except as set forth in Schedule 3.1(k), there are no
---------------
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of such technology by any independent
salesperson, distributor, sublicensor, or other remarketer or sales
organization.
(l) Litigation. Except as set forth on Schedule 3.1(l) hereto, there is
---------- ---------------
not pending or, to the knowledge of Basis, threatened any judicial,
administrative or arbitration action, suit or proceeding against Basis, which
might result in any significant adverse change in the Assumed
-23-
<PAGE>
Liabilities or have a MAE on the Business, or which questions the validity of
any Transaction Document or any action taken or to be taken in connection
therewith.
(m) Employees, Employee Benefit Plans, Labor Matters and Compensation.
-----------------------------------------------------------------
(i) Genesis LLC intends to offer employment effective as of January 1,
1997 to all of the employees of Basis employed in the Business under such
terms and conditions (including compensation and benefits) as Genesis LLC
may deem appropriate. Basis shall use its reasonable best efforts to
persuade such employees as Genesis LLC may designate to become employees of
Genesis LLC. Basis will not solicit, or in any other manner attempt to
induce, any employee of Genesis LLC to leave the employ of Genesis LLC.
Any severance pay or other severance-related obligations arising with
respect to employees of Basis, as of the Closing Date or thereafter, shall
be the obligation of Basis except as otherwise provided in Section 11.
----------
Basis will timely pay all its employees who will become employees of
Genesis LLC, their pro rata portion of any bonus otherwise payable under
any bonus payment plan or arrangement of Basis through the Closing Date.
(ii) Basis has provided Genesis LLC with summaries of all employee
benefit plans, programs and arrangements of Basis (the "Basis Employee
--------------
Plans") and each of the documents relating thereto as Genesis LLC shall
-----
reasonably request, as well as a list of employees of Basis who are
actively employed in the Business or are on leave with the right to return
to active employment, together with a listing of each such employee's
"service" with Basis and such other information as Genesis LLC may
reasonably request.
(iii) Except as described on Schedule 3.1(m), there are no agreements
---------------
with, or pending petitions for recognition of, a labor union or association
as the exclusive bargaining agent for any or all employees currently or
formerly employed in the Business, or their respective dependents
(collectively, the "Basis Employees"); no such petitions have been pending
---------------
at any time within two years prior to the date of this Agreement and, to
the best knowledge of Basis, there has not been any organizing effort by
any union or other group seeking to represent any Basis Employees as their
exclusive bargaining agent at any time within two years prior to the date
of this Agreement; and there are no labor strikes, work stoppages or other
labor troubles, other than routine grievance matters, now pending, or, to
the best of Basis's knowledge, threatened, against Basis, nor have there
been any such labor strikes, work stoppages or other labor troubles, other
than routine grievance matters, with respect to the Business at any time
within two years prior to the date of this Agreement.
(v) Except as set forth on Schedule 3.1(m) or pursuant to the
---------------
Transition Services Agreement, since January 1, 1996, Basis (a) has not
entered into any employment or similar contract with, or made any increase
in the compensation payable or to become payable by it to, any Basis
Employee other than in the ordinary course of business, in accordance with
past practice or in accordance with the requirements of applicable Laws,
which will become the obligation of Genesis OLP or Genesis LLC, and (b) has
not contributed or made any
-24-
<PAGE>
commitment to, or representation that it will, contribute any amounts to
any bonus or other Basis Employee Plan, severance plan or collective
bargaining agreement in respect of Basis Employees in the case of (a) and
(b), other than as required by applicable Laws or by the terms of any such
Basis Employee Plan as in effect on the date of the September Balance
Sheet, which will become the obligation of Genesis OLP or Genesis LLC.
(n) Consents. Except as set forth in Schedule 3.1(n), no consent,
-------- ---------------
approval, authorization or order of (or registration or filing with) any court
or governmental agency or body is required in connection with the execution,
delivery or performance by Basis of any Transaction Document or in connection
with the transactions contemplated thereby, except for such consents which the
failure to obtain would not have, individually or in the aggregate, a MAE with
respect to the Business.
(o) Contracts. Except as set forth in Schedule 3.1(o) and except for
--------- ---------------
lessee leases, to the knowledge of Basis with respect to Basis Assets or the
Business, Basis is not a party to, nor bound by, nor are any of the Basis Assets
or the Business subject to:
(i) any contract which (A) has not been entered into or received in
the ordinary course of Basis' business and is not consistent with prior
practice of Basis, or (B) involves the bulk or wellhead purchase, sale or
exchange of in the aggregate more than 5,000 barrels of oil per day;
(ii) any mortgage, pledge or other form of secured indebtedness for
borrowed money;
(iii) any debentures, notes or installment obligations, other than
accounts payable arising in the ordinary course of Basis' business, or
other instruments for or relating to any borrowing of money by Basis;
(iv) any guaranty of any obligation for borrowings or otherwise,
excluding endorsements made for collection, and any other guaranty, which
has not been entered into in the ordinary course of Basis' business;
(v) any agreement or arrangement for the sale or lease of any of the
Basis Assets (other than inventory and other than in the ordinary course of
business) or for the sale of inventory other than in the ordinary course of
business;
(vi) any contract pursuant to which Basis is obligated to make
payments, contingent or otherwise, on account of or arising out of the
prior acquisition of the business, or all or substantially all of the
assets or stock, of other companies or any division thereof; or
-25-
<PAGE>
(vii) any other contract, agreement or other instrument not entered
into in the ordinary course of business which is material to the Business
and not excluded by reason of the provisions of clauses (i) through (vi),
inclusive, of this subsection.
Except as would not have a MAE with respect to the Business, all contracts
referred to in Schedule 3.1(o) which are contracts assigned to Genesis OLP are
---------------
legal, valid and binding obligations of Basis enforceable against it in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting the rights of
creditors generally or as may be limited by the availability of equitable
remedies, including specific performance, subject to the discretion of the court
before which any proceeding therefor may be brought. Except as set forth on
Schedule 3.1(o), such assigned contracts have not been amended except in the
- ---------------
ordinary course of business and additions or deletions of leases pursuant to
such assigned contracts in the ordinary course of business. To the best
knowledge of Basis, (i) Basis is not in default, and no notice of alleged
default has been received by Basis, under any of such contracts which are
assigned contracts and (ii) no other party thereto is in default or alleged to
be in default thereunder. Except as separately identified in Schedule 3.1(o),
---------------
each of the assigned contracts of Basis set forth on Schedule 3.1(o) may be
---------------
assigned by Basis to Genesis OLP without the consent of any Person, except such
as would not have a MAE with respect to the Business. To the best knowledge of
Basis, the rights of Basis under all assigned contracts that are set forth in
Schedule 3.1(o) are owned or possessed by Basis free and clear of all Liens,
- ---------------
except such as would not have a MAE with respect to the Business. Except as set
forth on Schedule 3.1(o), Basis does not know of any cancellation, and Basis
---------------
has not received any written threat to cancel or not to renew or extend, any
such contract which is an assigned contract by or from any other party thereto.
To the extent that there are any exchange imbalances relating to assigned
contracts that are contracts for the exchange of liquid hydrocarbons, such
imbalances are to be settled in the ordinary course of business and consistent
with past practice and would not have a MAE on the Business.
(p) Broker's and Finder's Fees. Basis is not obligated to pay, nor has
--------------------------
Basis retained any broker or finder or any other Person who is entitled to, any
broker's or finder's fee or any other commission or financial advisory fee based
on any agreement or undertaking made by or on behalf of Basis in connection with
the transactions contemplated hereby or in the Transaction Documents, except
pursuant to the Underwriting Agreement.
(q) Environmental Matters.
---------------------
(i) Except as set forth in Schedule 3.1(q), Basis has not and does not
---------------
handle, treat, store or dispose of, on Basis' owned or leased real property
or easements included in the Basis Assets, any wastes (including, without
limitation, hazardous or toxic wastes but excluding ordinary garbage and
trash and further excluding the handling and storage of crude oil,
condensate, motor fuels, lubricants and solvents for use in the Business)
or hazardous or toxic substances. Except as set forth in Schedule 3.1(q),
---------------
any such handling, treatment, storage or disposal has been conducted in
compliance with all applicable Laws, except where
-26-
<PAGE>
the failure to so comply would not, individually or in the aggregate, have
a MAE on the Business.
(ii) Except as set forth on Schedule 3.1(q), the Business relating to
---------------
Basis as currently being operated meets and as operated at all times during
the three-year period prior to the date hereof met, all applicable federal,
state and local requirements with respect to air and water quality,
pipeline safety, and the handling, treatment, storage and disposal of
wastes or by-products (including hazardous or toxic wastes, if any) and
hazardous or toxic substances generated by Basis, where any failure to
meet, or during the three-year period prior to the date hereof any failure
to have met, such requirements would have a MAE on the Business. Basis has
given to pertinent government authorities all notices required pursuant to
the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Clean Water Act, 42
U.S.C. (S) 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. (S)
2601 et seq., the Solid Waste Disposal Act, as amended by the Resource,
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., CERCLA, and all
other federal, state and local environmental Laws, where any failure to
give such notices would have a MAE on the Business, or would materially and
adversely affect Basis' ability to consummate the transactions contemplated
by the Transaction Documents. Except as listed on Schedule 3.1(q), Basis
---------------
has not since the date five years prior to the date hereof received any
order or notice of violation or noncompliance from, or been the subject of
any regulatory audit or investigation (other than any periodic
investigation or inspection of a routine nature) by, any governmental
authority in connection with the ownership or operation of the Basis Assets
or the Business or as a potentially responsible party in connection with
any waste disposal facility, except where such violations or noncompliance
would not have a MAE with respect to the Business.
(iii) With respect to the operation of the Basis Assets, Basis has
not handled, treated, stored, recycled, reclaimed or disposed of, or
arranged for the handling, treatment, storage, recycling or reclamation or
disposal of, any wastes or by-products (including hazardous or toxic
wastes) or hazardous or toxic substances on any property other than the
sites disclosed on Schedule 3.1(q).
---------------
(iv) To the best knowledge of Basis, there are no Underground Storage
Tanks on the owned or leased real property or easements included in the
Basis Assets, and any Underground Storage Tanks that may have been on
Basis' owned or leased real property were removed, and any soil
contaminated as a result of such Underground Storage Tanks was remediated
in accordance with all applicable Laws. Except as set forth on Schedule
--------
3.1(q), none of the improvements owned or used by Basis on such owned or
------
leased real property or easements contain, to the knowledge of Basis, any
asbestos, nor does any equipment owned or used by Basis on such owned or
leased real property or easements contain, to the knowledge of Basis, any
polychlorinated biphenyls.
-27-
<PAGE>
(v) With respect to environmental matters, all financial assurances
required by governmental authorities for the lawful operation of the Basis
Assets are in place and fully funded as described on Schedule 3.1(q).
---------------
(r) Public Utility Status. Basis is not (i) a "public utility company", a
---------------------
"holding company" or an "affiliate" of a "holding company" as those terms are
defined in the Public Utility Holding Company Act of 1935, (ii) a "gas utility",
"public utility" or "utility" as those terms are defined in Article 6050 of the
Revised Civil Statutes of Texas or (iii) a "public utility" or "utility" as
those terms are defined in the Public Utility Regulatory Act of Texas or under
the applicable laws of any state in which Basis does business.
(s) Authorities, Permits, Tariffs and Regulatory Authorizations.
-----------------------------------------------------------
(i) Basis has no common carrier pipelines relating to the Business or
the Basis Assets and is licensed and qualified to own and operate any and
all trucks, tractors and trailers leased, owned or operated by, for or on
behalf of Basis in connection with the Basis Assets or the Business and
holds all necessary certificates, permits or other regulatory
authorizations to own and operate the Basis Assets as utilized in the
Business presently and during the past twelve months, except where the
failure to be so qualified or licensed would not have a MAE on the
Business.
(ii) Except as set forth on Schedule 3.1(s), (a) Basis has complied
---------------
with all federal, state and local Laws, including, without limitation, the
rules and regulations of all governmental agencies having authority over it
and any such Laws, concerned with export and import licenses, occupational
safety, environmental protection and employment practices, relating to the
Business, (b) Basis has complied with each and all permits and tariffs,
including any required filings and renewals, and no default exists with
respect thereto, and (c) Basis has not received written notice of violation
of any such rules or regulations, corrected or not, since January 1, 1996,
except, in the cases of (a) and (b) where such violations or noncompliance
would not have a MAE with respect to the Business. Basis has not received
from any governmental authority any written notice since January 1, 1996,
of any currently proposed public improvement which would impose a Lien upon
any of the Basis Assets, except as would not have a MAE with respect to the
Business.
(t) Suspense Accounts. Basis has maintained each of its Suspense Accounts
-----------------
for third party sellers of crude oil in accordance with all applicable Laws,
including, without limitation, applicable escheat laws, except as would not have
a MAE with respect to the Business.
(u) Third Party Rights. Except as set forth in Schedule 3.1(u), no party
------------------ ---------------
has any right, whether or not exercisable after notice or lapse of time or any
triggering event, to purchase any material part of the Basis Assets (other than
crude oil transactions in the ordinary course of business). Except as set forth
in Schedule 3.1(u), no agreement binding on Basis or the Business contains any
---------------
provision which would impose material limitations on Genesis OLP or any of its
-28-
<PAGE>
Affiliates or their respective business practices through a noncompetition, an
area of interest or similar type of provision.
(v) Prepayment. Basis is not obligated by virtue of any express or implied
----------
contract or agreement to deliver at some future time oil, gas or products
thereof, without receiving at such time a commitment for full payment in
accordance with usual business practice. Except as provided for in Schedule
--------
7.1, Basis has not received any prepayment for any oil or gas to be sold, or for
services, including transportation, treating or storage, to be rendered with
respect to which Genesis OLP could have any liability.
(w) Investment Representation. Basis is acquiring the Subordinated LP
-------------------------
Units for its own account and not with a view to or for sale in connection with
any distribution thereof, and will not sell or transfer the Subordinated LP
Units except pursuant to an effective registration statement under the
Securities Act, and the rules and regulations promulgated thereunder or an
exemption therefrom and in compliance with all state securities and blue sky
laws; provided, however, it is understood that Basis may transfer the
Subordinated LP Units to Affiliates of Basis and to John vonBerg under the
circumstances described in the Final Prospectus, and that the Subordinated LP
Units will bear an appropriate legend relating to such restriction on transfer
and to restrictions on transfer under the Securities Act and the regulations
thereunder. Basis is an "accredited investor" as defined in Rule 501(a) under
the Securities Act.
SECTION 3.2 Each of the Howell Entities hereby represents and warrants to
Genesis OLP as follows:
(a) Corporate Organization and Subsidiaries.
---------------------------------------
(i) Each of the Howell Entities is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or licensed as a foreign corporation
authorized to do business in each jurisdiction in which the character of
the properties and assets now owned or held by it, including the Howell
Assets, or the nature of the business now conducted by it requires it to be
so licensed or qualified, except in those jurisdictions where the failure
to be so qualified or licensed would not have a MAE on such entities as a
whole or the Business. Each of the Howell Entities has full corporate
power and authority to own its properties and carry on its business,
including the Business, as now being conducted. Each of the Howell
Subsidiaries is a direct or indirect wholly owned subsidiary of Howell.
Howell has delivered to Genesis OLP true, complete and correct copies of
the certificate of incorporation and all amendments thereto to the date
hereof and the by-laws as presently in effect for each of the Howell
Entities.
(ii) None of the Howell Entities owns, directly or indirectly,
interests in any partnership that is related to the Howell Assets or the
Business. Other than as set forth on Schedule 1.1B and other than stock of
-------------
the Howell Subsidiaries, none of the Howell Entities
-29-
<PAGE>
owns, directly or indirectly, any stock or other equity or profit interest,
or have any other investment of any kind, in any other entity or business,
that is necessary to or employed in the operation of the Howell Assets or
the Business.
(b) Authorization. Each of the Howell Entities has full corporate power
-------------
and authority to execute and deliver each Transaction Document to which it is a
party and to consummate the transactions contemplated thereby. The execution
and delivery of each Transaction Document by each of the Howell Entities to
which it is a party, and the consummation by each Howell Entity of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of each of the Howell Entities and their
stockholders, and no other corporate action or proceeding on the part of any
Howell Entity or its stockholders is necessary to authorize the execution and
delivery by the Howell Entities of any Transaction Document to which it is a
party or the consummation by each Howell Entity of the transactions contemplated
thereby. This Agreement has, and on the Closing Date each other Transaction
Document will have, been duly executed and delivered by each Howell Entity which
is a party and, assuming each has been duly authorized, executed and delivered
by the other parties thereto, is a legal, valid and binding obligation of each
Howell Entity party thereto, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency and similar
laws affecting the rights of creditors generally or as may be limited by the
availability of equitable remedies, including specific performance, subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) Noncontravention. The execution and delivery of each Transaction
----------------
Document, and the consummation of the transactions contemplated thereby, will
not: (i) violate any provision of the Certificate of Incorporation or By-laws of
any Howell Entity; (ii) except as set forth on Schedule 3.2(c), violate, or
---------------
result with the giving of notice or the passage of time in a violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or entitle any party to terminate any or all of the provisions
of, or result in the creation or imposition of any Lien upon any of the Howell
Assets pursuant to any provision of, or require the consent or approval of any
other party to, any mortgage, lease, license, loan agreement, indenture or other
agreement, instrument or document to which any Howell Entity is a party or to or
by which any of the Howell Assets is subject or bound; or (iii) violate or
conflict with any Law, order, arbitration award, judgment or decree to or by
which any Howell Entity or any of the Howell Assets is subject or bound; except,
in the case of (ii) and (iii) above, for such violations, conflicts, breaches,
defaults, Liens or encumbrances the existence of which would not, individually
or in the aggregate, have a MAE with respect to the Howell Entities taken as a
whole or the Business.
(d) Financial Statements. Howell has previously delivered to Genesis OLP
--------------------
balance sheets of Howell related to the Business as of the end of each of the
fiscal periods ended December 31, 1994, December 31, 1995 and September 30, 1996
and the related statements of income and statement of cash flow for the annual
fiscal periods of 1993, 1994 and 1995 and nine month period ended September 30,
1996. Howell has also previously delivered to Genesis OLP a
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<PAGE>
statement of revenue and direct operating expenses relating to the Howell Assets
acquired from Exxon (the "Exxon Pipeline Statement") as of the end of each of
------------------------
the fiscal periods ended December 31, 1992, December 31, 1993, December 31, 1994
and March 31, 1995. All of the financial statements referred to above in this
Section 3.2(d) are included in the Prospectus and are herein collectively
- --------------
referred to as the "Howell Financial Statements." Deloitte & Touche LLP has
---------------------------
audited Howell's Financial Statements other than the September Balance Sheet,
the income and cash flow statements for the nine month period ended September
30, 1996 and the Exxon Pipeline Statement and furnished an opinion with respect
thereto. Price Waterhouse LLP audited the Exxon Pipeline Statement, except for
the fiscal period ending March 31, 1995 and furnished an opinion with respect
thereto. The balance sheets included in the Howell Financial Statements fairly
present in all material respects the financial position of Howell and its
subsidiaries as of the respective dates set forth therein, and the income
statements and statements of cash flows included in the Howell Financial
Statements fairly present in all material respects the results of operations and
the cash flows of Howell and its subsidiaries for the respective periods set
forth therein, in each case in conformity with GAAP applied on a consistent
basis, except as otherwise noted therein and, in the case of unaudited
statements for the period ended September 30, 1996, for normally recurring year-
end adjustments which are not material.
(e) Condition of Assets. The Howell Assets (other than the real property)
-------------------
are in good condition, except for ordinary wear and tear and except for such
defects as would not in the aggregate have a MAE with respect to the Business.
Howell has not received any appraisals or engineering reports nor has Howell
conducted any appraisals or engineering reports relating to the condition of any
of the Howell Assets, other than data or reports the contents of which have been
specifically disclosed to Genesis OLP and to Basis.
(f) Information Included in Registration Statement. The information
----------------------------------------------
supplied or to be supplied by the Howell Entities for inclusion in the
Registration Statement, as of the time the Registration Statement becomes
effective, does not contain any untrue statement of a material fact or omit a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
(g) Absence of Certain Changes or Events. Except as reflected in Schedule
------------------------------------ --------
3.2(g) or as specifically set forth herein, or, as expressly permitted or
- ------
described elsewhere in the Transaction Documents or as disclosed in the
Prospectus since the September Balance Sheet, no Howell Entity has:
(i) incurred any material liability whether absolute or contingent,
with respect to the Howell Assets or the Business taken as a whole, except
(A) trade or business obligations or liabilities incurred in the ordinary
course of business, (B) obligations under any contracts or commitments made
in the ordinary course of business, (C) sales, income, franchise, ad
valorem, severance and windfall profit taxes and assessments accruing or
becoming payable in the ordinary course of business and (D) as expressly
permitted elsewhere in the Transaction Documents;
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<PAGE>
(ii) purchased or redeemed any shares from, or declared or made any
payment or distribution to, any stockholders of Howell or the Howell
Subsidiaries, except such payments or distributions consisting of Excluded
Assets or as reflected on Schedule 7.1;
------------
(iii) issued or authorized the issuance of any securities or any
options, warrants or rights to purchase any securities that relate to the
Howell Assets or the Business;
(iv) disposed of or acquired any material assets or business to be
included in the Howell Assets or Business (other than the Excluded Assets)
or canceled any debts or claims except in the ordinary course of business;
(v) suffered any extraordinary losses or any damage, destruction or
other casualty losses with respect to the Howell Assets, or waived any
rights of substantial value, except as would not, individually or in the
aggregate, have a MAE with respect to the Business;
(vi) entered into any material transaction with respect to the Howell
Assets or the Business other than in the ordinary course of business;
(vii) had, individually or in the aggregate, any material adverse
change in its business, assets, liabilities, financial condition or results
of operations, with respect to the Howell Assets or the Business or such
that would have a MAE on the Howell Assets or the Business, except for any
change resulting from general economic, market or financial conditions and
for any change resulting from conditions or circumstances generally
affecting the industry in which the Business operates or which have been
specifically disclosed to Genesis OLP and to Basis;
(viii) given any promise, assurance or guaranty of the payment,
discharge or fulfillment of any obligation of any other person or entity
with respect to the Assumed Liabilities or the Howell Assets or the
Business after the Closing Date except in the ordinary course of business;
(ix) had any actual or, to the knowledge of Howell, threatened
cancellation or nonrenewal of customer agreements or adverse change in the
relationship with any of the significant customers of the Business;
(x) sold or disposed of or otherwise divested itself of the ownership,
possession, custody and control of any corporate books and records of any
nature which, in accordance with past business practices, are retained for
a period of time after their use, creation or receipt with respect to the
Howell Assets or the Business;
(xi) transferred to any stockholder or any Affiliate of any
stockholder any right, property or interest which is necessary in the
operation of the Business other than in the ordinary course of business,
except Excluded Assets and regular cash compensation in
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<PAGE>
accordance with past practice or pursuant to existing severance agreements
with employees of any Howell Entity; or
(xii) engaged in any transaction which gives rise to an intercompany
receivable, payable or loan between any Howell Entity and any Affiliate
thereof except in the ordinary course of business.
(h) Taxes. For purposes of this Agreement, "Howell Taxes" shall mean all
----- ------------
federal, state, local and foreign taxes for which any Howell Entity is or may be
liable. Howell has taken the position on all tax returns, reports and forms
(collectively, "Howell Returns") since its incorporation that it is a
--------------
corporation. Except as set forth on Schedule 3.2(h), Howell has filed or caused
---------------
to be filed in a timely manner (within any applicable extension periods) all
Howell Returns required to be filed. All such Howell Returns when filed were
true, complete and accurate in all material respects except to the extent the
same would not have a MAE on the Howell Assets or the Business. The amounts
withheld and paid to governmental authorities for production, windfall profit
and other taxes during the immediately preceding year are correct in all
material respects. To the best of Howell's knowledge, there are no filed or
threatened state or federal tax Liens relating to the Howell Assets that would
have a MAE on the Howell Assets or the Business.
(i) Title to Properties. Each of the Howell Entities has, and will at the
-------------------
Closing have and shall convey by a recordable instrument, (i) good and
indefeasible title to all owned real property related to the Business, excluding
Pipeline Assets, to be transferred to Genesis OLP by Howell or any of its
Affiliates pursuant hereto, (ii) sufficient title to the portion of the Howell
Assets constituting the Pipeline Assets to enable Genesis OLP to use the
Pipeline Assets as they have been used in the past and as they are proposed to
be used in the Business and any lack of title to the Pipeline Assets has not had
and will not have a MAE on the Business and will not materially increase the
cost of such use, (iii) valid leasehold interests in each of the Howell
Entities' leased real property and leased personal property and vehicles that
are the subject of assigned leases included in the Howell Assets, and (iv) good
title to all other assets and properties, whether real, personal, mixed or
fixtures, included in the Howell Assets, in each case, with respect to clauses
-------
(i) - (iv) hereof, free and clear of all Liens, except for (a) Liens that are
- ----------
specified as a part of the Assumed Liabilities and (b) Permitted Encumbrances.
Each of the Howell Entities enjoys peaceful possession of all its owned or
leased real property, personal property and vehicles relating to the Business,
except as would not have a MAE on the Business, all of which assets are included
on Schedule 1.1B and are reflected on the September Balance Sheet. No
-------------
covenants, easements, restrictions, servitudes or rights of way applicable to
the Howell Assets have or can be reasonably expected to have a MAE with respect
to the Business.
(j) Leased Property. To the best knowledge of Howell, none of the Howell
---------------
Entities is in default, and no notice of alleged default has been received by
the Howell Entities, under any leases under which a Howell Entity is lessee of
any of the Howell Assets, no lessor is in default or alleged to be in default
thereunder, and there exists no condition or event which, after notice or lapse
of time or both, would constitute a default by any party thereto, except as
would not have a MAE
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<PAGE>
on the Business. Except as set forth on Schedule 3.2(j), there are no leases or
---------------
tenancies of third parties for any part of the real property, personal property
or vehicles included in the Howell Assets that shall remain in effect at or
after the Closing Date, except as would not have a MAE on the Business.
(k) Patents, Trademarks, Expertise, Etc. There are no patents, trade
------------------------------------
names, copyrights or trademarks relating to the Howell Assets or the Business
that are material to the Business. The consummation of the transactions
contemplated by the Transaction Documents will not result in the loss or
material impairment of any of the Howell Entities' Expertise; and no proceedings
have been instituted, are pending or, to the best knowledge of Howell, are
threatened which challenge the rights of any Howell Entity in respect to its
Expertise. To the best knowledge of Howell, each Howell Entity has adequate
patent and trademark rights to the technology used or useful with respect to the
Howell Assets or the Business, and the use thereof is not infringing any patent,
copyright, trademark or similar right of any person. Except as set forth in
Schedule 3.2(k), there are no agreements or arrangements in effect with respect
- ---------------
to the marketing, distribution, licensing or promotion of such technology by any
independent salesperson, distributor, sublicensor, or other remarketer or sales
organization.
(l) Litigation. Except as set forth on Schedule 3.2(l) hereto, there is
---------- ---------------
not pending or, to the knowledge of Howell, threatened any judicial,
administrative or arbitration action, suit or proceeding against Howell or any
of the Howell Subsidiaries, which might result in any significant adverse change
in the Assumed Liabilities or have, individually or in the aggregate, a MAE on
the Business, or which questions the validity of any Transaction Document or any
action taken or to be taken in connection therewith.
(m) Employees and Employee Benefit Plans, Labor Matters and Compensation.
--------------------------------------------------------------------
(i) Genesis LLC intends to offer employment effective as of January 1,
1997 to all of the employees of the Howell Entities employed in the
Business under such terms and conditions (including compensation and
benefits) as Genesis LLC may deem appropriate. Howell shall use its
reasonable best efforts to persuade such employees as Genesis LLC may
designate to become employees of Genesis LLC. Howell will not solicit, or
in any other manner attempt to induce, any employee of Genesis LLC to leave
the employ of Genesis LLC. Any severance pay or other severance-related
obligations arising with respect to employees of Howell or its Affiliates,
as of the Closing Date or thereafter, shall be the obligation of Howell
except as otherwise provided in Section 11 hereto. Howell will timely pay
----------
all its employees and its Affiliates' employees, including those who will
become employees of Genesis LLC, their pro rata portion of any bonus
otherwise payable under any bonus payment plan or arrangement of Howell or
its Affiliates through the Closing Date.
(ii) Howell has provided Genesis LLC with summaries of all employee
benefit plans, programs and arrangements of Howell ("Howell Employee
---------------
Plans") and each of the documents relating thereto as Genesis LLC shall
-----
reasonably request, as well as a list of
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<PAGE>
employees of Howell who are actively employed in the Business or are on
leave with the right to return to active employment, together with a
listing of each such employee's "service" with Howell and such other
information as Genesis LLC may reasonably request.
(iii) Except as described on Schedule 3.2(m), there are no agreements
---------------
with, or pending petitions for recognition of, a labor union or association
as the exclusive bargaining agent for any employees currently or formerly
employed in the Business, or their respective dependents (collectively, the
"Howell Employees"); no such petitions have been pending at any time within
----------------
two years prior to the date of this Agreement or in the case of the Exxon
Pipeline Acquisition since April 1, 1995 and, to the best knowledge of
Howell, there has not been any organizing effort by any union or other
group seeking to represent any Howell Employees as their exclusive
bargaining agent at any time within two years prior to the date of this
Agreement; and there are no labor strikes, work stoppages or other labor
troubles, other than routine grievance matters, now pending, or, to the
best of Howell's knowledge, threatened, against Howell, nor have there been
any such labor strikes, work stoppages or other labor troubles, other than
routine grievance matters, with respect to the Business at any time within
two years prior to the date of this Agreement.
(iv) Except as set forth on Schedule 3.2(m) or pursuant to the
---------------
Transition Services Agreement, since January 1, 1996, no Howell Entity (a)
has entered into any employment or similar contract with, or made any
increase in the compensation payable or to become payable by it to, any
Howell Employee other than in the ordinary course of business, in
accordance with past practice or in accordance with the requirements of
applicable Law, which will become the obligation of Genesis OLP or Genesis
LLC, (b) has contributed or made any commitment to, or representation that
it will, contribute any amounts to any bonus or other Howell Employee Plan,
severance plan or collective bargaining agreement in respect of Howell
Employees in the case of (a) and (b), other than as required by applicable
Law or by the terms of any such Howell Employee Plan as in effect on the
September Balance Sheet, which will become the obligation of Genesis OLP or
Genesis LLC.
(n) Consents. Except as set forth in Schedule 3.2(n), no consent,
-------- ---------------
approval, authorization or order of (or registration or filing with) any court
or governmental agency or body is required in connection with the execution,
delivery or performance by any Howell Entity of any Transaction Document or in
connection with the transactions contemplated thereby, except for such consents
the failure to obtain which would not have, individually or in the aggregate, a
MAE with respect to the Business.
(o) Contracts. Except as set forth in Schedule 3.2(o) and except for
--------- ---------------
lessee leases, to the knowledge of Howell with respect to the Howell Assets or
the Business, no Howell Entity is a party to, nor bound by, nor are any of the
Howell Assets or the Business subject to:
(i) any contract which (A) has not been entered into or received in
the ordinary course of business of the Howell Entities and which is not
consistent with prior practice of
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<PAGE>
the Howell Entities, or (B) involves the bulk or wellhead purchase, sale or
transfer of in the aggregate more than 5,000 barrels of oil per day;
(ii) any mortgage, pledge or other form of secured indebtedness for
borrowed money;
(iii) any debentures, notes or installment obligations, other than
accounts payable arising in the ordinary course of business of the Howell
Entities, or other instruments for or relating to any borrowing of money by
any Howell Entity;
(iv) any guaranty of any obligation for borrowings or otherwise,
excluding endorsements made for collection, and any other guaranty, which
has not been entered into in the ordinary course of business of the Howell
Entity;
(v) any agreement or arrangement for the sale or lease of any of the
Howell Assets (other than inventory and other than in the ordinary course
of business) or for the sale of inventory other than in the ordinary course
of business;
(vi) any contract pursuant to which a Howell Entity is obligated to
make payments, contingent or otherwise, on account of or arising out of the
prior acquisition of the business, or all or substantially all of the
assets or stock, of other companies or any division thereof; or
(vii) any other contract, agreement or other instrument not entered
into in the ordinary course of business which is material to the Business
and not excluded by reason of the provisions of clauses (i) through (vi),
inclusive, of this subsection.
Except as would not have a MAE with respect to the Business, all contracts
referred to in Schedule 3.2(o) which are contracts assigned to Genesis OLP are
---------------
legal, valid and binding obligations of the Howell Entities enforceable against
them in accordance their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting the rights of
creditors generally or as may be limited by the availability of equitable
remedies, including specific performance, subject to the discretion of the court
before which any proceeding therefor may be brought. Except as set forth on
Schedule 3.2(o), such assigned contracts have not been amended except in the
- ---------------
ordinary course of business and additions or deletions of leases pursuant to
such assigned contracts in the ordinary course of business. To the best
knowledge of Howell, (i) none of the Howell Entities is in default, and no
notice of alleged default has been received by any Howell Entity, under any of
such contracts which are assigned contracts and (ii) no other party thereto is
in default or alleged to be in default thereunder. Except as separately
identified in Schedule 3.2(o), each of the assigned contracts of the Howell
---------------
Entities set forth on Schedule 3.2(o) may be assigned by the Howell Entities to
---------------
Genesis OLP without the consent of any Person except such, individually or in
the aggregate, as would not have a MAE on the Business. To the best knowledge
of Howell, the rights of the Howell Entities under all assigned contracts that
are set forth in Schedule 3.2(o) are
---------------
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<PAGE>
owned or possessed by the Howell Entities free and clear of all Liens, except
such as would not have a MAE with respect to the Business. Except as set forth
on Schedule 3.2(o), Howell does not know of any cancellation, and no Howell
---------------
Entities has received any written threat to cancel or not to renew or extend,
any such contract which is an assigned contract by or from any other party
thereto. To the extent that there are any exchange imbalances relating to
assigned contracts that are contracts for the exchange of liquid hydrocarbons,
such imbalances are to be settled in the ordinary course of business and
consistent with past practice and would not have a MAE on the Business.
(p) Broker's and Finder's Fees. Neither Howell nor any of its Affiliates
--------------------------
is obligated to pay, nor has any of them retained any broker or finder or any
other Person who is entitled to, any broker's or finder's fee or any other
commission or financial advisory fee based on any agreement or undertaking made
by or on behalf of Howell nor any of its Affiliates in connection with the
transactions contemplated in the Transaction Documents, except pursuant to the
Underwriting Agreement.
(q) Environmental Matters.
---------------------
(i) Except as set forth in Schedule 3.2(q), none of the Howell
---------------
Entities have and none handle, treat, store or dispose of, on the Howell
Entities' owned or leased real property or easements included in the Howell
Assets, any wastes (including, without limitation, hazardous or toxic
wastes but excluding ordinary garbage and trash and further excluding the
handling and storage of crude oil, condensate, motor fuels, lubricants and
solvents for use in the Business) or hazardous or toxic substances. Except
as set forth in Schedule 3.2(q), any such handling, treatment, storage or
---------------
disposal has been conducted in compliance with all applicable Laws, except
where the failure to so comply would not, individually or in the aggregate,
have a MAE on the Business.
(ii) Except as set forth on Schedule 3.2(q), the Business relating to
---------------
the Howell Entities as currently being operated meets, and as operated at
all times during the three-year period prior to the date hereof met (except
that Howell makes no representations about the Pipeline Assets prior to
their acquisition by Howell in April 1995), all applicable federal, state
and local requirements with respect to air and water quality, pipeline
safety, and the handling, treatment, storage and disposal of wastes or by-
products (including hazardous or toxic wastes, if any) and hazardous or
toxic substances generated by any Howell Entity, where any failure to meet,
or during the three-year period prior to the date hereof any failure to
have met, such requirements would have a MAE on the Business. Howell has
given to pertinent government authorities all notices required pursuant to
the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Clean Water Act, 42
U.S.C. (S) 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. (S)
2601 et seq., the Solid Waste Disposal Act, as amended by the Resource,
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., CERCLA, and all
other federal, state and local environmental Laws, where any failure to
give such notices would have a MAE on the Business, or would materially and
adversely affect the Howell Entities' ability to consummate the
transactions contemplated by the Transaction Documents. Except
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<PAGE>
as listed on Schedule 3.2(q), no Howell Entity, and to the knowledge of
---------------
Howell with respect to the assets acquired from Exxon in April 1995, has
since the date five years prior to the date hereof received any order or
notice of violation or noncompliance from, or been the subject of any
regulatory audit or investigation (other than any periodic investigation or
inspection of a routine nature) by, any governmental authority in
connection with ownership or operation of the Howell Assets or the Business
or as a potentially responsible party in connection with any waste disposal
facility, except where such violations or noncompliance would not have,
individually or in the aggregate, a MAE with respect to the Business.
(iii) With respect to the operation of the Howell Assets, no Howell
Entity and, to the knowledge of Howell with respect to the assets acquired
from Exxon in April 1995, has handled, treated, stored, recycled, reclaimed
or disposed of, or arranged for the handling, treatment, storage, recycling
or reclamation or disposal of, any wastes or by-products (including
hazardous or toxic wastes) or hazardous or toxic substances on any property
other than the sites disclosed on Schedule 3.2(q).
---------------
(iv) To the best knowledge of Howell, there are no underground storage
tanks on the owned or leased real property or easements included in the
Howell Assets, and any Underground Storage Tanks that may have been on any
Howell Entity's owned or leased real property were removed, and any soil
contaminated as a result of such Underground Storage Tanks was remediated
in accordance with all applicable Laws. Except as set forth on Schedule
--------
3.2(q), none of the improvements owned or used by a Howell Entity on such
------
owned or leased real property or easements contain, to the knowledge of
Howell, any asbestos, nor does any equipment owned or used by a Howell
Entity on such owned or leased real property or easements contain, to the
knowledge of Howell, any polychlorinated biphenyls.
(v) With respect to environmental matters, all financial assurances
required by governmental authorities for the lawful operation of the Howell
Assets are in place and fully funded as described on Schedule 3.2(q).
---------------
(r) Public Utility Status. No Howell Entity is (i) a "public utility
---------------------
company", a "holding company" or an "affiliate" of a "holding company" as those
terms are defined in the Public Utility Holding Company Act of 1935, (ii) a "gas
utility", "public utility" or "utility" as those terms are defined in Article
6050 of the Revised Civil Statutes of Texas or (iii) a "public utility" or
"utility" as those terms are defined in the Public Utility Regulatory Act of
Texas or under the applicable laws of any state in which Howell or the Howell
Subsidiaries does business.
(s) Authorities, Permits, Tariffs and Regulatory Authorizations.
-----------------------------------------------------------
(i) Each Howell Entity is qualified and licensed to own and operate
each pipeline system owned or operated by such Howell Entity relating to
the Business or the Howell Assets and any and all trucks, tractors and
trailers leased, owned or operated by, for or on
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<PAGE>
behalf of Howell in connection with the Howell Assets or the Business, and
holds all necessary certificates, permits or other regulatory
authorizations to own and operate the Howell Assets as utilized in the
Business presently and during the past twelve months, except where the
failure to be so qualified or licensed would not have, individually or in
the aggregate, a MAE on the Business.
(ii) Except as set forth on Schedule 3.2(s), (a) each Howell Entity
---------------
has complied with all federal, state and local Laws, including, without
limitation, the rules and regulations of all governmental agencies having
authority over it and any such Laws, concerned with export and import
licenses, occupational safety, environmental protection and employment
practices, relating to the Business, (b) each Howell Entity has complied
with each and all permits and tariffs, including any required filings and
renewals and no default exists with respect thereto, and (c) no Howell
Entity has received written notice of violation of any such rules or
regulations, corrected or not, since January 1, 1996, except, in the cases
of (a) and (b), where such violations or noncompliance, individually or in
the aggregate, would not have a MAE with respect to the Business. No
Howell Entity has received from any governmental authority any written
notice since January 1, 1996, of any currently proposed public improvement
which would impose a Lien upon any of the Howell Assets, except as would
not have a MAE with respect to the Business.
(t) Suspense Accounts. Each Howell Entity has maintained its Suspense
-----------------
Accounts for third party sellers of crude oil in accordance with all applicable
Laws, including, without limitation, applicable escheat laws, except as would
not have a MAE with respect to the Business.
(u) Third Party Rights. Except as set forth in Schedule 3.2(u), no party
------------------ ---------------
has any right, whether or not exercisable after notice or lapse of time or any
triggering event, to purchase any material part of the Howell Assets (other than
crude oil sold in the ordinary course of business). Except as set forth in
Schedule 3.2(u), no agreement binding on any Howell Entity or the Business
- ---------------
contains any provision which would impose material limitations on Genesis OLP or
any of its Affiliates or their respective business practices through a
noncompetition, an area of interest or similar type of provision.
(v) Prepayment. No Howell Entity is obligated by virtue of any express or
----------
implied contract or agreement to deliver at some future time oil, gas or
products thereof, without receiving at such time a commitment for full payment
in accordance with usual business practice. Except as provided for in Schedule
--------
7.1, no Howell Entity has received any prepayment for any oil or gas to be sold,
- ---
or for services, including transportation, treating or storage, to be rendered.
(w) Investment Representation. The Howell Entities are acquiring the
-------------------------
Subordinated LP Units for their own account and not with a view to or for sale
in connection with any distribution thereof, and will not sell or transfer the
Subordinated LP Units except pursuant to an effective registration statement
under the Securities Act, and the rules and regulations promulgated thereunder,
or an exemption therefrom and in compliance with all state securities and blue
sky laws;
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<PAGE>
provided, however, it is understood that, subject to the provisions of
Section 4.6, a Howell Entity may transfer its Subordinated LP Units to its
- -----------
Affiliates, and that the Subordinated LP Units will bear an appropriate legend
relating to such restriction on transfer and to restrictions on transfer under
the Securities Act and the regulations thereunder. Each Howell Entity is an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
SECTION 3.3 Genesis OLP hereby represents and warrants to each Transferor
as follows:
(a) Organization, Standing and Authority. Genesis OLP is a limited
------------------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware. Genesis OLP has full power and authority to enter
into each Transaction Document to which it is a party, to perform its
obligations thereunder and to consummate the transactions contemplated thereby
which are to be consummated by it. The execution and delivery of the
Transaction Documents to which it is a party by Genesis OLP and the consummation
by Genesis OLP of the transactions contemplated thereby have been duly
authorized by all necessary partnership action on the part of Genesis OLP, and
no other partnership action or proceeding on the part of Genesis OLP is
necessary to authorize the execution and delivery by Genesis OLP of the
Transaction Documents to which it is a party or the consummation by Genesis OLP
of the transactions contemplated thereby. This Agreement has, and on the
Closing Date each other Transaction Document to which it is a party will have,
been duly executed and delivered by Genesis OLP and, assuming each has been duly
authorized, executed and delivered by the other parties thereto, is a legal,
valid and binding obligation of Genesis OLP enforceable against it in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency
and similar laws affecting the rights of creditors generally or as may be
limited by the availability of equitable remedies, including specific
performance, subject to the discretion of the court before which any proceeding
therefor may be brought.
(b) Noncontravention. The execution and delivery of the Transaction
----------------
Documents do not, and the consummation of the transactions contemplated thereby
will not: (i) violate any provision of the OLP Agreement; (ii) violate, or
result with the giving of notice or the passage of time in a violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or entitle any party to terminate any or all of the provisions
of, or result in the creation or imposition of any Lien upon any of the assets
of Genesis OLP pursuant to any provision of, or require the consent or approval
of any other party to, any mortgage, lien, lease, license, loan agreement,
indenture or other agreement, instrument or document to which Genesis OLP is a
party or to or by which Genesis OLP or any of the assets of Genesis OLP are
subject or bound; or (iii) violate or conflict with any Law, order, arbitration
award, judgment or decree to or by which Genesis OLP or any of the assets of
Genesis OLP are subject or bound; except, in the case of (ii) and (iii) above,
for such violations, conflicts, breaches, defaults or encumbrances the existence
of which would not have a MAE with respect to Genesis OLP.
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<PAGE>
(c) Brokers and Finders. Neither Genesis OLP nor any of the officers,
-------------------
directors or employees of Genesis LLC is obligated to pay, nor has any of them
retained, any broker or finder or any other person who is entitled to any
broker's or finder's fees or any other commission or financial advisory fee
based on any agreement or undertaking made by or on behalf of Genesis OLP or
Genesis LLC in connection with the transactions contemplated hereby or in the
Transaction Documents, except pursuant to the Underwriting Agreement.
SECTION 3.4 Genesis MLP hereby represents and warrants to each Transferor
as follows:
(a) Organization, Standing and Authority. Genesis MLP is a limited
------------------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware. Genesis MLP has full power and authority to enter
into each Transaction Document to which it is a party, to perform its
obligations thereunder and to consummate the transactions contemplated thereby
which are to be consummated by it. The execution and delivery of the
Transaction Documents to which it is a party by Genesis MLP and the consummation
by Genesis MLP of the transactions contemplated thereby have been duly
authorized by all necessary partnership action on the part of Genesis MLP and
no other partnership action or proceeding on the part of Genesis MLP is
necessary to authorize the execution and delivery by Genesis MLP of the
Transaction Documents to which it is a party or the consummation by Genesis MLP
of the transactions contemplated thereby. This Agreement has, and on the
Closing Date each other Transaction Document to which it is a party will have,
been duly executed and delivered by Genesis MLP and, assuming each has been duly
authorized, executed and delivered by the other parties thereto, is a legal,
valid and binding obligation of Genesis MLP enforceable against it in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency
and similar laws affecting the rights of creditors generally or as may be
limited by the availability of equitable remedies, including specific
performance, subject to the discretion of the court before which any proceeding
therefor may be brought.
(b) Noncontravention. The execution and delivery of the Transaction
----------------
Documents do not, and the consummation of the transactions contemplated thereby
will not: (i) violate any provision of the MLP Agreement; (ii) violate, or
result with the giving of notice or the passage of time in a violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or entitle any party to terminate any or all of the provisions
of, or result in the creation or imposition of any Lien upon any of the assets
of Genesis MLP pursuant to any provision of, or require the consent or approval
of any other party to, any mortgage, lien, lease, license, loan agreement,
indenture or other agreement, instrument or document to which Genesis MLP is a
party or to or by which Genesis MLP or any of the assets of Genesis MLP are
subject or bound; or (iii) violate or conflict with any Law, order, rule, award,
judgment or decree to or by which Genesis MLP or any of the assets of Genesis
MLP are subject or bound; except, in the case of (ii) and (iii) above, for such
violations, conflicts, breaches, defaults or encumbrances the existence of which
would not have a MAE with respect to Genesis MLP.
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<PAGE>
(c) Brokers and Finders. Neither Genesis MLP nor any of the officers,
-------------------
directors or employees of Genesis LLC is obligated to pay, nor has any of them
retained, any broker or finder or any other person who is entitled to any
broker's or finder's fees or any other commission or financial advisory fee
based on any agreement or undertaking made by or on behalf of Genesis MLP or
Genesis LLC in connection with the transactions contemplated in the Transaction
Documents, except pursuant to the Underwriting Agreement.
ARTICLE 4
MISCELLANEOUS PROVISIONS RELATING
TO TRANSFER OF ASSETS AND BUSINESS.
----------------------------------
SECTION 4.1 Nonassignability of Assets. (a) To the extent that any
--------------------------
lease, contract, license, permit, agreement, sales or purchase order,
commitment, property interest, qualification or other assets described in this
Agreement as being sold, assigned, transferred, set over or delivered to Genesis
OLP (each, a "Commitment") or any claim, right or benefit arising thereunder or
----------
resulting therefrom (collectively with the Commitment it arises or results from,
an "Interest"), is not capable of being sold, granted, conveyed, assigned,
--------
transferred, set over or delivered without the approval, consent or waiver of
the issuer thereof or the other party thereto, or any third person (including a
government or governmental authority), or if such sale, assignment, grant,
conveyance, transfer, set over or delivery or attempted sale, grant, conveyance,
assignment, transfer set over or delivery would be invalid, would destroy or
eliminate such Interest, or would constitute a breach of such Commitment or a
violation of any Law, this Agreement shall not constitute a sale, grant,
conveyance, assignment, transfer, set over or delivery thereof, or an attempted
sale, grant, conveyance, assignment, transfer, set over or delivery thereof in
the absence of such approval, consent or waiver. The obligations of Genesis OLP
and the Transferor with respect to such Interests will be governed by clause (b)
----------
hereof.
(b) The Parties hereto undertake to co-operate in good faith to ensure that
they do such acts and things as may be reasonably necessary to complete the
transfer of the Business. At all times after the date of this Agreement, the
Parties shall do such acts and things as may be reasonably required for the
purpose of giving to the OLP Parties hereto the full benefit of all the
provisions of this Agreement in respect of the Interests, including using their
reasonable best efforts in order that any necessary third party shall execute
such documents and do such acts and things as may be reasonably required for
such purpose. Each of the Transferors and Genesis OLP will use its reasonable
best efforts to obtain any consent, substitution, approval or amendment required
to novate, reissue or assign all Commitments; provided, however, that no
Transferor shall be obligated to pay more than a reasonable amount as
consideration therefor (except for filing fees and other similar charges) to,
and no Transferor nor Genesis OLP shall be obligated to commence litigation
against, the third party from whom such consents, approvals, substitutions or
amendments are requested. If the Transferors and Genesis OLP are unable to
obtain any such required consent, approval, substitution or amendment, the
Transferor (or its Affiliates) that is the holder of or party to a commitment
for which such required consent, approval, substitution or amendment cannot be
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<PAGE>
obtained shall continue to be bound by such Commitments and, unless not
permitted by Law or the terms thereof, Genesis OLP (or its Affiliates) shall, as
agent for such Transferor (or its Affiliates) or as subcontractor, pay, perform
and discharge fully all the obligations of such Transferor (or its Affiliates)
thereunder from and after the Closing Date and indemnify and hold harmless such
Transferor and its Affiliates from and against all losses, claims, damages,
taxes, liabilities and expenses whatsoever arising out of or in connection with
Genesis OLP's (or its Affiliates') performance of or omission to perform its
obligations thereunder and hereunder. Such Transferor (or its Affiliates)
shall, without further consideration, pay and remit to Genesis OLP (or its
designee) promptly all money, rights and other consideration received in respect
of such performance after payment of any taxes, costs or expenses due from such
Transferor (or its Affiliates) with respect to such receipt. Such Transferor
(or its Affiliates) shall exercise its rights and options under all such
Commitments only as reasonably directed by Genesis OLP and at Genesis OLP's
expense. If and when any such approval, consent or waiver shall be obtained or
such Commitment shall otherwise become assignable or able to be novated, the
assignment of the Assets and the assumption of the Assumed Liabilities related
to such approval, consent or waiver or restriction on assignment and/or
assumption shall become effective automatically as of the Effective Time,
without further action on the part of such Transferor, Genesis OLP or any of
their respective Affiliates, and without payment of further consideration. To
the extent that the assignment of any Commitment or the proceeds thereof
pursuant to this Section 4.1 is prohibited by Law, the assignment provisions of
-----------
this paragraph shall operate to create a subcontract or agency with Genesis OLP
to perform each relevant, unassignable Commitment, and the subcontract price
shall be equal to the money, rights and other consideration received by a
Transferor (net of any taxes imposed on such Transferor or any of its Affiliates
with respect to such money, rights or other consideration) in respect of the
performance by Genesis OLP under such subcontract. If any such restriction on
the assignability of the Interests is not satisfied or waived within 21 years
after the death of the last to die of all descendants of Joseph P. Kennedy,
father of the late President of the United States of America, who are living on
the date the assignments executed pursuant to this Agreement are executed, the
transfer to Genesis OLP of the Interests affected by such restriction shall be
null and void.
(c) Genesis OLP and each Transferor shall enter into the Agency Agreement
as of the Closing Date. To the extent that a conflict exists between the Agency
Agreement and this Agreement, the Agency Agreement shall control with respect to
the subject matter thereof.
SECTION 4.2 Direct Transfer to a Genesis OLP Affiliate. Genesis OLP may,
------------------------------------------
in its sole discretion, direct a Transferor to transfer any of the Assets
directly to an Affiliate of Genesis OLP; provided, however, that any such
transfer shall not relieve Genesis OLP of any of its obligations under this
Agreement (including, without limitation, the obligation to assume the Assumed
Liabilities and to indemnify the Transferor Parties).
SECTION 4.3 Assumption of Assumed Liabilities by Genesis OLP. In
------------------------------------------------
connection with the Asset Purchase and Sale and the Basis and Howell Crude
Contributions, Genesis OLP shall absolutely and irrevocably assume and agree to
be solely liable and responsible for, and to duly and timely pay, perform and
discharge, all of the Assumed Liabilities; provided, however, that said
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assumption and agreement shall not (a) increase the obligation of Genesis OLP to
any third party with respect to the Assumed Liabilities beyond the obligation
that a Transferor would have to any third party if not for said assumption and
agreement, (b) waive any valid defense that was available to a Transferor with
respect to the Assumed Liabilities or (c) enlarge any rights or remedies of any
third party under any of the Assumed Liabilities. The only liabilities to be
assumed by Genesis OLP in connection with the transfer of Assets from any of the
Transferors or their Affiliates are the Assumed Liabilities. Genesis OLP will
not assume or become obligated, and nothing in this Agreement shall be deemed to
constitute an assumption by Genesis OLP of liability, to pay, perform or
discharge, and will not be responsible for, any other liabilities or obligations
of any Transferor or its Affiliates, whether accrued, absolute, contingent or
otherwise, including, without limitation, liabilities or obligations based on,
arising out of or in connection with the Excluded Liabilities, except to the
extent set forth in Section 8 of this Agreement.
---------
SECTION 4.4 Post Signing Covenants and Agreements. Each of the
-------------------------------------
Transferors and Genesis OLP covenants and agrees with each other as follows:
(a) During the Post-Signing Period, each Transferor agrees, and will cause
its Affiliates,
(i) to maintain and operate their respective Assets and the Business
only in, and not to take any action except in, the ordinary course of
business and consistent with past practice;
(ii) to maintain books of account and records with regard to the
Assets in accordance with past practice of such Transferor or its
Affiliate;
(iii) not to enter into any material agreements with respect to any
of its respective Assets or the Business which is not in the ordinary
course of business and consistent with past practice;
(iv) not to encumber (other than by Permitted Encumbrances), sell, or
otherwise dispose of any of its respective Assets other than the
disposition of inventory in the ordinary course of business and consistent
with Schedule 7.1;
------------
(v) to maintain its properties, machinery and equipment in good
operating condition and repair subject to wear and tear consistent with
past practice;
(vi) not to take any action that is reasonably expected to result in
any termination of a material lease related to the Assets;
(vii) not to fail to take any action that is reasonably expected to
maintain a material lease related to the Assets;
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<PAGE>
(viii) to use its reasonable best efforts to preserve its business
relationships with suppliers, licensors, licensees, distributors, customers
and others having material business dealings with it such that the Business
will not be materially impaired;
(ix) not to cancel, release or waive any debt, claim, or right of
value relating to the Interests or the Business, which, in the aggregate,
exceeds $10,000; and
(x) not to agree in writing, or otherwise, to take any of the
foregoing actions or any other action which would make any representation
or warranty contained in Section 3 untrue or incorrect in any material
---------
respect as of the Closing Date.
(b) Each Party will cooperate with the other Parties and use its best
reasonable efforts to:
(i) procure upon reasonable terms and conditions all necessary
consents and approvals to (A) the Transaction Documents and (B) all
agreements, instruments or documents referred to on Schedules 3.1(c) and
----------------
3.2(c);
------
(ii) complete all necessary filings, registrations, and certificates;
and
(iii) satisfy all requirements prescribed by applicable Laws for, and
all conditions to, the consummation of the transactions contemplated in the
Transaction Documents.
(c) Notwithstanding any other provision of this Agreement, if any tangible
Asset currently used in the Business sustains damage greater than $50,000, per
occurrence, from and after the date hereof and prior to the Closing Date which
in the reasonable opinion of Genesis OLP either materially impairs its
usefulness or materially reduces its remaining useful life, other than wear and
tear sustained in the ordinary course of the Business, the Transferor thereof,
at its sole discretion, shall immediately either (i) replace, repair or cause to
be repaired the damage to such Asset at such Transferor's own expense, prior to
the Closing Date or (ii) pay to Genesis OLP at Closing an amount reasonably
necessary to allow Genesis OLP to replace such Asset or restore such Asset to
its condition immediately prior to such damage.
SECTION 4.5 Satsuma Crude Oil Tanks. (a) Covenants Made by Howell -
-----------------------
Howell makes the following covenants to Genesis OLP with regard to the Tank
Cleaning:
(i) Howell agrees to perform and shall retain liability for all Tank
Cleaning, provided that Howell reserves any rights it may have against
Exxon relating to the Tank Cleaning and rental obligations. Genesis OLP
shall be entitled to have a representative present to observe the Tank
Cleaning.
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<PAGE>
(ii) As between Howell and Genesis OLP, Howell shall retain full liability
and financial responsibility for all Tank Cleaning regardless of whether
such Tank Cleaning may be performed by Howell, Genesis OLP, or some other
party.
(b) Genesis OLP Performance Privilege - If Tank Cleaning has not been
completed by June 30, 1997, Genesis OLP, at its sole discretion, may elect by
written notice to Howell, at Howell's risk and expense, to commence judicial
proceedings with Howell's assistance and to perform any or all of the Tank
Cleaning itself or by contracting with any other party for the performance
thereof. Alternatively, Genesis OLP, at its sole discretion, may accept any
request from Howell, at Howell's risk and expense, to perform any or all of the
Tank Cleaning itself or by contracting with any other party for the performance
thereof. Should Genesis OLP exercise its right or so elect to perform any of
the Tank Cleaning in accordance with this Section 4.5(b), Genesis OLP shall
provide Howell copies of any resulting invoice for such amounts. Howell shall
reimburse Genesis OLP for all Tank Cleaning expenses within 15 days of receipt
of an invoice from Genesis OLP for any such expenses.
(c) Rental Payment for the Satsuma Station Tanks -All rental payments
attributable to the Exxon Satsuma facilities lease agreement, dated March 31,
1995 (the "Exxon Satsuma Facilities Lease Agreement"), for periods (i) prior to
----------------------------------------
June 30, 1997 shall be retained by Howell and (ii) on or after June 30, 1997
shall be delivered to Genesis OLP. Should the Tank Cleaning not be completed by
June 30, 1997, Howell agrees to pay monthly rent on any Usable Tank that is not
cleaned on or after that date until such time as such Usable Tank has been
cleaned and becomes available for service by Genesis OLP. These monthly rental
payments shall (x) be due on the first day of each month, (y) paid by Howell to
the extent such rental payments are not made by Exxon to Genesis OLP and (z) be
calculated at a rate of 10 cents per barrel of shell capacity without regard to
proration for any term less than a calendar month. Genesis OLP shall reimburse
Howell for any payments made by Howell for which Genesis OLP also received
payment from Exxon for such obligation.
(d) Indemnification - Howell shall indemnify, defend, save and hold
harmless each of the OLP Parties from and against all claims, liabilities,
obligations, losses, costs, cost of defense (as and when incurred), including
expenses, fines, charges, penalties, allegations, demands, damages (including
but not limited to actual, punitive or consequential, foreseen or unforeseen,
known or unknown), settlements, awards or judgments of any kind or nature
whatsoever and reasonable outside attorney's and consultant's fees, to the
extent arising out of (a) the Tank Cleaning Operations, whether performed by
Howell or any of the OLP parties or any third party, or the presence of waste in
any of the tanks, regardless or whether this liability results from the
negligent acts of Howell, any OLP Party or Exxon or any of their respective
contractors, invitees or licensees or (b) any and all claims made by Exxon under
the Exxon Satsuma Facilities Lease Agreement relating to matters occurring prior
to the Effective Time.
SECTION 4.6 Nontransferability of Subordinated LP Units. Except pursuant
-------------------------------------------
to the terms of the Pledge Agreement, the Subordinated LP Units received by
Howell Crude pursuant to Section 2 of this Agreement shall not be transferred
---------
to any Person nor shall any Subordinated LP
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<PAGE>
Units be transferred to Howell Crude until the special distribution pursuant to
Section 6.9 of the OLP Agreement has been made.
SECTION 4.7 Environmental Make-Whole Provisions. In the event that
-----------------------------------
pursuant to Section 8.1 Genesis OLP is entitled to a defense and/or
-----------
indemnification for environmental liabilities which constitute Excluded
Liabilities with respect to the Assets ("OLP Covered Liabilities"), the
-----------------------
allocated pro rata share of each of the Sponsors with respect to the Annual
Obligation and the Aggregate Obligation referenced in Section 8.3(c) shall be
--------------
66 2/3 % to Howell, including any matters related to the Howell Subsidiaries,
and 33 1/3 % to Basis. Each Sponsor will initially be allocated its pro rata
share of Genesis OLP's Annual Obligation and Aggregate Obligation. However, if
a Sponsor has not used any, or all, of its allocated pro rata share of the
Annual Obligation or the Aggregate Obligation (the "Underallocated Sponsor"),
----------------------
the other Sponsor shall be entitled to use such allocated pro rata share until
the Annual Obligation and the Aggregate Obligation are met. Once the Annual
Obligation and Aggregate Obligation have been met, the Underallocated Sponsor
shall be entitled to receive a cash payment for each occurrence from the other
Sponsor, which payment shall be in the amount of the claim up to $25,000 per
occurrence. These payments shall occur until the full unused amount of the
Underallocated Sponsor's allocated pro rata share has been utilized. Each
payment shall be made within five business days of the Underallocated Sponsor
having submitted to the other Sponsor a request for a make-whole reimbursement
payment for such environmental liability or liabilities (the "Make-Whole Payment
------------------
Request"). Any Sponsor who does not deliver a Make-Whole Payment Request for
- -------
any or all of its unused allocated pro rata share of the Annual Obligation or
Aggregate Obligation to the other Sponsor within seven years of the Closing Date
forfeits any claim hereunder for restitution for such unused allocated pro rata
share from such other Sponsor for any subsequent indemnification claims made by
Genesis OLP for OLP Covered Liabilities.
ARTICLE 5
CONDITIONS TO CLOSING.
---------------------
In addition to the conditions set forth in Section 2 of this Agreement, the
---------
obligations of each Party under this Agreement shall be subject to the prior
satisfaction of each of the following conditions:
(a) There shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction barring the consummation of any of
the transactions contemplated by this Agreement;
(b) There shall not have occurred any MAE with respect to the Basis
Assets, the Howell Assets or the Business of Basis and the Howell Entities since
December 31, 1995;
(c) The representations and warranties of each Party shall have been true
and correct on the date when made and such representations and warranties shall
be true and correct on and as of
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the Closing Date (except those, if any, expressly stated to be true and correct
at an earlier date), with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date;
(d) All consents, permits, approvals and other actions of any Person
required for the lawful transfer, conveyance and assignment to Genesis OLP of
the Assets (except (i) consents for the assignment of government leases that are
customarily obtained after the Closing of a sale of these type of assets and
(ii) consents the failure to obtain that will not individually or in the
aggregate have a MAE on Genesis OLP, Genesis MLP or the Business);
(e) Genesis OLP shall have received a full release of all Liens
encumbering the Howell Assets in favor of Banc One, Texas, N.A.; such release to
be in a form reasonable acceptable to Genesis OLP;
(f) Each Party shall have performed and satisfied in all material respects
all covenants and agreements required by this Agreement to be performed and
satisfied by the applicable Party at or prior to the Closing Date;
(g) All of the conditions under the Underwriting Agreement (other than
those conditions relating to the consummation of the transactions contemplated
by this Agreement) shall have been satisfied or waived and the Underwriting
Agreement shall be in full force and effect, enforceable against the
Underwriters in accordance with its terms (subject to the consummation of the
transactions contemplated by this Agreement);
(h) Opinions dated as of the Closing Date, in form and substance
reasonably acceptable to the Parties from (i) Wayne Kubicek, General Counsel of
Basis, on behalf of Basis, (ii) Robert T. Moffett, General Counsel of Howell, on
behalf of the Howell Entities and (iii) Andrews & Kurth L.L.P., counsel for
Genesis MLP and Genesis OLP, shall have been delivered; and
(i) The appropriate parties shall have executed and acknowledged each of
the Transaction Documents.
ARTICLE 6
CLOSING.
-------
SECTION 6.1 Date of Closing. Subject to the satisfaction of the
---------------
conditions in Section 5 of this Agreement, the closing of the transactions
---------
contemplated by this Agreement (the "Closing") shall take place on the Closing
Date at the offices of Andrews & Kurth L.L.P., 4200 Texas Commerce Tower,
Houston, Texas 77002 (or at such other place as the Parties may agree).
SECTION 6.2 Deliveries. In order to more fully implement the
----------
transactions contemplated by Sections 2 and 4 of this Agreement, the Parties
----------------
covenant and agree as follows:
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<PAGE>
(a) On the Closing Date, Genesis OLP and the Transferors shall, and shall
cause their Affiliates to each execute and deliver, to the other (or in the case
of Genesis OLP, to Genesis LLC), an Assignment and Assumption Agreement (Other
Assets), an Assignment Agreement (Pipelines) and an Assignment and Assumption
Agreement (Station Sites) and any instruments necessary to record such deeds and
other instruments, as may be necessary or appropriate to vest effectively in
Genesis OLP or its Affiliate or Genesis LLC title to the Assets and to comply
with the purpose and intent of this Agreement;
(b) The appropriate parties shall have executed and delivered each of the
Transaction Documents;
(c) On the Closing Date, Genesis OLP shall deliver to (i) each Transferor
or a Person designated by such Transferor, net proceeds pursuant to the terms
of Section 2 hereof and (ii) to the Collateral Agent pursuant to the Pledge
---------
Agreement certificates representing the Subordinated LP Units, which
certificates with appropriate restrictive legends imposed thereon shall be
issued in the name and denominations as requested by the Transferors on or prior
to the Closing Date;
(d) Each Transferor shall, and shall cause its Affiliates to, deliver to
Genesis OLP or its designee at its principal place of business the original or
copies of records related to the Assets; and
(e) Each of the Parties hereto shall, and shall cause its Affiliates to,
execute and deliver such other documents as may be reasonably necessary to
effectuate the transactions contemplated hereby.
ARTICLE 7
POST-CLOSING MATTERS.
--------------------
SECTION 7.1 Post-Closing Accounting Adjustment. The Parties hereto agree
----------------------------------
to the post closing adjustment referred to in Schedule 7.1.
------------
SECTION 7.2 Survival. The representations and warranties of the parties
--------
hereto contained herein and in any certificates, exhibits, schedules or other
documents furnished in connection with this Agreement shall survive the Closing
for a period of five (5) years thereafter, except for the representations and
warranties of Basis set forth in Section 3.1(h), and the representations and
--------------
warranties of Howell set forth in Section 3.2(h), which representations and
--------------
warranties shall survive until the expiration of any applicable statutes of
limitations; provided, that all such representations and warranties shall
survive with respect to any claim, notice of which shall have been duly given
under this Agreement prior to the time of expiration set forth above. All
covenants and agreements of the parties contained herein (other than
representations and warranties) shall except as expressly provided herein
survive the Closing, for the time periods set forth therein.
SECTION 7.3 Further Assurances. After the Closing Date, each Transferor
------------------
shall, and shall cause its Affiliates to, execute, acknowledge and
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deliver, or cause to be executed, acknowledged and delivered, such instruments,
agreements, and other documents and shall take such other action, including
providing transition services at reasonable charges to Genesis LLC, Genesis MLP
and Genesis OLP (such as use of Howell's computer hardware), as may reasonably
be necessary or advisable to effectuate the intent of this Agreement or to carry
out the obligations of the Parties under this Agreement or under any other
instrument, agreement, certificate or other document delivered pursuant hereto.
Each of Genesis MLP and Genesis OLP shall, and shall cause their Affiliates to,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, agreements, and other documents and shall take such
other action, including providing services to the Transferors and their
Affiliates (such as in connection with the accounting adjustment described in
Schedule 7.1), as may reasonably be necessary or advisable to effectuate the
- ------------
intent of this Agreement or to carry out the obligations of the Parties under
this Agreement or under any other instrument, agreement, certificate or other
document delivered pursuant hereto; provided, however, that any third-party
out-of-pocket expenses incurred by Genesis LLC, Genesis MLP or Genesis OLP on
behalf of any Transferor or Affiliate shall be reimbursed by such Transferor or
Affiliate.
ARTICLE 8
INDEMNIFICATION.
---------------
SECTION 8.1 Indemnification by the Transferors. (a) Subject to Section
---------------------------------- -------
8.3, each Transferor shall, without any further responsibility or liability of,
- ---
or recourse to, any of the OLP Parties, absolutely and irrevocably be solely
liable and responsible for its respective Excluded Liabilities; provided,
however, the Howell Entities shall be jointly and severally liable and
responsible for the Excluded Liabilities of the Howell Entities. Basis and its
Affiliates shall not be liable for the Excluded Liabilities of the Howell
Entities and their Affiliates and none of the Howell Entities or their
Affiliates shall be liable for the Excluded Liabilities of Basis and its
Affiliates. None of the OLP Parties shall be liable to any of the Transferor
Parties or any third parties for any reason whatsoever on account of any of the
Excluded Liabilities and none of the Transferor Parties shall be liable to any
of the OLP Parties or any third party for any reason whatsoever on account of
any of the Assumed Liabilities.
(b) Each Transferor shall indemnify, defend, save and hold harmless each
of the OLP Parties from and against all claims, liabilities, obligations,
losses, costs, costs of defense (as and when incurred), including expenses,
fines, charges, penalties, allegations, demands, damages (including but not
limited to actual, punitive or consequential, foreseen or unforeseen, known or
unknown), settlements, awards or judgments of any kind or nature whatsoever and
reasonable outside attorneys' and consultants' fees, to the extent arising out
of (a) Excluded Liabilities of such Transferor, including liability arising
under CERCLA or relating to the Assets or the operation of the Business prior to
the Effective Time, (b) any failure of a Transferor or its Affiliate to comply
with any applicable bulk sales law of any jurisdiction in connection with the
transactions contemplated by this Agreement, (c) any breach of the
representations and warranties of such Transferor in this Agreement for which
Genesis OLP must assert a claim for indemnification during the applicable
survival period referred to in Section 7.2 or (d) the breach by such Transferor
-----------
or its
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Affiliate of any of its obligations under this Agreement, including, without
limitation, with respect to Howell, Howell's obligations pursuant to Section
-------
4.5, all of which are hereinafter collectively referred to as the "OLP
- --- ---
Damages." The Transferors' obligations pursuant to this Section 8.1 shall
- ------- -----------
terminate in the event Genesis LLC is removed as a General Partner of Genesis
OLP without the General Partner's consent. Notwithstanding anything in this
Agreement to the contrary, each of Basis' and the Howell Entities' liability
under this Agreement shall be several and not joint; provided, however, the
Howell Entities shall be jointly and severally liable among themselves for the
liabilities of the Howell Entities. Notwithstanding anything in this Agreement
to the contrary, neither Basis' nor the Howell Entities' indemnification
obligations pursuant to this Section 8.1 shall include any liability or
-----------
responsibility attributable to the ownership or operation of certain of the
Assets by either JMP or Exxon, which liabilities or responsibilities were not
assumed by either Basis or the Howell Entities in connection with their
respective acquisitions of such Assets.
(c) The indemnification obligations of Basis and the Howell Entities
pursuant to this Section 8.1 shall not apply to any claims, liabilities,
-----------
obligations, losses, costs, costs of defense (as and when incurred), including
expenses, fines, charges, penalties, allegations, demands, damages (including
but not limited to actual, punitive or consequential, foreseen or unforeseen,
known or unknown), settlements, awards or judgments of any kind or nature
whatsoever and reasonable outside attorneys' and consultants' fees (hereafter
referred to as "Indemnified Losses"), to the extent such Indemnified Losses,
including liabilities arising under CERCLA, were suffered or incurred as a
result as a result of an invasive environmental site investigation of the Basis
Assets or Howell Assets undertaken after the Effective Time other than such an
investigation which is undertaken (i) under the direction of any financial
institution in connection with any application or request for a loan or other
financial transaction by Genesis LLC, Genesis MLP or Genesis OLP, (ii) as a
result of, or in defense of, or pursuant to any administrative, arbitral, civil
or criminal judicial proceeding by reason of a notice of deficiency, notice of
violation, judgment, order, consent decree, settlement or otherwise, (iii) as a
condition to, or in connection with, any merger, sale, assignment or other
disposition of the business or assets of Genesis LLC, Genesis MLP or Genesis OLP
or with respect to any part thereof, (iv) as a result of the discovery in the
ordinary course of business of (or, a discovery in prudent and customary
business practice, as a result of any condition, leaks or other occurrences
which reasonably suggests the possible presence of) a quantity of crude oil,
petroleum products or other hydrocarbons, wastes (whether hazardous or
nonhazardous) or materials that are required to be reported or otherwise
disclosed to any regulatory agency, body or authority or (v) in response to any
complaints of, or notices from, any property owner, community or civic group.
SECTION 8.2 Indemnification by Genesis OLP and Genesis MLP. Subject to
----------------------------------------------
Section 8.3, upon, from and after the Effective Time, Genesis OLP and Genesis
- -----------
MLP shall, without any further responsibility or liability of, or recourse to,
any of the Transferor Parties, absolutely and irrevocably assume and be solely
liable and responsible for the Assumed Liabilities. None of the Transferor
Parties shall be liable to any of the OLP Parties or any third parties for any
reason whatsoever on account of any of the Assumed Liabilities.
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Genesis OLP and Genesis MLP shall indemnify, defend, save and hold harmless
each of the Transferor Parties from and against all claims, liabilities,
obligations, losses, costs, costs of defense (as and when incurred), including
expenses, fines, charges, penalties, allegations, demands, damages (including
but not limited to actual, punitive or consequential, foreseen or unforeseen,
known or unknown), settlements, awards or judgments of any kind or nature
whatsoever and reasonable outside attorneys' and consultants' fees, to the
extent arising out of (a) the Assumed Liabilities, (b) any breach of the
representations or warranties of Genesis OLP and Genesis MLP in this Agreement
for which a Transferor Party must assert a claim for indemnification during the
applicable survival period referred to in Section 7.2 or (c) the breach by any
-----------
of the OLP Parties of any of their obligations under this Agreement, all of
which are hereinafter collectively referred to as the "Transferor Damages."
------------------
SECTION 8.3 Specific Indemnification Issues. (a) In the event a claim,
-------------------------------
demand, action or proceeding is brought by a third party in which the liability
as between any Transferor, on the one hand, and Genesis MLP or Genesis OLP, on
the other hand, is determined after trial in any judgment, award or decree to be
joint or concurrent or in which the entitlement to indemnification hereunder is
not readily determinable, the parties shall negotiate in good faith in an effort
to agree, as between such Transferor, on the one hand, and Genesis MLP or
Genesis OLP, on the other hand, on the proper allocation of liability or
entitlement to indemnification, as well as the proper allocation of the costs of
any joint defense or settlement pursuant to Section 8.5(d), all in accordance
--------------
with the provisions of, and the principles set forth in, this Agreement.
(b) It is acknowledged that after the Closing Date, the Parties may have
business relationships with one another, which relationships will be described
in contracts, agreements and other documents entered into in the normal course
of business, including the Transaction Documents. Such documents may include
agreements by the Parties and their Affiliates to supply, after the Closing
Date, materials, products, services and leases to another Party or its
Affiliate. Such business relationships shall not be subject to the indemnity
provisions hereof, unless the parties expressly agree to the contrary in the
agreements governing such relationships.
(c) Notwithstanding anything in this Agreement to the contrary, Genesis
OLP shall assume the responsibility for the payment of the first $25,000 per
occurrence as to any environmental liability included in Excluded Liabilities up
to an amount that shall not exceed in the aggregate $200,000 for the twelve-
month period beginning on the Closing Date and ending on the anniversary thereof
and for each twelve-month period thereafter (the "Annual Obligation"); provided
-----------------
that Genesis OLP's aggregate liability pursuant to this Section 8.3(c) shall not
--------------
exceed $600,000 (the "Aggregate Obligation"). As security to cover any and all
--------------------
costs, including any reserves required in accordance with GAAP, arising out of
each of the Transferor's indemnification obligation for environmental
liabilities included in the Excluded Liabilities, pursuant to the Pledge
Agreement, each Transferor shall pledge to Genesis OLP one half of its initial
Subordinated LP Units subject to release of such Subordinated LP Units from this
pledge upon conversion of such Subordinated LP Units into Common LP Units
pursuant to the terms of OLP Agreement.
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<PAGE>
(d) EACH OF THE AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD HARMLESS CONTAINED
IN THIS AGREEMENT SHALL APPLY, IN ACCORDANCE WITH ITS TERMS, IRRESPECTIVE OF
WHETHER THE SUBJECT CLAIM IS BASED IN WHOLE OR IN PART UPON THE CONTRIBUTING
NEGLIGENCE (WHETHER ACTIVE OR PASSIVE), BREACH OF WARRANTY, STRICT LIABILITY, OR
BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY LAW OR REGULATION, ON THE PART OF
THE BENEFICIARY OF THE AGREEMENT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT.
(e) The Indemnified Party shall not be entitled to recover from the
Indemnifying Party for any losses, costs, expenses, or damages arising under
this Agreement or in connection with or with respect to the transactions
contemplated in this Agreement any amount in excess of the actual compensatory
damages, court costs and reasonable attorney fees, suffered by the Indemnified
Party. Each OLP Party and each Transferor Party waives any right to recover
punitive, special, exemplary and consequential damages arising in connection
with or with respect to the transactions contemplated in this Agreement unless
recovered by a third party against the OLP Party or the Transferor Party.
(f) The Indemnified Party shall take reasonable steps to mitigate losses,
costs, expenses and damages after becoming aware of any event or circumstance
that could reasonably be expected to give rise to any losses, costs, expenses
and damages that are indemnifiable or recoverable hereunder or in connection
herewith; provided, however, that (i) such mitigation shall be necessary only
for a reasonable time after notice is given to the Indemnifying Party, and (ii)
all costs of such mitigation shall be an indemnifiable expense, including
indirect and administrative costs.
SECTION 8.4 Notice and Payment of Claims. (a) If any Person entitled to a
----------------------------
defense and/or indemnification under this Agreement (the "Indemnified Party")
-----------------
determines that it is or may be entitled to a defense or indemnification by
Genesis OLP, Genesis MLP or any Transfer or, as the case may be (the
"Indemnifying Party"), under this Agreement:
- -------------------
(i) The Indemnified Party shall deliver promptly to the Indemnifying
Party a written notice and demand for a defense or indemnification,
specifying the basis for the claim for defense and/or indemnification, the
nature of the claim, and if known, the amount for which the Indemnified
Party reasonably believes it is entitled to be indemnified. Nothing in
this subparagraph shall be interpreted to invalidate any claim by the
Indemnified Party to be entitled to indemnification, except to the extent,
if any, that the failure of the Indemnified Party to deliver such notice
resulted in actual prejudice to the Indemnifying Party.
(ii) The Indemnifying Party shall promptly, but in any event within 30
days from receipt of the notice requesting indemnification, either: (A)
assume the defense of such litigation or claim; (B) pay the claim in
immediately available funds; (C) reserve its rights pending resolution
under Section 8.5(d); or (D) object in
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accordance with clause (b) of this Section 8.4. This 30-day period may be
---------- -----------
extended by agreement of the parties. Nothing in this subparagraph shall be
interpreted to abrogate or delay a party's obligation to provide the other
with a defense under this Agreement.
(b) The Indemnifying Party may object to the claim for defense and/or
indemnification set forth in any notice; provided, however, that if the
Indemnifying Party does not give the Indemnified Party written notice setting
forth its objection to such claim (or the amount thereof) and the grounds
therefor within the same 30-day period (or any extended period), the
Indemnifying Party shall be deemed to have acknowledged its liability to provide
a defense or to pay the amount of such claim and the Indemnified Party may
exercise any and all of its rights under applicable Law to collect such amount
or obtain such defense.
(c) Payments due to be made to any Indemnified Party under this Section 8
---------
shall bear interest from the date on which the Indemnified Party paid any amount
or actually suffered a loss in respect of OLP Damages or Transferor Damages, as
the case may be, to but excluding the date of actual payment (whether before or
after judgment) at the Prime Rate.
(d) Payments due to be made under this Agreement shall be free and clear of
all deductions, withholdings, set-offs or counterclaims whatsoever, except as
may be required by law. If any deductions or withholdings are required by law,
the Indemnifying Party shall be obliged to pay such sum as will, after such
deduction, withholding, set-off or counter-claim has been made, leave the
Indemnified Party with the same amount as it would have been entitled to receive
in the absence of any such requirement to make a deduction, withholding, set-off
or counterclaim. The parties to this Agreement may enter into agreements or
other arrangements providing for the set-off of payments due to be made by way
of indemnification to both the Transferors and Genesis OLP.
(e) Payments due to be made under this Agreement shall be reduced by the
amount by which any taxes for which the Indemnified Party would have been
accountable or liable to be assessed are either (i) actually reduced prior to
payment falling due hereunder or (ii) likely to be reduced subsequent to payment
falling due hereunder in the reasonable opinion of the Indemnified Party acting
in good faith in the light of the circumstances prevailing at the time of
delivery of written notice in accordance with clause (a) of this Section 8.4.
---------- -----------
The determination of the amount by which taxes are actually or likely to be
reduced shall take into account the time value of money.
SECTION 8.5 Defense of Third Party Claims. (a) If the Indemnified Party's
-----------------------------
claim for indemnification is based, under this Agreement, on a claim, demand,
investigation, action or proceeding, judicial or otherwise, brought by a third
party, and the Indemnifying Party does not object under Section 8.4(b), the
--------------
Indemnifying Party shall, within the 30-day period (or any extended period)
referred to in Section 8.4(a), assume the defense of such third-party claim at
--------------
its sole cost and expense and shall thereafter be designated as the "Case
----
Handler." Any such defense shall be conducted by attorneys employed by the
- -------
Indemnifying Party. The Indemnified Party may retain
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<PAGE>
attorneys of its own choosing to participate in such defense at the Indemnified
Party's sole cost and expense.
(b) If the Indemnifying Party assumes the defense of any such third-party
claim, the Indemnifying Party may settle or compromise the claim without the
prior consent of the Indemnified Party so long as all existing and future claims
relating to the compromised claim against the Indemnified Party are irrevocably
and unconditionally released in full.
(c) The Indemnifying Party shall pay to the Indemnified Party in
immediately available funds the amount for which the Indemnified Party is
entitled to be indemnified within 30 days after the settlement or compromise of
such third-party claim or the judgment of a court of competent jurisdiction (or
within such longer period as agreed to by the parties in a final nonappealable
decision). If the Indemnifying Party does not assume the defense of any such
third-party claim, the Indemnifying Party shall be bound by the result obtained
with respect thereto by the Indemnified Party, except that the Indemnifying
Party has the right to contest that it is obligated to the Indemnified Party
under the terms of this Agreement, provided the Indemnifying Party shall have
raised its objection in a timely manner under Section 8.4.
-----------
(d) In the event a claim, demand, action or proceeding is brought by a
third party in which the liability as between Genesis OLP and any Transferor is
alleged to be joint or in which the entitlement to indemnification hereunder is
not readily determinable, the parties shall cooperate in a joint defense. Such
joint defense shall be under the general management and supervision of the party
which is expected to bear the greater share of the liability, and which will be
considered the Case Handler, unless otherwise agreed; provided, however, that
neither party shall settle or compromise any such joint defense matter without
the consent of the other, which consent shall not be unreasonably withheld. The
costs of such joint defense, any settlement and any award or judgment (unless
the award or judgment specifies otherwise) shall be borne as the parties may
agree; or in the absence of such agreement, such costs shall be borne by the
party incurring such costs.
SECTION 8.6 Cooperation and Preservation of Records. (a) The OLP
---------------------------------------
Parties and the Transferor Parties shall cooperate with one another fully and in
a timely manner in connection with the defense of any litigation or any other
actual or threatened claim.
(b) Such cooperation shall include, without limitation, making available to
the other party, during normal business hours and upon reasonable notice, all
books, records and information ("Litigation Records"), officers and employees
------------------
(without substantial interruption of employment) necessary or useful in
connection with any actual or threatened claim, investigation, audit, action or
proceeding.
(c) Each party shall continue in force, or at the request of the other
party, shall issue, notices exempting from destruction any Litigation Records
which the requesting party represents may be necessary to the defense of, or
required to be produced in discovery in connection with, any such claim,
investigation, audit, action or proceeding and shall either refrain from
destroying any
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<PAGE>
such Litigation Records until authorized by the requesting party or provide
copies at the requesting party's expense thereof. The requesting party shall
notify the other party promptly when the Litigation Records are no longer
required to be maintained.
(d) The party requesting access to Litigation Records or officers and
employees pursuant to clause (b) of this Section 8.6 or preservation of
---------- -----------
Litigation Records pursuant to clause (c) of this Section 8.6 shall bear all
---------- -----------
reasonable out-of-pocket expenses (except reimbursement of salaries, employee
benefits and general overhead) incurred by the other party in connection with
providing such Litigation Records or officers and employees.
(e) The party providing Litigation Records hereunder may elect, upon a
reasonable basis and within a reasonable time, to designate all or a portion of
the Litigation Records as confidential or proprietary. If Litigation Records
are so designated, the party receiving them will treat them as it would its own
confidential or proprietary information and will take all reasonable steps to
protect and safeguard the Litigation Records while in its own custody and will
attempt to shield such information from disclosure by motions to quash, motions
for a protective order, redaction or other appropriate actions.
ARTICLE 9
DISCLAIMERS AND WAIVER.
----------------------
SECTION 9.1 Disclaimer of Warranties. (a) EACH TRANSFEROR IS CONVEYING
------------------------
AND TRANSFERRING THE ASSETS "AS IS" AND, EXCEPT AS EXPRESSLY SET FORTH HEREIN,
WITHOUT REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY (ALL
OF WHICH THE TRANSFEROR HEREBY DISCLAIMS), AS TO (i) TITLE, (ii) FITNESS FOR ANY
PARTICULAR PURPOSE OR MERCHANTABILITY OR DESIGN OR QUALITY, OR (iii) ANY OTHER
MATTER WHATSOEVER. THE PROVISIONS OF THIS SECTION 9.1 HAVE BEEN NEGOTIATED BY
-----------
THE TRANSFERORS AND GENESIS OLP AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES OF THE
TRANSFERORS, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE ASSETS
THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE,
EXCEPT AS EXPRESSLY SET FORTH HEREIN.
(b) The Transferors, Genesis MLP and Genesis OLP agree that the
disclaimers contained in this Section 9.1 are "conspicuous" disclaimers. Any
-----------
covenants implied by statute or by the use of the words "grant," "convey,"
"bargain," "sell," "assign," "transfer," "deliver," or "set over" or any of
them or any other words used in this Agreement are hereby expressly disclaimed,
waived and negated.
SECTION 9.2 Waiver of Bulk Sales Laws. Each of the parties hereto hereby
-------------------------
waives compliance with any applicable bulk sales law or any similar law in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
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ARTICLE 10
TRADEMARKS AND TRADENAMES.
-------------------------
SECTION 10.1 Written Materials and Logos. Genesis OLP shall as soon as
---------------------------
reasonably practicable cease to use written materials, including without
limitation, packaging, labels, package inserts, invoices, catalogs, brochures,
handbooks, and similar materials, which contain the name Salomon, Phibro, Basis
Petroleum, Inc., Howell Corporation, any names of the Howell Subsidiaries or
variations thereof (including logos), or other trade names currently in use by
the Business and not included in the Assets, as necessary; provided, however,
that Genesis OLP shall use all reasonable efforts in its procurement of such
materials after the Closing Date to procure materials which do include any such
names, and to overprint, sticker, or otherwise identify on such materials in
such a way as to either obliterate such names or clearly indicate that the
Transferor is no longer affiliated with the Business or the Assets.
SECTION 10.2 Signs. Each Transferor hereby agrees that Genesis OLP and
-----
its Affiliates may, until April 1, 1997, use signs which contain the name Basis
Petroleum, Inc., any names of the Howell Entities or variations thereof
(including logos), or other trade names currently in use by the Business and not
included in the Assets, as necessary after the Effective Time; provided,
however, Genesis OLP shall remove such signs as soon as reasonably possible;
provided further, all pipeline signs in the name of Basis or any of the Howell
Entities may be used but must be removed by December 31, 1997.
ARTICLE 11
EMPLOYEE MATTERS.
----------------
SECTION 11.1 Employment. Genesis LLC on behalf of Genesis MLP and
----------
Genesis OLP shall offer employment as of January 1, 1997 to all persons who are
employees of the Business immediately prior to the Effective Time, including
any employees or agents of the Business who are not actively employed as of the
Effective Time, upon their return to active employment, each of which is listed
on Schedule 11.1, including, without limitation, the officers referred to
-------------
therein (collectively, the "Business Employees"). The Business Employees shall
------------------
be employed by Genesis LLC on substantially the same terms and conditions as
those in effect in respect of their employment by the Transferors or their
Affiliates immediately prior to the Closing Date. The officers identified on
Schedule 11.1 shall be offered employment pursuant to the form of Employment
- -------------
Agreement. Notwithstanding the foregoing, this Agreement shall not create
any obligation on the part of Genesis LLC or any of its Affiliates to continue
the employment of the Business Employees, nor create any other right of any such
employee, or his or her beneficiaries, in either case, following the Closing
Date. If Genesis LLC shall not hire or terminate without cause any Business
Employee within the first six months of employment, then Genesis LLC shall be
obligated to pay severance pursuant to the terms described in Schedule 11.1 or
-------------
the Employment Agreement, as the case may be. From the Closing Date through
December 31, 1996, each Transferor and its Affiliates shall provide the services
of the Business Employees to Genesis MLP and Genesis OLP and be promptly
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reimbursed by Genesis MLP and Genesis OLP for such services pursuant to the term
of the Transition Services Agreement.
SECTION 11.2 LLC Plans. To the extent required, as of January 1, 1997,
---------
Genesis LLC shall, directly, or indirectly through the Corporate Services
Agreement (a) become the sponsor of and/or shall duly adopt each plan, program,
policy, payroll practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, fringe benefits, medical benefits,
performance awards (other than stock or stock related awards), or other employee
benefits of any kind, including, without limitation, each "employee benefit
plan" (within the meaning of Section 3(3) of ERISA) (each, a "Benefit Plan"),
------------
sponsored by, maintained, contributed to, or required to be sponsored,
maintained or contributed to, by the Transferor or any of its Affiliates
immediately prior to January 1, 1997 for the benefit of any Business Employee or
former employee or agent of the Business (such Benefit Plans, the "LLC Plans").
---------
The foregoing does not and shall not be construed to provide the Business
Employees or former employees or agents of the Business any rights, or impose
upon Genesis OLP or its Affiliates, any obligations, in either case, in addition
to those which such employees or agents or a Transferor or its Affiliates may
have in respect of the LLC Plans immediately prior to January 1, 1997.
Notwithstanding anything to the contrary in this Agreement, Genesis OLP and its
Affiliates shall not assume any of the Excluded Liabilities related to the LLC
Plans.
SECTION 11.3 No Third Party Beneficiaries. This Section 11 is solely for
---------------------------- ----------
the benefit of the Parties and their respective Affiliates and nothing contained
herein should be deemed to confer upon any other person any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
ARTICLE 12
TERMINATION OF AGREEMENT.
------------------------
SECTION 12.1 Termination. This Agreement and transactions contemplated
-----------
hereby may be terminated and abandoned at any time prior to the Closing Date:
(a) by the mutual consent of the Transferors, Genesis MLP and Genesis OLP;
or
(b) by either Basis or Howell (provided that the Party seeking termination
has diligently and in good faith performed and complied in all material respects
with the agreements and covenants required to be performed by it hereunder), by
action of its Board of Directors, in the event the transactions contemplated
hereby are not consummated pursuant to this Agreement by December 31, 1996,
unless Basis and Howell shall have agreed upon an extension of time in which to
consummate the transactions contemplated hereby.
SECTION 12.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement and the transactions contemplated hereby pursuant to Section
-------
12.1, this Agreement shall become wholly void and of no force or effect, without
any liability or further obligation on the part of the
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<PAGE>
Transferors, Genesis MLP or Genesis OLP (or any of their respective Affiliates,
directors, officers, employees, agents, representatives, partners or members);
provided, however, that the provisions of Section 14.1(e) hereof shall survive
---------------
such termination; and provided further, that such termination shall not relieve
either Basis or Howell from any liability for any breach of this Agreement
attributable to bad faith or willful misconduct.
ARTICLE 13
TAX MATTERS.
-----------
SECTION 13.1 Refunds of Taxes. Upon the reasonable request of either
----------------
Sponsor, Genesis OLP shall assist such Sponsor in connection with (or to the
extent necessary shall file, or cause to be filed in such form as such Sponsor
may reasonably request), claims for refunds of federal, state, local or foreign
income taxes attributable to the operation of the Business prior to the
Effective Time. The Sponsor shall have the sole right to prosecute any claims
for such refunds (by suit or otherwise) at the Sponsor's expense and with
counsel of the Sponsor's choice, and Genesis OLP and its Affiliates shall
cooperate fully with the Sponsor in connection therewith.
SECTION 13.2 Notice of Tax Audits. Genesis LLC or Genesis OLP shall
--------------------
promptly notify the appropriate Sponsor in writing upon the receipt by Genesis
LLC, Genesis OLP or any of their Affiliates of a notice of any pending or
threatened audits or assessments against Genesis OLP or any of its Affiliates
with respect to any taxes for which Genesis OLP or any of its Affiliates is or
may be entitled to indemnification under this Agreement. The Sponsor shall have
the sole right, at its election, (a) to represent Genesis OLP's (and its
Affiliates') interest with respect to any such audits or assessments, including
in any administrative or court proceeding relating thereto, and (b) employ
counsel of its choice at its expense and to control the conduct of such audit,
assessment, or proceeding, including the settlement or disposition thereof.
Genesis LLC, Genesis OLP and their Affiliates shall cooperate fully with the
Sponsor and its counsel in the defense against or compromise of any claim in any
such audit, assessment, or proceeding.
ARTICLE 14
MISCELLANEOUS.
-------------
SECTION 14.1 Costs. (a) Genesis OLP shall be responsible for and,
-----
within a reasonable time after any request by a Transferor, shall pay directly
to any designated third party, all Transfer Expenses; provided, that in lieu of
such direct payment, the Transferor shall be entitled to pay such Transfer
Expenses directly to third parties and shall be entitled to be reimbursed by
Genesis OLP within a reasonable time after any request therefor.
(b) Genesis MLP shall be responsible for and shall pay all Public Offering
Expenses incurred prior to, as of or after the Closing Date. Such payment shall
be made by Genesis MLP or its subsidiaries directly to any obligee in respect of
such expenses. If, on or before April 30, 1997, Genesis MLP has reasonably
incurred or paid Public Offering Expenses in excess of the actual and estimated
amounts of such expenses used in the calculation as of the Closing Date of the
Net MLP
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Proceeds, each Sponsor shall, promptly after each request by Genesis MLP, pay to
Genesis MLP its Proportional Share of the amount of such excess. If, on or
before April 30, 1997, Genesis MLP has reasonably incurred or paid Public
Offering Expenses that are less than the actual and estimated amounts of such
expenses used in the calculation as of the Closing Date of the Net MLP Proceeds,
Genesis MLP shall promptly pay to each Sponsor, an amount equal to its
Proportional Share of such deficiency.
(c) If any Transferor or any of its Affiliates have paid any expenses,
fees, costs or taxes that are the responsibility of Genesis MLP or Genesis OLP
pursuant to clauses (a) or (b) of this Section 14.1, then Genesis MLP or Genesis
----------- --- ------------
OLP, as appropriate, shall reimburse the appropriate Transferor or such
Affiliate promptly upon request therefor.
(d) Each Transferor shall be responsible for and shall pay directly to any
designated third party its own fees and expenses of attorneys incurred in
connection with this Agreement.
(e) In the event that this Agreement is terminated pursuant to Section
-------
12.1, Basis and Howell shall bear their Proportional Share of all expenses,
fees, costs or taxes referred to in clauses (a) or (b) of this Section 14.1 that
----------- --- ------------
were the responsibility of Genesis MLP and Genesis OLP.
SECTION 14.2 Notices. All notices and other communications under this
-------
Agreement will be in writing and will be duly given (i) upon delivery if
delivered personally with signed receipt acknowledging delivery; or (ii) upon
dispatch if telexed (with answerback confirmation) or telegraphed (and if
telegraphed confirmed by first-class mail as hereinafter provided); or (iii) if
mailed, by certified mail, postage prepaid, ten business days after date of
mailing, addressed as follows:
(a) If to the Basis
Basis Petroleum, Inc.
One Allen Center, Suite 3200
500 Dallas
Houston, Texas 77002
Attention: President
with copy to: General Counsel
Fax No.: (713) 646-5278
(b) If to any of the Howell Entities
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002
Attention: Robert T. Moffett
Fax No.: (713) 658-4007
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(c) If to Genesis MLP,
Genesis OLP or Genesis LLC
c/o Genesis Energy, L.P.
One Allen Center, Suite 3200
500 Dallas
Houston, Texas 77002
Fax No.: (713) 646-____
Attention: President
with a copy to: General Counsel
or to such other address as a party may from time to time designate in the
manner heretofore provided.
SECTION 14.3 Files and Records. As soon as reasonably practicable
-----------------
following the Closing Date, each Transferor shall, and shall cause its
Affiliates to, deliver copies or originals of all books, files, records and
other data relating to the Assets and the Business (the "Information") to be
-----------
delivered to Genesis LLC's offices at One Allen Center, 500 Dallas, Suite 3200,
Houston, Texas. After the Effective Time, Genesis OLP and its Affiliates shall
permit each Transferor and its Affiliates and agents to have full access, at any
reasonable time and from time to time, to such Assets and former Information of
such Transferor as such Transferor and its Affiliates may reasonably request in
connection with the preparation of financial statements, tax returns, or other
similar reports regarding the Assets and former Business for periods of such
Transferor. If Genesis OLP intends at any time to discard any Information
relating to the Assets and operation of the Business prior to the Effective
Time, Genesis OLP shall (a) give the appropriate Transferor written notice of
such intention at least thirty days prior to discarding such Information, and
(b) offer to allow such Transferor to take possession of such Information.
SECTION 14.4 Headings; References; Interpretation. All Article and
------------------------------------
Section headings in this Agreement are for convenience only and shall not be
deemed to control or affect the meaning or construction of any of the provisions
hereof. All references herein to Articles, Sections, Schedules and Exhibits
shall, unless the context requires a different construction, be deemed to be
references to the Articles and Sections of this Agreement and the Schedules and
Exhibits attached hereto, and all such Schedules and Exhibits attached hereto
are hereby incorporated herein and made a part hereof for all purposes. All
personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular
shall include the plural and vice versa. The use herein of the word "including"
following any general statement. term or matter shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation," "but not limited to," or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within
the broadest possible scope of such general statement, term or matter.
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<PAGE>
Except as otherwise expressly provided herein, (a) any reference in this
Agreement to any Transaction Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time and (b) all terms
of an accounting or financial nature shall be construed in accordance with GAAP.
SECTION 14.5 Successors and Assigns. This Agreement shall not be
----------------------
assignable by any party hereto by operation of law or otherwise. The Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.
SECTION 14.6 No Third Party Rights. Except as expressly provided in
---------------------
Article 8, the provisions of this Agreement are not intended to and do not
- ---------
create rights in any Person not a party to this Agreement or confer upon any
other Person any benefits, rights or remedies, and except as expressly provided
for in Article 8, no Person is or is intended to be a third party beneficiary of
---------
any of the provisions of this Agreement.
SECTION 14.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
SECTION 14.8 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the internal laws of the State of Texas without
regard to the conflicts of law principles thereof.
SECTION 14.9 Waiver of Jury Trial. Each Party hereto hereby waives, to
--------------------
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or any Exhibit or Schedule hereto.
Each Party hereto (a) certifies that no representative, agent or attorney of any
other Party has represented, expressly or otherwise, that such other Party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other Parties hereto have been induced to enter
into this Agreement, as applicable by, among other things, the mutual waivers
and certifications in this Section 14.9.
------------
SECTION 14.10 Severability. If any of the provisions of this Agreement
------------
are held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provision or provisions held to be invalid, and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the parties as expressed in this Agreement at the time of
execution of this Agreement.
SECTION 14.11 Deed; Bill of Sale; Assignment. To the extent required by
------------------------------
applicable law, this Agreement shall also constitute a "deed," "bill of sale" or
"assignment" of the Assets.
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<PAGE>
SECTION 14.12 Amendment or Modification. This Agreement may be amended
-------------------------
or modified, or any provision waived or rescinded, from time to time only by the
written agreement of the Parties directly bound by, or benefited from, the
provisions in respect of which such amendment, modification, waiver or
rescission is sought.
SECTION 14.13 Integration. This Agreement supersedes all previous
-----------
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This Agreement and the Transaction Documents
constitute an integrated agreement which contain the entire understanding of the
parties. No understanding, representation, promise or agreement, whether oral
or written, is intended to be or shall be included in or form part of this
Agreement or the Transaction Documents unless it is contained in a written
amendment hereto executed by the Parties hereto after the date of this
Agreement.
-63-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
BASIS PETROLEUM, INC.
By:_______________________________________________
Jeffrey R. Serra
Chairman of the Board, President and
Chief Executive Officer
ATTEST: By:_______________________________________________
Name:
Title:
HOWELL CORPORATION
By:_______________________________________________
Paul N. Howell
President and Chief Executive Officer
ATTEST: By:_______________________________________________
Name:
Title:
-64-
<PAGE>
HOWELL CRUDE OIL COMPANY
By:_______________________________________________
Mark J. Gorman
President
ATTEST: By:_______________________________________________
Name:
Title:
HOWELL PIPELINE TEXAS, INC.
By:_______________________________________________
Allen R. Stanley
President
ATTEST: By:_______________________________________________
Name:
Title:
HOWELL PIPELINE U.S.A., INC.
By:_______________________________________________
Allen R. Stanley
President
ATTEST: By:_______________________________________________
Name:
Title:
-65-
<PAGE>
HOWELL TRANSPORTATION SERVICES, INC.
By:_______________________________________________
Bradley N. Howell
President
ATTEST: By:_______________________________________________
Name:
Title:
HOWELL POWER SYSTEMS, INC.
By:_______________________________________________
Allyn R. Skelton, II
President
ATTEST: By:_______________________________________________
Name:
Title:
-66-
<PAGE>
GENESIS ENERGY, L.L.C.
By:_______________________________________________
John P. vonBerg
President and Chief Executive Officer
ATTEST: By:_______________________________________________
Name:
Title:
GENESIS ENERGY, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By:_______________________________________________
John P. vonBerg
President and Chief Executive Officer
ATTEST: By:_______________________________________________
Name:
Title:
-67-
<PAGE>
GENESIS CRUDE OIL, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By:_______________________________________________
John P. vonBerg
President and Chief Executive Officer
ATTEST: By:_______________________________________________
Name:
Title:
-68-
<PAGE>
EXHIBIT 10.2
FORM OF DISTRIBUTION SUPPORT AGREEMENT
This DISTRIBUTION SUPPORT AGREEMENT, dated as of , 1996 (this
"Agreement"), is entered into by and between GENESIS CRUDE OIL, L.P., a Delaware
limited partnership ("Genesis OLP"), and SALOMON INC, a Delaware corporation
("Salomon").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and as an inducement to consummate the transactions
contemplated by the Genesis OLP Partnership Agreement (as hereinafter defined),
the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
-----------
SECTION 1.1. Terms Defined by Reference to the Genesis OLP Partnership
Agreement. All capitalized terms used herein and not defined herein shall have
the meanings provided therefor in the Amended and Restated Agreement of Limited
Partnership of Genesis Crude Oil, L.P., dated as of , 1996 (the "Genesis
OLP Partnership Agreement"), without giving effect to any amendments or
modifications to the Genesis OLP Partnership Agreement subsequent to the Closing
Date that would modify or amend in any respect any of such terms not defined
herein unless such amendment or modification is consented to in accordance with
the provisions of Section 3.6.
SECTION 1.2. Terms Defined Herein. The following definitions shall be
for all purposes, unless otherwise clearly indicated to the contrary, applied to
the terms used in this Agreement.
"Agreement" means this Distribution Support Agreement, as it may be
amended, supplemented or restated from time to time.
"Aggregate Ceiling" means, with respect to any Quarter, an amount equal to
the product obtained by multiplying (a) four, times (b) the Minimum Quarterly
Distribution as in effect for such Quarter, times (c) the sum of (i) the number
of OLP Common Units Outstanding as of the Closing Date, plus (ii) the number of
OLP Common Units, if any, issued after the Closing Date to Genesis MLP pursuant
to Section 5.2(a)(ii) of the Genesis OLP Partnership Agreement; provided,
however, that the number of OLP Common Units, if any, calculated as provided in
clause (c) of this definition shall be proportionately adjusted in the event of
any combination or subdivision of OLP Common Units, however effected, with the
result that, after taking into account an adjustment to the Minimum Quarterly
Distribution resulting pursuant to the Genesis OLP Partnership Agreement due to
such combination or subdivision, there shall not be any change in the Aggregate
Ceiling as a result of such combination or subdivision.
<PAGE>
"API Contributor" means Salomon unless and until Salomon has transferred
its obligations under this Agreement to a transferee pursuant to and in
compliance with Section 2.6, and thereafter shall mean the transferee of such
obligations.
"Cumulative OLP Common Unit Arrearage" has the meaning assigned to the term
"Cumulative Common Unit Arrearage" in the Genesis OLP Partnership Agreement.
"General Partner" means Genesis Energy, LLC unless and until Genesis
Energy, LLC has transferred its General Partner Interest in Genesis OLP in
compliance with the requirements of Section 4.6 of the Genesis OLP Partnership
Agreement, and thereafter shall mean the transferee of such General Partner
Interest.
"Genesis Energy, LLC" means Genesis Energy, L.L.C., a Delaware limited
liability company, and its successors.
"Genesis MLP" means Genesis Energy, L.P., a Delaware limited partnership,
and its successors.
"Genesis MLP Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Genesis Energy, L.P., dated as of _______,
1996, as it may be amended, supplemented or restated from time to time.
"Genesis OLP" means Genesis Crude Oil, L.P., a Delaware limited
partnership, and its successors.
"Genesis OLP Partnership Agreement" has the meaning assigned to such term
in Section 1.1.
"Investment Grade Entity" means (a) a Person that has any long-term
unsecured debt obligations that are rated Qualified Investment Grade or (b) in
the case of a Person (i) who does not have long-term unsecured debt obligations,
(ii) whose long-term unsecured debt obligations are not rated by S&P, Moody's or
an NRSRO or (iii) who is not a U.S. Person, a Person having, in the reasonable
judgment of the API Contributor, credit quality comparable to that of a Person
described in clause (a) of this definition.
"Letter of Credit" means a letter of credit issued by a Qualified Bank,
which letter of credit meets the requirements set forth in Section 2.7.
"MLP Unit" has the meaning assigned to the term "Unit" in the Genesis MLP
Partnership Agreement.
"MLP Unitholder" has the meaning assigned to the term "Unitholder" in the
Genesis MLP Partnership Agreement.
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<PAGE>
"Moody's" means Moody's Investors Service Inc., or any successor thereto.
"NRSRO" means a rating agency that is designated by the Securities and
Exchange Commission as a nationally recognized statistical rating organization.
"OLP Common Unit" has the meaning assigned to the term "Common Unit" in the
Genesis OLP Partnership Agreement.
"OLP Subordinated Unit" has the meaning assigned to the term "Subordinated
Unit" in the Genesis OLP Partnership Agreement.
"OLP Unit" has the meaning assigned to the term "Unit" in the Genesis OLP
Partnership Agreement.
"OLP Unitholders" has the meaning assigned to the term "Unitholders" in the
Genesis OLP Partnership Agreement.
"Qualified Bank" means a commercial bank whose long-term unsecured debt
obligations are rated Qualified Investment Grade at the time of issuance of a
Letter of Credit by such commercial bank.
"Qualified Investment Grade" means (a) a rating of at least BBB- by S&P,
(b) a rating of at least Baa3 by Moody's or (c) a rating by any other NRSRO that
is comparable to the ratings of S&P and Moody's described in clauses (a) and (b)
of this definition.
"Quarterly Ceiling" means, with respect to any Quarter and any contribution
contemplated hereby, an amount equal to the product of (i) the Minimum Quarterly
Distribution as in effect for such Quarter, times (ii) the number of OLP Common
Units Outstanding on the Record Date with respect to such Quarter.
"Required Contribution" has the meaning assigned to such term in
Section 2.7.
"S&P" means Standard & Poor's Corporation, or any successor thereto.
"Salomon" means Salomon Inc, a Delaware corporation, and its successors.
"Support Period" means the period commencing on the Closing Date and ending
on the earlier to occur of (a) the first day after the day on which Available
Cash is distributed with respect to the Quarter ending December 31, 2001, (b)
the first day of any Quarter beginning after December 31, 1999 in respect of
which (i) distributions of Available Cash from Operating Surplus on each of the
Outstanding OLP Common Units and OLP Subordinated Units with respect to the
four-Quarter period immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the Outstanding OLP Common Units
and OLP Subordinated Units
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<PAGE>
during such period, (ii) the Adjusted Operating Surplus generated during the
four-Quarter period immediately preceding such date equaled or exceeded 133% of
the sum of the Minimum Quarterly Distribution on all of the Outstanding OLP
Common Units and OLP Subordinated Units during such period and (iii) there are
no outstanding Cumulative OLP Common Unit Arrearages, and (c) the date this
Agreement terminates in accordance with its terms and as contemplated by Section
2.3.
"Trustee" has the meaning assigned to such term in Section 2.7.
"U.S. Person" means a Person who is organized and existing under the laws
of the United States of America or any state thereof.
ARTICLE 2
DISTRIBUTION SUPPORT
--------------------
SECTION 2.1. Distribution Support. The API Contributor agrees that, if
the amount of Available Cash from Operating Surplus (before giving effect to the
purchase of APIs as described below) with respect to any Quarter ending during
the Support Period is less at the relevant time than the amount necessary to
distribute the Minimum Quarterly Distribution as in effect for such Quarter on
all OLP Common Units Outstanding on the Record Date with respect to such
Quarter, then, on the date of determination of Available Cash with respect to
such Quarter, the API Contributor, subject to the limitations of this Agreement,
will contribute (or cause to be contributed) to Genesis OLP, in exchange for
APIs, cash in an amount equal to the lesser of (a) the amount that would enable
Genesis OLP to distribute the Minimum Quarterly Distribution as in effect for
such Quarter on all OLP Common Units Outstanding on the Record Date with respect
to such Quarter, (b) an amount equal to the Quarterly Ceiling with respect to
such Quarter and (c) the amount, if any, by which the Aggregate Ceiling with
respect to such Quarter exceeds at the relevant time the Unrecovered Capital of
the APIs Outstanding on the Record Date with respect to such Quarter.
SECTION 2.2. Issuance of APIs to the API Contributor. Genesis OLP shall
issue one API (having an initial Unrecovered Capital of $100) in exchange for
each $100 contributed (or caused to be contributed) by the API Contributor to
Genesis OLP pursuant to Section 2.1.
SECTION 2.3. Termination of Distribution Support Obligation Upon the
Dissolution and Liquidation of Genesis OLP. Upon the occurrence of the
Liquidation Date, the obligations of the API Contributor under this Agreement
shall terminate and the Support Period shall end immediately, retroactive to the
end of the last Quarter preceding the Liquidation Date with respect to which
distributions of Available Cash have been paid or are payable to holders of the
OLP Common Units. After such termination, the API Contributor shall not be
required to contribute (or cause to be contributed) any cash in exchange for
additional APIs from Genesis OLP.
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<PAGE>
SECTION 2.4. Rights of API Holders. As a result of the contribution of
cash in exchange for APIs, the holder of such APIs will become a non-voting
limited partner of Genesis OLP with a capital account in Genesis OLP and the
right to require Genesis OLP to redeem such APIs as provided in the Genesis OLP
Partnership Agreement and as provided in Section 2.5. APIs will not be
allocated any items of Genesis OLP income, gain, loss, deduction or credit,
except as otherwise expressly provided in the Genesis OLP Partnership Agreement.
SECTION 2.5. Redemption of APIs in Excess of Required Amount. In the
event that cash is contributed to Genesis OLP in exchange for APIs pursuant to
this Agreement and subsequent thereto it is determined that any portion of such
cash was not required to be so contributed by reason of the limitations
contained in this Article 2, then Genesis OLP shall redeem the APIs issued in
exchange for the portion of such cash not required to be so contributed as
promptly as practicable prior to any distributions of Available Cash with
respect to the OLP Common Units.
SECTION 2.6. Permitted Assignment by the API Contributor. The API
Contributor may transfer its obligations under this Agreement and be relieved of
its obligations hereunder at any time, provided that the transferee of such
obligations (a) unconditionally assumes all of the API Contributor's obligations
under this Agreement, (b) is an Affiliate of the General Partner, (c) is a
Person (i) who is a U.S. Person or (ii) who agrees to abide by and submit to the
jurisdiction of the United Kingdom or the United States of America with respect
to matters arising out of this Agreement and at the time of transfer is not
organized or based in any jurisdiction that is subject to any general provision
under the laws or regulations of the United States of America prohibiting U.S.
Persons from making investments in or conducting business with such
jurisdictions and (d) at the time of such transfer and after giving effect to
the assumption either (i) is an Investment Grade Entity or (ii) has arranged
for a Letter of Credit that satisfies the requirements of Section 2.7 to be
issued by a Qualified Bank for the account of Genesis OLP which Letter of Credit
secures the transferee's obligations under this Agreement to contribute cash to
Genesis OLP in exchange for APIs pursuant to Section 2.1.
SECTION 2.7. Letter of Credit. To constitute a Letter of Credit, a
letter of credit must (a) be a letter of credit providing for draws thereunder
to be made directly by a trustee ("Trustee") that is acceptable to Genesis OLP
and the API Contributor, (b) be issued by a Qualified Bank for the account of
Genesis OLP, (c) secure the API Contributor's obligations under this Agreement
to contribute cash to Genesis OLP in exchange for APIs pursuant to Section 2.1,
and (d) at all times be in an amount at least equal to the Aggregate Ceiling
less the Unrecovered Capital of any Outstanding APIs, unless more than one
Letter of Credit is issued and outstanding in which case the aggregate amount of
such Letters of Credit shall at all times be in an amount at least equal to the
Aggregate Ceiling less the Unrecovered Capital of any Outstanding APIs. Each
Letter of Credit must provide that (x) in the event that the API Contributor is
required to contribute cash to Genesis OLP in exchange for APIs pursuant to
Section 2.1 (a "Required Contribution") and such Required Contribution is not
made as required the Trustee will make a draw thereunder in an amount equal to
the amount of the Required Contribution and (y) the Trustee will make a draw
thereunder, in an amount equal to the full amount of such Letter of Credit, 30
days prior to the expiration of any such
-5-
<PAGE>
Letter of Credit, unless on such date the API Contributor has in place a
substitute Letter of Credit or Letters of Credit. In the event of any draw
under a Letter of Credit the amount of such draw will be paid directly to
Genesis OLP in cash.
ARTICLE 3
MISCELLANEOUS
-------------
SECTION 3.1. Headings. All Article or Section headings in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any of the provisions hereof.
SECTION 3.2. Benefit of Agreement. This Agreement is not a direct or
indirect guaranty of payment of all or any portion of the Minimum Quarterly
Distribution on any of the OLP Units or of any distribution on any of the MLP
Units. The covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and shall not be construed as conferring, and
are not intended to confer, any direct, indirect or third-party beneficiary
rights on any other persons, including without limitation, the OLP Unitholders
and the MLP Unitholders. This Agreement shall be binding upon Genesis OLP and
the API Contributor.
SECTION 3.3. Integration. This Agreement supersedes all previous
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This document is an integrated agreement which
contains the entire understanding of the parties. No understanding,
representation, promise or agreement, whether oral or written, is intended to be
or shall be included in or form part of this Agreement unless it is contained in
a written amendment hereto executed by the parties hereto after the date of this
Agreement.
SECTION 3.4 Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
SECTION 3.5 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law.
SECTION 3.6 Amendments and Waivers. The parties hereto, by mutual
agreement in writing, may amend, modify or supplement this Agreement; provided,
however, that if any such amendment, modification or supplement adversely
affects the holders of the OLP Common Units in any material respect then such
amendment, modification or supplement shall require the approval of holders of
more than 50% of the outstanding OLP Common Units (excluding OLP Common Units
held by the API Contributor and any of its Affiliates (other than Genesis MLP)).
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
GENESIS CRUDE OIL, L. P.
By: GENESIS ENERGY, L.L.C., general partner
By:_________________________________________
Name:
Title:
SALOMON INC
By:_________________________________________
Name:
Title:
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<PAGE>
EXHIBIT 10.3
MASTER CREDIT SUPPORT AGREEMENT, dated as of , 1996 (this
"Agreement"), entered into among GENESIS CRUDE OIL, L.P., a Delaware
limited partnership ("Genesis OLP"), SALOMON INC, a Delaware
corporation ("Salomon Inc"), and BASIS PETROLEUM, INC., a Texas
corporation ("Basis").
WHEREAS Genesis OLP has been formed to conduct the crude oil gathering and
marketing and pipeline business previously conducted by Howell Corporation
("Howell") and the crude oil gathering and marketing business previously
conducted by Basis;
WHEREAS the crude oil gathering and marketing business to be conducted by
Genesis OLP is expected to require significant transitional credit support in
connection with crude oil purchase, sale, transfer and other related
transactions entered into by Genesis OLP in the ordinary course of business; and
WHEREAS Salomon Inc and Basis desire to provide transitional credit support
to Genesis OLP on the terms and subject to the limitations specified herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
The following terms shall for purposes of this Agreement have the meanings
assigned below.
"Account" shall mean any right to payment for goods sold, exchanged or
leased or for services rendered, whether or not earned by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor with
respect to such Account.
"Affiliate" shall have the meaning assigned to such term in the Conveyance
Agreement.
"Agent" shall have the meaning assigned to such term in Section 2.4 of this
Agreement.
"Availability Period" shall mean (a) with respect to the Working Capital
Facility Commitment, the period from and including the Closing Date to but
excluding the earlier of (i) the Working Capital Facility Maturity Date and (ii)
the date of termination of the Working Capital Facility Commitment pursuant to
Section 3.2(d), Section 3.3 or Article VII and (b) with respect to the Guaranty
Facility Commitment, the period from and including the Closing Date to but
excluding the earlier of (i) the Guaranty Facility Maturity Date and (ii) the
date of termination of the Guaranty Facility Commitment pursuant to Section
2.1(b) or Article VII.
"Bankruptcy Code" shall mean Title 11 of the United States Code.
<PAGE>
2
"Borrowing Base" shall mean an amount equal to the sum, without
duplication, of (a) 90% of Pre-Approved Eligible Receivables, (b) 85% of
Eligible Receivables other than Pre-Approved Eligible Receivables and (c) 80% of
the crude oil inventories of Genesis OLP calculated on a mark-to-market basis on
the relevant date and in accordance with industry practice, which inventories
shall be taken into account if and only to the extent that the mark-to-market
value of such inventories is in excess of $5,000,000; provided that at no time
shall the amount resulting from clause (c) above with respect to crude oil
inventories exceed 20% of the total Borrowing Base. The Borrowing Base at any
time in effect shall be determined by reference to the Borrowing Base
Certificate most recently delivered hereunder.
"Borrowing Base Certificate" shall have the meaning assigned to such term
in Section 4.2(j) of this Agreement.
"Borrowing Request" shall mean a request by Genesis OLP in accordance with
the terms of Section 3.1(b) and substantially in the form of Exhibit G hereto.
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks in New York City are authorized or required by law to close.
"Capitalized Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" shall mean, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, any limited or general partnership interest and
any limited liability company membership interest.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean all the "Collateral" as defined in the Security
Agreement.
"Collateral Agent" shall mean Salomon Inc, in its capacity as Collateral
Agent for the Secured Parties under the Security Agreement.
"Commitments" shall mean the Guaranty Facility Commitment and the Working
Capital Facility Commitment.
"Compromise of Claims Agreement" shall mean an agreement evidenced in
writing whereby Genesis OLP and another Person have agreed to compromise their
claims and cancel in all respects without further liability specified contracts
to purchase and sell quantities of crude oil and both parties have agreed to
enter into a new contract to purchase and sell the net quantity of crude oil
related to such purchase and sale contracts and such agreement is in compliance
with the terms of Section 6.2 hereof.
<PAGE>
3
"Consolidated Current Assets" shall mean the current assets of Genesis OLP
and the Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean the current liabilities of
Genesis OLP and the Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the Consolidated Net
Income for such period, plus, to the extent deducted in computing Consolidated
Net Income, the sum (without duplication) of (a) income tax expense, (b)
interest expense, (c) depreciation and amortization expense, (d) Guaranty fees
and Letter of Credit fees payable hereunder and (e) any extraordinary losses,
minus, to the extent added in computing such Consolidated Net Income, (i) any
interest income and (ii) any extraordinary gains, all as determined on a
consolidated basis with respect to Genesis OLP and the Subsidiaries in
accordance with GAAP.
"Consolidated Fixed Charges" shall mean, for any period, the sum (without
duplication) of (i) Maintenance Capital Expenditures during such period, (ii)
interest expense for such period, (iii) Guaranty fees and Letter of Credit fees
payable hereunder for such period and (iv) the aggregate amount of payments of
principal on Indebtedness (including, without limitation, Capitalized Lease
Obligations to the extent deducted in calculating Consolidated EBITDA for such
period) of Genesis OLP and the Subsidiaries scheduled to be made during such
period.
"Consolidated Net Income" shall mean, for any period, the net income or
loss of Genesis OLP and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any Person in which any other Person (other than
Genesis OLP or any of the Subsidiaries or any director holding qualifying shares
in compliance with applicable law) has an interest, except to the extent of the
amount of dividends or other distributions actually paid to Genesis OLP or any
of the Subsidiaries (subject to the restriction contained in clause (d)) by such
Person during such period, (b) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or consolidated with
Genesis OLP or any of the Subsidiaries or the date that Person's assets are
acquired by Genesis OLP or any of the Subsidiaries, (c) the income of any
Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Subsidiary, directly or indirectly, to Genesis OLP, except to the extent of the
amount of dividends or other distributions actually paid to Genesis OLP or any
of the Subsidiaries as a dividend or other distribution (subject, in the case of
a dividend or other distribution paid to another Subsidiary, to the limitations
contained in this clause), (d) any after-tax gains or losses attributable to
sales of assets out of the ordinary course of business and (e) to the extent not
included in clauses (a) through (d) above, any non-cash extraordinary gains or
non-cash extraordinary losses.
"Consolidated Net Worth" shall mean the total partners' capital of Genesis
OLP determined on a consolidated basis in accordance with GAAP after appropriate
deduction for any less-than-wholly owned interests in Subsidiaries.
"Consolidated Tangible Net Worth" shall mean the total amount of assets
(less accumulated depreciation and amortization, allowances for doubtful
receivables, other applicable reserves and other properly deductible items)
which would appear on a consolidated balance sheet of Genesis OLP and the
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
after giving effect to purchase accounting and after deducting therefrom
Consolidated Current Liabilities and, to the extent
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4
otherwise included, the amounts of (i) minority interests in the Subsidiaries
held by Persons other than Genesis OLP or a Subsidiary; (ii) excess of cost over
fair value of assets of businesses acquired, as determined in good faith by the
General Partner; (iii) any revaluation or other write-up in book value of assets
subsequent to the Closing Date as a result of a change in the method of
valuation in accordance with GAAP consistently applied; (iv) unamortized debt
discount and expenses and other unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, licenses, organization or
developmental expenses and other intangible items; (v) treasury stock; and (vi)
cash set apart and held in a sinking or other analogous fund established for the
purpose of redemption or other retirement of Capital Stock to the extent such
obligation is not reflected in Consolidated Current Liabilities.
"Consolidated Total Liabilities" shall mean the total liabilities
(including, without limitation, all Indebtedness) of Genesis OLP and the
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" shall mean the Consolidated Current Assets
less the Consolidated Current Liabilities.
"Contingent Obligation" shall mean any obligation of a Person guaranteeing
or having the effect of guaranteeing any Indebtedness, leases, distributions,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purpose of payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the holder of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by Genesis OLP in good faith.
"Contract Cancelation Agreement" shall mean an agreement evidenced in
writing whereby Genesis OLP and another Person have agreed to cancel in all
respects and without further liability specified contracts to purchase and sell
equal quantities of crude oil resulting in no deliveries of crude oil and both
parties have agreed to pay cancelation fees as set forth in such agreement and
such agreement is in compliance with the terms of Section 6.2 hereof.
"Conveyance Agreement" shall mean that certain Purchase & Sale and
Contribution & Conveyance Agreement dated _______, 1996 by and between Genesis
MLP, Genesis OLP, Basis, Howell, certain subsidiaries of Howell and Genesis LLC.
"Credit Event" shall have the meaning assigned to such term in Section 4.1.
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5
"Crude Oil Contracts" shall mean contracts entered into by Genesis OLP with
third parties for the sale, purchase, exchange, marketing or transportation of
crude oil in form and substance customary in Genesis OLP's crude oil gathering,
marketing and transportation business and in compliance with Section 6.2 hereof.
"Default" shall mean any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"Disbursement" shall mean a Guaranty Disbursement or an L/C Disbursement.
"Disclosed Matters" shall mean the actions, suits and proceedings and the
environmental matters disclosed in Schedule 5.6.
"Domestic Subsidiary" shall mean each Subsidiary that is organized under
the laws of the United States or any state thereof.
"Eligible Receivable" shall mean, on any date, all Accounts of Genesis OLP
and the Subsidiaries on such date that (a) have been invoiced and represent the
bona fide sale and delivery or rendering of goods or services, in each case in
the ordinary course of business of such Person in connection with its trade
operations, and (b) are not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (i) through (ix) below or otherwise
deemed by the Collateral Agent in good faith to be ineligible for inclusion in
the calculation of the Borrowing Base as described below. Without limiting the
foregoing, to qualify as an Eligible Receivable, an Account shall indicate
Genesis OLP or any Subsidiary as sole payee and as sole remittance party. In
determining the amount to be so included, the face amount of Accounts shall be
reduced, without duplication, by (x) the amount of all accrued and actual
returns, discounts, claims, credits or credits pending, charges, price
adjustments, freight or finance charges or other allowances (including any
amount that Genesis OLP or any Subsidiary may be obligated to rebate to an
Account pursuant to the terms of any agreement or understanding (written or
oral)), (y) the aggregate amount of all reserves, limits and deductions provided
for in this definition and elsewhere in this Agreement and (z) the aggregate
amount of all cash received in respect of Accounts but not yet applied by
Genesis OLP or a Subsidiary to reduce the amount of the Accounts and modified to
take into account the effects of Compromise of Claims Agreements and Contract
Cancelation Agreements. Standards of eligibility may be fixed from time to time
solely by the Collateral Agent in the exercise of its reasonable judgment, with
any changes in such standards to be effective 10 days after delivery of notice
thereof to Genesis OLP. Unless otherwise approved from time to time in writing
by the Collateral Agent, no Account shall be an Eligible Receivable:
(i) if Genesis OLP or a Subsidiary does not have sole lawful and absolute
title to such Account (other than as pledged hereunder); or
(ii) if it arises out of a sale made by Genesis OLP or a Subsidiary to an
employee, officer, agent, director, stockholder, or Affiliate of Genesis
OLP (including Genesis MLP, but excluding Basis, Salomon Inc, Phibro Inc.
and Howell); or
(iii) if (A) it is unpaid more than 3 Business Days from the due date or
(B) it has been written off the books of Genesis OLP or a Subsidiary or has
been otherwise designated on such books as uncollectible; or
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6
(iv) if more than 50% in face amount of all Accounts of the same Account
Debtor are ineligible pursuant to clause (iii) above; or
(v) if the Account Debtor (A) is a creditor of Genesis OLP or a Subsidiary
other than as a creditor in the capacity of a party to a Crude Oil
Contract, Contract Cancelation Agreement or a Compromise of Claims
Agreement and other than Basis, Salomon Inc, Phibro Inc. or Howell, (B) has
or has asserted a right of setoff against Genesis OLP or a Subsidiary other
than in the ordinary course and in accordance with the terms of a Crude Oil
Contract, Compromise of Claims Agreement or Contract Cancelation Agreement
or (C) has disputed its liability (whether by chargeback or otherwise) or
made any claim with respect to the Account or any other Account of Genesis
OLP or a Subsidiary which has not been resolved, in each case, without
duplication, to the extent of the amount owed by Genesis OLP or a
Subsidiary to the Account Debtor, the amount of such actual or asserted
right of setoff, or the amount of such dispute or claim, as the case may
be; or
(vi) if the Account Debtor is insolvent or the subject of any bankruptcy
case or insolvency proceeding of any kind; or
(vii) if the Account is not payable in dollars or the Account Debtor is
either not incorporated under the laws of the United States of America or
any State thereof or Canada or is located outside or has its principal
place of business or substantially all of its assets outside the
continental United States or Canada, except to the extent the Account is
supported by an irrevocable letter of credit reasonably satisfactory to the
Collateral Agent (as to form, substance and issuer) and assigned to and
directly drawable by the Collateral Agent; or
(viii) if the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor, or the Account otherwise
does not represent a completed sale; or
(ix) if (A) either the perfection, enforceability or validity of the
Collateral Agent's security interest or the Secured Parties' right or
ability to receive direct payments as to such Account is governed by any
Federal or state statutory requirement other than the Uniform Commercial
Code, (B) it is not subject to a valid and perfected first priority Lien in
favor of the Collateral Agent for the benefit of the Secured Parties,
subject to no other Liens other than the Liens (if any) permitted by the
Loan Documents, or (C) it does not otherwise conform in all material
respects to the representations and warranties contained in the Loan
Documents.
In determining the aggregate amount of Accounts from the same Account Debtor
that are unpaid more than 3 Business Days from the due date pursuant to clause
(iii) above, there shall be excluded the amount of any net credit balances
relating to Accounts with invoice or payment dates more than 3 Business Days
from the due date.
"Environmental Laws" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
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7
"Environmental Liability" shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Genesis OLP or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with Genesis OLP, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Genesis OLP or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by Genesis OLP or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
Genesis OLP or any ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by Genesis OLP or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from Genesis OLP or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" shall have the meaning assigned to such term in Article
VII.
"First Purchase Lien" shall mean any Lien on crude oil under Section 9.319
of the Texas Business and Commerce Code securing the obligation of the first
purchaser to purchase and pay for such oil and arising in the ordinary course of
business.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"Forward Exposure" shall mean, for any date, the aggregate hypothetical
liability of Genesis OLP to third parties on such date with respect to executory
payment and performance obligations pursuant to Guaranteed Contracts which are
not Scheduled Obligations, assuming all such Guaranteed Contracts were
terminated on such date as a result of the nonpayment or nonperformance of
Genesis OLP, calculated in accordance with such Guaranteed Contracts if such
contracts specify a measure of such liability upon termination, in the form of
liquidated damages or otherwise, or if no such measure is specified, then in
accordance with industry standards as determined by the Agent, in each case
using the closing prices for
<PAGE>
8
the relevant commodities on the date Forward Exposure is calculated as published
in Platt's Crude Oil Marketwire.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"General Partner" shall mean the operating general partner of Genesis OLP.
"Genesis MLP" shall mean Genesis Energy, L.P., a Delaware limited
partnership.
"Genesis LLC" shall mean Genesis Energy, L.L.C., a Delaware limited
liability company.
"Genesis OLP Partnership Agreement" shall mean the Agreement of Limited
Partnership of Genesis OLP Crude Oil, L.P., as the same may be amended and
restated.
"Governmental Authority" shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guaranteed Contracts" shall mean Crude Oil Contracts with respect to which
the payment and/or performance obligations of Genesis OLP are guaranteed by
Salomon Inc pursuant to a Guaranty.
"Guaranty" shall mean a guaranty issued by Salomon Inc pursuant to Section
2.1 in form and substance acceptable to Salomon Inc.
"Guaranty Disbursement" shall mean any payment or disbursement made by
Salomon Inc pursuant to a Guaranty.
"Guaranty Exposure" shall mean, for any date, (a) the sum of (i) Priced
Exposure, (ii) Unpriced Exposure and (iii) Forward Exposure, in each case for
such date, plus (b) the aggregate principal amount of all Guaranty Disbursements
that have not yet been reimbursed at such time.
"Guaranty Facility Commitment" shall mean the commitment of Salomon Inc to
issue Guaranties pursuant to Section 2.1.
"Guaranty Facility Maturity Date" shall mean December 31, 1999.
"Hazardous Materials" shall mean all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" shall mean any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement,
forward agreement, futures contract or other interest rate, currency exchange
rate or commodity price hedging arrangement or like agreement.
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9
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
(other than any First Purchase Lien) on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, to the
extent of the book value of the property subject to such Lien, (g) all
Contingent Obligations of such Person, (h) all Capitalized Lease Obligations of
such Person, (i) all net obligations of such Person in respect of Hedging
Agreements, (j) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (k)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. For purposes of clause (g) above, the amount of the net obligation in
respect of any Hedging Agreement shall be determined after giving effect to any
other Hedging Agreement entered into for the purpose of offsetting the liability
with respect to such Hedging Agreement.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E hereto, among the Subsidiary Guarantors and the Collateral Agent.
"Investment Grade Entity" shall mean (a) with respect to any U.S. Entity,
an entity having long-term unsecured debt obligations which are rated at least
BBB- by Standard & Poor's Ratings Service, or any successor thereto ("S&P"), or
Baa3 by Moody's Investor Service or any successor thereto ("Moody's"), or a
comparable rating from any other rating agency designated by the Securities and
Exchange Commission as a nationally recognized statistical rating organization
(an "NRSRO") or (b) in the case of an entity which does not have long-term
unsecured debt obligations, or whose long-term unsecured debt obligations are
not rated by S&P, Moody's or any other NRSRO, or which is not a U.S. Entity, an
entity having, in the reasonable judgment of Salomon Inc, credit quality
comparable to that of an entity described in clause (a).
"L/C Disbursement" shall mean any payment or reimbursement made by Basis to
the issuer of any Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
principal amount of all L/C Disbursements that have not yet been reimbursed at
such time.
"Letter of Credit" shall mean any letter of credit issued for the benefit
of Genesis OLP pursuant to Section 3.2(b).
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10
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan" shall have the meaning assigned to such term in Section 3.1(a).
"Loan Parties" shall mean Genesis OLP and the Subsidiary Guarantors.
"Loan Documents" shall mean this Agreement, the Guaranties, the Letters of
Credit, the Notes, the Security Documents, the Subsidiary Guarantee Agreements,
the Pledge Agreements and the Indemnity, Subrogation and Contribution
Agreements.
"Maintenance Capital Expenditures" shall mean, for any period, capital
expenditures made during such period by Genesis OLP and the Subsidiaries to
maintain operating capacity, including to maintain or effect environmental
compliance, and to maintain the quality and cost-competitiveness of their
respective assets and operations, such amount to be offset by the proceeds of
the sales of any capital assets; provided that such proceeds are used to make
Maintenance Capital Expenditures for capital assets to be employed in a capacity
similar to those sold.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
Genesis OLP and the Subsidiaries taken as a whole, (b) the ability of Genesis
OLP or any other Loan Party to perform any of its obligations under this
Agreement or any other Loan Document or (c) the rights of or benefits available
to the Agent, the Collateral Agent, Salomon Inc or Basis under this Agreement
and the other Loan Documents.
"Maximum Credit Support Amount" shall mean (w) $550,000,000 for the period
beginning on the date hereof and ending on June 30, 1997; (x) $500,000,000 for
the period beginning on July 1, 1997 and ending on December 31, 1997; (y)
$400,000,000 for the period beginning on January 1, 1998 and ending on December
31, 1998; and (z) $300,000,000 for the period beginning on January 1, 1999 and
ending on December 31, 1999; provided, however, that the Maximum Credit Support
Amount at any time shall be reduced, on a dollar-for-dollar basis, by the
Working Capital Exposure at such time and by the amount of any obligation to a
third party to the extent that such third party has a security interest in any
Collateral (other than a First Purchase Lien) that is prior to the security
interest of the Collateral Agent for the benefit of the Secured Parties under
the Security Documents.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Obligations" shall mean (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on,
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by Genesis OLP under this Agreement in respect of any Guaranty or any
Letter of Credit, when and as due, including payments in respect of
reimbursement of Disbursements, interest thereon and obligations to provide cash
collateral and (iii) all
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11
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
this Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to this Agreement and the other Loan Documents
and (c) all obligations of Genesis OLP, monetary or otherwise, under each
Hedging Agreement entered into with Salomon Inc or Basis (or any Affiliate of
Salomon Inc or Basis).
"Officer's Certificate" shall mean a certificate signed by the President or
Chief Financial Officer of the General Partner in a form reasonably acceptable
to Basis.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" shall mean a Perfection Certificate substantially
in the form of Exhibit H hereto.
"Person" shall mean any individual, partnership, limited liability company,
joint venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which Genesis OLP or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in the
form of Exhibit D hereto, among Genesis OLP, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Pre-Approved Eligible Receivable" shall mean an Eligible Receivable, the
obligor of which has been, in accordance with the Agent's credit policies in
effect at such time, listed on a schedule to be prepared and delivered by the
Agent to Genesis OLP from time to time for such purpose.
"Priced Exposure" shall mean, for any date, the aggregate actual liability
of Genesis OLP to third parties on such date with respect to Scheduled
Obligations, the actual liability for the nonpayment or nonperformance of which
has been determined, in accordance with the Guaranteed Contracts to which such
Scheduled Obligations relate, either by reference to certain fixed prices or by
reference to certain average or closing commodity prices for dates on or prior
to the date Priced Exposure is calculated.
"Prime Rate" shall mean the U.S. annual interest rate published as the
"Prime Rate" in the Wall Street Journal under the column headed "Money Rates" or
such other title as may succeed such heading for the applicable period in effect
from time to time.
"Prospectus" shall mean the Prospectus dated [ ], 1996, relating to
the initial public offering of the common units of Genesis MLP.
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12
"Receivable and Payable Report" shall mean a report itemizing in reasonable
detail the accounts receivable and payable of Genesis OLP for the current month,
in form and substance reasonably acceptable to Basis.
"Restricted Payment" shall mean any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of or interest
in any class of Capital Stock of Genesis OLP or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any such shares of or interest in
Capital Stock of Genesis OLP or any option, warrant or other right to acquire
any such shares of or interest in Capital Stock of Genesis OLP.
"Scheduled Obligations" shall mean, on any date, all executory payment or
performance obligations of Genesis OLP to third parties pursuant to Guaranteed
Contracts, after taking into account the effects of any Compromise of Claims
Agreements or Contract Cancelation Agreements, the time and manner for the
payment or performance of which obligations have been determined as of any
pipeline scheduling day on or prior to such date.
"Secured Parties" shall have the meaning assigned to such term in the
Security Documents.
"Security Agreement" shall mean the Security Agreement, substantially in
the form of Exhibit B hereto, among Genesis OLP, the Collateral Agent and the
Secured Parties.
"Security Documents" shall mean the Security Agreement and each of the
security agreements and other instruments and documents executed and delivered
pursuant thereto or pursuant to Section 6.20 hereof.
"Subsidiary" shall mean (i) any corporation more than 50% of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect
a majority of the directors of such corporation (irrespective of whether or not
at the time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time owned by Genesis OLP and/or one or more Subsidiaries of Genesis OLP and
(ii) any limited liability company, partnership, association, joint venture or
other entity in which Genesis OLP and/or one or more Subsidiaries of Genesis OLP
has more than a 50% equity interest at the time.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit C hereto, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary that becomes a party to a
Subsidiary Guarantee Agreement pursuant to Section 6.20.
"Substitute Facility" shall mean one or more bank credit agreements or
other third party credit facilities entered into by Genesis OLP or Genesis MLP
in substitution or replacement of this Agreement (and which would accordingly
result in termination of this Agreement), which agreement or facility or
combination thereof is, in the reasonable judgment of the General Partner, fair
and reasonable to Genesis OLP, and adequate for Genesis OLP to conduct its
business substantially in the manner conducted under this Agreement.
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"Taxes" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Transactions" shall have the meaning assigned to such term in Section 5.2.
"Unpriced Exposure" shall mean, for any date, the aggregate hypothetical
liability of Genesis OLP to third parties on such date with respect to Scheduled
Obligations, the actual liability for the nonpayment or nonperformance of which
would be determined, in accordance with the Guaranteed Contracts to which such
Scheduled Obligations relate, by reference to certain average or closing
commodity prices for dates after the date Unpriced Exposure is calculated,
calculated as if such prices were the relevant average or closing commodity
prices for the date Unpriced Exposure is calculated as published in Platt's
Crude Oil Marketwire.
"U.S. Entity" shall mean any entity that is organized under the laws of the
United States or any state thereof.
"Wholly Owned Subsidiary" of any Person shall mean a subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital Facility Commitment" shall mean the commitment of Basis to
make Loans pursuant to Section 3.1(a) and to request the issuance of Letters of
Credit pursuant to Section 3.2(a).
"Working Capital Exposure" shall mean the aggregate principal amount at
such time of all outstanding Loans, plus the L/C Exposure at such time.
"Working Capital Facility Maturity Date" shall mean May 31, 1997.
SECTION 1.2. Terms Generally.
The definitions in Section 1.1 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Loan Document shall mean such document as
amended, restated, supplemented or otherwise modified from time to time and (b)
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided, however, that for purposes
of determining compliance with the covenants contained in Article VI, all
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14
accounting terms herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP as in effect on the date of this
Agreement and applied on a basis consistent with the application used in the
financial statements referred to in Section 6.5(d) and (e).
ARTICLE II
GUARANTY FACILITY
SECTION 2.1. Guaranties.
(a) Subject to the terms and conditions set forth herein, upon the request
of Genesis OLP, Salomon Inc shall, during the Availability Period (i) issue
Guaranties to third parties from time to time with respect to Crude Oil
Contracts on behalf of Genesis OLP and (ii) issue Guaranties as soon as
reasonably practicable in substitution for guaranties outstanding on the date
hereof issued by Basis, Howell or their Affiliates in connection with Crude Oil
Contracts entered into prior to the date hereof, in each case on terms
reasonably acceptable to Salomon Inc and generally consistent with its prior
practices with respect to Basis.
(b) The obligations of Salomon Inc pursuant to Section 2.1(a) shall be
subject to the following limitations:
(i) If (A) Genesis LLC is removed as General Partner of Genesis OLP
for any reason without the prior written consent of Salomon Inc, (B)
Salomon Inc assigns its obligations hereunder pursuant to Section 8.7
hereof, or (C) Salomon Inc's obligations hereunder are terminated pursuant
to Section 8.6 hereof, then Salomon Inc shall have no further obligation
hereunder to issue, substitute, keep in effect or available or amend any
Guaranty hereunder and shall have the right to cancel in all respects all
outstanding Guaranties with respect to any transaction entered into from
and after the date of such removal. In addition, Genesis OLP shall promptly
obtain full and complete releases of Salomon Inc from all outstanding
Guaranties and all related liabilities and obligations;
(ii) Salomon Inc shall have no obligation hereunder to issue,
substitute or amend any Guaranty hereunder if, at such time, the Guaranty
Exposure at such time exceeds the Maximum Credit Support Amount or if,
immediately after the issuance, substitution or amendment of such Guaranty,
the Guaranty Exposure would exceed the Maximum Credit Support Amount;
(iii) Salomon Inc shall have no obligation hereunder to issue or keep
in effect or available any Guaranty hereunder with a term extending beyond
December 31, 1999;
(iv) no Scheduled Obligation shall require payment or performance by
Genesis OLP on a date later than December 31, 1999, unless on such date the
Guaranty relating thereto is released and canceled in all respects and
Salomon has no further liabilities or obligations in respect of such
Scheduled Obligation from and after such date; and
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(v) Salomon Inc shall have no obligation hereunder to provide or
extend any Guaranty beyond the amounts or after the periods specified
herein (or such earlier date as Guaranties have been terminated pursuant to
Article VII).
(c) Genesis OLP shall not permit the Guaranty Exposure at any time to
exceed the Maximum Credit Support Amount at such time. Upon termination of the
Guaranty Facility Commitment pursuant to this Section 2.1, if any Guaranties
remain outstanding, Genesis OLP shall immediately deposit in an account with the
Collateral Agent an amount in cash equal to the Guaranty Exposure at such time
as collateral with respect to the outstanding Guaranties.
(d) Notwithstanding anything to the contrary in this Agreement, Genesis
OLP will not enter into any Guaranteed Contract or schedule any Scheduled
Obligation at any time if, after giving effect to such action, the Guaranty
Exposure would exceed the Maximum Credit Support Amount at such time.
SECTION 2.2. Notice of Issuance, Amendment, Renewal or Extension.
To request the issuance of a Guaranty (or the amendment, renewal or
extension of an outstanding Guaranty), Genesis OLP shall hand deliver or
telecopy to Salomon Inc or its Agent (reasonably in advance of the requested
date of issuance, amendment, renewal or extension) a notice requesting the
issuance of a Guaranty, or identifying the Guaranty to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on
which such Guaranty is to expire (which shall comply with Section 2.1(b)), the
amount of such Guaranty, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare, amend, renew or extend
such Guaranty. A Guaranty shall be issued, amended, renewed or extended at any
time only if (and, upon issuance, amendment, renewal or extension of each
Guaranty, Genesis OLP shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension, the Guaranty
Exposure shall not exceed the Maximum Credit Support Amount at such time.
SECTION 2.3. Guaranty Fees.
(a) Each month, commencing with the first full calendar month following
the Closing Date, as soon as practicable after the day of such month scheduled
for final discharge by Genesis OLP of all Scheduled Obligations relating to
deliveries of crude oil in the immediately preceding month (the "Payment Day"),
the Agent shall calculate (i) the Priced Exposure relating to such Scheduled
Obligations for each day from and including the later of (A) the Closing Date
and (B) the day in the calendar month immediately preceding such month such
obligations first became Scheduled Obligations (the "Scheduling Day") through
and including the Payment Day, (ii) the Forward Exposure for each day in the
immediately preceding month, and (iii) the Guaranty Exposure for each day in the
immediately preceding month. The Agent may determine the methodology for making
such calculations and may make any assumptions it deems appropriate, including
assuming that barrels of crude oil are delivered ratably over the immediately
preceding month.
(b) The Agent shall calculate and invoice the monthly guaranty fee payable
by Genesis OLP in accordance with the following formula:
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(i) the quotient of (A) the product of (1) the sum of each of the
daily amounts in Sections 2.3(a)(i) and 2.3(a)(ii) and (2) the applicable
rate in Schedule I hereto and (B) the number of days in the calendar year
including the immediately preceding calendar month; plus
(ii) to the extent that any of the daily amounts contained in Section
2.3(a)(iii) exceeded the Maximum Credit Support Amount for such day, the
quotient of (A) 1% of the sum of such excesses and (B) the number of days
in the calendar year including the immediately preceding calendar month.
Such guaranty fee so calculated and invoiced by the Agent shall be due and
payable by Genesis OLP on the last Business Day of the month of calculation.
SECTION 2.4. Agent.
Salomon Inc hereby appoints Basis to serve as its agent (the "Agent") with
respect to the management and administration of Guaranties to be provided by
Salomon Inc pursuant to this Article II (including in respect of monitoring,
determining issuance of Guaranties, calculation of certain amounts and
collection of fees), subject to Salomon Inc's notification to the parties hereto
of the termination or the substitution in its sole discretion of such Agent.
Genesis OLP will provide Basis, as Agent, and Salomon Inc, at its request, such
information as Basis shall request to enable Basis to maintain in its internal
records the Guaranty Exposure and such information necessary to manage the
Guaranties.
SECTION 2.5. Repayment Obligation.
Genesis OLP hereby agrees to reimburse Salomon Inc by making payment to
Salomon Inc in immediately available funds for any Guaranty Disbursement made by
Salomon Inc or its Agent under any Guaranty immediately upon delivery of notice
by Salomon Inc or its Agent of such Guaranty Disbursement, together with
interest on the amount so paid or disbursed at the Prime Rate in effect for the
period during which any such Guaranty Disbursement remains outstanding. If
Genesis OLP fails to make such reimbursement by the second Business Day after
the date of notice of such Guaranty Disbursement, interest shall accrue on the
outstanding amount at the Prime Rate plus an additional 2.00% per annum until
the date of payment, all such interest to be payable on demand.
ARTICLE III
WORKING CAPITAL FACILITY
SECTION 3.1. Loans.
(a) Subject to the terms and conditions set forth herein and to
availability under Basis's credit facilities as the same may exist from time to
time, Basis will use its best efforts to make working capital loans (each, a
"Loan") to Genesis OLP, at any time and from time to time during the
Availability Period, in an aggregate principal amount at any time outstanding
that will not result in (i) the Working Capital Exposure exceeding the lesser of
(A) $50,000,000 and (B) the Borrowing Base in effect at such time or (ii) the
aggregate principal amount of Loans outstanding exceeding $35,000,000. Within
the limits set forth in the preceding sentence, Genesis OLP may borrow, pay or
prepay and reborrow Loans on or after
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the Closing Date and prior to the Working Capital Facility Maturity Date,
subject to the terms, conditions and limitations set forth herein. Each Loan
shall have a maturity not to exceed 30 days and be in an aggregate principal
amount that is (x) an integral multiple of $250,000 or (y) equal to the
remaining available balance of the Working Capital Facility Commitment.
Notwithstanding any other provision of this Agreement, Genesis OLP shall not be
entitled to request any new Loan after 10:00 a.m., New York City time, on the
Business Day prior to the Working Capital Facility Maturity Date. Loans shall be
made solely for the purpose of supporting the working capital requirements of
Genesis OLP and the Subsidiaries.
(b) In order to request a Loan, Genesis OLP shall notify Basis
telephonically not later than 10:00 a.m., New York City time, and hand deliver
or telecopy to Basis a duly completed request (a "Borrowing Request") not later
than 12:00 p.m., New York City time, on the proposed date of such Loan (which
shall be a Business Day). Each Borrowing Request shall be irrevocable, signed
by or on behalf of Genesis OLP and shall specify the following information: (i)
the proposed date of such Loan (which shall be a Business Day); (ii) the number
and location of the account to which funds are to be disbursed; (iii) the amount
of such Loan; and (iv) the maturity of such Loan; provided, however, that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Loan shall comply with the requirements set forth in Section 3.1(a).
SECTION 3.2. Letters of Credit.
(a) Issuance of Letters of Credit. Subject to the terms and conditions
set forth herein, upon the request of Genesis OLP, at any time and from time to
time during the Availability Period, Basis will request the issuance of standby
and documentary letters of credit on behalf of Genesis OLP for the benefit of
third parties on the terms and subject to availability under Basis's credit
facilities as the same may exist from time to time. Such Letters of Credit
shall be issued solely for the purpose of supporting Crude Oil Contracts and
other general corporate purposes of Genesis OLP and the Subsidiaries.
(b) Notice of Issuance, Amendment, Renewal or Extension. To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), Genesis OLP shall hand deliver or telecopy to
Basis (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with Section 3.2(c)), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. A Letter of Credit shall be issued, amended, renewed or extended
only if (and, upon issuance, amendment, renewal or extension of each Letter of
Credit, Genesis OLP shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension, the Working Capital
Exposure shall not exceed the lesser of (i) $50,000,000 and (ii) the Borrowing
Base in effect at such time.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) up to 120 days after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, up to 120 days after such renewal or extension) and (ii) the date that
is five Business Days prior to the Working Capital Facility Maturity Date.
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(d) Reimbursement. Genesis OLP hereby agrees to reimburse Basis, by
making payment to Basis in immediately available funds, for any L/C Disbursement
made by Basis under any Letter of Credit issued at its direction or for any
other financial liability or obligation incurred by Basis in connection with the
Working Capital Facility Commitment immediately after, and in any event on the
date of, notice from Basis of such L/C Disbursement, with interest on the amount
so paid or disbursed at the rate per annum equal to the Prime Rate plus an
additional 2% per annum if not reimbursed by the second Business Day after the
date of notice of such L/C Disbursement, such interest to be payable on demand.
In addition, in the event of the failure of Genesis OLP to reimburse Basis in
accordance with this Section 3.2(d) for any such L/C Disbursement by Basis in
respect of any standby Letter of Credit, Basis shall have no further obligation
to Genesis OLP to request the issuance of Letters of Credit or make Loans, any
outstanding Loans shall be repaid immediately and Genesis OLP shall immediately
deposit in an account with the Collateral Agent an amount in cash equal to face
amount of any outstanding Letters of Credit as collateral with respect to such
Letters of Credit.
SECTION 3.3. Term.
Subject to the limitations set forth in Sections 3.1 and 3.2, the Working
Capital Facility Commitment shall expire on the Working Capital Maturity Date
(or such earlier date on which the Loans shall become due and payable hereunder
pursuant to Article VII or otherwise) and all amounts owing by Genesis OLP
thereunder shall be paid in full at such time. If Genesis LLC is removed as
General Partner of Genesis OLP for any reason without the prior written consent
of Salomon Inc or Basis, the Working Capital Facility Commitment shall terminate
and Basis shall have no further obligation to Genesis OLP to cause or facilitate
the issuance of Letters of Credit or make Loans, any outstanding Loans shall be
repaid immediately and Genesis OLP shall immediately remit cash to Basis equal
to the amount of any outstanding Letters of Credit as collateral with respect to
such outstanding Letters of Credit.
SECTION 3.4. Pricing Terms.
Genesis OLP shall pay the amounts set forth on Schedule II in connection
with the Working Capital Facility and amounts outstanding thereunder. Genesis
OLP shall pay all accrued and unpaid interest on each Loan at the maturity of
such Loan and all accrued and unpaid Letter of Credit fees on demand; provided
that (i) in the event of any prepayment of any Loan, accrued interest on the
principal amount prepaid shall be payable on the date of such prepayment and
(ii) all accrued interest and Letter of Credit fees shall be payable upon
termination of the Working Capital Facility Commitment.
SECTION 3.5. Notes.
Each Loan shall bear interest from and including the date such Loan is made
on the outstanding principal balance thereof as provided in Section 3.4.
Genesis OLP's obligation to pay the principal of, interest on and any and all
other fees or payments associated with Loans shall be evidenced by a promissory
note duly executed and delivered by Genesis OLP in the form of Exhibit A hereto.
Basis will note on its internal records the amount of each such Loan made by it
and each payment with respect thereto, and will note on the reverse side of such
promissory note the outstanding principal amount of the loans evidenced thereby
and the interest payments made thereon; provided that failure to make any such
notation shall not affect the obligations of Genesis OLP thereunder.
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SECTION 3.6. Default Interest.
If Genesis OLP shall default in the payment of the principal of or interest
on any Loan or any other amount becoming due hereunder, by acceleration or
otherwise, or under any other Loan Document, Genesis OLP shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount to but excluding the date of actual payment (after as well as before
judgment) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be) equal to the
sum of the Prime Rate plus 2.00%.
SECTION 3.8. Payments Generally.
(a) Genesis OLP shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of
Disbursements), prior to 12:00 noon, New York City time, on the date when due,
in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the Agent at
its offices at One Allen Center, 500 Dallas, Suite 3200, Houston, Texas 77002,
or by wire transfer to such account as may be designated by the Agent from time
to time. The Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension.
(b) If at any time insufficient funds are received by and available to the
Agent to pay fully all amounts of principal, unreimbursed Disbursements,
interest and fees then due hereunder, such funds shall be applied (i) first, to
pay interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, to pay principal and unreimbursed Disbursements then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed Disbursements then due to such parties.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.1. Conditions to All Credit Events.
The obligations of Salomon Inc to issue (or amend, renew or extend)
Guaranties pursuant to Article II and of Basis to make Loans and to cause the
issuance (or amendment, renewal or extension) of Letters of Credit pursuant to
Article III (each, a "Credit Event") shall be subject to the satisfaction of the
following conditions:
(a) The Agent shall have received (i) a notice requesting such
issuance (or amendment, renewal or extension) of a Guaranty as required by
Section 2.2, (ii) a Borrowing Request for such Loan as required by Section
3.1(b) or (iii) a notice requesting such issuance (or amendment, renewal or
extension) of a Letter of Credit as required by Section 3.2(b).
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(b) The representations and warranties set forth in Article V hereof
shall be true and correct in all material respects on and as of the date of
such Credit Event with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly
relate to an earlier date.
(c) Each Loan Party shall be in material compliance with all the terms
and provisions set forth herein and in the Security Documents on its part
to be observed or performed, and at the time of and immediately after such
Credit Event, no Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
Genesis OLP on the date of such Credit Event as to the matters specified in
clauses (b) and (c) of this Section 4.1.
SECTION 4.2. Conditions to First Credit Event.
On the Closing Date:
(a) The Agent shall have received, on behalf of itself, Salomon Inc
and Basis, a favorable written opinion of Andrews & Kurth L.L.P.,
substantially to the effect set forth in Exhibit I hereto (i) dated the
Closing Date, (ii) addressed to the Agent, Salomon Inc and Basis and (iii)
covering such other matters relating to the Loan Documents as the Agent
shall reasonably request, and Genesis OLP hereby request such counsel to
deliver such opinions.
(b) The Agent shall have received such documents and certificates as
the Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party and the
General Partner, the authorization of the Transactions and any other legal
matters relating to the each Loan Party and the General Partner, this
Agreement, the other Loan Documents or the Transactions, all in form and
substance satisfactory to the Agent and its counsel.
(c) The Agent shall have received an Officer's Certificate, dated the
Closing Date, confirming compliance with the conditions precedent set forth
in paragraphs (b) and (c) of Section 4.1.
(d) The Collateral Agent shall have received a Perfection Certificate
with respect to Genesis OLP dated the Closing Date and duly executed by an
executive officer of the General Partner.
(e) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code filings (or equivalent filings) made with
respect to the Loan Parties in the states (or other jurisdictions) in which
the chief executive office of each such Person is located, any offices of
such Persons in which records have been kept relating to Accounts and the
other jurisdictions in which Uniform Commercial Code filings (or equivalent
filings) are to be made pursuant to the following paragraph, together with
copies of the financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Collateral Agent
that the Liens indicated in any such financing statement (or similar
document) would be permitted under Section 6.1 or have been released.
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(f) The Security Documents shall have been duly executed by Genesis
OLP and shall have been delivered to the Collateral Agent and shall be in
full force and effect on such date and each document (including each
Uniform Commercial Code financing statement) required by law or reasonably
requested by the Collateral Agent to be filed, registered, recorded or
pledged in order to create in favor of the Collateral Agent for the benefit
of the Secured Parties a valid, legal and perfected first-priority security
interest in and lien on the Collateral (subject to any Lien expressly
permitted by Section 6.1) described in such agreement shall have been
delivered to the Collateral Agent.
(g) The Conveyance Agreement shall have been executed and delivered by
the parties thereto and the Transactions contemplated by the Prospectus
shall have been consummated or shall be consummated simultaneously with the
initial Credit Event hereunder in accordance with applicable law.
(h) All material consents to the Transactions by Governmental
Authorities and third parties shall have been obtained to the extent
required as of the Closing Date, all applicable appeal periods and waiting
periods shall have expired and there shall be no governmental or judicial
action, actual or threatened, that has or could have a reasonable
likelihood of restraining, preventing or imposing materially burdensome
conditions on the Transactions.
(i) The Agent shall have received (i) a certificate in the form of
Exhibit F hereto (a "Borrowing Base Certificate"), setting forth on an
itemized basis, a good faith estimate of the Borrowing Base, as well as a
Receivable and Payable Report, each as of the last day of the preceding
month on a pro forma basis, giving effect to the Transactions as if they
had occurred on such date, with counterparty transactions identified on
such schedule that are subject to a Compromise of Claims Agreement or a
Contract Cancelation Agreement, such Certificate to be certified as
complete and correct on behalf of Genesis OLP by the chief financial
officer of the General Partner and (ii) such other supporting documentation
and additional reports with respect to the Borrowing Base as the Agent
shall reasonably request.
(j) A counterpart of this Agreement shall have been duly executed and
delivered by Genesis OLP.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Genesis OLP represents and warrants to the Agent, the Collateral Agent,
Salomon Inc and Basis that:
SECTION 5.1. Organization; Powers.
Each of Genesis OLP, the General Partner and the Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted (and, in the case of the General Partner, to
act as the general partner of Genesis OLP) and, except where the failure to do
so, individually or in the aggregate,
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could not reasonably be expected to result in a Material Adverse Effect, is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 5.2. Authorization; Enforceability.
The execution, delivery and performance of each of the Loan Documents by
each Loan Party, the use of proceeds of the Loans and the issuance of the
Guaranties and Letters of Credit, the creation of the security interests
contemplated by the Loan Documents and the consummation of the other
transactions contemplated by the Prospectus (collectively, the "Transactions")
are within the partnership or corporate power of each Loan Party and have been
duly authorized by all necessary partnership or corporate and, if required,
partner or stockholder action. This Agreement has been duly executed and
delivered by Genesis OLP and constitutes a legal, valid and binding obligation
of Genesis OLP, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 5.3. Governmental Approvals; No Conflicts.
The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except such as have been obtained or made and are in full force and effect, (b)
will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of Genesis OLP, the General Partner or any of the
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon Genesis OLP, the General Partner or any of the Subsidiaries or any of their
respective assets, or give rise to a right thereunder to require any payment to
be made by Genesis OLP, the General Partner or any of the Subsidiaries, and (d)
will not result in the creation or imposition of any Lien on any asset of
Genesis OLP, the General Partner or any of the Subsidiaries (other than the
Liens under the Loan Documents).
SECTION 5.4. No Material Adverse Change.
There has been no material adverse change in the business, assets,
operations, prospects or condition, financial or otherwise, of Genesis OLP and
the Subsidiaries, taken as a whole, since the Closing Date.
SECTION 5.5. Title to Properties.
(a) Each of Genesis OLP and the Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of Genesis OLP and the Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by Genesis OLP and the
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
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SECTION 5.6. Litigation and Environmental Matters.
(a) There are no actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of Genesis OLP,
threatened against or affecting Genesis OLP or any of the Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither Genesis OLP nor any of the
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any condition or event that could reasonably be expected to result
in any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 5.7. Compliance with Laws and Agreements.
Each of Genesis OLP and the Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION 5.8. Investment and Holding Company Status.
Neither Genesis OLP nor any of the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 5.9. Taxes.
Each of Genesis OLP and the Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
Genesis OLP or such Subsidiary, as applicable, has set aside on its books
adequate reserves in accordance with GAAP or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.10. ERISA.
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No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect; provided, however, that Genesis OLP shall not be deemed
to make any representation and warranty under this Section with respect to any
Plan of Basis if and for so long as Genesis OLP shall participate in such Plan
and Basis shall be a Wholly Owned Subsidiary of Salomon Inc.
SECTION 5.11. Disclosure.
Genesis OLP has disclosed to Salomon Inc and Basis all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. None of the reports, financial statements, certificates or
other information furnished by or on behalf of Genesis OLP to Salomon Inc or
Basis in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, Genesis OLP represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 5.12. Subsidiaries.
Schedule 5.12 sets forth as of the Closing Date, a list of all Subsidiaries
and the percentage ownership interest of Genesis OLP and any other Person
therein. The shares of Capital Stock or other ownership interests so indicated
on such Schedule are fully paid and non-assessable and are owned by Genesis OLP
or a Subsidiary, as applicable, directly or indirectly, free and clear of all
Liens.
SECTION 5.13. Federal Reserve Regulations.
None of Genesis OLP or any of the Subsidiaries is engaged, directly or
indirectly, in the business of extending or maintaining credit for the purpose
of buying or carrying Margin Stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System of the United States of America
(the "Board") as from time to time in effect and all official rulings and
interpretations thereunder or thereof). No part of the proceeds of any Loan or
any Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the regulations of
the Board, including Regulation G, U or X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
SECTION 5.14. Security Agreement.
The Security Agreement is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified in Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral, in
each case prior and superior in right to any other Person.
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SECTION 5.15. Solvency.
Immediately after the consummation of the Transactions and the execution
and delivery of the Loan Documents, and immediately following the making of each
Loan made on the Closing Date and after giving effect to the application of the
proceeds of such Loans, (i) the fair value of the assets of each Loan Party, at
a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability on its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
ARTICLE VI
COVENANTS
Genesis OLP covenants and agrees that on and after the date hereof and
until the commitments of Salomon Inc and Basis hereunder have terminated and all
obligations of Genesis OLP incurred hereunder are paid in and performed in full:
SECTION 6.1. Liens.
Genesis OLP will not, and will not permit any of the Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with respect to any
property or assets (real or personal, tangible or intangible) of Genesis OLP or
such Subsidiary, whether now owned or hereafter acquired; provided that the
provisions of this Section 6.1 shall not prevent the creation, incurrence,
assumption or existence of:
(i) Liens for Taxes not yet due, or Liens for Taxes being contested in
good faith and by appropriate proceedings for which adequate reserves have
been established;
(ii) Liens in respect of property or assets of Genesis OLP or any
Subsidiary imposed by law or agreement, which were incurred in the ordinary
course of business, such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business,
including Liens created by statute for the benefit of interest owners of
oil and gas production, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of Genesis OLP and the
Subsidiaries, and (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or assets subject to any such Lien;
(iii) Liens created pursuant to the Security Documents;
(iv) pledges or deposits in connection with the worker's compensation,
unemployment insurance and other social security legislation in the
ordinary course of business;
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(v) good faith deposits in connection with any tender, lease or real
estate, bid or contract, deposits to secure any duty or public or statutory
obligation, deposits to secure, or in lieu of, surety, stay or appeal
bonds, and deposits as security for the payment of any Tax or assessment or
similar charge, in each case in the ordinary course of business;
(vi) Liens on accounts maintained with commodity brokers or finance
affiliates thereof incurred in the ordinary course of business;
(vii) Liens consisting of any (A) statutory landlord's Lien under any
lease to which Genesis OLP or any Subsidiary is a party or any other Lien
on leased property reserved in any lease thereof for rent or for compliance
with the terms of such lease, (B) First Purchase Lien, (C) rights reserved
to or vested in any municipality or governmental, statutory or public
authority to control or regulate any property of Genesis OLP or any
Subsidiary or to use such property in any manner which does not materially
impair the use of such property for the purpose for which it is held by
Genesis OLP or any Subsidiary, (D) obligations or duties to any
Governmental Authority with respect to any franchise, grant, license, lease
or permit and the rights reserved or vested in any Governmental Authority
or public utility to terminate any such franchise, grant, license, lease or
permit or to condemn or expropriate any property, or (E) zoning laws,
ordinances or municipal regulations;
(viii) Liens on deposit required by any Person with whom Genesis OLP
or any Subsidiary enters into forward contracts, futures contracts, swap
agreements or other commodities contracts in the ordinary course of
business, including Liens in connection with New York Mercantile Exchange
margin obligations;
(ix) Liens existing on any property or asset prior to the acquisition
thereof by Genesis OLP or any Subsidiary; provided that (A) such Lien is
not created in contemplation of or in connection with such acquisition, (B)
such Lien does not apply to any other property or asset of Genesis OLP or
any Subsidiary and (C) such Lien does not (1) materially interfere with the
use, occupancy and operation of such property or asset, (2) materially
reduce the fair market value of such property or asset but for such Lien or
(3) result in any material increase in the cost of operating, occupying or
owning or leasing such property or asset; and
(x) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by Genesis OLP or any Subsidiary; provided that (A) such
security interests secure Indebtedness permitted by Section 6.7 hereof, (B)
such security interests are incurred, and the Indebtedness secured thereby
is created, within 90 days after such acquisition (or construction), (C)
the Indebtedness secured thereby does not exceed 85% of the lesser of the
cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) and (D) such
security interests do not apply to any other property or assets of Genesis
OLP or any Subsidiary.
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SECTION 6.2. Management Practices.
Genesis OLP shall, and shall cause the Subsidiaries to, operate at all
times in conformity with risk management policies, credit and receivable risk
exposure practices and cash management practices in effect prior to the date
hereof for the crude gathering operations of Basis; provided that Salomon Inc
may from time to time revise or alter such policies and practices in its
reasonable discretion, in which case Genesis OLP and the Subsidiaries shall from
and thereafter operate in conformity with such revised or altered policies and
practices.
SECTION 6.3. Limitation on Transactions.
Genesis OLP shall not, and shall not permit any of the Subsidiaries to,
acquire or dispose of any business, line of business or any assets, other than
in the ordinary course of business and consistent with past practice. For such
purpose, (i) transactions which could reasonably be expected to increase or
decrease consolidated revenues or net income of Genesis OLP on a pro forma basis
for its most recent 12 months of operations as if such transaction has occurred
at the beginning of such period, by more than 10% or (ii) any sale or
disposition of any business, line of business or any assets (other than
inventory or obsolete equipment sold in the ordinary course of business) having
a market value in excess of $500,000 shall, in each such case, be deemed to be
not in the ordinary course of business.
SECTION 6.4. Cash Management.
Genesis OLP shall, and shall cause each of the Subsidiaries to, invest its
cash with Salomon Inc's designee, in accordance with the cash management
practices determined by the Agent; provided that such investment shall be fully
guaranteed by Salomon Inc. In addition to any other rights and remedies which
Basis and Salomon Inc may have, if an Event of Default shall have occurred and
be continuing, each of Basis and Salomon Inc is hereby authorized to the fullest
extent permitted by law to set off and apply any amounts invested with Basis
pursuant to this Section 6.4 against any of the Obligations of the Loan Parties
under the Loan Documents, whether matured or unmatured.
SECTION 6.5. Information Covenants.
Genesis OLP will furnish to Basis:
(a) Event of Default. Prompt (but in no event later than three Business
Days after any executive officer (or, without limitation, the principal
accounting officer, treasurer or controller) of Genesis OLP obtains knowledge
thereof) written notice of:
(i) any Default or Event of Default, specifying the nature and period
of existence thereof and what action has been taken, is being taken or is
proposed to be taken with respect thereto;
(ii) the filing or commencement of, or any written threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against Genesis OLP, the General Partner or any Subsidiary that
could reasonably be expected to result in a Material Adverse Effect; and
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(iii) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
(b) Monthly Management Reports. As soon as available, and in any event,
within 30 days after the end of each monthly accounting period in each fiscal
year of Genesis OLP, a monthly report of management of Genesis OLP as to the
financial condition of Genesis OLP and the Subsidiaries as at the end of such
monthly period, in a form reasonably satisfactory to the Agent.
(c) Borrowing Base Reports. As soon as available, and in any event within
five Business Days after the end of each month, a Borrowing Base Certificate as
of the last day of such preceding month, setting forth on an itemized basis, a
good faith estimate of the Borrowing Base, as well as monthly Receivable and
Payable Report, each as of the last day of each month by counterparty
transactions identified on such schedule that are subject to a Compromise of
Claims Agreement or a Contract Cancelation Agreement, together with such other
supporting documentation and additional reports with respect to the Borrowing
Base as the Agent shall reasonably request; provided, however, that Genesis OLP
shall provide the information required by this paragraph (c) as often as may be
reasonably requested by Salomon Inc, Basis or the Agent if (i) a Default or
Event of Default has occurred and is continuing or (ii) Salomon Inc, Basis or
the Agent otherwise determines that a material adverse change has occurred with
respect to the Loan Parties, their management practices or the performance of
the Collateral.
(d) Quarterly Financial Statements. As soon as available, and in any
event, within 45 days after the end of each quarterly accounting period in each
fiscal year of Genesis OLP, the consolidated and consolidating balance sheets of
Genesis OLP and the Subsidiaries as at the end of such quarterly period and the
related consolidated and consolidating statements of operations, partners'
capital and cash flows of such quarterly period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly period, in each case
setting forth comparative figures for the related periods in the prior fiscal
year, all of which shall be prepared in accordance with GAAP and certified by an
appropriate officer of the General Partner, subject to normal year-end audit
adjustments, which certificate shall set forth computations in reasonable detail
demonstrating compliance with the covenants contained in Sections 6.8, 6.9,
6.10, 6.11 and 6.12.
(e) Annual Financial Statements. As soon as available, and in any event
within 90 days after the end of each fiscal year of Genesis OLP, the
consolidated and consolidating balance sheets of Genesis OLP and the
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of operations, partners' capital and cash flows for such fiscal year,
in each case setting forth comparative figures for the preceding fiscal year and
prepared in accordance with GAAP and certified, in the case of the consolidated
financial statements, by independent certified public accountants of recognized
national standing reasonably acceptable to Salomon Inc, in each case together
with the audit report of such accounting firm.
(f) Perfection Certificate. Concurrently with any delivery of annual
financial statements under paragraph (e) above, a certificate executed by the
Chief Financial Officer and the chief legal officer (if
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any) of the General Partner (i) certifying that the information contained in the
most recently delivered Perfection Certificate is true, complete and correct in
all material respects as of such date, and (ii) certifying that none of the Loan
Parties has consented to, or is aware of, the filing of any Uniform Commercial
Code financing statements with respect to the Collateral naming such Person as
the debtor therein by any Person other than the Collateral Agent since the date
of the most recently delivered Perfection Certificate, or if any such filing has
been made, setting forth a reasonably detailed description thereof and of the
related financing.
(g) Additional Information. Promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of Genesis OLP or any Subsidiary, or compliance with the terms of any Loan
Document, as the Agent, Salomon Inc or Basis may reasonably request.
SECTION 6.6. Consolidation, Merger, Sale of Assets, etc.
Genesis OLP will not, and will not permit any of the Subsidiaries to, wind
up, liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any substantial part of its
property or assets, or permit any of the Subsidiaries to do any of the
foregoing, except that (i) Genesis OLP and the Subsidiaries may make sales of
inventory in the ordinary course of business, (ii) Genesis OLP and the
Subsidiaries may, in the ordinary course of business, sell equipment which is
uneconomic or obsolete and (iii) any subsidiary of Genesis OLP may be merged or
consolidated with or into Genesis OLP (provided that Genesis OLP shall be the
continuing or surviving entity) and any Subsidiary of Genesis OLP may be merged
with or into any one or more Wholly Owned Subsidiaries of Genesis OLP (provided
that the Wholly Owned Subsidiary shall be the continuing or surviving entity).
SECTION 6.7. Indebtedness.
Genesis OLP will not, and will not permit any of the Subsidiaries to,
contract, create, incur, assume or suffer to exist any Indebtedness other than:
(a) Indebtedness hereunder;
(b) Indebtedness in existence on the date of this Agreement;
(c) Indebtedness permitted pursuant to Section 6.13(ii);
(d) Indebtedness pursuant to Hedging Agreements entered into in the
ordinary course of business and not for the purpose of speculation; and
(e) APIs (as defined in the Genesis OLP Partnership Agreement).
SECTION 6.8. Minimum Tangible Net Worth.
Genesis OLP shall not, at any time, permit its Consolidated Tangible Net
Worth to be less than $50,000,000.
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SECTION 6.9. Minimum Working Capital.
Genesis OLP shall not, at any time, permit its Consolidated Working Capital
to be less than $1,000,000.
SECTION 6.10. Working Capital Leverage Ratio.
Genesis OLP shall not, at any time, permit the ratio of its Consolidated
Current Liabilities to its Consolidated Working Capital plus net property, plant
and equipment to exceed 7.5:1.0.
SECTION 6.11. Fixed Charge Coverage.
Genesis OLP shall not permit, as of the last day (the "Test Date") of any
fiscal quarter, the ratio of (i) Consolidated EBITDA of Genesis OLP for the four
consecutive fiscal quarters ending on the Test Date (taken as one accounting
period) to (ii)(a) Consolidated Fixed Charges of Genesis OLP for the period
beginning on the Closing Date and ending on the Test Date (taken as one
accounting period) multiplied by (b) 365 divided by the number of days from and
excluding the Closing Date to and including the Test Date to be less than
1.75:1.0.
SECTION 6.12. Leverage Ratio.
Genesis OLP shall not permit, at any time, the ratio of its Consolidated
Total Liabilities to its Consolidated Tangible Net Worth to exceed 10.0:1.0.
SECTION 6.13. Advances, Investments and Loans.
Genesis OLP will not, and will not permit any of its Subsidiaries to, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person, except that the following shall be
permitted:
(i) Genesis OLP and its Subsidiaries may acquire and hold receivables
owing to it, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; and
(ii) Genesis OLP may make advances and capital contributions to any of
its Wholly Owned Subsidiaries and any Wholly Owned Subsidiary of Genesis
OLP may make advances and capital contributions to Genesis OLP or any other
Wholly Owned Subsidiary of Genesis OLP; provided that (A) all the
outstanding Capital Stock of any such Wholly Owned Subsidiary shall have
been pledged under the Pledge Agreement for the ratable benefit of the
Secured Parties and (B) any such Wholly Owned Subsidiary shall have
executed and delivered each applicable Security Document as required by
Section 6.20.
SECTION 6.14. Restricted Payments.
Genesis OLP will not, and will not permit any of the Subsidiaries to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (a) Genesis OLP may declare and pay
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(i) dividends or distributions with respect to its outstanding limited partner
interests payable solely in additional limited partners interests or (ii)
dividends or distributions payable solely to Genesis OLP or a Wholly Owned
Subsidiary of Genesis OLP (or pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary of Genesis OLP to minority
securityholders), (b) Genesis OLP may make Restricted Payments pursuant to and
in accordance with stock option plans or other benefit plans for management or
employees of Genesis OLP and its Subsidiaries and (c) Genesis OLP may make
Restricted Payments pursuant to and in accordance with the terms of the Genesis
OLP Partnership Agreement as in effect on the date of this Agreement.
SECTION 6.15. Existence; Conduct or Businesses.
Genesis OLP will, and will cause each of the Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.6.
SECTION 6.16. Payment of Obligations.
Genesis OLP will, and will cause each of the Subsidiaries to, pay its
obligations, including Tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) Genesis OLP or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6.17. Maintenance of Properties; Insurance.
Genesis OLP will, and will cause each of the Subsidiaries to, (i) keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and (ii) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations.
SECTION 6.18. Books and Records; Inspection Rights.
Genesis OLP will, and will cause each of the Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities.
Genesis OLP will, and will cause each of the Subsidiaries to, permit any
representatives designated by the Agent, Salomon Inc or Basis, upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested.
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SECTION 6.19. Compliance with Laws.
Genesis OLP will, and will cause each of the Subsidiaries to, comply with
all laws, rules, regulations and orders of any Governmental Authority applicable
to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 6.20. Further Assurances.
Genesis OLP shall, and shall cause the Subsidiaries to, execute any and all
further documents, financing statements, agreements and instruments, and take
all further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or that the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. Genesis OLP will cause any
subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary
Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and
each applicable Security Document in favor of the Collateral Agent. In addition,
from time to time, Genesis OLP will, at its cost and expense, promptly secure
the Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
as the Collateral Agent shall designate. Such security interests and Liens will
be created under the Security Documents and other security agreements,
instruments and documents in form and substance satisfactory to the Collateral
Agent, and Genesis OLP shall deliver or cause to be delivered to Salomon Inc and
Basis all such instruments and documents (including legal opinions, and lien
searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section. Genesis OLP agrees to provide such evidence as the
Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien.
The parties hereto acknowledge that the intent of this Agreement is to
provide transitional credit support to Genesis OLP and that, during the
Availability Period, Genesis OLP and Genesis MLP are expected to be actively
seeking to enter into one or more bank credit agreements or third party credit
facilities to supplement and eventually replace this Agreement, and Salomon Inc
and Basis agree to cooperate with Genesis OLP and Genesis MLP to effect this
transition; provided that neither Salomon Inc nor Basis will be obligated to
effect any amendment to this Agreement prior to its termination that would
adversely affect either Salomon Inc or Basis. In connection with Genesis OLP or
Genesis MLP entering into any such agreement or facility, Salomon Inc, as
Collateral Agent, will take any action with respect to the Collateral that it
deems appropriate at such time, including partially or fully releasing the
security interest of the Secured Parties.
ARTICLE VII
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
(i) Genesis OLP shall (x) default in the payment when due of any
principal on any payment obligation to Salomon Inc or Basis hereunder or
(y) default, and such default shall continue unremedied for two Business
Days, in the payment when due of any interest, fee or other repayment
obligation hereunder or under any Loan Document, including, without
limitation, pursuant to Section 2.5 or Section 3.2(d), or in any of its
other obligations contained in Article II hereof; or
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(ii) the Guaranty Exposure, as calculated on and for the first day of
each calendar month, shall exceed the applicable Maximum Credit Support
Amount for such day for two or more consecutive calendar months; or
(iii) any Loan Party shall default in the due performance or
observance by it of any covenant contained in any Loan Document and such
default shall continue unremedied for a period of 30 days after written
notice by Salomon Inc or Basis or Genesis OLP (except in the case of a
default relating to Section 6.2, with respect to which a period of five
days after written notice shall be applicable); or
(iv) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of
Guaranties or Letters of Credit hereunder, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to
any Loan Document, shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(v) Genesis OLP shall (x) default in any payment of any indebtedness
for borrowed money (other than indebtedness incurred under this Agreement)
in an aggregate amount of $1,000,000 or more beyond the period of grace
(not to exceed 30 days), if any, provided in the instrument or agreement
under which such indebtedness was created or (y) default in the observance
or performance of any agreement, covenant or condition relating to any
indebtedness in an aggregate principal amount of $1,000,000 or more (other
than indebtedness incurred under this Agreement) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is
required), any such indebtedness to become due prior to its stated
maturity; or any indebtedness in an aggregate principal amount of
$1,000,000 or more of Genesis OLP shall be declared to be due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(vi) Genesis OLP shall commence a voluntary case concerning itself
under the Bankruptcy Code; or an involuntary case is commenced against
Genesis OLP, and the petition is not controverted within 10 days, or is not
stayed or dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Genesis OLP, or
Genesis OLP commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or hereafter
in effect relating to Genesis OLP, or there is commenced against Genesis
OLP any such proceeding which remains unstayed or undismissed for a period
of 60 days, or Genesis OLP is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or Genesis OLP suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or Genesis OLP makes a
general assignment for the benefit of creditors; or any corporate action is
taken by Genesis OLP for the purpose of effecting any of the foregoing; or
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(vii) any Loan Document or any provision thereof shall cease to be in
full force and effect, or shall cease to give the Liens, rights, powers and
privileges purported to be created thereby; or
(viii) one or more judgments or decrees shall be entered against
Genesis OLP involving in the aggregate a liability (not paid or fully
covered by insurance except for normal deductibles) of $1,000,000 or more,
and all such judgments or decrees shall not have been vacated, discharged
or stayed or bonded pending appeal within 60 days after the entry thereof;
or
(ix) an ERISA Event shall have occurred that, in the opinion of the
Agent, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect;
then, and in any such event (other than an event with respect to Genesis OLP
described in clause (vi) above), and at any time thereafter, if any Event of
Default shall then be continuing, Salomon Inc, acting for itself and on behalf
of Basis, or Basis may by written notice to Genesis OLP take any or all of the
following actions, without prejudice to any other rights of Salomon Inc or
Basis: (A) declare the commitments and obligations of Salomon Inc and Basis to
provide credit support to Genesis OLP terminated, whereupon any fees payable
hereunder shall forthwith become due and payable without any other notice of any
kind; (B) declare the principal of and any accrued interest in respect of all
obligations owing hereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Genesis OLP; (C) enforce any or all of
the Liens and security interests created pursuant to the Security Documents; (D)
terminate any Letter of Credit which may be terminated in accordance with its
terms and cash collateralize all other outstanding Letters of Credit; (E)
terminate any Guaranty issued by Salomon Inc hereunder which may be terminated
in accordance with its terms; and in any event with respect to Genesis OLP
described in clause (vi) above, the obligations of Salomon Inc and Basis under
this Agreement shall automatically terminate and the principal of and any
accrued interest in respect of all obligations owing hereunder shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by Genesis OLP.
Notwithstanding anything to the contrary in this Agreement, no Event of Default
shall be deemed to have occurred under clause (iv) or (ix) above solely as a
result of any ERISA Event relating to any Plan of Basis, if and for so long as
Genesis OLP shall participate in such Plan and Basis shall be a Wholly Owned
Subsidiary of Salomon Inc.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be subject to and governed by the laws of State
of New York, excluding any conflicts-of-law rule or principle that might refer
the construction or interpretation of this Agreement to the laws of another
state.
<PAGE>
35
(b) Genesis OLP hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Agent, the Collateral Agent, Salomon Inc or Basis may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against Genesis OLP or its properties in the courts of any jurisdiction.
Genesis OLP hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any New York
State or Federal court. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court. Each party to
this Agreement irrevocably consents to service of process in the manner provided
for notices in Section 8.2. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner permitted by
law.
(c) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.1.
SECTION 8.2. Notices.
All notices, requests and other communications to any party hereunder shall
be in writing (including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party by personal delivery, telex or
facsimile at the address or number set forth on the signature pages hereof,
confirmed in writing if telex or facsimile at the address set forth in the
signature pages (with, in the case of notices to Genesis LLC, a copy to Howell
Corporation, 1111 Fannin, Suite 1500, Houston, Texas 77002). Each such notice
request or other communication shall be effective upon (i) actual receipt by
personal delivery or (ii) such telex or facsimile is transmitted to the telex or
facsimile number specified in this Section and the appropriate answer-back is
received or accompanied by a telephone call to the party receiving such
transmission subject to confirmation given within 72 hours by mail with first
class postage prepaid, addressed as aforesaid; if received during the
recipient's normal business hours, or at the beginning of the recipient's next
Business Day after receipt if not received during the recipient's normal
business hours or delivered at the address specified in this Section. All
notices to be sent to a party
<PAGE>
36
pursuant to this Agreement shall be sent to or made at the number and address
set forth below such party's signature to this Agreement, or at such other
number and address as such party may stipulate to other parties in the manner
provided in this Section 8.2.
SECTION 8.3. Entire Agreement.
This Agreement constitutes the entire agreement of the parties relating to
the matters contained herein, superseding all prior contracts or agreements,
whether oral or written, relating to the matters contained herein.
SECTION 8.4. Effect of Waiver or Consent.
No waiver or consent, express or implied, by any party to or of any breach
or default by any Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default by such Person of the same or any other obligations of
such Person hereunder. Failure on the part of a party to complain of any act of
any Person or to declare any Person in default, irrespective of how long such
failure continues, shall not constitute a waiver by such party of its rights
hereunder until the applicable statute of limitations period has run.
SECTION 8.5. Amendment, Modification or Waiver.
(a) Except as otherwise provided herein or contemplated hereby, this
Agreement may be amended, modified or waived from time to time only by a written
instrument signed by all parties hereto; provided that this Agreement may not be
amended or modified if in the reasonable judgment of the General Partner such
amendment or modification would not be fair and reasonable to Genesis MLP or the
limited partners of Genesis MLP. Any such amendment, modification or waiver
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement. Except as expressly provided in the Loan
Documents, no full or partial release of any Collateral or any Subsidiary
Guarantor shall be effective without the prior written approval of Salomon Inc
and Basis.
(b) No failure or delay of the Agent, the Collateral Agent, Salomon Inc or
Basis in exercising any power or right hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agent, the Collateral Agent, Salomon Inc and Basis hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by Genesis OLP
or any other Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (a) above, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on Genesis OLP in any case shall entitle Genesis OLP
to any other or further notice or demand in similar or other circumstances.
SECTION 8.6. Termination.
On the date of the closing of any Substitute Facility entered into by
either Genesis OLP or Genesis MLP (i) this Agreement shall terminate and all
obligations of Salomon Inc and Basis hereunder
<PAGE>
37
shall cease, (ii) Salomon Inc shall have the right to cancel all outstanding
Guaranties with respect to any transactions entered into from and after such
date and (iii) Genesis OLP shall immediately repay any outstanding Loans to
Basis and shall immediately remit cash to Basis equal to the amount of any
outstanding Letters of Credit as collateral with respect to such outstanding
Letters of Credit. Upon the termination of the Working Capital Facility
Commitment, the expiration of all outstanding Letters of Credit, the repayment
of all outstanding Loans and the payment of all other amounts owing to Basis
hereunder, Basis shall have no further rights or obligations under this
Agreement, other than any rights pursuant to Sections 8.9 and 8.14 and any
rights or obligations it may have in its capacity as Agent. Upon the
termination of this Agreement pursuant to this Section 8.6 and the final
satisfaction of all Obligations, the security interest of the Secured Parties in
the Collateral shall be released in accordance with Section 9.08 of the Security
Agreement.
SECTION 8.7. Assignment.
No party shall have the right to assign its rights or obligations under
this Agreement without the consent of the other applicable party or parties
hereto; provided, however, Salomon Inc or Basis may assign any of its rights or
obligations under this Agreement (including any Loans at the time owing to it),
provided that the assignee thereof (i) unconditionally assumes such obligations
of Salomon Inc or Basis, as applicable, under this Agreement, (ii) (x) is a U.S.
Entity or (y) agrees to abide by and submit to the jurisdiction of the United
Kingdom or the United States of America with respect to matters arising out of
this Agreement and at the time of assignment is not organized or based in any
jurisdiction that is subject to any general provision under U.S. laws or
regulations prohibiting U.S. Persons from making investments in or conducting
business with such jurisdiction and (iii) at the time of such transfer and
giving effect to such transfer, is an Investment Grade Entity.
SECTION 8.8. Counterparts.
This Agreement may be executed in any number of counterparts with the same
effect as if all signatory parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the same
instrument.
SECTION 8.9. Demands and Claims.
Genesis OLP shall use its best efforts to assist Basis and Salomon Inc in
defending, pursuing, monitoring or settling any demands or claims for payment of
any Guaranties, Letters of Credit, Loans or any other obligations arising
hereunder by Basis or Salomon Inc.
SECTION 8.10. U.S. Currency.
All sums and amounts payable or to be payable pursuant to the provisions of
this Agreement shall be payable in coin or currency of the United States of
America that, at the time of payment, is legal tender for the payment of public
and private debts in the United States of America.
SECTION 8.11. Laws and Regulations.
Notwithstanding any provision of this Agreement to the contrary, no party
hereto shall be required to take any act, or be prohibited from taking any act,
under this Agreement if the effect thereof would be to cause such party to be in
violation of any applicable law, statute, rule or regulation.
SECTION 8.12. Negation of Rights of Assignees and Third Parties.
<PAGE>
38
The provisions of this Agreement are enforceable solely by the parties to
this Agreement and Genesis MLP, and no assignee, other than a permitted
transferee of Salomon Inc pursuant to Section 8.7 of this Agreement, or other
Person shall have the right to enforce any provision of this Agreement or to
compel any party to this Agreement to comply with the terms of this Agreement.
SECTION 8.13. Maximum Interest Rate.
Nothing contained in this Agreement or the promissory notes issued pursuant
hereto shall require Genesis OLP to pay interest at a rate exceeding the maximum
rate permitted without penalty by applicable law. Each provision in this
Agreement and any note, financial document or other agreement executed in
connection herewith is expressly limited so that in no event whatsoever shall
the amount paid thereunder, or otherwise paid, by Genesis OLP for the use,
forbearance or detention of the money to be loaned under this Agreement, exceed
that amount of money which would cause the effective rate of interest thereon to
exceed the maximum rate of interest permitted without penalty under applicable
law, and all amounts payable under any note, financial documents or any other
agreement executed in connection herewith, or otherwise payable in connection
therewith, shall be subject to reduction so that such amounts paid or payable
for the use, forbearance or detention of money to be loaned under this Agreement
shall not exceed that amount of money which would cause the effective rate of
interest thereon to exceed the maximum rate of interest permitted without
penalty under applicable law.
SECTION 8.14. Expenses; Indemnification.
(a) Genesis OLP agrees to pay all out-of-pocket expenses incurred by the
Agent, the Collateral Agent, Salomon Inc and Basis in connection with any
amendments, modifications or waivers of the provisions hereof or thereof or
incurred by the Agent, the Collateral Agent, Salomon Inc or Basis in connection
with the enforcement or protection of its rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made or
Guaranties or Letters of Credit issued hereunder, including the fees, charges
and disbursements of counsel, and, in connection with any such enforcement or
protection, the fees, charges and disbursements of counsel for the Agent, the
Collateral Agent, Salomon Inc and Basis.
(b) Genesis OLP shall indemnify the Agent, the Collateral Agent, Salomon
Inc and Basis, each Affiliate of any of the foregoing Persons and each of their
respective directors, officers, employees and agents (each such Person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any other Loan Document or
any agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) any Loans,
Guaranty or Letter of Credit or the use of proceeds therefrom, (iii) any actual
or alleged presence or release of Hazardous Materials on any property owned or
operated by Genesis OLP or any of the Subsidiaries, or any Environmental
Liability related in any way to Genesis OLP or the Subsidiaries, in each case
arising out or resulting from any such Person being a party to this Agreement or
any other Loan Document, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and
<PAGE>
39
nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) The provisions of this Section 8.14 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Working Capital Facility Commitment or the
Guaranty Facility Commitment, the expiration of any Guaranty or Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Agent, the Collateral Agent, Salomon Inc or Basis. All amounts due under
this Section 8.14 shall be payable on written demand therefor.
SECTION 8.15. Cash Collateralization.
If any Event of Default shall occur and be continuing, on the Business Day
that Genesis OLP receives notice from the Agent or Basis, demanding the deposit
of cash collateral pursuant to this paragraph, Genesis OLP shall deposit in an
account with the Agent, in the name of the Agent and for the benefit of Basis
and Salomon Inc, an amount in cash equal to the Guaranty Exposure and the L/C
Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to Genesis OLP described in clause (vi) of Article VII. Such
deposit shall be held by the Agent as collateral for the payment and performance
of the obligations of Genesis OLP under this Agreement. The Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion of
the Agent and at Genesis OLP's risk and expense, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall be applied by the Agent to reimburse
Salomon Inc or Basis, as applicable, for Guaranty Disbursements or L/C
Disbursements for which they have not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
Genesis OLP for the Guaranty Exposure and the L/C Exposure at such time or may
be applied to satisfy other obligations of Genesis OLP under this Agreement. If
Genesis OLP is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to Genesis OLP within three Business
Days after all Events of Default have been cured or waived.
SECTION 8.16. Survival.
All covenants, agreements, representations and warranties made by Genesis
OLP herein and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans and issuance of any Guaranty or Letters of
Credit, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Agent, Salomon Inc or Basis may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Guaranty or Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Section 8.14
shall
<PAGE>
40
survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Guaranties or Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 8.17. Obligations Absolute.
Genesis OLP's obligation to reimburse Disbursements as provided in Section
2.5 and Section 3.2(d) shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever and irrespective of:
(i) any lack of validity or enforceability of any Guaranty or Letter
of Credit or this Agreement, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Guaranty or Letter of Credit or this
Agreement;
(iii) the existence of any claim, setoff, defense or other right that
Genesis OLP, any other party guaranteeing, or otherwise obligated with,
Genesis OLP, any Subsidiary or other Affiliate thereof or any other Person
may at any time have against the beneficiary under any Guaranty or Letter
of Credit, the Agent, Salomon Inc, Basis or any other Person, whether in
connection with this Agreement or any other related or unrelated agreement
or transaction;
(iv) any draft or other document presented under a Guaranty or Letter
of Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect;
(v) payment by Salomon Inc under any Guaranty or by the issuer of any
Letter of Credit under such Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such
Guaranty or Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
Agent, Salomon Inc, Basis or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or
equitable discharge of Genesis OLP's obligations hereunder.
Neither the Agent, Salomon Inc and Basis nor any of their Affiliates, shall have
any liability or responsibility by reason of or in connection with the issuance
or transfer of any Guaranty or Letter of Credit or any payment or failure to
make any payment thereunder, including any of the circumstances specified in
clauses (i) through (vi) above, as well as any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Guaranty or Letter of Credit (including
any document required to make a drawing thereunder), any error in interpretation
of technical terms or any consequence arising from causes beyond the control of
the Agent, Salomon Inc or Basis, provided that the foregoing shall not be
construed to excuse the Agent, Salomon Inc or Basis from liability to Genesis
OLP to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by Genesis OLP to the extent
<PAGE>
41
permitted by applicable law) suffered by Genesis OLP that are caused by such
Person's gross negligence or wilful misconduct.
IN WITNESS WHEREOF, the parties have executed this Agreement on, and
effective as of, the Closing Date.
GENESIS CRUDE OIL, L.P.
By: GENESIS ENERGY, L.L.C., general partner
One Allen Center
500 Dallas, Suite 3200
Houston, Texas 77002
Telephone Number: ______________________
Fax/Telex Number: ______________________
Attention:
By: _________________________________________
SALOMON INC
Seven World Trade Center
43rd Floor
New York, New York 10048
Telephone Number: ______________________
Fax/Telex Number: ______________________
Attention:
By: _________________________________________
BASIS PETROLEUM, INC.
One Allen Center
500 Dallas, Suite 3200
Houston, Texas 77002
Telephone Number:_______________________
Fax/Telex Number:_______________________
Attention:
By: _________________________________________
By: _________________________________________
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
$ New York, New York
[ ], 1996
FOR VALUE RECEIVED, the undersigned Genesis Crude Oil, L.P., a
Delaware limited partnership (the "Borrower"), hereby promises to pay to the
order of Basis Petroleum, Inc. (the "Lender"), at the office of [ ]
(the "Agent"), at [ ], (i) on the maturity date thereof (as determined
by reference to the Master Credit Support Agreement dated as of [ ],
1996 (the "Credit Agreement"), among Salomon Inc, the Lender and the Borrower),
the aggregate unpaid principal amount of each Loan (as defined in the Credit
Agreement) to which such maturity Date applies and (ii) on May 31, 1997, the
lesser of the principal sum of THIRTY-FIVE MILLION DOLLARS ($35,000,000) and the
aggregate unpaid principal amount of all Loans made to the Borrower by the
Lender pursuant to the Credit Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from the date hereof
on the principal amount hereof from time to time outstanding, in like funds, at
said office, at the rate or rates per annum and payable on the dates provided in
the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at the rate or rates provided in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on the schedule attached hereto and made
a part hereof or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by such holder in its internal
records; provided, however, that the failure of the holder hereof to make such a
notation or any error in such notation shall not affect the obligations of the
Borrower under this Note.
This Note is one of the promissory notes referred to in the Credit
Agreement, which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions therein specified. THIS NOTE SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
GENESIS CRUDE OIL, L.P., by GENESIS
ENERGY, L.L.C, its operating general partner,
By________________________________________
Name:
Title:
<PAGE>
2
Loans and Payments
------------------
<TABLE>
<CAPTION>
Unpaid Name of
Principal Person
Amount Maturity Payments Balance of Making
Date of Loan Date Principal Interest Note Notation
- ---- ------- -------- ------------------ ---------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.4
FORM OF REDEMPTION AND REGISTRATION RIGHTS AGREEMENT
REDEMPTION AND REGISTRATION RIGHTS AGREEMENT, dated as of
, 1996 by and among BASIS PETROLEUM, INC., a Texas corporation ("Basis"),
HOWELL CORPORATION, a Delaware corporation ("Howell"), HOWELL CRUDE OIL COMPANY,
a Delaware corporation ("Howell Crude"), HOWELL PIPELINE TEXAS, INC., a Delaware
corporation ("Howell Texas"), HOWELL PIPELINE U.S.A., INC., a Delaware
corporation ("Howell Pipeline"), HOWELL POWER SYSTEMS, INC., a Delaware
corporation ("Howell Power"), HOWELL TRANSPORTATION SERVICES, INC., a Delaware
corporation ("Howell Transportation" and, collectively with Howell Crude, Howell
Texas, Howell Pipeline and Howell Power, the "Howell Subsidiaries"), GENESIS
ENERGY, L.P., a Delaware limited partnership ("Genesis MLP"), and GENESIS CRUDE
OIL, L.P., a Delaware limited partnership ("Genesis OLP").
W I T N E S S E T H:
WHEREAS, Basis and Howell have agreed pursuant to the Purchase & Sale
and Contribution & Conveyance Agreement (the "Conveyance Agreement") by and
among Basis, Howell, the Howell Subsidiaries, Genesis MLP, Genesis OLP and
Genesis Energy, L.L.C., a Delaware limited liability company, to transfer their
respective crude oil gathering, marketing, transportation and pipeline assets to
Genesis OLP in exchange for, among other things, the net proceeds of an offering
to the public of Common Units representing limited partner interests of Genesis
MLP and for the issuance to each of Basis and the Howell Subsidiaries of a
certain number of Subordinated OLP Units representing limited partner interests
in Genesis OLP; and
WHEREAS, pursuant to the Amended and Restated Agreement of Limited
Partnership of Genesis OLP (the "OLP Agreement"), upon the expiration of the
Subordination Period (as defined in the OLP Agreement), the Subordinated OLP
Units will convert on a one-for-one basis into Common OLP Units and, in
addition, up to one half of the Subordinated OLP Units may convert into Common
OLP Units prior to the end of the Subordination Period; and
WHEREAS, the parties desire that, upon the conversion of all or part
of Subordinated OLP Units into Common OLP Units, each of Basis and Howell (on
behalf of the Howell Subsidiaries) may, subject to the terms and conditions set
forth herein cause Genesis OLP to redeem the Common OLP Units held by either
Basis or the Howell Subsidiaries, in either case using the proceeds, net of
underwriting discounts and commissions or placement fees, if any, of a public
offering or private sale by Genesis MLP of a number of newly issued Common Units
equal to the number of Common OLP Units being redeemed.
<PAGE>
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms, as used herein, have the following meanings (all
terms defined herein in the singular to have the correlative meanings when used
in the plural and vice versa):
"Affiliate" shall have the meaning ascribed to such term in the
OLP Agreement.
"Aggregate Redemption Number" has the meaning ascribed to it in
Section 2.1(a) of this Agreement.
"Agreement" means this Redemption and Registration Rights Agreement,
as the same shall be amended, modified or supplemented from time to time.
"Ancillary Agreement" means the Ancillary Agreement among Salomon Inc,
Howell, the Howell Entities and the Collateral Agent, as defined in the
Ancillary Agreement.
"API" has the meaning set forth in the OLP Agreement.
"Assignee" has the meaning ascribed to it in Section 10 of this
Agreement.
"Common OLP Unit" has the meaning assigned to the term "Common LP
Unit" in the OLP Agreement.
"Common Units" means the Common Units representing limited partner
interests of Genesis MLP.
"Demand Redemption" means any sale of Common Units effected in
accordance with Section 2.1 of this Agreement.
"Distribution Support Agreement" means the Distribution Support
Agreement between Genesis OLP and Salomon Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"General Partner" means Genesis Energy, L.L.C., a Delaware limited
liability company and the general partner of Genesis MLP and Genesis OLP.
-2-
<PAGE>
"Holders" means the holders of record of Common OLP Units or the agent
designated by such holders of record (in the case of the Howell Subsidiaries,
Howell).
"Howell Entities" means Howell and the Howell Subsidiaries.
"Indemnified Party" has the meaning ascribed to it in Section 2.4(a)
of this Agreement.
"Individual Redemption Number" has the meaning ascribed to it in
Section 2.1(a) of this Agreement.
"Loss" has the meaning ascribed to it in Section 2.4(a) of this
Agreement.
"Notice of Demand" has the meaning ascribed to it in Section 2.1(a) of
this Agreement.
"Offering Expenses" means all expenses incident to Genesis MLP's
performance of or compliance with this Agreement, including, without limitation,
(a) all registration, filing, securities exchange listing, rating agency and
National Association of Securities Dealers fees, (b) all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws of all jurisdictions in which the securities are to be registered and
any legal fees and expenses incurred in connection with the blue sky
qualifications of the Common Units and the determination of their eligibility
for investment under the laws of all such jurisdictions, (c) all word
processing, duplicating, printing, messenger and delivery expenses, (d) the fees
and disbursements of counsel for Genesis MLP and of its independent public
accountants, including, without limitation, the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, (e) premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Common Units being
registered to the extent Genesis MLP elects to obtain such insurance, (f) the
fees of preparing a private placement memorandum, (g) any expenses and
disbursements of underwriters or placement agents customarily paid by issuers or
sellers of securities (but excluding underwriting discounts and commissions,
placement fees and transfer taxes, if any, relating to the Common Units being
registered) and (h) fees and expenses of other Persons retained or employed by
Genesis MLP. Offering Expenses, to the extent payable by Genesis MLP pursuant
to this Agreement, shall not include fees and disbursements of counsel for any
Participating Holder.
"Participating Holder" means a Holder who has provided a Notice of
Demand or a Participation Notice to Genesis MLP requesting the redemption of all
or a part of its Common OLP Units.
"Participation Notice" has the meaning ascribed to it in Section
2.1(c) of this Agreement.
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"Person" means a natural person, a corporation, a partnership, a
limited liability company, a trust, a joint venture, any regulatory authority or
any other entity or organization.
"Pledge Agreement" means the Pledge Agreement among Basis, the Howell
Entities and Genesis OLP.
"Reasonable Efforts," when used with respect to any obligation to be
performed or term or provision to be observed hereunder, means such efforts as a
prudent Person seeking the benefits of such performance or action would make,
use, apply or exercise to preserve, protect or advance its rights or interests,
provided, that such efforts do not require such Person to incur a material
financial cost or a substantial risk of material liability unless such cost or
liability (i) would customarily be incurred in the course of performance or
observance of the relevant obligation, term or provision, (ii) is caused by or
results from the wrongful act or negligence of the Person whose performance or
observance is required hereunder or (iii) is not excessive or unreasonable in
view of the rights or interests to be preserved, protected or advanced. Such
efforts may include, without limitation, the expenditure of such funds and
retention by such Person of such accountants, attorneys or other experts or
advisors as may be necessary or appropriate to effect the relevant action; and
the commencement, termination or settlement of any action, suit or proceeding
involving such Person to the extent necessary or appropriate to effect the
relevant action.
"Redemption Notice" has the meaning ascribed to it in Section 2.1(e)
of this Agreement.
"Redemption Price" has the meaning ascribed to it in Section 2.1(a) of
this Agreement.
"SEC" means the United States Securities and Exchange Commission, or
any successor governmental agency or authority thereto.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"Subordinated OLP Units" has the meaning assigned to the term
"Subordinated LP Units" in the OLP Agreement.
"Successor" means, with respect to any Person, a successor to such
Person by merger, consolidation, liquidation or other similar transaction.
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ARTICLE II
SALE OF COMMON UNITS TO EFFECT
REDEMPTION OF COMMON OLP UNITS
Section 2.1. Right to Demand the Redemption of Common OLP Units.
(a) Request to Effect Redemption. At any time and from time to
time after any conversion of any of the Subordinated OLP Units held by Basis or
any Howell Subsidiary into Common OLP Units pursuant to Section 5.8 of the OLP
Agreement, either Basis or Howell (on behalf of the Howell Subsidiaries) may
provide Genesis MLP with a request ("Notice of Demand") (with a copy to the non-
requesting Holder of Common OLP Units) that Genesis MLP cause Genesis OLP to
redeem Common OLP Units held by such requesting Holder at a per unit redemption
price (the "Redemption Price") equal to the per unit proceeds, net of
underwriting discounts and commissions or placement fees, if any, of a sale by
Genesis MLP of a number of Common Units equal to the number (the "Aggregate
Redemption Number") of Common OLP Units the Participating Holders request at any
one time in the applicable Notice of Demand and, as the case may be, a
Participation Notice to have redeemed, as such requested number may be reduced
pursuant to Section 2.1(d) of this Agreement. Upon receipt of a Notice of Demand
and, as the case may be, a Participation Notice, Genesis MLP shall, subject to
Sections 2.1(b) and 2.1(d) of this Agreement, use Reasonable Efforts (i) to sell
a number of Common Units at least equal to the Aggregate Redemption Number, (ii)
if the sale of Common Units is to be effected pursuant to a registered public
offering, to effect at the earliest practicable date the registration under the
Securities Act of a number of Common Units at least equal to the Aggregate
Redemption Number, (iii) to complete the sale in accordance with terms and
conditions satisfactory to the Participating Holders (provided that if such
terms are not satisfactory to any Participating Holder, then such Participating
Holder may withdraw its participation at any time prior to Genesis MLP's
undertaking of any contractual obligations to any underwriter or other purchaser
in connection with such sale) and (iv) to apply, pursuant to Section 2.1(e) of
this Agreement, the proceeds of such sale, net of underwriting discounts and
commissions or placement fees, if any, to the redemption by Genesis OLP of the
Common OLP Units with respect to which the Notice of Demand or Participation
Notice applies, as adjusted pursuant to Section 2.1(d) of this Agreement. Upon
completion of a sale with respect to a Notice of Demand or Participation Notice,
pursuant to Section 2.1(e) of this Agreement, each Participating Holder that has
not withdrawn in accordance with clause (ii) of the foregoing sentence shall be
obligated to transfer to Genesis OLP the number of Common OLP Units (the
"Individual Redemption Number") such Participating Holder requested be redeemed
in such Notice of Demand or Participation Notice, as such number of Common OLP
Units to be redeemed may have been reduced pursuant to Section 2.1(d) of this
Agreement. Genesis MLP shall not be obligated pursuant to this Agreement to
cause Genesis OLP to redeem Common OLP Units of Holders other than from the
proceeds of a sale of Common Units equal to the Aggregate Redemption Number
pursuant to this Agreement (net of underwriting discounts and commissions or
placement fees, if any, and excluding proceeds from the simultaneous sale of
Common Units in excess of the Aggregate Redemption Number, including pursuant to
any over-allotment option granted in connection with a sale pursuant to this
Agreement).
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(b) Limitations on Demand Redemption. (i) In case of an
underwritten public offering and notwithstanding any of the foregoing, (A)
Genesis MLP shall not be obligated to file a registration statement at any time
during the six-month period immediately following the effective date of another
registration statement subject to this Agreement and (B) Genesis MLP may delay
for a period not to exceed 60 days after receipt of a Notice of Demand the
filing of a registration statement pursuant to this Section 2.1, and may for a
period not to exceed 60 days after receipt of a Notice of Demand withhold
efforts to cause the registration statement to become effective, if the General
Partner determines in good faith that such registration might (x) interfere with
or affect the negotiation or completion of any transaction that is being
contemplated by Genesis MLP (whether or not a final decision has been made to
undertake such transaction) at the time the right to delay is exercised, or (y)
involve disclosure obligations the timing of which is not in the best interests
of Genesis MLP, including, but not limited to, the obligation to conduct a
special audit prior to the regular audit conducted by Genesis MLP.
(ii) The right of a Holder to request Genesis MLP to cause
redemption of Common OLP Units shall be limited to one Notice of Demand and one
Participation Notice during any period of six (6) consecutive months.
(c) Notice to the Non-Requesting Holder. Upon receipt of any
Notice of Demand, Genesis MLP will give prompt (but in any event within ten (10)
days after such receipt) notice to the non-requesting Holder of the receipt of
the Notice of Demand. Upon the request of any such Holder to participate
("Participation Notice") made within fifteen (15) days after the receipt by such
Holder of any such notice (which request shall specify the number of Common OLP
Units to be redeemed Genesis MLP will (subject to any priorities in redemption
rights) use Reasonable Efforts to effect the sale of a number of Common Units
equal to at least the number of Common OLP Units to be redeemed from the
Participating Holders.
(d) Priority in Demand Redemption. Notwithstanding Section 2.1(a)
of this Agreement, in the case of an underwritten offering, if the managing
underwriter of an underwritten offering of the Common Units being distributed
pursuant to this Agreement, or the placement agent in the case of a private
sale, shall inform Genesis MLP by letter of its belief that the amount of
securities requested to be included in such distribution or private placement
exceeds the amount which can be sold in such distribution or placement within a
price range acceptable to the Participating Holders, then Genesis MLP will
include in such distribution or placement such amount of Common Units which
Genesis MLP is so advised can be sold in such sale pro rata on the basis of the
Participating Holders' respective aggregate ownership of Subordinated OLP Units
and Common OLP Units or otherwise as the Participating Holders may agree.
(e) Redemption Mechanics. Prior to the undertaking by Genesis MLP
of any contractual obligations to any underwriter or other purchaser to complete
any sale of Common Units by Genesis MLP pursuant to this Agreement, the
Participating Holders shall transfer to a custodian, pursuant to custodial
arrangements satisfactory to Genesis MLP and the Participating Holders,
certificates representing Common OLP Units equal to the Aggregate Redemption
Number. After
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the completion of a sale of Common Units by Genesis MLP pursuant to this
Agreement, Genesis MLP shall transfer to Genesis OLP the proceeds of the sale of
a number of Common Units equal to the Aggregate Redemption Number, net of
underwriting discounts and commissions or placement fees, if any, with respect
to such sale. Genesis OLP shall thereafter send a notice (a "Redemption
Notice") to each Participating Holder that has not withdrawn in accordance with
clause (ii) of Section 2.1(a) of this Agreement specifying (i) that the sale is
complete and (ii) that Genesis OLP will redeem the Individual Redemption Number
of Common OLP Units of such Participating Holder. Within ten (10) days after
the date of the Redemption Notice, Genesis OLP shall submit payment of the
Redemption Price to the Participating Holders.
Section 2.2. Redemption Terms and Procedures.
(a) Underwritten Public Offering. If the sale of Common Units
pursuant to this Agreement is conducted through a registered underwritten public
offering:
(i) Registration Statement Form. Registrations pursuant to this
Agreement shall be on such appropriate registration forms of the SEC as shall
permit the issuance and sale of Common Units. Genesis MLP agrees to include in
any such registration statement all information that any Participating Holder
shall reasonably request (to the extent such information relates to such
Participating Holder), and each Participating Holder shall be obligated to
provide to Genesis MLP information concerning such Participating Holder as
Genesis MLP shall reasonably request for inclusion in the registration
statement.
(ii) Registration Procedures. In connection with Genesis MLP's
obligations to register Common Units pursuant to this Agreement, Genesis MLP
will use Reasonable Efforts to effect such registration so as to permit the sale
of any Common Units included in such registration, and pursuant thereto Genesis
MLP will as expeditiously as possible:
(A) as soon as reasonably practicable after receipt of a
Notice of Demand and a Participation Notice (or the expiration of the period for
receipt thereof), prepare and file with the SEC the requisite registration
statement and thereafter use Reasonable Efforts to cause such registration
statement to be declared effective by the SEC, provided that before filing such
registration statement or any amendment or supplement thereto, Genesis MLP will
furnish to the Participating Holders copies of drafts of all such documents
proposed to be filed (excluding exhibits, which shall be made available upon
request by any Participating Holder), and any Participating Holder shall have
the opportunity to timely object to any information relating to such
Participating Holders contained therein and Genesis MLP will make the
corrections reasonably requested with respect to information relating to such
Participating Holder prior to filing any such registration statement, amendment
or supplement;
(B) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may
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be necessary to complete the distribution of the securities covered thereby and
as may be required to comply with Section 4(3) of the Securities Act and Rule
174 thereunder;
(C) furnish to each underwriter participating in the
distribution of securities under such registration statement, such number of
conformed copies of such registration statement and of each amendment thereto
(in each case excluding all exhibits and documents incorporated by reference,
which exhibits and documents shall be furnished upon request), such number of
copies of the prospectus contained in such registration statement (including
each preliminary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, as such underwriter may reasonably request to facilitate the
distribution of such Common Units;
(D) use Reasonable Efforts to register or qualify all Common
Units and other securities covered by such registration statement under all
applicable blue sky and other securities laws, and to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, except that Genesis MLP shall not for any such purpose be required to
(a) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this clause (D) be
obligated to be so qualified, (b) subject itself to taxation in any such
jurisdiction or (c) consent to general service of process in any jurisdiction;
(E) use Reasonable Efforts to cause all Common Units covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities applicable to Genesis MLP as may be
reasonably necessary to enable Genesis MLP (or underwriter or agent, if any) to
consummate the offering and sale of such Common Units pursuant to such
registration statement;
(F) use Reasonable Efforts to prevent the issuance by the SEC
or any other governmental agency or court of a stop order, injunction or other
order suspending the effectiveness of such registration statement and, if such
an order is issued, use Reasonable Efforts to cause such order to be lifted as
promptly as practicable;
(G) take such other actions as are reasonably necessary to
expedite or facilitate the disposition of such Common Units; and
(H) participate, to the extent reasonably requested by the
managing underwriter for the offering, in customary efforts to sell the
securities under the offering.
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(b) Private Sale. In the case of a private placement, Genesis MLP
will use Reasonable Efforts to effect such private placement as to permit the
sale of any Common Units included in such private placement, and pursuant
thereto, Genesis MLP will as expeditiously as possible and as soon as reasonably
practicable after receipt of a Notice of Demand and a Participation Notice (or
the expiration of the period for receipt thereof), prepare and distribute the
requisite private placement memorandum, provided that before distributing such
private placement memorandum or any amendment or supplement thereto, Genesis MLP
will furnish to the Participating Holders copies of drafts of all such documents
proposed to be distributed (excluding exhibits, which shall be made available
upon request by any Participating Holder), and any Participating Holder shall
have the opportunity to timely object to any information relating to such
Participating Holders contained therein and Genesis MLP will make the
corrections reasonably requested with respect to information relating to such
Participating Holder prior to distribution of any such private placement
memorandum, amendment or supplement. Each Participating Holder shall be
obligated to provide to Genesis MLP information concerning such Participating
Holder as Genesis MLP shall reasonably request for inclusion in any such private
placement memorandum.
(c) General Redemption Terms.
(i) Offering Expenses. Genesis MLP will pay all Offering Expenses
incurred in connection with one Demand Redemption effected pursuant to a Notice
of Demand by Basis and one Demand Redemption effected pursuant to a Notice of
Demand by Howell on behalf of the Howell Subsidiaries (including any incremental
expenses resulting from the inclusion of additional Common Units by reason of a
Participation Notice being given); Offering Expenses associated with subsequent
sales effected pursuant to Section 2.1 shall be borne by the Participating
Holders.
(ii) Effectiveness of Demand Redemption. A Demand Redemption will
not be deemed to have been effected under Section 2.1 unless a sale of Common
Units has been effected pursuant thereto.
(iii) Selection of Underwriter or Placement Agent. The
Participating Holders shall select one or more nationally recognized firms of
investment bankers to act as the book-running managing underwriter or
underwriters in the case of an underwritten public offering, and, in the case of
a private placement, as placement agents, in connection with a distribution or
private placement effected pursuant to Section 2.1, provided that such selection
shall be subject to the consent of Genesis MLP, which consent shall not be
unreasonably withheld.
Section 2.3. Underwriting Agreement.
If the sale of Common Units pursuant to this Agreement is conducted
through an underwritten public offering, Genesis MLP hereby agrees to enter into
an underwriting agreement with the underwriters for such offering selected
pursuant to Section 2.2 (c)(iii), such agreement (a) to be reasonably
satisfactory in substance and form to the Participating Holders and (b) to
contain such
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representations and warranties by Genesis MLP and by each of the Participating
Holders and such other terms as are generally prevailing in agreements of such
type.
Section 2.4. Indemnification.
(a) Indemnification by Genesis MLP. Genesis MLP agrees to indemnify
and hold harmless, to the full extent permitted by law, the Participating
Holders, their directors, officers, shareholders, employees, investment
advisers, agents and Affiliates, either direct or indirect (and each such
Affiliate's directors, officers, shareholders, employees, investment advisers
and agents), and each other Person, if any, who controls such Persons within the
meaning of the Securities Act (each such Person, an "Indemnified Party"), from
and against any losses, claims, damages, liabilities or expenses, joint or
several (each a "Loss" and collectively, "Losses"), to which such Indemnified
Party may become subject under the Securities Act, to the extent that such
Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act (including all
documents incorporated therein by reference), any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto (or in any private placement memorandum distributed by
Genesis MLP to effect a private placement of Common Units pursuant to this
Agreement), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and Genesis MLP will reimburse such Indemnified Party for any legal
or any other expenses reasonably incurred by it in connection with investigating
or defending against any such Loss, action or proceeding; provided that in any
such case Genesis MLP shall not be liable to any particular Indemnified Party to
the extent that such Loss (or action or proceeding in respect thereof) arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, amendment or supplement (or in any
private placement memorandum distributed by Genesis MLP to effect a private
placement of Common Units pursuant to this Agreement), in reliance upon and in
conformity with written information furnished to Genesis MLP by such Indemnified
Party specifically for inclusion therein. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of such securities by such
Indemnified Party. Genesis MLP shall also indemnify each other Person who
participates (including as an underwriter) in the offering or sale of Common
Units hereunder, its officers and directors and each other Person, if any, who
controls any such participating Person within the meaning of the Securities Act
to the same extent as provided above with respect to Indemnified Parties.
(b) Indemnification by the Participating Holders. (i) Genesis MLP may
require, as a condition to filing any registration statement or distributing any
private placement memorandum for the issuance and sale of new Common Units
pursuant to this Agreement and as a condition to indemnifying the Participating
Holders pursuant to this Section 2.4, that Genesis MLP shall have received an
undertaking reasonably satisfactory to it from each Participating Holder in
which they agree to indemnify and hold harmless and reimburse (in the same
manner and to the same extent as
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set forth in paragraph (a) of this Section 2.4) Genesis MLP, Genesis OLP, each
director, officer, employee and agent of Genesis MLP and Genesis OLP, and each
other Person, if any, who controls Genesis MLP and Genesis OLP within the
meaning of the Securities Act or the Exchange Act, from and against any Losses
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement under which such
securities were registered under the Securities Act (including all documents
incorporated therein by reference), any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto
(or in any private placement memorandum distributed by Genesis MLP to effect a
private placement of the Common Units pursuant to this Agreement), or any
omission or alleged omission from such registration statement, preliminary
prospectus, final prospectus or summary prospectus, or any amendment or
supplement thereto required to be stated therein or necessary to make the
statements therein not misleading, if (but only if) such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to Genesis MLP by such
Participating Holder specifically for inclusion therein; provided, however, that
no Participating Holder shall be obligated to provide such indemnity to the
extent that such Losses result, directly or indirectly, from the failure of
Genesis MLP to promptly amend or take action to correct or supplement any such
registration statement, prospectus, amendment or supplement (or in any private
placement memorandum distributed by Genesis MLP to effect a private placement of
Common Units pursuant to this Agreement), based on corrected or supplemental
information provided in writing by such Participating Holder to Genesis MLP
expressly for such purpose; and provided further, that the obligation to provide
indemnification pursuant to this Section 2.4(b) shall be several, and not joint
and several, among such indemnifying parties. Notwithstanding anything in this
Section 2.4(b) to the contrary, in no event shall the liability of any
Participating Holder under such indemnity be greater in amount than the amount
of the proceeds received by such Participating Holder upon the redemption from
such Participating Holder of Common OLP Units using proceeds from the sale of
Common Units to which the Losses relate. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of
Genesis MLP or any such director, officer, employee, agent or participating or
controlling Person and shall survive the transfer of such securities by such
Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in paragraph (a) or (b) of this Section 2.4, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give prompt written notice to the latter of the commencement of such
action, provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Section 2.4, except to the extent that the indemnifying party is
actually and materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof (such
assumption to constitute its acknowledgment of its agreement to indemnify the
indemnified party with respect to such matters), jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such
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indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
fees or other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, that if, in such indemnified party's reasonable judgment, a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, such indemnified party shall be entitled to separate counsel at
the expense of the indemnifying party; and provided further, that, unless there
exists a conflict of interest among indemnified parties, all indemnified parties
in respect of such claim shall be entitled to only one counsel or firm of
counsel for all such indemnified parties. In the event an indemnifying party
shall not be entitled, or elects not, to assume the defense of a claim, such
indemnifying party shall not be obligated to pay the fees and expenses of more
than one counsel or firm of counsel for all parties indemnified by such
indemnifying party in respect of such claim, unless in the reasonable judgment
of any such indemnified party a conflict of interest exists between such
indemnified party and any other of such indemnified parties in respect of such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of one additional counsel or firm of counsel for such indemnified
parties. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement that (i)
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all Losses in respect of
such claim or litigation or (ii) would impose injunctive relief on such
indemnified party. No indemnifying party shall be subject to any Losses for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) Other Indemnification. The provisions of this Section 2.4 shall
be in addition to any other rights to indemnification or contribution which an
indemnified party may have pursuant to law, equity, contract or otherwise.
(e) Indemnification Payments. The indemnification required by this
Section shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, promptly after receipt by the
Indemnifying Party of invoices or other evidence of Losses incurred by the
Indemnified Party.
(f) Contribution. If for any reason the foregoing indemnity and
reimbursement is unavailable or is insufficient to hold harmless an indemnified
party under paragraph (a) or (b) of this Section 2.4, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any Loss (or actions or proceedings, whether commenced or
threatened, in respect thereof), including, without limitation, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss, action or proceeding, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. Notwithstanding anything in
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this Section 2.4(f) to the contrary, no indemnifying party (other than Genesis
MLP) shall be required pursuant to this Section 2.4(f) to contribute any amount
in excess of the amount by which the net proceeds received by such indemnifying
party from the sale of Common Units in the offering to which the Losses of the
indemnified parties relate exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such untrue
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Section 2.5. Term.
This Agreement shall be effective on the date hereof and shall
continue in full force and effect until all Subordinated OLP Units have
converted into Common OLP Units and all Common OLP Units have been purchased or
redeemed.
Section 2.6. Holdback Agreement.
If any sale hereunder shall be in connection with an underwritten
public offering, each Holder agrees not to sell or request any redemption of
Common OLP Units by Genesis OLP and thereby cause Genesis MLP to effect any
public sale or distribution, including any sale pursuant to Rule 144 under the
Securities Act, of Common Units other than as part of such underwritten public
offering within seven (7) days before or 90 days (or such lesser period as the
managing underwriter may permit) after the effective date of such registration.
Section 2.7. Amendments and Waivers.
This Agreement may be amended, supplemented or modified at any time,
provided that each of (i) Basis and Howell, on behalf of the Howell
Subsidiaries, and (ii) Genesis MLP has provided its written consent to such
amendment, supplement or modification. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same term
or condition of this Agreement on any future occasion.
Section 2.8. Entire Agreement.
This Agreement supersedes all prior discussions and agreements between
the parties with respect to the subject matter hereof and contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
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Section 2.9. No Third-Party Beneficiary.
The terms and provisions of this Agreement are intended solely for the
benefit of each party and their respective Successors and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person.
Section 2.10. Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
Section 2.11. Notices.
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only (i) if delivered
personally, (ii) by facsimile transmission, (iii) by Federal Express or other
nationally recognized courier service or (iv) mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Genesis MLP to:
Genesis Energy, L.P.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to:
General Counsel
Fax No.: (713) 646-____
If to Basis, to:
Basis Petroleum, Inc.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to:
General Counsel
Fax No.: (713) 646-5278
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<PAGE>
If to Howell or any of the Howell Subsidiaries, to:
Howell Corporation
1111 Fannin, Suite
Houston, Texas 77002
Attention: Robert T. Moffett
Fax No.: (713) 658-4007
Section 2.12. Assignment.
Basis and the Howell Subsidiaries may assign (by written instruments
in form reasonably acceptable to the parties) any of their rights hereunder (in
whole or in part) to one or more transferees of Subordinated OLP Units or Common
OLP Units ("Assignee"). Any such assignment may provide that each Assignee shall
be entitled (subject to priorities in registration rights) to participate in a
sale of Common Units pursuant to this Agreement and, with respect to any such
participation, to have all of the rights of its assignor provided in this
Agreement, provided that the assignment of rights by Basis or any Howell
Subsidiary shall not enlarge the rights of Basis or any Howell Subsidiary
hereunder, and any such assignment shall establish the procedures for the
exercise of the rights originally granted to Basis or such Howell Subsidiary
hereunder, as the case may be. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their successors and
assigns .
In case Basis transfers less than all of its Subordinated OLP Units
and Common OLP Units (collectively, the "OLP Units") to one or more transferees,
Basis shall retain the right to act on behalf of such transferees for purposes
of this Agreement. In case Basis transfers all of its OLP Units to one or more
transferees, Basis shall appoint an agent who shall act on behalf of such
transferees for purposes of this Agreement.
In case any Howell Subsidiary transfers its OLP Units, Howell shall
act on behalf of the transferee(s) for purposes of this Agreement. In case all
of the Howell Subsidiaries transfer their OLP Units to one or more transferees,
Howell shall appoint an agent who shall act on behalf of such transferee(s) for
purposes of this Agreement.
Section 2.13. Descriptive Headings.
The descriptive headings of the several sections and paragraphs of
this Agreement are inserted for convenience of reference only and do not define
or limit the provisions hereof or otherwise affect the meaning hereof.
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<PAGE>
Section 2.14. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF.
Section 2.15. Attorneys' Fees.
In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party shall, to the extent permitted by applicable law, be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
Section 2.16. No Inconsistent Agreements.
Genesis MLP will not hereafter enter into, modify, amend or waive any
agreement with respect to its securities if such agreement, modification or
waiver would conflict with the rights granted pursuant to this Agreement to
Basis, Howell and the Howell Subsidiaries.
Section 2.17. Pledge Agreement.
The rights of Basis and Howell or of their Assignees pursuant to this
Agreement shall be subject to their obligations under and to the terms of the
Pledge Agreement.
Section 2.18. Specific Performance.
The parties agree that, to the extent permitted by law, (i) the
obligations imposed on them in this Agreement are special, unique and of an
extraordinary character, and that in the event of a breach by any such party
damages would not be an adequate remedy and (ii) each of the other parties shall
be entitled to specific performance and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled at law or in equity.
Section 2.19. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, L.L.C., its general partner
By:____________________________________________
Name:_______________________________________
Title:______________________________________
GENESIS CRUDE OIL, L.P.
By: GENESIS ENERGY, L.L.C., its general partner
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
BASIS PETROLEUM, INC.
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
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<PAGE>
HOWELL CORPORATION
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
HOWELL CRUDE OIL COMPANY
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
HOWELL PIPELINE TEXAS, INC.
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
HOWELL PIPELINE USA, INC.
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
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<PAGE>
HOWELL POWER SYSTEMS, INC.
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
HOWELL TRANSPORTATION SERVICES, INC.
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
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<PAGE>
EXHIBIT 10.5
FORM OF CORPORATE SERVICES AGREEMENT
This Corporate Services Agreement, dated as of ______________, 1996 (this
"Agreement"), is entered into on, and effective as of, the Closing Date by and
among GENESIS ENERGY, L.P., a Delaware limited partnership ("Genesis MLP"),
GENESIS CRUDE OIL, L.P., a Delaware limited partnership ("Genesis OLP") and
BASIS PETROLEUM, INC., a Texas corporation ("Basis").
R E C I T A L S:
WHEREAS, the parties desire by their execution of this Agreement to
evidence their understanding concerning the providing of certain services by
Basis to Genesis OLP and Genesis MLP.
WHEREAS, capitalized terms used herein but not defined shall have the
meanings provided therefor in the Amended and Restated Agreement of Limited
Partnership of GENESIS CRUDE OIL, L.P., dated as of the Closing Date, as such
agreement is in effect on the Closing Date (the "OLP Partnership Agreement"), to
which reference is hereby made for all purposes of this Agreement. Other
definitions are set forth in Section 8.14.
THEREFORE, in consideration of the premises and the covenants, conditions,
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
SERVICES
SECTION 1.1 Services Generally.
During the Applicable Period, in exchange for the reimbursement described
herein, Basis agrees to use its reasonable best efforts to provide or cause one
or more of its Affiliates to provide to Genesis MLP and Genesis OLP
(collectively, the "Partnership Entities"), certain corporate and staff
services, including those services listed on Exhibit A hereto, and office space
(collectively, the "Services") to the extent such Services may be reasonably
requested by Genesis Energy L.L.C., a Delaware limited liability company and the
operating general partner of Genesis OLP and the general partner of Genesis MLP
(the "General Partner"), from time to time during the Applicable Period;
provided, at Basis' election, it may engage third-party contractors to provide
any Service (an "Outsourced Service") called for by this Agreement; provided,
however, any such Outsourced Service provided solely for the Partnership
Entities shall require approval of such contractor by the Partnership Entities
and approval of the terms and conditions of any such agreement governing the
Outsourced Service. The Services shall include, without limitation, and in
addition to those Services
<PAGE>
listed on Exhibit A hereto: (i) computer and telecommunications-related
services, (ii) credit, treasury and tax services, (iii) accounting and human
resource services, (iv) corporate office services and (v) any additional
services not specifically named in this Agreement or listed on Exhibit A hereto
that shall be mutually agreed upon by Basis and Genesis OLP or Genesis MLP, as
the case may be. It is expressly agreed that Basis shall not be obligated to
hire any additional employees or retain or acquire any outside or additional
assistance, equipment, computer programs or data to enable it to provide any of
the Services. In the event that the employment with Basis of an employee
providing Services pursuant to this Agreement ("Terminated Employee") terminates
voluntarily or involuntarily, Basis shall use its reasonable efforts to continue
to provide the Services provided by the Terminated Employee, but Basis shall not
be required to do so if providing such Services would unreasonably disrupt the
other operations of Basis or its Affiliates.
ARTICLE II
CANCELLATION OR REDUCTION OF SERVICES
SECTION 2.1 Notice Requirements.
Except as provided in Sections 2.2, 5.1 or 8.16 or otherwise mutually
agreed between Basis and the General Partner on behalf of the Partnership
Entities, either Basis or the General Partner on behalf of the Partnership
Entities may terminate or reduce the level of any Service or Services, other
than office space or Outsourced Services, on ninety (90) days' prior written
notice to the other party; provided, however, the office space may be terminated
or reduced in amount on one hundred eighty (180) days' prior written notice to
the other party. Genesis MLP or Genesis OLP may terminate any Outsourced
Service upon proper notice as provided in and in compliance with the agreement
for such Outsourced Service.
SECTION 2.2 Consequences of Cancellation.
Should Genesis MLP or Genesis OLP terminate or be ineligible for any
Service being provided hereunder or cease to be eligible to purchase certain
Services from Basis' third party providers (such as the inability of Genesis MLP
or Genesis OLP to use computer licenses or otherwise not qualify under certain
agreements to purchase equipment or Services as a result of Genesis MLP or
Genesis OLP not meeting the definition of "Affiliate" or in the eligibility of
Genesis MLP, Genesis OLP or the General Partner to participate in Basis'
programs such as any applicable employee related plans), Basis shall have no
liability to Genesis MLP or Genesis OLP for their failure or inability to
replace such terminated Service or Services, as the case may be. Further, if
Genesis MLP or Genesis OLP terminates any Service, Genesis MLP and Genesis OLP
agree that Basis shall not be required to provide the terminated Service to the
General Partner, Genesis MLP or Genesis OLP in the future. No agreement entered
into by Basis or any of its Affiliates after the Closing Date shall give to any
third party a preferential right to provide the General Partner or any of the
Partnership Entities with Services.
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ARTICLE III
NATURE AND QUALITY OF SERVICES
SECTION 3.1 Nature and Quality of Services Generally.
The parties agree that the Services described in Exhibit A shall be
performed with reasonable care. Basis alone may determine whether or not to
Outsource a Service. To the extent Basis Outsources a Service, then Basis shall
provide and each of the Partnership Entities agrees that such Services will be
of the nature and quality provided in the agreement with the third party
provider. This Agreement is subject to all of the provisions of Basis' lease for
office space (the "Lease"). The Partnership Entities acknowledge that they have
received a copy of the Lease and are familiar with the terms thereof. The
Partnership Entities shall observe all of the rules posted by the lessor
pursuant to the Lease and will comply with all restrictions. The Partnership
Entities shall preserve the premises and personal property covered thereby and
keep them free from damage, waste and nuisance and shall deliver up same in good
repair and condition, reasonable wear and tear and damage by fire or other
casualty excepted, upon expiration of this Agreement.
ARTICLE IV
PAYMENT
SECTION 4.1 Payment Generally.
Each of the Partnership Entities, in consideration for the performance of
the Services by or on behalf of Basis agrees to reimburse Basis for (i) all
direct and indirect expenses actually incurred by Basis relating to the Services
provided by Basis hereunder to the General Partner or the Partnership Entities,
including all Administrative and General Expenditures ("Direct Charges"), (ii)
the actual cost of any item purchased for the General Partner or the Partnership
Entities by Basis ("Operating Charges"), (iii) all expenses actually incurred by
Basis for Outsourced Services or other contract services or utilities provided
by any third party providers for the General Partner or the Partnership Entities
under an agreement between Basis or any of its Affiliates and such third party
("Outsourced Charges"), and (iv) all expenses for office space, including any
leasehold improvements, as allocated per space and per individual by reasonable
determination of Basis ("Office Charges").
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<PAGE>
ARTICLE V
INVOICING
SECTION 5.1 Invoicing for Direct Charges, Operating Charges, Outsourced Charges
and Office Charges.
Basis shall invoice, or cause its Affiliates to invoice, the General
Partner, on behalf of the Partnership Entities, by the 15th working day of each
month for all Direct Charges, Operating Charges, Outsourced Charges and Office
Charges attributable to each of the Partnership Entities with respect to the
preceding month and any adjustments that may be necessary to correct prior
invoices. All invoices shall reflect in reasonable detail a description of the
Services performed during the preceding month, and shall be due and payable on
the last day of the month in which the invoice is received. In the event of
default in payment by either of the Partnership Entities, upon thirty (30) days'
written notice to the General Partner, sent by certified mail to the address
specified below, Basis may terminate this Agreement as to those Services which
relate to the unpaid portion of the invoice if it has not received payment
within such thirty (30) days. In the event of a dispute as to the propriety of
invoiced amounts (a "Dispute"), the Partnership Entity shall pay all undisputed
amounts on each invoice, but shall be entitled to withhold payment of any amount
in dispute and shall notify Basis within ten (10) business days from receipt of
the disputed invoice of the disputed amount and the reasons each such charge is
disputed by the Partnership Entity. Basis shall provide the General Partner on
behalf of the Partnership Entity with records relating to the disputed amount so
as to enable the parties to resolve the Dispute. If the Dispute cannot be
resolved within fifteen (15) days of Basis receiving such notification, either
party may initiate arbitration proceedings in the manner provided for by Section
5.2 herein. So long as the parties are attempting in good faith to resolve the
Dispute, including the period during which the Dispute is in arbitration, Basis
shall not be entitled to terminate the Services related to and by reason of the
disputed charge.
SECTION 5.2 Arbitration of Disputed Invoiced Amounts.
Resolution of any and all Disputes arising under Section 5.1 herein shall
be exclusively governed by and settled in accordance with the provisions of this
Section 5.2; provided, however, that nothing contained herein shall preclude any
party from seeking or obtaining (i) injunctive relief or (ii) equitable or other
judicial relief, in each case to preserve the status quo, pending resolution of
Disputes hereunder. Either Basis, Genesis MLP or Genesis OLP may commence
proceedings hereunder by delivering a written notice to the other party
expressly requesting arbitration hereunder after a Dispute has remained
unresolved for the period of time specified under Section 5.1 herein. The
parties hereby agree to submit all Disputes to arbitration under the terms
hereof, which arbitration shall be final, conclusive and binding upon the
parties, their successors and assigns. The arbitration shall be conducted in
Houston, Texas by a sole arbitrator selected by mutual agreement of the parties
not later than ten (10) days after delivery of such notice or, failing such
agreement, appointed pursuant to the commercial arbitration rules of the
American Arbitration Association, as
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<PAGE>
amended from time to time (the "AAA Rules"). The arbitrators shall be generally
knowledgeable about the crude oil gathering, marketing and pipeline operating
industry and the nature of the issues to be arbitrated and shall be qualified by
education, experience and training to render a decision upon the issues in
arbitration. If the arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted in accordance with the AAA Rules to the extent such AAA Rules do not
conflict with the terms of this Agreement. Notwithstanding the foregoing: (i)
each party shall have the right to audit the books and records of the other
party that are reasonably related to the Dispute; (ii) each party shall provide
to the other party involved in the applicable Dispute, reasonably in advance of
any hearing, copies of all documents which such party intends to present in such
hearing; and (iii) each party shall be allowed to conduct reasonable discovery
through written requests for information, document requests, requests for
stipulation of fact and depositions, the nature and extent of which discovery
shall be determined by the arbitrator, taking into account the needs of the
parties and the desirability of making discovery expeditious and cost effective.
All hearings shall be conducted on an expedited schedule, and all proceedings
shall be confidential. Any party may, at its expense, make a stenographic
record thereof. The arbitrator shall complete all hearings not later than sixty
days after his or her selection or appointment and shall make a final award not
later than thirty days thereafter. All claims presented for arbitration shall be
particularly identified, and the parties to the arbitration shall each prepare a
written statement of their position and their proposed course of action. These
written statements of positions and proposed courses of action shall be
submitted to the arbitrator. In making his or her decision, the arbitrator must
accept in its entirety the position of one party or the other and make an
arbitration award based on that party's proposed course of action. The
arbitrator shall not be empowered in reaching his or her decision to equitably
adjust and declare a result utilizing the positions espoused by both parties, or
to make decisions beyond the scope of the written statements. All costs and
expenses of arbitration, including the fees and expenses of the arbitrator or of
any experts, shall be borne equally between the prevailing and non-prevailing
party, except that each party shall pay all of its respective attorneys' fees,
consultants' fees and other costs of participating in the Arbitration
proceeding. Notwithstanding the foregoing, in no event may the arbitrator award
multiple, punitive or exemplary damages. Any arbitration award shall be binding
and enforceable against each party involved in the particular Dispute and
judgment may be entered thereon in any court of competent jurisdiction. Payment
of any such award shall be made within five (5) business days of the
arbitrator's decision.
SECTION 5.3 Finality of Undisputed Statements.
Any statement or payment not disputed in writing by either party within six
months of the date of such statement shall be considered final and no longer
subject to adjustment. Neither Genesis MLP nor Genesis OLP shall be obligated
to pay for any Direct Charges, Operating Charges, Outsourced Charges or Office
Charges for which statements for payment are submitted more than one year after
the termination of this Agreement.
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<PAGE>
ARTICLE VI
INPUT FROM THE PARTNERSHIP ENTITIES
SECTION 6.1 Input Necessary for Basis to Perform Services.
Any input or direction necessary for Basis or any third party provider
to perform any Services shall be provided by the Partnership Entities as
reasonably requested in a manner consistent with the practices utilized by Basis
during the one year period prior to the effective date hereof under this
Agreement, which manner shall not be altered except by mutual written agreement
of the parties. Should the Partnership Entities' failure to supply such input or
direction render performance of any Services by or on behalf of Basis
unreasonably difficult, Basis, upon reasonable notice, may provide a lesser
quality of Services or refuse to perform such Services.
ARTICLE VII
BENEFICIARIES
SECTION 7.1 Partnership Entities are Sole Beneficiaries.
Genesis MLP and Genesis OLP acknowledge that the Services shall be
provided only with respect to the business of Genesis MLP and Genesis OLP as
foreseeably operated. Neither Genesis MLP nor Genesis OLP shall request
performance of any Services for the benefit of any entity other than the General
Partner, Genesis MLP and Genesis OLP. Each of Genesis MLP and Genesis OLP
represents and agrees that it will direct that the Services be conducted only in
accordance with all applicable federal, state and local laws and regulations and
communications and common carrier tariffs, and in accordance with the reasonable
conditions, rules, regulations and specifications which may be set forth in any
manuals, materials, documents or instructions furnished from time to time by
Basis to Genesis MLP and Genesis OLP. Basis reserves the right to take all
actions, including termination of any particular Services, that Basis reasonably
believes to be necessary to assure compliance with applicable laws, regulations
and tariffs. Basis will notify the General Partner of the reasons for any such
termination of Services.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Limited Warranty, Limitation of Liability.
BASIS REPRESENTS THAT IT WILL PROVIDE OR CAUSE THE SERVICES TO BE
PROVIDED TO THE GENERAL PARTNER AND THE PARTNERSHIP ENTITIES WITH REASONABLE
DILIGENCE. EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE, ALL
PRODUCTS OBTAINED FOR THE GENERAL
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<PAGE>
PARTNER OR THE PARTNERSHIP ENTITIES ARE AS IS, WHERE IS, WITH ALL FAULTS. BASIS
AND ITS AFFILIATES MAKE NO (AND HEREBY DISCLAIM AND NEGATE ANY AND ALL)
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES
RENDERED OR PRODUCTS OBTAINED FOR THE GENERAL PARTNER OR THE PARTNERSHIP
ENTITIES. FURTHERMORE, NONE OF THE GENERAL PARTNER OR THE PARTNERSHIP ENTITIES
MAY RELY UPON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE MADE TO BASIS
OR ITS AFFILIATES BY ANY PARTY (INCLUDING, AN AFFILIATE OF BASIS) PERFORMING
SERVICES ON BEHALF ON BASIS OR ITS AFFILIATES HEREUNDER, UNLESS SUCH PARTY MAKES
AN EXPRESS WARRANTY TO THE GENERAL PARTNER, GENESIS MLP OR GENESIS OLP. HOWEVER,
IN THE CASE OF OUTSOURCED SERVICES PROVIDED SOLELY FOR THE PARTNERSHIP ENTITIES,
IF THE THIRD PARTY PROVIDER OF SUCH SERVICES MAKES AN EXPRESS WARRANTY TO BASIS,
THE GENERAL PARTNER AND THE PARTNERSHIP ENTITIES ARE ALSO ENTITLED TO RELY ON
SUCH WARRANTY.
IT IS EXPRESSLY UNDERSTOOD BY GENESIS MLP AND GENESIS OLP AND GENESIS
MLP AND GENESIS OLP AGREE THAT BASIS AND ITS AFFILIATES SHALL HAVE NO LIABILITY
FOR THE FAILURE OF THIRD PARTY PROVIDERS TO PERFORM ANY SERVICES HEREUNDER AND
FURTHER THAT BASIS AND ITS AFFILIATES SHALL HAVE NO LIABILITY WHATSOEVER FOR THE
SERVICES PROVIDED BY THEM UNLESS SUCH SERVICES ARE PROVIDED IN A MANNER WHICH
WOULD EVIDENCE GROSS NEGLIGENCE ON THE PART OF BASIS OR ITS AFFILIATES OR
WILLFUL OR INTENTIONAL MISCONDUCT. GENESIS MLP AND GENESIS OLP AGREE THAT THE
REMUNERATION PAID TO BASIS OR AN AFFILIATE HEREUNDER FOR THE SERVICES TO BE
PERFORMED REFLECT THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES. IN
NO EVENT SHALL BASIS OR ITS AFFILIATES BE LIABLE TO THE GENERAL PARTNER, THE
PARTNERSHIP ENTITIES OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR IN THE PERFORMANCE OF SERVICES OR
FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF THE FAULT OF BASIS, ANY BASIS
AFFILIATE OR ANY THIRD PARTY PROVIDER OR WHETHER BASIS, ANY BASIS AFFILIATE OR
THE THIRD PARTY PROVIDER ARE WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY
NEGLIGENT. TO THE EXTENT ANY THIRD PARTY PROVIDER HAS LIMITED ITS LIABILITY TO
BASIS OR ITS AFFILIATE FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT,
GENESIS MLP AND GENESIS OLP AGREE TO BE BOUND BY SUCH LIMITATION OF LIABILITY
FOR ANY PRODUCT OR SERVICE PROVIDED TO THE GENERAL PARTNER OR ANY PARTNERSHIP
ENTITY BY SUCH THIRD PARTY PROVIDER UNDER BASIS'S OR SUCH AFFILIATE'S AGREEMENT.
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<PAGE>
Section 8.2 Indemnity.
IT IS EXPRESSLY UNDERSTOOD BY EACH OF GENESIS MLP AND GENESIS OLP AND
GENESIS MLP AND GENESIS OLP AGREE TO INDEMNIFY AND HOLD HARMLESS BASIS AND ITS
AFFILIATES FROM AND AGAINST ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, JOINT OR
SEVERAL, EXPENSES (INCLUDING LEGAL FEES AND EXPENSES), JUDGMENTS, FINES,
PENALTIES, INTEREST SETTLEMENTS AND OTHER AMOUNTS ARISING FROM ANY AND ALL
CLAIMS, DEMANDS, ACTIONS, SUITS OR PROCEEDINGS, WHETHER CIVIL, CRIMINAL,
ADMINISTRATIVE OR INVESTIGATIVE, IN WHICH BASIS OR ITS AFFILIATES MAY BE
INVOLVED OR IS BELIEVED TO BE INVOLVED, AS A PARTY OR OTHERWISE, BY REASON OF
ITS STATUS OR SERVICES RENDERED OR ARISING FROM THE PROVISION OF SERVICES UNDER
THIS AGREEMENT, UNLESS DUE TO GROSS NEGLIGENCE OR WILLFUL OR INTENTIONAL
MISCONDUCT ON THE PART OF BASIS OR ITS AFFILIATES.
Section 8.3 Force Majeure.
BASIS SHALL HAVE NO OBLIGATION TO PERFORM OR CAUSE THE SERVICES TO BE
PERFORMED IF ITS FAILURE TO DO SO IS CAUSED BY OR RESULTS FROM ANY ACT OF GOD,
GOVERNMENTAL ACTION, NATURAL DISASTER, STRIKE, FAILURE OF ESSENTIAL EQUIPMENT OR
ANY OTHER CAUSE OR CIRCUMSTANCE BEYOND THE CONTROL OF BASIS, OR, IF APPLICABLE,
ITS AFFILIATES OR THIRD PARTY PROVIDERS OF SERVICES TO BASIS ("EVENT OF FORCE
MAJEURE"). Basis will notify the General Partner of any Event of Force Majeure.
Basis agrees that upon the restoration of Services following any Event of Force
Majeure, Basis will allow Genesis MLP and Genesis OLP to have equal priority
with Basis and its Affiliates, in accordance with prior practice, with respect
to access to the restored Service.
SECTION 8.4 Waiver of Trial, by Jury.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.4.
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<PAGE>
SECTION 8.5 Severability.
In the event any portion of this Agreement shall be found by a court
of competent jurisdiction to be unenforceable, that portion of this Agreement
will be null and void and the remainder of this Agreement will be binding on the
parties as if the unenforceable provisions had never been contained herein.
SECTION 8.6 Assignment.
Except for the ability of Basis to cause one or more of the Services
to be performed by another Basis Affiliate or third party provider, no party
shall have the right to assign its rights or obligations under this Agreement
without the consent of the other party.
SECTION 8.7 Entire Agreement, Supersedure.
This Agreement constitutes the entire agreement of the parties
relating to the performance of the Services, and all prior or contemporaneous
written or oral agreements are merged herein.
SECTION 8.8 Choice of Law.
This Agreement shall be subject to and governed by the laws of the
State of Texas, excluding any conflicts-of-law rule or principle that might
refer the construction or interpretation of this Agreement to the laws of
another state.
SECTION 8.9 Amendment or Modification.
This Agreement may be amended or modified from time to time only by a
written amendment signed by Genesis MLP, Genesis OLP and Basis.
SECTION 8.10 Conflicts.
In the event of any conflict between the terms of this Agreement and
the Conveyance Agreement or between the terms of this Agreement and the
Transition Services Agreement, the terms of the Conveyance Agreement or this
Agreement, as the case may be, shall control.
SECTION 8.11 Notices.
Any notice, request, instruction, correspondence or other document to
be given hereunder by any party to any other party (collectively, "Notice")
shall be in writing and delivered personally, by mail, postage prepaid, or by
telegram or telecopier, as follows:
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If to Basis:
Basis Petroleum, Inc.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to General Counsel
Fax No.: (713) 646-5278
If to Genesis MLP or Genesis OLP:
Genesis Energy, L.P.
Genesis Crude Oil, L.P.
c/o Genesis Energy, L.L.C.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to General Counsel
Fax No.: (713) 646-____
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may change the address
to which Notice is to be given to such Party by giving Notice as provided above
of such change of address.
SECTION 8.12 Further Assurances.
In connection with this Agreement and all transactions contemplated by this
Agreement each signatory party hereto agrees to execute and deliver such
additional documents and instruments as may be required for Basis to provide the
Services hereunder and to perform such other additional acts as may be necessary
or appropriate to effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement.
SECTION 8.13 Acknowledgment Regarding Certain Provisions.
EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES (a) THAT IT
HAS A DUTY TO READ THIS AGREEMENT AND THAT IT IS CHARGED WITH NOTICE AND
KNOWLEDGE OF THE TERMS HEREOF, (b) THAT IT HAS IN FACT READ THIS AGREEMENT AND
IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND
EFFECTS OF THIS AGREEMENT, AND (c) THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS
OF THIS AGREEMENT
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<PAGE>
PROVIDE FOR THE ASSUMPTION BY ONE PARTY OF, AND/OR RELEASE OF THE OTHER PARTY
FROM, CERTAIN LIABILITIES ATTRIBUTABLE TO THE MATTERS COVERED BY THIS AGREEMENT
THAT SUCH PARTY WOULD OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTY
HERETO FURTHER AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE
PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT SUCH PROVISIONS ARE
NOT "CONSPICUOUS".
Section 8.14 Definitions.
The following terms shall have the indicated meanings for the purposes of
this Agreement:
"Administrative and General Expenditures" shall mean all administrative and
general expenditures, including (i) salaries, bonus, incentive compensation and
related benefits, payroll taxes and expenses of personnel who render Services
related to the business or administration of Genesis MLP or Genesis OLP, (ii)
charges related to the computer and telecommunications services, (iii) the
administrative fee charged by Basis Affiliates to manage, administer and bill
for third party contracts related to the provision of Services hereunder, but
administrative and general expenditures shall not include charges related to
Basis' senior executive management. The Administrative and General Expenditures
shall be allocated to the General Partner in a fair and reasonable manner
determined by Basis in its sole discretion.
"Affiliate" shall mean, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question; provided,
however, that for the purposes of this Agreement neither the General Partner,
Genesis MLP, Genesis OLP, nor any Person controlled by Genesis MLP, Genesis OLP
or the General Partner shall be deemed to be an Affiliate of Basis. Salomon Inc
shall be deemed an Affiliate of Basis for purposes of this Agreement. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Applicable Period" shall mean the period from the Closing Date to the date
that neither the General Partner nor an Affiliate of Basis is the general
partner of Genesis OLP.
"Outsource" shall mean to cause a Service to be provided by a third party
provider.
"Transition Services Agreement" shall mean that certain Transition Services
Agreement, dated as of the date hereof, among Genesis LLC, Basis and Howell
Corporation, a Delaware corporation, Howell Crude Oil Company, a Delaware
corporation, and Howell Transportation Services, Inc., a Delaware corporation.
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<PAGE>
SECTION 8.15 No Third Party Beneficiary.
The provisions of this Agreement are enforceable solely by the parties to
this Agreement, and no Limited Partner, Assignee or other Person shall have the
right, separate and apart from the Partnership Entities, to enforce any
provision of this Agreement or to compel any party to this Agreement to comply
with the terms of this Agreement; provided, however, that Basis' Affiliates and
vendors are third party beneficiaries of those provisions of this Agreement that
apply to Basis' Affiliates and vendors and may enforce such provisions directly
against Genesis MLP and Genesis OLP.
SECTION 8.16 Termination.
This Agreement shall terminate upon the expiration of the Applicable Period
except for liabilities or obligations accruing prior to such termination. In
addition to the terms provided in Sections 2.1, 2.2 or 5.1 or as mutually or
otherwise agreed between Basis and the Partnership Entities, either the General
Partner on behalf of Genesis MLP and Genesis OLP or Basis shall have the right
to terminate this Agreement by giving written notice, signed by the terminating
party, to the other party and this Agreement shall terminate one hundred eighty
(180) days from the date on which notice is delivered.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on their behalf by their duly authorized officers.
BASIS PETROLEUM, INC.
By:_________________________________________
Name:
Title:
GENESIS ENERGY, L.P., a Delaware limited
partnership
By: GENESIS ENERGY, L.L.C., a Delaware
limited liability company
By:_________________________________________
Name:
Title:
GENESIS CRUDE OIL, L.P., a Delaware limited
partnership
By: GENESIS ENERGY, L.L.C., a Delaware
limited liability company
By:_________________________________________
Name:
Title:
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<PAGE>
EXHIBIT 10.6
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT, dated as of , 1996 (this
"Agreement"), is entered into by and among GENESIS ENERGY, L.P., a Delaware
limited partnership ("Genesis MLP"), GENESIS CRUDE OIL, L.P., a Delaware limited
partnership ("Genesis OLP"), SALOMON INC, a Delaware corporation ("Salomon"),
BASIS PETROLEUM, INC., a Texas corporation ("Basis"), and HOWELL CORPORATION, a
Delaware corporation ("Howell").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and as an inducement to consummate the transactions
contemplated by the Genesis MLP Partnership Agreement (as hereinafter defined)
and the Genesis OLP Partnership Agreement (as hereinafter defined), the parties
hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
-----------
SECTION 1.1. Terms Defined Herein. The following definitions shall be for
all purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Agreement" means this Non-Competition Agreement, as it may be amended,
supplemented or restated from time to time.
"General Partner" means Genesis Energy, LLC unless and until Genesis
Energy, LLC has transferred its general partner interests in Genesis MLP and
Genesis OLP in compliance with the requirements of the Genesis MLP Partnership
Agreement and the Genesis OLP Partnership Agreement, and thereafter shall mean
the transferee of such General Partner Interest.
"Genesis MLP Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Genesis Energy, L.P., dated as of _______,
1996, as it may be amended, supplemented or restated from time to time.
"Genesis OLP Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Genesis Crude Oil, L.P., dated as of
__________, 1996, as it may be amended, supplemented or restated from time to
time.
<PAGE>
"Group Member" means a member of the Partnership Group.
"Partnership Group" means Genesis MLP, Genesis OLP and any other Subsidiary
of Genesis MLP, treated as a single consolidated entity.
"Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Restricted Party" has the meaning assigned to such term in Section 2.1(a).
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of such partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
ARTICLE 2
COVENANT NOT TO COMPETE
-----------------------
SECTION 2.1. Outside Activities. (a) During the period commencing on the
Closing Date and ending on the tenth anniversary of the Closing Date, each of
Salomon, Basis and Howell and their respective Subsidiaries (other than a Group
Member) (each, a "Restricted Party") shall not engage in the business of (i)
crude oil gathering at the wellhead in the states of Alabama, Florida, Kansas,
Louisiana, Mississippi, New Mexico, Oklahoma or Texas, or any states contiguous
to such states or (ii) transporting for third parties crude oil by pipeline
along the routes of the crude oil pipelines owned by the Partnership Group as of
the Closing Date; provided, however, that notwithstanding the foregoing, (A) a
Restricted Party will not be restricted from any activity incidental to its
refinery operations so long as such activities are not substantially in
competition with the lease gathering operations of the Partnership Group, (B)
the restrictions set forth in this Section 2.1(a) will not prevent a Restricted
Party from entering into joint ventures or strategic alliances with a Group
Member, (C) the restrictions set forth in this Section 2.1(a) will not apply to
purchases of crude oil for feedstock supply for Howell's research and reference
fuels business, and
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<PAGE>
(D) if Salomon, Basis or Howell sells or otherwise disposes of its entire
interest (direct and indirect) in the General Partner to a Person that is not an
Affiliate of the Person making such sale or disposition, the restrictions set
forth in this Section 2.1(a) shall no longer apply to the Person making such
sale or disposition or its Subsidiaries.
(b) Except as specifically provided in Section 2.1(a), it is
understood that there is no restriction upon any of the Restricted Parties with
respect to engaging in any of the activities conducted by the Partnership Group,
even if in direct competition with the Partnership Group, and none of the
Restricted Parties will have an obligation pursuant to this Agreement or
otherwise to present business opportunities to the Partnership Group.
ARTICLE 3
MISCELLANEOUS
-------------
SECTION 3.1. Headings. All Article or Section headings in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any of the provisions hereof.
SECTION 3.2. Integration. This Agreement supersedes all previous
understandings or agreements between the parties, whether oral or written, with
respect to its subject matter. This document is an integrated agreement which
contains the entire understanding of the parties. No understanding,
representation, promise or agreement, whether oral or written, is intended to be
or shall be included in or form part of this Agreement unless it is contained in
a written amendment hereto executed by the parties hereto after the date of this
Agreement.
SECTION 3.3. Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
SECTION 3.4. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law.
SECTION 3.5. Amendments and Waivers. The parties hereto, by mutual
agreement in writing, may amend, modify or supplement this Agreement; provided,
however, that Genesis MLP and Genesis OLP may not agree to any amendment,
modification or supplement of this Agreement unless such amendment, modification
or supplement is approved by the Audit Committee of the General Partner.
SECTION 3.6. Enforcement. The Restricted Parties agree and acknowledge
that the Partnership Group does not have an adequate remedy at law for the
breach by the Restricted Parties of the covenants and agreements set forth in
Section 2.1, and that any breach by the Restricted Parties of the covenants and
agreements set forth in Section 2.1 would result in irreparable injury
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<PAGE>
to the Partnership Group. The Restricted Parties further agree and acknowledge
that any Group Member may, in addition to the other remedies which may be
available to the Partnership Group, file a suit in equity to enjoin the
Restricted Parties from such breach, and consent to the issuance of injunctive
relief hereunder.
SECTION 3.7. Severability. In the event that any provision contained in
this Agreement shall, for any reason, be judicially declared to be invalid,
illegal, unenforceable or void in any respect, such declaration shall not have
the effect of invalidating or voiding the remainder of this Agreement and the
parties hereto agree that the part or parts of this Agreement so declared to be
invalid, illegal, unenforceable or void in any respect will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part had never been included herein.
SECTION 3.9 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or sent by
facsimile transmission or by registered or certified mail, postage prepaid,
return receipt requested, as follows:
If to Salomon:
Salomon Inc
Seven World Trade Center
New York, New York 10048
Attention: Managing Director
Fax No.: (212) 783-3219
If to Basis:
Basis Petroleum, Inc.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to General Counsel
Fax No.: (713) 646-5278
If to Howell:
Howell Corporation
1111 Fannin, Suite 1500
Houston, Texas 77002
Attention: Robert T. Moffett
Fax No.: (713) 658-4007
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<PAGE>
If to the Partnership Group:
Genesis Energy L.P.
Genesis Crude Oil, L.P.
c/o Genesis Energy, L.L.C.
500 Dallas, Suite 3200
Houston, Texas 77002
Attention: President
with a copy to General Counsel
Fax No.:
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered or electronically transmitted or sent after mailing
thereof.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
GENESIS ENERGY, L.P.
By: GENESIS ENERGY, L.L.C., general partner
By:_________________________________________
Name:
Title:
GENESIS CRUDE OIL, L. P.
By: GENESIS ENERGY, L.L.C., general partner
By:_________________________________________
Name
Title:
SALOMON INC
By:_________________________________________
Name:
Title:
BASIS PETROLEUM, INC.
By:_________________________________________
Name:
Title:
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<PAGE>
HOWELL CORPORATION
By:_________________________________________
Name:
Title:
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<PAGE>
EXHIBIT 10.7
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of November 15, 1996
by and between Genesis Energy, L.L.C. (the "Company") and ("Executive").
RECITALS:
--------
A. The Company is the general partner of Genesis Energy L.P. ("Genesis
MLP") and Genesis Crude Oil, L.P. ("Genesis OLP") and is engaged in the crude
oil gathering, marketing and pipeline business.
B. Executive is the for the Company.
C. Executive desires to obtain the benefits and incentives from the
Company of a written employment agreement having an initial term through
December 31, 1999, and, at the Company's election, certain extension terms.
D. The Company desires to enter into such an employment agreement with
Executive.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows:
SECTION 1. Employment. The Company hereby employs Executive as
of the Company; provided, however, that Executive will continue as an employee
of Executive's employer on the date hereof but will be seconded to the Company
until January 1, 1997 at which time Executive will become employed by the
Company. In such capacity, Executive will have the responsibilities and perform
the services and duties described in Section 3 of this Agreement. Executive
hereby accepts such employment and agrees to perform such services and duties
for the Company.
SECTION 2. Term. This Agreement will be for an initial term commencing
on the effective date of that certain initial public offering of limited
partnership interests in Genesis MLP and ending on December 31, 1999 (the
"Initial Term"), unless sooner terminated in accordance with the provisions
hereof. Thereafter, the Company will have the option, exercisable by notice to
Executive given not less than 60 days prior to the expiration of the Initial
Term, or any Extension Term (as hereinafter defined), to extend this Agreement
for one additional term of two calendar years ending December 31, 2001, and, if,
in each instance, so extended, for five additional terms of one calendar year
each with the term of the last extension, if so exercised, expiring on
December 31, 2006 (each such extension an "Extension Term"). Anything herein to
the contrary notwithstanding, this Agreement, and Executive's employment
hereunder, may be terminated at any time, with or without cause, upon notice of
termination to Executive; provided, however, that in the event of any such
<PAGE>
termination without cause (including any Involuntary Termination (as hereinafter
defined)), Executive will be entitled to the Termination Compensation (as
hereinafter defined) set forth herein.
SECTION 3. Duties of Executive. As , Executive will
report directly to the President and Chief Executive Officer and will have such
duties and responsibilities with respect to the Company, Genesis MLP and Genesis
OLP as customarily would be undertaken by the of
companies engaged in businesses similar to, or competitive with, the Company.
Executive will not be required to hold any other offices, positions or
directorships of the Company and/or any subsidiary or affiliate of the Company
during the term of this Agreement. Executive will act in the best interest of
the Company, Genesis MLP and Genesis OLP and their subsidiaries and affiliates
in the performance of Executive's services and duties under this Agreement.
Without the prior consent of the Non-Executive Chairman of the Board of
Directors of the Company, Executive will not actively engage in any other
business or business activity; provided, however, that nothing herein contained
will limit the right of Executive to manage Executive's personal investment
activities provided that such personal investment activities do not materially
interfere with the performance of Executive's duties and responsibilities
hereunder or otherwise materially conflict with any policies which have been
promulgated and distributed by the Company.
SECTION 4. Compensation.
4.1 Compensation during the Initial Term. Subject to the terms and
conditions of this Agreement, the Company will cause Executive to be paid an
annual salary of $ for the partial year ending December 31, 1996 and
will pay Executive an annual salary of $ for each of the years ending
December 31, 1997, 1998 and 1999 (such annual salary hereinafter referred to as
the "Base Compensation"). The Base Compensation will reviewed annually by the
Compensation Committee of the Board of Directors of the Company. In addition,
Executive will be entitled to participate in the Company's Incentive Plan in
accordance with the terms thereof (the "Incentive Plan Amount").
4.2 Compensation during the Extension Terms. The Base Compensation
paid by the Company to Executive during the Extension Terms will be established
by the Company in connection with the election to extend the term of this
Agreement pursuant to Section 2, will not be less than the Base Compensation
multiplied by 1.05 with respect to the first Extension Term and thereafter not
less than the Base Compensation in effect immediately prior to such election for
any subsequent Extension Term and will be advised to Executive simultaneously
with notice from the Company of its election to exercise an Extension Term
option.
4.3 Award of Restricted Units. The Company will grant to Executive
Restricted Units ("Initial Award Units") in an amount determined by dividing
$600,000 by the initial offering price of a limited partnership interest in
Genesis MLP, pursuant to the Company's Restricted Unit Plan, in accordance with
the terms thereof, promptly upon the adoption of such plan by the Board
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<PAGE>
of Directors of the Company. The Initial Award Units shall vest in accordance
with terms of the Restricted Unit Plan.
4.4 Short Term Disability Salary Continuance. In the event of a short
term illness or injury that would entitle Executive to salary continuance
benefits under the Company's short term disability salary continuance plan (the
"STD Plan") in effect from time to time, and Executive's years of service with
the Company, as determined in accordance with the STD Plan, are not sufficient
to provide 100% of the maximum amount of salary continuance that would otherwise
be available to Executive with more years of service (the "Maximum STD Payment")
the Company will pay Executive, as and when salary continuance payments are made
under the STD Plan, an amount equal to the difference between the Maximum STD
Payment and the payment made to Executive under the STD Plan.
SECTION 5. Payment of Compensation. The compensation payable to Executive
pursuant to Section 4 of this Agreement will be paid as follows:
(i) During the term of Executive's employment by the Company
(A) the Base Compensation will be paid to Executive in accordance
with the Company's customary payroll practices; and
(B) the Incentive Plan Amount, if any, will be paid in the manner
determined by the Compensation Committee of the Board of
Directors of the Company in accordance with the Incentive
Plan.
(ii) Upon termination of Executive's employment by the Company in
accordance with Section 7.5(A) of this Agreement, the Termination
Compensation (as hereinafter defined), if any, will be paid in
accordance with the provisions of Section 7.5(C).
All payments of Base Compensation, the Incentive Plan Amount, Initial Award
Units and any other amounts paid to Executive will be subject to such deductions
and withholdings as, from time to time, may be required by law or as may be
elected by Executive pursuant to the Company's benefit plans in effect from time
to time.
SECTION 6. Employment Benefits. During the Initial Term or any Extension
Term of Executive's employment by the Company, Executive will be entitled to
four weeks paid vacation. In addition, Executive will be entitled to sick leave
in accordance with the Company's sick leave plans in effect from time to time,
and to participate, subject to qualification requirements, in such medical,
dental, life or other insurance or employee benefit plans as the Company may
have in effect from time to time and generally offer to its employees.
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<PAGE>
SECTION 7. Termination.
7.1 Termination for Cause. This Agreement will be null and void
(except for the provisions of Section 8 concerning Confidentiality which will
survive any termination of this Agreement) upon the termination of Executive's
employment for Cause. As used in this Agreement, "Cause" will mean (a)
conviction of Executive, in a final non-appealable decision, in a court of law
of a felony, a crime involving moral turpitude or any crime or offense involving
the misuse or misappropriation of money, credit or other property of the Company
or any subsidiary or affiliate of the Company which hereinafter may employ
Executive; provided, however, that the Company may suspend Executive's
employment and any payment due Executive under this Agreement during the
pendency of any such criminal charge; (b) violation in any material respect of
any material rule or policy promulgated and distributed by the Company, Genesis
MLP, Genesis OLP or any subsidiary or affiliate of the Company which hereinafter
may employ Executive (hereinafter the "Genesis Affiliates"); (c) violation, as
determined in a final non-appealable decision, of any rule or regulation of any
regulatory or self-regulatory body to which any of the Genesis Affiliates is
subject or of which any of the Genesis Affiliates is a member including without
limitation, the New York Stock Exchange, The National Association of Securities
Dealers, Inc., the Commodity Futures Trading Commission and the New York
Mercantile Exchange, which violation would materially reflect on Executive's
character, competence or integrity; (d) a material breach by Executive of
Executive's duty of loyalty to any of the Genesis Affiliates including, by way
of illustration, Executive's pretermination of employment solicitation of
customers or employees of any of the Genesis Affiliates, unauthorized removal of
Confidential Business Information (as hereinafter defined) from the premises of
any of the Genesis Affiliates and the dissemination thereof or refusal to return
such Confidential Business Information to the Company; (e) Executive's material
breach of this Agreement; or (f) Executive's gross misconduct, gross
insubordination or willful refusal to perform the lawful duties of his
employment. In no event will Executive be entitled to any compensation or
payments under this Agreement following Executive's termination, or deemed
termination, for Cause, provided that Executive's termination for Cause under
this Agreement shall not affect Executive's rights with respect to any Initial
Award Units that shall have vested at the time of termination. If, after
Executive's termination of employment, it is determined that Executive's
employment could have been terminated for Cause under items (a),(b),(c) or (d)
above and such grounds for termination resulted in or reasonably could be
expected to result in injury to the business, reputation or prospects of the
Company or the Genesis Affiliates, Executive's employment shall, at the election
of the Company in its sole discretion, be deemed to have been terminated for
Cause. If Executive's employment and payment are suspended pursuant to item (a)
above, Executive will have the right, exercisable by notice to the Company given
within 15 days after any such suspension, to treat such suspension as a
termination for Cause and resign from the Company without being bound by the
non-compete provisions of Section 10 of this Agreement.
Prior to any termination of Executive's employment for Cause, the
Company shall afford Executive an opportunity to meet with the Company's
independent directors and Chairman of the Board and present Executive's position
with respect to such grounds for termination.
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<PAGE>
7.2 Involuntary Termination. Executive's employment will be considered
to have been terminated involuntarily (an "Involuntary Termination") upon
occurrence of the following: (a) the duties and responsibilities of Executive
shall have been substantially and materially reduced such that Executive's
duties and responsibilities would no longer reasonably be considered to be
comparable to those of the of companies similar to, or competitive
with, the Company, (b) reduction in Executive's Base Compensation or exclusion,
other than for failure to meet qualification requirements, from the Company's
employee benefit plans in effect from time to time and generally offered to its
employees, (c) a change of greater than 75 miles in the location, on the date
hereof, of the Company's principal executive offices or (d) the Company's
material breach of this Agreement. Executive will promptly, but in any event
within 30 days after the occurrence or discovery thereof, notify the Company of
any event which Executive considers an Involuntary Termination.
7.3 Termination under Benefit Plans. If Executive's employment is
terminated in accordance with the terms of the Company's long term disability
plan in effect from time to time, any unpaid portion of Executive's Base
Compensation will be due Executive pursuant to this Agreement only for periods
prior to such termination, and any payment pursuant to the Incentive Plan may be
made solely in the discretion of the Compensation Committee and otherwise in
accordance with the terms of such plan.
7.4 Termination due to Death. If Executive dies while employed by the
Company, this Agreement will immediately terminate and, except for any unpaid
portion of Executive's Base Compensation for periods prior to Executive's death,
no further payments will be due hereunder, whether to Executive, Executive's
heirs, estate or otherwise; provided, however, that Executive's heirs and estate
will be entitled to retain any Initial Award Units for a period of six months
after Executive's death. Executive shall have the right to designate in writing
from time to time a beneficiary or beneficiaries by filing a written notice of
such designation with the Company, which Beneficiary shall be entitled to
receive any amount required to be paid as provided in this Section 7.4 in the
event of the Executive's death. In the event that the beneficiary designated by
Executive does not survive Executive and no successor beneficiary is selected or
in the event no valid designation has been made, Executive's beneficiary shall
be such Executive's estate. In the event of the death of Executive, any payment
required to be made hereunder to Executive shall be made to such Executive's
beneficiary or beneficiaries. In the event Executive's beneficiary is the
Executive's estate, no payment shall be made unless the Company shall have been
furnished with such evidence as the Company may deem necessary to establish the
validity of the payment.
7.5 Termination Compensation.
(A) In the event the Company (i) terminates Executive's employment
during the Initial Term or any Extension Term for any reason other
than Cause, including any Involuntary Termination, or as provided
in Section 7.3 of this Agreement, or (ii) does not exercise its
option to extend the Initial Term or any Extension Term of this
Agreement, the Company will pay Executive, in
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<PAGE>
full settlement of all sums due Executive from the Company
(excluding, however, any sums then due Executive under any of the
Company's benefit plans or with respect to accrued vacation),
whether under this Agreement or arising at law or in equity, a
termination payment (the "Termination Compensation") equal to the
greater of (i) Executive's Base Compensation for the remaining
period of the Initial Term or Extension Term then in effect, as
the case may be, or (ii) one year of Executive's Base Compensation
at the level in effect at the time of termination or expiration
without exercise of the option to extend. In addition, Executive
will be entitled to (a) retain any Initial Award Units for a
period of six months after Executive's termination or after
expiration of this Agreement without the exercise by the Company
of the option to extend, (b) such Incentive Compensation, if any,
as may be payable to Executive in accordance with any Incentive
Compensation plan then in effect and (c) in the event Executive
elects to continue medical and/or dental coverage under the
provisions of the Consolidated Omnibus Budget Reconciliation Act
(COBRA), the Company will pay Executive, as and when required to
maintain such coverage, an amount equal to the required premiums
for the duration of the Non-Compete Period (as hereinafter
defined).
(B) As a condition to the right to receive the Termination
Compensation, Executive will (i) execute and deliver to the
Company a severance and release agreement in the form attached
hereto as Exhibit A, and (ii) Executive will not, for a period
(the "Non-Compete Period") equal to (a) six months in the event
the Company does not exercise its option to extend this Agreement
or (b) or in the event of termination of the shorter of one year
after the date of Executive's termination or the unexpired portion
of the Initial Term or Extension Term, as the case may be, but in
no event less than six months, either directly or indirectly,
compete with the Company in the crude oil gathering, marketing
(including domestic crude oil trading but excluding trading solely
on the New York Mercantile Exchange or other commodities
exchanges) and transportation (including pipeline) business
whether as an employee, officer, director, shareholder (other than
as an ordinary shareholder of a publicly traded entity), partner,
proprietor or otherwise, in the geographical areas in which the
Company then operates or is engaged in business.
(C) The Termination Compensation will be paid to Executive in the
event of a termination pursuant to Section 7.5(A) above, in four
equal installments with the first installment due on the date of
such termination and the remaining installments at equal intervals
thereafter over the applicable Non-Compete Period.
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SECTION 8. Confidentiality. Executive acknowledges that the business of
the Company and the Genesis Affiliates is highly competitive and that the
Company's method of operation, crude oil trading practices, financial condition
and other matters relating to the conduct of such business, and the conduct of
such business as previously conducted by Basis Petroleum, Inc. and Howell
Corporation and its affiliates, comprise confidential business information (the
"Confidential Business Information") which is unique and valuable to the
Company. Executive further acknowledges that the use of the Confidential
Business Information by Executive in competition with the Company and the
Genesis Affiliates will be highly detrimental to the continued successful
operation of the business of the Company and the Genesis Affiliates. Executive
will keep the Confidential Business Information confidential and will not
disclose it to any unauthorized parties. Executive acknowledges and agrees that
the Company shall have the broadest possible protection, consistent with public
policy, of the business of the Company and the Genesis Affiliates from the
wrongful use by Executive of such Confidential Business Information.
Confidential Business Information shall not include any information which is
generally available to the public other than as a result of a disclosure by
Executive or which was known to Executive prior to Executive's employment with
the Company or with Basis Petroleum, Inc. or Howell Corporation and its
affiliates, as the case may be.
SECTION 9. Remedies. Each of the parties acknowledges that the rights
hereunder are necessarily of a special, unique and extraordinary nature, and
that the loss arising from a breach hereof cannot reasonably and adequately be
compensated by money damages and will cause a party to suffer irreparable harm.
Accordingly, upon the breach by a party of any material term of this Agreement
at any time, the other party shall be entitled to injunctive or other
extraordinary relief in case of such breach, and such injunctive or other
extraordinary relief shall be cumulative to, but not in limitation of, any other
remedies to which the party may be entitled as a result of the breach of such
Agreement. In the event Executive breaches this Agreement, the Company will
also have the right, in addition to any other rights it may have at law, in
equity or under this Agreement to cancel, withhold and/or offset any payments
due Executive hereunder against any payments otherwise due to Executive from the
Company, Genesis MLP or Genesis OLP. In any action to enforce any right or
remedy hereunder, the prevailing party in a final non-appealable decision of a
court of competent jurisdiction shall be entitled to recover such prevailing
party's reasonable legal fees and expenses.
SECTION 10. Noncompetition. If Executive resigns or otherwise terminates
his employment for any reason other than the Company's breach of a material
provision of this Agreement, or as a result of an Involuntary Termination, then,
Executive will not, for the duration of the Non-Compete Period, directly or
indirectly compete with the Company in the crude oil gathering, marketing
(including domestic crude oil trading but excluding trading solely on the New
York Mercantile Exchange or other commodities exchanges) and transportation
(including) pipeline business at the time of such resignation or termination
whether as an employee, officer, director, shareholder (other than as an
ordinary shareholder of a publicly traded entity), partner, proprietor or
otherwise in the geographical areas in which the Company then operates or is
engaged in business. Executive will not be entitled to any compensation or
payments under this Agreement following any
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such resignation or termination except for Incentive Compensation, if any,
payable to Executive in accordance with any Incentive Compensation plan then in
effect.
SECTION 11. Amendments; Waivers. This Agreement may not be modified,
revised, amended or waived in any manner except by an instrument in writing
signed on behalf of each of the parties by their respective duly authorized
representatives. No delay on the part of either party in exercising any right,
power or privilege under this Agreement will operate as a waiver thereof, nor
will any partial exercise or waiver of any right, power or privilege under this
Agreement preclude any other or further exercise of such right, power or
privilege.
SECTION 12. Severability. In the event that any provision of this
Agreement is determined by a court of competent jurisdiction to be invalid or
unenforceable in any respect, the parties will amend this Agreement to provide a
substitute provision which as nearly as possible carries out the intent of the
provision so held invalid or unenforceable; provided, however, that no such
amendment will in any way materially increase the obligation of either party
under this Agreement. Any such determination of invalidity or unenforceability
will not affect such provision in any other respect or affect any other
provision of this Agreement all of which will remain in full force and effect.
SECTION 13. Notices. All notices and other communications under this
Agreement will be in writing and will be duly given (i) upon delivery if
delivered personally with signed receipt acknowledging delivery; or (ii) upon
dispatch if telexed (with answerback confirmation) or telegraphed (and if
telegraphed confirmed by first-class mail as hereinafter provided); or (iii) if
mailed, by first class mail, postage prepaid, ten business days after date of
mailing, addressed as follows:
(a) If to the Company
Genesis Energy, L.L.C.
One Allen Center, Suite 3200
500 Dallas
Houston, Texas 77002
Attention: President
(b) If to Executive
at such address as appears on the records of the Company
or to such other address as a party may from time to time
designate in the manner heretofore provided.
SECTION 14. Governing Law and Jurisdiction. This Agreement and the
obligations of the parties hereunder will be governed by and construed in
accordance with the substantive laws of the
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State of Texas without regard to any conflict of law rules. Each party consents
to the jurisdiction of the courts located in Harris County, Texas with respect
to any action arising hereunder.
SECTION 15. Assignment. This Agreement, and any rights or obligations
hereunder, may not be assigned by either party hereto without written consent of
the other; provided, however, that the Company may assign this Agreement to
Genesis MLP, Genesis OLP, an affiliate of the Company which has succeeded to all
or substantially all of the business of the Company or to a third party
acquiring all or substantially all of the business, equity or assets of the
Company.
SECTION 16. No Third Party Beneficiaries. No person other than Executive
and his beneficiaries on the one hand and the Company or its successors and
assigns on the other hand shall be made a party to this Agreement directly or
indirectly or have any rights or benefits under this Agreement.
SECTION 17. Captions. The titles, captions and headings in this Agreement
are inserted for convenience of reference only and are not intended to form a
part of, or to affect the meaning or interpretation of, this Agreement.
SECTION 18. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
Agreement, and will become a binding Agreement when one or more counterparts
have been signed by each of the parties and delivered to the other party.
SECTION 19. Entire Agreement. This Agreement constitutes the entire
agreement between Executive and the Company concerning the subject matter hereof
and supersedes all previous negotiations, commitments and writings with respect
to such subject matter.
SECTION 20. Advice of Counsel. Executive represents and warrants that
Executive has been advised by competent counsel of his own selection as to the
meaning and significance of this Agreement and all of the terms hereof.
______________________________
GENESIS ENERGY, L.L.C.
By: BASIS PETROLEUM, INC.
As Member
By:______________________________________
Jeffrey R. Serra, Chairman, President
and Chief Executive Officer
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EXHIBIT A
---------
________________,199_____
[Name]
[Address]
[Address]
Dear [Name]:
This will confirm that your employment at Genesis Energy, L.L.C. (the
"Company") was terminated effective ______________________________, 199_____.
Pursuant to that certain Employment Agreement between the Company and you dated
as of November , 1996 (the "Employment Agreement"), the Company has
agreed that, in addition to your salary and accrued vacation time through
______________________________, 199_____, it will pay you the Initial Term
Termination Compensation or Extension Term Termination Compensation, as
applicable (as defined in and determined and payable in accordance with the
Employment Agreement).
As a condition to the receipt of the Initial Term or Extension Term
Termination Compensation and in consideration thereof, you have agreed, and
hereby agree (i) that the payment of the Termination Compensation, and your
salary and accrued vacation through the above specified date of termination
shall be full settlement of all compensation due to you by the Company, Genesis
MLP and Genesis OLP and their affiliates, (ii) to release the Company, Genesis
MLP and Genesis OLP and each of their officers, directors and employees and all
of their subsidiaries and affiliates and their directors, officers and employees
from any claims of any kind whatsoever, except as provided herein, (iii) to
maintain the confidentiality of all information concerning the business of the
Company, Genesis MLP and Genesis OLP and their subsidiaries and affiliates that
you have received in the course of your employment with the Company and its
affiliates except information which is a matter of public record or is generally
known in the trade and (iv) at the request of the Company or any of its
subsidiaries or affiliates, at any time during the six-year period ending on the
sixth anniversary of the above specified date of termination, to give testimony
at or pursuant to any judicial, arbitral, administrative or other judicial or
quasi-judicial proceedings, including depositions and other pretrial evidentiary
proceedings and to cooperate and assist such companies in the preparation,
prosecution or defense of any such proceedings for reasonable periods of time.
In consideration of your agreement specified in subprovision (iv) above, the
Company agrees to reimburse you for the expenses and out of pocket costs which
you incur in connection with the services to be rendered described in
subprovision (iv) above.
This release and waiver includes but is not limited to any rights or
claims under federal, state or local law, statutory or decisional, for wrongful
or abusive discharge or for any personal injury or tort, for breach of any
contract, or for discrimination based upon race, color, ethnicity, sex, age,
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national origin, religion, disability, or any other unlawful criterion or
circumstance, including without limitation rights or claims under the Age
Discrimination in Employment Act of 1967, as amended, including the Older
Workers Benefit Protection Act of 1990 ("ADEA") (except that you do not waive
ADEA rights or claims that may arise after the date of this agreement). Your
signature below will also constitute confirmation that you have been given at
least 21 days within which to consider this release and its consequences, and
that you have been advised prior to signing this agreement to consult with an
attorney or any personal or financial advisor you choose.
For a period of seven days following the execution of this agreement
and release (the "Revocation Period"), you may revoke this agreement and
release. In the event of such revocation, the Initial Term or Extension Term
Termination Compensation will not be paid to you and this agreement and release
will be null and void.
Kindly sign and return a copy of this letter in confirmation of the
foregoing.
Very truly yours,
GENESIS ENERGY, L.L.C.
By: BASIS PETROLEUM, INC.
As Member
By:______________________________________
Duly Authorized Officer
Confirmed:
___________________________
[Name]
___________________________
Date
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