SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 3, 1996
___________________
HOWELL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1-8704 74-1223027
(Commission File Number) (I.R.S. Employer Identification No.)
1111 Fannin, Suite 1500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 658-4000
<PAGE>
Item 2. Disposition of Assets
On December 3, 1996 (the "Closing Date"), Genesis Crude Oil, L.P., a
Delaware limited partnership ("Buyer"), Genesis Energy, L.P., a Delaware limited
partnership ("MLP"), and Genesis Energy, L.L.C., a Delaware limited liability
company ("LLC"), entered into a Purchase & Sale and Contribution & Conveyance
Agreement ("Agreement") with Howell Corporation and certain of its subsidiaries
("Registrant") and Basis Petroleum, Inc. ("Basis"), a subsidiary of Salomon Inc
("Salomon"). Pursuant to the Agreement, Registrant agreed to sell and convey
certain of its assets to Buyer. These assets consist of the crude oil gathering
and marketing operations and pipeline operations of Registrant (referred to
hereafter as the "Business").
Buyer was formed by MLP and LLC to acquire the Business from Registrant and
similar assets from Basis. MLP is owned 98% by limited partners and 2% by LLC,
which is the general partner. LLC is owned 46% by Registrant and 54% by Basis.
MLP made an initial public offering of 7,500,000 common units. Additionally,
the underwriters of the transaction have exercised their option to purchase an
additional 1,125,000 common units to cover overallotments. The sales of the
initial 7,500,000 common units and the 1,125,000 additional common units have
been treated in this report on Form 8-K as though both transactions have been
completed.
In accordance with the Agreement, Registrant received cash of approximately
$74.9 million and 991,300 subordinated limited partner units in Buyer in
exchange for its sale and conveyance of the Business. Except as specifically
provided in the Agreement, Registrant retained all liabilities related to the
Business arising from the operations, activities and transactions of the
Business up through the Closing Date, including various environmental related
liabilities. Registrant made various representations and warranties as to
itself and the Business and has agreed to indemnify Buyer for any breaches
thereof. Claims for breaches of such representations and warranties must be
brought before December 3, 2001. Registrant has also agreed to perform, and
retain the liability for, the cleaning of certain tanks used in the pipeline
operations.
On the Closing Date, Registrant entered into various agreements with Buyer,
MLP and LLC pursuant to the Agreement including (a) a noncompetition agreement
prohibiting Registrant from competing with the Business for a period of ten
years; (b) an agreement relating to the purchase of crude oil by Registrant for
use in its technical fuels business and the sale of crude oil by Registrant from
its oil and gas exploration and production business; (c) an agreement whereby
Registrant will provide certain transitional services to Buyer; (d) an agreement
whereby MLP will sell additional limited partner units to the public and use the
proceeds to redeem the subordinated limited partner units in Buyer owned by
Registrant after certain conditions are met; and (e) an agreement whereby one-
half of the subordinated limited partner units owned by Registrant are pledged
to secure Registrant's indemnification of Buyer for environmental liabilities.
Also at Closing, Registrant entered into an agreement with Salomon which
provides (a) an unconditional obligation of Registrant to buy its 46% share of
additional limited partner interests ("API's") from Salomon if Registrant (as a
member of LLC) has approved an acquisition by Buyer and (b) to the extent API's
are outstanding, an obligation by Registrant to purchase 46% of such outstanding
API's, but only to the extent of any distributions made to Registrant by Buyer
on Registrant's subordinated limited partner units.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996 Page F-1
Pro Forma Condensed Consolidated Statements of Earnings:
Year Ended December 31, 1995 Page F-2
Nine Months Ended September 30, 1996 Page F-3
The Pro Forma Condensed Consolidated Balance Sheet of the Registrant as of
September 30, 1996, reflects the financial position of the Registrant after
giving effect to the disposition of the Business discussed in Item 2 and
assumes the disposition took place on September 30, 1996. The Pro Forma
Condensed Consolidated Statements of Earnings for the year ended December 31,
1995, and the nine months ended September 30, 1996, assume that the
disposition occurred on January 1, 1995, and January 1, 1996, respectively,
and are based on the operations of the Registrant for the year ended December
31, 1995 and the nine months ended September 30, 1996.
The unaudited pro forma condensed consolidated financial statements have
been prepared by the Registrant based upon assumptions deemed proper by it.
The unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations
of the Registrant, or of the financial position or results of operations of
the Registrant that would have actually occurred had the transaction been in
effect as of the date or for the periods presented. In addition, it should
be noted that future filings of Registrant's financial statements will
reflect the disposition only from December 3, 1996, the Closing Date.
The Pro Forma Condensed Consolidated Statements of Earnings for the year
ended December 31, 1995, and the nine months ended September 30, 1996, assume
that all cash proceeds were used to retire debt and therefore reduce interest
expense for the periods. The gain on the disposition of the assets is not
included in such Pro Forma Condensed Combined Statements of Earnings.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of the Registrant.
(c) Exhibits
2.1 Purchase & Sale and Contribution & Conveyance Agreement, dated as of
November 26, 1996, by and among the Registrant, Buyer, the MLP, the
LLC and Basis. (Registrant hereby agrees to furnish supplementally to
the Securities and Exchange Commission upon request a copy of any
omitted schedule or exhibit, all of which are listed in the Table of
Contents of the Purchase & Sale and Contribution & Conveyance
Agreement.)
2.2 First Amendment to Purchase & Sale and Contribution & Conveyance
Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOWELL CORPORATION
(Registrant)
Date: December 18, 1996 By /s/ Robert T. Moffett
-----------------------
Robert T. Moffett
Vice President, General Counsel
and Secretary
<PAGE>
<TABLE>
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1996
(UNAUDITED)
<CAPTION>
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
Assets (Dollars in thousands)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,110 $ - $ (1,556)<F2> $ 1,554
24,625 <F3>
(25,625)<F5>
Trade accounts receivable 77,178 (69,625) 7,553
Inventories 5,476 (3,045) 2,431
Other current assets 1,699 (162) 1,537
--------- --------- -------- ---------
Total current assets 88,463 (72,832) (2,556) 13,075
--------- --------- -------- ---------
Property, plant and equipment:
Oil and gas properties 278,594 - 278,594
Mineral fee interests 18,188 - 18,188
Other 112,179 (78,779) 33,400
Less accumulated depreciation,
depletion and amortization (218,719) 8,444 (210,275)
--------- --------- -------- ---------
Net property and equipment 190,242 (70,335) - 119,907
--------- --------- -------- ---------
Investment in Genesis LLC and MLP - - 5,006 <F2> 20,504
15,498 <F3>
Other assets 1,944 (232) 1,712
--------- --------- -------- ---------
Total assets $ 280,649 $(143,399) $ 17,948 $ 155,198
========= ======== ======== =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 14,362 $ (6,147) $ (8,215)<F5>$ -
Note payable on demand - - 3,450 <F2> 3,450
Accounts payable 70,655 (69,328) 1,327
Accrued liabilities 8,589 (3,822) 4,767
Accrued income taxes payable - - 2,920 <F4> 2,920
--------- --------- -------- ---------
Total current liabilities 93,606 (79,297) (1,845) 12,464
--------- --------- -------- ---------
Deferred income taxes 21,659 - 3,949 <F4> 25,608
--------- --------- -------- ---------
Other liabilities 459 - - 459
--------- --------- -------- ---------
Long-term debt 83,805 (42,055) (17,410) <F5> 24,340
--------- --------- -------- ---------
Commitments and contingencies - - - -
Total shareholders' equity 81,120 (22,047) 33,254 92,327
--------- --------- -------- ---------
Total liabilities and
shareholders' equity $ 280,649 $(143,399) $ 17,948 $ 155,198
========= ======== ======== =========
<FN>
<F1>
To eliminate assets and liabilities included in the balance sheet of the
Business as of September 30, 1996.
<F2>
To reflect the investment in LLC by Registrant. The investment consisted of
cash totaling $1.6 million and a note in the amount of $3.5 million. Through
its investment in LLC, Registrant holds a general partner interest in both MLP
and Buyer.
<F3>
To reflect the net proceeds from the sale of the Business, net of the repayment
of debt secured by assets of the Business which was eliminated in (a) above, and
the receipt of 991,300 subordinated limited partner units in Buyer.
<F4>
To reflect income tax liabilities related to the transactions.
<F5>
To reflect the use of unexpended net proceeds to reduce other debt of
Registrant.
</FN>
</TABLE>
<PAGE>
<TABLE>
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(dollars and shares in thousands except per share amount)
<CAPTION>
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
<S> <C> <C> <C> <C>
Revenues $673,537 $(630,794) $ - $42,743
-------- --------- ------ -------
Costs and expenses:
Products including operating expenses 646,676 (617,720) 28,956
Selling, general and administrative
expenses 11,748 (4,116) 7,632
-------- --------- ------ -------
658,424 (621,836) - 36,588
-------- --------- ------ -------
Other income (expense):
Interest expense (7,109) 3,598 2,101 <F2> (1,410)
Interest income 229 (9) 220
Equity in earnings of Genesis - 2,100 <F3> 2,100
Other, net 154 (1) 153
-------- --------- ------ -------
(6,726) 3,588 4,201 1,063
-------- --------- ------ -------
Earnings from operations before income taxes 8,387 (5,370) 4,201 7,218
Provision for income taxes 3,061 (483) <F4> 2,578
-------- --------- ------ -------
Net earnings $ 5,326 $ (5,370) $4,684 $4,640
======== ========= ====== =======
Weighted average shares outstanding 4,869 4,869
======== =======
Net earnings per common share $ 0.60 $ 0.46
======== =======
<FN>
<F1>
To eliminate the profit and loss of the Business for the entire period including
interest expense related to debt secured by assets of the Business.
<F2>
To reflect the reduction in interest expense due to a revised debt structure
that would have existed had the transaction occurred at the beginning of the
period.
<F3>
To reflect the Registrant's equity in the pro forma earnings of Buyer and LLC.
Such pro forma earnings were determined in accordance with the rules and
regulations of the Securities and Exchange Commission.
<F4>
To reflect the change in the provision for income taxes related to (a), (b) and
(c) above.
</FN>
</TABLE>
<PAGE>
<TABLE>
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(dollars and shares in thousands except per share amount)
<CAPTION>
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
<S> <C> <C> <C> <C>
Revenues $554,958 $(521,302) $ $33,656
-------- --------- ------ -------
Costs and expenses:
Products including operating expenses 533,731 (509,903) 23,828
Selling, general and administrative
expenses 8,589 (3,100) 5,489
-------- --------- ------ -------
542,320 (513,003) 29,317
-------- --------- ------ -------
Other income (expense):
Interest expense (5,666) 3,034 1,461 <F2> (1,171)
Interest income 73 (2) 71
Equity in earnings of Genesis - 1,630 <F3> 1,630
Other, net 4 4
-------- --------- ------ -------
(5,589) 3,032 3,091 534
-------- --------- ------ -------
Earnings from operations before income taxes 7,049 (5,267) 3,091 4,873
Provision for income taxes 2,615 (808) <F4> 1,807
-------- --------- ------ -------
Net earnings $ 4,434 $(5,267) $3,899 $ 3,066
======== ========= ====== =======
Weighted average shares outstanding 4,936 4,936
======== =======
Net earnings per common share $ 0.53 $ 0.25
======== =======
<FN>
<F1>
To eliminate the profit and loss of the Business for the entire period including
interest expense related to debt secured by assets of the Business.
<F2>
To reflect the reduction in interest expense due to a revised debt structure
that would have existed had the transaction occurred at the beginning of the
period.
<F3>
To reflect the Registrant's equity in the pro forma earnings of Buyer and LLC.
Such pro forma earnings were determined in accordance with the rules and
regulations of the Securities and Exchange Commission.
<F4>
To reflect the change in the provision for income taxes related to (a), (b) and
(c) above.
</FN>
</TABLE>
PURCHASE & SALE
AND
CONTRIBUTION & CONVEYANCE
AGREEMENT
Dated as of November 26, 1996
<PAGE>
TABLE OF CONTENTS
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 29
3.3 Genesis OLP 40
3.4 Genesis MLP 41
4. Miscellaneous Provisions Relating to Transfer of Assets
and Business 42
4.1 Nonassignability of Assets 42
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 44
4.5 Satsuma Crude Oil Tanks 46
4.6 Nontransferability of Subordinated LP Units 47
4.7 Environmental Make-Whole Provision 47
5. Conditions to Closing 48
6. Closing 49
6.1 Date of Closing 49
6.2 Deliveries 49
7. Post-Closing Matters 50
7.1 Post-Closing Accounting Adjustment 50
7.2. Survival 50
7.3. Further Assurances 50
8. Indemnification 50
8.1 Indemnification by the Transferors 50
8.2 Indemnification by Genesis OLP and Genesis MLP 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 57
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 60
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 63
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
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 Redemption and Registration Rights Agreement
O Form of Supply, Transportation and Purchase Agreement
P Form of Transition Services Agreement
Schedules
1.1 Assets
A. Basis 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
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 increases in benefits
payable under Basis Employee Plan;
Basis exceptions to representations regarding employment
matters contained in Section 3.1(m)(iv)
3.1(n) Basis consents required in connection with execution,
delivery or performance of agreements (excepting such
consents which the failure to obtain 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
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)(iv)
3.2(n) Howell consents required in connection with execution,
delivery or performance of agreements (excepting such
consents which the failure to obtain 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)
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
PURCHASE & SALE AND
CONTRIBUTION & CONVEYANCE AGREEMENT
This PURCHASE & SALE AND CONTRIBUTION & CONVEYANCE AGREEMENT, dated as of
November 26, 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 USA, 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;
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).
"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, Howell Crude and Howell Pipeline Texas, 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,
including, however, any accounting adjustments for operating income in the
ordinary course of business as of the Effective Date.
"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; provided, however, that any
accounting adjustment to operating expenses in the ordinary course of business
shall be as of the Effective Date.
"Base Inventory" means (i) with respect to Basis 184,671 barrels of crude
oil and (ii) with respect to Howell 100,000 barrels of crude oil.
"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).
"Basis Adjusted Working Capital" has the meaning assigned to such term in
Schedule 7.1.
"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. 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).
"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 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.
"Estimated Basis Adjustment" means $4,298,539, a good faith estimate as of
the date hereof by Basis, in consultation with Genesis OLP, of the amount
necessary to be paid by Basis to Genesis OLP so that no post-closing adjustment
is required pursuant to section 1(b)(i) of Schedule 7.1.
"Excess Basis Cash" means an amount equal to the excess of (x) the Basis
Purchase Cash over (y) $8,700,000.
"Estimated Howell Adjustment" means $2,828,373, a good faith estimate as of
the date hereof by Howell, in consultation with Genesis OLP, of the amount
necessary to be paid by Howell to Genesis OLP so that no post-closing adjustment
is required pursuant to section 1(b)(ii) of Schedule 7.1.
"Excess Howell Cash" means an amount equal to the excess, if any, of (x)
the Howell Purchase Cash over (y) the Howell Affiliate Cash.
"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) for income and franchise taxes; (c) 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; (d) 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; (e) 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; (f) 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; (g) any indebtedness of Basis or any of the Howell Entities for
borrowed money; (h) any obligation or liability relating primarily to the
Excluded Assets; and (i) 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; provided, however,
that any accounting adjustment for operating expenses in the ordinary course of
business shall be as of the Effective Date.
"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).
"Final Balance Sheets" means the Basis Final Balance Sheet and the Howell
Final Balance Sheet.
"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 Adjusted Working Capital" has the meaning assigned to such term in
Schedule 7.1.
"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.
"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 Crude Operations" has the meaning assigned to such term in Section
3.2(d).
"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.
"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.
"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.
"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.
"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 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.
"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.
"Retained Accounts" has the meaning assigned to such term in Schedule 7.1.
"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.
"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 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 P.
"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. 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.
"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% 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 $8,700,000, 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
$38,818,514, 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
$44,116,066, 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 $1,573,000, 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
$3,586,000, 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 first to Howell Pipeline,
Howell Transportation and Howell Power with the remainder, if any, to
Howell Texas, 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. 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.
(d) Genesis OLP shall use the cash received pursuant to clause (c) 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 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.
(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;
(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.
(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 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 actively 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 any 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 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.
(iv)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 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
(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 or for which consent has
been obtained. 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 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. 7401 et seq., the Clean Water Act, 42 U.S.C.
1251 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.,
the Solid Waste Disposal Act, as amended by the Resource, Conservation and
Recovery Act, 42 U.S.C. 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
friable asbestos, nor does any equipment owned or used, except for
electrical transformers owned and in service by third parties, by Basis on
such owned or leased real property or easements contain, to the knowledge
of Basis, any polychlorinated biphenyls at least greater than 50 parts per
million.
(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
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 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 the combination of Howell Crude and its wholly-owned
subsidiaries and the crude oil transportation operations of Howell
Transportation (collectively referred to as "Howell Crude Operations") 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. 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 the Howell 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 Howell Financial Statements fairly present in all
material respects the financial position of Howell Crude Operations 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. Howell has also previously delivered to Genesis OLP a 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. Price Waterhouse LLP audited the Exxon Pipeline Statement, except for
the fiscal period ending March 31, 1995 and furnished an opinion with respect
thereto.
(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;
(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 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 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 actively 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 any 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 employees of Howell who are
actively employed in the Business 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 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 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 3.2(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 or for which consent has
been obtained. 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
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. 7401 et seq., the Clean Water Act, 42 U.S.C.
1251 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.,
the Solid Waste Disposal Act, as amended by the Resource, Conservation and
Recovery Act, 42 U.S.C. 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 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 friable asbestos, nor does any equipment owned or used, except
for electrical transformers owned and in service by third parties by a
Howell Entity on such owned or leased real property or easements contain,
to the knowledge of Howell, any polychlorinated biphenyls at levels greater
than 50 parts per million.
(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 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; 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.
(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.
(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
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 Closing Date, 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
assumption and agreement shall not (a) waive any valid defense that was
available to a Transferor with respect to the Assumed Liabilities or (b) 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;
(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.
(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, if
any, 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 Closing Date.
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 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 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:
(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 Sections 3.1(f) and (h), and the
representations and warranties of Howell set forth in Sections 3.2(f) and (h),
which representations and warranties shall survive until the expiration of any
applicable statutes of limitations, including, without limitation, as a result
of any claims for violations of state or federal securities or tax laws;
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 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 Closing Date, (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, including, without limitation, any
loss suffered by Genesis OLP or Genesis MLP to the Underwriters or any third
party that is attributable solely to a breach by any Transferor of its
representations in Section 3.1(f) or Section 3.2(f), as the case may be, or (d)
the breach by such Transferor or its 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 of an invasive environmental site investigation of the Basis Assets or
Howell Assets undertaken after the Closing Date 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 Closing Date, 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.
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.
(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 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 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 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.
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 Closing Date; 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 actively employed immediately prior to the date
hereof, 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 in the Final Prospectus shall be offered employment pursuant
to the form of Employment Agreement. Either Sponsor shall have the right to
designate any employee who becomes actively employed in the Business between
date hereof and December 31, 1996 as a Business Employee to be added to Schedule
11.1. 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
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 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 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 Closing
Date. 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 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
(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+5278
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 Closing Date, 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 Closing Date,
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. The definitions in
this Agreement shall apply equally to both the singular and plural forms of the
terms defined. 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. 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 without the
applicable consent of the Parties to this Agreement. 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, to the
extent permitted by law, 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.
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.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
BASIS PETROLEUM, INC.
By: /s/ Jeffrey R. Serra
--------------------
Jeffrey R. Serra
Chairman of the Board, President and
Chief Executive Officer
HOWELL CORPORATION
By: /s/ Paul N. Howell
------------------
Paul N. Howell
President and Chief Executive Officer
HOWELL CRUDE OIL COMPANY
By: /s/ Mark J. Gorman
------------------
Mark J. Gorman
President
HOWELL PIPELINE TEXAS, INC.
By: /s/ Allen R. Stanley
--------------------
Allen R. Stanley
President
HOWELL PIPELINE USA, INC.
By: /s/ Allen R. Stanley
--------------------
Allen R. Stanley
President
HOWELL TRANSPORTATION SERVICES, INC.
By: /s/ Bradley N. Howell
---------------------
Bradley N. Howell
President
HOWELL POWER SYSTEMS, INC.
By: /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
President
GENESIS ENERGY, L.L.C.
By: /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
Chief Financial Officer
GENESIS ENERGY, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By: /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
Chief Financial Officer
GENESIS CRUDE OIL, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By: /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
Chief Financial Officer
FIRST AMENDMENT TO PURCHASE & SALE
AND CONTRIBUTION & CONVEYANCE AGREEMENT
This First Amendment to the Purchase & Sale and Contribution and Conveyance
Agreement (the "First Amendment") is effective as of December 2, 1996 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 USA, 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").
W I T N E S S E T H:
WHEREAS, on November 26, 1996 the parties entered into a Purchase & Sale
and Contribution & Conveyance Agreement (the "Agreement") relating to the
contribution, conveyance and sale of certain crude oil gathering, marketing and
pipeline assets and operations to Genesis OLP; and
WHEREAS, pursuant to Section 14.2 of the Agreement, the parties now
mutually desire to amend the Agreement as described hereinbelow.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
1. The following definitions in Article I shall be amended as follows:
A. The defined term "Basis Final Balance Sheet" is replaced with
"Basis Final Adjustment Statement."
B. The definition of "Basis Purchase Cash" is hereby amended to read
as follows: " `Basis Purchase Cash' means 54% of the Purchase
Cash minus the Estimated Basis Adjustment."
C. The definition of "Effective Time" is hereby amended to mean
"12:01 a.m. on December 1, 1996, the Effective Date."
D. The amount included in the definition of the "Estimated Basis
Adjustment" is hereby amended by changing it from "$4,298,538" to
"$4,429,563."
E. The amount included in the definition of "Estimated Howell
Adjustment" is hereby amended by changing it from "$2,828,373" to
$2,858,691.84."
F. The defined term "Howell Final Balance Sheet" is replaced with
"Howell Financial Adjustment Statement."
2. Section 2.4(a)(i) is hereby amended to delete the word "tangible."
3. Section 2.4(a)(iii) is hereby amended to add the following phrase at
the end of the last line of such section "subject to reduction pursuant to
Section 2.4(b)(i)."
4. Section 2.5(a)(i) is hereby amended to add the phrase "not included in
the Basis Assets" on the fourth line after business and before the comma.
5. Schedule 1.1A to the Agreement is hereby amended to delete the "and"
after (n) and insert "and" after (o) and to add the following:
"(p) 26 new 1997 Mack trucks on order.
For purposes hereof, the words "primarily in the operation of the Business" or
words of similar import shall mean used in the operation of the Business and not
otherwise used primarily in the operation of any other business of Basis."
6. Schedule 1.3(d) is hereby amended to add the word "and" after refining
in the last line of 1.3(d).
7. Schedule 7.1 to the Agreement is hereby deleted in its entirety and
replaced with Annex A, attached hereto.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed this 3rd day of December, 1996.
BASIS PETROLEUM, INC.
By: /s/ Jeffrey R. Serra
--------------------
Jeffrey R. Serra
Chairman of the Board, President and
Chief Executive Officer
HOWELL CORPORATION
By: /s/ Paul N. Howell
------------------
Paul N. Howell
President and Chief Executive Officer
HOWELL CRUDE OIL COMPANY
By: /s/ Mark J. Gorman
------------------
Mark J. Gorman
President
HOWELL PIPELINE TEXAS, INC.
By: /s/ Allen R. Stanley
--------------------
Allen R. Stanley
President
HOWELL PIPELINE USA, INC.
By: /s/ Allen R. Stanley
--------------------
Allen R. Stanley
President
HOWELL TRANSPORTATION SERVICES, INC.
By: /s/ Bradley N. Howell
---------------------
Bradley N. Howell
President
HOWELL POWER SYSTEMS, INC.
By: /s/ Allyn R. Skelton, II
------------------------
Allyn R. Skelton, II
President
GENESIS ENERGY, L.L.C.
By: /s/ John P. vonBerg
-------------------
John P. vonBerg
President and Chief Executive Officer
GENESIS ENERGY, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By: /s/ John P. vonBerg
-------------------
John P. vonBerg
President and Chief Executive Officer
GENESIS CRUDE OIL, L.P.
By: Genesis Energy, L.L.C.
As General Partner
By: /s/ John P. vonBerg
-------------------
John P. vonBerg
President and Chief Executive Officer
