EXHIBIT 10.43
AGREEMENT FOR SALE OF MEMBERSHIP INTEREST
IN D-GAS, L.L.C.
THIS AGREEMENT is made this 14th day of November 1995 between Xxxxxxxx
Refining Co., a Texas corporation ("HRC"), as seller herein, and Tipperary
Corporation, a Texas corporation ("Tipperary"), as buyer herein.
RECITALS
The parties hereto desire that, subject to the preferential rights of
purchase set forth in Section 17 E(4) of the D-GAS Operating Agreement (the
"Operating Agreement"), attached hereto as Exhibit A, the entire membership
interest of HRC (the "HRC Interest") in D-GAS, LLC, an Alabama limited
liability company ("D-GAS"), shall be transferred to Tipperary, in respect of
the consideration hereafter set forth (the "Sale"). D-GAS was formed for the
purpose of constructing and operating a natural gas liquids ("NGL")
fractionating plant (the "Plant")in Monroe County, Alabama.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
1. AGREEMENT TO SELL AND/OR ASSIGN AND TRANSFER. If certain conditions
set forth below are met, concerning the Plant becoming operational and meeting
certain performance tests within a stated period of time, HRC agrees to sell,
assign and transfer, and Tipperary agrees to buy, the HRC Interest for a price
$210,000 (the "Sale Price"). If the conditions, as set forth below, are not
met, then HRC agrees that it shall be deemed to have assigned and transferred
the HRC Interest to Tipperary for no monetary consideration.
2. PREFERENTIAL PURCHASE RIGHTS. By entering into this Agreement, HRC
acknowledges that under the Operating Agreement, HRC is required to and agrees
promptly to provide written notice to FCF and Xxxxxx of this Agreement, and with
such notice, pursuant to Section 17 E(4) of the Operating Agreement, offers to
sell and/or assign and transfer the HRC Interest to FCF and Xxxxxx under the
same terms and conditions as set forth in this Agreement.
3. OPERATING AGREEMENT. Tipperary agrees to be bound by all the terms
and provisions of the Operating Agreement.
4. CONDITIONS AND TERMS OF CLOSING. "Closing" herein shall mean,
pursuant to the terms and conditions set forth below, either (1) the sale,
assignment and transfer by HRC of the HRC Interest to Tipperary for the Sale
Price of $210,000, or (2) the assignment
and transfer by HRC of the HRC Interest to Tipperary for no monetary
consideration. If the conditions set forth below are met, the Plant having
been placed into operation, having passed the performance tests set forth
below (the "Performance Tests") by a certain date, which is the sixtieth day
after start-up of the Plant (the "Cut-off Date"), Tipperary shall deliver to
HRC the Sale Price, and HRC shall deliver the HRC Interest to Tipperary, and
to consummate the Sale, Tipperary and HRC shall sign the "Execution of
Closing" section at the end of this Agreement. The date upon which the Plant
passes the Performance Tests shall be referred to hereafter as the
"Completion Date," whether it occurs on or before the Cut-off Date. If the
Completion Date does not occur by the Cut-Off Date, the Closing shall be
automatically consummated without further action by the parties, and in such
Closing HRC agrees that it shall be deemed to have assigned and transferred
the HRC Interest to Tipperary for no monetary consideration. However, if in
the process of testing the equipment, any of the used equipment should have
any major breakdown rendering the Plant inoperable until replacement parts
can be received, then the Cut-off Date shall be extended by the time or
number of days that it shall take to receive the replacement parts and have
them installed. The terms and conditions of Closing are as follows:
(a) Regarding the completion of the Plant, the following agreements
shall remain in effect:
- TURNKEY AGREEMENT dated August 9, 1994, attached hereto as
Exhibit B;
- AMENDMENT TO TURNKEY AGREEMENT dated September 9, 1994, attached
hereto as Exhibit C;
- FRACTIONATING AGREEMENT dated August 19, 1994, attached hereto as
Exhibit D; and
- CONSTRUCTION AGREEMENT dated August 30, 1994, attached hereto as
Exhibit E;
The foregoing agreements, including the Operating Agreement, Exhibits A through
E, shall hereafter be referenced collectively as the "Performance Agreements."
HRC shall continue its performance under the Performance Agreements through
completion of construction, testing, start-up and the achievement of certain
operational standards as further provided below, provided, however: (1) that
the Parties recognize and agree that D-GAS has undertaken certain
responsibilities for the construction and operation of the Plant, including
authorizing expenditures, retaining personnel, and working with certain third
parties, and HRC has retained only Plant design and design performance
responsibilities pending the Closing of the Sale; and provided further (2) that
Tipperary, on condition that the Sale is Closed, has advanced and will continue
to advance HRC's 40% share (pursuant to the
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Turnkey Agreement) of the obligation of FOG, ORC and GGPC to fund Plant
construction cost overruns.
(b) The following are the Performance Tests which must be met on or
before the Cut-off Date in order for HRC to be entitled to the Sale Price upon
Closing:
(1) The construction of the Plant shall be completed, with all
strength and tightness tests performed, all instrument and control loops tested,
all field installation work performed, and the Plant placed into operation,
pursuant to all plans and specifications in the Performance Agreements.
(2) The Plant shall be capable of the sustained processing of
100,000 gallons per day of NGL raw stock with the composition of said stock
reasonably close to that set forth in the Fractionating Agreement. The Plant
must be capable of generating ethane, commercial grade natural gasoline
(pentanes +), and commercial and propellant grade propane, iso butane and normal
butane, subject to the following specifications:
PRODUCT RECOVERY VAPOR PRESSURE AT
PERCENTAGE 100 DEGREES FAHRENHEIT
Natural Gasoline
(Pentanes +) 100% [not applicable]
Propane 95% 190 PSI absolute, +/- 10%
Iso Butane 99% 72 PSI absolute, +/- 10%
Normal Butane 99% 51 PSI absolute, +/- 10%
The recovery percentages for propane, iso butane and normal butane, reflect the
diversion of a portion of the raw stock for the production of ethane. The
foregoing products shall be 96% pure by volume and shall contain no contaminants
such as water vapor or sulfur compounds that make their use unsuitable in the
propellant industry. HRC, having no control over the raw stock, shall not be
responsible in the event that the raw stock delivered to the Plant should have
olefins or heavy hydrocarbons or any other such contaminants that would make
their use unsuitable for the propellant industry.
(3) After the Plant is placed into operation, it must be
stabilized as to all pressures, temperatures, rates, proportions of products,
and other parameters for a period of six hours. Then, following said six hour
period, the Plant must continuously maintain its production, in accordance with
the foregoing specifications, for a period of 24 hours, in which 24-hour period
at least 100,000 gallons of NGL raw stock must be fractionated into finished
products meeting the most stringent specifications (I.E. "propellant grade"),
and at no time during said 24-hour period may the rate of production fall below
95,000 gallons per day.
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(c) In the expectation of Closing the Sale, and in consideration of
Tipperary funding HRC's 40% share of construction cost overruns, as stated
above, HRC hereby appoints Tipperary as its attorney in fact in accordance with
the Irrevocable Limited Power of Attorney attached hereto as Exhibit F.
(d) HRC agrees to cooperate with Tipperary and D-GAS in every
reasonable way, with a view toward the cessation of HRC's involvement with the
construction and operation of the Plant, including permitting representatives of
Tipperary and/or D-GAS liberal access to HRC's records concerning the Plant,
and, as Tipperary or D-GAS may request, providing complete drawings,
specifications and other records concerning the Plant, providing all accounting
books, records and reports concerning the Plant, and providing information and
assistance as requested for a period of not longer than 90 days after Closing in
order to facilitate and assist in the operation of the Plant following HRC's
departure, and executing such agreements and documents as may reasonably be
requested to accomplish the purposes of this Agreement.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF HRC.
(a) HRC covenants and agrees that, at the time of Closing, it shall
have performed all of its obligations hereunder which, at that point in time,
HRC shall have been obligated to perform, and that at Closing HRC shall not be
in material breach of any of the terms of this Agreement.
(b) HRC represents and warrants that, to the best of its knowledge
and belief, as of the Closing, all equipment, fixtures, structures and other
personal and real property constituting the Plant has been constructed,
installed and placed according to the plans and specifications set forth in the
Performance Agreements and also is in compliance with all industry standards and
all applicable codes, regulations and laws, and that the component parts of the
Plant, as constructed, installed or placed are fully sufficient to perform their
intended functions in accordance with the foregoing plans, specifications and
requirements, that all asbestos has been thoroughly and satisfactorily removed
from any and all parts of the Plant and its components, that the Plant and all
of its materials and components meet all present federal and state
environmental, safety and health laws and regulations, and there is no condition
in the Plant, which absent some extraordinary or catastrophic event, would
create an environmental hazard.
6. TERMINATION OF AGREEMENTS AND RELEASES. An Agreement for Termination
and Assignment of Agreements and Limited Mutual Releases, attached hereto as
Exhibit G (without exhibits), shall automatically, and without further action by
the parties thereto, become effective upon the Closing of the Sale and not
before then.
7. NOTICES. Any notice under this Agreement shall be in writing and
personally delivered or deposited in the United States Mail, postage prepaid,
certified or registered,
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and return receipt requested. Notice shall be deemed given upon personal
delivery or 72 hours after the same shall have been deposited in the United
States Mail. Notice shall be given to the parties at the addresses below:
TO TIPPERARY:
Attn: Xxxxxx X. Xxxxxxx, President
000 Xxxxxxxxxxx Xx., Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
TO HRC:
Attn: Xxxxxxx X. Xxxxxxxx, President
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx 00000
8. ARBITRATION. It is hereby agreed that if, at any time hereafter, any
dispute, difference or question shall arise between the parties regarding the
construction, meaning or effect of this Agreement or any act or omission to act
of any of the parties, every such dispute, difference or question, shall be
expeditiously submitted for arbitration in accordance with the rules of the
American Arbitration Association, and the determination of the arbitrators
appointed pursuant thereto shall be binding upon the parties. Such arbitration
shall be conducted in Monroe County, Alabama or such other location as the
parties shall decide. Within 10 business days after any party gives notice of
an election to arbitrate, Tipperary shall select an arbitrator, and HRC shall
select an arbitrator. The two arbitrators who have been appointed shall, within
10 business days thereafter appoint the third arbitrator. If only one
arbitrator is appointed by the parties, or if the foregoing two arbitrators fail
to appoint the third arbitrator, then any of the parties may petition any court
of competent jurisdiction, with venue as herein provided, to appoint the
remaining one or two arbitrators. The arbitrators shall proceed with all
reasonable dispatch to hear and determine the matter in dispute, and the
decision or award in writing of said arbitrators or a majority of them shall be
final and binding upon the parties. With respect to any dispute subject to this
arbitration provision, the prevailing party or parties shall be awarded their
reasonable costs and attorney fees. If a question should arise as to whether a
dispute is subject to this arbitration provision, the arbitrators, not a court,
shall decide such question. Any of the parties may enter said arbitration award
in any court of competent jurisdiction with venue as herein provided.
9. MISCELLANEOUS PROVISIONS.
(a) FAIR MEANING. The parties acknowledge that this Agreement is the
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product of arms-length negotiations among persons with substantially equal
bargaining power and shall not be construed against the party which drafted this
Agreement. The language in this Agreement shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against any party.
When the context of this Agreement requires, any pronouns used herein include
the neuter, masculine, feminine, a partnership, corporation, unincorporated
association or any other legally recognized entity, and the singular includes
the plural or vice versa.
(b) ASSIGNMENT. Except as provided in Section 17 E(4) of the
Operating Agreement, this Agreement shall not be assigned, in whole or in part,
without the express, written consent of the parties.
(c) ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof,
superseding all negotiations and all prior discussions, agreements and
understandings of the parties.
(d) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be considered an original.
(e) AMENDMENT. This Agreement may not be altered or amended, nor any
rights hereunder waived, except by an instrument executed by the parties. No
right or obligation of, or default by, any of the parties shall be deemed waived
by any other waiver of the same or any other right, obligation, or default, or
by any previous or subsequent forbearance or course of dealing.
(f) GOVERNING LAW, VENUE AND ATTORNEYS' FEES. This Agreement shall
be construed and enforced under the laws of the State of Alabama. The Parties
agree that venue shall lie in any of the courts of competent jurisdiction in
Monroe County Alabama and in the Federal District Court for the district and
division in which Monroe County is located. If an action or suit is brought
upon this Agreement, the prevailing party or parties shall be entitled to all
costs and reasonable attorneys' fees.
(g) SEVERABILITY. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remainder of the terms or provisions within this
Agreement so long as, pursuant to such remainder, the purposes of this Agreement
can nonetheless be fulfilled in all material respects.
(h) SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of all successors, assigns, and heirs of the parties.
(i) HEADINGS. The headings of the sections of this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
provisions of this Agreement.
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EXECUTED as of the date first written above.
TIPPERARY CORPORATION XXXXXXXX REFINING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxx, President Xxxxxxx X. Xxxxxxxx, President
EXECUTION OF CLOSING
The necessary terms and conditions, as set forth above, having been, to the
best of the knowledge of the parties hereto, performed and satisfied, with the
Completion Date occurring on February 2, 1996, which is within 60 days after
start-up of the Plant, the parties hereby perform the following acts on this
13th day of February 1996:
1. Tipperary tenders to HRC the Sale Price, less withholdings, as
provided in Section 4(d) above, in the amount of $210,000; and
2. HRC accepts said Sale Price and sells, assigns and transfers its
entire interest in D-GAS to Tipperary;
thus closing the sale of said membership interest in accordance with Section 4
above.
TIPPERARY CORPORATION XXXXXXXX REFINING COMPANY
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President Xxxxxxx X. Xxxxxxxx, President
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