EXHIBIT 99.7
CONSENT, ACKNOWLEDGMENT AND RATIFICATION
The parties to this Consent, Acknowledgment and Ratification are American
Resources Offshore, Inc. and Blue Dolphin Exploration Company ("Purchaser") and
Fidelity Oil Holdings, Inc. ("Fidelity").
R E C I T A L S
WHEREAS, DNB Energy Assets, Inc., Den norske Bank, ASA, Blue Dolphin
Exploration Company and Fidelity Oil Holdings, Inc. have entered into a Note
Purchase Agreement ("Note Purchase Agreement").
WHEREAS, this Consent, Acknowledgment and Ratification Agreement is an
exhibit to the Note Purchase Agreement.
WHEREAS, this Consent, Acknowledgment and Ratification Agreement is
executed by American Resources Offshore, Inc. to induce Purchaser to enter into
the Note Purchase Agreement and assuming the conditions therein are satisfied to
close on the transactions provided for in the Note Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms herein which are defined in the Note Purchase
Agreement shall have the same meaning herein unless otherwise defined herein or
the context otherwise requires.
ARTICLE II
CONSENT
American Resources Offshore, Inc. hereby consents to (i) the terms and
provisions of the Note Purchase Agreement, and the Assignment of Note, Claims,
Liens, Security Interests and Other Rights, and (ii) DNB Energy Assets, Inc.,
Den norske Bank, ASA, and Purchaser taking the actions provided for in the Note
Purchase Agreement and the Assignment of Note, Claims, Liens, Security Interests
and Other Rights.
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ARTICLE III
OBLIGATION TO SELLER
Effective as of the Closing Date, American Resources Offshore, Inc. agrees
to the obligations set forth in Section 13.01 of the Note Purchase Agreement and
to indemnify and hold Purchaser harmless from and against any and all claims,
liabilities, lawsuits, costs and expenses of any kind, including without
limitation, reasonable attorneys' fees, arising out of or related to the
obligations of American Resources Offshore, Inc. to Seller that are contained in
Section 13.01 of the Note Purchase Agreement.
ARTICLE IV
APPLICATION OF PURCHASE PRICE PAID PURSUANT TO
THE PROPERTY PURCHASE AND SALE AGREEMENT
The Adjusted Purchase Price (as defined in the Property Purchase and Sale
Agreement) shall be paid by Fidelity to Den norske Bank in accordance with the
terms of the Note Purchase Agreement. The Adjusted Purchase Price (as defined in
the Property Purchase and Sale Agreement) shall be applied by Den norske Bank
against the balance owed by ARO on the ARO Note. ARO and Fidelity agree that the
conditions to Closing set forth in Section 9.2 of the Property Purchase and Sale
Agreement and the obligations of Fidelity under the Property Purchase and Sale
Agreement, including those set forth in Article 3 and Section 11.2 of the
Property Purchase and Sale Agreement relating to payment of the Adjusted
Purchase Price, and any such condition or obligation of Fidelity shall be deemed
satisfied by Fidelity paying to Den norske Bank a sum equal to the Adjusted
Purchase Price (as defined in the Property Purchase and Sale Agreement) in
accordance with the Note Purchase Agreement.
ARTICLE V
APPLICATION OF PURCHASE PRICE PAID
PURSUANT TO THE INVESTMENT AGREEMENT
Notwithstanding the language of the Investment Agreement (including, but
not limited to Article 1 and Section 6.2(a)(13) thereof) to the contrary, a
portion of the Purchase Price (as defined in Section 1.4(a) of the Investment
Agreement) shall be paid by BDEX to Den norske Bank in accordance with the terms
of the Note Purchase Agreement. Notwithstanding the language of the Property
Purchase and Sale Agreement to the contrary, the Purchase Price (as defined in
Section 3.1 of the Property Purchase and Sale Agreement) shall be paid by
Fidelity to Den norske Bank in accordance with the terms of the Note Purchase
Agreement. Such payment shall be applied by Den norske Bank against the balance
owed by ARO on the ARO Note. Such payment shall be applied by Den norske Bank
against the balance owed by ARO on the ARO Note. ARO and BDEX agree that the
conditions to closing set forth in 6.2(a)(13) of the Investment Agreement and
the obligations of BDEX under the Investment Agreement, including those set
forth in Article 1 of the Investment Agreement relating to payment of the
Purchase Price (as defined in Section 1.4(a) of the Investment Agreement), and
any such conditions or obligations of BDEX shall be deemed satisfied by BDEX
paying to ARO that portion of the Purchase Price in excess of that to be paid to
Den norske Bank in accordance with the Note Purchase Agreement.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
American Resources Offshore, Inc., effective as of the Closing Date,
hereby expressly makes, in favor of Purchaser, all of the representations and
warranties contained in or incorporated in the Third Amendment to First Amended
and Restated Credit Agreement between American Resources Offshore, Inc., DNB
Energy Assets, Inc., and Den norske Bank, ASA, dated August 1, 1999.
ARTICLE VII
ACKNOWLEDGMENT
American Resources Offshore, Inc. acknowledges that as of August 1, 1999
the ARO Indebtedness was $51,223,000, net of any claims or offsets and exclusive
of any obligation as guarantor of the indebtedness of Southern Gas Co. of
Delaware, Inc.
ARTICLE VIII
RATIFICATION OF LIENS
Effective as of the Closing Date, American Resources Offshore, Inc does
hereby adopt, ratify, and confirm the Credit Agreement and the other Loan
Documents, in all things in accordance with the terms and provisions thereof, as
amended. Effective as of the Closing Date, American Resources Offshore, Inc.
hereby grants and assigns to Purchaser a mortgage, lien and security interest in
the property described therein, (excluding the property conveyed by ARO to
Fidelity pursuant to the Property Purchase and Sale Agreement), to secure
payment and performance of the ARO Note and the ARO Indebtedness. American
Resources Offshore, Inc. hereby confirms and agrees that any and all mortgages,
liens, security interests and other security or collateral acquired by Purchaser
pursuant to the Note Purchase Agreement and/or Assignment of Note, Claims,
Liens, Security Interests and Other Rights, (subject to the Partial Release of
Lien), as security for payment and performance of the ARO Indebtedness hereby
are renewed and carried forth to secure payment and performance of all of the
ARO Indebtedness.
ARTICLE IX
WAIVERS AND RELEASE OF CLAIMS
9.01 American Resources Offshore, Inc. agrees to execute and deliver
original counterparts of the following at Closing in accordance with the terms
of the Note Purchase Agreement: (i) the Seller Partial Release of ARO, (ii) the
DNB Release of ARO, and (iii) the Subordination Agreement.
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9.02 American Resources Offshore, Inc. acknowledges, confesses and agrees
that, to the extent that any existing facts, events or conditions constitute a
basis for any claims, actions, demands, or causes of action of whatever kind or
character, whether joint or several, whether known or unknown, which may have
arisen or accrued prior to the date of execution of this Consent, Acknowledgment
and Ratification, including, but not limited to, any claim, demand, cause of
action or liability for any and all injuries, harm, damages, penalties, costs,
losses, expenses, attorneys' fees, and/or liabilities whatsoever (including any
defense, counterclaim or right of setoff to the payment or performance of any
obligations or indebtedness of American Resources Offshore, Inc.), whenever
incurred or suffered by it, including, without limitation, any claim, demand,
action, damage, liability, loss, cost, expense, and/or detriment, of any kind or
character, growing out of or in any way connected with or in any way resulting
from any breach of any duty of loyalty, fair dealing, care, fiduciary duty, or
any other duty, confidence, or commitment, undue influence, duress, economic
coercion, conflict of interest, negligence, willful misconduct, bad faith,
violations of the racketeer influence and corrupt organizations act, intentional
or negligent infliction of distress or harm, tortuous interference with
contractual relations, tortuous interference with corporate governance or
prospective business advantage, breach of contract, failure to perform any
obligation under any of the Loan Documents, deceptive trade practices, libel,
slander, conspiracy, interference with business, usury, strict liability, lender
liability, breach of warranty or representation, fraud, or any other claim or
cause of action (herein being collectively referred to as "Claims"), American
Resources Offshore, Inc., hereby, for itself, its subsidiaries, its
representatives, agents, officers, directors, employees, shareholders,
successors, heirs and assigns (collectively called the "Releasing Parties"),
knowingly and willfully, fully, finally and completely release, discharge, waive
and acquit DNB Energy Assets, Inc., Den norske Bank, ASA, Fidelity Oil Holdings,
Inc. and Purchaser and their respective representatives, agents, officers,
directors, employees, shareholders, and successors and assigns (collectively
called the "Released Parties") from the Claims. It is the intent of all parties
hereto that upon the Closing Date all Claims shall be released and extinguished.
IT IS EXPRESSLY AGREED THAT THE CLAIMS RELEASED HEREBY INCLUDE THOSE ARISING
FROM OR IN ANY MANNER ATTRIBUTABLE TO THE NEGLIGENCE (SOLE, CONCURRENT, ORDINARY
OR OTHERWISE), WILLFUL MISCONDUCT, OR OTHER CONDUCT OF ANY OF THE RELEASED
PARTIES. Notwithstanding any provision of this Consent, Acknowledgment and
Ratification or any Loan Document, this Agreement shall remain in full force and
effect and shall survive the delivery and payment of the ARO Note and the Loan
Documents, and the making, extension, renewal, modification, amendment or
restatement of any thereof.
ARTICLE X
AMENDMENT
No amendment to the Note Purchase Agreement shall be binding upon ARO
unless consented to in writing by ARO.
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ARTICLE XI
THIRD PARTY BENEFICIARY
Den norske Bank, ASA and DNB Energy Assets, Inc. are intended third
party beneficiaries of this Agreement
EXEUCTED this 19th day of November, 1999.
BLUE DOLPHIN ENERGY COMPANY
By: /s/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
Vice President
AMERICAN RESOURCES OFFSHORE,
INC.
By: /s/ XXXXX X. XXXXXXX
Its: V.P. & General Counsel
FIDELITY OIL HOLDINGS, INC.
By: /s/ XXXX X. XXXXXX
Its: VP-Operations and Acquisitions
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