EXHIBIT 10.4
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OMNIBUS AGREEMENT
BETWEEN
XXXXXX RESOURCE MANAGEMENT CORPORATION,
XXXXXX MIDSTREAM GP LLC,
XXXXXX MIDSTREAM PARTNERS L.P.
AND
XXXXXX OPERATING PARTNERSHIP L.P.
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OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into as of [*], 2002 by and among Xxxxxx
Resource Management Corporation, a Texas corporation ("MRMC"), Xxxxxx Midstream
GP LLC, a Delaware limited liability company (the "General Partner"), Xxxxxx
Midstream Partners L.P., a Delaware limited partnership (the "Partnership"), and
Xxxxxx Operating Partnership L.P. (the "Operating Partnership"). The above-named
entities are sometimes referred to in this Agreement each as a "Party" and
collectively as the "Parties."
RECITALS:
WHEREAS, MRMC and its Affiliates (as defined herein) formed the
Partnership, the General Partner and the Operating Partnership for the purpose
of conducting of the Business (as defined below);
WHEREAS, certain assets and services used by MRMC or its Affiliates in the
conduct of the Business prior to the formation of the Partnership were not
transferred to the Partnership;
WHEREAS, the Parties desire to ensure the continued effective operation of
the Business, and the Parties recognize that the continued effective operation
of the Business requires that MRMC provide certain management and employee
services to the Business as set forth in this Agreement;
WHEREAS, the Parties desire to evidence their understanding, as more fully
set out in this Agreement, with respect to those business opportunities that
MRMC will not engage in for so long as the Partnership is an Affiliate of MRMC
unless the Partnership has declined to engage in any such business opportunity
for its own account and the procedures whereby such business opportunities are
to be offered to the Partnership and accepted or declined;
WHEREAS, the Operating Partnership owns a 49.5% limited partner interest in
XX Xxxxxx Sulphur, L.P., a Delaware limited partnership ("XX Xxxxxx") and the
Parties desire to evidence their understanding, as more fully set out in this
Agreement, regarding the exercise by MRMC of its rights in relation to the
management and operation of XX Xxxxxx through MRMC's ownership of 50% of X.X.
Xxxxxx Sulphur, L.L.C., a Delaware limited liability company and the general
partner of XX Xxxxxx (the "XX Xxxxxx GP"); and
WHEREAS, the Parties desire to evidence other agreements and relationships,
as more fully set out in this Agreement, with respect to the transfer of the
Business to the Partnership and the Operating Partnership as well as the
operation of the Business by the Partnership and the Operating Partnership.
NOW THEREFORE, in consideration of the premises and the covenants,
conditions, and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS. (a) As used in this Agreement, the following terms shall have
the respective meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As
used herein, the term "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Agreement" means this Omnibus Agreement, as it may be amended,
modified, or supplemented from time to time in accordance with Section 6.8
hereof.
"Allocated General and Administrative Expenses" means expenses
associated with general and administrative services provided by MRMC and
its Subsidiaries (other than the Partnership and its Subsidiaries),
including, but not limited to, certain management, engineering, accounting,
finance, information technology, insurance, human resource, administration
of employee benefit plans and other shared corporate services, that are
allocated to the Partnership by MRMC on the same basis as these types of
expenses are allocated among MRMC and its Subsidiaries (other than the
Partnership and its Subsidiaries).
"Assets" means the "Contributed Assets" as such term is defined in the
Contribution Agreement.
"Business" means (i) providing marine transportation, terminalling,
distribution and midstream logistical services for hydrocarbon products and
by-products, and (ii) manufacturing and marketing fertilizers and related
sulfur-based products.
"XX Xxxxxx" is defined in the Recitals to this Agreement.
"XX Xxxxxx Contribution Agreement" means the Contribution Agreement,
dated as of November 20, 2000, by and between XX Xxxxxx, XX Xxxxxx GP,
MRMC, Xxxxxx Gas Sales, Inc., Xxxxxx Gas Marine, Inc., and Xxxxxx
Transport, Inc.
"XX Xxxxxx GP" is defined in the Recitals to this Agreement.
"XX Xxxxxx GP Agreement" means the Limited Liability Company Agreement
of XX Xxxxxx GP, dated November 22, 2000, as amended to date.
"XX Xxxxxx LP Agreement" means the Agreement of Limited Partnership of
X.X. Xxxxxx, dated November 22, 2000, as amended to date.
"Closing Date" means the date of the closing of the Partnership's
initial public offering of Common Units of the Partnership.
"Conflicts Committee" is defined in the Partnership Agreement.
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"Consumer Price Index" means the "Consumer Price Index for Urban Wage
Earners and Clerical Workers (1967 = 100)" specified for "All Item - United
States" compiled by the Bureau of Labor Statistics for the United States.
"control" means the possession, directly or indirectly, 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.
"Contribution Agreement" means the Contribution, Conveyance and
Assumption Agreement, dated [*], 2002, by and among various MRMC Entities,
the Partnership, the Operating Partnership, the General Partner and Xxxxxx
Operating GP LLC, a Delaware limited liability company.
"Covered Environmental Losses" is defined in Section 3.1(a).
"Environmental Laws" means all federal, state, and local laws,
statutes, rules, regulations, orders, and ordinances, now or hereafter in
effect, relating to protection of human health and the environment
including, without limitation, the federal Comprehensive Environmental
Response, Compensation, and Liability Act, the Superfund Amendments
Reauthorization Act, the Resource Conservation and Recovery Act, the Clean
Air Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the
Hazardous Materials Transportation Act, and other environmental
conservation and protection laws, each as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" is defined in the introduction to this Agreement.
"Hazardous Substance" means any substance that is designated, defined,
or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance, or that is otherwise
regulated under any Environmental Law, including, without limitation, any
hazardous substance as defined under the Comprehensive Environmental
Response, Compensation, and Liability Act.
"Indemnified Party" means the Partnership Entities or the MRMC
Entities, as the case may be, in their capacity as the parties entitled to
indemnification in accordance with Article III.
"Indemnifying Party" means either the Partnership Entities or the MRMC
Entities, as the case may be, in its capacity as the parties from whom
indemnification may be sought in accordance with Article III.
"Indirect Expenses Limit" is defined in Section 4.2(a).
"J.V. Management Rights" is defined in Section 6.2.
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"Losses" means any losses, damages, liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs, and
expenses (including, without limitation, court costs and reasonable
attorney's and expert's fees) of any and every kind or character.
"Xxxxxx Manager" is defined in the XX Xxxxxx GP Agreement.
"MRMC" is defined in the introduction to this Agreement.
"MRMC Entities" means MRMC and each of its Subsidiaries (other than
the General Partner, the Partnership and any Subsidiary of the
Partnership).
"Names and Marks" means the tradenames and logos attached hereto on
Schedule 1.
"Offer" is defined in Section 2.3(b).
"Partnership" is defined in the introduction to this Agreement.
"Partnership Agreement" means the First Amended and Restated Agreement
of Limited Partnership of the Xxxxxx Midstream Partners L.P., dated as of,
and in the form on, the Closing Date. No amendment or modification to the
Partnership Agreement subsequent to the Closing Date shall be given effect
for the purposes of this Agreement unless consented to by each of the
Parties to this Agreement.
"Partnership Entities" means the Partnership, the General Partner. and
each Subsidiary of the Partnership.
"Party" and "Parties" is defined in the introduction to this
Agreement.
"Pass-Through Environmental Losses" is defined in Section 3.1(b).
"Person" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other
entity.
"Restricted Portion" is defined in Section 2.2(c)(iv).
"Retained Assets" means, collectively, (i) any assets and investments
owned by any of the MRMC Group that were not conveyed, contributed or
otherwise transferred to any of the Partnership Entities prior to or on the
Closing Date, and (ii) the "Retained Assets" as such term is defined in the
Contribution Agreement.
"Services" is defined in Section 4.1.
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"Subject Assets" is defined in Section 2.2(c).
"Subsidiary" means, with respect to any Person, (a) a corporation of
which more than 50% of the Voting Power is owned, directly or indirectly,
at the date of determination, by such Person, by one or more Subsidiaries
of such Person or a combination thereof, (b) a partnership (whether general
or limited) in which such Person or a Subsidiary of such Person is, at the
date of determination, a general or limited partner of such partnership,
but only if more than 50% of the partnership interests of such partnership
(considering all of the partnership interests of the partnership as a
single class) is owned, directly or indirectly, at the date of
determination, by such Person, by one or more Subsidiaries of such Person,
or a combination thereof, or (c) any other Person (other than a corporation
or a partnership) in which such Person, one or more Subsidiaries of such
Person, or a combination thereof, directly or indirectly, at the date of
determination, has (i) at least a majority ownership interest or (ii) the
power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Venture Interest" is defined in the XX Xxxxxx LP Agreement.
"Voting Stock" means securities of any class of a Person entitling the
holders thereof to vote on a regular basis in the election of members of
the board of directors or other governing body of such Person.
ARTICLE II
BUSINESS OPPORTUNITIES
2.1 RESTRICTED ACTIVITIES. For so long as MRMC controls the General
Partner, or any subsequent general partner of the Partnership and except as
permitted by Section 2.2, MRMC shall be prohibited from engaging in, directly or
indirectly through an Affiliate, whether by acquisition, construction or
otherwise, the Business.
2.2 PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 2.1 to
the contrary, MRMC and its Affiliates may engage in the following activities
under the following circumstances:
(a) The ownership and/or operation of any of the Retained Assets
(including replacements of and modifications or additions to the Retained
Assets) and the conduct of the businesses operated by MRMC and its Affiliates on
the Closing Date that were not transferred to the Partnership Entities and that
are described on Schedule 2.2(a);
(b) The operation on behalf of a member of any Partnership Entity of
any asset or group of assets owned by any Partnership Entity;
(c) The ownership and/or operation of any asset or group of related
assets used in a Business that are acquired or constructed by MRMC or any of its
Affiliates (other than any of the Partnership Entities) after the date of this
Agreement (the "Subject Assets") if:
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(i) the fair market value of the Subject Assets (as determined in
good faith by the Board of Directors of MRMC) is less than $5.0 million at
the time of such acquisition by any of the MRMC Entities or completion of
construction, as the case may be;
(ii) in the case of an acquisition of Subject Assets with a fair
market value (as determined in good faith by the Board of Directors of
MRMC) equal to or greater than $5.0 million at the time of such acquisition
by MRMC, the Partnership has been offered the opportunity to purchase the
Subject Assets within 90 days of such acquisition in accordance with
Section 2.3(b) and the Partnership (with the concurrence of the Conflicts
Committee) has elected not to purchase the Subject Assets;
(iii) in the case of the construction of Subject Assets with a
fair market value (as determined in good faith by the Board of Directors of
MRMC) equal to or greater than $5.0 million at the time of completion of
construction, the Partnership has been offered the opportunity to purchase
the Subject Assets in accordance with Section 2.3(b) and the Partnership
(with the concurrence of the Conflicts Committee) has elected not to
purchase the Subject Assets; or
(iv) in case of the acquisition or construction of any Subject
Assets, a portion of which participate in a Business (the "Restricted
Portion"), where the Restricted Portion has a fair market value (as
determined in good faith by the Board of Directors of MRMC) that is (i)
greater than $5.0 million and (ii) less than 20% of the aggregate value of
the business or assets acquired or constructed (as determined in good faith
by the Board of Directors of MRMC), the Partnership is offered the
opportunity to purchase the Subject Assets related to the Restricted
Portion in accordance with Section 2.3(b) and the Partnership (with the
concurrence of the Conflicts Committee) has elected not to purchase such
Subject Assets;
2.3 PROCEDURES.
(a) If any of the MRMC Entities becomes aware of an opportunity to
purchase Subject Assets described in Section 2.2(c)(ii), then as soon as
practicable, MRMC shall notify the General Partner of such opportunity and
deliver to the General Partner all information prepared by or on behalf of MRMC
relating to such potential purchase. As soon as practicable but in any event
within 30 days after receipt of such notification and information, the General
Partner, on behalf of the Partnership, shall notify MRMC that either (i) the
General Partner, on behalf of the Partnership, has elected, with the approval of
the Conflicts Committee, not to cause any of the Partnership Entities to pursue
the opportunity to acquire such Subject Assets, or (ii) the General Partner, on
behalf of the Partnership, has elected to cause any of the Partnership Entities
to pursue the opportunity to acquire such Subject Assets. If, at any time, the
General Partner abandons such opportunity with the approval of the Conflicts
Committee (as evidenced in writing by the General Partner following the request
of MRMC), MRMC may pursue such opportunity. Any Subject Assets that are
permitted to be purchased by MRMC pursuant to this Section 2.3(a) must be so
purchased (i) within 12 months of the time MRMC becomes able to pursue such
opportunity in accordance with the provisions of this Section 2.3(a) and (ii) on
terms
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not materially more favorable to MRMC than were offered to the Partnership. If
either of these conditions are not satisfied, the opportunity must be reoffered
to the Partnership in accordance with this Section 2.3(a).
(b) If any MRMC Entity constructs or acquires Subject Assets as
described in Section 2.2(c)(iii) and (iv), then not later than 90 days after the
consummation of the completion of construction or acquisition by any MRMC Entity
of the Subject Assets, as the case may be, MRMC shall notify the General Partner
in writing of such construction or acquisition and offer the Partnership
Entities the opportunity to purchase the Subject Assets or, in the case of
Subject Assets described in Section 2.2(c)(iv), the Subject Assets related to
the Restricted Portion, in each case for their fair market value in accordance
with this Section 2.3 (the "Offer"). The Offer shall set forth MRMC's proposed
terms relating to the construction or purchase of such Subject Assets by any of
the Partnership Entities. MRMC will provide all information concerning the
business, operations and finances of such Subject Assets as may be reasonably
requested by the General Partner. As soon as practicable, but in any event
within 60 days after receipt of such written notification, the General Partner
shall notify MRMC in writing that either (i) the General Partner has elected,
with the approval of the Conflicts Committee, not to cause any of the
Partnership Entities to purchase such Subject Assets, in which event MRMC shall
be forever free to continue to own or operate such Subject Assets; provided,
however, that any future acquisitions or opportunities related to such
particular Subject Assets (except for expansions of existing facilities and
except as provided in Section 2.2(c)(i)) shall be subject to the procedures set
forth in this Section 2.3, or (ii) the General Partner has elected to cause any
of the Partnership Entities to purchase such Subject Assets, in which event the
procedures outlined in this Section 2.3 shall apply.
(c) After the receipt of such Offer by the General Partner, MRMC and
the General Partner shall negotiate in good faith the terms on which such
Subject Assets will be sold to a Partnership Entity. If MRMC and the General
Partner (with the concurrence of the Conflicts Committee) are able to agree on
the fair market value of the Subject Assets that are subject to the Offer and
the other terms of the Offer within 60 days after receipt by the General Partner
of the Offer, one or more of the Partnership Entities shall purchase such
Subject Assets for the agreed upon fair market value as soon as commercially
practicable after such agreement has been reached.
(d) If MRMC and the General Partner are unable to agree on the fair
market value of the Subject Assets that are subject to the Offer or the other
terms of the Offer within 60 days after receipt by the General Partner of the
Offer, MRMC and the General Partner will engage a mutually agreed upon,
nationally recognized investment banking firm to determine the fair market value
of such Subject Assets. Such investment banking firm will determine the fair
market value of such Subject Assets within 30 days of its engagement and furnish
MRMC and the General Partner its determination. The fees and expenses of the
investment banking firm will be split equally between MRMC and the Partnership
Entities. Once the investment banking firm has submitted its determination of
the fair market value of the Subject Assets, the General Partner will have the
right, but not the obligation, subject to the approval of the Conflicts
Committee, to cause one or more of the Partnership Entities to purchase such
Subject Assets pursuant to the Offer as modified by the determination of the
investment banking firm. If the General Partner elects to cause one or more of
the Partnership Entities to purchase such Subject
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Assets, then such Partnership Entities shall purchase such Subject Assets
pursuant to the Offer as modified by the determination of the investment banking
firm as soon as commercially practicable after such determination. If the
General Partner elects not to cause any of the Partnership Entities to purchase
such Subject Assets, MRMC shall be forever free to continue to own or operate
such Subject Assets; provided, however, that any future acquisitions or
opportunities related to such Subject Assets (except for expansions of existing
facilities and except as provided in Section 2.2(c)(i)) shall be subject to the
procedures set forth in this Section 2.3.
2.4 SCOPE OF PROHIBITION. Except as provided in this Article II and the
Partnership Agreement, each of MRMC and its Affiliates shall be free to engage
in any business activity whatsoever, including those that may be in direct
competition with any Partnership Entity.
2.5 ENFORCEMENT. MRMC agrees and acknowledges that the Partnership Entities
do not have an adequate remedy at law for the breach by MRMC of the covenants
and agreements set forth in this Article II, and that any breach by MRMC of the
covenants and agreements set forth in Article II would result in irreparable
injury to the Partnership Entities. MRMC further agree and acknowledge that any
member of the Partnership Entities may, in addition to the other remedies which
may be available to the Partnership Entities, file a suit in equity to enjoin
MRMC from such breach, and consent to the issuance of injunctive relief under
this Agreement.
ARTICLE III
INDEMNIFICATION
3.1 ENVIRONMENTAL INDEMNIFICATION.
(a) Subject to the limitations contained in this Section 3.1(a), MRMC
shall indemnify, defend and hold harmless each of the Partnership Entities from
and against environmental and toxic tort Losses suffered, incurred or paid by
any of the Partnership Entities by reason of or arising out of:
(i) any violation or correction of violation of Environmental
Laws associated with the Assets or the Retained Assets,
(ii) any event or condition associated with the ownership or
operation of the Assets or the Retained Assets (including, without
limitation, the presence of Hazardous Substances on, under, about or
migrating to or from the Assets or the Retained Assets or the disposal or
release of Hazardous Substances generated by operation of the Assets or the
Retained Assets at non-Asset locations) including, without limitation, (A)
the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation, or
other corrective action required or necessary under Environmental Laws, (B)
the cost or expense of the preparation and implementation of any closure,
remedial, corrective action, or other plans required or necessary under
Environmental Laws, and (C) the cost and expense for any environmental or
toxic tort pre-trial, trial, or appellate legal or litigation support work,
or
(iii) any environmental indemnity provisions contained in the XX
Xxxxxx Contribution Agreement.
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but only to the extent that such violation complained of under Section 3.1(a)(i)
or such events or conditions included under Section 3.1(a)(ii) occurred before
the Closing Date and only to the extent that a written notice of such violation,
event or condition is given to MRMC by the Partnership within five years
following the Closing Date (collectively, "Covered Environmental Losses"). In no
event shall the aggregate liability of MRMC pursuant to this Section 3.1(a)
exceed $7,500,000.
(b) MRMC shall indemnify, defend and hold harmless any of the
Partnership Entities from and against any Losses suffered or incurred by any of
the Partnership Entities to the extent that MRMC is entitled to and receives
indemnification, is defended or held harmless against any such Losses from any
third-party pursuant to any agreement between any third-party and MRMC
(collectively, "Pass-Through Environmental Losses"). In furtherance of such
agreement, MRMC agrees to use its best commercially reasonable efforts to
pursue, for the benefit of the Partnership Entities, any such indemnification
with respect to which it might be entitled if requested by the Partnership;
provided that, the Partnership shall reimburse MRMC for all costs and expenses
incurred in connection with pursuing such indemnity on behalf of the
Partnership.
(c) The Partnership shall indemnify, defend and hold harmless MRMC
from and against Losses suffered or incurred by any of the MRMC Entities by
reason of or arising out of:
(i) any violation or correction of violation of Environmental
Laws associated with the Assets, or
(ii) any event or condition associated with ownership or
operation of the Assets (including, but not limited to, the presence of
Hazardous Substances on, under, about or migrating to or from the Assets or
the disposal or release of Hazardous Substances generated by operation of
the Assets at non-Asset locations) including, without limitation, (A) the
cost and expense of any investigation, assessment, evaluation, monitoring,
containment, cleanup, repair, restoration, remediation, or other corrective
action required or necessary under Environmental Laws, (B) the cost or
expense of the preparation and implementation of any closure, remedial,
corrective action, or other plans required or necessary under Environmental
Laws, and (C) the cost and expense for any environmental or toxic tort
pre-trial, trial, or appellate legal or litigation support work;
and regardless of whether such violation complained of under Section 3.1(c)(i)
or such events or conditions included under Section 3.1(c)(ii) occurred before
or after the Closing Date, except to the extent that any of the foregoing are
Covered Environmental Losses or Pass-Through Environmental Losses for which the
Partnership Entities are entitled to indemnification from MRMC under this
Article III.
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3.2 Additional Indemnification
(a) In addition to and not in limitation of the indemnification
provided under Sections 3.1(a), 3.1(b) and 5.5, MRMC shall indemnify, defend,
and hold harmless the Partnership Entities from and against any Losses suffered
or incurred by the Partnership Entities by reason of or arising out of
(i) any events and conditions associated with the ownership or
operation of the Retained Assets, whether occurring before or after the
Closing Date,
(ii) the failure of the Partnership Entities to be the owner of
such valid leasehold interests or fee ownership interests in and to the
Assets as are necessary to enable the Partnership Entities to continue to
own and operate the Assets and the Business in the same manner that the
Assets and the Business were owned and operated by the MRMC Entities during
the one-year period immediately prior to the Closing date to the extent
that MRMC is notified of any of the foregoing within three years after the
Closing Date,
(iii) the failure of the Partnership Entities to have any consent
or permit necessary to allow the Partnership Entities to own or operate the
Assets and the Business in the same manner that the Assets and the Business
were owned and operated by the MRMC Entities during the one-year period
immediately prior to the Closing date to the extent that MRMC is notified
of any of the foregoing within three years after the Closing Date,
(iv) the currently pending legal actions against MRMC set forth
on Schedule 3.2 hereto, and
(v) all federal, state and local income tax liabilities
attributable to the operation of the Assets prior to the Closing Date,
including any such income tax liabilities of MRMC that may result from the
consummation of the transactions contemplated by the Contribution
Agreement.
(b) In addition to and not in limitation of the indemnification
provided under Sections 3.1(c) and 5.5, or under the Partnership Agreement, the
Partnership shall indemnify, defend, and hold harmless the MRMC Entities from
and against any Losses suffered or incurred by any of the MRMC Entities by
reason of or arising out of events and conditions associated with:
(i) the operation of the Assets and the Business, and
(ii) the performance of the Services by MRMC and/or its employees
pursuant to this Agreement (provided that MRMC is not in breach of this
Agreement),
in each case occurring on or after the Closing Date (other than Covered
Environmental Losses which are provided for under Section 3.1), unless in any
such case such indemnification would not be permitted under Section 7.7 of the
Partnership Agreement.
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3.3 INDEMNIFICATION PROCEDURES.
(a) The Indemnified Party agrees that within a reasonable period of
time after it becomes aware of facts giving rise to a claim for indemnification
under this Article III, it will provide notice thereof in writing to the
Indemnifying Party, specifying the nature of and specific basis for such claim.
(b) The Indemnifying Party shall have the right to control all aspects
of the defense of (and any counterclaims with respect to) any claims brought
against the Indemnified Party that are covered by the indemnification under this
Article III, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; provided however, that no such
settlement shall be entered into without the consent of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or
issues, as the case may be.
(c) The Indemnified Party agrees to cooperate fully with the
Indemnifying Party, with respect to all aspects of the defense of any claims
covered by the indemnification under this Article III, including, without
limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may
receive, permitting the name of the Indemnified Party to be utilized in
connection with such defense, the making available to the Indemnifying Party of
any files, records or other information of the Indemnified Party that the
Indemnifying Party considers relevant to such defense and the making available
to the Indemnifying Party of any employees of the Indemnified Party; provided
however, that in connection therewith the Indemnifying Party agrees to use
reasonable efforts to minimize the impact thereof on the operations of the
Indemnified Party. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding
sentence be construed as imposing upon the Indemnified Party an obligation to
hire and pay for counsel in connection with the defense of any claims covered by
the indemnification set forth in this Article III; provided however, that the
Indemnified Party may, at its own option, cost and expense, hire and pay for
counsel in connection with any such defense. The Indemnifying Party agrees to
keep any such counsel hired by the Indemnified Party reasonably informed as to
the status of any such defense, but the Indemnifying Party shall have the right
to retain sole control over such defense.
(d) In determining the amount of any Losses for which the Indemnified
Party is entitled to indemnification under this Agreement, the gross amount of
the indemnification will be reduced by (i) any insurance proceeds realized or to
be realized by the Indemnified Party, and such correlative insurance benefit
shall be net of any incremental insurance premium that becomes due and payable
by the Indemnified Party as a result of such claim and (ii) all amounts
recovered or recoverable by the Indemnified Party under contractual indemnities
from third parties.
ARTICLE IV
SERVICES AND RELATED PARTY TRANSACTIONS
4.1 SERVICES. During the term of this Agreement, MRMC agrees to provide
(either directly or through its Subsidiaries) on behalf of the General Partner
in accordance with Article VII of the Partnership Agreement, the employees or
independent contractors, corporate staff, support services and administrative
services necessary to operate the Business (the "Services"). MRMC shall perform
the Services in a manner that is substantially identical in nature and quality
to the services performed by MRMC for the Business during the one-year period
immediately prior to the Closing Date. The General Partner and the Partnership
agree that MRMC shall be reimbursed for all costs and expenses incurred in
connection with the performance of the
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Services as if it were the General Partner in accordance with Section 7.4(b) and
7.6(c) of the Partnership Agreement, subject to the limitations set forth in
Section 4.2 of this Agreement.
4.2 GENERAL AND ADMINISTRATIVE REIMBURSEMENT.
(a) Except as provided in Section 4.2(b) below, the amount for which
MRMC shall be entitled to reimbursement from the Partnership pursuant to the
last sentence of Section 4.1 for Allocated General and Administrative Expenses
shall not exceed $1.0 million in the aggregate in the first year following the
date of this Agreement (the "Indirect Expenses Limit). Thereafter, the Indirect
Expenses Limit shall be increased annually by no more than the percentage
increase in the Consumer Price Index for the applicable year. Additionally, MRMC
and the General Partner may agree, with the consent of the Conflicts Committee,
to further increases to the Indirect Expenses Limit in order to account for
adjustments in the nature of the Services as the result of acquisitions by the
Partnership or other expansions of the Business.
(b) Notwithstanding Section 4.2(a), the Indirect Expenses Limit will
not apply to (i) the cost of any third party legal, accounting or advisory
services received, or the direct expenses of MRMC incurred in connection with
acquisition or business development opportunities evaluated on behalf of the
Partnership; or (ii) expenses directly attributable to the operation of the
Partnership, its assets or the Business.
4.3 DESIGNATION OF AGENTS. In connection with the provision of the Services
by the employees of MRMC, the General Partner, on behalf of the Partnership,
hereby appoints and empowers MRMC and each current and future employee of MRMC
who is fulfilling a job function for the Partnership in connection with the
conduct by the Partnership of its business in the ordinary course, as agent of
the Partnership with full power and authority to execute and deliver on behalf
of the Partnership, any documents, contracts, governmental filings or other
instruments commensurate with, but limited to, such job function. The power and
authority granted pursuant to this Section 4.3 to a person described in the
preceding sentence will be valid only for so long as such person is employed by
MRMC.
4.4 RIGHT TO OPERATE. MRMC shall have the right, but not the obligation, to
act as operator of the Partnership's facilities to the same extent it acted as
operator of such facilities prior to the effective date of this Agreement for so
long as MRMC has responsibilities associated with such facilities.
4.5 RELATED PARTY TRANSACTIONS. Each of MRMC, the General Partner, the
Partnership and the Operating Partnership agree that the execution or material
amendment of any "significant Xxxxxx agreement" (as such term is defined below)
must be approved by the Conflicts Committee. The term "significant Xxxxxx
agreement" means any agreement between the General Partner, the Partnership or
the Operating Partnership, on the one hand, and any Xxxxxx Entity, on the other
hand, that requires aggregate annual payments to or from any Xxxxxx Entity or
Xxxxxx Entities in excess of the Indirect Expense Limit.
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ARTICLE V
USE OF THE NAMES AND MARKS
5.1 GRANT OF LICENSE. MRMC hereby grants to the Partnership and the
Partnership hereby accepts, a nontransferable, nonexclusive royalty-free right
and license to use the Names and Marks in connection with the Business during
the term of this Agreement.
5.2 USE. All use of and reference to the Names and Marks by the Partnership
shall be generally approved by MRMC prior to such use or reference, and all such
use and reference shall conform with such instructions and quality standards as
MRMC from time to time may issue. MRMC shall have 30 days from the submission of
approval to approve or disapprove of the use or reference. Failure on the part
of MRMC to act within such 30-day period shall be deemed to constitute approval.
In no event shall use of or reference to the Names and Marks be inconsistent in
form or content with the sole ownership of the Names and Marks by MRMC. All use
of the Names and Marks by the Partnership, its agents, servants, employees and
vendees, shall inure solely to the benefit of MRMC. MRMC shall have the right to
make reasonable inspection of the Partnership's services rendered in connection
with the Names and Marks to protect the goodwill of MRMC associated with the
Names and Marks.
5.3 VARIATIONS. The Partnership shall not adopt and commence using any
variations of the Names and Marks, or any other names and marks confusingly
similar thereto, without the prior approval of MRMC. MRMC shall have 30 days
from the submission of approval to approve or disapprove of the variation.
Failure on the part of MRMC to act within such 30-day period shall be deemed to
constitute approval.
5.4 NONTRANSFERABLE. The license granted to the Partnership to use the
Names and Marks is not assignable or transferable, and it shall not inure to the
benefit of any other Person, including, without limitation, a trustee in
bankruptcy or any other successor to the Partnership, whether by operation of
law or otherwise; provided, however, that the Partnership shall be entitled to
sublicense the Names and Marks to any of its Subsidiaries.
5.5 INDEMNITY. The Partnership agrees to be solely responsible for and to
defend and indemnify MRMC from and against any and all claims, demands and
causes of action, and all Losses sustained in connection therewith, arising out
of, resulting from or related to the use of the Names and Marks in the Business,
even if such claim, demand or cause of action is based on the sole, partial or
concurrent negligence of MRMC, except that MRMC shall defend and indemnify the
Partnership from and against all claims, demands or causes of action for
trademark infringement arising from the use of the Names and Marks by the
Partnership. If requested by MRMC, the Partnership shall retain counsel
reasonably satisfactory to MRMC to represent MRMC, and the Partnership shall pay
the fees and expenses of such counsel relating to such claim, demand, or cause
of action. MRMC shall be consulted with respect to all matters concerning such
claim, demand, or cause of action, and settlement of such claim, demand, or
cause of action shall not be made without the prior written approval of MRMC.
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5.6 DISCLAIMER OF WARRANTIES. MRMC DISCLAIMS ANY AND ALL WARRANTIES,
CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT
TO THE LICENSE IN THIS ARTICLE V, OR ANY PART THEREOF, INCLUDING ANY AND ALL
IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS OR
SUITABILITY FOR ANY PURPOSE (WHETHER THE PARTY KNOWS, HAS REASON TO KNOW, HAS
BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED
TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF
DEALING.
ARTICLE VI
MISCELLANEOUS
6.1 INSURANCE MATTERS. MRMC hereby agrees to cause each of the Partnership
Entities to be named as additional insureds in MRMC's current insurance program,
which is described on Schedule 6.1 attached hereto. Each of the Partnership
Entities shall pay for its allocated cost of that insurance coverage in an
amount equal to MRMC's cost of insuring the assets and operations of Partnership
Entity and generally in accordance with the allocations and methodology
described in Schedule 6.1.
6.2 MANAGEMENT OF XX XXXXXX.
(a) Except as set forth below and to the extent allowed by applicable
law, MRMC agrees that it will, and (when applicable) it will use commercially
reasonable efforts to cause each of the MRMC Entities and each Xxxxxx Manager
to, exercise its J.V. Management Rights (as such term is defined below) in a
manner that it reasonably believes is in the best interests of the Partnership.
For purposes of this Agreement, the term "J.V. Management Rights" shall mean the
exercise by each of the Xxxxxx Entities or any Xxxxxx Manager of any voting
right or consent right granted by the XX Xxxxxx GP Agreement and the XX Xxxxxx
LP Agreement, including but not limited to, the exercise of rights contained in
Section 4.3 of the XX Xxxxxx LP Agreement (relating to distributions by XX
Xxxxxx) and Article X of the XX Xxxxxx LP Agreement (relating to transfers).
Notwithstanding anything to the contrary in this Agreement, no Xxxxxx Manager
shall be required to act in any manner that he or she reasonably believes would
(i) violate law, or (ii) constitute a breach of a fiduciary or similar duty that
such Xxxxxx Manager owes to XX Xxxxxx GP or XX Xxxxxx, or any of its members or
partners, respectively.
(b) MRMC agrees to promptly provide the Partnership with a copy of any
notice it receives as a result of Article X of the XX Xxxxxx LP Agreement.
(c) Except as provided for in this Section 6.2(c), MRMC agrees that no
member of the MRMC Group will either sell its Venture Interest, nor purchase the
Venture Interest of a third party, pursuant to Sections 10.1, 10.2, 10.5, 10.6
or 10.7 of the XX Xxxxxx LP Agreement without the written consent of the
Partnership. In addition, MRMC agrees that it will exercise its rights contained
in Section 10.2, 10.5, 10.6 or 10.7 of the XX Xxxxxx LP Agreement only as
directed by the Partnership. As between the MRMC Group and the Partnership, in
the event MRMC and the Partnership agree to purchase the Venture Interest of a
third party, the purchase price for and ownership of such Venture Interest shall
be allocated between the MRMC Group and the Partnership in accordance with their
respective ownership percentages in XX Xxxxxx and MRMC shall pay, or cause the
applicable MRMC Entity to pay, its proportionate share of the purchase price of
the Venture Interest to be purchased by MRMC or such MRMC
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Entity. Notwithstanding the foregoing, in no event will MRMC or any MRMC Entity
be prohibited by this Agreement from selling its Venture Interest when required
to do so by the terms of the XX Xxxxxx LP Agreement or the XX Xxxxxx GP
Agreement.
(d) MRMC agrees that it will not, and it will cause each of the MRMC
Entities to not, vote in favor of or otherwise consent to any amendment of the
XX Xxxxxx LP Agreement without the prior written consent of the Partnership.
6.3 CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
subject to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state. Each Party hereby
submits to the jurisdiction of the state and federal courts in Dallas County,
Texas.
6.4 NOTICE. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by telecopier or telegram to such
Person. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below such Party's signature to this Agreement, or at such other address as such
Party may stipulate to the other parties in the manner provided in this Section
6.4.
6.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the Parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.
6.6 TERMINATION. This Agreement, other than the provisions of Article III,
shall terminate if the Partnership is no longer an Affiliate of MRMC.
Termination of this Agreement shall not terminate any Indemnifying Party's
continuing obligation of indemnification pursuant to Article III of this
Agreement which obligations shall survive as provided in Article III. In the
event of termination of this Agreement, the license granted by Article V hereof
shall automatically cease. As promptly as practicable (but in no event more than
180 days) following the termination of this Agreement, the Partnership shall
cease all use of the Names and Marks and any and all other names and marks
confusingly similar thereto. Termination of the license granted by Article V
hereof shall not terminate the Partnership's continuing obligation of
indemnification under Section 5.5 hereof. Upon termination of this Agreement,
MRMC shall have the right, but not the obligation, to continue as operator of
the Partnership's facilities to the same extent it acted as operator of such
facilities on behalf of the Partnership prior to the termination of this
Agreement for so long as MRMC has responsibilities associated with such
facilities, or the operation thereof.
15
6.7 EFFECT OF WAIVER OR CONSENT. No waiver or consent, express or implied,
by any Party to or of any breach or default by any Person in the performance by
such Person of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such Person of the same or any other obligations of such Person hereunder.
Failure on the part of a Party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues,
shall not constitute a waiver by such Party of its rights hereunder until the
applicable statute of limitations period has run.
6.8 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties hereto;
provided however, that the Partnership may not, without the prior approval of
the Conflicts Committee, agree to any amendment or modification of this
Agreement. Each such instrument shall be reduced to writing and shall be
designated on its face an "Amendment" or an "Addendum" to this Agreement.
6.9 ASSIGNMENT. No Party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other Parties
hereto.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.
6.11 SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
6.12 FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
6.13 LAWS AND REGULATIONS. Notwithstanding any provision of this Agreement
to the contrary, no Party this Agreement shall be required to take any act, or
fail to take any act, under this Agreement if the effect thereof would be to
cause such Party to be in violation of any applicable law, statute, rule or
regulation.
6.14 NEGOTIATION OF RIGHTS OF LIMITED PARTNERS, ASSIGNEES, AND THIRD
PARTIES. The provisions of this Agreement are enforceable solely by the Parties
to this Agreement, and no limited partner, member, assignee or other Person of
the Partnership or General Partner shall have the right, separate and apart from
the Partnership or the General Partner, to enforce any provision of this
Agreement or to compel any Party to this Agreement to comply with the terms of
this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on, and
effective as of, the date first written above.
XXXXXX MIDSTREAM PARTNERS, L.P.
By: XXXXXX MIDSTREAM GP. L.L.C.,
On behalf of itself and on behalf of Partnership
as its General Partner
By:
--------------------------------------------
Xxxxx X. Xxxxxx, III
President
XXXXXX OPERATING PARTNERSHIP L.P.
By: XXXXXX OPERATING GP LLC
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
XXXXXX RESOURCE MANAGEMENT
CORPORATION
By:
--------------------------------------------
Xxxxx X. Xxxxxx, III
President
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