ASSET PURCHASE AGREEMENT
by and among
BLUE DOLPHIN PIPE LINE COMPANY,
BUCCANEER PIPE LINE CO. AND MISSION ENERGY, INC.,
as Sellers
and
COENERGY OFFSHORE PIPELINE & PROCESSING COMPANY,
as Purchaser
Dated as of August 31, 1995
TABLE OF CONTENTS
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
Section 1.01 Agreement to Purchase and Sell. . . . . . . . . .1
Section 1.02 Purchase Price. . . . . . . . . . . . . . . . . .2
Section 1.03 Customer Contracts. . . . . . . . . . . . . . . .2
Section 1.04 Effective Time. . . . . . . . . . . . . . . . . .3
Section 1.05 Other Agreements. . . . . . . . . . . . . . . . .3
ARTICLE II
CLOSING
ARTICLE III
ACTIONS TAKEN AT THE CLOSING
Section 3.01 Actions Taken by the Blue Dolphin Companies . . .4
Section 3.02 Actions Taken by XXXX . . . . . . . . . . . . . .5
ARTICLE IV
REPRESENTATIONS BY AND WARRANTIES OF THE BLUE DOLPHIN COMPANIES
Section 4.01 The Blue Dolphin Companies. . . . . . . . . . . .5
(a) Organization and Powers. . . . . . . . . . .5
(b) Agreements and Consents. . . . . . . . . . .5
(c) Litigation; Orders . . . . . . . . . . . . .6
(d) Validity and Enforceability. . . . . . . . .6
(e) Condition of Assets. . . . . . . . . . . . .7
(f) Ownership of Assets. . . . . . . . . . . . .7
(g) Governmental Licenses and Permits. . . . . .7
(h) Contracts. . . . . . . . . . . . . . . . . .7
(i) Compliance with Laws . . . . . . . . . . . .7
(j) Environmental Matters. . . . . . . . . . . .8
(k) No Brokers . . . . . . . . . . . . . . . . .8
(l) Conformity of Copies . . . . . . . . . . . .9
(m) No Changes . . . . . . . . . . . . . . . . .9
(n) Accuracy as of the Closing Date. . . . . . .9
(o) Not a Retailer . . . . . . . . . . . . . . .9
(p) Employees. . . . . . . . . . . . . . . . . .9
(q) Forecasts and Projections. . . . . . . . . .9
(r) Corporate Structure. . . . . . . . . . . . .9
(s) Disclosure of Other Matters. . . . . . . . .9
Section 4.02 No Other Warranties . . . . . . . . . . . . . . 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXX
Section 5.01 By XXXX . . . . . . . . . . . . . . . . . . . . 10
(a) Organization and Powers. . . . . . . . . . 10
(b) Agreements and Consents. . . . . . . . . . 10
(c) Litigation; Orders . . . . . . . . . . . . 11
(d) Validity and Enforceability. . . . . . . . 11
(e) No Brokers . . . . . . . . . . . . . . . . 11
(f) No Distribution. . . . . . . . . . . . . . 12
(g) Corporate Structure. . . . . . . . . . . . 12
(h) Accuracy as of the Closing Date. . . . . . 12
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.01 Exclusivity . . . . . . . . . . . . . . . . . . 12
Section 6.02 Public Announcements. . . . . . . . . . . . . . 12
Section 6.03 Tax Matters . . . . . . . . . . . . . . . . . . 13
Section 6.04 Further Assurances. . . . . . . . . . . . . . . 14
Section 6.05 Casualty Loss & Condemnation. . . . . . . . . . 14
Section 6.06 Conduct and Preservation of Business. . . . . . 14
Section 6.07 Restrictions on Certain Actions . . . . . . . . 14
Section 6.08 Third Party Consents. . . . . . . . . . . . . . 15
Section 6.09 Amendment of Schedules. . . . . . . . . . . . . 16
Section 6.10 Assignment of Customer Contracts. . . . . . . . 16
Section 6.11 Texas Land Office . . . . . . . . . . . . . . . 17
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to XXXX'x Obligation to Close. . . . 17
(a) Representation and Warranties True . . . . 17
(b) Compliance with Covenants. . . . . . . . . 17
(c) Officer's Certificate. . . . . . . . . . . 18
(d) No Injunction. . . . . . . . . . . . . . . 18
(e) Casualty Loss. . . . . . . . . . . . . . . 18
(f) Due Diligence. . . . . . . . . . . . . . . 18
(g) Condition of the Assets. . . . . . . . . . 18
(h) All Necessary Consents and Approvals . . . 18
(i) Opinion of Counsel . . . . . . . . . . . . 18
(j) Bank One Lien Release. . . . . . . . . . . 18
Section 7.02 Conditions to the Obligation
of the Blue Dolphin Companies to Close. . . . . 18
(a) Representation and Warranties True . . . . 18
(b) Compliance with Covenants. . . . . . . . . 19
(c) Officer's Certificate. . . . . . . . . . . 19
(d) No Injunction. . . . . . . . . . . . . . . 19
(e) Casualty Loss. . . . . . . . . . . . . . . 19
(f) All Necessary Consents and Approvals . . . 19
(g) Opinion of Counsel . . . . . . . . . . . . 19
(h) Bank One Lien Release. . . . . . . . . . . 20
ARTICLE VIII
ASSUMPTION AND INDEMNIFICATION
Section 8.01 Assumption of Liabilities Relating
to the Purchased Interests. . . . . . . . . . . 19
Section 8.02 Indemnification by the Blue Dolphin Company . . 20
Section 8.03 Indemnification by XXXX . . . . . . . . . . . . 20
Section 8.04 Notice of Asserted Liability. . . . . . . . . . 20
Section 8.05 Opportunity to Defend . . . . . . . . . . . . . 21
Section 8.06 Negligence and Strict Liability Waiver. . . . . 21
Section 8.07 Exclusive Remedy. . . . . . . . . . . . . . . . 21
ARTICLE IX
MISCELLANEOUS
Section 9.01 Survival. . . . . . . . . . . . . . . . . . . . 22
Section 9.02 Due Diligence Review. . . . . . . . . . . . . . 22
Section 9.03 Counterparts. . . . . . . . . . . . . . . . . . 22
Section 9.04 Governing Law . . . . . . . . . . . . . . . . . 22
Section 9.05 Entire Agreement. . . . . . . . . . . . . . . . 22
Section 9.06 Expenses. . . . . . . . . . . . . . . . . . . . 23
Section 9.07 Notices . . . . . . . . . . . . . . . . . . . . 23
Section 9.08 Successors and Assigns. . . . . . . . . . . . . 24
Section 9.09 Headings. . . . . . . . . . . . . . . . . . . . 24
Section 9.10 DTPA Waiver . . . . . . . . . . . . . . . . . . 24
Section 9.11 Severability. . . . . . . . . . . . . . . . . . 24
Section 9.12 No Third Party Beneficiaries. . . . . . . . . . 25
Section 9.13 Cross-references. . . . . . . . . . . . . . . . 25
ASSET PURCHASE AGREEMENT
This Agreement is made and entered into as of the 31st day of
August, 1995, by and among Blue Dolphin Pipe Line Company, a Delaware
corporation ("BDPL"), Buccaneer Pipe Line Co., a Texas corporation
("BPC"), Mission Energy, Inc., a Delaware corporation doing business in
Texas under the name "MEI Mission Energy, Inc." ("MEI") (BDPL, BPC, and
MEI are sometimes collectively referred to herein as the "Blue Dolphin
Companies" or singularly as a "Blue Dolphin Company"), and CoEnergy
Offshore Pipeline & Processing Company, a Michigan corporation ("XXXX").
WITNESSETH:
WHEREAS, BDPL is engaged in the business (the "Blue Dolphin
Pipeline Business") of providing services relating to the transportation
of natural gas and liquids through the Blue Dolphin Pipeline (as
hereinafter defined);
WHEREAS, MEI is engaged in the business (the "Shore Facilities
Business") of providing services relating to the dehydration of natural
gas and the separation and storage of liquids on and at the Land and the
Shore Facilities (as hereinafter defined);
WHEREAS, BPC is engaged in the business (the "Buccaneer Pipeline
Business") of providing services relating to the transportation of
liquids through the Buccaneer Pipeline (as hereinafter defined); and
WHEREAS, XXXX desires to purchase an undivided 1/3 interest in the
assets comprising the Blue Dolphin Pipeline Business, the Shore
Facilities Business, and the Buccaneer Pipeline Business (collectively,
the "Businesses"), and the Blue Dolphin Companies desire to sell to XXXX
an undivided 1/3 interest in said assets on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and covenants
herein contained, and the benefits to be derived herefrom, the parties
hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.01 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and the
conditions set forth in this Agreement, at the Closing (as defined in
Article II):
(a) BDPL will sell to XXXX, and XXXX will purchase from BDPL, an
undivided 1/3 interest in and to that certain pipeline system owned by
BDPL located both onshore in Brazoria County, Texas, and offshore of the
coast of Texas, which is referred to and described in Exhibit 1.01(a),
including an undivided one-third (1/3) interest in all pipelines and
related equipment and fixtures and any easements, right-of-ways, and
permits necessary to conduct the Blue Dolphin Pipeline Business (the
"Blue Dolphin Pipeline");
(b) BPC will sell to XXXX, and XXXX will purchase from BPC, an
undivided 1/3 interest in and to that certain pipeline system owned by
BPC located onshore in Brazoria County, Texas, which is referred to and
described in Exhibit 1.01(b), including an undivided one-third (1/3)
interest in all pipelines and related equipment and fixtures and any
easements, right-of-ways, and permits necessary to conduct the Buccaneer
Pipeline Business (the "Buccaneer Pipeline");
(c) MEI will sell to XXXX, and XXXX will purchase from MEI,
undivided 1/3 interests in and to:
(i) those certain tracts or parcels of real estate described
in Exhibit 1.01(c)(i) (the "Land"), and
(ii) the onshore separation, vapor recovery, and dehydration
facilities, related equipment and fixtures owned by MEI
which are located on the Land on the date of this
Agreement (the "Shore Facilities").
The assets comprising the Businesses which are subject to the sale
and assignment of 1/3 undivided interests pursuant to this Section are
sometimes referred to herein collectively as the "Assets". The
undivided 1/3 interests in the Assets to be acquired by XXXX pursuant to
this Section are sometimes referred to herein collectively as the
"Purchased Interests" or singularly as a "Purchased Interest".
1.02 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Purchased Interests shall be U.S. $10,000,000 together
with the assumption by XXXX of the Assumed Obligations (as defined in
Section 8.01). The Purchase Price includes XXXX'x pro rata share of the
capital improvements described on Exhibit 1.02 to the extent the cost of
such capital improvements does not exceed $500,000. In addition, XXXX
shall pay its pro rata share of any such capital improvements to the
extent such costs exceeds $500,000, provided, however, that XXXX'x pro
rata share of such costs shall not exceed $83,300. The Purchase Price
shall be allocated to Class III assets as defined in Temp. Treas. Reg.
1.1060-1T(d)(2)(ii) and among the Purchased Interests in the manner set
forth in Section 6.03(d).
1.03 CUSTOMER CONTRACTS. Subject to Section 6.10, the sale and
purchase of the Purchased Interests shall include an assignment of an
undivided 1/3 interest in and to the rights of the respective Blue
Dolphin Company in the agreements described on Schedule 1.03 (the
"Customer Contracts") pursuant to which certain persons have entered
into agreements with one or more of the Blue Dolphin Companies with
respect to (a) the transportation, separation, dehydration, or storage
of natural gas, crude oil, and/or condensate through, by, and/or on
certain of the Assets, or (b) the vapor recovery processes performed by
MEI.
1.04 EFFECTIVE TIME. The transfer of the ownership of the
Purchased Interests shall be effective as of 7:00 a.m., Central Daylight
Time, on the first day of the calendar month within which the Closing
Date occurs (the "Effective Time"). All sums owing on account of the
ownership, operation, or use of the Purchased Interests prior to the
Effective Time shall be for the account of and charged to the respective
Blue Dolphin Company, and all sums owing on account of the ownership,
operation, or use of the Purchased Interests on or after the Effective
Time shall be charged to and for the account of XXXX. The respective
Blue Dolphin Company shall be entitled to any and all revenues, refunds,
sums or amounts attributable to the ownership, operation, or use of the
Purchased Interests prior to the Effective Time. XXXX shall be entitled
to any and all revenues, refunds, sums or amounts attributable to the
ownership, operation, or use of the Purchased Interests on and after the
Effective Time. Nothing set forth in this Section 1.04 shall be
construed, however, to supersede any agreements made pursuant to the
Operating Agreements (as defined in Section 1.05) with respect to the
operation of the Assets subsequent to the Effective Time, which shall be
controlling for all such purposes. For purposes of this Section 1.04,
(a) revenues shall be treated as realized with respect to the storage of
crude oil, condensate, and natural gas liquids prior to the Effective
Time to the extent such liquids were in storage in or on the Assets at
the Effective Time and (b) such liquids shall be deemed delivered from
storage on a "FIFO" basis.
1.05 OTHER AGREEMENTS. At the Closing, XXXX, BDPL, BPC, and MEI
will enter into (a) operating agreements for each Business (the
"Operating Agreements") substantially identical in form and content to
Exhibit 1.05(a) pursuant to which the parties will make certain
covenants, give certain agreements, and incur certain obligations in
connection with the operation of the Assets subsequent to Closing, and
(b) a purchase rights and participation agreement (the "Purchase Rights
Agreement") substantially identical in form and content to Exhibit
1.05(b) pursuant to which the parties will be subjected to certain
restrictions on future transfers of their interests in the Assets.
ARTICLE II
CLOSING
The closing of the transactions contemplated by this Agreement
("Closing") shall take place at the offices of Cokinos, Bosien & Young,
Houston, Texas as soon as possible following execution of this
Agreement, but in no event later than August 31, 1995, at 9:00 a.m.,
Houston time. The date of the Closing is referred to herein as the
"Closing Date". The Closing Date will not be extended past August 31,
1995, regardless of whether the satisfaction of the conditions described
in Article VII remain pending, except the Closing Date will be extended
past August 31, 1995 if (a) the Closing Date is extended in writing by
mutual agreement of the parties, or (b) receipt of required and material
governmental consents or approvals remains pending, in which case the
Closing Date shall be extended until the grant or denial of the
necessary consents or approvals.
ARTICLE III
ACTIONS TAKEN AT THE CLOSING
3.01 ACTIONS TAKEN BY THE BLUE DOLPHIN COMPANIES. At the Closing,
the Blue Dolphin Companies shall execute and deliver the following:
(a) an Assignment and Xxxx of Sale substantially identical in form
and content to Exhibit 3.01(a) (the "Assignment") and any other
instruments reasonably necessary to transfer an undivided 1/3 interest
in the Blue Dolphin Pipeline, the Buccaneer Pipeline and the Shore
Facilities to XXXX, free and clear of all Liens, other than Permitted
Encumbrances;
(b) a Special Warranty Deed substantially identical in form and
content to Exhibit 3.01(b) (the "Deed"), and any other instruments
reasonably necessary to transfer an undivided 1/3 interest in the Land
to XXXX free and clear of all Liens, other than Permitted Encumbrances;
(c) the Operating Agreements;
(d) the Purchase Rights Agreement; and
(e) an affidavit or other certification that such Blue Dolphin
Company is not a "foreign person" within the meaning of Section 1445 (or
similar provisions) of the Internal Revenue Code of 1986, as amended
(i.e., such Blue Dolphin Company is not a non-resident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate as
those terms are defined in such code and the regulations promulgated
thereunder).
As used in this Agreement: (a) the term "Liens" shall mean any lien,
pledge, claim, charge, security interest or other encumbrance, and (b)
the term "Permitted Encumbrances" shall mean: (i) Liens for taxes not
yet due and payable or which are being contested in good faith and
disclosed in Schedule 3.01; (ii) materialmen's, mechanics', workers',
repairmen's, or other similar Liens arising in the ordinary course of
the operation of the Assets for amounts not due and payable or which are
being contested in good faith and disclosed on Schedule 3.01; (iii) all
rights to, consents by, required notices to, filings with, or other
actions by governmental entities if the same are customarily obtained
subsequent to sale or conveyance; (iv) rights reserved to or vested in
any local, state, and federal governmental bodies, authorities, or
agencies to control or regulate any of the real property occupied by the
Assets in any manner, and all laws, rules, regulations, ordinances, and
orders of any such bodies, authorities, or agencies; (v) Liens to be
released at or before Closing; (vi) any other Liens that do not,
individually or in the aggregate, have a material adverse effect on the
ownership, operation, or value of the Purchased Interests; (vii) the
encumbrances and restrictions with respect to the Land described in
Exhibit "B" to the Deed and (viii) the Applicable Operating Agreements
(as defined in Section 4.01(h)).
3.02 ACTIONS TAKEN BY XXXX. At the Closing, XXXX shall deliver or
cause to be delivered, by wire transfer of immediately available funds
to the bank accounts designated by each Blue Dolphin Company, that Blue
Dolphin Company's share of the Purchase Price, and shall execute and
deliver the following:
(a) the Assignment;
(b) the Operating Agreements; and
(c) the Purchase Rights Agreement.
ARTICLE IV
REPRESENTATIONS BY AND WARRANTIES OF THE BLUE DOLPHIN COMPANIES
4.01 THE BLUE DOLPHIN COMPANIES. Each Blue Dolphin Company,
jointly and severally, represents and warrants to XXXX as set forth
below:
(a) ORGANIZATION AND POWERS. BDPL and MEI are corporations duly
organized, validly existing, and in good standing under the laws of the
State of Delaware and are duly qualified to do business in, and are in
good standing under the laws of, the State of Texas. BPC is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Texas. The Blue Dolphin Company has all
corporate power and authority necessary to conduct its business as
presently conducted, and to own, lease, or operate all properties now
owned, leased, or operated by the Blue Dolphin Company.
(b) AGREEMENTS AND CONSENTS. Neither the execution, delivery, nor
performance of this Agreement, the Operating Agreements, the Assignment,
the Deed, the Purchase Rights Agreement or any other documents or
instruments executed and delivered at the Closing (the "Closing
Agreements") by the Blue Dolphin Company will (i) conflict with or
result in any breach of any provisions of the articles of incorporation,
certificate of incorporation, or bylaws of that Blue Dolphin Company;
(ii) to the knowledge of that Blue Dolphin Company, require the consent,
approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, except as set forth in
Schedule 4.01(b) or Section 6.11, or any regulatory approvals or routine
governmental consents normally acquired after consummation of
transactions such as transactions of the nature contemplated by this
Agreement, (iii) except as set forth in Schedule 4.01(b), violate,
effect acceleration of or result in the termination, cancellation, or
modification of any material agreement, indenture, instrument, lease,
contract, or other undertaking to which that Blue Dolphin Company is a
party or is bound, except as provided in Section 6.10 or for such
defaults (or rights of termination, cancellation, or acceleration) as to
which requisite waivers or consents have been obtained or will be
obtained prior to the Closing; (iv) violate any order, writ, injunction,
or decree to which the Blue Dolphin Company is bound or may be bound,
(v) to the knowledge of the Blue Dolphin Company, violate any statute,
rule, or regulation to which that Blue Dolphin Company is bound or may
be bound; or (vi) result in the imposition or creation of any Lien upon
any of the Assets other than a Permitted Encumbrance.
(c) LITIGATION; ORDERS. There is no action, suit, investigation,
inquiry, or proceeding ("Litigation") pending, or to the knowledge of
the Blue Dolphin Company threatened, to which such Blue Dolphin Company
is or would be a party and which relates to the Assets. As of the date
hereof there is no Litigation, judgment or outstanding order, writ,
injunction, decree, stipulation, or award (whether rendered by a court
or administrative agency, or by arbitration) to which that Blue Dolphin
Company is bound that would prohibit or delay in any material respect
the consummation of the transactions contemplated hereby or in the
Closing Agreements or that could otherwise be reasonably expected to
materially adversely affect the Purchased Interests.
(d) VALIDITY AND ENFORCEABILITY. The Blue Dolphin Company has the
corporate power and authority to execute and deliver this Agreement and
the Closing Agreements. The execution and delivery by the Blue Dolphin
Company of this Agreement and the Closing Agreements and the
consummation by the Blue Dolphin Company of the transactions and
performance of the terms and conditions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action
on behalf of that Blue Dolphin Company. This Agreement has been, and at
the Closing the Closing Agreements will be, duly and validly executed
and delivered by the Blue Dolphin Company and, assuming this Agreement
and the Closing Agreements constitute valid and binding obligations of
XXXX, this Agreement constitutes, and at the Closing this Agreement and
the Closing Agreements will constitute, valid and binding obligations of
the Blue Dolphin Company, enforceable in accordance with their
respective terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, bank moratorium, fraudulent
conveyance, or similar laws affecting creditors' rights generally,
general principles of equity, and laws restricting the availability of
equitable remedies).
(e) CONDITION OF ASSETS. Except as set forth on Schedule 4.01(e),
the Assets constitute all of the assets and properties used in
connection with the Businesses. To the knowledge of the Blue Dolphin
Company, the Assets owned by the Blue Dolphin Company are in serviceable
and functional condition, subject only to (i) normal maintenance
requirements and normal wear and tear reasonably expected in the
ordinary course of business based on the age and nature of such Assets
or (ii) any other matters which do not have a material adverse effect on
the Purchased Interests, and are suitable for the purposes used and are
adequate for the normal operation of the respective Business.
(f) OWNERSHIP OF ASSETS. The Blue Dolphin Company is the owner of
and has title to the Purchased Interests which are to be assigned by
that Blue Dolphin Company pursuant to Section 1.01, free and clear of
all Liens other than Permitted Encumbrances.
(g) GOVERNMENTAL LICENSES AND PERMITS. To the knowledge of the
Blue Dolphin Company, (i) the Blue Dolphin Company possesses all
governmental licenses, franchises, permits, certificates, orders,
approvals, authorizations, exemptions, registrations, and similar
documents or instruments (the "Permits") necessary for the ownership,
operation, and maintenance of the Assets as currently operated (all of
which are listed on Schedule 4.01(g)), and (ii) the Assets are in
compliance with the Permits and all orders, judgments and decrees
applicable to the ownership, use, maintenance, and operation of the
Assets.
(h) CONTRACTS. Schedule 1.03 sets forth all of the Customer
Contracts. The contracts and agreements listed on Schedule 4.01(h) (the
"Applicable Operating Agreements") constitute all of the material
contracts and agreements (other than the Customer Contracts) relating to
the continued ownership, operation, and maintenance of the Assets by the
Blue Dolphin Company and, except as set forth on Schedule 4.01(h), each
of the Customer Contracts and the Applicable Operating Agreements is in
full force and effect and there is no breach or default by the Blue
Dolphin Company under any such contract or agreement (or the occurrence
of any event which, after the giving of notice or the passage of time or
otherwise, will result in a breach or default) that could reasonably be
expected to have a material adverse effect on the ownership, operation,
or maintenance of the Purchased Interests. To the knowledge of the Blue
Dolphin Company, no other party to any of such contracts or agreements
is in breach of or in default under such contracts and agreements, nor
has any assertion been made by the Blue Dolphin Company of any such
breach or default. Except as disclosed on Schedule 4.01(h) and Section
6.10, each of such contracts and agreements are freely and fully
assignable to XXXX without penalty or other adverse consequence.
(i) COMPLIANCE WITH LAWS. To the knowledge of the Blue Dolphin
Company, the Blue Dolphin Company is operating the Assets in compliance
with all laws, rules and regulations of federal, state, or local
entities (other than Environmental Laws (as defined below)) which have
jurisdiction over the Blue Dolphin Company or the ownership, operation,
and maintenance of the Assets. The Blue Dolphin Company is not charged
or, to the knowledge of the Blue Dolphin Company, threatened with or
under investigation with respect to, any violation of any applicable law
relating to any aspect of the ownership or operation of the Assets or
the operation of the respective Business.
(j) ENVIRONMENTAL MATTERS. Except as set forth on Schedule
4.01(j), to the knowledge of the Blue Dolphin Company, the Assets have
been operated by the Blue Dolphin Company in compliance with all
applicable Environmental Laws (as defined below), other than violations
which individually or in the aggregate do not and will not have a
material adverse effect on the operation and ownership of the Assets or
the results of operations and the condition (financial or otherwise) or
prospects of the respective Business. There is at the date hereof no
pending Litigation or, to the knowledge of that Blue Dolphin Company,
any threatened Litigation, relating to any violation of any
Environmental Laws with respect to the Assets; and to the Blue Dolphin
Company's knowledge, all material notices, permits, or similar
authorization, if any, required to be obtained or filed in connection
with the ownership and operation of the Assets, including, without
limitation, the treatment, storage, disposal, or release of a hazardous
substance or solid waste into the environment, have been duly obtained
or filed. As used in this Agreement "Environmental Laws" means any and
all laws, statutes, ordinances, rules, regulations, orders, judicial, or
arbitrated decisions, or determinations of any governmental authority or
court pertaining to the environment currently in effect in Brazoria or
Galveston County, Texas and offshore of the Texas Gulf Coast, including,
without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), the Federal Water Pollution Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act, as amended, comparable
state and local laws, and other safety, health, and environmental
conservation or protection laws. The term "release" has the meaning
specified in the CERCLA, and the term "disposal" (or "disposed") has the
meaning specified in the RCRA.
(k) NO BROKERS. Neither the Blue Dolphin Company nor any of its
affiliates has employed any investment banker, broker, or finder in
connection with the transactions contemplated by this Agreement, nor has
any of them taken any action which would give rise to any valid claim
against XXXX or any of its affiliates, officers, directors, or employees
for a brokerage commission, finder's fee, or other like payment in
connection with the transaction evidenced hereby.
(l) CONFORMITY OF COPIES. The Blue Dolphin Companies have made
available to XXXX accurate and complete copies of all Customer Contracts
and Applicable Operating Agreements.
(m) NO CHANGES. Except as disclosed on Schedule 4.01(m), since
July 20, 1995 (i) there has not been any material adverse change in, or
any event or condition that might reasonably be expected to result in
any material adverse change in, the business, assets, results of
operations, or condition of the Businesses or the ownership or operation
of the Assets or any material portion thereof; (ii) the Businesses have
been conducted only in the ordinary course consistent with past
practice; (iii) the Blue Dolphin Company has not, in respect of the
Business conducted by that Blue Dolphin Company, incurred any material
liability, engaged in any material transaction, or entered into any
material agreement outside the ordinary course of business consistent
with past practice; (iv) the Blue Dolphin Company has not suffered any
material loss, damage, destruction, or other casualty to any of the
Assets (whether or not covered by insurance); and (v) the Blue Dolphin
Company has not, in respect of the Business conducted by that Blue
Dolphin Company, taken any of the actions set forth in Section 6.07
except as permitted thereunder.
(n) ACCURACY AS OF THE CLOSING DATE. The representations and
warranties made in this Article IV will be true and correct on and as of
the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing
Date, except that any such representations and warranties which
expressly relate only to an earlier date shall be true and correct on
the Closing Date as of such earlier date.
(o) NOT A RETAILER. MEI is not engaged in the business of selling
tangible personal property at retail, does not hold a sales and use tax
permit issued by the state of Texas, and has not made any retail sale of
tangible personal property during the twelve month period ending on the
Closing Date.
(p) EMPLOYEES. None of the Blue Dolphin Companies employ any
individuals.
(q) FORECASTS AND PROJECTIONS. To the knowledge of the Blue
Dolphin Companies, the forecasts of future throughput and operating
expenses previously provided to XXXX by the Blue Dolphin Companies were
prepared based upon reasonable assumptions.
(r) CORPORATE STRUCTURE. Each Blue Dolphin Company is wholly
owned by Blue Dolphin Energy Company, a Delaware corporation.
(s) DISCLOSURE OF OTHER MATTERS. To the knowledge of the Blue
Dolphin Company, no representation or warranty made by the Blue Dolphin
Company in this Agreement, and no statement of the Blue Dolphin Company
contained in any Closing Agreement, contains or will contain, at the
time of delivery, any untrue statement of a material fact or omits or
will omit, at the time of delivery, to state any material fact necessary
in order to make the statements contained therein, in light of the
circumstances under which they are made, not misleading. To the
knowledge of the Blue Dolphin Company, it is not aware of any
information which could not have been discovered pursuant to a
reasonable and diligent investigation of the files and records
maintained by the Blue Dolphin Company (including the records listed on
Schedule 9.02) which would materially and adversely affect the operation
or ownership of the Assets. The Blue Dolphin Company has made available
to XXXX accurate and complete copies of all agreements, documents, and
other writings referred to or listed in this Article or any Schedule
hereto, exclusive of the records listed on Schedule 9.02.
4.02 NO OTHER WARRANTIES. Except as and to the extent set forth
in this Article IV, the Blue Dolphin Company (i) has not made any
representations or warranties to XXXX whatsoever, and (ii) hereby
disclaims all liability and responsibility for any other representation,
warranty, statement, or information made or communicated (orally or in
writing) to XXXX by any person, including without limitation a Blue
Dolphin Company or any of their representatives. Specifically, XXXX
acknowledges that none of the Blue Dolphin Companies nor any of their
affiliates have made any representation or warranty other than that
which is set forth in Section 4.01(e) relating to the condition,
fitness, or suitability of any of the tangible assets included in the
Purchased Interests, and acknowledges that it will acquire such tangible
assets, except for the representations set forth in Section 4.01(e), "AS
IS" and "WHERE IS" without any representation or warranty from any of
the Blue Dolphin Companies or any of their affiliates relating to their
condition, merchantability or fitness for a specific purpose.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXX
5.01 BY XXXX. XXXX represents and warrants to each of the Blue
Dolphin Companies as set forth below:
(a) ORGANIZATION AND POWERS. XXXX (i) is a corporation duly
organized, validly existing, and in good standing under the laws of the
state of Michigan, (ii) is duly qualified to do business in, and is in
good standing under the laws of, the state of Texas, and (iii) has all
corporate power and authority necessary to conduct its business as it is
presently conducted.
(b) AGREEMENTS AND CONSENTS. Neither the execution, delivery, nor
performance of this Agreement or the Closing Agreements by XXXX will (i)
conflict with or result in any breach of any provisions of the
certificate of incorporation or bylaws of XXXX; (ii) to XXXX'x
knowledge, require the consent or approval, authorization, or permit of,
or filing with or notification to, any governmental or regulatory
authority, except any regulatory approvals or routine governmental
consents normally acquired after consummation of transactions such as
transactions of the nature contemplated by this Agreement, (iii)
violate, effect acceleration of, or result in termination, cancellation,
or modification of any material agreement, indenture, instrument, lease,
contract, or other undertaking to which XXXX is a party or by which it
is bound, except for such defaults (or rights of termination,
cancellation, or acceleration) as to which requisite waivers or consents
have been obtained or will be obtained prior to the Closing; or (iv)
violate any order, writ, or injunction to which XXXX is bound or may be
bound, or (v) to the knowledge of XXXX, violate any decree, statute,
rule, or regulation to which XXXX is bound or may be bound.
(c) LITIGATION; ORDERS. There is no Litigation, judgment or
outstanding order, writ, injunction, decree, stipulation, or award
(whether rendered by a court or administrative agency, or by
arbitration) pending, or to the knowledge of XXXX threatened, to which
XXXX is or would be a party or to which XXXX is bound that would have an
adverse effect on the ability of XXXX to consummate the transactions
contemplated hereby or in the Closing Agreements or that would prevent
or delay in any material respect the consummation of the transactions
contemplated hereby or in the Closing Agreements or could otherwise be
reasonably expected to materially adversely affect the Purchased
Interests.
(d) VALIDITY AND ENFORCEABILITY. XXXX has the corporate power and
authority to execute and deliver this Agreement and the Closing
Agreements. The execution and delivery by XXXX of this Agreement and
the Closing Agreements and the consummation by XXXX of the transactions
and performance of the terms and conditions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action on behalf of XXXX. This Agreement has been, and at the Closing
the Closing Agreements will be, duly and validly executed and delivered
by XXXX and, assuming this Agreement and the Closing Agreements
constitute a valid and binding obligation of the Blue Dolphin Companies,
the Agreements constitute, and at the Closing the Closing Agreements
will constitute, valid and binding obligations of XXXX, enforceable
against XXXX in accordance with their respective terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, bank moratorium, fraudulent conveyance, or similar laws
affecting creditors' rights generally, general principles of equity, and
laws restricting the availability of equitable remedies).
(e) NO BROKERS. XXXX has advised the Blue Dolphin Companies that
at the Closing XXXX (but not any of the Blue Dolphin Companies) will
incur an obligation to Xxxxxx XxXxxx Associates ("CMA") for the payment
of a fee in connection with this transaction. Except as described in
the immediately preceding sentence, neither XXXX nor any of its
affiliates has employed any investment banker, broker, or finder in
connection with the transactions contemplated by this Agreement, nor has
any of them taken any action which would give rise to any valid claim
against any Blue Dolphin Company or any of their affiliates, officers,
directors, or employees for a brokerage commission, finder's fee, or
other like payment in connection with the transaction evidenced hereby.
(f) NO DISTRIBUTION. XXXX is an experienced and knowledgeable
investor in the natural gas and liquids pipeline business. Prior to
entering into this Agreement, XXXX was advised by its counsel and such
other persons it has deemed appropriate concerning this Agreement. XXXX
is acquiring the Purchased Interests for its own account and for
investment, and not in connection with a distribution thereof in
violation of the Securities Act of 1933, as amended, and the rules and
regulations as promulgated thereunder or any applicable state blue sky
laws.
(g) CORPORATE STRUCTURE. XXXX is wholly owned by Pipeline &
Processing Group, Inc., a Michigan corporation, which is wholly owned by
MCN Investment Corporation, a Michigan corporation.
(h) ACCURACY AS OF THE CLOSING DATE. The representations and
warranties made in this Article V will be true and correct on and as of
the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing
Date, except that any such representations and warranties which
expressly relate only to an earlier date shall be true and correct on
the Closing Date as of such earlier date.
ARTICLE VI
ADDITIONAL COVENANTS
6.01 EXCLUSIVITY. On or before August 31, 1995 or the occurrence
of the Closing, whichever occurs first, the Blue Dolphin Companies shall
not, indirectly or directly, through any director, officer, agent,
financial advisor, affiliate or otherwise, solicit, initiate or
encourage submission of proposals of offers from any person relating to
any acquisition or purchase of all or a portion of the Assets, and shall
not participate in any negotiations regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other person to do or seek any of the
foregoing, unless XXXX has indicated that it does not intend to
consummate the transactions contemplated hereby on or before the Closing
Date for any reason, in which case the obligations of the Blue Dolphin
Companies under this Section 6.01 shall terminate.
6.02 PUBLIC ANNOUNCEMENTS. Without the prior written approval of
the other parties hereto, which approval shall not be unreasonably
withheld, no party hereto will issue, or permit any agent or affiliate
to issue, any press releases or otherwise make or cause any agent or
affiliate to make, any public statements with respect to this Agreement
or the transactions contemplated hereby except where such release or
statement is deemed in good faith by the releasing party to be required
by applicable law or any national securities exchange. Any party or
parties issuing such a release or statement will use its or their
reasonable efforts to provide a copy to the other parties prior to the
issuance of such release or statement.
6.03 TAX MATTERS.
(a) The term "Taxes" shall mean all income, gross receipts,
profits, franchise, sales, use, occupation, property (including in
lieu-of-taxes), ad valorem, capital, wealth, environmental, employment,
severance, production, excise, stamp, transfer, workers' compensation,
social security, withholding or similar taxes, motor vehicle
registration fees, customs or import duties and all other taxes or other
governmental fees or charges imposed by any country or political
subdivision thereof, together with any interest, additions or penalties
with respect thereto.
(b) XXXX shall pay all transfer taxes, including without
limitation, sales, use, excise (including excise taxes on petroleum,
products of petroleum, petrochemicals, chemicals, and other taxable
substances), stamp, documentary, filing, recording, permit, license,
authorization, and other similar Taxes, filing fees and similar charges
("Transfer Taxes"), incurred or imposed in connection with or as a
result of the transactions effected pursuant to this Agreement
regardless of upon whom such Transfer Tax is levied or imposed by law.
XXXX shall prepare and file all returns and reports for such Transfer
Taxes. Should any of the Blue Dolphin Companies be required by law to
pay such Transfer Tax, XXXX shall notify the appropriate Blue Dolphin
Company of such amount and the due dates thereof and remit the amount of
such Transfer Tax and pre-prepared filings associated therewith to the
Blue Dolphin Company for remittance at least ten days before such
Transfer Tax is due.
(c) The Blue Dolphin Companies shall be liable for all Taxes
(other than Transfer Taxes described in Section 6.03(b)) incurred in
connection with the sale of the Purchased Interests and all taxes with
respect to the ownership and operation of the Purchased Interests for
taxable periods ending on or before the Effective Time. XXXX shall be
liable for its pro rata share of all Taxes (other than (subject to its
obligations under the Operating Agreements) employment, workers'
compensation, social security, withholding, or similar taxes relating to
employees) imposed with respect to the ownership and operation of the
Assets for periods beginning after the Effective Time. With respect to
the taxable period which includes the Effective Time (i) property and
other ad valorem Taxes accruing with respect to the Purchased Interests
shall be apportioned between the respective Blue Dolphin Company, on the
one hand, and XXXX, on the other hand, based on the daily proration of
such Taxes, and (ii) any other Taxes accruing during such period shall
be equitably apportioned among the parties.
(d) The Blue Dolphin Companies and XXXX agree that the Purchase
Price shall be allocated among the Purchased Interests in the manner set
forth in Schedule 6.03(d). Each party agrees to complete IRS Form 8594
consistently with the agreed allocation and to furnish the other party
with a draft copy of such form within a reasonable period before the
filing due date of such form. Neither the Blue Dolphin Companies nor
XXXX shall file any return with a tax authority that is inconsistent
with such allocation.
6.04 FURTHER ASSURANCES. After the Closing, the Blue Dolphin
Companies and XXXX shall, and shall cause their affiliates to, execute,
acknowledge, and deliver all such further conveyances, notices,
assumptions, releases, and acquittances, and such other instruments, and
shall take such further actions, as may be necessary or appropriate more
fully to assure to XXXX, and its successors or assigns, all of the
properties, rights, titles, interests, estates, remedies, powers, and
privileges intended to be conveyed to XXXX pursuant to this Agreement
and to assure fully to the Blue Dolphin Companies, their affiliates and
successors and assigns, the assumption of the liabilities and
obligations intended to be assumed by XXXX pursuant to this Agreement.
6.05 CASUALTY LOSS AND CONDEMNATION. In the event that there
exist at and as of the Closing any casualty loss or condemnation
proceeding with respect to the Purchased Interests, the Blue Dolphin
Companies shall assign to XXXX at and as of the Closing any rights it
may have to claims against any insurance carrier, governmental entity,
or third party with respect to such casualty loss or condemnation
proceeding.
6.06 CONDUCT AND PRESERVATION OF BUSINESS. Except as expressly
provided in this Agreement, during the period from the date hereof to
the Closing, each Blue Dolphin Company (i) shall conduct the Business
now conducted by that Blue Dolphin Company only in the ordinary course
consistent with past practice and in compliance with all applicable
laws; (ii) shall use its reasonable best efforts to preserve, maintain,
and protect the Assets; and (iii) shall use its reasonable best efforts
to preserve intact the business organization of such Business, to keep
available the services of the employees of the Business, and to maintain
existing relationships with licensors, licensees, suppliers,
contractors, distributors, customers, and others having business
relationships with the Business.
6.07 RESTRICTIONS ON CERTAIN ACTIONS. Without limiting the
generality of Section 6.06, and except as otherwise expressly provided
in this Agreement, prior to the Closing, each Blue Dolphin Company shall
not, without the prior written consent of XXXX:
(a) make any material change in the ongoing operations of the
Assets or the Business;
(b) except in the ordinary course of the Business consistent
with past practice, create, incur, guarantee, or assume any
indebtedness for borrowed money in respect of the Business;
(c) mortgage or pledge any of the Assets or create or suffer
to exist any encumbrance thereupon, other than the Permitted
Encumbrances;
(d) sell, lease, transfer, or otherwise dispose of, directly
or indirectly, any of the Assets, other than inventories of
finished goods sold in the ordinary course of the Business
consistent with past practice;
(e) make any capital expenditure or expenditures relating to
any of the Businesses which, individually, is in excess of $75,000
or, in the aggregate, are in excess of $75,000;
(f) permit any current insurance or reinsurance policies
covering the Assets to be cancelled or terminated or any of the
coverages thereunder to lapse if such policy covers Assets or
insures risks, contingencies, or liabilities of the Business,
unless simultaneously with such cancellation, termination, or
lapse, replacement policies providing coverage equal to or greater
than the coverage cancelled, terminated, or lapsed are in full
force and effect and written copies thereof have been provided to
XXXX;
(g) take any action which would make any of the
representations or warranties of a Blue Dolphin Company contained
in this Agreement untrue or inaccurate as of any time from the date
of this Agreement to the Closing or would result in any of the
conditions set forth in this Agreement not being satisfied; or
(h) authorize or agree in writing or otherwise to take any of
the actions described in this Section.
6.08 THIRD PARTY CONSENTS. The Blue Dolphin Companies and XXXX
shall use their respective reasonable best efforts to obtain all
consents, approvals, orders, authorizations, and waivers of, and to
effect all declarations, filings, and registrations with, all third
parties (including governmental entities) that are necessary or required
to enable the Blue Dolphin Companies to transfer the Purchased Interests
to XXXX as contemplated by this Agreement and to otherwise consummate
the transactions contemplated hereby. All costs and expenses of
obtaining or effecting any and all of the consents, approvals, orders,
authorizations, waivers, declarations, filings, and registrations
referred to in this Section shall be borne by the Blue Dolphin Company,
provided, however, that the foregoing shall not affect the obligation of
XXXX to pay such expenses as required for it to comply with regulatory
requirements imposed on it.
6.09 AMENDMENT OF SCHEDULES. Each Blue Dolphin Company agrees
that, with respect to the representations and warranties of such Blue
Dolphin Company contained in this Agreement, such Blue Dolphin Company
shall have the continuing obligation until the Closing to supplement or
amend promptly the Schedules with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules. For all purposes of this Agreement, including without
limitation for purposes of determining whether the conditions set forth
in Section 7.01 has been fulfilled, the Schedules shall be deemed to
include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in
any supplement or amendment thereto; provided, however, that if the
Closing shall occur, then all matters disclosed pursuant to any such
supplement or amendment at or prior to the Closing shall be waived and
no party shall be entitled to make a claim thereon pursuant to the terms
of this Agreement.
6.10 ASSIGNMENT OF CUSTOMER CONTRACTS. Substantially all of the
Customer Contracts include provisions which require that a party
thereto, prior to assigning the respective Customer Contract, must
obtain the consent of the other party thereto, which consent is not to
be unreasonably withheld. In order to comply with these provisions, the
parties hereto have agreed that the Blue Dolphin Companies will not
assign an interest in the Customer Contracts at Closing. The Blue
Dolphin Companies will (a) from and after the Closing use reasonable
best efforts to promptly obtain the consent of the customers to the
assignment of the Customer Contracts to XXXX pursuant to Section 1.03,
and (b) will deliver to XXXX on or before the day which is ninety (90)
days after the Closing Date an Assignment substantially in the form of
Exhibit 6.10 pursuant to which undivided 1/3 interests in the Customer
Contracts are assigned to XXXX pursuant to Section 1.03. The Blue
Dolphin Companies will mail a letter to each of the Major Customers (as
hereinafter defined) requesting their consent to the assignment of the
respective Customer Contract to XXXX within thirty (30) days of the
Closing Date. If the written consent of any of the Major Customers is
not received within fifty (50) days of the Closing Date, the Blue
Dolphin Company shall within sixty (60) days of the Closing Date mail a
second letter to the Major Customers who have not consented requesting
their consent to the transaction. If the consent of any of the Major
Customers is not received within eighty (80) days of the Closing Date,
the Blue Dolphin Companies will mail a third letter to such Major
Customers requesting their consent and stating that their consent will
be deemed given on the ninetieth (90th) day after the Closing Date. The
Blue Dolphin Companies shall provide copies of all such letters to XXXX.
The failure of any of the Blue Dolphin Companies to mail a letter
required of it pursuant to this Section shall result in the Blue Dolphin
Companies being jointly and severally obligated to pay XXXX an aggregate
amount of $2,000 per week until such failure is cured. The maximum
liability of all of the Blue Dolphin Companies collectively shall be
$2,000 per week pursuant to this Section. For the purpose of this
Section, the term "Major Customer" shall mean any customer whose average
daily throughput through the Blue Dolphin Pipeline exceeds 1500 MCF of
gas per day, or forty (40) barrels of condensate per day, based on
average daily throughput during the ninety (90) days prior to the
Closing Date. The Blue Dolphin Companies represent and warrant that the
Major Customers represent over ninety-five percent (95%) of the revenue
attributable to the Businesses. Notwithstanding anything to the
contrary herein, with respect to any Customer Contract that has not been
assigned, XXXX shall be entitled to receive its pro rata share of the
benefits and shall bear its pro rata share of the obligations of such
Customer Contract as if it had been assigned.
6.11 TEXAS LAND OFFICE. The easements listed on Exhibits 1.01(a)
and 1.01(b) which have been issued by the state of Texas purport to
require the advance consent of the state of Texas to an assignment
thereof. The Blue Dolphin Companies have been advised by counsel,
however, that such consents are normally obtained after the consummation
of the applicable transaction. Accordingly, the parties have agreed to
use their reasonable best efforts to obtain such consents subsequent to
the Closing.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 CONDITIONS TO XXXX'X OBLIGATION TO CLOSE. The obligation of
XXXX to consummate the transactions contemplated hereby is subject to
the satisfaction or waiver at or prior to the Closing of all of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Blue Dolphin Companies contained in this Agreement
shall be true and correct in all material respects at and as of the
Closing with the same effect as though such representations and
warranties had been made at and as of the Closing, except for the
representations and warranties that speak as of a specific date or time
other than the date of this Agreement, which need only be true and
correct as of such date or time. For the sole purpose of determining
whether or not any of such representations and warranties are true and
correct as aforesaid on and as of the Closing Date, no effect shall be
given to any statement herein that any such representation or warranty
is "to the knowledge of Blue Dolphin Company."
(b) COMPLIANCE WITH COVENANTS. The Blue Dolphin Companies shall
have performed in all material respects the covenants and agreements to
be performed on or before the Closing in accordance with this Agreement.
(c) OFFICER'S CERTIFICATE. XXXX shall have received at the
Closing a certificate confirming the matters referred to in Section 7.01
(a) and (b) dated the Closing Date and validly executed on behalf of the
Blue Dolphin Companies by duly authorized officers thereof.
(d) NO INJUNCTION. At and as of the Closing, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect
that restrains or prohibits the Closing.
(e) CASUALTY LOSS. The Purchased Interests shall not have been
materially damaged, lost, or destroyed and there shall have been no
condemnation of the Purchased Interests where the cost to repair or
replace such assets to the condition prior to such damage, loss,
destruction, or taking exceeds an amount equal to 5% of the Purchase
Price.
(f) DUE DILIGENCE. XXXX shall be satisfied with the results of
its due diligence review of the Assets (including an outward examination
of the structural integrity of the Blue Dolphin Pipeline and the
performance of an environmental review).
(g) CONDITION OF THE ASSETS. There shall have been no material
adverse change in the condition of the Assets since the date of this
Agreement.
(h) ALL NECESSARY CONSENTS AND APPROVALS. Except as provided in
Sections 6.10 and 6.11, all material consents and approvals of third
parties (including governmental entities) necessary or required in
connection with the consummation of the transactions contemplated to
occur at the Closing shall have been obtained, including the consent of
Bank One, Texas, N.A. ("Bank One").
(i) OPINION OF COUNSEL. XXXX shall have received an opinion of
Xxxxxxx, Bosien & Young, legal counsel to the Blue Dolphin Companies,
dated the Closing Date, in the form of Exhibit 7.01(i).
(j) BANK ONE LIEN RELEASE. Bank One shall have released its
security interests and liens against the Purchased Interests.
7.02 CONDITIONS TO THE OBLIGATION OF THE BLUE DOLPHIN COMPANIES TO
CLOSE. The obligation of the Blue Dolphin Companies to consummate the
transactions contemplated hereby is subject to the satisfaction or
waiver at or prior to the Closing of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of XXXX contained in this Agreement shall be true and correct
in all material respects at and as of the Closing with the same effect
as though such representations and warranties had been made at and as of
the Closing, except for the representations and warranties that speak as
of a specific date or time other than the date of this Agreement, which
need only be true and correct as of such date or time. For the sole
purpose of determining whether or not any of such representations and
warranties are true and correct as aforesaid on and as of the Closing
Date, no effect shall be given to any statement herein that any such
representation or warranty is "to the knowledge of XXXX".
(b) COMPLIANCE WITH COVENANTS. XXXX shall have performed in all
material respects the covenants and agreements to be performed at or
before the Closing in accordance with this Agreement.
(c) OFFICER'S CERTIFICATE. The Blue Dolphin Companies shall have
received at the Closing a certificate confirming the matters referred to
in Section 7.02 (a) and (b) dated the Closing Date and validly executed
on behalf of XXXX by a duly authorized officer thereof.
(d) NO INJUNCTION. At and as of the Closing, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect
that restrains or prohibits the Closing.
(e) CASUALTY LOSS. The Purchased Interests shall not have been
materially damaged, lost, or destroyed and there shall have been no
condemnation of the Purchased Interests where the cost to repair or
replace such assets to the condition prior to such damage, loss,
destruction, or taking exceeds an amount equal to 5% of the Purchase
Price.
(f) ALL NECESSARY CONSENTS AND APPROVALS. Except as provided in
Sections 6.10 and 6.11, all material consents and approvals of third
parties (including governmental entities) necessary or required in
connection with the consummation of the transactions contemplated to
occur at the Closing shall have been obtained, including the consent of
Bank One.
(g) OPINION OF COUNSEL. The Blue Dolphin Companies shall have
received an opinion of Xxxxxx X. Xxxxxxxx, General Counsel to MCN and
legal counsel to XXXX, dated the Closing Date, in the form of Exhibit
7.02(g).
(h) BANK ONE RELEASE. Bank One shall have released its Liens
against the Purchased Interests.
ARTICLE VIII
ASSUMPTION AND INDEMNIFICATION
8.01 ASSUMPTION OF LIABILITIES RELATING TO THE PURCHASED
INTERESTS. As of the Effective Time, XXXX shall assume and agree to
pay, perform, and discharge or cause to be paid, performed, and
discharged all duties, obligations, and liabilities ("Obligations")
arising out of, in connection with, or otherwise in respect of the
ownership or operation of the Purchased Interests, whether primary or
secondary, fixed or contingent, arising after the Effective Time,
including (a) a pro rata portion of the duties, obligations, and
liabilities of the Blue Dolphin Companies under the Customer Contracts
and the Applicable Operating Agreements, and (b) a pro rata share of the
cost of the improvements described on Exhibit 1.02 to the extent the
gross amount of such costs exceed $500,000, up to a maximum liability of
$83,300 (collectively, the "Assumed Obligations"); provided, however,
that XXXX does not assume any Obligations of the Blue Dolphin Companies
associated with or arising out of matters as to which a Blue Dolphin
Company is obligated to indemnify XXXX pursuant to Section 8.02.
8.02 INDEMNIFICATION BY THE BLUE DOLPHIN COMPANY. Each Blue
Dolphin Company shall jointly and severally indemnify, defend, and hold
harmless XXXX (and its directors, officers, employees, affiliates,
successors, and assigns) from and against any Obligations based upon,
arising out of or otherwise in respect of (a) any inaccuracy in or
breach of any representation, warranty, or covenant of any Blue Dolphin
Company contained in this Agreement; (b) any Obligations arising out of,
in connection with, or otherwise in respect to the ownership of the
Purchased Interests arising before the Effective Time, and (c) any
liability for Taxes the responsibility for the payment of which is
retained by that Blue Dolphin Company pursuant to Section 6.05(c);
provided, however, that the Blue Dolphin Companies shall have no
liability under this Section 8.02 with respect to matters described in
clause (a) above for Obligations until the aggregate amount of such
Obligations shall exceed the sum of $200,000 and, in any event only with
respect to the amount in excess thereof, subject at all times, to the
provisions of this Article VIII. Notwithstanding anything to the
contrary herein contained, the maximum aggregate amount of the
obligations of the Blue Dolphin Companies to indemnify XXXX pursuant to
this Section 8.02 shall be $10,000,000.
8.03 INDEMNIFICATION BY XXXX. XXXX shall indemnify, defend, and
hold harmless each of the Blue Dolphin Companies (and their respective
directors, officers, employees, affiliates, successors, and assigns)
from and against any Obligations based upon, arising out of or otherwise
in respect of (a) any inaccuracy in or breach of any representation,
warranty, or covenant of XXXX contained in this Agreement; (b) any
liability for Taxes the responsibility for the payment of which is
assumed by XXXX pursuant to Section 6.05(b) and (c) hereof; (c) the
Assumed Obligations, and (d) any claim asserted by CMA arising from the
consummation of the transactions contemplated hereby.
8.04 NOTICE OF ASSERTED LIABILITY. Promptly after receipt by any
party hereto (the "Indemnitee") of notice of any demand, claim, or
circumstance which, with the lapse of time, would give rise to a claim
or the commencement (or threatened commencement), or any action,
proceeding, or investigation (an "Asserted Liability") that may result
in an Obligation, the Indemnitee shall give notice thereof (the "Claims
Notice") to the other party hereto (the "Indemnifying Party"). The
Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount (estimated, if necessary) of the
Obligation that has been or may be suffered by the Indemnitee.
Notwithstanding the foregoing, no party shall have any liability for
claims arising pursuant to Section 8.02(a) or 8.03(a) unless a Claims
Notice has been delivered within the appropriate time period indicated
in Section 9.01.
8.05 OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any
Asserted Liability and if it does so the Indemnifying Party shall have
the right to make all judgments and decisions in respect of the handling
of the defense of such Asserted Liability and the settlement or
compromise of the Asserted Liability, subject to the provisions of this
Section 8.05. If the Indemnifying Party elects to defend such Asserted
Liability, it shall within 30 days of the Claims Notice (or sooner, if
the nature of the Asserted Liability so requires) notify the Indemnitee
of its intent to do so, and the Indemnitee shall cooperate, as requested
by and at the expense of the Indemnifying Party, in the compromise of,
or defense against, such Asserted Liability. If the Indemnifying Party
elects not to defend the Asserted Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligation
to indemnify under this Agreement, the Indemnitee may pay, compromise,
or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim subject to indemnification over the objection of
the other, provided, however, that consent to settlement or compromise
shall not be unreasonably withheld. In any event, the Indemnitee and
the Indemnifying Party may participate, at their own expense, in the
defense of such Asserted Liability. If the Indemnifying Party chooses
to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records, or other documents within its
control that are necessary or appropriate for such defense.
8.06 NEGLIGENCE AND STRICT LIABILITY WAIVER. The indemnification
provided for in this Article VIII shall be applicable regardless of
whether Obligations in question arose solely or in part from the active,
passive, or concurrent negligence of any Indemnitee (or under any theory
of strict liability) prior to the Effective Time or after the Effective
Time, as the case may be.
8.07 EXCLUSIVE REMEDY. After the Closing, and to the extent
permitted by applicable law, the rights and remedies expressly set forth
in this Agreement and in the Closing Agreements shall be the exclusive
rights and remedies of the parties hereto with respect to the matters
set forth herein.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. The representations and warranties made by the
Blue Dolphin Companies and XXXX pursuant to this Agreement shall expire
eighteen (18) months after the Closing Date and shall thereafter be of
no force and effect except such representations and warranties shall be
considered as continuing until three (3) years after the Closing Date
with respect to any intentional and willful misrepresentations set forth
herein, after which time no claim or suit may be brought with respect to
the same.
9.02 DUE DILIGENCE REVIEW. XXXX acknowledges that it has assumed
the responsibility for conducting its own due diligence review with
respect to the Assets and the transactions contemplated hereby. XXXX
acknowledges that except as set forth on Schedule 9.02 it has been
provided full access to such information as it has requested from the
Blue Dolphin Companies with respect to the Assets and the books,
records, facilities, leases, equipment, consultants, and personnel of
the Blue Dolphin Companies and all other matters and things sought to be
examined by XXXX in connection with its due diligence investigation, and
that it has conducted its due diligence review to its satisfaction.
XXXX acknowledges that it has conducted its own independent evaluation
of any forecast or projection provided to it by any of the Blue Dolphin
Companies or their representatives, and specifically has independently
evaluated the future throughput, revenue, and expenses of the Purchased
Interests.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party.
9.04 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without
reference to the conflicts of law principles thereof.
9.05 ENTIRE AGREEMENT. The Agreements and the Schedules and
Exhibits hereto supersede all prior agreements between the parties
(written or oral) other than the Confidentiality Agreement executed by
Blue Dolphin Energy Company and XXXX, dated March 21, 1995 and, except
as aforesaid, is intended as a complete and exclusive statement of the
terms of the agreement between the parties. This Agreement may be
amended only by a written instrument duly executed by the parties.
9.06 EXPENSES. Except as expressly set forth in this Agreement,
whether the transactions contemplated hereby are or are not consummated,
all legal and other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
9.07 NOTICES. All notices hereunder shall be sufficiently given
(and deemed made) for all purposes hereunder if in writing and (a)
delivered personally, (b) sent by documented overnight delivery service,
(c) to the extent receipt is confirmed, sent by telecopy, telefax, or
other electronic transmission service to the appropriate address or
number as set forth below, or (d) sent by United States mail, postage
prepaid with return receipt requested. Notices to any of the Blue
Dolphin Companies shall be transmitted or addressed to:
(Name of Blue Dolphin Company) 00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 Attention: President Telecopier No.: (713)
621-4687
with a copy to:
Cokinos, Bosien & Young 1500 Liberty Tower 0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000 Attention: Xx. Xxxxx X. Xxxxxxx Telecopier
No.: (000) 000-0000
or at such other addresses or telefax numbers and to the attention of
such other person as the Blue Dolphin Company may designate by written
notice to each of the other parties.
Notices to XXXX shall be transmitted or addressed to:
000 Xxxx Xxxxxxxxx Xxxxxx Xxxxx 0000 Xxxxxxx, Xxxxxxxx 00000
Attention: Vice President Telecopier No.: (000) 000-0000 with a
copy to:
MCN Corporation 000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
or at such other addresses or telefax numbers and to the attention of
such other person as XXXX may designate by written notice to each of the
other parties.
9.08 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto may
assign its rights or delegate its obligations under this Agreement
without the express prior written consent of each other party hereto.
9.09 HEADINGS. The section and article headings contained in this
Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement.
9.10 DTPA WAIVER. XXXX HEREBY REPRESENTS AND ACKNOWLEDGES THAT IT
IS A "BUSINESS CONSUMER" FOR THE PURPOSES OF THE TEXAS DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT (SUBCHAPTER E OF CHAPTER 17 OF THE
TEXAS BUSINESS AND COMMERCE CODE), THAT IT HAS ASSETS OF $5,000,000 OR
MORE ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENTS PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, THAT IT HAS
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE
IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THAT IT HAS BEEN REPRESENTED BY LEGAL COUNSEL OF ITS
CHOICE IN ENTERING INTO THIS AGREEMENT AND THE RELATED AGREEMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND THAT IT IS NOT IN
A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH RESPECT TO THE
PARTIES TO AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. XXXX
HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT (OTHER THAN SECTION 17.555 THEREOF)
(THE "DTPA"), AS FROM TIME TO TIME AMENDED, XXXX EXPRESSLY RECOGNIZES
THAT THE PRICE FOR WHICH THE BLUE DOLPHIN COMPANIES HAVE AGREED TO SELL
THE PURCHASED INTERESTS AND PERFORM THEIR RESPECTIVE OBLIGATIONS UNDER
THIS AGREEMENT HAS BEEN PREDICATED ON THE INAPPLICABILITY OF THE DTPA
AND THIS WAIVER OF THE DTPA. XXXX FURTHER RECOGNIZES THAT THE BLUE
DOLPHIN COMPANIES, IN DETERMINING TO PROCEED WITH THE ENTERING INTO OF
THIS AGREEMENT, HAVE EXPRESSLY RELIED ON THIS WAIVER AND THE
INAPPLICABILITY OF THE DTPA.
9.11 SEVERABILITY. If any term or provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in any material adverse manner to any party. Upon such
determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
9.12 NO THIRD PARTY BENEFICIARIES. Except as provided in Article
VIII, nothing in this Agreement shall entitle any person other than the
Blue Dolphin Companies and XXXX or their respective successors and
assigns permitted hereby to any claim, cause of action, remedy, or right
of any kind.
9.13 CROSS-REFERENCES. References in this Agreement to Articles,
Sections, Exhibits, or Schedules shall be deemed to be references to
Articles, Sections, Exhibits, and Schedules of this Agreement unless the
context specifically and expressly requires otherwise.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the date first above written.
COENERGY OFFSHORE PIPELINE & BLUE DOLPHIN PIPE LINE COMPANY,
PROCESSING COMPANY, a Delaware corporation
a Michigan corporation
By:Xxxxxx X. Xxxxxxx By:Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxxxx,
Vice President Senior Vice President
BUCCANEER PIPE LINE CO.,
a Texas corporation
By:Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx,
Senior Vice President
MISSION ENERGY, INC.,
a Delaware corporation
By:Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx,
Senior Vice President
