EXHIBIT 10.3
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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 November 1, 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:
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ARTICLE I
DEFINITIONS
DEFINITIONS. 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 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 October 31, 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 or incurred 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, or
(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;
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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.
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
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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 four 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.
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
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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
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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 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.
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
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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 (i) the General Partner or any successor general partner
of the Partnership is not an Affiliate of MRMC or (ii) the Partnership Entities
no longer own and/or operate all or substantially all of the Assets or the
Business. 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.
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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.
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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: /s/ Xxxxx X. Xxxxxx, III
Xxxxx X. Xxxxxx, III
President
XXXXXX OPERATING PARTNERSHIP L.P.
By: Xxxxxx Operating GP LLC,
its general partner;
By: Xxxxxx Resource LLC,
its sole member;
By: Xxxxxx Resource Management
Corporation,
its sole member;
By: /s/ Xxxxx X. Xxxxxx, III
Xxxxx X. Xxxxxx, III
President
XXXXXX RESOURCE MANAGEMENT
CORPORATION
By: /s/ Xxxxx X. Xxxxxx, III
Xxxxx X. Xxxxxx, III
President
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SCHEDULE 1
TRADENAMES AND LOGOS
Attached
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SCHEDULE 2.2(a)
RETAINED BUSINESSES
The operations, assets and activities related to the businesses and
operations related to the business activities described on page 87 of the Xxxxxx
Midstream Partners, L.P. Prospectus, dated October 31, 2002.
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SCHEDULE 3.2
LITIGATION
All pending legal actions existing as of the Closing Date.
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SCHEDULE 6.1
INSURANCE PROGRAM
Attached
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