Exhibit 2.01
PURCHASE AGREEMENT
by and between
TEJAS GAS, LLC
and
ENOGEX INC.
Dated as of May 14, 1999
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND TERMS
1.01 Specific Definitions
1.02 Construction and Interpretation
ARTICLE II PURCHASE AND SALE
2.01 Purchase and Sale of Membership Interests
2.02 Purchase Price
2.03 The Closing
2.04 Deliveries
2.05 Allocation of Purchase Price
2.06 Sale of Greasy Creek Gas Inventory
2.07 Post-Closing Adjustments
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERAS TO THE SELLER
3.01 Organization
3.02 Ownership of Membership Interests
3.03 Validity and Enforceability
3.04 Approvals
3.05 No Violation
3.06 Litigation
3.07 Brokerage Agreements
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERAS TO THE COMPANY
4.01 Organization
4.02 Capitalization
4.03 No Violation
4.04 Litigation
4.05 Compliance With Applicable Law
4.06 Permits
4.07 Taxes
4.08 Environmental Compliance
4.09 Disclaimer of other Representations and Warranties
4.10 Major Acquired Assets
4.11 Subsidiaries
4.12 Major Contracts
4.13 Financial Statements
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4.14 Absence of Certain Changes
4.15 Employee Agreements and Plans
4.16 Employee Relations
4.17 CSW Claims
4.18 FERC Reports
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.01 Organization and Good Standing
5.02 Authorization of Agreement
5.03 No Violations
5.04 Consents and Approvals
5.05 Litigation; Impairment
5.06 No Brokers
5.07 Purchaser=s Knowledge and Expertise
5.08 Financing
5.09 No Reliance
5.10 Knowledge
5.11 Investment Intent
ARTICLE VI COVENANTS
6.01 Conduct of the Business Pending the Closing
6.02 Access to Information
6.03 Consents
6.04 Public Announcements
6.05 Environmental Matters
6.06 Employee Related Matters
6.07 Supplemental Disclosures
6.08 Options Concerning El Paso Agreements
6.09 Casualty Loss
6.10 Customer Relations
6.11 Dormant Subsidiaries
6.12 Corporate Books
6.13 Rate Proceedings
6.14 Change of Name
6.15 Termination of Transok Properties Indemnities
6.16 Intercompany Disputes
ARTICLE VII CONDITIONS TO CLOSING
7.01 General Conditions
7.02 Conditions to Obligations of the Seller
7.03 Conditions to Obligations of Purchaser
ARTICLE VIII TERMINATION
8.01 Termination
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8.02 Effect of Termination
ARTICLE IX INDEMNIFICATION; SURVIVAL
9.01 Indemnification by Purchaser
9.02 Indemnification by Seller
9.03 Indemnification Procedure
9.04 Survival
9.05 Indemnification Limitation
9.06 Excluded Proceeding
ARTICLE X GENERAL PROVISIONS
10.01 Expenses and Taxes
10.02 Amendment
10.03 Waiver
10.04 Notices
10.05 Headings and Schedules
10.06 Applicable Law
10.07 No Third Party Rights
10.08 Counterparts
10.09 Severability
10.10 Entire Agreement
10.11 Arbitration; Waiver
10.12 Fair Construction
10.13 Forwarding Notices
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LIST OF SCHEDULES
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Schedule 3.01 List of Subsidiaries
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Schedule 3.04 Required Consents
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Schedule 4.02(a) Outstanding Stock Appreciation, Phantom Stock, Profit
---------------- Participation, or Similar Rights
Schedule 4.02(b) List of Subsidiaries, Jurisdiction of Incorporation,
---------------- Number of Issued and Outstanding Capital Stock, and
Membership Interests of each
Schedule 4.04 Litigation
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Schedule 4.05 Compliance with Laws
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Schedule 4.06 Permits
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Schedule 4.07 Taxes
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Schedule 4.08 Environmental Matters
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Schedule 4.10 Major Acquired Assets and Spatial Gaps
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Schedule 4.11 Ownership Interests in Companies other the
------------- Subsidiaries
Schedule 4.12 Major Contracts
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Schedule 4.15(a) Liability under Benefit Plans, Severance, Employment
---------------- or Compensation Related Contracts
Schedule 4.15(b) Benefit Plans
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Schedule 4.15(e) Post-Retirement Welfare Benefits and Medical Benefits
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Schedule 4.16(a) Compliance with Employment Laws
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Schedule 4.16(b) Unfair Labor Practices
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Schedule 4.17 CSW Claims
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Schedule 6.01(a) Capital Expenditures
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Schedule 6.06 Employees
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LIST OF EXHIBITS
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Exhibit A Knowledge of Seller
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Exhibit B Knowledge of Purchaser
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Exhibit C Assignment of Membership Interests
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Exhibit D Allocation of Purchase Price
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Exhibit E Guaranty
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Exhibit F Waiver of Required Consents
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PURCHASE AGREEMENT
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This PURCHASE AGREEMENT, dated as of May 14, 1999, is by and between TEJAS
GAS, LLC, a Delaware limited liability company ("Seller"), and ENOGEX INC., an
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Oklahoma corporation ("Purchaser").
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The Seller is the owner of all of the issued and outstanding equity
interests (the "Membership Interests") of Tejas Transok Holding, LLC, a Delaware
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limited liability company (the "Company");
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On the terms and subject to the conditions contained in this Agreement, the
Seller desires to sell and Purchaser desires to purchase all of the Seller=s
right, title and interest in and to the Membership Interests;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
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I.1 Specific Definitions. As used in this Agreement, the following terms
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have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly or
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indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
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meaning, the terms "controlling," "controlled by" and "under common control
----------- -------------- ---------------------
with") means the possession, directly or indirectly, of the power to direct or
----
cause the direction of management and policies of such Person through the
ownership of more than 10% of the voting securities, by contract or otherwise.
"Agreement" means this Purchase Agreement, as the same may be amended or
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supplemented from time to time.
"Benefit Plans" means any employee pension benefit plan (whether or not
--------------
insured), as defined in Section 3(2) of ERISA, any employee welfare benefit plan
(whether or not insured) as defined in Section 3(1) of ERISA, any stock bonus,
stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock or other stock plan (whether qualified or nonqualified), and any
bonus or incentive or deferred compensation plan or fringe benefit arrangement
in which any of the present or former directors, officers, employees, agents,
consultants or other similar representatives providing services to or for the
Company or any of its Subsidiaries participate in connection with such services,
but only to the extent the Company or any of its Subsidiaries are liable for or
bear the burden of such compensation or benefit.
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"Business Day" means any day other than a Saturday, a Sunday or a legal
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holiday on which banks in Houston, Texas and New York, New York are authorized
or obligated by Law to close.
"Claim Notice" has the meaning specified in Section 9.03(a).
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"Closing" means the closing of the transactions provided for in this
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Agreement.
"Closing Balance Sheet" means the unaudited, consolidated balance sheet of
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the Company and its Subsidiaries as of the last day of the month preceding the
day of the Closing unless the Closing occurs on the last day of a calendar month
in which case the Closing Balance Sheet will be as of the day of the Closing.
"Closing Date" means the date on which the Closing occurs as provided in
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Section 2.03.
"Closing Date Working Capital" has the meaning specified in Section 2.07.
----------------------------
"Code" means the United States Internal Revenue Code of 1986, as amended.
----
"Company" has the meaning specified in the recitals.
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"Company Balance Sheets" has the meaning specified in Section 4.13.
----------------------
"Company Group" has the meaning specified in Section 4.15.
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"Company Financial Statements" has the meaning specified in Section 4.13.
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"Confidentiality Agreement" means the Confidentiality Agreement, dated
--------------------------
March 16, 1999 between Seller and Purchaser.
"Consent" means any consent, waiver, approval, authorization, exemption,
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registration or declaration.
"Continued Employees" has the meaning specified in Section 6.06.
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"Contracts" means all agreements, contracts, leases, purchase and sale
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orders, arrangements, commitments and licenses to which the Company or any of
its Subsidiaries is a party.
"Coral Agreements" means (i)the Master Agreement in the form published by
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the International Swaps and Derivatives Association, Inc. ("ISDA Agreement"),
including the schedules thereto, dated April 1, 1999, between Tejas Energy, LLC
and Transok, LLC, under
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which Transok, LLC will enter into the Transok Swap Transaction in order to
hedge the natural gas stored at the Greasy Creek Storage Facility, which ISDA
Agreement and Transok Swap Transaction will be guaranteed by the Purchaser
Guarantor concurrently with Purchaser=s purchase of such natural gas pursuant to
the Storage Gas Purchase Agreement; (ii) the Assignment pursuant to which the
Company and its Affiliates will assign to Seller and its Affiliates all claims
against third parties relating to migrated gas at the Greasy Creek storage
facility; (iii) the Gas Purchase Agreement dated May 14, 1999, under which
Transok Gas, LLC will sell to Coral Energy Resources, L.P. up to 50,000 MMBtu of
gas per day; (iv) the Non-Dedicated Interruptible Service Agreement dated May
14, 1999, pursuant to which Transok, LLC will transport for Coral Energy
Resources, L.P. up to 50,000 MMBtu of gas per day (limited to any volumes sold
and purchased under the Gas Purchase Agreement referred to under clause (iii));
(v) the ▇▇▇▇ of Sale of Natural Gas dated April 1, 1999, pursuant to which
Transok Gas, LLC has sold 14,127,802 MMBtu of natural gas located in the Greasy
Creek Storage Facility to Tejas Gas Marketing, LLC; (vi) the Firm Storage
Service Agreement dated April 1, 1999, pursuant to which Transok, LLC will
provide storage services for up to 18,000,000 MMBtu of natural gas for Tejas Gas
Marketing, LLC until Closing, (vii) the El Paso Sale Agreement dated May 14,
1999; (viii) the Assignment Agreement dated as of May 14, 1999 wherein Coral
Energy Resources, L.P. will assign certain gas sales agreements to Transok Gas,
LLC effective as of the Closing Date; (ix) the Assignment Agreement (NGPL) dated
May 3, 1999 wherein Transok Gas, LLC will assign to Tejas Gas Marketing, LLC a
storage agreement dated April 1, 1997, between Transok Gas Company, predecessor
to the assignor, and Natural Gas Pipeline Company of America; and (x) the ▇▇▇▇
of Sale of Natural Gas dated May 1, 1999, pursuant to which Transok Gas, LLC has
sold 2,488,678 MMBtu's of natural gas located in the NGPL storage facility to
Tejas Gas Marketing, LLC.
"Coral Services" has the meaning specified in Section 4.15.
--------------
"Coral Thrift Plan" has the meaning specified in Section 6.06.
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"Court" means any federal, state, or local court, or
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arbitration tribunal.
"CSW Indemnity" means the Agreement of Merger, dated May 9, 1996, between
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Central and South West Corporation and Tejas Gas Corporation relating to
Transok, Inc., and assigned to the Company on June 6, 1996.
"Current Assets" means those assets classified as current assets of the
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Company and its Subsidiaries in accordance with generally accepted accounting
principles.
"Current Liabilities" means those liabilities classified as current
--------------------
liabilities of the Company and its Subsidiaries in accordance with generally
accepted accounting principles.
"Damages" has the meaning specified in Section 9.01.
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"Deloitte Report" has the meaning specified in Section 2.07.
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"Deposit" has the meaning specified in Section 2.02.
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"Direct Claim" has the meaning specified in Section 9.03(a).
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"Disagreement" and "Disagreements" have the meaning specified in Section
------------ -------------
2.07.
"Disclosure Memorandum" has the meaning specified in Article III.
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"El Paso Sale Agreement" means the Gas Sale Agreement (El Paso) dated as of
----------------------
April 6, 1999, between Coral Energy Resources, L.P., as seller, and Transok,
LLC, as buyer.
"El Paso Transportation Agreements" means, collectively, (i) the
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Transportation Service Agreement (9K3X) dated as of November 23, 1998, between
El Paso Natural Gas Company and Coral Energy Resources, L.P.; (ii) the
Transportation Service Agreement (9K3Y) dated as of November 23, 1998, between
El Paso Natural Gas Company and Coral Energy Resources, L.P.; (iii)
Transportation Service Agreement (9K3Z) dated as of November 23, 1998, between
El Paso Natural Gas Company and Coral Energy Resources, L.P.; and the (iv)
Transportation Service Agreement (9K42) dated as of November 23, 1998, between
El Paso Natural Gas Company and Coral Energy Resources, L.P.
"Environmental Laws" means any and all laws, statutes, regulations, rules,
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orders, ordinances, and any judicial or administrative orders, judgments or
interpretations of any Governmental Authority pertaining to the environment in
effect or applicable on, or prior to, the Closing Date in any jurisdictions in
which the assets on the property of the Company or any of the Company's
Subsidiaries is located, or the business of the Company or any of the Company's
Subsidiaries is at any time conducted, or where any off-site location (as set
forth in Section 4.08) is located, including, without limitation, the Clean Air
Act, as amended (including the Clean Air Act Amendments of 1990), the Federal
Water Pollution Control Act, as amended, the Rivers and Harbors Act of 1899, as
amended, the Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Superfund Amendments and the Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act, as amended ("RCRA"), the Hazardous and
Solid Waste Amendments Act of 1984, as amended, the Toxic Substances Control
Act, as amended, the Hazardous Materials Transportation Act, as amended, the
Natural Gas Pipeline Safety Act of 1968, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990 ("OPA"), the
Hazardous and Solid Waste Amendments Act of 1984, as amended, and any state laws
implementing any of the foregoing laws, any state laws pertaining to the
handling of oil and gas wastes or the use, maintenance, and closure of pits and
impoundments.
"Environmental Permits" shall have the meaning set forth in Section 4.08(b)
---------------------
hereof.
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"ERISA" means the United States Employee Retirement Income Security Act of
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1974, as amended, and the rules and regulations promulgated thereunder.
"Estimated Working Capital" means the consolidated Working Capital of the
--------------------------
Company and its Subsidiaries determined on the basis of the best estimates
available to Seller one Business Day prior to the Closing.
"Excluded Proceeding" shall mean the litigation styled Midgard Energy
-------------------- ---------------
Company f/k/a Maxus Exploration Company v. Natural Gas Clearinghouse, Transok,
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Inc., and Transok Gas Gathering Company, filed in the 181st Judicial District
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Court of Potter County, Texas.
"Forward Price" has the meaning set forth in clause (c) of the definition
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for "Forward Price" in the Storage Gas Purchase Agreement.
"Governmental Authority" means any federal, state or local governmental
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agency or authority (other than a Court).
"Greasy Creek Gas Inventory" shall mean the AWorking Gas@ as defined in the
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Storage Gas Purchase Agreement.
"HSR Act" means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
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Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section 9.03.
-----------------
"Indemnifying Party" has the meaning specified in Section 9.03.
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"Interest Rate" means, for any day, the sum of the Commercial Paper Rate
--------------
Margin and the Commercial Paper Rate for such day; provided that if such day is
not a Business Day, the "Interest Rate" for such day shall be the rate
determined as set forth above for the next preceding Business Day. As used
herein, "Commercial Paper Rate" means, for any day, the rate for such day as
reported for one-month nonfinancial commercial paper in the daily Federal
Reserve H.15 report or any successor Federal Reserve Report (as such rate is
made available on the Telerate, Page 133), provided that if such rate shall
cease to be published, the Commercial Paper Rate shall be the rate of interest
then reported on any generally recognized replacement page or service agreed to
by Purchaser and Seller. As used herein, "Commercial Paper Rate Margin" means
0.03%.
"IRS" means the United States Internal Revenue Service.
---
"ISDA Agreement" has the meaning specified in the definition of "Coral
---------------
Agreements" in this Section 1.01.
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"Judgments" means any judgments, injunctions, orders, decrees, writs,
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rulings or awards of any court or other judicial authority or any governmental,
administrative or regulatory authority of competent jurisdiction.
"Knowledge" or "knowledge" means, with respect to Seller, the Company
--------- ---------
Group, the Company and its Subsidiaries, actual knowledge of the persons listed
on Exhibit A , and with respect to the Purchaser, actual knowledge of the
---------
persons listed on Exhibit B; provided that none of the persons named in Exhibits
--------- --------
A and B shall be deemed to have performed, or be obligated to perform, any
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independent investigation or inquiry with respect to the matter to which such
Knowledge relates.
"Laws" means any federal, state, local or foreign law, statute, ordinance,
----
rule, regulation, order or decree.
"Liens" means all liens, mortgages, easements, charges, security interests,
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options or other encumbrances.
"Major Acquired Assets" has the meaning specified in Section 4.10.
---------------------
"Major Contracts" has the meaning specified in Section 4.12.
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"Material Adverse Effect" means a material adverse effect on the financial
------------------------
condition or business of the Company and its Subsidiaries, taken as a whole
(other than any event that is of general application to all or a substantial
portion of the Company=s industry).
"Material Breach" means any facts or matters which constitute breaches of
----------------
Seller's covenants, representations, or warranties herein and for which the
aggregate amount of the Damages resulting from such breaches can be reasonably
expected to exceed $10,000,000.
"Materials of Environmental Concern" means any material quantity of solid
-----------------------------------
or hazardous waste, hazardous substance, pollutant, contaminant, oil, petroleum
product, natural gas or natural gas liquid, commercial product or other
substance which is listed, regulated or designated as a toxic or hazardous
waste, substance, or material (or words of similar meaning and regulatory
effect), or with respect to which remedial obligations may be imposed, under any
Environmental Law.
"Membership Interests" has the meaning specified in the recitals.
--------------------
"Necessary Contracts" has the meaning specified in Section 4.10.
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"Negative Balance" has the meaning specified in Section 2.07.
----------------
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"Order" means any judgment, order or decree of any Court or Governmental
-----
Authority.
"Permits" means all permits, authorizations, approvals, registrations,
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licenses, certificates or variances granted by or obtained from any federal,
state, local or foreign governmental, administrative or regulatory authority.
"Permitted Liens" means (i) Liens created by Purchaser, (ii) liens of
----------------
Governmental Authorities for or in respect of Taxes, impositions, assessments,
fees, water and sewer rents and other governmental charges levied or assessed or
imposed which are not yet delinquent or are being contested in good faith by
appropriate proceedings, (iii) the rights of lessors and lessees under leases
executed in the ordinary course of business, (iv) the rights of licensors and
licensees under licenses executed in the ordinary course of business, (v) Liens,
and rights to Liens, of mechanics, warehousemen, carriers, repairmen and others
arising by operation of law and incurred in the ordinary course of business,
securing obligations not yet delinquent or being contested in good faith by
appropriate proceedings, (vi) easements, leases, reservations or other rights of
others in, or minor defects and irregularities in title to, property or assets
of the Company or any of its subsidiaries; PROVIDED that such easements, leases,
reservations, rights, defects or irregularities do not materially impair the use
of such property or assets for the purposes for which they are held; and (vii)
Liens set forth on any schedule of the Disclosure Memorandum.
"Person" means an individual, a corporation, a limited liability company, a
------
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Positive Balance" has the meaning specified in Section 2.07.
----------------
"Proceeding" means any action, suit, demand, claim or legal,
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administrative, arbitration or other alternative dispute resolution proceeding,
hearing or investigation.
"Purchase Price" has the meaning specified in Section 2.02.
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"Purchase Price Adjustment Payment" has the meaning specified in Section
-----------------------------------
2.07.
"Purchaser" has the meaning specified in the recitals.
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"Purchaser Guarantor" means OGE Energy Corp.
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"Purchaser's Pension Plan" has the meaning specified in Section 6.06.
------------------------
"Purchaser's Savings Plan" has the meaning specified in Section 6.06.
------------------------
"Purchaser's Severance Plan" has the meaning specified in Section 6.06.
--------------------------
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"Purchaser's Welfare Plans" has the meaning specified in Section 6.06.
-------------------------
"Required Consents" has the meaning specified in Section 3.04.
-----------------
"Securities Act" means the Securities Act of 1933, as amended.
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"Seller" has the meaning specified in the recitals.
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"Seller Group" has the meaning specified in Section 4.15.
------------
"Seller's Pension Plan" has the meaning specified in Section 6.06.
---------------------
"Seller's Severance Plan" has the meaning specified in Section 6.06.
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"Storage Gas Purchase Agreement" means the Storage Gas Purchase Agreement
-------------------------------
dated May 14, 1999 between Tejas Gas Marketing and Purchaser pursuant to which
Purchaser will acquire the Greasy Creek Gas Inventory.
"Storage Gas Purchase Consideration" has the meaning specified in the
-------------------------------------
Storage Gas Purchase Agreement.
"Subsidiary" or "Subsidiaries" of any Person means any corporation,
---------- ------------
partnership, limited liability company, association, trust, joint venture or
other entity or organization of which such Person, either alone or through or
together with any other Subsidiary, owns, directly or indirectly, more than 50%
of the stock or other equity interests, the holder of which is generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, association,
trust, joint venture or other entity or organization.
"Taxes" means all taxes, however denominated, including any interest or
-----
penalties that may become payable in respect thereof, imposed by any Federal,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include all net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, goods and services, ad
--
valorem, earnings, franchise, profits, license, withholding (including all
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obligations to withhold or collect for Taxes imposed on others), payroll,
employment, excise, severance, stamp, occupation, premium, property, excess
profit or windfall profit tax, custom duty, value added or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest and any penalty, addition to tax or additional amount
(whether payable directly, by withholding or otherwise).
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"Tax Returns" means any report, return, declaration or other filing
------------
required to be supplied to any taxing authority or jurisdiction with respect to
Taxes including any amendments thereto.
"Tax Statute of Limitations Date" means the close of business on the 30th
---------------------------------
day after the expiration of the applicable statute of limitations with respect
to Taxes, including any tollings or extensions thereof.
"Tejas Gas Marketing" means Tejas Gas Marketing, LLC, a Delaware limited
-------------------
liability company.
"Third Party Claim" has the meaning specified in Section 9.03(a).
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"Transok Swap Transaction" means that certain swap transaction between
--------------------------
Tejas Energy, LLC and Transok, LLC under the ISDA Agreement, having the
following terms: (i) Tejas Energy, LLC is the fixed price payer, with fixed
price for Calculation Period One and Calculation Period Two equal to the Forward
Price (as defined in the Storage Gas Purchase Agreement) for each such period;
(ii) Transok, LLC is the floating price payer, with floating price equal to the
Panhandle Eastern Pipe Line - Texas, Oklahoma (main line) Index Price for
delivery during the applicable Calculation Period in the "Prices of Spot Gas
Delivered to Pipelines" Section located in the first issue of Inside FERC's Gas
Market Report published during the applicable Calculation Period; (iii)
Calculation Period One is the month described in variable "C" of the pricing
formula set forth in Section 3 of the Storage Gas Purchase Agreement, and
Calculation Period Two is the month described in variable "E" of the pricing
formula set forth in Section 3 of the Storage Gas Purchase Agreement; (iv)
notional quantity for Calculation Period One is equal to two-thirds of the
Working Gas (as defined in the Storage Gas Purchase Agreement), and for
Calculation Period Two is equal to one-third of the Working Gas; and (v) payment
date shall be on the fifth Business Day after determination of the floating
price for each Calculation Period.
"United States" means the United States of America, its territories and
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possessions, any state of the United States, and the District of Columbia.
"Working Capital" means Current Assets plus the Storage Gas Purchase
----------------
Consideration minus Current Liabilities.
I.2 Construction and Interpretation. The following rules of construction
--------------------------------
and interpretation shall apply to this Agreement, unless elsewhere specifically
indicated to the contrary:
(1) all terms defined herein in the singular shall include the plural,
as the context requires, and vice-versa;
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(2) pronouns stated in the neuter gender shall include the masculine,
the feminine and the neuter genders;
(3) the term "including" (or any form thereof) shall not be limiting
or exclusive and shall be deemed to mean "including, without limitation";
(4) all references to this Agreement shall include any modifications,
amendments or supplements hereto;
(5) unless otherwise indicated, any reference made in this Agreement
to a section is a reference to a section of this Agreement, any reference to
an exhibit is a reference to an exhibit to this Agreement, and any reference
to a schedule is a reference to a schedule of the Disclosure Memorandum; and
(6) the phrase the "Company and its Subsidiaries" or the "Company and
the Company's Subsidiaries" means the Company and its Subsidiaries listed in
in Schedule 4.02(b).
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ARTICLE II
PURCHASE AND SALE
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II.1 Purchase and Sale of Membership Interests. Upon the terms and
-------------------------------------------
subject to the conditions of this Agreement, at the Closing, Seller shall sell,
transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase,
acquire and accept from Seller, all of Seller's right, title and interest in
and to the Membership Interests of the Company.
II.2 Purchase Price. Upon the terms and subject to the conditions
--------------
of this Agreement, Purchaser will deliver or cause to be delivered to Seller
at the Closing, as payment for the aforesaid sale, conveyance, assignment,
transfer and delivery of the Membership Interests, same-day funds by
wire transfer in the total amount of (a) $______________, minus the amount of
the Storage Gas Purchase Consideration and (b) plus the amount by which the
Estimated Working Capital exceeds zero dollars or minus the amount by which the
Estimated Working Capital is less than zero dollars (such price as adjusted
pursuant to Section 2.07 the "Purchase Price"). Contemporaneously with the
execution and delivery hereof, Purchaser has deposited the sum of $25,000,000
with Seller as a deposit hereunder (the "Deposit"), to be held by Seller and,
upon the Closing, the amount of the Deposit together with interest at the
Interest Rate shall be credited toward the Purchase Price. Purchaser
acknowledges and agrees that the Deposit will not be held in a segregated
deposit account or in an escrow account, but rather will be held by Seller in
one or more of its general operating accounts.
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II.3 The Closing. Unless otherwise mutually agreed, the
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Closing, which shall be effective as of 9:00 a.m. of the day of the Closing,
will take place at 9:00 a.m., Houston time, at the offices of ▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The "Closing Date" shall be such
Business Day (within 15 Business Days after satisfaction of the condition
precedent set forth in Section 7.01) as may be selected by Seller upon at least
five Business Days' notice to Purchaser.
II.4 Deliveries. At the Closing (a) the Seller will deliver or
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cause to be delivered to Purchaser an assignment, in the form of Exhibit C,
---------
representing the sale, conveyance, assignment and transfer of all the Membership
Interests of the Company and (b) the Purchaser shall pay to Seller the Purchase
Price for the Membership Interests sold by Seller in same day funds by wire
transfer to an account specified by Seller in writing to Purchaser at least two
Business Days prior to the Closing.
II.5 Allocation of Purchase Price. The transactions
------------------------------------
contemplated by this Agreement shall be treated as a purchase and sale of all of
the assets of the Company and its Subsidiaries for federal income tax purposes,
and the Purchase Price (including for this purpose any debt assumed in
connection with the purchase) shall be allocated among such assets of the
Company and its Subsidiaries as set forth on Exhibit D subject to the following:
---------
(1) such allocation of the Purchase Price shall be in accordance
with Section 1060 of the Code; and
(2) Purchaser and Seller shall treat and report in filings under
the Code the transactions contemplated by this Agreement in a manner
consistent with one another.
II.6 Sale of Greasy Creek Gas Inventory. Purchaser and Tejas
--------------------------------------
Gas Marketing have executed the Storage Gas Purchase Agreement pursuant to which
Purchaser separately will acquire the Greasy Creek Gas Inventory, and Purchaser
will deliver, or cause to be delivered, to Tejas Gas Marketing the Storage Gas
Purchase Consideration in same day funds by wire transfer.
II.7 Post-Closing Adjustments. As promptly as practical after
-------------------------
the Closing, the Seller shall deliver to the Purchaser the Closing Balance Sheet
prepared in accordance with generally accepted accounting principles and in a
manner consistent with Seller's past practices. The Closing Balance Sheet shall
set forth in reasonable detail all items necessary to determine the Working
Capital of the Company and its Subsidiaries as of the Closing Date (the "Closing
Date Working Capital"). The Closing Date Working Capital will include the
receivables and payables relating to any gas imbalances as of the Closing Date.
The Purchase Price defined in Section 2.02 shall be adjusted dollar-for-dollar
based on the Closing Date Working Capital set forth on the Closing Balance
Sheet, if such Closing Date Working Capital shall not equal the Estimated
Working Capital, as follows: (i) to the extent such Closing Date Working Capital
exceeds the Estimated Working Capital (a "Positive Balance"), Purchaser shall
make a payment
33
in immediately available funds by wire transfer to an account designated by
Seller in an amount equal to such Positive Balance, or (ii) to the extent such
Closing Date Working Capital is less than the Estimated Working Capital (a
"Negative Balance"), Seller shall make a payment in immediately available funds
by wire transfer to an account designated by Purchaser in an amount equal to
such Negative Balance (the payment of either a Positive Balance or a Negative
Balance each being called a "Purchase Price Adjustment Payment").
Not later than ten (10) Business Days after receiving the
Closing Balance Sheet, Purchaser shall notify Seller in writing in reasonable
detail as to all exceptions or disagreements, if any, regarding the Closing Date
Working Capital (any such exception or disagreement individually a
"Disagreement" and collectively "Disagreements"). In the event that the
Purchaser shall so notify the Seller of one or more Disagreements, the Purchaser
and Seller shall endeavor in good faith to resolve such Disagreements; provided,
--------
that if Purchaser and Seller are unable to resolve all Disagreements within
twenty (20) Business Days after receipt by Purchaser of the Closing Balance
Sheet, either Purchaser or Seller may, without the consent of the other party,
refer all remaining Disagreements to the managing partner of the Dallas branch
of Deloitte & Touche, L.L.P., for resolution of all such remaining Disagreements
in accordance with generally accepted accounting principles, which resolution
shall be delivered in writing to Purchaser and Seller within fifteen (15) days
of submission of any such Disagreements and shall set forth his decision
regarding each point of Disagreement (the "Deloitte Report"). The Deloitte
Report, if any, shall be binding on both Purchaser and Seller.
Purchaser and Seller agree to make any Purchase Price
Adjustment Payment as set forth above as follows: (i) in the event that the
Purchaser shall not have notified the Seller of a Disagreement, within fifteen
(15) Business Days of the date on which the Purchaser received the Closing
Balance Sheet, or (ii) in the event that the Purchaser shall have notified the
Seller of one or more Disagreements, (A) within five (5) Business Days of the
date on which the Purchaser and Seller shall resolve each Disagreement, and/or
(B) within five (5) Business Days of receipt of the Deloitte Report, if any.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
AS TO THE SELLER
----------------
Except as disclosed in the disclosure memorandum (the
"Disclosure Memorandum") delivered at or prior to the date of this Agreement,
Seller represents and warrants to Purchaser that the following statements are
true and correct in all respects as of the date of this Agreement:
III.1 Organization. The Seller is a limited liability company
------------
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, with all requisite power and authority to own the Company and
its Subsidiaries (each of which is listed in
34
Schedule 3.01 of the Disclosure Memorandum) and to carry on its business as it
-------------
is now conducted.
III.2 Ownership of Membership Interests. Seller is the owner,
------------------------------------
beneficially and of record, of all the Membership Interests in the Company free
and clear of any Lien. At the Closing, Seller will transfer title to all
Membership Interests to Purchaser free and clear of any Lien.
III.3 Validity and Enforceability. Seller has the requisite
-----------------------------
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Seller, and no additional authorization on the part of Seller is
necessary in order to authorize this Agreement or consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller and, assuming due authorization and execution by Purchaser, constitutes
the legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of creditors, or by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including the availability of
specific performance.
III.4 Approvals. Except for the requirements (a) listed in
---------
Schedule 3.04 of the Disclosure Memorandum (the "Required Consents"), (b) of the
-------------
HSR Act and (c) of those Laws, noncompliance with which could not reasonably be
expected to have a material adverse effect on the ability of the Seller to
perform its obligations under this Agreement or to have a Material Adverse
Effect on the Company, no filing or registration with, no waiting period imposed
by and no Permit or Order of, any Governmental Authority is required under any
Law applicable to the Seller or the Company or any of its Subsidiaries to permit
the Seller to execute, deliver or perform this Agreement or any instrument
required hereby to be executed and delivered by it at the Closing.
III.5 No Violation. Assuming the receipt of all Required
-------------
Consents, and the effectuation of all filings and registrations with,
termination or expiration of any applicable waiting periods imposed by and
receipt of all Permits and Orders of, Governmental Authorities indicated as
required in Section 3.04, neither the execution and delivery by the Seller of
this Agreement or any instrument required hereby to be executed and delivered by
it at the Closing nor the performance by the Seller of its obligations hereunder
or thereunder will violate or breach the terms of or cause a default under (i)
any Law applicable to the Seller, (ii) the certificate of formation, the limited
liability company agreement or other organizational documents of the Seller, or
(iii) any contract or agreement to which the Seller or any of its Subsidiaries
(other than the Company and its Subsidiaries) is a party or by which it or any
of its properties or assets is bound, except in any such case for any matters
described in this Section that would not
35
reasonably be expected to have a Material Adverse Effect upon the ability of the
Seller to perform its obligations under this Agreement.
III.6 Litigation. There are no Proceedings pending, or, to the
----------
Knowledge of the Seller, threatened, against the Seller, at law or in equity, in
any Court or before or by any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect on the validity or enforceability of
this Agreement or the ability of the Seller to perform its obligations under
this Agreement.
III.7 Brokerage Agreements. Neither the Seller nor the Company
--------------------
or any of the Company's Subsidiaries has, directly or indirectly, entered into
any agreement with any Person that would obligate the Company, any of its
Subsidiaries or the Purchaser to pay any commission, brokerage fee or "finder=s
fee" in connection with the transactions contemplated herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
AS TO THE COMPANY
-----------------
The Purchaser acknowledges that, prior to the execution of
this Agreement, it has been afforded the opportunity to inspect the business and
properties of the Company and to examine the records of the Company at its
offices, and has been afforded access to all information in the Company's
possession requested by the Purchaser. THE PURCHASER FURTHER ACKNOWLEDGES THAT,
EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE III OR THIS ARTICLE IV, THE SELLER, ITS
OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES AND AGENTS HAVE MADE NO, AND THE
SELLER HEREBY EXPRESSLY DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES AS TO THE
ACCURACY OR COMPLETENESS OF SUCH INFORMATION, AS TO TITLE OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES TO ANY ASSETS, OR AS TO ANY OTHER INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO THE PURCHASER OR ITS REPRESENTATIVES OR
AGENTS BY OR ON BEHALF OF THE SELLER.
Except as disclosed in the Disclosure Memorandum, the Seller
represents and warrants to the Purchaser as to the Company and its Subsidiaries
that:
IV.1 Organization. Each of the Company and its Subsidiaries is
------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
carry on its business as it is now being conducted and to own, lease and operate
its properties where now conducted, owned, leased or operated. Each of the
Company and its Subsidiaries is duly licensed or qualified to do business and is
in good standing in each jurisdiction where such license or qualification is
required to
36
carry on its business as now conducted, except where the failure to be so
qualified or licensed or in good standing, as the case may be, is not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
IV.2 Capitalization.
--------------
(1) All of the Membership Interests of the Company are held
beneficially and of record by the Seller. All of the issued and
outstanding Membership Interests have been duly authorized and are
validly granted. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments, other than this
Agreement, that could require the Company to issue, sell, or otherwise
cause to become outstanding any of its Membership Interests. Except as
set forth on Schedule 4.02(a) of the Disclosure Memorandum, there are
----------------
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company.
(2) Schedule 4.02(b) of the Disclosure Memorandum sets forth a
-----------------
complete list, as of the date hereof, of all of the Subsidiaries of
the Company, the jurisdiction of incorporation or formation of each
such Subsidiary and the number of issued and outstanding shares of
capital stock or, as the case may be, membership interests of each
such Subsidiary and the record holders thereof. Except as set forth on
Schedule 4.02(b) of the Disclosure Memorandum, all of the outstanding
----------------
shares of capital stock or membership interests are owned beneficially
and of record by the Company or the Company's Subsidiaries, free and
clear of all Liens, and no capital stock or membership interests of
any of the Company's Subsidiaries is or may become required to be
issued by reason of options, warrants, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable or exercisable for, shares
of capital stock or membership interests of its Subsidiaries and,
other than as contemplated by this Agreement, there are no contracts,
commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may be bound to issue, redeem, purchase
or sell shares of capital stock or membership interests or securities
convertible into or exchangeable for any such shares or membership
interests.
IV.3 No Violation. Except for the Required Consents and the
-------------
requirements of the HSR Act, neither the execution and delivery by the Seller of
this Agreement or any instrument required hereby to be executed and delivered by
it at the Closing nor the performance by the Seller of its obligations hereunder
or thereunder will (a) violate or breach the terms of or cause a default under
(i) any Law applicable to the Company or any of its Subsidiaries, (ii) the
certificate of organization, the limited liability company agreement or other
organizational documents of the Company or any of its Subsidiaries or (iii) any
contract or agreement to which
37
the Company or any of its Subsidiaries is a party or by which they or any of
their properties or assets are bound, (b) result in the creation or imposition
of any Lien, other than any Permitted Liens, on any of the properties or assets
of the Company or any of its Subsidiaries, or (c) result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any Permit owned
or held by the Company or any of its Subsidiaries, except in any such case for
any matters described in this Section that could not reasonably be expected to
have a Material Adverse Effect.
IV.4 Litigation.
-----------
(1) Except as set forth on Schedule 4.04 of the Disclosure
--------------
Memorandum, there are no Proceedings pending or, to the Knowledge of
Seller, threatened, involving the Company or any of its Subsidiaries.
(2) To Seller's Knowledge, neither the Company nor any of its
Subsidiaries is the subject of any Judgment other than those which
have been settled, discharged or accrued on the financial statements
of the Company, those which are covered by insurance, or those which,
individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect or materially impair Seller's
ability to effect the Closing.
IV.5 Compliance With Applicable Law. Except as set forth on
--------------------------------
Schedule 4.05 of the Disclosure Memorandum, to the Knowledge of Seller, each of
-------------
the Company and its Subsidiaries is presently complying in all material respects
with all applicable Laws and Judgments.
IV.6 Permits. To the Knowledge of Seller, except as set forth
-------
on Schedule 4.06 of the Disclosure Memorandum, the Company and each of its
--------------
Subsidiaries have all material Permits required to conduct their respective
business as currently conducted and the Company and each of the Subsidiaries
have been operating their respective businesses pursuant to and in material
compliance with the terms of all such Permits. Except as set forth on Schedule
--------
4.06 of the Disclosure Memorandum, such Permits held by the Company and its
----
Subsidiaries are valid and in full force and effect and none of the Permits
which are material to business operations will, assuming the related Required
Consents have been obtained, be terminated or become terminable as a result of
the transactions contemplated by this Agreement.
IV.7 Taxes. Except as set forth on Schedule 4.07 of the
------ --------------
Disclosure Memorandum, all Tax Returns of the Company and its Subsidiaries that
are required to be filed (taking into account any extensions of time within
which to file) before the Closing Date, have been or will be filed, the
information provided in such Tax Returns is complete and accurate in all
material respects, and all Taxes shown to be due and payable by the Company and
its Subsidiaries on such Tax Returns have been or will be paid in full. The
Company and each of the Company's Subsidiaries (other than Transok Energy
Company) are currently disregarded as
38
entities separate from their respective owners for federal income tax purposes
under Treasury Regulation 301.7701 3(b)(1). There are no tax sharing agreements
in effect applicable to the Company and its Subsidiaries.
IV.8 Environmental Compliance. Except as disclosed on Schedule 4.08 of
------------------------ -------------
the Disclosure Memorandum and subject to the provisions of Section 6.05, to
the Knowledge of the Seller:
(1) The Company and each of the Company's Subsidiaries is in
material compliance with all Environmental Laws (including, without
limitation, all monitoring, reporting and record keeping requirements
thereunder) in connection with the conduct, ownership, use,
maintenance and operation of its business or assets;
(2) The Company and each of the Company's Subsidiaries has given
all material notices and obtained all material permits, licenses,
registrations, authorizations, approvals and approved exemptions
required by Environmental Laws ("Environmental Permits") for the
conduct, ownership, use, maintenance and operation of its business and
assets, and the Company and each of the Company's Subsidiaries is in
compliance with all material terms and conditions of such
Environmental Permits;
(3) There are no pending lawsuits, administrative actions or
proceedings, orders, decrees, consent agreements or notices of
violation related to Environmental Laws by any governmental agency or
any third person against the Company or any of the Company's
Subsidiaries with respect to its present or former assets or the
business or operations of the Company or any of the Company's
Subsidiaries, nor to the knowledge of Seller is any such action
threatened;
(4) No material quantity of Materials of Environmental Concern
have been used, generated, manufactured, stored, treated, disposed of,
land filled, transported or in any other way released (and no release
is threatened), on, under, to, or from any of the property where the
business or assets of the Company or any of the Company's Subsidiaries
have been operated or located, in material violation of Environmental
Laws, or in such amounts or quantities that would require notice to
applicable governmental authorities or remediation under Environmental
Laws;
(5) Neither the Company nor any of the Company's Subsidiaries has
been named as a potentially responsible party ("PRP") under, and none
of the property owned or leased by the Company or its Subsidiaries
where the assets or business of the Company or any of the Company's
Subsidiaries has been located or operated has been nominated,
identified, or proposed for listing as a facility
39
which is subject to remedial or enforcement investigation, material
remediation, or any material existing or known potential claim under,
Environmental Laws (including, without limitation, listing as a PRP or
facility on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the Environmental Protection Agency or any analogous
state list of sites requiring investigation or remediation), and none
of such assets, or property is subject to any lien arising under
Environmental Laws;
(6) None of the off-site locations where any material quantity of
Materials of Environmental Concern related to any of the assets or
business of the Company or any of the Company's Subsidiaries have been
stored, treated, transferred, recycled, disposed of or released is
subject to an existing or potential claim or remedial or removal
action under Environmental Laws (including, without limitation,
listing as a PRP or facility on the National Priorities List or the
Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the Environmental Protection Agency
or any analogous state list of sites requiring investigation or
remediation). Neither the Company nor any of the Company's
Subsidiaries has been named as a PRP under, and none of the off-site
locations has been nominated, identified, or proposed for listing as a
facility which is subject to remedial or enforcement investigation,
material remediation or any material claim under, Environmental Laws,
and none of such off-site locations is subject to any lien arising
under Environmental Laws; and
(7) Without in any manner limiting the generality of (a) through
(f) above:
(1) to the Knowledge of Seller, the Company and the
Company's Subsidiaries, there are no underground or above ground
storage tanks, material quantities of asbestos-containing
materials, hazardous waste treatment, storage or disposal
facilities or solid waste management units (identified under
RCRA) present on any property owned or leased by the Company or
its Subsidiaries where the business or assets of the Company have
been operated or located;
(2) there are no material obligations or liabilities with
respect to assets or businesses sold by the Company or its
Subsidiaries between June 6, 1996, and the Closing arising out of
or relating to Environmental Laws which the Company or the
Company's Subsidiaries has agreed to, assumed or retained, by
contract or otherwise (except by operation of Law); and
40
(3) no material quantity of polychlorinated biphenyls
("PCBs"), substances containing PCBs, or PCB-containing
electrical equipment owned or leased by the Company or its
Subsidiaries is present on any property owned or leased by the
Company or its Subsidiaries where the business or assets of the
Company or the Company's Subsidiaries are, or have been, operated
or located.
IV.9 Disclaimer of other Representations and Warranties. Except
-----------------------------------------------------
as expressly set forth in Article III and this Article IV, SELLER MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF THE COMPANY, ITS SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE ASSETS,
LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR ANY REPRESENTATION OR
WARRANTIES WITH RESPECT TO THE DESIGN, QUALITY, DURABILITY, VALUE, OR CONDITION
OR SUITABILITY OF SUCH ASSETS OR THE PRESENCE, ABSENCE OR CONDITION OF HAZARDOUS
SUBSTANCES OR POLLUTANTS IN, ON OR UNDER SUCH ASSETS, AND ANY SUCH
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. PURCHASER HEREBY
ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN
ARTICLE III AND THIS ARTICLE IV, THE PURCHASER IS PURCHASING THE COMPANY AND ITS
SUBSIDIARIES ON AN "AS-IS, WHERE-IS" BASIS.
IV.10 Major Acquired Assets. The Company and each of the
------------------------
Company's Subsidiaries own, lease, or otherwise hold such title to their
respective assets as is necessary to conduct its business in the manner it is
currently being conducted. The assets listed on Schedule 4.10 ("Major Acquired
-------------
Assets") are in good and serviceable condition, normal wear and tear excepted
and suitable for their current uses. The Company and the Company's Subsidiaries
have, and at the Closing shall have, good and marketable title to the Major
Acquired Assets free and clear of any Liens, except for Permitted Liens. Except
as set forth in Schedule 4.10 of the Disclosure Memorandum, to Seller's
--------------
Knowledge all rights of way, leases or easements of the Company and its
Subsidiaries ("Necessary Contracts") are valid and binding upon each party
thereto and are in full force and effect according to their terms, and all
amendments, modifications or supplements thereto are contained in the files of
the Company or the Company's Subsidiaries and neither Seller, the Company nor
the Company's Subsidiaries has received any notice of the termination or
cancellation of any Necessary Contract. Except as set forth in Schedule 4.10 of
-------------
the Disclosure Memorandum, there is, to Seller's Knowledge, no default or claim
of default under any Necessary Contract, and no event has occurred which, with
the passage of time or the giving of notice (or both), would constitute a
default by Seller, Company or any of the Company's Subsidiaries, under any such
document or instrument, or would permit modification, acceleration or
termination of any such document or instrument, or result in the creation of any
Lien (or accelerate the performance of any obligation of the Company or the
Company's Subsidiaries secured by such Lien) on any of the Major Acquired
Assets, other than
41
Permitted Liens. To Seller's Knowledge, the pipeline is on the lands or premises
covered by the Necessary Contracts and, except as disclosed on Schedule 4.10,
-------------
there are no material spatial gaps in the rights-of-way or easements underlying
the Company's and its Subsidiaries' pipelines, except gathering lines on
producer leaseholds and connections on customers' facilities.
IV.11 Subsidiaries. The Company is the owner, beneficially and
------------
of record, of all the equity interest of those business entities listed on
Schedule 4.02(b) free and clear of any Lien. Except as set forth in Schedule
----------------- --------
4.11 of the Disclosure Memorandum, the Company does not own, directly or
----
indirectly, any capital stock or equity interest in any other Person.
IV.12 Major Contracts. With respect to the Company and the
----------------
Company's Subsidiaries, (a) the 20 largest purchase and/or sale of natural gas
contracts by volume, (b) the 20 largest transportation of natural gas contracts
by maximum daily quantity obligation, (c) the 20 largest gathering of natural
gas contracts by maximum daily quantity obligation (d) the compression of
natural gas contracts, if any, for the customers listed in items (b) and (c)
above, (e) the 20 largest natural gas processing contracts by maximum quantity
obligation, (f) all of the leases of capacity to third parties in the pipeline
systems of the Company and its Subsidiaries, (g) all of the leases of capacity
to Company or its Subsidiaries in the pipeline systems of third parties, and (h)
all of the contracts that require the payment by the Company or its Subsidiaries
of an amount of $200,000 or more during a three month period or $500,000 or more
during any year, except for any contracts in (a) through (h) above which are
terminable by the Company without any payment obligation upon 60 days or less
notice, are set forth on Schedule 4.12 ("Major Contracts"). To the Knowledge of
-------------
Seller, each of the Major Contracts is in full force and effect in accordance
with all amendments, modifications, or supplements thereto as contained in the
files of the Company or the Company's Subsidiaries and neither Seller, the
Company or the Company's Subsidiaries has received any notice of the termination
or cancellation of any of the Major Contracts. Except as disclosed in Schedule
--------
4.12 of the Disclosure Memorandum, neither the Company, nor the Company's
----
Subsidiaries, nor, to the Knowledge of the Seller, any other party is in default
under or in breach of, and no event has occurred that with notice or lapse of
time or both would constitute a default under or breach of, the terms,
conditions or provisions of any Major Contract. Except as set forth on Schedule
--------
4.12 of the Disclosure Memorandum, there is, to Seller's Knowledge, no default
----
or claim of default under any Major Contract and no event has occurred which,
with the passage of time or the giving of notice (or both), would constitute a
default by Seller, the Company or, any of the Company's Subsidiaries, or which
would permit the modification, acceleration or termination of any Major
Contract.
IV.13 Financial Statements. Seller has delivered to Purchaser
---------------------
copies of (i) the unaudited balance sheet of the Company and each Subsidiary as
of March 31, 1999 and the unaudited balance sheet of the Company as of December
31, 1998, including a detailed statement of estimated Working Capital and
inventory including the method of valuation of such inventory, (the "Company
Balance Sheets") and (ii) the unaudited statement of income of the Company for
the three months ended March 31, 1999 and for the year ended December 31, 1998.
The Seller
42
will deliver, as soon as practicable after the Closing, the Closing Balance
Sheet. The financial statements described herein, including the notes thereto
delivered therewith, are herein referred to as the "Company Financial
Statements." The Company Financial Statements have been prepared, or in the case
of the Closing Balance Sheet will be prepared, in accordance with generally
accepted accounting principles consistently applied (except for year end audit
adjustments and requirements for notes) and fairly present, or with respect to
the Closing Balance Sheet will fairly present, the financial position and
results of operation of the Company as of the dates indicated and for the
periods then ended.
IV.14 Absence of Certain Changes. Except as disclosed to
------------------------------
Purchaser in the Disclosure Memorandum or the Company Financial Statements,
since the date of the latest balance sheet included in the Company Financial
Statements, there has not been:
(1) any change which would have a Material Adverse Effect on the
business, properties, financial condition or results of operations of
the Company or any of the Company's Subsidiaries taken as a whole;
(2) any material change by the Company or any of the Company's
Subsidiaries in accounting methods or principles which would be
required to be disclosed under generally accepted accounting
principles;
(3) any declaration or payment of any dividend on, or any other
distribution with respect to, the equity securities of the Company or
any of the Company's Subsidiaries; provided, however, that nothing
-------- -------
herein shall be construed to prohibit the payment of any cash
dividends to Seller prior to the date of the Closing Balance Sheet, or
the repayment of debt, equal to all the cash or cash equivalents in or
generated by the Company and its Subsidiaries;
(4) any contract or commitment to do any of the foregoing or to
take any action that, if taken prior to the date hereof, would have
made any representation or warranty in this Article IV materially
incorrect.
IV.15 Employee Agreements and Plans. The following
--------------------------------------
representations are limited to Benefit Plans, contracts, agreements, and
programs that impose any severance, employment or compensation related
obligations that pertain to employees listed on Schedule 6.06 (the "Scheduled
Employees") as adopted or maintained by the Company, Tejas Energy, LLC, Coral
Energy Services, LLC ("Coral Services"), or their predecessors (hereinafter
collectively referred to as the "Company Group") on or after June 6, 1996, and
do not cover plans, contracts, agreements and programs adopted or maintained by
Central and South West Corporation, the predecessor parent of the Company (or
its predecessor).
(1) Except as described in Schedule 4.15(a), the Company Group
-----------------
has no liability relating to Scheduled Employees under any Benefit
Plans or under any
43
severance, employment or compensation related contracts, nor is the
Company Group a party to or bound by any collective bargaining
agreement, consulting, independent contractor or service agreement, or
deferred compensation agreement, relating to the Scheduled Employees
which is material to the business of the Company.
(2) Except as described in Schedule 4.15(a), (i) the Company
-----------------
Group does not maintain, nor is it required to contribute to, any
Benefit Plan on behalf of the Scheduled Employees; (ii) no Scheduled
Employees of the Company Group are covered under any Benefit Plan; and
(iii) each Benefit Plan described in Schedule 4.15(a) that is intended
----------------
to be qualified under Section 401(a) of the Code has received a
favorable determination letter of the IRS stating that the plan meets
the requirements of the Code and that the trust associated with the
plan is tax-exempt under Section 501(a) of the Code, or, where the
Benefit Plan has been amended since the latest determination letter,
is either within the remedial amendment period for obtaining such a
favorable determination letter and shall obtain such a favorable
determination letter, or opinion of counsel is provided stating that
the plan, as amended, meets the requirements of the Code and that the
trust associated with the plan is tax-exempt under Section 501(a) of
the Code.
(3) The Company Group has no liability under any multi-employer
plan (within the meaning of Section 4001 of ERISA) with respect to its
employees.
(4) To Seller's Knowledge, each Benefit Plan which is a group
health plan (within the meaning of Section 5000(b)(1) of the Code)
complies in all material respects with, and has been maintained and
operated in all material respects in accordance with, each of the
health care continuation requirements of Section 162(k) of the Code as
in effect for years beginning prior to 1989, Section 4980B of the Code
for years beginning after December 31, 1988, and Part 6 of Title I,
Subtitle B of ERISA.
(5) Except as disclosed in Schedule 4.15(e), the Company Group
-----------------
has no liability for post-retirement welfare benefits, including
retiree medical benefits.
(6) To Seller's Knowledge (i) each Benefit Plan, the
administrator and fiduciaries of each Benefit Plan, and all members of
the Company Group have complied with the applicable requirements of
ERISA (including, but not limited to, the fiduciary responsibilities
imposed by Part 4 of Title I, Subtitle B of ERISA), the Code and any
other applicable requirements of law governing each Benefit Plan,
except for such noncompliance as is not likely to have a Material
Adverse Effect; and (ii) each Benefit Plan has at all times been
properly
44
administered in accordance with all such requirements of law, except
for such impropriety as is not likely to have a Material Adverse
Effect.
(7) No member of the Company Group is delinquent as to
contributions or payments to or in respect of any Benefit Plan as to
which any member of the Company Group is obligated to make
contributions or payments, and no member of the Company Group has
failed to pay any assessments made with respect to any such Benefit
Plan. All contributions and payments with respect to Benefit Plans
that are required to be made by any member of the Company Group with
respect to periods ending on or before the Closing Date (including
periods from the first day of the then-current plan or policy year to
and including the Closing Date) have been made or will be accrued
before the Closing Date by the Company Group in accordance with the
appropriate actuarial valuation report or insurance contracts or
arrangements.
(8) With respect to each Benefit Plan, to Seller's Knowledge,
there has not occurred, nor is any person contractually bound to enter
into, any non-exempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA.
(9) No member of the Company Group has any liability under any
"employee pension benefit plan" (within the meaning of Section 3(2) of
ERISA) subject to Title IV of ERISA, maintained by any member of the
Company Group and covering current or former employees of any member
of the Company Group, that has been terminated and no employee pension
benefit plan maintained by any member of the Company Group has been
the subject of a "reportable event" (within the meaning of Section
4043 of ERISA) as to which notices would be required to be filed with
the Pension Benefit Guaranty Corporation, other than events reportable
on Form 5310 of the IRS.
(10) No proceeding by the Pension Benefit Guaranty Corporation to
terminate any Benefit Plan in accordance with Subtitle 1 of Title IV
of ERISA has been instituted or, to Seller's Knowledge, threatened.
(11) As to each Benefit Plan subject to Title IV of ERISA, the
value of the assets equals or exceeds the minimum required funding
obligations as determined by the Plan's independent actuaries as of
the date of this Agreement.
(l) The execution and performance of this Agreement will not
result in payments or transfers of property which constitute "excess
parachute payments" within the meaning of Code Section 280G.
45
IV.16 Employee Relations.
------------------
(1) Except as set forth in Schedule 4.16(a), with respect to
-----------------
Scheduled Employees, to Seller's Knowledge: (i) each member of the
Company Group is in compliance with all applicable requirements of law
with respect to employment, employment practices, employment
verifications, terms and conditions of employment and wages, overtime
pay, and hours, except for such noncompliance as is not likely to have
a Material Adverse Effect; (ii) no member of the Company Group has
engaged in any unfair labor practice or illegally discriminated with
regard to any aspect of employment on the basis of any legally
prohibited category or classification; and (iii) with respect to
employees and former employees who rendered services to, or
participated in conduct or activities in connection with the Company
Group, no member of the Company Group is liable for any arrears of
wages, salaries or other payments.
(b) Except as set forth in Schedule 4.16(b), with respect to
-----------------
Scheduled Employees, there are no: (i) unfair labor practice charges
or complaints pending or, to Seller's Knowledge, threatened against
the Company Group before the National Labor Relations Board; (ii)
discrimination charges pending or, to Seller's Knowledge, threatened
against the Company Group before any federal, state or local agency or
authority; (iii) complaints, charges or citations pending or, to
Seller's Knowledge, threatened against the Company Group under OSHA or
any state or local occupational safety act or regulation; or (iv) to
Seller's Knowledge material controversies pending or threatened
between its employees or any labor union or organization representing
or claiming to represent such employees' interests.
IV.17 CSW Claims. To Seller's Knowledge, all matters which
----------
would constitute "Losses" indemnifiable for breach of Section 4.12 of the CSW
Indemnity (for the purposes of determining Losses, the threshold in Section
8.02(a)(x) shall be changed from $500,000 to $200,000 and the threshold in
Section 8.02(a)(y) shall be ignored) are attached on Schedule 4.17.
IV.18 FERC Reports. The Company has filed all material reports
------------
required by the Federal Energy Regulatory Commission with respect to 18 CFR
284.227(d).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller that the following
statements are true and correct in all material respects as of the date of this
Agreement:
46
V.1 Organization and Good Standing. The Purchaser is a
------------------------------------
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Oklahoma with all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
currently conducted.
V.2 Authorization of Agreement. The Purchaser has all
-------------------------------
requisite corporate power and authority to enter into this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Purchaser of
this Agreement and each instrument required hereby to be executed and delivered
by it at the Closing, and the performance of its obligations hereunder and
thereunder, have been duly and validly authorized by all requisite corporate
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and, assuming due authorization and execution by the
Seller, constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as the
same may be limited by legal principles of general applicability governing the
application and availability of equitable remedies.
V.3 No Violations. The execution, delivery and performance by
-------------
Purchaser of this Agreement, and the consummation of the transactions
contemplated by this Agreement, do not and will not (i) conflict with or violate
any provision of the certificate of incorporation, bylaws or other
organizational documents of Purchaser, (ii) subject to obtaining the Required
Consents, conflict with, or result in the breach of, or constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the giving of notice or the lapse of time or both) of any right or obligation of
Purchaser under, any note, bond, mortgage, indenture, Permit, license, lease,
agreement, contract, arrangement or commitment to which Purchaser is a party or
by which Purchaser or any of its assets or properties are bound or affected, or
(iii) subject to obtaining the Required Consents, violate or result in a breach
of or constitute a default under any Law or Judgment applicable to Purchaser or
by which Purchaser or any of its assets are bound or affected, except, in the
cases of clauses (ii) and (iii), for any conflict, breach, default, termination,
cancellation, acceleration, loss or violation which, individually or in the
aggregate, would not materially impair Purchaser's ability to effect the
Closing.
V.4 Consents and Approvals. Except for the Required Consents
------------------------
and the requirements of the HSR Act, no Consent is required to be obtained by
Purchaser or any Affiliate from, and no notice or filing is required to be given
by Purchaser or any Affiliate to or made by Purchaser or any Affiliate with, any
Governmental Authority or other Person in connection with the execution,
delivery and performance by Purchaser of this Agreement, other than in all cases
where the failure to obtain such Consent or to give or make such notice or
filing would not, individually or in the aggregate, materially impair
Purchaser's ability to effect the Closing.
V.5 Litigation; Impairment. There are no actions, suits,
------------------------
claims or proceedings pending (whether at law or in equity) or, to the best
knowledge of Purchaser, threatened against
47
or involving Purchaser in any court or before or by any Governmental Authority
which (i) questions the validity of this Agreement or seeks to restrain,
prohibit, invalidate, set aside, prevent or make unlawful this Agreement or any
of the transactions contemplated hereby, or (ii) if adversely determined would
in any material respect prevent or impair the ability of Purchaser to purchase
the Membership Interests or perform any of its obligations under this Agreement.
V.6 No Brokers. Neither Purchaser nor any of its Affiliates
-----------
has employed any investment banker, broker, or finder in connection with the
transactions contemplated by this Agreement, which would give rise to a valid
claim against Seller, the Company or any of its Subsidiaries for a brokerage
commission, finder's fee, or other like payment.
V.7 Purchaser's Knowledge and Expertise. Purchaser is engaged
--------------------------------------
in the business of gathering, transporting and processing natural gas and
related oil and gas businesses, is generally familiar with the federal, state
and local statutes, laws, rules and regulations applicable to the Company and
its Subsidiaries and any associated business Purchaser intends to conduct after
the Closing, and Purchaser has the expertise necessary to independently evaluate
Seller's title to, and the condition, operation, suitability, performance and
prospects of, the Company and its Subsidiaries.
V.8 Financing. Purchaser has, or has arranged for, the funds
---------
necessary to purchase the Membership Interests for cash from Seller and, subject
to the satisfaction of Purchaser's conditions to Closing set forth in Article
VII, will cause the timely availability of such funds for the purposes of
consummating the purchase of the Membership Interests in accordance with the
terms of this Agreement and otherwise fully performing its obligations pursuant
to this Agreement and the transactions contemplated hereby. The availability and
sufficiency of funds for the purchase of the Membership Interests and the
performance of Purchaser's obligations under this Agreement are not conditions
precedent to the obligations of Purchaser under this Agreement.
V.9 No Reliance. Purchaser has not relied upon any oral or
------------
written statements, representations or warranties which may have been made by or
on behalf of Seller or upon any written reports, financial or production data,
business plans, projections, forecasts, reserve reports or evaluations, or any
environmental reports, audits, studies or assessments, or any other written
materials, copies of which may have been furnished to Purchaser or as to which
Purchaser may have been provided access in connection with the transactions
contemplated by this Agreement.
V.10 Knowledge. Purchaser has no knowledge of any breach of,
---------
or inaccuracy in, any of the representations and warranties of Seller set forth
in this Agreement.
V.11 Investment Intent. Purchaser hereby acknowledges that the
-----------------
Membership Interests being purchased by Purchaser under this Agreement are not
registered under the
48
Securities Act or registered or qualified for sale under any state securities
law and cannot be resold without registration thereunder or exemption therefrom.
Purchaser is acquiring such Membership Interests for its own account as
principal, for investment and not with a view toward the sale or distribution
thereof. Purchaser has sufficient knowledge and experience in financial and
business matters to enable it to evaluate the risks of investment in such
Membership Interests and has the ability to bear the economic risk of such
investment.
ARTICLE VI
COVENANTS
---------
VI.1 Conduct of the Business Pending the Closing. During the
-----------------------------------------------
period from the date of this Agreement to the Closing, except as otherwise
contemplated by this Agreement or as Purchaser shall otherwise consent in
writing, Seller shall cause the Company and its Subsidiaries to conduct the
business and operations of the Company and its Subsidiaries in the ordinary and
usual course in a manner consistent with past practice, except (i) as may be
necessary to comply with applicable Law or the terms of this Agreement or (ii)
as may be required by emergency or force majeure conditions. It is understood
and agreed that Seller may cause the Company to pay cash dividends to Seller up
to and including the date of the Closing Balance Sheet, and cause the repayment
of debt, equal to all of the cash or cash equivalents in or generated by the
Company. During the period from the date of this Agreement to the Closing,
except as otherwise provided for in this Agreement or as Purchaser shall
otherwise consent, Seller covenants and agrees that, with respect to the Company
and its Subsidiaries, it shall:
(10 not approve any new individual capital expenditure (other
than expenditures under AFE's previously approved by the Company and
listed on Schedule 6.01(a)) that is in excess of $100,000, without
-----------------
prior written consent of Purchaser or aggregate capital expenditures
that are in excess of $1 million, (Seller will provide Purchaser
written documentation and economic support in anticipation of capital
expenditures, and Purchaser shall have one (1) Business Day from
receipt to respond in writing. If no response is received by Seller,
then such capital expenditure will be deemed approved);
(20 not permit the Company or its Subsidiaries to dispose of any
capital assets of the Company or its Subsidiaries if the greater of
the book value or the fair market value, individually or in the
aggregate, of such assets exceeds $200,000; or incur, create or assume
any Lien on any individual capital asset of the Company or its
Subsidiaries, other than Permitted Liens;
(30 except for well connections in the ordinary course of
business and consistent with past practice, not permit the Company or
its Subsidiaries to enter into any contract or other commitment
(including any hedging arrangement or other derivative transaction) in
excess of $250,000 per transaction or that has a
49
term of, or requires the performance of any obligations by the Company
or its Subsidiaries over a period in excess of, one year, or incur any
indebtedness for money borrowed or sell any stock in the Company or
any of its Subsidiaries (except to an Affiliate of Seller which shall
be obligated to sell the Company pursuant to the terms hereof).
(Seller will provide Purchaser with a description of any transaction
requiring approval under this Section 6.01(c) and Purchaser shall have
one (1) Business Day from receipt to respond in writing. If no
response is received by Seller then such capital expenditure will be
deemed approved);
(40 except for annual merit increases or as required by law or
the terms of any existing Contract, not permit any Affiliate any of
whose employees provide services primarily to or for the Company and
its Subsidiaries to increase materially the salary, wage, rate of
compensation, commission, bonus or other direct or indirect
remuneration payable to, or other compensation of, any such employee
or enter into any contract or other binding commitment in respect of
any such increase except in the ordinary course of business or as is
consistent with past practice and except for retention, incentive or
similar payments relating to the consummation of the transactions
contemplated by this Agreement, not amend, adopt or terminate any
Benefit Plans covering such employees that would materially increase
the liability of the Company hereunder or enter into any negotiation
in respect of or enter into any collective bargaining agreement
covering such employees;
(50 not permit the Company or its Subsidiaries to amend in any
respect any Major Contract, or terminate any of the Major Contracts
(except with respect to purchase orders or termination of material
Contracts caused by the termination or default of any other party
thereto) or default in the performance of any material covenant or
obligation thereunder which default is not cured within any applicable
grace period;
(60 not permit the Company or any of its Subsidiaries to make any
change in its articles of formation, operating agreements, bylaws, or
equivalent governing instruments;
(70 except for the ISDA Agreement and the Transok Swap
Transaction, not permit the Company or any of its Subsidiaries to
incur, assume or guarantee any debt or capitalized lease obligation or
to enter into any transaction or contract with an Affiliate;
(80 not permit the Company or any of its Subsidiaries to make any
election or take any action inconsistent with the treatment of the
Company and the Subsidiaries as disregarded entities for federal
income tax purposes under Treasury Regulation 301.7701-3(b)(1); and
50
(90 not agree or commit to do any of the foregoing.
VI.2 Access to Information.
---------------------
(10 Seller will cause each of the Company and its Subsidiaries
(i) to permit representatives of the Purchaser to have access at all
reasonable times, and in a manner so as not to unreasonably interfere
with the normal business operations of the Company and its
Subsidiaries, to all premises, properties, personnel, books, records,
contracts and documents of or pertaining to each of the Company and
its Subsidiaries, (ii) to permit representatives of the Purchaser to
review all employee records and to interview all employees assigned to
the Company and its Subsidiaries, including without limitation, the
right to have such employees answer questions concerning their job
qualifications, employment history, current and past job duties and
work experience during those periods employed by the Company or any of
its Subsidiaries, and (iii) to furnish to the Purchaser and its
representatives such information concerning the business, properties,
contracts, records and personnel of the Company and its Subsidiaries
(including financial, operating and other data and information) as may
be reasonably requested, from time to time, by the Purchaser
(including for the purposes hereof information necessary to audit the
Company's and its Subsidiaries' financial statements and balance
sheets).
(20 Notwithstanding the foregoing provisions of this Section, the
Seller shall not be required to cause the Company or any of its
Subsidiaries to grant access or furnish information to the Purchaser
or any of the Purchaser's representatives to the extent that such
information is subject to an attorney/client, attorney work product or
accountant/client privilege or that such access or the furnishing of
such information is prohibited by Law or by a valid and binding
confidentiality agreement with a third party; PROVIDED, HOWEVER, that,
in the latter instance, (i) if so requested by the Purchaser, the
Seller will use all commercially reasonable efforts to obtain from
such third party a waiver of such prohibition, and (ii) Seller shall
provide a schedule showing a description of any information not
disclosed and the reason such information was not disclosed. In the
event Purchaser requests any scheduled information, Seller shall
supply such information and Purchaser shall indemnify Seller for any
Damages (as hereafter defined) which Seller suffers as a result of
such disclosure.
(30 To the extent reasonably necessary or desirable in connection
with the Seller's ownership of the Company or any matter arising under
this Agreement, after the consummation of the transactions
contemplated hereby, Seller will, upon prior written notice to
Purchaser, have reasonable access at all reasonable times and in a
manner so as not to interfere with the normal business
51
operations of the Company and its Subsidiaries, to all personnel,
books, records, work papers, contracts and documents of or pertaining
to each of the Company and its Subsidiaries prior to Closing.
Purchaser shall preserve all such information, records and documents
for a period of six (6) years following the Closing and if requested
by Seller give Seller an opportunity to make copies thereof at the
sole expense of Seller.
(40 Each of the parties hereto will preserve and retain all
schedules, work papers and other documents relating to any Tax Returns
of or with respect to the Company or any of its Subsidiaries or to any
claims, audits or other proceedings affecting the Company or any of
its Subsidiaries until the expiration of the statute of limitations
(including extensions) applicable to the taxable period to which such
documents relate or until the final determination of any controversy
with respect to such taxable period and until the final determination
of any payments that may be required with respect to such taxable
period under this Agreement.
(50 The confidentiality of all documents and information
furnished in connection with the transactions contemplated by this
Agreement shall be governed by the terms of the Confidentiality
Agreement. The Confidentiality Agreement shall terminate at the
Closing.
VI.3 Consents.
--------
(10 To the extent required by the HSR Act, each of the parties
will (i) file or cause to be filed with the Federal Trade Commission
and the United States Department of Justice, as promptly as
practicable after the execution and delivery of this Agreement, all
reports and other documents required to be filed by such party and any
other person (as defined in the HSR Act) affiliated with such party
under the HSR Act concerning the transaction contemplated hereby
(requesting early termination of the waiting period under the HSR Act)
and (ii) promptly comply with or cause to be complied with any
requests by the Federal Trade Commission or the United States
Department of Justice for additional information concerning such
transactions. Each party agrees to request early termination on its
Premerger Notification Form of the applicable waiting period under the
HSR Act.
(20 Each of the parties will use all commercially reasonable
efforts (and will cooperate with the other party) (i) to obtain all
other consents, approvals, orders, authorizations and waivers of, and
to effect all declarations, filings and registrations with, all third
parties (including Governmental Authorities) that are required to be
made or effected by it to enable it to effect the transactions
contemplated hereby and (ii) to take, or to cause to be taken, all
appropriate action, and to do, or to cause to be done, all things
necessary, proper or advisable
52
under applicable Laws or otherwise to consummate and make effective
the transactions contemplated by this Agreement.
(30 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
6.03 shall be borne by the party incurring the same.
(40 Seller shall obtain the waiver of the Required Consents set
forth on Schedule 3.04 prior to Closing in writing in a form
--------------
satisfactory to Purchaser.
VI.4 Public Announcements. Except as may be required by
----------------------
applicable Law or any securities exchange on which the securities of the parties
or their Affiliates are listed, neither Purchaser nor Seller shall issue any
press release or make any public statement with respect to this Agreement or the
transactions contemplated by this Agreement without the prior approval of the
other party to this Agreement, such approval not to be unreasonably withheld or
delayed. Purchaser and Seller will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated by this Agreement.
VI.5 Environmental Matters. Purchaser has reviewed the CSW
-----------------------
Indemnity and has made its own determination of the availability and adequacy of
the CSW Indemnity to indemnify the Company and its Subsidiaries against certain
environmental claims, as therein provided. Purchaser acknowledges that, prior to
its execution of this Agreement, it has independently conducted such environment
inspections and investigations or obtained such environmental reports, audits,
studies, assessments and inspections as it has deemed necessary or advisable and
that it is relying upon its own inspections and investigation in order to
satisfy itself as to environmental matters pertaining to the Company and its
Subsidiaries. Purchaser hereby assumes all risks that the Company and its
Subsidiaries may have sites and own or lease properties containing waste
materials or hazardous substances. Except as provided in Section 9.02, Purchaser
forever and unconditionally waives and releases Seller from any and all Damages
and costs of remediation relating to violations by the Company and its
Subsidiaries of any Environmental Laws, including those which are unknown,
unanticipated or unsuspected or which may hereafter arise as a result of the
discovery of new or additional facts.
53
VI.6 Employee Related Matters
------------------------
(10 Purchaser agrees to offer on or about the Closing Date
at-will employment to at least 280 of the employees of Coral Services
listed on Schedule 6.06 ("Continued Employees") of the Disclosure
--------------
Memorandum. Purchaser further agrees to identify the names of such
Continued Employees at least five (5) days prior to the Closing Date.
Seller shall be responsible for the termination of employees of Coral
Services listed on Schedule 6.06 not identified by Purchaser as a
Continued Employee (not to exceed 105 individuals). Purchaser and
Seller agree to require, as a condition of Purchaser's employment of
Continued Employees and in consideration of Purchaser's and Seller's
costs connected therewith, a waiver and release of all of the
Continued Employee's claims against Purchaser, Seller, the Company,
Coral Services, and all of their Affiliates based on all occurrences
prior to the date of execution of the waiver and release. As
additional consideration for Continued Employees to accept Purchaser's
offer of employment and to execute the waiver and release, Purchaser
shall offer each Continued Employee a sign-on bonus equal to one-half
of his or her monthly rate of base pay on the day preceding the
Closing Date. Purchaser and Seller have entered into a letter
agreement simultaneously with the execution of this Agreement that
allocates severance costs and other benefit expenses between the
parties. The terms of the employment of Continued Employees by the
Purchaser after the Closing shall be under substantially similar terms
of such employees' employment by Coral Services on the date hereof,
including the level of wages or salary, vacation, holiday, and sick
leave. Purchaser agrees that, except as provided herein, for a period
of two years following the Closing Date, neither it nor the Company
nor any of its Subsidiaries shall directly solicit for hire any
Oklahoma employee of Seller or Coral Services without the written
consent of Seller or Coral Services, as applicable.
(20 Purchaser represents, warrants, and covenants that the
employees of Coral Services which will not be offered employment by
Purchaser are less than fifty (50) at any one site and therefore will
not require notice under the Worker Adjustment and Retraining
Notification Act ("WARN").
(30 Effective as of the Closing Date, Continued Employees shall
cease to participate in all Benefit Plans of Seller or Seller's
Affiliates.
(40 Effective as of the Closing Date, the Purchaser shall take
all action necessary or appropriate to extend coverage under a new or
existing defined benefit pension plan (the "Purchaser's Pension Plan")
qualified under section 401(a) of the Code to the Continued Employees
who are participants in the defined benefit pension plan in effect for
Coral Services employees (the "Seller's Pension Plan") at the Closing
Date. The Continued Employees shall be credited
54
with service under the Purchaser's Pension Plan, for eligibility and
vesting purposes, but not for accrual of benefits purposes, with the
service credited to them for eligibility and vesting purposes under
the Seller's Pension Plan as of the Closing Date.
(50 Effective as of the Closing, the Seller shall cause each
Continued Employee who is a participant in the Coral Energy Services
LLC Thrift Plan (the Coral Thrift Plan) on the Closing Date to become
100% vested in his or her account balances under the Coral Thrift Plan
as of the Closing Date. Effective as of the Closing, the Purchaser
shall take all action necessary and appropriate to extend coverage
under a new or existing defined contribution plan (the "Purchaser's
Savings Plan") qualified under section 401(a) of the Code to the
Continued Employees who have account balances under the "Coral Thrift
Plan" at the Closing Date. The Continued Employees will be credited
with service under the Purchaser's Savings Plan, for eligibility and
vesting purposes, with the service credited to them under the terms of
the Coral Thrift Plan as of the Closing Date. As soon as practicable
following the Closing Date, the Seller shall cause to be transferred
from the trustee of the Coral Thrift Plan to the trustee of the
Purchaser's Savings Plan, an amount, in cash or in kind (including
participant loans which shall be transferred in kind), equal to the
aggregate account balances of the Continued Employees under the Coral
Thrift Plan determined as of the date of transfer in accordance with
the valuation methods of the Coral Thrift Plan. From and after the
date of such transfer, the Purchaser shall cause the Purchaser=s
Savings Plan to assume the obligations of the Coral Thrift Plan with
respect to the benefits accrued by the Continued Employees under the
Coral Thrift Plan, and the Coral Thrift Plan shall cease to be
responsible therefor. Purchaser and Seller shall use their best
efforts to ensure that any loan balances outstanding under the Coral
Thrift Plan with respect to any Continued Employee shall be
transferred to the Purchaser's Savings Plan without acceleration or
default.
(60 Effective as of the Closing Date, Purchaser shall take all
actions necessary or appropriate to extend coverage under new or
existing welfare benefit plans (the "Purchaser Welfare Plans") to the
Continued Employees, which plans shall include medical, dental,
prescription drug, life insurance, long-term disability and retiree
medical benefits. Claims for such benefits by Continued Employees with
respect to purchases, services or treatment rendered on or subsequent
to the Closing shall be covered by the Purchaser Welfare Plans in
accordance with the terms of such Plans, and not by the Seller's
plans. Claims for welfare benefits by employees of Coral Services
listed on Schedule 6.06, with respect to purchases, services or
treatment rendered prior to the Closing shall be covered by the Seller
Welfare Plans in accordance with the terms of such Plans, and not by
the Purchaser plans. Claims for long term disability benefits by
Continued Employees arising out of occurrences subsequent to the
Closing Date
55
shall be covered by the Purchaser's Welfare Plans in accordance with
the terms of such Plans, and not by the Seller's plans. Claims for
long term disability benefits by Continued Employees arising out of
occurrences prior to the Closing Date shall be covered by the Seller
Welfare Plans in accordance with the terms of such Plans, and not by
the Purchaser's plans. Neither the Purchaser nor any of its Affiliates
shall be liable for payment of any disability benefit due to disabled
employees of Coral Services (such employees listed on Schedule 6.06)
who, prior to the Closing, are in the waiting or qualifying period for
disability benefits. After the Closing, the Seller shall be
responsible for disability benefits payable to such persons under the
Seller's disability plan. The Purchaser shall cause the Continued
Employees to be granted credit under the Purchaser Welfare Plans, for
the year during which the Closing occurs, against the deductibles,
co-payment limits and out-of-pocket limits of Purchaser's Welfare
Plans for the covered expenses already incurred by such Continued
Employees for such year under the welfare plans of Seller or its
Affiliates in which such Continued Employees participate at the
Closing Date. In addition, the Purchaser shall cause to be waived any
eligibility waiting periods and pre-existing condition limitations or
restrictions under the Purchaser's Welfare Plans to the extent
necessary to provide immediate coverage of Continued Employees under
such welfare plans as of the Closing Date (but only to the extent that
coverage was provided under the applicable welfare plan of the Seller
or its Affiliates). Group health benefits provided under Purchaser's
Welfare Plans shall be sufficient to satisfy the obligations of the
Seller and its Affiliates under Section 4980B of the Code with respect
to the Continued Employees so that neither the Seller nor its
Affiliates shall incur any tax under Section 4980B of the Code.
(70 Seller shall be responsible for all claims for health care
flexible spending account benefits submitted after the Closing Date
for expenses incurred prior to the Closing Date by Continued Employees
shall be paid by the Seller's or its Affiliates' health care flexible
spending account plan. The Purchaser shall allow each continued
Employee who participated in a health care flexible spending account
of the Company Group or their Affiliates to establish a health care
flexible spending account pursuant to Purchaser's flexible benefit
account plan. If Continued Employees elect to participate in
Purchaser's flexible benefit account plan, all claims incurred after
Closing Date and submitted shall be paid out of Purchaser's flexible
spending account plan. Group health benefits provided under
Purchaser's health care flexible benefit account plan shall be
sufficient to satisfy the obligations of the Seller and its Affiliates
under Section 4980B of the Code with respect to the Continued
Employees so that neither the Seller nor its Affiliates shall incur
any tax under Section 4980B of the Code. Purchaser and Seller agree to
adjust the Continued Employees flexible spending accounts as necessary
to accomplish the intent of this paragraph.
56
(80 For the period from the Closing until January 5, 2001, the
Purchaser agrees to, establish and maintain a severance benefit plan
(the "Purchaser's Severance Plan") applicable to the Continued
Employees.
(90 All service credited under Seller's vacation policy for
Continued Employees, including unused balances, shall be recognized by
Purchaser and the Company and its Subsidiaries. All Continued
Employees who are eligible will be entitled to participate in the
Purchaser's Employee Gain Share Plan or other applicable incentive
program that the Purchaser may have or that may be established by the
Company or its Subsidiaries after the Closing.
(100 Claims for workers' compensation benefits arising out of
occurrences prior to the Closing shall be the responsibility of Seller
or Coral Services. Claims for workers' compensation benefits for
Continued Employees arising out of occurrences subsequent to the
Closing shall be the responsibility of Purchaser or the Company or its
Subsidiaries.
(110 Nothing herein shall be deemed or construed to (i) give rise
to any rights, claims, benefits, or causes of action to any Continued
Employee or (ii) prevent, restrict, or limit the Purchaser or the
Company and its Subsidiaries following the Closing from modifying or
terminating its pension or other benefit plans, programs or policies
from time to time as it may deem appropriate, subject only to
compliance with the express provisions of paragraphs (a) through (i)
of this Section 6.06 for the benefit of Seller.
VI.7 Supplemental Disclosures. Between the date of this
--------------------------
Agreement and the Closing, Seller will promptly notify Purchaser, in writing, if
Seller obtains actual Knowledge of any fact or condition that causes or
constitutes a breach of any of Seller's representations and warranties as of the
date of this Agreement, or if Seller obtains actual Knowledge of the occurrence
after the date of this Agreement of any fact or condition that would cause or
constitute a material breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
VI.8 Options Concerning El Paso Agreements. Purchaser shall
-----------------------------------------
have the option, exercisable by written notice delivered to Seller no later than
fifteen (15) days prior to the Closing Date, to require the termination of the
El Paso Sale Agreement and the assignment to Transok Gas, LLC, of the El Paso
Transportation Agreements, effective in each case as of the Closing Date. The
failure of Purchaser to give such notice to Seller on or prior to fifteen (15)
days prior to the Closing Date shall constitute an election by Purchaser not to
exercise such option. If Purchaser exercises such option in a timely manner as
provided in this Section 6.09, then, at the Closing, Seller will deliver to
Purchaser (a) an agreement executed by Coral Energy Resources, L.P., and Transok
Gas, LLC, terminating the El Paso Sale Agreement, and (b) an
57
assignment of contract rights from Coral Energy Resources, L.P., to Transok Gas,
LLC, pursuant to which Coral Energy Resources, L.P., assigns the El Paso
Transportation Agreements to Transok Gas, LLC, and Transok Gas, LLC, assumes and
agrees to perform all of the terms thereof, effective in each case as of the
Closing Date.
VI.9 Casualty Loss. If, between the date of this Agreement and
-------------
the Closing, all or any portion of the real or personal property of the Company
or its Subsidiaries is damaged or destroyed by fire or other casualty loss
("Casualty Loss"), this Agreement shall remain in full force and effect
notwithstanding such destruction or damage. In such case, the Purchaser shall be
entitled to the proceeds of any insurance payments relating to such damaged
property and Seller shall pay Purchaser an amount equal to any deductible or
uninsured physical Casualty Loss (to the extent of the actual expenses to repair
or replace the destroyed or damaged property) not covered under the terms of the
applicable insurance policy or policies.
VI.10 Customer Relations. Purchaser and Seller shall work
--------------------
together to assure a smooth transition and a minimum disruption in the business
of the Company and its Subsidiaries and Seller shall, as necessary when
requested by Purchaser, cooperate with Purchaser in customer contacts and
meetings to facilitate the transaction.
VI.11 Dormant Subsidiaries. Prior to the Closing, Seller shall
--------------------
cause the Company and its Subsidiaries to divest themselves of any interest in
any Subsidiaries which own no assets and have no contracts.
VI.12 Corporate Books. To the extent Seller or any of its
-----------------
Affiliates possesses any books and records of the Company or its Subsidiaries,
Seller shall deliver such books and records to Purchaser promptly following the
Closing.
VI.13 Rate Proceedings. The Company or its Subsidiaries currently
----------------
have the following pending rate proceedings:
(a) Oklahoma Traditional System FERC Section 311 Petition for
Rate Approval;
(b) Oklahoma Transmission System FERC Section 311 Petition for
Rate Approval;
(c) Anadarko System FERC Section 311 1996 Petition; and
(d) Palo Duro Texas Railroad Commission (TRC) "Application of
Transok L.L.C. pursuant to Section 311 of the Natural Gas
Policy Act for review of a transportation rate."
Notwithstanding the foregoing, the Seller reserves the right
for the Company and its Subsidiaries to agree with the appropriate Governmental
Authorities or other parties, at any time prior to the Closing, to settle all or
any part of the issues in such proceedings or litigation, including any issues
regarding the appropriate maximum rate, fuel component, rate of return or
58
other cost of service or rate design aspect, when such action is in the best
interest of the Company or such Subsidiary and could not reasonably be expected
to have a Material Adverse Effect on the Company.
From the date of this Agreement until the Closing, Seller
shall cause the Company and its Subsidiaries to use commercially reasonable
efforts to pursue the obtaining of the maximum rates requested in such
proceedings.
VI.14 Change of Name. Within 90 days following the Closing,
---------------
Purchaser shall cause the Company to remove the name "Tejas" from the Company's
name and neither the Company and its Subsidiaries nor Purchaser shall have any
right thereafter to the name "Tejas"for purposes of identification or otherwise.
VI.15 Termination of Transok Properties Indemnities. Effective
------------------------------------------------
at the Closing, without the need of any further action or documentation, the
eleventh paragraph shall be eliminated, canceled, and terminated from each of
the following agreements: (a) the Assignment and Indemnity Agreement relating to
Transok Properties, LLC, dated as of the 1st day of April, 1999, by and between
Tejas Transok Holding, LLC, and Tejas Gas, LLC, and (b) the Assignment and
Indemnity Agreement relating to Transok Properties, LLC, dated as of the 1st day
of February, 1999, by and between Transok, LLC, and Tejas Transok Holding, LLC.
VI.16 Intercompany Disputes. Any intercompany disputes between
---------------------
Seller and its Affiliates (other than the Company and the Company's
Subsidiaries), on the one hand, and the Company and the Company's Subsidiaries,
on the other hand, shall be resolved and settled prior to Closing.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
VII.1 General Conditions.
------------------
The obligations of each party to this Agreement to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction or, to the extent permitted by Law, waiver of the following
condition at or prior to the Closing:
No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order by any court of competent jurisdiction
or governmental or regulatory authority or instrumentality shall be
in effect that prohibits the consummation of the transactions contemplated by
this Agreement, and the applicable waiting period under the HSR Act shall have
terminated or expired.
59
VII.2 Conditions to Obligations of the Seller. The obligations
-------------------------------------------
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction or waiver at or prior to the Closing of
each of the following conditions:
(10 Except for nonperformance or noncompliance with agreements or
covenants by Purchaser that, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect on
the expected benefits to the Seller of the transactions contemplated
under this Agreement, Purchaser shall have performed and complied with
all agreements and covenants required to be performed and complied
with by Purchaser under this Agreement at or prior to the Closing;
(20 The representations and warranties of Purchaser contained in
this Agreement shall be true and correct at and as of the date of this
Agreement and at and as of the Closing Date as though restated on and
as of such date (except in the case of any representation or warranty
that by its terms is made as of a date specified therein, in which
case such representation or warranty shall be true and correct as of
such date), except where the failure of one or more representations or
warranties to be true and correct, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse
Effect on the expected benefits to the Seller of the transactions
contemplated under this Agreement;
(30 The Purchaser Guarantor shall have executed the Guaranty in
form and substance similar to that set forth in Exhibit E, pursuant to
---------
which such Purchaser Guarantor unconditionally guarantees fulfillment
of the obligations of Transok, LLC under the ISDA Agreement and the
Transok Swap Transaction;
(40 Purchaser shall have entered into the Storage Gas Purchase
Agreement; and
(50 Seller shall have received from Purchaser the Purchase Price
and Tejas Gas Marketing shall have received the Storage Gas Purchase
Consideration.
VII.3 Conditions to Obligations of Purchaser.
--------------------------------------
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver at
or prior to the Closing of each of the following conditions:
(10 Except for nonperformance or noncompliance with agreements or
covenants by Seller that, individually or in the aggregate, would not
reasonably be expected to result in a Material Breach, Seller shall
have performed and complied
60
with all agreements and covenants required to be performed and
complied with by Seller under this Agreement at or prior to the
Closing;
(20 There shall have been no Material Breach of the
representations and warranties of Seller in Articles III and IV of
this Agreement (in those instances in which a representation or
warranty is limited to Seller's knowledge and in those instances in
which a covenant, representation, or warranty is limited to matters
which would have a Material Adverse Effect, such limitations shall NOT
apply to such covenant, representation, or warranty for purposes of
Purchaser's conditions to Closing under Sections 7.03(a) and (b)) at
and as of the date of this Agreement and at and as of the Closing Date
which remain uncured for more than thirty (30) days following notice
from Purchaser to Seller of such Material Breach (it is understood the
cure may, among other options, take the form of a reduction in the
Purchase Price to offset the Damages resulting from such Material
Breach or Seller may indemnify Purchaser against the Damages incurred
by Purchaser as a result of such Material Breach);
(30 Purchaser shall have received the documents referred to in
Section 2.04;
(40 Purchaser shall have received from Seller the ▇▇▇▇ of Sale of
Natural Gas conveying the Greasy Creek Gas Inventory as referred to in
Section 2.06 and in writing the waiver of the Required Consents set
forth in Schedule 3.04 in the form attached as Exhibit F; and
------------- ---------
(50 Purchaser shall have received the resignation of all
officers, managers and directors of the Company and the Company's
Subsidiaries other than the Continued Employees.
ARTICLE VIII
TERMINATION
-----------
VIII.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing only as follows:
(10 by the mutual written agreement of Purchaser and Seller; or
(20 by either Purchaser or Seller if there shall be any Law or
regulation that makes the consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or if
consummation of the transactions
61
contemplated by this Agreement would violate any nonappealable final
Judgment of any Court or Governmental Authority having competent
jurisdiction.
VIII.2 Effect of Termination. If this Agreement is terminated
----------------------
as permitted under Section 8.01, such termination shall be without liability to
any party to this Agreement or to any Affiliate, or their respective
shareholders, directors, officers, employees, agents, advisors or
representatives, and following such termination no party shall have any
liability under this Agreement or relating to the transactions contemplated by
this Agreement to any other party; provided, however, that:
--------
(1) If the Closing does not occur on the Closing Date due to any
breach of this Agreement by Purchaser, Seller, at its option, may (i)
enforce specific performance, or (ii) terminate this Agreement in
which case Seller shall be entitled to indemnification from Purchaser
for all Damages (as defined below) arising as a result of such breach.
If Seller terminates this Agreement as a result of any breach of this
Agreement by Purchaser, Seller may retain the Deposit and accrued
interest thereon and apply said sum and accrued interest thereon
against any amounts awarded to Seller as indemnification for
Purchaser's breach. If the award for such Damages is less than the
Deposit, Seller will return the amount of the Deposit and accrued
interest thereon which is in excess of the award to Purchaser within
15 days after any such award becomes final and binding and the time
for filing all appeals has expired.
(2) If the Closing does not occur on the Closing Date due to any
breach of this Agreement by Seller, Purchaser, at its option, may
either (i) enforce specific performance of this Agreement, or (ii)
terminate this Agreement in which case, Purchaser shall be entitled to
the prompt return of the Deposit and accrued interest thereon and to
indemnification from Seller for all Damages arising as a result of
such breach by Seller.
(3) Notwithstanding anything to the contrary contained herein, if
the Closing does not occur on the Closing Date for any reason other
than Purchaser's breach of this Agreement, then Seller shall return
the Deposit and accrued interest at the Interest Rate.
The provisions of this paragraph and the Confidentiality Agreement shall survive
any termination of this Agreement pursuant to this Article.
62
ARTICLE IX
INDEMNIFICATION; SURVIVAL
-------------------------
IX.1 Indemnification by Purchaser. Purchaser hereby
----------------------------------
indemnifies and holds harmless Seller and its Affiliates from and against (a)
any and all claims, liabilities, damages, penalties, Judgments, assessments,
losses, costs and expenses, including reasonable attorneys' fees (collectively,
"Damages"), arising in connection with the Company and its Subsidiaries from
events, conditions or occurrences after the Closing, (b) any and all Damages
incurred by Seller and its Affiliates in connection with (i) a breach of any
representation or warranty made by Purchaser in Article V, and (ii) any failure
by Purchaser to perform any covenant or other agreement hereunder. Nothing
herein shall be interpreted or construed to limit Purchaser's or the Company's
rights under the CSW Indemnity.
IX.2 Indemnification by Seller. Seller shall indemnify and
---------------------------
hold harmless Purchaser and its Affiliates from and against (a) Damages for a
breach of the representations, warranties or covenants contained in the
following Sections: 3.02; 3.07; 4.04; 4.07; 4.11; 4.13; 4.14; 4.15; 6.01,
arising in connection with the Company and its Subsidiaries that arise from
events, conditions or occurrences prior to the Closing and provided further that
claims for Damages arising from a breach of the representations, warranties and
covenants set forth in Sections 4.13; 4.14 and 6.01 are raised within one year
following the Closing and Damages arising from a breach of the representations
and warranties set forth in Sections 3.02; 3.07; 4.04; 4.11 and 4.15 are raised
within two years of Closing, (b) Damages for breach of the representations and
warranties contained in Section 4.08, but only to the extent such Damages result
from events occurring between June 6, 1996, and the Closing and provided further
that any such claims for Damages arising from a breach of the representations
and warranties set forth in Section 4.08 are raised within18 months following
the Closing, (c) all Taxes, including any and all interest, penalties or other
assessments related thereto, attributable to the operations of the Company and
its Subsidiaries for any taxable period ending prior to the Closing Date
(treating any taxable period that does not close prior to such time as a short
taxable period ending at such time).
IX.3 Indemnification Procedure. The party or parties making a
---------------------------
claim for indemnification under this Article IX shall be, for the purposes of
this Agreement, referred to as the "Indemnified Party" and the party or parties
-----------------
against whom such claims are asserted under this Article IX shall be, for the
purposes of this Agreement, referred to as the "Indemnifying Party". All claims
------------------
by any Indemnified Party under this Article IX shall be asserted and resolved as
follows:
(1) In the event that (i) any claim, demand or Proceeding is
asserted or instituted by any Person other than the parties to this
Agreement or their Affiliates which could give rise to Damages for
which an Indemnifying Party could be liable to an Indemnified Party
under this Agreement (such claim, demand or Proceeding, a "Third Party
-----------
Claim") or (ii) any Indemnified Party under this
-----
63
Agreement shall have a claim to be indemnified by any Indemnifying
Party under this Agreement which does not involve a Third Party Claim
(such claim, a "Direct Claim"), the Indemnified Party shall with
-------------
reasonable promptness send to the Indemnifying Party a written notice
specifying the nature of such claim, demand or Proceeding and the
amount or estimated amount thereof (which amount or estimated amount
shall not be conclusive of the final amount, if any, of such claim,
demand or Proceeding) (a "Claim Notice"), provided that a delay in
-------------
notifying the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations under this Agreement except to the extent
that (and only to the extent that) such failure shall have caused the
Damages for which Indemnifying Party is obligated to be greater than
such Damages would have been had the Indemnified Party given the
Indemnifying Party proper notice.
(2) In the event of a Third Party Claim, the Indemnifying Party
shall be entitled to appoint counsel of the Indemnifying Party's
choice at the expense of the Indemnifying Party to represent the
Indemnified Party and any others the Indemnifying Party may reasonably
designate in connection with such claim, demand or Proceeding (in
which case the Indemnifying Party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by any
Indemnified Party except as set forth below); provided that such
--------
counsel is reasonably acceptable to the Indemnified Party.
Notwithstanding an Indemnifying Party's election to appoint counsel to
represent an Indemnified Party in connection with a Third Party Claim,
an Indemnified Party shall have the right to employ separate counsel,
and the Indemnifying Party shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel selected
by the Indemnifying Party to represent the Indemnified Party would
present such counsel with a conflict of interest or (ii) the
Indemnifying Party shall not have employed counsel to represent the
Indemnified Party within a reasonable time after notice of the
institution of such Third Party Claim. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim, demand or
Proceeding which the Indemnifying Party defends, or, if appropriate
and related to the claim, demand or Proceeding in question, in making
any counterclaim against the Person asserting the Third Party Claim,
or any cross-complaint against any Person. No Third Party Claim may be
settled or compromised (i) by the Indemnified Party without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed or (ii) by the Indemnifying Party
without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld or delayed. In the event
any Indemnified Party settles or compromises or consents to the entry
of any Judgment with respect to any Third Party Claim without the
prior written consent of the Indemnifying Party, each Indemnified
Party shall be deemed to have
64
waived all rights against the Indemnifying Party for indemnification
under this Article IX.
(3) In the event of a Direct Claim, the Indemnifying Party shall
notify the Indemnified Party within 30 Business Days of receipt of a
Claim Notice whether or not the Indemnifying Party disputes such
claim.
(4) From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party, each
Indemnified Party shall grant the Indemnifying Party and its
representatives all reasonable access to the books, records and
properties of such Indemnified Party to the extent reasonably related
to the matters to which the Claim Notice relates. All such access
shall be granted during normal business hours and shall be granted
under conditions which will not unreasonably interfere with the
business and operations of such Indemnified Party. The Indemnifying
Party will not, and shall require that its representatives do not, use
(except in connection with such Claim Notice) or disclose to any third
Person other than the Indemnifying Party's representatives (except as
may be required by applicable Law) any information obtained pursuant
to this Section 9.03(d) which is designated as confidential by an
Indemnified Party.
IX.4 Survival. Except for the representations, warranties and
--------
covenants set forth in Sections 3.02, 3.07, 4.04, 4.07, 4.08 (but only as they
pertain to events occurring between June 6, 1996, and the Closing), 4.11, 4.13,
4.14, 4.15, and 6.01, none of the representations and warranties of the Seller,
and none of Seller's covenants which are to be performed prior to the Closing,
shall survive the Closing. The representations and warranties of the Seller in
Section 4.07 shall survive the Closing and shall expire on the applicable Tax
Statute of Limitations Date; and the representations, warranties and covenants
of Seller in Sections 3.02, 3.07, 4.04, 4.11 and 4.15 shall survive the Closing
for two years, the representations and warranties of Seller in Section 4.08 as
they pertain to events occurring between June 6, 1996, and the Closing shall
survive the Closing for 18 months, and those set forth in Sections 4.13, 4.14
and 6.01 shall survive the Closing for one year. All representations, warranties
and covenants made by the Purchaser shall survive the Closing. No
indemnification with respect to any representation, warranty, or covenant shall
be owed by Seller on any claims made after the relevant expiration date thereof.
IX.5 Indemnification Limitation. Seller's obligation to
-----------------------------
indemnify Purchaser as provided in Section 9.02 shall not become effective until
the aggregate of all such claims shall have exceeded $10,000,000; provided
further that any Purchase Price Adjustments to be made pursuant to Section 2.07
shall not be subject to this $10,000,000 threshold.
IX.6 Excluded Proceeding. Seller shall indemnify and hold
---------------------
harmless Purchaser and its Affiliates from and against Damages resulting from
the Excluded Proceeding.
65
ARTICLE X
GENERAL PROVISIONS
------------------
X.1 Expenses and Taxes; Tax Returns.
-------------------------------
(1) Each party to this Agreement shall pay all fees and expenses
incurred by it in connection with this Agreement and the transactions
contemplated by this Agreement. The parties to this Agreement agree
that all applicable excise, sales, transfer, documentary, filing,
recordation and other similar Taxes, levies, fees and charges, if any
(including all real estate transfer taxes and conveyance and recording
fees, if any, but excluding Seller's income taxes and any franchise
taxes arising as a result of the transactions contemplated by this
Agreement) that may be imposed upon, or payable or collectible or
incurred in connection with, this Agreement and the transactions
contemplated by this Agreement shall be borne by Purchaser. Each party
to this Agreement agrees to file all necessary documentation
(including all Tax Returns) with respect to such Taxes in a timely
manner.
(2) Seller shall timely file (taking into account any extensions
received from the relevant Tax authorities) all Tax Returns accurately
reflecting the operations of the Company and its Subsidiaries for
periods ending prior to the Closing Date and shall pay all Taxes with
respect thereto. Purchaser shall timely file (taking into account any
extensions received from the relevant Tax authorities) all Tax Returns
accurately reflecting the operations of the Company and its
Subsidiaries for periods ending on or after the Closing Date and shall
pay all Taxes with respect thereto. For any period that begins before
and ends after the Closing Date, the Taxes required to be shown on
such Tax Returns shall be apportioned between Purchaser and Seller
based on an interim closing of the books except that real and personal
property taxes, franchise taxes and other items of expense that accrue
ratably over the period in question shall be apportioned to the
portion of such period that ends at midnight of the day before the
Closing Date and to the portion of the period that ends thereafter on
a per diem basis; provided, however, that any state income or
franchise taxes arising as a result of the transaction contemplated by
this Agreement shall be borne entirely by Seller. Seller shall forward
any tax returns or tax bills immediately upon receipt. Purchaser shall
promptly notify Seller upon the receipt of any Tax statement or other
notice of Tax due for any period for which Purchaser is required to
file Tax Returns and pay Taxes under this Section 10.01(b). Purchaser
shall be entitled to reimbursement from Seller, and Seller shall pay
to Purchaser within ten (10) days after receipt of notice from
Purchaser, the portions of any such Taxes which are
66
apportioned to Seller or for which Seller has responsibility under
Section 9.02 or this Section 10.01(b).
(3) Seller shall be responsible for all Taxes owed by the Company
and its Subsidiaries with respect to its operations prior to the
Closing Date.
X.2 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed by Purchaser and Seller. Notwithstanding the
foregoing, Seller acknowledges and agrees that Purchaser may assign its rights
to purchase the Membership Interests and its obligations under this Agreement to
one or more wholly owned subsidiaries of Purchaser; provided that no such
--------
assignment shall relieve Purchaser of its obligations under this Agreement.
X.3 Waiver. Either Purchaser or Seller may (a) extend the time
------
for the performance of any of the obligations or other acts of the other, (b)
waive any inaccuracies in the representations and warranties of the other
contained in this Agreement or in any document delivered by the other pursuant
to this Agreement or (c) waive compliance with any of the agreements, or
satisfaction of any of the conditions, contained in this Agreement by the other.
Any agreement on the part of a party to this Agreement to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party against whom enforcement is sought.
X.4 Notices. Any notices or other communications required or
-------
permitted under, or otherwise in connection with, this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission or on
receipt after dispatch by registered or certified mail, postage prepaid,
addressed, as follows:
If to Seller:
Tejas Gas, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Tejas Energy, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
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Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser to:
Enogex Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Enogex Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President Business Development
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as the person to whom notice is to be given has furnished
in writing to the other parties. A notice of change in address shall not be
deemed to have been given until received by the addressee.
X.5 Headings and Schedules. The descriptive headings of the
------------------------
Articles and Sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement. The disclosure or inclusion of any
matter or item on any schedule to the Disclosure Memorandum shall not be deemed
an acknowledgment or admission that any such matter or item is required to be
disclosed or is material for purposes of the representations and warranties set
forth in this Agreement. Any disclosure made for purposes of, and included in,
any to the Disclosure Memorandum shall be deemed made and disclosed to Purchaser
for purposes of all representations and warranties made in this Agreement.
X.6 Applicable Law. This Agreement shall be governed by and
---------------
construed in accordance with the laws of the State of Texas regardless of
principles of conflicts of laws.
X.7 No Third Party Rights. Except as specifically provided in
---------------------
Article IX, this Agreement is intended to be solely for the benefit of the
parties to this Agreement and is not intended to confer any benefits upon, or
create any rights in favor of, any Person other than the parties to this
Agreement.
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X.8 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
X.9 Severability. If any provision of this Agreement shall be
------------
held invalid, illegal or unenforceable, the validity, legality or enforceability
of the other provisions of this Agreement shall not be affected thereby, and
there shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
X.10 Entire Agreement. This Agreement (including the documents
-----------------
and instruments referred to in this Agreement) sets forth the entire
understanding and agreement among the parties as to the matters covered in this
Agreement and supersedes and replaces any prior understanding, agreement or
statement of intent, in each case, written or oral, of any and every nature with
respect to such understanding, agreement or statement other than the
Confidentiality Agreement.
X.11 Arbitration; Waiver.
-------------------
(1) Except as provided in Section 2.07, any controversy or claim,
whether based on contract, tort, statute or other legal or equitable
theory (including but not limited to any claim of fraud,
misrepresentation or fraudulent inducement or any question of validity
or effect of this Agreement including this clause) arising out of or
related to this Agreement (including any amendments or extensions), or
the breach of termination hereof or any right to indemnity hereunder
shall be settled by arbitration in accordance with the then current
CPR Institute for Dispute Resolution Rules for Non-Administered
Arbitration of Business Disputes, and this provision. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C.
1-16, to the exclusion of any provision of state law inconsistent
therewith or which would produce a different result, and judgment upon
the award rendered by the arbitrator may be entered by any court
having jurisdiction. The arbitration shall be held in ▇▇▇▇▇▇ County,
Texas. There shall be one arbitrator. The arbitrator shall determine
the claims of the parties and render a final award in accordance with
the substantive law of the State of Texas, excluding the conflicts
provisions of such law. The arbitrator shall not be precluded from
granting injunctive relief if it determines such relief is
appropriate. The arbitrator shall set forth the reasons for the award
in writing.
(2) Without in any way limiting Section 10.11(a), each of the
parties hereto hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or the
actions of any of them in the negotiation, administration, performance
and enforcement thereof.
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X.12 Fair Construction. This Agreement shall be deemed to be
------------------
the joint work product of the Purchaser and Seller without regard to the
identity of the draftsperson, and any rule of construction that a document shall
be interpreted or construed against the drafting party shall not be applicable.
X.13 Forwarding Notices. If Seller or any of the Seller's
--------------------
Affiliates receives on or after the Closing any notice concerning any matter
(including, without limitation, any tax matter) relating to the business of the
Company or its Subsidiaries, Seller or Seller's Affiliates shall promptly
provide such notice to the Company or its Subsidiaries. If either the Purchaser,
the Company or any of its Subsidiaries receives on or after the Closing any
notice concerning any matter relating to a pre-Closing event or any matter for
which Seller may have any liability under the terms of this Agreement (including
Taxes relating to the period prior to the Closing and Seller's representations,
warranties and covenants which survive the Closing), Purchaser or such other
recipient, as applicable, shall promptly provide such notice to Seller.
Each of the parties to this Agreement has caused this Agreement
to be executed on its behalf by its duly authorized officer, all as of the day
and year first above written.
TEJAS GAS, LLC
By: ________________________________
Title: ________________________________
ENOGEX INC.
By: ________________________________
Title: ________________________________
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EXHIBIT A
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KNOWLEDGE OF SELLER
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▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Street
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EXHIBIT B
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KNOWLEDGE OF PURCHASER
----------------------
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT C
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▇▇▇▇ OF SALE AND ASSIGNMENT OF MEMBERSHIP INTERESTS OF
------------------------------------------------------
TEJAS GAS, LLC
--------------
This ▇▇▇▇ of Sale and Assignment of Membership Interests
("▇▇▇▇ of Sale"), dated _______________, 1999, is by and between Tejas Gas, LLC,
a Delaware limited liability company ("Seller"), and Enogex Inc., an Oklahoma
corporation ("Purchaser"). This ▇▇▇▇ of Sale is being entered into pursuant to
and in accordance with the terms and conditions of Section 2.04 of the Purchase
Agreement, dated as of May 14, 1999; between Seller and Purchaser (the "Purchase
Agreement"). Capitalized terms used but not otherwise defined in this ▇▇▇▇ of
Sale shall have the same meanings as set forth in the Purchase Agreement.
In consideration of the payment by Purchaser to Seller in the
amount of $___________ and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller, intending to
be legally bound, does hereby sell, transfer, convey, assign and deliver to
Purchaser, as of the Closing Date, free and clear of all Liens, all of Seller=s
right, title and interest in and to all of the Membership Interests owned by
Seller.
From time to time after the date of this ▇▇▇▇ of Sale, Seller,
without further consideration but at Purchaser's expense, will execute, deliver
and record or cause to be executed, delivered and recorded such other
instruments of conveyance, assignment, transfer and delivery and will take such
other actions as Purchaser may reasonably request in order to more effectively
transfer, convey, assign and deliver to Purchaser, and to place Purchaser in
possession and control of the Membership Interests previously owned by Seller,
or to enable Purchaser to exercise and enjoy all rights and benefits of Seller's
Membership Interests in Tejas Transok Holding, LLC.
This ▇▇▇▇ of Sale shall be governed by and construed in
accordance with the laws of the State of Texas.
TEJAS GAS, LLC ENOGEX INC.
By:_______________________________ By:______________________________
Name: Name:
Title: Title:
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EXHIBIT D
---------
ALLOCATION OF PURCHASE PRICE
----------------------------
Asset % of Purchase Price Asset Class IRC 1060
----- ------------------- --------------------
Tangibles 15 year 8.0 III
Tangibles 9 year 55.0 III
Tangibles 4 year 34.7 III
Tangibles 3 year 0.3 III
Cushion Gas 2.0 III
Total 100%
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EXHIBIT E
---------
GUARANTY
--------
This guaranty ("Guaranty") dated as of __________, 1999, is entered into by
_________, a _______ corporation ("Guarantor"), in favor of Tejas Energy, LLC, a
Delaware limited liability company ("Counterparty").
RECITALS:
--------
A. Transok, LLC ("Guaranteed Party") and Counterparty have entered into
an ISDA Master Agreement, dated as of April 1, 1999, and related Transok Swap
Transaction (as defined in that certain Purchase Agreement, dated as of May 14,
1999, between Tejas Gas, LLC and Enogex Inc. (such ISDA Master Agreement, as the
same may from time to time be modified, amended, supplemented, replaced,
renewed, or extended shall be referred to herein collectively as the
"Agreement").
B. Guaranteed Party is a subsidiary or affiliate of Guarantor and
Guarantor will directly or indirectly benefit from the Agreement between
Counterparty and Guaranteed Party;
1. GUARANTY. Subject to the terms and conditions hereof, Guarantor hereby
--------
irrevocably and unconditionally guarantees the timely payment when due of the
payment obligations of Guaranteed Party to Counterparty under the Transok Swap
Transaction and the Agreement (the "Obligations"). To the extent that Guaranteed
Party shall fail to pay any Obligation, Guarantor shall promptly pay to
Counterparty the amount due. This Guaranty shall constitute a guarantee of
payment and not of collection.
2. LIMITATIONS. Guarantor's liability for Obligations or other costs and
-----------
expenses under this Guaranty is limited in the aggregate to US $50 million (the
"Guaranty Cap"). Guarantor will not be obligated to monitor the amount of
Guaranteed Party's Obligations to Counterparty, and Counterparty will bear the
risk that the aggregate amount of the Obligations exceeds the Guaranty Cap. IN
NO EVENT SHALL GUARANTOR BE SUBJECT HEREUNDER TO CONSEQUENTIAL, EXEMPLARY,
EQUITABLE, LOSS OF PROFITS, PUNITIVE, OR ANY OTHER DAMAGES, EXCEPT TO THE EXTENT
SPECIFICALLY PROVIDED IN THE TRANSOK SWAP TRANSACTION OR THE AGREEMENT TO BE DUE
FROM GUARANTEED PARTY. Guarantor reserves the right to assert defenses which
Guaranteed Party may have to payment of any Obligation under the Agreement,
other than defenses arising from the bankruptcy, insolvency, dissolution, or
liquidation of Guaranteed Party and other defenses expressly waived herein.
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3. TERM. This Guaranty shall remain in full force and effect until December 31,
----
2000. Termination shall not affect, release or discharge Guarantor's liability
with respect to any Obligations existing or arising under the Transok Swap
Transaction and/or the Agreement prior to the date of termination.
4. NATURE OF GUARANTY. The Guarantor's obligations hereunder with respect to any
------------------
Obligation shall not be limited, diminished, or otherwise affected by the
existence, validity, enforceability, perfection, release, or extent of any
collateral for such Obligations. Counterparty shall not be obligated to file any
claim relating to the Obligations owing to it in the event that Guaranteed Party
becomes subject to a bankruptcy, reorganization, or similar proceeding, and the
failure of Counterparty to so file shall not affect the Guarantor's obligations
hereunder. In the event that any payment to Counterparty in respect to any
Obligations is rescinded or must otherwise be returned for any reason
whatsoever, the Guarantor shall remain liable hereunder in respect to such
Obligations as if such payment had not been made.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that (a) it
------------------------------
is duly organized and validly existing under the laws of the jurisdiction in
which it was organized and has the power and authority to execute, deliver, and
perform this Guaranty; (b) no authorization, approval, consent or order of, or
registration or filing with, any court or other governmental body having
jurisdiction over Guarantor is required on the part of Guarantor for the
execution and delivery of this Guaranty; and (c) this Guaranty constitutes a
valid and legally binding agreement of Guarantor, and is enforceable against
Guarantor, except as the enforceability of this Guaranty may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor's rights generally and by general principles of
equity.
6. SUBROGATION. Guarantor waives its right to be subrogated to the rights of
-----------
Counterparty with respect to any Obligations paid by Guarantor until all
Obligations have been fully and indefeasibly paid to Counterparty, subject to no
rescission or right of return, and Guarantor has fully and indefeasibly
satisfied all of Guarantor's obligations under this Guaranty. Upon such payment,
Guarantor shall be subrogated to the rights of the Counterparty against the
Guaranteed Party. The Conterparty agrees to take such reasonable steps as
Guarantor may request to implement such subrogation.
7. WAIVERS. Guarantor hereby waives (a) notice of acceptance of this Guaranty;
-------
(b) presentment and demand concerning the liabilities of Guarantor; (c) any
right to require that any action or proceeding be brought against Guaranteed
Party or any other person, or to require that Counterparty seek enforcement of
any performance against Guaranteed Party or any other person, prior to any
action against Guarantor under the terms hereof; (d) notice of the amounts and
terms of any swap, option or other financially settled transaction with
Guaranteed Party or of any modifications, renewals, replacements, or extensions
thereof; (e) notice of any extension of time for the payment of any sums due and
payable to Counterparty ; (f) with respect to any notes or evidences of
indebtedness received by Counterparty from Guaranteed Party, notice of
76
presentment, demand for payment, protest, or notice of protest; and (g) notice
of any dishonor or default by, or disputes with, Guaranteed Party. Except as to
applicable statutes of limitation, no delay of Counterparty in the exercise of,
or failure to exercise, any rights hereunder shall operate as a waiver of such
rights, a waiver of any other rights, or a release of Guarantor from any
obligations hereunder.
8. NOTICE. Any demand, notice, request, instruction, correspondence or other
------
document to be given hereunder (herein collectively called "Notice") shall be in
writing and delivered personally or mailed by certified mail, postage prepaid
and return receipt requested, or by facsimile, to Guarantor or to Counterparty
at their respective addresses set forth below. Notice given by personal delivery
or mail shall be effective upon actual receipt. Notice given by facsimile 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. Any party
may change any address to which Notice is to be given to such party by giving
Notice thereof as provided above.
9. MISCELLANEOUS. No term or provision of this Guaranty shall be amended,
-------------
modified, altered, waived, or supplemented except in a writing signed by the
party against whom enforcement is sought. This Guaranty embodies the entire
agreement of the parties, and supersedes all prior agreements and understandings
of the parties, with respect to the subject matter hereof. This Guaranty shall
be binding upon Guarantor, its successors and assigns and shall inure to the
benefit of and be enforceable by Counterparty, its successors and assigns. THIS
GUARANTY SHALL BE IN ALL RESPECTS GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
[GUARANTOR]
By:___________________________________
Name:_________________________________
Title:________________________________
ADDRESS FOR NOTICES:
COUNTERPARTY: GUARANTOR:
Tejas Energy, LLC ______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ______________________________________
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ______________________________________
Attn: Chief Financial Officer Attn:_________________________________
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.:______________________________
77
EXHIBIT F
---------
WAIVER OF REQUIRED CONSENTS
---------------------------
Enogex Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Two
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Purchase Agreement Dated as of May 14, 1999 (the "Agreement"),
by and between Tejas Gas, LLC ("Seller") and Enogex Inc.
("Purchaser")
Gentlemen:
Shell Oil Company hereby consents to Purchaser's acquisition of Tejas
Transok Holding, LLC, and certain of its subsidiaries ("Transok"), from Seller
and hereby waives any and all rights that Shell Oil Company has to purchase
Transok.
Sincerely yours,
SHELL OIL COMPANY
By:___________________________________
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