EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BETWEEN
AMOCO PRODUCTION COMPANY
("SELLER")
AND
TEJAS GAS CORP.
("PURCHASER")
DATED
NOVEMBER 6, 1997
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TABLE OF CONTENTS
SECTIONS OF THE DISCLOSURE SCHEDULE
SECTION # DISCLOSURE SCHEDULE
4.4 Subsidiaries
4.5 Financial Statements
4.6 Absence of Undisclosed Liabilities
4.7 Assets
4.8(a) Owned Real Property
4.8(b) Rights-of-Way
4.8(c) Leases
4.9 Material Contracts
4.10 Environmental Matters
4.11 Litigation
4.14 Absence of Changes
7.2(b) Seller Consents
7.3(b) Purchaser Consents
9.3(f)(i) Employee Benefit Plans and Policies
9.3(f)(vi) Severance
9.5 Employees
EXHIBITS
EXHIBIT # EXHIBIT NAME PAGE NO.
--------- ------------ --------
1.1 Working Capital 7
7.2(e) Form of Opinion of Seller's Counsel 18
7.2(a) Form of Assignment and Assumption Agreement 18
7.2(h) Utilities Agreement 18
7.2(i) Form of Affiliate Contract Amendments 18
7.3(d) Form of Opinion of Purchaser's Counsel 19
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made on the 6th day of
November, 1997, by and between Tejas Gas Corp., a corporation incorporated under
the laws of Nevada and having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (the "PURCHASER") and Amoco Production Company, a corporation
incorporated under the laws of the State of Delaware, United States of America
and having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (the "SELLER"). The Purchaser and the Seller are
sometimes referred to herein as the "PARTIES." Unless otherwise indicated,
capitalized terms used but not defined prior to the first usage herein are
defined in Article I.
RECITALS
A. The Seller owns one hundred percent (100%) of the issued and outstanding
capital stock of Amoco Gas Company, a Delaware corporation (the
"COMPANY").
B. The Seller desires to sell, and the Purchaser desires to purchase, all of
the issued and outstanding capital stock of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, provisions and covenants contained in this Agreement, the Parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITION OF CERTAIN TERMS. The terms defined in this Section 1.1,
whenever used in this Agreement (including in the Disclosure Schedule), shall
have the respective meanings indicated below for all purposes of this Agreement.
"ACTION" means any action, complaint, petition, investigation, suit
or other proceeding, whether civil or criminal, in law or in equity, or before
any arbitrator, mediator or Governmental Authority.
"AETC" shall have the meaning ascribed to such term in Section
7.2(g).
"AETC CONTRACTS" shall have the meaning ascribed to such term in
Section 3.3 hereof.
"AFFILIATE" of a Person means a Person that directly or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, the first Person.
"AGREEMENT" means this Stock Purchase Agreement, including the
Disclosure Schedule hereto and all Exhibits, Schedules or other attachments.
"AMOCO AFFILIATE" means any company wholly owned, directly or
indirectly by Amoco Corporation, an Indiana corporation.
"AMOCO SAVINGS PLAN" shall have the meaning ascribed to such term in
Section 9.3(f) (iii) hereof.
"APPLICABLE LAW" means all applicable provisions of all (i) Laws
and (ii) Governmental Approvals.
"AMOCO RETIREMENT PLAN" shall have the meaning ascribed to such term
in Section 9.3(f)(ii) hereof.
"AMOCO SEVERANCE PLAN" shall have the meaning ascribed to such term
in Section 9.3(f)(vi) hereof.
"AUDIT PROCEEDINGS" shall have the meaning ascribed to such term in
Section 8.2 hereof.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to be closed in the State of Texas.
"CLOSING" shall have the meaning ascribed to such term in Section
3.1 hereof.
"CLOSING DATE" shall have the meaning ascribed to such term in
Section 3.1 hereof.
"CLOSING DATE VOLUME" shall have the meaning ascribed to such term
in Section 3.2(c) hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall mean Amoco Gas Company, a Delaware corporation.
"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed to such
term in Section 6.6 hereof.
"CONFIDENTIAL INFORMATION" shall mean any information concerning
the business and affairs of the Company.
"CONSENT" means any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority, in each
case only if the failure to obtain, file, report or give notice would be
material to the Company.
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"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"DECEMBER 31, 1996 FINANCIAL STATEMENTS" shall have the meaning
ascribed to such term in Section 4.5 hereof.
"DISCLOSURE SCHEDULE" shall have the meaning ascribed to such term
in Article IV hereof.
"EMPLOYEE PLANS" means all of the Company's employee benefit plans
established, maintained or contributed to by the Company or Amoco Corporation in
which active or retired employees of the Company or their beneficiaries
participate as listed in Section 9.3(f)(i) of the Disclosure Schedule.
"EMPLOYEES" means all employees of the Company as listed on
Section 9.5 of the Disclosure Schedule.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESTIMATED PURCHASE PRICE" shall have the meaning ascribed to such
term in Section 3.2(a).
"FINANCIAL ADJUSTMENT AMOUNT" shall have the meaning ascribed to
such term in Section 3.2(c) hereof.
"FINAL PURCHASE PRICE CALCULATION" shall have the meaning ascribed
to such term in Section 3.2(b) hereof.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term
in Section 4.5 hereof.
"GAAP" shall mean generally accepted accounting principles.
"GOVERNMENTAL APPROVAL" means any Consent of any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof (including executive, legislative,
judicial, regulatory, or administrative bodies thereof).
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT" means the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
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"HOUSTON SHIP CHANNEL INDEX" shall have the meaning ascribed to such
term in Section 3.2(c) hereof.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such term in
Section 11.3 hereof.
"INDEMNIFYING PARTY" shall have the meaning ascribed to such term in
Section 11.3 hereof.
"JUNE 30, 1997 BALANCE SHEET" shall have the meaning ascribed to
such term in Section 4.5 hereof.
"JUNE 30, 1997 FINANCIAL STATEMENTS" shall have the meaning ascribed
to such term in Section 4.5 hereof.
"LAW" means any law, statute, regulation, code, ordinance, rule,
order, judgment, Consent, decree, settlement agreement, governmental
requirement, permit or license having the force of law enacted, promulgated,
entered into, agreed, granted or imposed by any Governmental Authority.
"LAZARD" shall have the meaning ascribed to such term in Section
4.15 hereof.
"LEASES" shall have the meaning ascribed to such term in Section
4.8(c) hereof.
"LEAVE" shall have the meaning ascribed to such term in 9.3(f)(i)
hereof.
"LIEN" means any mortgage, pledge, security interest, charge,
right-of-way, easement, encroachment or encumbrance.
"LOSS" means any loss, liability, deficiency, damage, claim or
expense (including without limitation reasonable legal fees and expenses and
fines and penalties).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition of the Company, taken as a whole.
"MATERIAL CONTRACTS" shall have the meaning ascribed to such term in
Section 4.9 hereof.
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
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"OWNED REAL PROPERTY" shall have the meaning ascribed to such term
in Section 4.8(a) hereof.
"PAD GAS" shall have the meaning ascribed to such term in Section
3.2(c) hereof.
"PERMITTED LIENS" means (i) Liens securing liabilities which are
reflected or reserved against in the Financial Statements to the extent so
reflected or reserved, (ii) liens of carriers, warehousemen, mechanics and
materialmen and incurred in the Ordinary Course of Business that individually
and in the aggregate do not have a Material Adverse Effect; (iii) zoning,
entitlements, land use, easements, rights of way, restrictions of record and
other similar charges and encumbrances, or (iv) Liens that, individually and in
the aggregate, do not materially detract from the value of any of the property
or assets of the Company or materially interfere with the use thereof as
currently used.
"PERSON" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or a Governmental Authority.
"POTENTIAL SURPLUS EMPLOYEE" shall have the meaning ascribed to such
term in Section 9.5 hereof.
"PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.2 hereof.
"PURCHASER'S SAVINGS PLAN" shall have the meaning ascribed to such
term in Section 9.3(f)(iii) hereof.
"PURCHASER'S PENSION PLAN" shall have the meaning ascribed to such
term in Section 9.3(f)(ii) hereof.
"REAL PROPERTY" means the Owned Real Property, the Rights-of-Way
and the Leases.
"REASONABLE EFFORTS" means reasonable efforts which are commercially
reasonable under the circumstances, excluding the payment of any money or other
consideration to any third party or the commencement of any litigation or
arbitration.
"RIGHTS-OF-WAY" shall have the meaning ascribed to such term in
Section 4.8(b) hereof.
"SALES AND TRANSFER TAXES" shall have the meaning ascribed to such
term in Section 8.1 hereof.
"SHARES" shall have the meaning ascribed to such term in Section 4.4
hereof.
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"▇▇▇▇▇▇▇▇ RIDGE STORAGE CAVERN" shall mean the ▇▇▇▇▇▇▇▇ Ridge gas
storage facility.
"STOCK POWER" means a duly executed assignment document for the
Shares.
"SUBSIDIARY" means, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"TAX" or "TAXES" means all taxes, charges, fees, duties, levies or
other assessments, including without limitation any local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, environmental, customs, capital
stock, franchise, employee income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
similar tax, governmental fee, governmental assessment or governmental charge of
any kind whatsoever, including any interest, penalties or additions to Tax or
additional amounts with respect to the foregoing.
"TAX RETURNS" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"THRESHOLD" shall have the meaning ascribed to such term in Section
11.4 hereof.
"TRANSACTION DOCUMENTS" means this Agreement, the Stock Power and
the agreements and other documents described in Sections 7.2 and 7.3.
"TRANSACTION EXPENSES" shall have the meaning ascribed to such term
in Section 9.3(b) hereof.
"TRANSFER DATE" shall have the meaning ascribed to such term in
Section 9.5 hereof.
"TRANSITION PERIOD" shall have the meaning ascribed to such term in
Section 9.5 hereof.
"WARN AND WARN OBLIGATIONS" shall have the meanings ascribed to such
terms in Section 9.3(f)(xi) hereof.
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"WORKING CAPITAL OF THE COMPANY" shall mean those current assets of
the Company and its subsidiaries minus those current liabilities of the Company
and its subsidiaries described in Exhibit 1.1 hereof.
"WORKING GAS" shall have the meaning ascribed to such term in
Section 3.2(c) hereof.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) ACCOUNTING TERMS. Accounting terms (if any) which are not
otherwise defined in this Agreement have the meanings given to them under
GAAP.
(b) HEREOF, ETC. The "HEREOF," "HEREIN" and "HEREUNDER" and terms of
similar import are references to this Agreement as a whole and not to any
particular provision of this Agreement. The term "including" as used in
this Agreement is used to list items by way of example and shall not be
deemed to constitute a limitation of any term or provision contained
herein. As used in this Agreement, the singular or plural number shall be
deemed to include the other whenever the context so requires. Article,
Section, clause, Exhibit and Section of Disclosure Schedule references
contained in this Agreement are references to Articles, Sections, clauses,
Exhibits and Sections of the Disclosure Schedule in or to this Agreement,
unless otherwise specified.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE SHARES. On the terms and subject to the
conditions set forth herein, at the Closing (as defined below), the Seller shall
sell to the Purchaser, and the Purchaser shall purchase from the Seller, the
Shares (as defined below).
2.2 PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") payable to the Seller
shall be an amount equal to $162,100,000; plus (i) the amount by which the
Working Capital of the Company as of the Closing exceeds zero or minus the
amount by which the Working Capital of the Company as of the Closing is less
than zero, as the case may be, plus or minus, as the case may be, (ii) the
amount by which the value of the Working Gas on the Closing differs from the
value of the Working Gas on the date hereof, plus or minus, as the case may be,
(iii) the amount by which the value of the natural gas attributable to the
Company pipeline imbalances ("Pipeline Imbalances") at the Closing differs from
the value of the Pipeline Imbalances on the date hereof.
(b) The Estimated Purchase Price, determined as provided in Section 3.2,
shall be paid by the Purchaser to the Seller by wire transfer of immediately
available funds, to the
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account of the Seller at the Chase Manhattan Bank, New York, New York, Account
No. ▇▇▇-▇▇▇-▇▇▇▇ (Route No. 221-000-021), at the Closing and the Purchase Price
shall be determined and paid as provided in Section 3.2. The Seller shall
furnish to the Purchaser written wiring instructions not less than one Business
Day prior to the Closing.
ARTICLE III
CLOSING
3.1 THE CLOSING. The closing of the purchase and sale of the Shares (the
"CLOSING") shall take place at the offices of the Seller at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 2:00 p.m. local time on the third Business Day
following the satisfaction or waiver of all conditions to the obligations of the
Parties hereto to consummate the transactions contemplated hereby or such other
date as the Purchaser and the Seller may mutually determine (the "CLOSING
DATE").
3.2 PURCHASE PRICE CALCULATION.
(a) ESTIMATED PURCHASE PRICE. At least three (3) days prior to the
Closing, the Seller in good faith shall prepare in reasonable detail and deliver
to the Purchaser a statement setting forth the Seller's calculations with
respect to its best estimation of the Purchase Price (the "Estimated Purchase
Price").
(b) DETERMINATION OF PURCHASE PRICE. As soon as reasonably
practicable and in any event within sixty (60) days following the Closing Date,
the Purchaser shall cause the Company to prepare and deliver to the Seller a
statement setting forth the Purchaser's calculation (the "Final Purchase Price
Calculation") of the Purchase Price, including (i) the actual amount of Working
Capital as of the Closing, (ii) the actual amount by which the value of the
Working Gas on the Closing differs from the value of the Working Gas on the date
hereof and (iii) the actual amount by which the value of the Pipeline Imbalances
at the Closing differs from the value of the Pipeline Imbalances on the date
hereof and, if the Purchase Price differs from the Estimated Purchase Price, the
reasons therefor in reasonable detail. The Final Purchase Price Calculation
shall contain sufficient detail to enable the Seller to relate the calculations
contained therein to the books and records of the Company and its subsidiaries.
The Purchaser shall cause the Company to make available to the Seller all
information in the possession of the Company and its subsidiaries reasonably
required for the Seller to verify whether the Final Purchase Price Calculation
is correct. Within forty-five (45) days following the delivery of the Final
Purchase Price Calculation, the Seller shall notify the Purchaser whether it
agrees with the Final Purchase Price Calculation; PROVIDED, HOWEVER, that, if
the Seller shall fail so to notify the Purchaser within such forty-five (45) day
period, it shall be deemed to have agreed with the Final Purchase Price
Calculation. If the Seller shall disagree with the Final Purchase Price
Calculation, the Seller and the Purchaser shall endeavor in good faith to agree
on the Purchase Price but, if they shall not agree within thirty (30) days
following the Seller's notice to the Purchaser, either the Purchaser or the
Seller may cause the issues in dispute to be referred for resolution to a
nationally recognized firm of independent
8
public accountants as the Purchaser and the Seller may mutually designate, and
the Seller and the Purchaser shall cooperate, and the Purchaser shall cause the
Company and its subsidiary to cooperate, with such firm of independent public
accountants by making available to that firm such information, books and records
and such personnel as such firm may reasonably request. The costs of such firm
of independent public accountants shall be borne equally by the Purchaser and
the Seller. The Purchaser and the Seller shall use all commercially reasonable
efforts to cause such firm of independent public accountants to examine the
books and records of the Company and its subsidiaries, as well as any other
information that such firm may reasonably conclude is necessary to make such
determination, and to make a determination with respect to such issues within
sixty (60) days following the date such issues are referred to them. Any such
determination shall be final and binding on the Purchaser and the Seller and may
be enforced by appropriate judicial or other proceedings. The Purchase Price
shall then be calculated by the Seller and the Purchaser based on those matters
as to which they are in agreement and the determination by the independent
public accountants as to those matters, if any, as to which they did not agree.
If the Purchase Price as so determined (whether by agreement of the parties or
determination by accountants) shall exceed the Estimated Purchase Price, the
Purchaser shall pay the Seller the amount of such excess plus interest thereon
from the Closing Date until paid at the "Prime rate" as published in the WALL
STREET JOURNAL on the day before the day of payment, but, if the Final Purchase
Price as so determined shall be less than the Estimated Purchase Price, the
Seller shall pay the Purchaser the amount of such shortfall plus interest
thereon from the Closing Date until paid at the Prime rate as published in the
WALL STREET JOURNAL on the day before the day of payment, such payment in either
case to be made within five (5) days following the final determination of the
Purchase Price.
(c) VALUE OF WORKING GAS. The working gas in the ▇▇▇▇▇▇▇▇ Ridge Storage
Cavern (the "Working Gas") shall be valued as follows:
(i) The amount of the Working Gas as of the Closing shall be
determined by subtracting the amount of the Pad Gas and Financial
Adjustment Amount from the Closing Date Volume.
(A) The "Closing Date Volume" is the amount of natural
gas in the ▇▇▇▇▇▇▇▇ Ridge Cavern on the Closing. The amount of the
Closing Date Volume shall be calculated by determining the change in
volume in the ▇▇▇▇▇▇▇▇ Ridge Storage Cavern from June 30, 1997 to
the Closing. This change in volume will be based upon metered
receipts into and shipments out of the ▇▇▇▇▇▇▇▇ Ridge Storage Cavern
between June 30, 1997 and the Closing. The Parties agree that the
volume of natural gas in the ▇▇▇▇▇▇▇▇ Ridge Storage Cavern as of
June 30, 1997 is 2,821 mmcf. The change in volume based on metered
receipts into and out of the ▇▇▇▇▇▇▇▇ Ridge Storage Cavern shall be
determined using substantially the same procedures the Company used
for determination of the volume as of June 30, 1997. The volumes at
the Closing shall be determined a MMBtu basis.
(B) The "Financial Adjustment Amount" is agreed to be
375 mmcf, which is the amount the Parties agree is the appropriate
amount by which to
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write down the amount of inventory in the ▇▇▇▇▇▇▇▇ Ridge Storage
Cavern due to a difference between the inventory volume (calculated
based on wellhead pressure) and the financial book volume (which is
based on metered receipts and deliveries).
(C) The volume of gas which remains as a pad in the
▇▇▇▇▇▇▇▇ Ridge Storage Cavern ("Pad Gas") is agreed to be 1,029
mmcf.
(ii) The value of the Working Gas on the Closing shall be
calculated by multiplying the volume of the Working Gas on the Closing
Date determined in accordance with Section 3.2(c)(i) above, by the Houston
Ship Channel Index as of January 1, 1998. The "Houston Ship Channel Index"
is 100% of that certain price quoted by INSIDE F.E.R.C.'S GAS MARKET
REPORT, in its first appropriate publication of each month, and identified
in the section entitled "Delivered Spot-Gas Prices" and by Caption
"Houston Ship Channel/Beaumont, Texas," "index (Large Package)" for sales
of at least 3,500 mcf per day.
(iii) The value of the Working Gas as of the date hereof is
agreed to be $4,506,060. The volume of the Working Gas on the date hereof
is agreed to be 1,417 mmcf and the price of the natural gas on the date
hereof is agreed to be $3.18 per mcf.
(d) VALUE OF PIPELINE IMBALANCES.
(i) The Pipeline Imbalances at the Closing shall be
valued as follows:
(A) The amount of Pipeline Imbalances as of the Closing
shall be determined by subtracting and adding, as appropriate, the
metered receipts for the changes in volume from September 30, 1997
to the Closing from 277 mmcf due to the Company. This change in
volume from September 30, 1997 to the Closing shall be determined
using substantially the same procedures the Company used for
determination of the volume as of September 30, 1997. The volumes at
the Closing shall be determined a MMBtu basis.
(B) The parties agree that the net Pipeline Imbalances
as of the date hereof is 277 mmcf due to the Company.
(ii) The value of the Pipeline Imbalances on the Closing shall
be calculated by multiplying the volume of the Pipeline Imbalances on the
Closing, determined in accordance with 3.2(d)(i) above, by the Houston
Ship Channel Index as of January 1, 1998.
(iii) The value of the Pipeline Imbalances on the date hereof
is agreed to be $882,431. The volume of the Pipeline Imbalances on the
date hereof is agreed to be 277 mmcf and the price of natural gas on the
date hereof is agreed to be $3.18 per mcf.
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3.3 CLOSING DATE ACTIONS. The Company's trade accounts receivable (except
pipeline imbalance accounts) and payable balances (except pipeline balance
accounts) and the intercompany account balances (balance sheet account balances
resulting from transactions with affiliates) as of the Closing Date will be
assigned by the Company to the Seller or another Amoco Affiliate designated by
the Seller (and the Seller or such Amoco Affiliate shall assume such accounts
payable) immediately prior to the Closing. AETC shall retain any and all
accounts receivable generated or resulting from the Material Contracts
identified on the Disclosure Schedule as AETC contracts (the "AETC CONTRACTS")
up to and including the Closing Date. The AETC Contracts shall be assigned to
the Company and the Company shall assume the AETC Contracts as of the Closing
and shall be entitled to the accounts receivable generated or resulting from the
AETC Contracts from and after the Closing Date. Any and all cash of the Company
as of the Closing Date shall be transferred by the Company to the Seller or
another Amoco Affiliate designated by the Seller immediately prior to the
Closing. No adjustments to the Purchase Price shall be made as a result of the
assignments, transfers and assumptions described in this Section 3.3.
3.4 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will deliver
to the Purchaser the various certificates, instruments, and documents referred
to in Section 7.2 below, (ii) the Purchaser will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 7.3
below, (iii) the Seller will deliver to the Purchaser the stock certificate
representing the Shares, endorsed in blank or accompanied by the Stock Power,
and (iv) the Purchaser will deliver to the Seller the Purchase Price as
specified in Section 2.2 above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser that the statements
contained in this Article IV are correct as of the date of this Agreement and
will be correct in all material respects as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article IV), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the parties (the
"DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Article
IV and in this Agreement.
4.1 CORPORATE STATUS. The Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware.
4.2 AUTHORIZATION OF TRANSACTION. The Seller has the corporate power and
authority to execute and deliver the Transaction Documents, to perform fully its
obligations hereunder and thereunder, and to consummate the actions contemplated
hereby and thereby. The execution and delivery by the Seller of the Transaction
Documents, and the consummation of
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the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action of the Seller. The Seller has duly executed and
delivered this Agreement, and the other Transaction Documents when delivered by
the Seller pursuant to the terms hereof, will have been duly executed and
delivered by the Seller. This Agreement is a legal, valid and binding obligation
of the Seller, and the other Transaction Documents, when executed and delivered
pursuant to the terms hereof, will constitute a legal, valid and binding
obligation of the Seller, in each case enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by (i)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
Laws affecting creditors' rights generally and (ii) applicable equitable
principles (whether considered in a proceeding at law or in equity). Except for
the Government Approvals of the Governmental Authorities and other Consents set
forth in Section 7.2(b) of the Disclosure Schedule, to the Seller's knowledge,
the Seller need not give any notice to, make any filing with, or obtain any
authorization or Consent in order to consummate the transactions contemplated by
this Agreement.
4.3 NO CONFLICTS. To the Seller's knowledge, neither the execution or the
delivery by the Seller of any Transaction Document nor, assuming receipt of the
Government Approvals and other Consents set forth in Section 7.2(b) of the
Disclosure Schedule, the performance by the Seller of the transactions
contemplated hereby will: (i) violate any statute, regulation, rule, order or
decree of any Governmental Authority or arbitrator applicable to the Seller or
the Company; (ii) violate any Applicable Law; (iii) violate or conflict with any
provision of the Certificate of Incorporation or Bylaws of the Seller; or (iv)
violate or conflict with, or result in a breach of, or constitute a default
(with or without notice or lapse of time or both) under, or permit cancellation
of, or result in the creation of any Lien (other than Permitted Liens) upon any
of the properties or assets of the Seller under any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, lease, license, franchise,
permit, agreement or other instrument or obligation to which the Seller is a
party, or by which any of its properties or assets are bound; excluding from the
foregoing clauses (i), (ii) and (iv) such violations, conflicts, breaches,
defaults and events of default which would neither (A) materially adversely
affect the Seller's ability to consummate the transactions contemplated by this
Agreement nor (B) have a Material Adverse Effect.
4.4 CAPITAL STOCK AND SUBSIDIARIES. The outstanding capital stock of the
Company consists of 4,000 shares, $100 par value per share (the "Shares"), all
of which as of the date hereof are validly authorized, validly issued, fully
paid, and nonassessable and have not been issued and are not owned or held in
violation of any preemptive right of shareholders, and all of which as of the
Closing Date shall be owned by the Seller free and clear of any security
interests, voting trusts, proxies, options or other restrictions. Except as set
forth in Section 4.4 of the Disclosure Schedule, the Company has no
Subsidiaries, no interest in any partnership or joint venture and does not hold
shares of stock or other ownership interest in any corporation, trust or other
Person.
4.5 FINANCIAL STATEMENTS. Section 4.5 of the Disclosure Schedule contains
copies of (a) the unaudited December 31, 1996 balance sheet and statement of
income of the Company as of and for the twelve month period ended December 31,
1996 (the "DECEMBER 31, 1996
12
FINANCIAL STATEMENTS"), and (b) the unaudited balance sheet (the "JUNE 30, 1997
BALANCE SHEET") and statement of income of the Company as of and for the six
month period ended June 30, 1997 (the "JUNE 30, 1997 FINANCIAL STATEMENTS") (the
December 31, 1996 Financial Statements and the June 30, 1997 Financial
Statements are collectively referred to as the "FINANCIAL STATEMENTS"). Except
as set forth in Section 4.5 of the Disclosure Schedule, the Financial Statements
have been prepared in accordance with GAAP.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. The Company did not have, as of
the date of the June 30, 1997 Balance Sheet, except to the extent reflected,
disclosed or reserved against therein or in Section 4.6 of the Disclosure
Schedule or except liabilities or obligations which individually and in the
aggregate did not and do not have a Material Adverse Effect, any unrecorded
liabilities or obligations (absolute or contingent) of a nature customarily
reflected in balance sheets prepared in accordance with GAAP.
4.7 ASSETS. Except as set forth in Section 4.7 of the Disclosure Schedule,
the Company has good title to all material personal, tangible assets (other than
Real Property which shall be governed by the provisions of Section 4.8 below)
reflected on the June 30, 1997 Balance Sheet (except for sales of inventory or
services in the Ordinary Course of Business subsequent to June 30, 1997) free
and clear of all Liens except Permitted Liens. Except as set forth in Section
4.7 of the Disclosure Schedule, to the Seller's knowledge, all material
personal, tangible assets of the Company are in good condition and repair,
normal wear and tear excepted.
4.8 REAL PROPERTY.
(a) OWNED REAL PROPERTY. Section 4.8(a) of the Disclosure Schedule,
lists all owned property ownership interests of the Company (the "OWNED
REAL PROPERTY"), and except for matters which would not have a Material
Adverse Effect:
(i) except as set forth in Section 4.8(a)(i) of the Disclosure
Schedule, the Company has good and marketable title to each parcel
of Owned Real Property, free and clear of any Lien except for
Permitted Liens;
(ii) other than as set forth in Section 4.8(a)(ii) of the
Disclosure Schedule, there are no leases, subleases, licenses,
concessions, or other agreements granting to any party or parties
the right of use or occupancy of any portion of the parcels of Owned
Real Property except for Permitted Liens; and
(iii) other than as set forth in Section 4.8(a) (iii) of the
Disclosure Schedule, there are no outstanding options or rights of
first refusal to purchase any of the parcels of Owned Real Property,
or any portion thereof or interest therein.
(b) RIGHTS OF WAY. Section 4.8(b) of the Disclosure Schedule lists
all easements and rights of way interests held by the Company relating to
real property
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used in business of the Company (collectively, "Rights of Way"). Except as
set forth in Section 4.8(b) of the Disclosure Schedule, the Company is not
in material violation of the terms of any Rights of Way. Except as set
forth in Section 4.8(b) of the Disclosure Schedule, all Rights of Way are
valid and enforceable and grant the rights purported to be granted thereby
and all rights necessary thereunder for the current operation of the
business of the Company except to the extent the failure to have such
Rights of Way would not have a Material Adverse Effect. There are no
spatial gaps in any of the Rights of Way except for spatial gaps that
would not have a Material Adverse Effect. Except as set forth on Section
4.8(b) of the Disclosure Schedule, all of the Company's pipelines are
lawfully located in the Rights of Way.
(c) LEASES. Section 4.8(c) of the Disclosure Schedule contains a
complete and correct list of all leasehold interests of the Company, as
lessee, (the "LEASES"), setting forth the address, landlord and tenant for
each lease or sublease. Except as set forth in Section 4.8(c) of the
Disclosure Schedule, neither the Seller nor the Company has received
notice of any material default of the Leases that has not been cured. The
Company has a valid leasehold interest in each Lease to which it is a
party, free and clear of any Lien, except for (i) the subleases set forth
on Section 4.8(c) of the Disclosure Schedule, (ii) Permitted Liens and
(iii) encumbrances and restrictions referred to in such Leases and except
that Leases of Real Property may be subject to zoning or planning
restrictions, easements, permits, licenses and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of or interfere with the
use of such leased property.
4.9 MATERIAL CONTRACTS. Section 4.9 of the Disclosure Schedule lists all
contracts, agreements, and other written arrangements to which the Company is a
party (i) for the purchase, sale, storage, processing or transportation of
natural gas, (ii) involving the payment by or to the Company of more than
$100,000, or (iii) in the nature of a collective bargaining agreement,
employment agreement, or severance agreement with any of its directors,
officers, and employees ("MATERIAL CONTRACTS"). The Seller has made available
and will deliver prior to Closing to the Purchaser a correct and complete copy
of each Material Contract. Except as set forth in Section 4.9 of the Disclosure
Schedule, the Company has not received any written notice of any material
default of any of the Material Contracts that has not been cured.
4.10 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.10 of the
Disclosure Schedule, to the Seller's knowledge, the Seller has made available to
the Purchaser all of the Company's currently existing reports and records
relating to (i) known emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, wastes, petroleum, toxic substances and
hazardous substances on the Company's Owned Real Property or Rights Of Way or
(ii) the handling, treatment, storage or disposal of any such materials on
property not currently owned by the Company. Such reports and records were
prepared by or furnished to the Company in the Ordinary Course of Business and
were relied upon by the Company in the Ordinary Course of its Business. Other
than as set forth in Section 4.10 of the Disclosure Schedule, (a) the
properties, operations and activities of the Company are in compliance with all
applicable environmental laws except to the extent non-compliance would not have
a
14
Material Adverse Effect, and (b) all permits, if any, required to be obtained or
filed by the Company under any environmental law in connection with the business
of the Company have been obtained or filed and are valid and currently in full
force and effect.
4.11 LITIGATION. Except as set forth in Section 4.11 of the Disclosure
Schedule, there is no Order or Action pending or, to the Seller's knowledge,
threatened in writing against the Company that individually or when aggregated
with one or more other Orders or Actions is reasonably expected to have a
Material Adverse Effect or materially impair the ability of the Seller to
perform this Agreement or any other aspect of the transactions contemplated by
this Agreement.
4.12 TAXES. The Company has filed all Tax Returns that it was required to
file, and has paid all Taxes shown thereon as owing, except where the failure to
file or to pay Taxes would not have a Material Adverse Effect.
4.13 GOVERNMENTAL APPROVALS . The Company has obtained all Governmental
Approvals necessary for the conduct of its business as now conducted except
where the failure to obtain such Governmental Approvals would not have a
Material Adverse Effect and all such Governmental Approvals are in full force
and effect and the Company is in compliance in all material respects with each
such Governmental Approval.
4.14 ABSENCE OF CHANGES. Since June 30, 1997, except as disclosed in
Section 4.14 of the Disclosure Schedule or as contemplated or expressly required
or permitted by this Agreement, to the Seller's knowledge, the Company has not
taken any action which, if taken subsequent to the execution of this Agreement
and on or prior to the Closing Date, would constitute a breach of Section 6.3 or
would have a Material Adverse Effect.
4.15 BROKERS, FINDERS, ETC. With the exception of Lazard Freres & Co. LLC
("LAZARD"), no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement. The Seller is solely responsible for the fees
and expenses of Lazard.
4.16 INTERCOMPANY TRANSACTIONS. The Company and its subsidiaries have not
guaranteed, or provided collateral, surety, or credit support for, any
obligations of the Seller and its Affiliates (other than the Company and its
subsidiaries) to third parties, except such that will be released at the
Closing.
4.17 EMPLOYMENT AGREEMENTS. Except for standard Amoco and Amoco Affiliate
employment agreements, which are employment at will agreements, and an
arrangement with one Company employee that he will have employment beyond the
Transition Period with an Amoco Affiliate immediately following the Closing if
he so desires, there are not employment agreements between the Company or its
subsidiary and any employees (not subject to a collective bargaining agreement).
15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as of the date hereof,
as follows:
5.1 CORPORATE STATUS. The Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of Nevada.
5.2 AUTHORIZATION OF TRANSACTION. The Purchaser has the corporate power
and authority to execute and deliver the Agreement, to perform fully its
obligations hereunder and thereunder, and to consummate the actions contemplated
hereby. The execution and delivery by the Purchaser of the Transaction
Documents, and the consummation of the actions contemplated hereby have been
duly authorized by all requisite corporate action of the Purchaser. The
Purchaser has duly executed and delivered this Agreement and the other
Transaction Documents when delivered by the Purchaser pursuant to the terms
hereof, will have been duly executed and delivered by the Purchaser. This
Agreement is a legal, valid and binding obligation of the Purchaser and
constitutes, and the other Transaction Documents when delivered by the Purchaser
pursuant to the terms hereof, will each constitute, a legal, valid and binding
obligation of the Purchaser, in each case enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by (i)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
Laws affecting creditors' rights generally and (ii) applicable equitable
principles (whether considered in a proceeding at law or in equity). Except for
the Government Approvals set forth in Section 7.3(b) of the Disclosure Schedule,
the Purchaser need not give any notice to, make any filing with, or obtain any
authorization, Consent, or Governmental Approval in order to consummate the
transactions contemplated by this Agreement.
5.3 NO CONFLICTS. To the Purchaser's knowledge, neither the execution or
the delivery by the Purchaser of the Agreement, nor assuming receipt of the
Government Approvals set forth in Section 7.3(b) of the Disclosure Schedule, the
performance by the Purchaser of the transactions contemplated hereby will: (i)
violate any statute, regulation, rule, Order or decree of any Governmental
Authority or arbitrator applicable to the Purchaser; (ii) violate any applicable
Law; (iii) violate or conflict with any provision of the charter or bylaws of
the Purchaser; or (iv) violate or conflict with, or result in a breach of, or
constitute a default (with or without notice or lapse of time or both) under, or
permit cancellation of, or result in the creation of any Lien upon any of the
properties or assets of the Purchaser under any of the terms, conditions, or
provisions of any note, bond, mortgage, indenture, lease, license, franchise,
permit, agreement or other instrument or obligation to which the Purchaser is a
party, or by which any of its properties or assets are bound; excluding from the
foregoing clauses (i), (ii) and (iv) such violations, conflicts, breaches,
defaults and events of default which would neither (A) materially adversely
affect the Purchaser's ability to consummate the transactions contemplated by
this Agreement nor (B) have a material adverse effect on the financial condition
of the Purchaser.
16
5.4 LITIGATION. There is no Order or Action pending or, to the knowledge
of the Purchaser, threatened in writing against or affecting the Purchaser that
individually or when aggregated with one or more other Orders or Actions has or
might reasonably be expected to have a material adverse effect on the
Purchaser's ability to perform this Agreement or any other aspect of the
transactions contemplated by this Agreement.
5.5 AVAILABLE FUNDS. The Purchaser has sufficient funds available to pay
the Purchase Price in immediately available funds on the Closing Date and to
make all other necessary payments by it in connection with the transactions
contemplated hereby.
5.6 INVESTMENT INTENT. The Purchaser is purchasing the Shares for its own
account with the present intention of holding such Shares for investment
purposes and not with a view to, or for sale in connection with, any public
distribution of the Shares in violation of any federal or state or other
securities Laws.
5.7 BROKERS, FINDERS, ETC.. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried out without the
participation of any Person acting on behalf of the Purchaser in such manner as
to give rise to any valid claim against the Seller for any brokerage or finder's
commission, fee or similar compensation.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 GENERAL. Each of the Parties will use Reasonable Efforts to take all
action and to do all things necessary, proper, or advisable to consummate and
make effective the transactions contemplated by this Agreement (including
satisfying the closing conditions set forth in Article VII below).
6.2 NOTICES AND CONSENTS. The Seller will give any notices to third
parties, and will use its Reasonable Efforts to obtain any third party consents
that the Purchaser reasonably may request in connection with the matters
pertaining to the Company disclosed or required to be disclosed in the
Disclosure Schedule. Each of the Parties, if required, will file any
Notification and Report Forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will use
Reasonable Efforts to obtain a waiver from the applicable waiting period, and
will make any further filings pursuant thereto that may be necessary, proper, or
advisable. Each of the Parties will take any additional action that may be
necessary, proper, or advisable in connection with any other notices to, filings
with, and authorizations, consents, and approvals of governments, governmental
agencies, and third parties that it may be required to give, make, or obtain;
provided, however, that the Party shall not be required to make any material
expenditure or commitment in order to obtain any such authorizations, consents
or approvals.
6.3 OPERATION OF BUSINESS. Prior to the Closing, the Company will not
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of
17
Business without the express prior written consent of the Purchaser provided
that the Seller may do environmental assessments on the Real Property prior to
Closing. The Seller will use Reasonable Efforts to keep its business and
properties substantially intact, including (unless otherwise consented to by the
Purchaser) its present operations, physical facilities and relationships with
lessors, licensors, suppliers, customers, and employees.
6.4 ACCESS. The Seller will permit representatives of the Purchaser to
have reasonable access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company, to the premises,
properties, books, records, contracts, Tax records, and documents of or
pertaining to the Company.
6.5 RESIGNATION OF OFFICERS AND DIRECTORS. The Seller shall cause each
officer and member of the Board of Directors of the Company to tender his or her
resignation from such position effective as of the Closing Date.
6.6 CONFIDENTIALITY. At all times prior to the Closing, the Purchaser will
treat and hold as such any Confidential Information it receives from the Seller,
the Company, Lazard or any of their respective Affiliates, agents or
representatives in accordance with the terms of the confidentiality agreement
between the Seller and the Purchaser dated as of July 15, 1997 (the
"CONFIDENTIALITY AGREEMENT").
6.7 ACQUISITION PROPOSALS. From the execution of this Agreement by the
Seller and the Purchaser until the Closing or the termination of this Agreement
in accordance with its terms, the Seller will not, and will cause its officers,
directors, employees or agents not to, directly or indirectly, (a) take any
action to solicit, initiate or encourage any proposal regarding the acquisition
of the Company or its assets by sale of stock or otherwise or (b), except as
required by Law, Regulation or Order, engage in negotiations with, or disclose
any non-public information relating to the Company, or afford access to its
properties, books and records other than in connection with the Ordinary Course
of Business of the Company to any Person that has made or, to the knowledge of
the Seller, may be considering making a proposal to acquire the Company.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITION TO OBLIGATIONS OF EACH PARTY. The obligations of the Parties
to consummate the transactions contemplated hereby shall be subject to the
fulfillment on or prior to the Closing Date on the condition that the
consummation of the transactions contemplated hereby shall not have been
restrained, enjoined or otherwise prohibited by any Order of any Governmental
Authority.
7.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the actions contemplated hereby shall be subject to the
fulfillment on or prior to the Closing Date of the following conditions:
18
(a) REPRESENTATIONS, PERFORMANCE. The representations and warranties
of the Seller contained in Article IV of this Agreement shall be true and
correct in all material respects at and as of the Closing Date. The Seller
shall have duly performed and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date. The
Seller shall have delivered to the Purchaser a certificate, dated the
Closing Date and signed by its duly authorized officers to the foregoing
effect.
(b) CONSENTS. All applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise
been terminated, and if terminated, no such termination shall require
either Purchaser or the Company or any Affiliate thereof to divest any
assets or impose any restrictions on any business or operations of any
such parties or Affiliates. The Seller shall have obtained and shall have
delivered to the Purchaser copies of all Consents reasonably requested by
the Purchaser necessary to be obtained by the Seller in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby as identified in Section 7.2(b) of the
Disclosure Schedule, unless the failure to obtain any Consent would not,
individually or in the aggregate, result in a Material Adverse Effect. The
Seller shall have obtained and shall have delivered to Purchaser copies of
all material Governmental Approvals necessary to be obtained by the Seller
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) TRANSACTION DOCUMENTS. The Seller shall have executed and
delivered to the Purchaser the Transaction Documents.
(d) RESOLUTIONS. The Seller shall have delivered to the Purchaser
copies of the resolutions duly adopted by the Seller's Board of Directors
authorizing the execution, delivery and performance of this Agreement and
each of the other agreements contemplated hereby.
(e) OPINION OF COUNSEL TO THE SELLER. The Seller shall have
delivered an opinion, dated the Closing Date, of internal counsel for the
Seller substantially in the form attached hereto as Exhibit 7.2(e).
(f) CLOSING DATE ACTIONS. The Closing Date actions described in
Section 3.3 shall have been consummated.
(g) AETC CONTRACTS Amoco Energy Trading Corporation ("AETC") shall
have assigned to the Company the AETC Contracts and the Company shall have
assumed all the obligations under the AETC Contracts pursuant to an
assignment and assumption agreement substantially in the form attached as
Exhibit 7.2(g).
(h) UTILITIES AGREEMENT. Prior to or simultaneously with the
Closing, the Company, and Amoco Oil Company and/or Amoco Affiliates shall
have executed an
19
agreement (substantially in the form attached hereto as Exhibit 7.2(h))
providing for the supply of certain utilities and other services to the
Company for a period of fifteen (15) years after the Closing.
(i) AFFILIATE CONTRACTS. Evidence that the amendments to the
agreements described on Exhibit 7.2(i) attached hereto shall have been
duly executed by the applicable Amoco Affiliate and the Company.
(j) OTHER ACTIONS. All actions to be taken by the Seller in
connection with the consummation of the transactions contemplated hereby
and all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Purchaser.
The Purchaser may waive any condition specified in this Section 7.2 if it
executes a writing so stating at or prior to the Closing.
7.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the Seller
to consummate the transactions contemplated hereby shall be subject to the
fulfillment, on or prior to the Closing Date, of the following additional
conditions:
(a) REPRESENTATIONS, PERFORMANCE. The representations and warranties
of the Purchaser contained in Article V of this Agreement shall be true
and correct in all material respects at and as of the Closing Date. The
Purchaser shall have duly performed and complied in all material respects
with all covenants, agreements and conditions required by this Agreement
to be performed or complied with by it prior to or on the Closing Date.
The Purchaser shall have delivered to the Seller a certificate, dated the
Closing Date and signed by its duly authorized officers to the foregoing
effect.
(b) CONSENTS. All applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise
been terminated, and if terminated, no such termination shall require the
Company or any Affiliate thereof to divest any assets or impose any
restrictions on any business or operations of the Seller or its Affiliates
or the Company or its Affiliates. The Purchaser shall have obtained and
shall have delivered to the Seller copies of all Government Approvals and
consents necessary to be obtained by the Purchaser in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby as identified in Section 7.3(b) of the
Disclosure Schedule, unless the failure to obtain any such Government
Approval and Consent would not, individually or in the aggregate, result
in a Material Adverse Effect.
(c) RESOLUTIONS. The Purchaser shall have delivered to the Seller
copies of the resolutions duly adopted by the Purchaser's Board of
Directors authorizing the execution, delivery and performance of this
Agreement and each of the other agreements contemplated hereby.
20
(d) OPINION OF COUNSEL TO THE PURCHASER. The Purchaser shall have
delivered an opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.,
counsel to the Purchaser, substantially in the form attached hereto as
Exhibit 7.3(d).
(e) PAYMENT FOR SHARES. Seller shall have received at the Closing
the Estimated Purchase Price in immediately available funds pursuant to
Section 2.2 of this Agreement.
(f) UTILITIES AGREEMENT Prior to or simultaneously with the Closing,
the Company, and Amoco Oil Company and/or Amoco Affiliates shall have
executed an agreement (substantially in the form attached hereto as
Exhibit 7.2(h)), providing for the supply of certain utilities and other
services to the Company for a period of fifteen (15) years after the
Closing.
(g) CLOSING DATE ACTIONS. The Closing Date actions described in
Section 3.3 hereof shall have been consummated.
(h) OTHER ACTIONS. All actions to be taken by the Purchaser in
connection with consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 7.3 if it executes
a writing so stating at or prior to the Closing.
ARTICLE VIII
TAXES
8.1 SALES AND TRANSFER TAXES. All Taxes (other than income or franchise
Taxes) imposed upon or resulting from the sale and transfer of the Shares to the
Purchaser ("SALES AND TRANSFER TAXES") as contemplated herein shall be borne by
the Purchaser. The Purchaser and the Seller shall cooperate in timely preparing
and making all filings, returns, reports and forms as may be required to comply
with the provisions of Applicable Law in connection with the payment of the
Sales and Transfer Taxes, and the Purchaser and the Seller shall cooperate in
good faith to minimize the amount of any Sales and Transfer Taxes payable in
connection with the sale and transfer of the Shares.
8.2 TAX INFORMATION AND AUDITS. The Purchaser shall, with regard to any
taxable period of the Company prior to or including the Closing Date or with
respect to any tax for which the Seller is responsible pursuant to Section
8.4(a) hereof, (i) provide the Seller with notice of any communication with any
federal, state or local Tax authority; (ii) permit the Seller at any time,
directly or through its representatives, to exercise exclusive control over all
stages of all audit, administrative or judicial proceedings (collectively,
"AUDIT PROCEEDINGS"); (iii) permit the Seller to have authority to settle any
proposed Tax adjustment or deficiency
21
with any federal, state or local Tax authority; (iv) permit the Seller to
contest any proposed Tax adjustment or deficiency with a federal, state or local
Tax authority; and (v) provide, at the Seller's cost and expense (other than DE
MINIMIS out-of-pocket costs and expenses incurred by the Purchaser, which shall
be borne by the Purchaser), full and accurate Tax information reasonably
requested by the Seller and such cooperation as the Seller may reasonably
request in regard to any Audit Proceedings. The Seller agrees that to the extent
it exercises control or authority with regard to any such Audit Proceedings it
will do so in good faith. In the event the Seller declines to exercise control
over such Audit Proceeding, the Purchaser shall act in good faith and shall not
settle or compromise such proceedings with respect to any Taxes for which the
Seller would be liable pursuant to Section 8.4(a) hereof without the prior
written consent of the Seller. In any event, the Seller or Amoco Corporation
shall be entitled to control any proceedings that relate to a consolidated or
combined return filed by Amoco Corporation, the Seller or any of their
Affiliates. Notwithstanding the foregoing, Seller shall not agree to any
settlement concerning Taxes for any period ending on or before the Closing Date
which may result in an increase in federal income Taxes for any period ending
after the Closing Date without the prior written consent of Purchaser.
8.3 TAX RETURNS. The Seller shall cause the Company and its eligible
Affiliates to join for all taxable years and periods ending on or before the
Closing Date in the consolidated federal income tax return of the "affiliated
group" or corporations of which Amoco Corporation is the common parent. The
Seller shall be responsible for the preparation and filing of all returns of the
Company for all Taxes for taxable periods ending on or before the Closing Date.
The Seller shall indemnify the Purchaser and the Company against any additional
liability incurred by reason of the failure of the Seller to timely file the
returns and pay the Taxes as required by the immediately preceding sentence. The
Purchaser shall be responsible for the preparation of all tax returns that
relate to the Company and which are required to be filed for periods ending
after the Closing Date, and shall indemnify the Seller against any additional
liability incurred by reason of the failure of the Purchaser to timely file such
returns and pay such Taxes.
Each of the Purchaser and the Seller and their respective Affiliates shall
(1) provide the other Party with reasonable assistance and any and all
information, documentation, working papers and schedules reasonably requested by
such other Party for use in the preparation and timely filing of any Tax Return
with respect to or containing information pertaining to the Company, (2)
preserve all such information, records and documents at least until the
expiration of any applicable tax statutes of limitations or extensions thereof
and as otherwise provided, (3) make available to the other party, as reasonably
requested, personnel responsible for preparing or maintaining information,
records and documents in connection with tax matters (subject to reimbursement
by such other party of the additional direct costs incurred thereby), (4)
provide timely notice to the other party in writing of any pending or threatened
tax audits or assessments of the Company for periods beginning prior to the
Closing date, and (5) furnish the other party with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such period.
22
8.4 TAXES.
(a) SELLER RESPONSIBILITY. The Seller shall be solely responsible
(i) for all income Taxes, and franchise Taxes which are based on income,
incurred or payable with respect to the Company for periods ending on or
before the Closing Date, or attributable to transactions and income
occurring on or before the Closing Date (including, without limitation,
any liability that arises because of the elections made pursuant to
Section 8.6 hereof) and (ii) for all withholding Taxes on wages paid to
employees of the Company prior to the Closing.
(b) PURCHASER RESPONSIBILITY. Except as provided in the preceding
Section 8.4(a), the Purchaser shall be solely responsible for all other
Taxes that are imposed on or incurred by the Company for all periods
ending after the Closing Date.
(c) PAYMENTS. All Taxes shall be paid by the party legally
responsible therefore. However, the foregoing sentence shall not change
the ultimate responsibility for such Taxes, as determined pursuant to
Sections 8.4(a) and 8.4(b) hereof. Upon payment of any Taxes with respect
to which a party is entitled to receive indemnification hereunder, such
party shall submit an invoice to the indemnifying party stating that such
Taxes have been paid and giving in reasonable detail the particulars
relating thereto. The indemnifying party shall remit payment for such
Taxes promptly upon receipt of invoice.
(d) TAX REFUNDS. If Purchaser or any of its Affiliates receives a
refund of any Taxes described in Section 8.4(a) or if Seller or any of its
Affiliates receives a refund of any Taxes described in Section 8.4(b), the
party receiving such refund shall, within thirty days of the receipt of
such refund, remit it to the other party. The amount of such remittance
shall be reduced by any amount reasonably necessary to compensate the
initial recipient against any additional liability for Taxes that such
party may incur as a result of the refund payment assuming the highest
marginal federal income tax rate for the tax period in which the refund or
credit is received.
8.5 TAX AGREEMENTS. Any and all agreements with respect to Taxes imposed
by any taxing jurisdiction executed between or agreed to by the Company and any
of its Affiliates, on the one hand, and the Seller or any of its Affiliates, on
the other hand, shall be terminated as of the Closing Date with respect to the
Company, and no payments that are owed by or to the Company pursuant thereto
subsequently shall be made thereafter except as set forth in the June 30, 1997
Financial Statements.
8.6 SECTION 338 ELECTIONS. The Purchaser shall make a timely election
under Section 338(g) of the Internal Revenue Code of 1986, as amended (the
"CODE") (and any similar state law provisions in all applicable states) with
respect to the sale and purchase of the Shares. Amoco Corporation (or any
corporation controlling the consolidated group of which Seller is a member) and
the Purchaser shall jointly make a timely election under Section 338(h)(10) of
the Code (and any similar state law provisions in all applicable states) with
23
respect to such sale and purchase. The Purchaser and the Seller (or any
corporation controlling the consolidated group of which Seller is a member)
shall similarly make timely elections pursuant to Code Sections 338(g) and
338(h)(10) with respect to each eligible corporate subsidiary of the Company
which is included as a member of the consolidated federal income tax return
group which includes the Company as of the Closing Date. The parties confirm
that for purposes of Section 338 of the Code, the "acquisition date" as defined
in Section 338(h)(2) of the Code shall be the Closing Date. The Seller and the
Purchaser shall, as promptly as practicable following the Closing Date, take all
actions necessary and appropriate to effect and preserve timely elections. Each
party shall be liable for, and shall indemnify and hold the other party harmless
against, any Taxes or other costs resulting from such party's failure to take
all actions required by the immediately preceding sentence. The Seller and the
Buyer shall act together in good faith to determine and agree upon (i) the
amount of the "adjusted grossed-up basis" of the Shares; and (ii) appropriate
allocations of such amount among the assets of the Company. The Seller and the
Purchaser and their respective Affiliates shall not take any position
inconsistent with such determinations in any tax return or otherwise; provided
that each side may take into account its respective transaction costs in making
such determinations. If, within 60 days following the Closing Date, the parties
are unable to agree upon either (i) the calculation of the "adjusted grossed-up
basis" of the Company Shares, or (ii) the Allocations, or both, then as promptly
as practicable, but in any event in sufficient time to allow for timely filing
of the elections, the Purchaser shall select a firm of qualified appraisers to
conduct at Purchaser's sole expense an appraisal of the Company's assets (the
"Appraisal") which selection must be approved by the Seller, such approval not
to be unreasonably withheld. The Seller and the Purchaser agree that the results
of the Appraisal shall be used to allocate the Purchase Price and liabilities of
the Company and its subsidiaries (plus other relevant items) to the assets of
the Company and its subsidiaries for all purposes (including United States or
any state, county or local government Tax purposes) in accordance with the Code
and applicable Treasury Regulations. Such allocation of the Purchase Price shall
be prepared by the Purchaser and submitted in writing to the Seller within
ninety (90) calendar days after the date on which the Final Purchase Price is
determined. The Seller shall consent to such Purchase Price allocation unless
such Purchase Price allocation is unreasonable. If the Seller does not object in
writing to such proposed allocation within thirty (30) calendar days after
receipt of the Purchaser's written proposal, the Purchaser's proposed allocation
shall become final and binding on the Seller and the Purchaser. If the Seller
makes timely objection to the Purchaser's proposal, the Purchaser and Seller
shall have thirty (30) calendar days to reach agreement or the allocation shall
be submitted to Price Waterhouse L.L.P. The determination of Price Waterhouse
L.L.P. shall be final and binding on the Purchaser and the Seller and the fees
and expenses of Price Waterhouse L.L.P. shall be borne equally by the Purchaser
and the Seller. Price Waterhouse L.L.P. shall adjust the Purchase Price
allocation provided by the Purchaser to the extent necessary to make such
allocation reasonable. The Purchaser and the Seller shall duly prepare and
timely file such reports and information returns as may be required under the
Code and applicable Treasury Regulations and any corresponding or comparable
provisions of applicable state and local Tax laws to report the allocation of
the Purchase Price.
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ARTICLE IX
OTHER COVENANTS AND AGREEMENTS
9.1 FURTHER ASSURANCES OF THE SELLER. Following the Closing, the Seller
shall from time to time execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by the Purchaser, to confirm and
assure the rights and obligations provided for in this Agreement and render
effective the consummation of the transactions contemplated hereby. To the
extent any such further actions are expressly required by other provisions of
this Agreement then the expenses, costs and fees incurred in connection with
such actions shall be paid by the Parties as provided in Section 9.3(b), and all
other costs, expenses and fees incurred in connection with such actions shall be
paid by the Seller. The making of any recordings and the costs and expenses
(including any recording fees) associated with any such recordings and any
actions pursuant to the foregoing sentence shall be borne by the Purchaser.
9.2 COVENANTS AND AGREEMENTS OF THE PURCHASER.
(a) FURTHER ASSURANCES. Following the Closing, the Purchaser shall
from time to time execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall
be necessary, or otherwise reasonably requested by the Seller, to confirm
and assure the rights and obligations provided for in this Agreement and
render effective the consummation of the transactions contemplated hereby.
Such actions shall include, but not be limited to, taking the necessary
steps under Applicable Law to ensure that the corporate name of the
Company and its subsidiary be immediately changed following the Closing to
delete all references to "Amoco".
(b) POST-CLOSING ACCESS AND INFORMATION.
(i) After the Closing Date, the Purchaser will (and will cause
each of its Affiliates and its Affiliates' respective accountants,
counsel, consultants, employees and agents to) give the Seller, and
its accountants, counsel, consultants, employees and agents,
reasonable access, during normal business hours and upon reasonable
notice, to all employees, documents, records, work papers and
information with respect to all of the Company's properties, assets,
books, contracts, commitments, reports and records relating to the
business of the Company prior to Closing, including, without
limitation, with respect to the lawsuits identified in Section
11.2(a) hereof for which the Seller is retaining responsibility and
liability, as the Seller may from time to time reasonably request.
In addition, the Purchaser shall permit the Seller to make copies at
its own expense of any of the above-mentioned documents, records and
information.
25
(ii) The Purchaser will retain all books and records relating
to the Company for at least seven (7) years. The Purchaser shall not
dispose of or permit the disposal of any such books and records
without first giving 60 days' prior written notice to the Seller
offering to surrender the same to the Seller at the Seller's
expense.
(iii) In the event that the Purchaser obtains, either prior to
or after the Closing, any documents, records or information that,
instead of or in addition to relating to the Company, relate to the
Seller or any of its Affiliates (other than the Company) or any of
their respective operations or businesses, the Purchaser shall (A)
promptly notify the Seller of that fact, (B) promptly return such
document, record or information to the Seller and Purchaser may
retain a copy thereof, and (C) comply with Section 9.2(c).
(c) CONFIDENTIALITY.
(i) Until the fifth anniversary of the Closing, the Purchaser
agrees to maintain the confidentiality of all proprietary and other
non-public information regarding the Seller and any of its
Affiliates (other than the Company and its subsidiary and the AETC
Contracts), except as may be required by Law. Until the fifth
anniversary of the Closing, the Seller agrees to maintain the
confidentiality of all proprietary and other non-public information
regarding the Company and its subsidiary, except as may be required
by Law. In the event that a Party reasonably believes after
consultation with counsel that it is required by Law to disclose any
such information (the "Disclosing Party"), the Disclosing Party
shall (i) provide the other Party with prompt notice before such
disclosure in order that the other Party may attempt to obtain a
protective order or other assurance that confidential treatment will
be accorded such confidential information and (ii) cooperate with
the other Party in attempting to obtain such order or assurance. The
provisions of this Section 9.2(c) shall not apply to any
information, documents or materials which are, as shown by
appropriate evidence, in the public domain or, as shown by
appropriate evidence, shall come into the public domain, other than
by reason of default by the Disclosing Party or its Affiliates.
(ii) The Parties agree the Confidentiality Agreement shall
terminate as of the Closing.
(iii) Each Party agrees that any remedy at Law for any breach
by it of this Section 9.2(c) would be inadequate, and the
non-breaching Party would be entitled to injunctive relief in such a
case. If it is ever held that the restrictions placed on either
Party by this Section 9.2(c) are too onerous and are not necessary
for the protection of the other Party, the Parties agree that any
court sitting in the State of Texas, United States of America of
competent jurisdiction may reduce the duration or scope hereof, or
delete specific words or phrases,
26
and in its reduced form such provision will then be enforceable and
will be enforced.
9.3 OTHER AGREEMENTS OF THE PARTIES.
(a) USE OF BUSINESS NAMES BY THE PURCHASER. The Purchaser agrees
that the right to the use of the trademarks, service marks, brand, trade,
corporate or business logos of the Seller or of any of the Amoco
Affiliates, including without limitation the "TORCH AND OVAL" and the name
"AMOCO", shall remain the property of the Seller or the relevant Amoco
Affiliate following the Closing.
(b) EXPENSES. Except as otherwise provided herein, the Seller, on
the one hand, and the Purchaser, on the other hand, shall bear their
respective expenses, costs and fees (including attorneys' and accountants'
fees) in connection with the transactions contemplated hereby, including
the preparation, execution and delivery of this Agreement and compliance
herewith (the "TRANSACTION EXPENSES"), whether or not the transactions
contemplated hereby shall be consummated.
(c) BROKERS. Without limiting the generality of Section 9.3(b)
above, regardless of whether the Closing shall occur, (i) Seller shall
indemnify the Purchaser and its Affiliates against and hold the Purchaser
and its Affiliates harmless from any and all liability for any brokers' or
finders' fees arising with respect to brokers for finders retained or
engaged by, or having any claim by virtue of the actions of, the Seller or
any of its Affiliates in respect of the transactions contemplated by this
Agreement and (ii) the Purchaser shall indemnify the Seller and its
Affiliates against and hold the Seller and its Affiliates harmless from
any and all liability for any brokers' or finders' fees arising with
respect to brokers or finders retained or engaged by, or having any claim
by virtue of the actions of, the Purchaser or any of its Affiliates in
respect of the actions contemplated by this Agreement.
(d) DISCLAIMER OF INFORMATION. Except for the specific
representations and warranties of Seller or its Affiliates contained in
this Agreement, the Transaction Documents, or in the Disclosure Schedule,
any information supplied by any director, officer, employee, agent,
advisor, consultant or contractor of the Seller, the Company, Amoco
Corporation or any Amoco Affiliate in connection with this Agreement or
the business or affairs of the Company (including, but not limited to,
information supplied by Lazard) shall not constitute a representation or
warranty by any such Person as to the accuracy thereof and the Purchaser
agrees not to bring (or allow the Company to bring) any action or
proceeding against any such director, officer, employee, agent, advisor,
consultant or contractor with respect to the provision of such
information. THE PURCHASER ACKNOWLEDGES AND CONFIRMS THAT NONE OF THE
SELLER, THE COMPANY, AMOCO CORPORATION OR ANY AMOCO AFFILIATE MAKES ANY
REPRESENTATION OR WARRANTY TO THE PURCHASER EXCEPT AS SPECIFICALLY MADE BY
THE SELLER IN THIS AGREEMENT AND THAT THE PURCHASER HAS NOT RELIED ON ANY
27
REPRESENTATIONS OR WARRANTIES BY ANY OTHER PERSON. By way of illustration,
and in no way as a limitation on the above disclaimers of warranties,
neither the Seller nor the Company make any representation or warranty to
the Purchaser with respect to (i) the information set forth in the
Information Memorandum or any supplement to such Information Memorandum,
distributed by Lazard pertaining to the business of the Company, (ii) the
accuracy of any statement or information made or communicated (orally or
in writing) to the Purchaser or its representatives or agents by Lazard,
(iii) any summary of any agreement or other document relating to the
Company made available to the Purchaser by the Seller, or (iv) any
financial projection, estimate or forecast relating to the Company. With
respect to any such projection, estimate or forecast delivered by or on
behalf of the Seller to the Purchaser, the Purchaser acknowledges that (A)
there are uncertainties inherent in attempting to make such projections,
estimates and forecasts, (B) it is familiar with such uncertainties, (C)
it is taking full responsibility for making its own evaluation of the
matters set forth in all such projections, estimates and forecasts and (D)
it shall have no claim against any director, officer, employee, agent,
advisor, consultant or contractor of the Seller or the Company including,
but not limited to, Lazard in connection with such projections, estimates
and forecasts.
(e) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Until the Closing Date,
the Parties hereby agree that, except as may be required by law or a rule
of the New York Stock Exchange, they will not issue any press release or
other public announcements to the Company's customers, suppliers or the
public relating to the transactions contemplated hereby unless such press
release or announcement is mutually agreed upon and prepared by the
Purchaser, Lazard and the Seller, except that the Seller may make any such
announcement(s) to the employees of the Company.
(f) EMPLOYEES AND EMPLOYEE BENEFITS PLANS.
(i) PERSONNEL EMPLOYMENT. The Purchaser shall continue to
employ all Employees including those Employees who, as of the
Transfer Date, are on personal, military, family, educational or
medical leave or those receiving sickness and disability benefits,
occupational illness and injury benefits, or long-term disability
benefits (as those terms are defined in the excerpts from the Amoco
Corporation Personnel Policy Manual set forth in Section 9.3(f)(i)
of the Disclosure Schedule, hereinafter collectively referred to as
"LEAVE"), at the same or substantially similar base salaries or
wages, and except as provided herein, under substantially similar
employee benefit plans and policies provided Employees by Amoco or
its Affiliates with similar duties and responsibilities, and for
those Employees currently located at Texas City, Texas, at the same
location immediately prior to the Transfer Date. Purchaser shall
assume and become obligated under contract number 149 of Section 4.9
of the Disclosure Schedule; PROVIDED HOWEVER, that Purchaser shall
not be precluded from asserting any claims it might have subsequent
to the Transfer Date that it is not
28
bound as a matter of fact or law to honor the terms of that contract
or to recognize the contracting party.
(ii) Effective as of the Transfer Date, the Purchaser shall
take all action necessary and appropriate to extend coverage under
the existing Tejas Gas Corp. Pension Plan (the "Purchaser's Pension
Plan") qualified under section 401(a) of the Code to the Employees
who were participants in the Amoco Employee Retirement Plan of Amoco
Corporation and Participating Companies ("Amoco Retirement Plan") at
the Transfer Date. The Employees shall be credited with service
under the Purchaser's Pension Plan, for eligibility, vesting, and
accrual of benefit purposes, with the service credited to them for
such purposes under the Amoco Retirement Plan as of the Transfer
Date. The Employees' benefits under the Purchaser's Pension Plan
shall be reduced by the accrued age 65 single life annuity payable
to Employees eligible under the Amoco Retirement Plan. In no event
shall the age 65 single life benefit accrued under Purchaser's
Pension Plan for Employees be less than the benefit such Employees
would receive if only service with the Purchaser were recognized
under Purchaser's Pension Plan. Purchaser's Pension Plan may include
such other terms and provisions as shall be determined by the
Purchaser in its sole discretion to the extent not inconsistent with
this Section 9.3(f)(ii). Amoco agrees to furnish on a timely basis
such information with regard to benefits payable to Employees under
the Amoco Retirement Plan and such other information as the
Purchaser may from time to time reasonably request for purposes of
complying with this Section 9.3(f)(ii).
(iii) Effective as of the Transfer Date, the Purchaser shall
take all action necessary and appropriate to extend coverage under
the Tejas Gas Corp. Thrift Plan (the "Purchaser's Savings Plan")
qualified under section 401(a) of the Code to the Continuing
Employees who have account balances under the Amoco Employees
Savings Plan ("Amoco Savings Plan") on the Transfer Date. The
Employees shall 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 Amoco Savings Plan as of the
Transfer Date. Effective as of the Transfer Date, Purchaser shall
amend its Purchaser's Savings Plan to provide (1) that Employees are
eligible to participate in Purchaser's Savings Plan on the Transfer
Date on the same terms as other employees of Purchaser, and (2) that
Employees' vesting service recognized under the Amoco Employee
Savings Plan shall be recognized in the Purchaser's Savings Plan for
the purposes of both vesting service and eligibility service.
Purchaser shall permit Employees at their option to transfer their
Amoco Savings Plan Accounts to the Purchaser's Savings Plan pursuant
to a trust to trust transfer within ninety (90) days of the Transfer
Date, and to transfer any outstanding loan balances to the
Purchaser's Savings Plan under terms and conditions established by
the Purchaser's Savings Plan. Within ten (10) days of Closing, the
Seller shall provide Purchaser a list of Employees' vesting service
recognized under the
29
Amoco Employee Savings Plan as of the Transfer Date.
(iv) Except as provided in subsections (v), (viii), and (ix)
of this Section, claims for benefits under welfare plans, as such
term is defined in Section 3(1) of ERISA, in which Employees
participate arising out of occurrences prior to the Transfer Date
shall be covered by the applicable welfare plan of Amoco in
accordance with the terms of such plan. All such claims for benefits
by Employees arising out of occurrences subsequent to the Transfer
Date shall be covered by the applicable welfare plan of the
Purchaser in accordance with the terms of such plan. Neither the
Purchaser nor any of its subsidiaries shall be liable for payment of
any long-term disability benefit due to any Employee who, prior to
the Transfer Date, is in the waiting or qualifying period for
long-term disability benefits or is on long-term disability. After
the Transfer Date, the Seller shall be responsible for disability
benefits payable to such Employees under the Seller's disability
plan.
(v) Claims for medical, dental, prescription drug, vision, and
employee assistance plan benefits by Employees with respect to
purchases or services or treatment rendered prior to the Transfer
Date shall be covered by the applicable welfare plan of Amoco
Corporation in accordance with the terms of such plan. Claims for
such benefits by Employees with respect to purchases of services, or
treatment rendered on or subsequent to the Transfer Date shall be
covered by the applicable welfare plan of the Purchaser in
accordance with the terms of such plan. The Purchaser shall cause
the Employees to be granted credit under the welfare plan of the
Purchaser providing medical, dental, prescription drug, vision, and
employee assistance plan coverage, for the year during which the
Transfer Date occurs, for any deductibles already incurred by such
Employees for such year under the welfare plan of Amoco Corporation
providing such coverage, and the Purchaser shall cause to be waived
any eligibility waiting periods and pre-existing condition
restrictions under the welfare plans of the Purchaser to the extent
necessary to provide immediate coverage under such welfare plans as
of the Transfer Date (but only to the extent that coverage was
provided under the applicable welfare plan of Amoco). The Purchaser
shall provide the Employees (and their respective beneficiaries)
with medical benefits sufficient to satisfy the obligations of the
Seller under Section 4980B(f) of the Code with respect to such
Employees so that the Seller will not incur any tax under Section
4980B of the Code.
(vi) For a period of twelve (12) months following the Transfer
Date, the Purchaser shall establish and manage a severance benefit
plan to cover the Employees with such severance benefit being a
severance benefit plan substantially similar to the Amoco
Corporation and Participating Affiliates Severance Plan (the "Amoco
Severance Plan"). The Purchaser's severance benefit plan shall
include, without limitation, a severance allowance, medical
benefits, life insurance, and educational assistance, to Employees
whose
30
employment is terminated by the Purchaser following the Transfer
Date or who are offered positions with the Purchaser that require a
geographical relocation of more than fifty (50) miles or who suffer
wage or salary reductions effected by the Purchaser during the
period of twelve (12) months after the Transfer Date under
circumstances that would make such Employees eligible for the
severance benefits described in the Amoco Severance Plan. During
this same twelve (12) month period, the Purchaser also agrees to
provide an additional sixty (60) calendar days on the payroll after
such Employees are notified of eligibility for severance benefits,
which is consistent with the past practice and policy of Amoco and
its Affiliates, and to provide up to Five Thousand Dollars ($5,000)
in outplacement benefits to each such Employee, with the level of
outplacement benefits actually provided being commensurate with the
level of each Employee's job. For purposes of calculating the
severance allowance described in the Amoco Severance Plan, as
applied herein by Purchaser, "credited service" shall include each
Employee's service with Amoco and its Affiliates in addition to each
Employee's service with the Purchaser, its successors and its
Affiliates. The amounts of each Employee's credited service with
Amoco and its Affiliates immediately prior to the Transfer Date
shall be delivered to the Purchaser prior to the Closing. The
Purchaser also agrees to include the Seller and its Affiliates as
third party beneficiaries in any release executed by Employee in
order to receive the severance benefits described in the Amoco
Severance Plan. The Purchaser agrees not to require Employees to
execute a release in order to receive the sixty (60) calendar days
on the payroll and the outplacement benefits described above.
Purchaser shall be responsible for the first five hundred thousand
dollars ($500,000) paid in severance benefits to any Potential
Surplus Employee who is terminated either by Amoco or by Purchaser
after the Transfer Date pursuant to the provisions of this section.
Purchaser will reimburse Amoco for any severance benefits it
provides to Potential Surplus Employees pursuant to the $500,000
maximum. Amoco will reimburse Purchaser in the event Purchaser
incurs severance benefit expenses pursuant to this provision
exceeding $500,000 in the aggregate. Notwithstanding the two
preceding sentences, Purchaser shall be responsible for all
severance benefits pursuant to this Section for all other Employees
after the Transfer Date who are not Potential Surplus Employees.
During the period of twelve (12) months after the Transfer Date, the
Purchaser shall not be responsible for providing severance benefits
under this Section if circumstances arise which cause the Purchaser
to enact a salary or wage reduction, layoff, or relocation program
which affects a simple majority of the Purchaser's entire work force
at the time of the action.
(vii) Vacation entitlement accrued by Employees for the year
in which the Transfer Date occurs under Amoco's vacation policy as
in effect as of the Transfer Date shall be recognized by the
Purchaser following the Transfer Date. Service with Amoco
Corporation or any Amoco Affiliate shall be credited for purposes of
the Purchaser's vacation policy following the Transfer Date.
31
(viii) With respect to all Employees who retired from
employment with Amoco Corporation or an Amoco Affiliate prior to the
Transfer Date and who have been, or are eligible to be, provided
with post-retirement medical or life insurance coverage as of the
Transfer Date sponsored by Amoco Corporation or an Amoco Affiliate,
the Seller shall assume or retain any and all liability with respect
to the provision of such coverages to such retired employees and
their eligible dependents on and after the Closing. With respect to
all Employees who retire from employment with Purchaser after the
Transfer Date, such Employees shall be covered by Purchaser's plans
that are in effect at the time of retirement.
(ix) Claims for workers compensation benefits for Employees
arising out of occurrences prior to the Transfer Date shall be the
responsibility of the Seller. Claims for workers compensation
benefits for Employees arising out of occurrences subsequent to the
Transfer Date shall be the responsibility of the Purchaser.
(x) Nothing herein shall be deemed or construed (i) to give
rise to any rights, claims, benefits, or causes of action to any
Employee or any other person, except the Seller or (ii) to prevent,
restrict, or limit the Purchaser and its subsidiaries following the
Transfer Date 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 subsections (i) through (x) of this Section for the
benefit of the Seller.
(xi) The Purchaser represents and warrants that there will be
no major employment losses as a consequence of the transactions
contemplated by this Agreement that might trigger obligations under
the Worker Adjustment and Retraining Notification ("WARN") Act, 29
U.S.C. Section 2102 et seq., or under any similar provision of any
federal, state, regional, foreign, or local law, rule, or regulation
(referred to collectively as "WARN OBLIGATIONS"). Moreover, to the
extent that any WARN obligations might arise as a consequence of the
transactions contemplated by this Agreement, it is agreed that the
Seller shall be responsible for any WARN obligations arising as a
result of any employment losses occurring prior to the Transfer Date
and the Purchaser shall be responsible for any WARN obligations
arising as a result of any employment losses occurring upon or after
the Transfer Date. Furthermore, for the first ninety (90) days
following the Transfer Date, the Purchaser shall not engage in any
mass layoff, plant closing, or other action that might trigger
obligations of the Seller and/or its Affiliates under the WARN Act
or under any similar provision of any federal, state, regional,
foreign, or local law, rule or regulation.
32
(xii) Prior to the Closing Date, Purchaser shall provide the
Seller a list of current Company employee classifications that it
deems to be surplus. Employees in the surplus classifications (the
"Potential Surplus Employees") shall have an opportunity to seek
alternate employment with Amoco Corporation or an Amoco Affiliate
prior to the Transfer Date, and any Potential Surplus Employees who
have not obtained alternative employment with Amoco Corporation or
an Amoco Affiliate will become employees of Purchaser on the
Transfer Date pursuant to Section 9.5. A list of the employees of
the Company is included in Section 9.5 of the Disclosure Schedule.
This list will be updated and delivered to Purchaser at least two
(2) days prior to the Closing.
(g) EASEMENTS. The Seller acknowledges that certain pipelines,
compressors, measurement facilities and other facilities relating thereto
which are owned or leased by the Company and its subsidiaries (the
"Pipelines") are located on property owned by the Seller and its
Affiliates. The Seller and its Affiliates grant to the Company and its
subsidiaries easements for the purposes of maintaining, inspecting,
operating, protecting, repairing, replacing, changing the size of, and
removing the Pipelines and all valves, fittings, devices for controlling
electrolysis and cleaning the Pipeline interior, other necessary
appurtenances above or below ground, and suitable markers to ▇▇▇▇ the
location of the Pipelines, together with rights of ingress and egress
upon, over, and through the property of Seller and its Affiliates adjacent
to such easements for the purpose of constructing, operating, inspecting,
repairing, maintaining, replacing, re-sizing or removing the Pipelines and
appurtenances of the Company and its subsidiaries located on the
easements. After the Closing, Seller and its Affiliates will execute,
notarize, and record such further documents evidencing the foregoing
easements as may be reasonably requested by Purchaser from time to time.
(h) ASSETS. After the Closing, the Seller and its Affiliates
will transfer and convey to the Company and its subsidiaries all
furniture, computers, telephones, copying and fax machines, supplies, and
equipment, if any, used by the Company and its subsidiaries in the
Ordinary Course of Business but held in the name of the Seller or its
Affiliates other than the Company and its subsidiaries.
9.4 BENEFIT PLAN INDEMNITY. The Seller shall indemnify and
hold harmless the Purchaser against any Loss suffered by the Purchaser
resulting from:
(a) any liability, action, suit, claim, contribution,
benefits, or accumulated funding deficiency payable under the terms of, or
relating to, any Employee Plans of Amoco Corporation or an Amoco Affiliate
(including those in which the Company was a participant prior to the
Transfer Date) whether arising under the terms of such plan, ERISA, the
Code or any other applicable Law;
(b) non-compliance of any such Employee Plans with the Code,
ERISA or any Law to the extent the Code, ERISA or such Law is applicable
to such Employee Plans;
33
(c) any post-retirement life insurance or medical benefits
payable under any Amoco Employee Plans to any person employed by the
Company after the Transfer Date;
(d) any liability of the Company or its subsidiaries to the
Pension Benefit Guaranty Corporation relating to such Employee Plans; or
(e) any obligations of the Company or its subsidiaries to
contribute to any multi-employer plan within the meaning of Section 3(37)
of ERISA.
Seller agrees to remain responsible for and make all payments
required under the Amoco Gas Company Retention Plan.
9.5 EMPLOYMENT MATTERS.
(a) TRANSITION PERIOD. Effective on the Closing Date all
Employees will be transferred to an Amoco Affiliate for a period of 60
days following the Closing Date ("Transition Period"). Upon the 60th day
following the Closing Date (the "Transfer Date"), all the Employees who
were transferred to such Amoco Affiliate on the Closing Date shall be
offered employment with the Company or an Affiliate in accordance with the
provisions of Section 9.3(f) unless any such Employees have accepted
alternate employment with an Amoco Affiliate or have terminated employment
with Amoco Corporation and its Affiliates prior to the Transfer Date.
During the Transition Period the Employees who were transferred to such
Amoco Affiliate shall provide services to the Company in similar
capacities as such Employees provided services to the Company prior to the
Closing, in accordance with a Transition Services Agreement, the terms of
which shall be mutually agreed upon by the parties prior to the Closing
and shall be effective as of the Closing.
9.6 NEGATIVE COVENANTS. From the date of this Agreement
through the Closing, neither the Company nor AETC shall (i) accept
prepayment for goods (including natural gas and liquids) or services to be
rendered by the Company or under any AETC Contract after the Closing or
(ii) enter into any fixed-price, take-or-pay or ship-or-pay contracts to
be assumed by the Company or its subsidiaries or the Purchaser or its
Affiliates which would obligate any such parties after the Closing to
purchase or sell gas at a fixed (as distinguished from floating index)
price for more than 30 days or to pay for natural gas or transportation
not taken or used (or demand or reservation charges therefor).
34
ARTICLE X
TERMINATION
10.1 ABILITY TO TERMINATE. The Parties may terminate this Agreement as
provided below:
(a) the Purchaser and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or before
December 31, 1997 by reason of the failure of any condition precedent
pursuant to Sections 7.1 or 7.2 (unless the failure results primarily from
the Purchaser breaching any representation, warranty, or covenant
contained in this Agreement); and
(c) the Seller may terminate this Agreement by giving written notice
to the Purchaser if the Closing shall not have occurred on or before
December 31, 1997 by reason of the failure of any condition precedent
pursuant to Sections 7.1 or 7.3 (unless the failure results primarily from
the Seller breaching any representation, warranty, or covenant contained
in this Agreement).
10.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 10.1, all rights and obligations of the Parties to the other
Party hereunder shall terminate without any liability of any Party to the other
Party; PROVIDED, HOWEVER, that the provisions contained in Sections 6.7, 9.3(b)
and 9.3(c) shall survive termination; and PROVIDED, FURTHER, that any
termination of this Agreement pursuant to subparagraphs (b) or (c) of Section
10.1 by reason of any breach of any representation and warranty or failure to
perform or comply with any covenant or other agreement contained herein shall
not relieve the breaching or defaulting Party from any liability for breach of
contract to the other Party hereto.
ARTICLE XI
INDEMNIFICATION AND RELATED MATTERS
11.1 INDEMNIFICATION.
(a) SELLER INDEMNIFICATION. The Seller shall indemnify and hold
harmless the Purchaser against any Loss suffered by the Purchaser
resulting from (i) any breach by the Seller of this Agreement including
without limitation failure by the Seller to pay promptly any Taxes
pursuant to Article VIII or (ii) any inaccuracy in or breach of any of the
representations, warranties or covenants made by the Seller herein or in
any document delivered pursuant hereto.
(b) PURCHASER INDEMNIFICATION. The Purchaser shall indemnify and
hold harmless the Seller against any Loss suffered by the Seller resulting
from (i) any breach
35
by Purchaser of this Agreement or (ii) any inaccuracy in or breach of any
of the representations, warranties or covenants made by Purchaser herein
or in any document delivered pursuant hereto.
11.2 ALLOCATION OF ENVIRONMENTAL LIABILITY.
(a) ENVIRONMENTAL LIABILITY OF THE SELLER. The Seller shall remain
liable and indemnify and hold harmless the Purchaser from any and all
Losses of any kind relating to any release, discharge, disposal or
emission of hazardous waste, hazardous substances, pollutants,
contaminants, materials, products or byproducts ("POLLUTANTS") into the
environment, including, without limitation, the surface or subsurface of
the Real Property and/or any other property on which Pollutants from the
Real Property have come to be located (hereinafter "ENVIRONMENTAL
CONTAMINATION"), that occurred on or before the Closing Date; provided,
however, that the foregoing indemnities shall not apply nor shall any of
them be construed as covering any loss or dimunition in the value of the
Real Property as a result of the presence on or under the Real Property of
said Pollutants. Without limiting the foregoing, the Seller agrees to
retain control, management, responsibility and liability for the following
lawsuits and all appeals and progeny thereof: ▇▇▇▇▇▇▇, ET AL V. AMOCO, ET
AL; TERRY, CARL, ET AL V. AMOCO CHEMICAL COMPANY AND AMOCO GAS COMPANY;
and CROFTON V. AMOCO CHEMICAL COMPANY.
(b) ENVIRONMENTAL LIABILITY OF THE PURCHASER. The Purchaser shall be
liable and indemnify and hold harmless the Seller from any and all Losses
relating to any Environmental Contamination that occurs after the Closing
Date; except to the extent the cause of such Environmental Contamination
is attributable to the Seller, its Affiliates, or their respective
employees, contractors, agents, representatives or licensees. The
Purchaser shall notify the Seller, in writing and by telephone, of any
releases, discharges, disposal or emissions of Pollutants onto the surface
or subsurface of the Real Property by the Purchaser, or by any third
party, after the Closing Date, if the Purchaser has actual knowledge of
such releases, discharges, disposal or emissions by such third party.
(c) COMPARATIVE RESPONSIBILITY. As to Environmental Contamination
where there is a dispute between the parties regarding whether Seller or
Purchaser is responsible under Sections 11.2(a) and (b) above, the Seller
and the Purchaser shall allocate liability and responsibilities with
respect to remediation based on comparative responsibility. In such event,
the party having the larger share of such comparative liability shall be
entitled to control and manage the remediation under Sections 11.2(d) or
(e), as the case may be. If such party does not undertake such remediation
within a reasonable period of time following the discovery of the
Environmental Contamination, then the other Party may do so upon thirty
(30) days prior written notice to the other Party, during which period the
Party having the larger share of such comparative liability may commence
and shall be entitled to control and manage such remediation. If at the
end of such thirty (30) day period such remediation shall not have
commenced, the other Party may commence, control and manage such
remediation. The fact that a
36
Party undertakes remediation pursuant to this Section 11.2(c) shall not
waive, diminish, prejudice, impair, or otherwise reduce such Party's right
to indemnity under Section 11.2(a) or (b).
(d) REMEDIATION BY THE SELLER. To the extent the Seller is liable
for Environmental Contamination under Section 11.2(a) herein, the Seller
shall have the right to perform or have performed at its cost, any
required remediation, including dealing with any environmental agency or
agencies with regard to the corrective action required, clean-up standards
and appropriate work plans. With respect to any required remediation that
the Seller elects to perform, the Seller may select, subject to approval
by the Purchaser (such approval not to be unreasonably withheld), one or
more environmental consultants to investigate and characterize all
environmental contamination potentially subject to remediation, and to
design and perform any required remediation. The Purchaser shall have the
right, at its cost, to participate in the planning and design of any
required remediation, and the Purchaser shall be provided, for review and
comment, a draft of any study, workplan, report or similar document to be
submitted to an environmental agency at least ten (10) working days before
the Seller intends to submit it. The Seller will consider in good faith
any comments made by the Purchaser with respect to any such study,
workplan, report or similar document and, to the extent practicable, will
incorporate such comments into the document submitted to the environmental
agency. Any required remediation will be designed and performed by the
Seller in a manner that complies with all environmental laws, minimizes
any potential future liability of the site owner/operator, is commercially
reasonable and cost effective and does not unreasonably interfere with the
Purchaser's operations. The Seller shall provide the Purchaser a copy of
all reports, plans and correspondence submitted to an environmental agency
with respect to any required remediation thereof. In addition, the
Purchaser shall have the right, at its cost, to attend and participate in
any meetings, conferences or other sessions with any environmental agency
concerning the required remediation and will be provided at least ten (10)
days' notice of any such meetings (or the maximum number of days as is
practicable if the meeting date is not set at least ten (10) days prior to
the meeting). With respect to any remediation performed by or on behalf of
the Seller pursuant to this Section, the Seller shall be the generator of
any wastes generated in connection with such remediation and shall prepare
all documents associated with such remediation in a manner that clearly
identifies the Seller as the generator of the waste, including, but not
limited to, the use of identification numbers issued to the Seller. Upon
completion of the required remediation, the Seller shall provide the
Purchaser written confirmation that the remediation plan designed as set
forth above has been completed. TO THE EXTENT THAT, PURSUANT TO THIS
SECTION, THE SELLER OR ITS REPRESENTATIVES OR CONSULTANTS ARE PROVIDED
ACCESS TO THE REAL PROPERTY, THE SELLER SHALL REIMBURSE THE PURCHASER FOR,
AND DEFEND, INDEMNIFY AND HOLD HARMLESS THE PURCHASER FROM AND AGAINST,
ANY AND ALL LOSS, DAMAGE, COSTS (INCLUDING REIMBURSEMENT OF ALL REASONABLE
ATTORNEY FEES AND OTHER COSTS OF DEFENSE), LIABILITY, CLAIM OR SUIT,
WHETHER FOR BODILY
37
INJURY OR DEATH OF ANY PERSON (INCLUDING THE SELLER'S EMPLOYEES, AGENTS
AND REPRESENTATIVES), DAMAGE TO OR DESTRUCTION OR LOSS OF PROPERTY, OR
OTHERWISE, ARISING IN ANY MANNER WHATSOEVER OUT OF THE SELLER OR ITS
REPRESENTATIVES OR CONSULTANTS BEING GIVEN ACCESS TO THE REAL PROPERTY,
WHETHER OR NOT BASED UPON STRICT LIABILITY OR CAUSED BY THE SOLE OR
CONCURRENT NEGLIGENCE (ORDINARY OR GROSS) OF THE PURCHASER OR ANY OTHER
PERSON OR ENTITY, UNLESS SUCH LOSS, DAMAGE, COST, LIABILITY, CLAIM OR SUIT
WAS OCCASIONED SOLELY BY THE NEGLIGENCE OR INTENTIONAL TORT OF THE
PURCHASER OR ANY OFFICER, DIRECTOR OR AGENT THEREOF.
(e) REMEDIATION BY THE PURCHASER. To the extent the Purchaser is
liable for Environmental Contamination under Section 11.2(b) herein, the
Purchaser shall have the right to perform or have performed at its cost,
any required remediation, including dealing with any environmental agency
or agencies with regard to the corrective action required, clean-up
standards and appropriate work plans. With respect to any required
remediation that the Purchaser elects to perform, the Purchaser may
select, subject to approval by the Seller (such approval not to be
unreasonably withheld), one or more environmental consultants to
investigate and characterize all environmental contamination potentially
subject to remediation, and to design and perform any required
remediation. The Seller shall have the right, at its cost, to participate
in the planning and design of any required remediation, and the Seller
shall be provided, for review and comment, a draft of any study, workplan,
report or similar document to be submitted to an environmental agency at
least ten (10) working days before the Purchaser intends to submit it. The
Purchaser will consider in good faith any comments made by the Seller with
respect to any such study, workplan, report or similar document and, to
the extent practicable, will incorporate such comments into the document
submitted to the environmental agency. Any required remediation will be
designed and performed by the Purchaser in a manner that complies with all
environmental laws, minimizes any potential future liability of the site
owner/operator, is commercially reasonable and cost effective and does not
unreasonably interfere with the Seller's operations. The Purchaser shall
provide the Seller a copy of all reports, plans and correspondence
submitted to an environmental agency with respect to any required
remediation thereof. In addition, the Seller shall have the right, at its
cost, to attend and participate in any meetings, conferences or other
sessions with any environmental agency concerning the required remediation
and will be provided at least ten (10) days' notice of any such meetings
(or the maximum number of days as is practicable if the meeting date is
not set at least ten (10) days prior to the meeting). With respect to any
remediation performed by or on behalf of the Purchaser pursuant to this
Section, the Purchaser shall be the generator of any wastes generated in
connection with such remediation and shall prepare all documents
associated with such remediation in a manner that clearly identifies the
Purchaser as the generator of the waste, including, but not limited to,
the use of identification numbers issued to the Purchaser. Upon completion
of the required remediation, the Purchaser shall provide the Seller
38
written confirmation that the remediation plan designed as set forth above
has been completed. TO THE EXTENT THAT, PURSUANT TO THIS SECTION, THE
PURCHASER OR ITS REPRESENTATIVES OR CONSULTANTS ARE PROVIDED ACCESS TO THE
SELLER'S PROPERTY, THE PURCHASER SHALL REIMBURSE THE SELLER FOR, AND
DEFEND, INDEMNIFY AND HOLD HARMLESS THE SELLER FROM AND AGAINST, ANY AND
ALL LOSS, DAMAGE, COSTS (INCLUDING REIMBURSEMENT OF ALL REASONABLE
ATTORNEY FEES AND OTHER COSTS OF DEFENSE), LIABILITY, CLAIM OR SUIT,
WHETHER FOR BODILY INJURY OR DEATH OF ANY PERSON (INCLUDING THE
PURCHASER'S EMPLOYEES, AGENTS AND REPRESENTATIVES), DAMAGE TO OR
DESTRUCTION OR LOSS OF PROPERTY, OR OTHERWISE, ARISING IN ANY MANNER
WHATSOEVER OUT OF THE PURCHASER OR ITS REPRESENTATIVES OR CONSULTANTS
BEING GIVEN ACCESS TO THE SELLER'S PROPERTY, WHETHER OR NOT BASED UPON
STRICT LIABILITY OR CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE (ORDINARY
OR GROSS) OF THE SELLER OR ANY OTHER PERSON OR ENTITY, UNLESS SUCH LOSS,
DAMAGE, COST, LIABILITY, CLAIM OR SUIT WAS OCCASIONED SOLELY BY THE
NEGLIGENCE OR INTENTIONAL TORT OF THE SELLER OR ANY OFFICER, DIRECTOR OR
AGENT THEREOF.
(f) ACCESS. Effective as of the Closing Date, the Purchaser hereby
grants to the Seller, its employees, contractors, agents, representatives,
and licensees, access to the Real Property for the purpose of testing,
assessing and, if necessary, remediating the Real Property, including but
not limited to: (a) the installation, monitoring and maintenance of
monitoring ▇▇▇▇▇, recovery ▇▇▇▇▇, and other equipment and devices onto, in
or around the Real Property; (b) the removal, storage and/or treatment of
soils, groundwater and surface water from or on the Real Property; (c)
ingress and egress, by persons, vehicles and equipment, in, across and
around the Real Property; and (d) the completion of such additional
related activities as may be necessary or desired by the Seller to test,
assess and, if necessary, remediate any Environmental Contamination in or
on the surface or subsurface of the Real Property.
11.3 INDEMNIFICATION PROCEDURES.
(a) NOTICE OF CLAIM. Upon obtaining knowledge thereof, a party
entitled to be indemnified pursuant to Section 11.1(a), 11.1(b) or 11.2
hereof (the "INDEMNIFIED PARTY") shall notify the party liable for such
indemnification (the "INDEMNIFYING PARTY") of any claim or demand which it
has determined has given or could give rise to a right of indemnification
under this Agreement. If such claim or demand relates to a claim asserted
by a third party, the Indemnifying Party shall have a reasonable time to
contest any such claim or demand and the condition's and procedures in
Section 11.3(b) shall be followed. Subject to the Indemnifying Party's
right to defend third party claims as set forth above and Section 11.3(b),
the Indemnifying Party shall reimburse the Indemnified Party promptly upon
demand for any payment made or Loss suffered by the Indemnified
39
Party in respect of any Loss, to which this Article XI relates.
Notwithstanding anything contained in this Section 11.3, with respect to
remediation of Environmental Contamination the procedures described in
Section 11.2 shall supercede the procedures described in this Section
11.3.
(b) CONTROL OF DEFENSE; CONDITIONS. The obligations of an
Indemnifying Party under this Section 11 with respect to Losses arising
from claims of any third party that are subject to the indemnification
provided in Section 11.1 above shall be governed by and contingent upon
the following additional terms and conditions:
(i) At its option, an Indemnifying Party may appoint as lead
counsel of such defense any legal counsel selected by the
Indemnifying Party (even if the provisions of Section 11.1 or 11.2
would or could limit such Indemnifying Party's obligation), which
legal counsel shall be acceptable to the Indemnified Party (such
acceptance not to be unreasonably withheld or delayed).
(ii) Notwithstanding Section 11.3(b)(i) above, the Indemnified
Party will be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose; provided, that
such employment shall be at the Indemnified Party's own expense
unless (1) the employment thereof has been specifically authorized
by the Indemnified Party in writing, (2) the Indemnifying Party has
failed to assume the defense and employ counsel, or (3) one or more
of the Indemnifying Parties is a party to such claim and there is a
conflict of interest which could prohibit a single legal counsel
from representing both the Indemnified Party and the Indemnifying
Party, in which case the reasonable fees and expenses of the
Indemnified Party's counsel shall be paid by the Indemnifying Party.
(iii) The Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to any third
party claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably). The Indemnifying Party will
not consent to the entry of any judgment or enter into any
settlement with respect to any third party claim without the prior
written consent of the Indemnified Party (not to be withheld
unreasonably); PROVIDED, HOWEVER, that no such consent of the
Indemnified Party shall be required if such judgment or settlement
contains no finding or admission of fault or guilt on the part of
the Indemnified Party and such judgment or settlement contains an
unconditional release of the Indemnified Party with respect to the
particular matter.
11.4 LIMITATIONS ON INDEMNIFICATION. An Indemnified Party shall not be
entitled to assert any right of indemnification (x) under Section 11.1 for any
Loss suffered by it after the second anniversary of the Closing and (y) under
Section 11.2 for any Loss suffered by it after the tenth anniversary of the
Closing, except that (i) if there shall then be pending any dispute, claim,
proceeding or action under this Agreement, the Indemnified Party shall continue
to have the right to be indemnified with respect to such pending dispute, claim,
proceeding or action and (ii) there
40
shall be no time limitation on claims for indemnification for breaches of
Sections 4.2, 4.4 and 5.2 of the Agreement and the time limitation for claims
under Section 9.4 and claims regarding Taxes under Article VIII shall be the
applicable statue of limitations for the underlying Tax or claim (including any
tollings or extensions thereof). The Purchaser shall not be entitled to
indemnification hereunder until the aggregate Loss suffered by it exceeds
$5,000,000 ("THRESHOLD"), whereupon the Purchaser shall be entitled to
indemnification hereunder by the Seller for any Loss in excess of the Threshold;
provided that this limitation shall not apply to claims for income and Texas
franchise taxes under Article VIII or to claims under Section 9.4. The Seller's
aggregate liability under Section 11.1 shall be limited to, and shall not
exceed, the Purchase Price; provided that this limitation shall not apply to
claims for income and Texas franchise taxes under Article VIII or to claims
under Section 9.4.
11.5 OTHER INDEMNIFICATION PROVISIONS.
(a) SOLE REMEDY. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory or common law remedy
any Party may have for breach of representation, warranty, or covenant;
PROVIDED, HOWEVER, that the Purchaser acknowledges that (i) its sole
pre-Closing remedy for any breach of any of the representations and
warranties contained in Article IV above shall be the release of its
obligation to close pursuant to Section 7.2(a) above and (ii) its sole
post-Closing remedy for any breach of any of the representations and
warranties contained in Article IV of the Agreement shall be the
indemnification provisions set forth in this Article XI.
(b) NO CONSEQUENTIAL DAMAGES. Any indemnification obligation with
respect to any breach or non-performance by either Party of a
representation, warranty, covenant or agreement shall be limited to the
amount of actual damages sustained by such Party by reason of such breach
or non-performance. Notwithstanding anything to the contrary elsewhere in
this Agreement or in the Transaction Documents, no Party or its Affiliates
shall in any event be liable to the other Party or its Affiliates for any
consequential damages, including, but not limited to, loss of revenue or
income, cost of capital, or loss of business reputation or opportunity.
Each Party agrees that it shall not seek punitive damages as to any matter
relating to this Agreement or the Transaction Documents or the
transactions contemplated thereby.
ARTICLE XII
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. The Transaction Documents (including the Disclosure
Schedule thereto) and the Confidentiality Agreement constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the Parties with respect to the subject matter hereof.
12.2 DISCLOSURE SCHEDULE. Any information set forth in any Section of the
Disclosure Schedule attached to this Agreement or incorporated in any Section of
this Agreement shall be
41
considered to have been set forth in each other Section of the Disclosure
Schedule hereto unless it is not reasonably apparent that a disclosure in one
section of the Disclosure Schedule applies to another section of the Disclosure
Schedule. The specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the Disclosure Schedule hereto is not intended to imply that such amounts, or
higher or lower amounts, or the items so included or other items, are or are not
required to be disclosed (including, without limitation, whether such amounts or
items are required to be disclosed as material or threatened) or are within or
outside of the Ordinary Course of Business, and neither Party shall use the fact
of the setting of such amounts or the fact of the inclusion of any such item in
the Disclosure Schedule in any dispute or controversy between the Parties as to
whether any obligation, item or matter not described herein or included in a
Section of the Disclosure Schedule hereto is or is not required to be disclosed
(including, without limitation, whether such amounts or items are required to be
disclosed as material or threatened) or is within or outside of the Ordinary
Course of Business for the purposes of this Agreement; PROVIDED, HOWEVER, that
specification of any dollar amount in Section 4.11 is intended to imply that
items exceeding such dollar amount are required to be disclosed. The information
contained in the Disclosure Schedule hereto is disclosed solely for the purposes
of this Agreement, and no information contained therein shall be deemed to be an
admission by any Party hereto to any third party of any matter whatsoever,
including any violation of law or breach of any agreement.
12.3 GOVERNING LAW, ETC.. This Agreement will be governed by and construed
in accordance with the domestic Laws of the State of Texas without giving effect
to any choice of Law or conflict provision or rule (whether of the State of
Texas or any other jurisdiction) that would cause the Laws of any jurisdiction
other than the State of Texas to be applied. In furtherance of the foregoing,
the domestic Laws of the State of Texas will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of Law
or conflict of Law analysis, the substantive Law of some other jurisdiction
would ordinarily apply, PROVIDED, HOWEVER, that any issue pertaining to the
transfer of the Shares from the Seller to the Purchaser shall be governed by
Applicable Law. The Parties each acknowledge that they were advised by counsel
regarding this Agreement.
12.4 SEVERABILITY. If any covenant, agreement, provision or term of this
Agreement is held to be invalid for any reason whatsoever, then such covenant,
agreement, provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and will in no way
affect the validity or enforceability of any other provision of this Agreement.
12.5 NOTICES. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (iii) sent by next-day or overnight mail or
delivery by an express courier of national repute or (iv) sent by telecopy (with
verbal or electronic confirmation of receipt) or telegram.
42
IF TO THE SELLER:
Amoco Production Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Mail Code 3203
Fax Number: (▇▇▇)▇▇▇-▇▇▇▇
Confirm Number: (▇▇▇)▇▇▇-▇▇▇▇
WITH A COPY TO:
Amoco Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Mail Code 2108
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Attorney - Corporate
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Confirm Number: ▇▇▇-▇▇▇-▇▇▇▇
IF TO THE PURCHASER:
Tejas Gas Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Confirm Number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
General Counsel
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Confirm Number: ▇▇▇-▇▇▇-▇▇▇▇
or, in each case, at such other address as may be specified in writing to the
other parties.
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified, registered, next-day or overnight mail or
delivery, on the day delivered, and (iii) if by telecopy or telegram, on the
next day following the day on which such telecopy or telegram was sent, provided
that a copy is also sent by certified or registered mail.
43
12.6 HEADINGS. The headings used in this Agreement are for the purpose of
reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
12.7 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.
12.8 ASSIGNMENT. This Agreement shall not be assignable or otherwise
transferable by any Party hereto without the prior written consent of the other
Party hereto.
12.9 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall confer
any rights upon any Person or entity other than the Parties and their respective
successors and permitted assigns.
12.10 AMENDMENT, WAIVERS, ETC. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the Party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the Party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
Parties of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the Parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.
12.11 NO STRICT CONSTRUCTION; INTERPRETATION. The language used in this
Agreement will be deemed to be the language chosen by the Parties to express
their mutual intent and no rule of strict construction will be applied against
any Person.
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IN WITNESS WHEREOF, the Parties have duly executed this Stock Purchase
Agreement as of the date first above written.
AMOCO PRODUCTION COMPANY
By: /s/ M.C. ▇▇▇▇▇▇▇▇
Name: M.C. ▇▇▇▇▇▇▇▇
Title: Treasurer
TEJAS GAS CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Sr. Exec. V.P.