EXHIBIT 10.76
CONTRIBUTION AGREEMENT
BETWEEN AND AMONG
▇▇▇▇▇▇▇▇ ENERGY SERVICES, LLC
▇▇▇▇▇▇▇▇ ▇▇ LLC
AND
▇▇▇▇▇▇▇▇ ENERGY PARTNERS L.P.
APRIL 11,2002
TABLE OF CONTENTS
Page
ARTICLE 1 CONTRIBUTION................................................................................... 1
1.1 Excluded Assets.............................................................................. 1
ARTICLE 2 CONTRIBUTION AND CLOSING...................................................................... 2
2.1 Contribution and Closing..................................................................... 2
2.2 Deliveries at the Closing.................................................................... 2
2.3 Transfer Taxes and Recording Fees............................................................ 3
2.4 Working Capital.............................................................................. 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ▇▇▇......................................................... 4
3.1 Organization and Existence................................................................... 4
3.2 Capitalization of WPL........................................................................ 4
3.3 Subsidiaries................................................................................. 4
3.4 Authority and Approval....................................................................... 5
3.5 No Conflict.................................................................................. 5
3.6 Consents..................................................................................... 6
3.7 Laws and Regulations; Litigation............................................................. 6
3.8 Financial Statements......................................................................... 7
3.9 No Adverse Changes........................................................................... 7
3.10 Liabilities.................................................................................. 7
3.11 Taxes ...................................................................................... 8
3.12 Employees and Benefits....................................................................... 9
3.13 Accurate and Complete Records................................................................ 10
3.14 Environmental................................................................................ 10
3.15 Bankruptcy................................................................................... 12
3.16 Contracts and Commitments.................................................................... 12
3.17 Assets....................................................................................... 14
3.18 Assets Other than Real Property Interests.................................................... 14
3.19 Title to Real Property....................................................................... 15
3.20 Intellectual Property........................................................................ 15
3.21 Licenses; Permits............................................................................ 16
3.22 Insurance.................................................................................... 16
3.23 Utility Status............................................................................... 16
3.24 Brokerage Arrangements....................................................................... 16
3.25 Securities Laws.............................................................................. 16
3.26 Transactions with Affiliates................................................................. 17
3.27 Excluded Assets.............................................................................. 17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇ ▇▇ LLC AND
ENERGY PARTNERS......................................................................................... 17
4.1(a) Organization and Existence................................................................... 17
4.1(b) Authority and Approval....................................................................... 18
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4.1(c) Brokerage Arrangements....................................................................... 18
4.1(d) Utility Status............................................................................... 18
4,1(e) Securities Laws.............................................................................. 18
4.2(a) Organization and Existence................................................................... 19
4.2(b) Authority and Approval....................................................................... 19
4.2(c) Brokerage Arrangements....................................................................... 19
4.2(d) Utility Status............................................................................... 20
4.2(e) New Units.................................................................................... 20
ARTICLE 5 ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS...................................... 20
5.1 Certain Changes.............................................................................. 20
5.2 Operations................................................................................... 21
5.3 Access....................................................................................... 22
5.4 Reporting Requirements....................................................................... 23
5.5 Reasonable Best Efforts; Further Assurances.................................................. 23
5.6 Casualty Loss................................................................................ 23
ARTICLE 6 CONDITIONS TO CLOSING......................................................................... 24
6.1 Conditions to the Obligations of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners......................... 24
6.2 Conditions to the Obligation of ▇▇▇.......................................................... 25
ARTICLE 7 TAX MAYFERS................................................................................... 26
7.1 Liability for Taxes.......................................................................... 26
7.2 Tax Returns.................................................................................. 28
7.3 Tax Proceedings.............................................................................. 30
7.4 Cooperation and Exchange of Information...................................................... 30
7.5 Survival..................................................................................... 31
7.6 Conflict..................................................................................... 31
7.7 Miscellaneous................................................................................ 31
ARTICLE 8 INVESTIGATION; LIMITATIONS.................................................................... 31
8.1 Independent Investigation; Limitations....................................................... 31
ARTICLE 9 TERMINATION................................................................................... 32
9.1 Events of Termination........................................................................ 32
9.2 Effect of Termination........................................................................ 33
ARTICLE 10 INDEMNIFICATION upon closing................................................................. 33
10.1 Indemnification of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners upon Closing.......................... 33
10.2 Indemnification of ▇▇▇....................................................................... 33
10.3 Demands...................................................................................... 34
10.4 Right to Contest and Defend.................................................................. 34
10.5 Cooperation.................................................................................. 35
10.6 Right to Participate......................................................................... 35
10.7 Payment of Damages........................................................................... 35
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10.8 Limitations on Indemnification............................................................... 36
10.9 Sole Remedy.................................................................................. 37
10.10 Addition to or Substitution of ▇▇▇ as Indemnitor............................................. 37
10.11 Express Negligence........................................................................... 39
ARTICLE 11 MISCELLANEOUS................................................................................ 39
11.1 Expenses..................................................................................... 39
11.2 Notices...................................................................................... 39
11.3 No Negotiations.............................................................................. 40
11.4 Governing Law................................................................................ 41
11.5 Public Statements............................................................................ 41
11.6 Form of Payment.............................................................................. 41
11.7 Entire Agreement; Amendments and Waivers..................................................... 41
11.8 Conflicting Provisions....................................................................... 42
11.9 Binding Effect and Assignment................................................................ 42
11.10 ▇▇▇ Right of First Refusal................................................................... 42
11.11 Severability................................................................................. 43
11.12 Interpretation............................................................................... 43
11.13 Headings and Schedules....................................................................... 43
11.14 Multiple Counterparts........................................................................ 44
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DEFINED TERMS
Adverse Effect........................................................................................5
Affiliate.............................................................................................1
Agreement.............................................................................................1
Cap...................................................................................................37
Closing...............................................................................................2
Closing Date..........................................................................................2
Constituent Documents.................................................................................41
Contracts.............................................................................................12
Contributor's Tax.....................................................................................29
Damages...............................................................................................33
Deductible............................................................................................36
Disclosure Letter.....................................................................................6
Energy Partners.......................................................................................1
Energy Partners Notice................................................................................30
Energy Partners Parties...............................................................................33
Environmental Deductible..............................................................................36
Environmental Laws....................................................................................10
Excluded Assets.......................................................................................1
Financial Statements..................................................................................7
Hazardous Materials...................................................................................11
Historical WPL Working Capital........................................................................3
Indemnity Claim.......................................................................................34
Knowledge.............................................................................................6
Liens.................................................................................................15
Net Cash Proceeds.....................................................................................2
New Units.............................................................................................2
Notice................................................................................................39
PACE Collective Bargaining Agreement..................................................................10
Permitted Liens.......................................................................................15
Person................................................................................................5
Proceeding Notice.....................................................................................30
Tax...................................................................................................26
Tax Losses............................................................................................27
Tax Returns...........................................................................................27
Taxes.................................................................................................26
Taxing Authority......................................................................................27
Transfer..............................................................................................43
▇▇▇...................................................................................................1
▇▇▇ Equity Amount.....................................................................................2
▇▇▇ Parties...........................................................................................33
▇▇▇▇▇▇▇▇ Group........................................................................................28
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WPL...................................................................................................1
WPL Benefit Plans.....................................................................................10
WPL LLC Interest......................................................................................1
WPL Working Capital...................................................................................3
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ARTICLE 2
CONTRIBUTION AND CLOSING
2.1 Contribution and Closing
Subject to the satisfaction or waiver of the conditions to closing set
forth in Article 6, the closing of the contributions of the WPL LLC
Interest and the other transactions described in Section 2.2 (the
"Closing") will be held at the offices of ▇▇▇ on or before the third
business day following satisfaction or waiver of all such conditions,
commencing at 9:00 a.m., Tulsa,
Oklahoma time or such other place, date
and time as may be mutually agreed upon by the parties hereto. The
"Closing Date," as referred to herein, shall mean the date of the
Closing.
2.2 Deliveries at the Closing.
(a) ▇▇▇ will contribute the WPL LLC Interest to ▇▇▇▇▇▇▇▇ ▇▇ LLC;
(b) In exchange for ▇▇▇' contribution of the WPL LLC Interest,
▇▇▇▇▇▇▇▇ ▇▇ LLC will assign and transfer to ▇▇▇ an additional
20.72% membership interest in ▇▇▇▇▇▇▇▇ ▇▇ LLC;
(c) ▇▇▇▇▇▇▇▇ ▇▇ LLC will contribute the WPL LLC Interest to Energy
Partners in exchange for the following:
(A) the right to receive $674,364,000 in cash (the
"Net Cash Proceeds") pursuant to a borrowing of $700
million, reduced by transaction fees of $10,600,000
and the amount of $15,036,000 for the WPL trade notes
and accounts receivable reflected in Part V of
Exhibit 1.1 and assigned to ▇▇▇ before Closing; and
(B) a number of Class B units of limited partnership
interest in Energy Partners (the "New Units")
determined by dividing 98% of the ▇▇▇ Equity Amount
(as that term is defined below in this section) by
the average price per unit for Energy Partners'
common units (determined by averaging the closing
price for such common units as reported in the
principal composite reporting system for the NYSE for
each of the first twenty trading days of the
twenty-one trading days immediately preceding the
Closing. If there are no sales on any one of those
days of that twenty-day period, the average of the
closing bid and asked prices for that day, as
reported in the principal composite reporting system
for the NYSE, will be used). Such New Units would
have the rights and obligations specified in the
Amended and Restated Agreement of Limited Partnership
of Energy Partners as further amended by the First
Amendment thereto dated as of the Closing Date. The
term "▇▇▇ Equity Amount" means $1,000,000,000 minus
the sum of (i) the Net Cash Proceeds and (ii)
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the amount of $15,036,000 for the "NFL trade notes
and accounts receivable reflected in Part V of
Exhibit 1.1 and assigned to ▇▇▇ before Closing); and
(C) an additional General Partner Interest in Energy
Partners equal to 2% of the ▇▇▇ Equity Amount in
satisfaction of ▇▇▇▇▇▇▇▇ ▇▇ LLC's obligation, in
connection with the transaction contemplated by this
Agreement, to contribute 2% of total contributions to
Energy Partners in accordance with the terms of
Energy Partners' Amended and Restated Agreement of
Limited Partnership; and.
(d) In accordance with clause (c)(1) above, Energy Partners will
borrow the necessary funds and distribute the Borrowing
Proceeds to ▇▇▇▇▇▇▇▇ ▇▇ LLC in satisfaction of GP LLC's right
to receive such amount as set forth in clause (c)(1)(A) above.
2.3 Transfer Taxes and Recording Fees
(a) ▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇ LLC, as contributors hereunder, will each
be responsible for any and all taxes or fees imposed or
incurred by reason of the contributions hereunder and/or the
filing or recording of any instruments necessary to effect the
contributions hereunder, regardless of when such taxes or fees
are levied or imposed.
2.4 Working Capital
The term "WPL Working Capital" means the adjusted net working capital
working capital of WPL which excludes the receivables, intercompany
amounts and other items specified by, and calculated a~ set forth, in
Schedule 2.4 hereto. "Historical WPL Working Capital" means the average
of the adjusted net working capital WPL Working Capital amounts for the
six months of September - December, 2001 and January and February,
2002, as shown on Schedule 2.4.
As soon after Closing as is practicable (but not later than June 30,
2002), the Historical WPL Working Capital will be compared to WPL's
Working Capital amount as of March 31, 2002. If there is a change from
the Historical WPL Working Capital to the WPL Working Capital as of
March 31, 2002, the following shall occur: (a) If such difference
reflects either an increase in positive WPL Working Capital or a
decrease in negative WPL Working Capital, Energy Partners shall
promptly pay (in New Units or cash or a combination thereof, as the
Parties shall mutually agree) the amount of such difference to ▇▇▇; (b)
if such difference reflects either a decrease in positive WFL Working
Capital or an increase in negative WPL Working Capital, ▇▇▇ shall
promptly pay (in New Units or cash or a combination thereof, as the
Parties shall mutually agree) the amount of such difference to Energy
Partners.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇
▇▇▇ hereby represents and warrants to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners that
as of the date hereof and as of the Closing Date:
3.1 Organization and Existence
(a) ▇▇▇ is duly formed, validly existing and in good standing
under the laws of the State of Delaware. ▇▇▇ has full limited
liability company power and authority to transfer its
ownership interest in WPL and perform its obligations
hereunder
(b) WPL is duly formed, validly existing and in good standing
under the laws of the State of Delaware. WPL has full limited
liability company power and authority to own and hold the
properties and assets it now owns and holds and to carry on
its business as and where such properties are now owned or
held and such business is now conducted. WPL is duly licensed
or qualified to do business and is in good standing in the
states in which the character of the properties and assets now
owned or held by it or the nature of the business now
conducted by it requires it to be so licensed or qualified,
except where the failure to be so qualified or in good
standing would not reasonably be expected to have a material
adverse effect on WPL's business, financial condition or
results of operations. The Limited Liability Company Agreement
of WPL is attached as Schedule 3.1 to the Disclosure Letter
(as that term is defined in Section 3.5).
3.2 Capitalization of WPL
(a) The authorized ownership interest of WPL consists of the WPL
LLC Interest. The WPL LLC Interest has been validly issued and
is fully paid and non-assessable and has not been issued in
violation of any pre-emptive rights.
(b) There are no outstanding subscriptions, options, convertible
securities, warrants, calls or rights of any kind issued or
granted by, or binding upon, WPL, ▇▇▇ or any of their
Affiliates (other than Energy Partners, ▇▇▇▇▇▇▇▇ ▇▇ LLC or
their subsidiaries) to purchase or otherwise acquire or issue,
sell or otherwise transfer any security of or equity interest
in WPL. ▇▇▇ owns the legal and beneficial title to, and has
full legal right to contribute, assign and transfer the WPL
LLC Interest to ▇▇▇▇▇▇▇▇ ▇▇ LLC and will, at the time of
delivery thereof to ▇▇▇▇▇▇▇▇ ▇▇ LLC pursuant to the terms
hereof, transfer good and valid title thereto free and clear
of all Liens.
3.3 Subsidiaries
As of the Closing, WPL will not own any equity interest in any Person.
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3.4 Authority and Approval
▇▇▇ has the full limited liability company power and authority to
execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform all of the terms and conditions
hereof to be performed by it. The execution and delivery of this
Agreement, the performance of all the terms and conditions hereof to be
performed by ▇▇▇ and the consummation of the transactions contemplated
hereby have been duly authorized and approved by all requisite limited
liability company governance action of ▇▇▇. The ▇▇▇ Board of Directors
has approved this Agreement and the transactions contemplated hereby.
This Agreement constitutes the valid and binding obligation of ▇▇▇
enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally
and by general principles of equity (whether applied in a proceeding at
law or in equity).
3.5 No Conflict
Except as set forth in Part 3.5 of the Disclosure Letter (as defined
below in this section), this Agreement and the execution and delivery
hereof by ▇▇▇ does not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated hereby will not, (a) conflict with any of, or require the
consent of any Person (as defined below in this section) under, the
terms, conditions or provisions of the limited liability company
agreements charter, by-laws or equivalent governing instruments of ▇▇▇,
WPL or any of their Affiliates (other than Energy Partners, ▇▇▇▇▇▇▇▇ ▇▇
LLC and their subsidiaries); (b) violate any provision of any law or
administrative regulation or any judicial, administrative or
arbitration order, award, judgment, writ, injunction or decree
applicable to ▇▇▇, WPL or any of their Affiliates (other than Energy
Partners, ▇▇▇▇▇▇▇▇ ▇▇ LLC and their subsidiaries); (c) conflict with,
result in a breach of, constitute a default under (whether with notice
or the lapse of time or both), or accelerate or permit the acceleration
of the performance required by, or require any consent, authorization
or approval under, any indenture, mortgage, lien or Contract to which
▇▇▇, WPL or any of their Affiliates (other than Energy Partners,
▇▇▇▇▇▇▇▇ ▇▇ LLC and their subsidiaries) is a party or by which it is
bound or to which any property of ▇▇▇, WPL or any of their Affiliates
(other than Energy Partners, ▇▇▇▇▇▇▇▇ ▇▇ LLC and their subsidiaries) is
subject; (d) result in the creation of any lien, charge or encumbrance
on the assets of WPL under any such indenture, mortgage, lien, lease or
Contract, except in the case of clauses (b), (c) and (d), for those
which individually or in the aggregate would not reasonably be expected
to have an Adverse Effect as defined below in this section); or
As used in this Agreement: "Adverse Effect" means an adverse effect on
the business, financial condition or results of operations of WPL,
provided that Adverse Effect shall not include an adverse effect
arising from matters that generally affect the economy or the industry
in which WPL is engaged; "Person" means an individual or entity,
including without limitation any partnership, corporation,
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association, trust, limited liability company, joint venture,
unincorporated organization or Governmental Authority; and "Disclosure
Letter" means the disclosure letter delivered by ▇▇▇ to ▇▇▇▇▇▇▇▇ ▇▇ LLC
and Energy Partners concurrently with the execution and delivery of
this Agreement.
3.6 Consents
Except as set forth in Part 3.6 of the Disclosure Letter, no consent,
approval, license, permit, order or authorization of any court or
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality (collectively, "Governmental
Authorities") or other Person is required to be obtained or made by or
with respect to ▇▇▇, WPL or any of their Affiliates (other than Energy
Partners, ▇▇▇▇▇▇▇▇ ▇▇ LLC and their subsidiaries) in connection with:
(a) the execution, delivery, and performance of this Agreement or
the consummation of the transactions contemplated hereby; and
(b) the conduct by WPL of its business following the Closing as
conducted on the date hereof.
3.7 Laws and Regulations; Litigation
Part 3,7 of the Disclosure Letter sets forth a list, as of the date of
this Agreement, of all pending lawsuits or claims, with respect to
which either ▇▇▇, WPL or any of their Affiliates (other than Energy
Partners, ▇▇▇▇▇▇▇▇ ▇▇ LLC and their subsidiaries) has been contacted in
writing, against or affecting WPL or any of its properties, assets,
operations or businesses. Except as set forth in the Disclosure Letter,
none of such pending lawsuits or claims (a) would individually, or in
the aggregate, reasonably be expected to have an Adverse Effect or (b)
seek any injunctive relief.
Except for those violations which would not individually, or in the
aggregate, have an Adverse Effect, WPL is not in violation of or in
default under any law or regulation or under any order of any
Governmental Authorities applicable to it. Part 3.7 of the Disclosure
Letter lists all of the claims, fines, actions, suits, demands,
investigations or proceedings pending or, to WES' Knowledge (as the
term Knowledge is defined below in this section), threatened against or
affecting WPL, at law or in equity, by any Governmental Authorities
having jurisdiction over WPL. Except as set forth in the Disclosure
Letter none of such listed claims, fines, actions, suits, demands,
investigations or proceedings would, individually or in the aggregate,
reasonably be expected to have an Adverse Effect. Except as set forth
in Part 3.7 of the Disclosure Letter, as of the date of this Agreement
there is no lawsuit or claim by WPL that is pending against any other
Person.
"Knowledge," as used in this Agreement with respect to a party means
the actual knowledge of that party's designated officer without the
need by that officer to have
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conducted any independent investigation or inquiry. The designated
officers for WES and WPL are ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇. The
designated officer for both ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners is ▇▇▇
▇▇▇▇▇▇▇▇▇▇.
3.8 Financial Statements
Set forth as Schedule 3.8 of the Disclosure Letter are true and correct
copies of Ernst & Young-audited WPL balance sheets as of December 31,
1999, 2000 and 2001, statements of income, cash flows and changes in
member's equity for the fiscal years ended December 31, 1999, 2000 and
2001, including the notes thereto (the "Financial Statements"). Such
Financial Statements present fairly, in all material respects, the
financial condition, the results of operations and the cash flows of
WPL as of such dates for each of those three years in conformity with
generally accepted accounting principles applied on a consistent basis.
3.9 No Adverse Changes
Except as set forth in Part 3.9 of the Disclosure Letter, since
December 31, 2001 there have been no changes in (a) the assets,
liabilities, operations or financial condition of WPL, from that set
forth in the Financial Statements or (b) the business or results of
operations of WPL, which changes have had, or could reasonably be
expected to have, an Adverse Effect.
Except as set forth in Part 3.9 of the Disclosure Letter, since
December 31, 2001, WES has caused the business of WPL to be conducted
in the ordinary course and in substantially the same manner as
previously conducted and has made all reasonable efforts consistent
with past practices to preserve WPL's relationships with customers and
suppliers.
3.10 Liabilities
Except as set forth in the Financial Statements, WPL has incurred no
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due) that would
individually or in the aggregate reasonably be expected to have an
Adverse Effect, other than contractual and other liabilities incurred
in the ordinary course of business which are not required to be
disclosed on the Financial Statements under generally-accepted
accounting principles and which would not, individually or in the
aggregate, have an Adverse Effect.
WES or its Affiliates (excluding Energy Partners, its general partner
and their subsidiaries) will, at Closing, assume or retain all
liabilities and obligations relating to the Excluded Assets.
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3.11 Taxes
(a) Except as set forth in Part 3.11 of the Disclosure Letter, (1)
all Tax Returns (as defined in Section 7.1) required to be
tiled by or with respect to WPL or its income, business assets
or activities and any affiliated, consolidated, combined,
unitary or similar group of which WPL or a predecessor to WPL
is or was a member have been or will be duly filed on a timely
basis (taking into account all extensions of due dates); (2)
all Taxes owed by WPL or a predecessor to WPL and any
affiliated, consolidated, combined, unitary or similar group
of which WPL or a predecessor to WPL is or was a member which
are or have become due have been timely paid in full; (3) WPL
and its predecessor have withheld and paid over all Taxes
required to have been withheld and paid over, and complied
with all information reporting and backup withholding
requirements, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third
party; (4) there are no liens on any of the assets of WPL that
arose in connection with any failure (or alleged failure) to
pay any Tax on any of the assets of the WPL, with respect to
Taxes, other than liens for Taxes not yet due and payable; (5)
there is no pending action, proceeding or investigation for
assessment or collection of Taxes and no Tax assessment,
deficiency or adjustment has been asserted or proposed with
respect to WPL or any predecessor to WPL.
(b) Except as set forth in Part 3.11 of the Disclosure Letter,
there are no outstanding claims by an authority in a
jurisdiction where WPL (or any predecessor to WPL or any
affiliated, consolidated, combined, unitary or similar group
of which WPL is or was a member) does not file Tax Returns
that WPL or any predecessor to WPL is or may be subject to
taxation in that jurisdiction.
(c) Except as set forth in Part 3.11 of the Disclosure Letter, the
total amounts set up as liabilities for current Taxes in the
Financial Statements (as adjusted for operations and
transactions in the ordinary course of business since the date
of the Financial Statements in accordance with past custom and
practice) will be sufficient to cover the payment of all
Taxes, whether or not assessed or disputed, which are, or are
hereafter found to be, or to have been, due by or with respect
to WPL up to and through the periods ending on the dates
thereof.
(d) Appended to Part 3.11 of the Disclosure Letter are true and
complete copies of each written Tax allocation or sharing
agreement (if any) and a true and complete description of each
unwritten Tax allocation or sharing arrangement affecting WPL
(if any). All such Tax allocation or sharing arrangements will
be terminated with respect to WPL effective as of the Closing
Date, and no payments will become due by WPL thereafter.
(e) WPL owns no interest in any controlled foreign corporation (as
defined in section 957 of the Internal Revenue Code of 1986,
as amended), foreign
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personal holding company (as defined in Section 552 of the
Internal Revenue Code of 1986, as amended), passive foreign
investment company (as defined in section 1297 of the Internal
Revenue Code of 1986, as amended) or other entity the income
of which is or could be required to be included in the income
of WPL.
(f) WPL is a disregarded entity for Federal income tax purposes.
WPL has never made any election to be treated as a corporation
under the Internal Revenue Code of 1986, as amended.
(g) None of the assets of WPL are subject to a safe-harbor lease
(pursuant to section 168(0(8) of the Internal Revenue Code of
1954 as in effect after the Economic Recovery Tax Act of 1981
and before the Tax Reform Act of 1986) or is "tax-exempt use
property" (within the meaning of section 168(h) of the
Internal Revenue Code of 1986, as amended) or "tax-exempt bond
financed property" (within the meaning of section 168(g)(5) of
the Internal Revenue Code of 1986, as amended). No Person
other than WPL may be treated as the owner of the assets of
WPL for income tax purposes.
(h) Except as set forth in Part 3.11 of the Disclosure Letter,
neither WPL nor its predecessor (1) has been a member of an
affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was The
▇▇▇▇▇▇▇▇ Companies, Inc.) and (2) has any liability for the
Taxes of any person or entity under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise.
(i) Neither WPL nor Energy Partners will be required to include
any material amount in taxable income for any taxable period
ending after the Closing Date attributable to any item that
was economically accrued by WPL prior to the Closing Date.
Furthermore, there are no agreements or arrangements with any
Taxing Authority (as defined in Section 7.1) that may affect
Taxes related to WPL following the Closing Date.
3.12 Employees and Benefits
(a) All of the non-union individuals performing employment-related
services to WPL are shared services employees provided by WES.
As of the Closing Date, WPL will not have any employees.
(b) Prior to Closing, ▇▇▇▇▇▇▇▇ Petroleum Services, LLC will become
a party to, and WPL will cease to be a party to, an amended
collective bargaining agreement with the Paper,
Allied-Industrial, Chemical, and Energy Workers International
Union ("PACE") and with PACE Local 5-348 with respect to
certain individuals who perform services in connection with
the operations of WPL (the "PACE Collective Bargaining
Agreement," a copy of which will be appended to Part 3.12 of
the Disclosure Letter). Except for the foregoing,
9
WPL is not a party to or bound by any collective bargaining
agreement with respect to employees who perform services in
connection with the business or operations of WPL and, to the
Knowledge of WES, there are not any union organizing efforts
underway with respect to any such employees.
(c) Except as set forth in the Disclosure Letter, WPL does not
sponsor, contribute to or maintain or have an obligation to
sponsor, contribute to or maintain, and at any time during the
past six (6) years has not sponsored, contributed to or
maintained any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any other employee benefit or compensation
arrangement, agreement or program under which any director,
employee, service provider or consultant or former director,
employee, service provider or consultant of WPL has any
present or future right to benefits, sponsored, contributed to
or maintained by The ▇▇▇▇▇▇▇▇ Companies, Inc., WES or WPL, or
under which WPL has had or has any present or future liability
(collectively, the "WPL Benefit Plans").
(d) At the Closing, ▇▇▇▇▇▇▇▇ Petroleum Services, LLC and WES will
assume or retain all liabilities and obligations relating to
employees of WPL, any individuals performing services for WPL,
and any WPL Benefit Plans with respect to all periods prior to
Closing.
3.13 Accurate and Complete Records
To the Knowledge of WES, the books, ledgers, financial records
and other records of WPL, all of which have been made
available to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners, are, or will
be as of the Closing Date, in the possession of or accessible
by and available to WPL, and have, in all material respects,
been maintained in accordance with all applicable laws, rules
and regulations and generally accepted standards of practice.
3.14 Environmental
(a) For purposes of this Agreement:
"Environmental Laws" includes, without limitation, the
following laws, as amended: (1) the Resource Conservation and
Recovery Act; (2) the Clean Air Act; (3) the Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"); (4) the Federal Water Pollution Control Act; (5)
the Safe Drinking Water Act; (6) the Toxic Substances Control
Act; (7) the Emergency Planning and Community Right-to Know
Act; (8) the National Environmental Policy Act; (9) the
Occupational Safety and Health Act; (10) the Pollution
Prevention Act of 1990; (11) the Oil Pollution Act of 1990;
and (12) the Hazardous Materials Transportation Act. The term
"Environmental Laws" also includes all rules, regulations,
orders, judgments, decrees promulgated or issued with respect
to the foregoing Environmental Laws by Governmental
Authorities with jurisdiction and any other federal,
10
state or local statutes, laws, ordinances, rules, regulations,
orders, codes, decisions, injunctions or decrees that regulate
or otherwise pertain to the protection of human health,
natural resources or the protection of the environment,
including the management, control, discharge, emission,
treatment, containment, handling, removal, use, generation,
permitting migration, storage, release, transportation,
disposal, remediation, manufacture, processing or distribution
of Hazardous Materials that are or may present a threat to
public health, worker or public safety or the environment,
"Hazardous Materials" means any substance, whether solid, liquid, or
gaseous: (1) which is listed, classified, defined, or regulated as a
"hazardous material," "hazardous waste," "solid waste," "hazardous
substance," "toxic substance," "pollutant," "contaminant" or words of
similar import, or otherwise classified as hazardous or toxic, in or
pursuant to any Environmental Law; or (2) which is or contains
asbestos, polychlorinated biphenyls, radon, urea formaldehyde foam
insulation, explosives, or radioactive materials; or (3) any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any
components, fractions, or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic gas and
any mixtures thereof; or (4) which causes or poses a threat to cause
contamination or nuisance on any properties, or any adjacent property
or a hazard to the environment or to the health or safety of persons on
or about any properties.
(b) All current investigations, remediations and sites being monitored in
connection with the assets, properties or operations of WPL are set
forth in Part 3.14 of the Disclosure Letter. Except as disclosed in
Part 3.14 of the Disclosure Letter or as would not reasonably be
expected, individually or in the aggregate, to have an Adverse Effect:
(1) the respective assets, properties and operations of WPL are in
compliance with applicable Environmental Laws and with the terms and
conditions of all permits, registrations, licenses, filings,
notifications, exemptions, authorizations and other approvals required
under applicable Environmental Laws; (2) no circumstances exist with
respect to WPL's respective assets and operations that give rise to an
obligation by WPL to investigate, remediate, monitor or otherwise
address the presence, on-site or offsite, of Hazardous Materials under
any applicable Environmental Laws; (3) except as set forth in Part 3.14
of the Disclosure Letter, WPL and its respective assets and operations
are not subject to any pending or, to the Knowledge of WES or WPL,
threatened, claim, action, suit, investigation, inquiry or proceeding
under any Environmental Law (including, without limitation, designation
as a potentially responsible party under CERCLA or any similar local or
state law); (4) all notices, permits, permit exemptions, registrations,
licenses, approvals or similar authorizations, if any, required to be
obtained or filed by WPL under any Environmental Law in connection with
its operations and businesses have been duly obtained or filed and are
valid and currently in effect; (5) there has been no release of any
Hazardous Material into the environment by WPL or in connection with
its assets, properties and operations; (6) there has been no exposure
of any person or property to any Hazardous Material in
11
connection with the properties, operations or activities of WPL; (7)
there are no facts or circumstances that could reasonably be expected
to form the basis for any claim, action, investigation, notice or
demand by any Person alleging potential liability against WPL or its
assets or operations arising out of the presence or release of any
Hazardous Material or noncompliance with Environmental Laws; and (8)
WPL has made available to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners all
internal and external environmental audits, studies, correspondence and
related documents on environmental matters (in each case relevant to
WPL) in the possession or control of WPL.
3.15 Bankruptcy
There are no bankruptcy, reorganization or arrangement proceedings
pending against, being contemplated by, or to WES's Knowledge,
threatened against WES or WPL.
3.16 Contracts and Commitments
(a) Part 3.16 of the Disclosure Letter contains a complete and
accurate list of all contracts (written or oral), plans,
undertakings, commitments or agreements (including all
amendments or supplements thereto) of the following categories
to which WPL is a party or by which it or its assets are bound
as of the date of this Agreement (the "Contracts"):
(1) each Contract that obligates WPL to perform services
or deliver goods or materials;
(2) each Contract that obligates WPL to purchase services
or goods or materials that either has a term
extending beyond December 31, 2002 or would cause WPL
to exceed budgeted amounts in its existing plan for
2002;
(3) each Contract that was not entered into in the
ordinary course of business and that involves
expenditures or receipts of WPL in excess of $100,000
per year;
(4) each lease, rental, license, and installment and
conditional sale agreement affecting the ownership
of, leasing of, title to, use of, or any or other
interest in, any material real or personal property
of WPL;
(5) each licensing agreement or other Contract with
respect to patents, trademarks, copyrights, or other
intellectual property;
12
(6) each joint venture, partnership, investment and other
Contract (however named) requiring the investment of funds or
the making of any loan by WPL in another Person, the purchase
of any securities of any Person, the making of any investment
in any venture or other business enterprise or involving a
sharing of profits, losses, costs, or liabilities by WPL with
any other Person;
(7) each Contract containing covenants that in any way purport
to restrict the business activity of WPL or limit the freedom
of WPL to engage in any line of business or to compete with
any person;
(8) each Contract providing for payments to or by any person
based on sales, purchases, or profits, other than direct
payments for goods;
(9) each Contract for capital expenditures in excess of
$1,000,000 and all Contracts for capital expenditures which,
in the aggregate, exceed a total of $7.5 million;
(10) each written indemnity or guaranty, and any other similar
undertaking with respect to contractual performance extended
by WPL;
(11) each Contract relating to indebtedness for borrowed money
or the mortgaging, pledging or encumbering of any assets; and
(12) each Contract with any Affiliate of WPL other than
Contracts for the use of WPL's pipeline facilities in the
ordinary course of business, arrangements related to services
provided to WPL at cost and agreements for the purchase and
sale of commodities required to operate the WPL facilities in
the ordinary course of business.
(b) True copies of the written Contracts, and accurate written summaries of
the oral Contracts, have been made available to Energy Partners. Except
as set forth on Exhibit 3.16, neither WPL nor, to WES's Knowledge, any
other party is in default under, or in breach or violation of (and no
event has occurred which, with notice or the lapse of time or both,
would constitute a default under, or a breach or violation or lapse of)
any term, condition or provision of any Contract except for defaults,
breaches, violations or events which, individually or in the aggregate,
would not reasonably be expected to have an Adverse Effect.
(c) Other than Contracts which have terminated or expired in accordance
with their terms, each of the Contracts is in full force and effect and
constitutes valid, binding and enforceable obligations of WPL and
enforceable obligations of any other party thereto, in accordance with
its terms (subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing), except where the
failure of such Contracts to be in full
13
force and effect or to have enforceable obligations would not
reasonably be expected to have an Adverse Effect.
(d) Except as set forth in Part 3.16 of the Disclosure Letter or
as would not, individually, or in the aggregate, reasonably be
expected to have an Adverse Effect, in connection with any
Contract (1) WPL has not received any prepayment, advance
payment, deposits or similar payments, and has no refund
obligation, with respect to any products or capacity
purchased, sold, leased, transported, stored or handled by or
on behalf of WPL; (2) WPL has not received any compensation
for transportation, capacity leasing, storage or handling
services which would be subject to any refund or creates any
repayment obligation either by or to WPL, and to WES's
Knowledge, there is no basis for a claim that such a refund is
due; and (3) with regard to capacity leasing, transportation,
handling and storage Contracts in effect as of the Closing
Date, WPL will be entitled to receive the full contract price
in accordance with the terms of each such contract for all
capacity leased and for all products transported, handled,
stored and/or sold on and after the Closing Date.
3.17 Assets
All of the assets which are necessary for the continued conduct of the
business of WPL, as such business is conducted on the date of this
Agreement, are, owned or leased by WPL.
The pipeline and terminal facilities, structures and equipment of WPL
necessary to conduct its business as it's now being conducted are in
good operating condition and repair (ordinary wear and tear excepted)
3.18 Assets Other than Real Property Interests
WPL has good and valid title to all non-real property material assets
reflected on the balance sheets of the Financial Statements or
thereafter acquired, except those sold or otherwise disposed of since
December 31, 2001 in the ordinary course of business consistent with
past practice and/or in accordance with the terms of this Agreement, in
each case free and clear of all Liens (as defined below in this
section) except (a) such Liens as are set forth in Part 3.18 of the
Disclosure Letter, (b) mechanics', carriers', workmen's, repairmen's or
other like Liens arising or incurred in the ordinary course of
business, (c) Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in
the ordinary course of business, (d) Liens for Taxes that are not due
and payable or that may thereafter be paid without penalty, and (e)
other imperfections of title or encumbrances, if any, that,
individually or in the aggregate, would not reasonably be expected to
have an Adverse Effect or to interfere with the
14
conduct of WPL's business (the Liens described in clauses (b), (c), (d)
and (e) above are hereinafter referred to collectively as "Permitted
Liens")
As used herein, the term "Liens" means liens, mortgages, security
interests, pledges, charges, encumbrances or rights of others.
3.19 Title to Real Property
WPL has:
(a) Valid and indefeasible rights in and to all easements and
rights-of-way as are necessary to enable WPL to continue to
conduct its business as it is now being conducted;
(b) good and valid title in fee to all real property and interests
in real property purported to be owned in fee by WPL; and
(c) good and valid title to the leasehold estates in all real
property and interests in real property purported to be leased
by WPL, and in the case of both clause (b) and (c), free and
clear of all Liens, except:
(1) Liens set forth in Part 3.19 of the Disclosure
Letter;
(2) Permitted Liens; and
(3) easements, covenants, rights-of-way and other similar
restrictions of record.
3.20 Intellectual Property
Part 3.20 of the Disclosure Letter sets forth a true and complete list
of all material patents, trademarks (registered or unregistered), trade
names, service marks and copyrights and applications therefore
(collectively, "Intellectual Property"), owned, used, filed by or
licensed to WPL. With respect to registered trademarks, Part 3.20 of
the Disclosure Letter sets forth a list of all jurisdictions in which
such trademarks are registered or applied for and all registration and
application numbers. Except as set forth in Part 3.20 of the Disclosure
Letter, WPL owns, and WPL has the right to use, execute, reproduce,
display, perform, modify, enhance, distribute, prepare derivative works
of and sublicense, without payment to any other person, all of the
Intellectual Property, as applicable, and the consummation of the
transactions contemplated hereby will not conflict with, alter or
impair any such rights, in each case, except as such, individually or
in the aggregate, would not reasonably be expected to have an Adverse
Effect.
15
3.21 Licenses; Permits
Except as set forth in Part 3.21 of the Disclosure Letter WPL has all
material licenses, permits and authorizations issued or granted by
Governmental Authorities that are necessary for the conduct of the
business of WPL as now being conducted. Except as set forth in Part
3.21 of the Disclosure Letter, all such licenses, permits and
authorizations are validly held by WPL, WPL has complied in all
material respects with all terms and conditions thereof and the same
will not be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, except
such as, individually or in the aggregate, would not reasonably be
expected to have an Adverse Effect.
3.22 Insurance
WES' parent company currently maintains policies of fire and casualty,
liability, and other forms of insurance covering WPL in such amounts,
with such deductibles, and against such risks and losses as are listed
in Part 3.22 of the Disclosure Letter. All such policies are in full
force and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that are
not yet, but may be, required to be paid with respect to any period
ending prior to the Closing Date under comprehensive general liability
and workmen's compensation insurance policies), and no notice of
cancellation or termination has been received with respect to any such
policy that has not been replaced on substantially similar terms prior
to the date of such cancellation. To the Knowledge of WES, the
activities and operations of WPL have been conducted in a manner so as
to conform in all material respects to all applicable provisions of
such insurance policies.
3.23 Utility Status
Neither WES nor WPL is a "Holding Company" or a "Public Utility
Company" or a "Gas Utility Company" as those terms are defined in the
Public Utility Holding Company Act of 1935.
3.24 Brokerage Arrangements
Neither WES nor WPL has entered (directly or indirectly) into any
agreement with any person, firm or corporation that would obligate
▇▇▇▇▇▇▇▇ ▇▇ LLC, Energy Partners or WPL to pay any commission,
brokerage or "finder's fee" or other fee in connection with this
Agreement or the transactions contemplated herein.
3.25 Securities Laws
(1) WES is an accredited investor within the meaning of Rule
501(a) under the Securities Act.
16
(2) WES has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits
and risks of its investment herein and WES is capable of
bearing the economic risks of such investment.
3.26 Transactions with Affiliates
Except as set forth in Part 3.26 of the Disclosure Letter, there are no
agreements, contracts or arrangements between WPL and any of its
Affiliates other than Contracts for the use of WPL's pipeline
facilities in the ordinary course of business, arrangements related to
services provided to WPL at cost and agreements for the purchase and
sale of commodities required to operate the WPL facilities in the
ordinary course of business.
3.27 Excluded Assets
With the exception of the Atlas software (for which a license has been
granted to Energy Partners and its Affiliates), none of the assets that
are Excluded Assets set forth in Exhibit 1.1 are used in the operation
of WPL's business as currently conducted, or are reasonably expected to
be necessary in the operation of WPL's business in the foreseeable
future.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇ ▇▇ LLC AND ENERGY
PARTNERS
4.1 ▇▇▇▇▇▇▇▇ ▇▇ LLC, as the general partner of Energy Partners, hereby
represents and warrants to WES and Energy Partners that as of the date
hereof and as of the Closing Date:
4.1(a) Organization and Existence
▇▇▇▇▇▇▇▇ ▇▇ LLC is a limited liability company validly
existing and in good standing under the laws of the State of
Delaware. ▇▇▇▇▇▇▇▇ ▇▇ LLC has full limited liability company
power and authority to own and hold the properties and assets
it now owns and holds and to carry on its business as and
where such properties are now owned or held and such business
is now conducted. ▇▇▇▇▇▇▇▇ ▇▇ LLC is duly licensed or
qualified to do business as a foreign limited liability
company and is in good standing in the states in which the
character of the properties and assets now owned or held by it
or the nature of the business now conducted by it requires it
to be so licensed or qualified, except where the failure to be
so qualified or in good standing would not reasonably be
expected to have a material adverse effect on the business,
financial condition or results of operations of ▇▇▇▇▇▇▇▇ ▇▇
LLC.
17
4.1(b) Authority and Approval
▇▇▇▇▇▇▇▇ ▇▇ LLC has the limited liability company power and
authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform all the
terms and conditions hereof to be performed by it. Prior to
Closing, the execution and delivery by ▇▇▇▇▇▇▇▇ ▇▇ LLC of this
Agreement, the performance by ▇▇▇▇▇▇▇▇ ▇▇ LLC of all the terms
and conditions hereof to be performed by it and the
consummation of the transactions contemplated hereby shall
have been duly authorized and approved by all requisite
limited liability company action of ▇▇▇▇▇▇▇▇ ▇▇ LLC. The
Conflicts Committee of the Board of Directors of ▇▇▇▇▇▇▇▇ ▇▇
LLC and the Board of Directors of ▇▇▇▇▇▇▇▇ ▇▇ LLC have
approved this Agreement and the transactions contemplated
hereby on behalf of Energy Partners. This Agreement
constitutes the valid and binding obligation of ▇▇▇▇▇▇▇▇ ▇▇
LLC enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law
or in equity). Assuming receipt of good and valid title to the
WPL LLC Interest by ▇▇▇▇▇▇▇▇ ▇▇ LLC upon the contribution
pursuant to this Agreement of the WPL LLC Interest to ▇▇▇▇▇▇▇▇
▇▇ LLC by WES, ▇▇▇▇▇▇▇▇ ▇▇ LLC will have the full legal right
to contribute, assign and transfer the WPL LLC Interest to
Energy Partners and will, at the time of delivery thereof to
Energy Partners pursuant to the terms hereof, transfer good
and valid title thereto free and clear of all Liens.
4.1(c) Brokerage Arrangements
▇▇▇▇▇▇▇▇ ▇▇ LLC has not entered (directly or indirectly) into
any agreement with any person, firm or corporation that would
obligate WES or any of its Affiliates (other than ▇▇▇▇▇▇▇▇ ▇▇
LLC and Energy Partners and its subsidiaries) to pay any
commission, brokerage or "finder's fee" in connection with
this Agreement or the transactions contemplated herein.
4.1(d) Utility Status
▇▇▇▇▇▇▇▇ ▇▇ LLC is not a "Holding Company" or a "Public
Utility Company" or a "Gas Utility Company" as those terms are
defined in the Public Utility Holding Company Act of 1935.
4.1(e) Securities Laws
(1) ▇▇▇▇▇▇▇▇ ▇▇ LLC is an accredited investor within the
meaning of Rule 50 1(a) under the Securities Act.
18
(2) ▇▇▇▇▇▇▇▇ ▇▇ LLC has such knowledge and experience in
financial and business matters so as to be capable of
evaluating the merits and risks of its investment in
the New Units and ▇▇▇▇▇▇▇▇ ▇▇ LLC is capable of
bearing the economic risks of such investment.
4.2 Energy Partners represents and warrants to WES and to ▇▇▇▇▇▇▇▇ ▇▇ LLC
that as of the date hereof and as of the Closing Date:
4.2(a) Organization and Existence
Energy Partners is a limited partnership validly existing and
in good standing under the laws of the State of Delaware.
Energy Partners has full limited partnership power and
authority to own and hold the properties and assets it now
owns and holds and to carry on its business as and where such
properties are now owned or held and such business is now
conducted. Energy Partners is duly licensed or qualified to do
business as a foreign limited partnership and is in good
standing in the states in which the character of the
properties and assets now owned or held by it or the nature of
the business now conducted by it requires it to be so licensed
or qualified, except where the failure to be so qualified or
in good standing would not reasonably be expected to have a
material adverse effect on the business, financial condition
or results of operations of Energy Partners.
4.2(b) Authority and Approval
Energy Partners has the limited partnership power and
authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform all the
terms and conditions hereof to be performed by it. The
execution and delivery by Energy Partners of this Agreement,
the performance by Energy Partners of all the terms and
conditions hereof to be performed by it and the consummation
of the transactions contemplated hereby have been duly
authorized and approved by all requisite action of the general
partner of Energy Partners, This Agreement constitutes the
valid and binding obligation of Energy Partners enforceable in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
4.2(c) Brokerage Arrangements
Energy Partners has not entered (directly or indirectly) into
any agreement with any person, firm or corporation that would
obligate WES or any of its Affiliates (other than ▇▇▇▇▇▇▇▇ ▇▇
LLC and Energy Partners and its subsidiaries) to pay any
commission, brokerage or "finder's fee" in
19
connection with this Agreement or the transactions
contemplated herein.
4.2(d) Utility Status
Energy Partners is not a "Holding Company" or a "Public
Utility Company" or a "Gas Utility Company" as those terms are
defined in the Public Utility Holding Company Act of 1935.
4.2(e) New Units
The New Units to be delivered at Closing shall be duly
authorized and validly issued in accordance with, and subject
to the terms of, the Amended and Restated Agreement of Limited
Partnership of Energy Partners, as further amended by the
First Amendment thereto dated as of the Closing Date, and free
of all Liens and restrictions other than as expressly set
forth in accordance with, and subject to the terms of, the
Amended and Restated Agreement of Limited Partnership of
Energy Partners, as further amended by the First Amendment
thereto dated as of the Closing Date.
ARTICLE 5
ADDITIONAL AGREEMENTS,
COVENANTS, RIGHTS AND OBLIGATIONS
5.1 Certain Changes
Except as set forth in Part 5.1 of the Disclosure Letter or with
respect to the Excluded Assets, without first obtaining the written
consent of Energy Partners, from the date hereof until the Closing
Date, ▇▇▇▇ covenants that it will cause WPL not to:
(a) make any material change in the conduct of its businesses and
operations, or its financial reporting and accounting methods;
(b) other than in the ordinary course of business, enter into any
contract or agreement that would be defined as a "Contract"
hereunder or terminate or amend in any material respect any
Contract;
(c) declare, set aside .or pay any dividends, or make any
distributions, in respect of the WPL LLC Interest, or
repurchase, redeem or otherwise acquire any such securities;
(d) merge into or with or consolidate with any other entity or
acquire all or substantially all of the business or assets of
any person or other entity;
20
(e) make any change in its charter documents, limited liability
company documents, or equivalent governing instruments;
(f) purchase any securities of any person or entity, except short
term debt securities of governmental entities and banks, or
make any investment in any venture or other business
enterprise other than as required pursuant to existing
Contracts;
(g) increase the indebtedness of, or incur any obligation or
liability, direct or indirect, for WPL, other than the
incurrence of liabilities pursuant to existing Contracts or in
the ordinary course of business consistent with past
practices;
(h) sell, lease or otherwise dispose of any of its assets other
than the sale of assets in the ordinary course of business or
pursuant to existing Contracts;
(i) purchase, lease or otherwise acquire any property of any kind
other than in the ordinary course of business;
(j) implement or adopt any material change in its tax methods,
principles or elections;
(k) hire any employees, enter into any employment agreement or
enter into or amend any collective bargaining or labor
agreements (except as set forth in Section 3.12) or adopt,
modify or terminate any benefit plan (except as contemplated
by Section 3.12);
(1) permit any of its assets to become subjected to any material
Lien, covenant, right-of-way or other similar restriction of
any nature whatsoever;
(m) waive any claims or rights of substantial value;
(n) enter into or agree upon any settlement or compromise of
pending litigation or other pending proceedings before any
Governmental Authority other than any matter that is settled
or compromised by the payment of damages or fines of less than
$100,000;
(o) except as contemplated in Sections 5.2(d) and 5.2(e) or as may
be required to perform WES's obligations under this Agreement,
make any application, filing or other request for approval
from any Governmental Authority with respect to any new rates,
services, terms and conditions of service or construction of
facilities; or
(p) enter into a binding commitment to do any of the foregoing.
5.2 Operations
Other than as provided in this Agreement, WES will cause WPL to:
21
(a) maintain its properties and facilities necessary to conduct
its business as it is now being conducted in as good working
order and condition as of the date hereof, ordinary wear and
tear excepted;
(b) use its reasonable best efforts to maintain and preserve its
business, retain present employees and maintain its
relationship with suppliers, customers and others having
business relations with it;
(c) advise ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners promptly in writing
of any material change in any document, schedule or other
information delivered pursuant to this Agreement;
(d) file on a timely basis all notices, reports or other filings
necessary or required for the continuing operation of WPL's
business to be filed with or reported to any federal, state,
municipal or other governmental department, commission, board,
bureau, agency or any instrumentality of any of the foregoing
wherever located; and
(e) file on a timely basis all complete and correct applications
or other documents necessary to maintain, renew or extend any
permit, variance or any other approval required by any
Governmental Authority necessary or required for the
continuing operation of WPL's business whether or not such
approval would expire before or after the Closing Date.
5.3 Access
WES will continue to afford ▇▇▇▇▇▇▇▇ ▇▇▇ LLC and Energy Partners and
their authorized representatives reasonable access to WPL's financial,
title, tax, corporate and legal materials and operating data and
information available as of the date hereof and which becomes available
to WES at any time prior to the Closing Date, and will furnish to
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners such other information as it may
reasonably request, unless any such access and disclosure would violate
the terms of any confidentiality agreement to which WES and/or WPL is
bound or any applicable law or regulation.
WES will use its reasonable best efforts upon request to secure all
requisite consents for the examination by ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy
Partners and its representatives of any information covered by
confidentiality agreements which would restrict their access to
information. WES will cause WPL to allow ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy
Partners and their representative's access to and consultation with the
lawyers, accountants, and other professionals employed by or used by
the WPL for all purposes under this Agreement. Any such consultation
shall occur under circumstances appropriate to maintain intact the
attorney-client privilege as to privileged communications and attorney
work product.
22
Additionally, WES will afford to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners
and their representatives reasonable access to the books and records of
WES insofar as they relate to property, accounting and tax matters of
WPL. Until the Closing Date, the confidentiality of any data or
information so acquired shall be maintained by ▇▇▇▇▇▇▇▇ ▇▇ LLC and
Energy Partners and their representatives. Further, ▇▇▇ will afford to
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners and their authorized
representatives reasonable access from the date hereof until the
Closing Date, during normal business hours, to the WPL assets and
properties; provided that such access shall be at the sole cost,
expense and risk of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners.
5.4 Reporting Requirements
WES, ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners will duly and timely file all
notices and reports required to be filed with all Governmental
Authorities in contemplation of the consummation of the transactions
described herein,
5.5 Reasonable Best Efforts; Further Assurances
WES and ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners shall use their reasonable
best efforts (a) to obtain all approvals and consents required by or
necessary for the transactions contemplated by this Agreement, and (b)
to ensure that all of the conditions to the obligations of ▇▇▇▇▇▇▇▇ ▇▇
LLC and Energy Partners and WES contained in Sections 6.1 and 6.2,
respectively, are satisfied timely.
Each of the parties acknowledges that certain actions may be necessary
with respect to the matters and actions contemplated by this Agreement
such as making notifications and obtaining consents or approvals or
other clearances that are material to the consummation of the
transactions contemplated hereby, and each agrees to take all
appropriate action and to do all things necessary, proper or advisable
under applicable laws and regulations to make effective the
transactions contemplated by this Agreement; provided, however, that
nothing in this Agreement will require any party hereto to hold
separate or make any divestiture not expressly contemplated herein of
any asset or otherwise agree to any restriction on its operations or
other materially burdensome condition which would in any such case be
material to its assets, liabilities or business in order to obtain any
consent or approval or other clearance required by this Agreement.
5.6 Casualty Loss
If all or any material portion of the WPL facilities is damaged or
destroyed by fire or other casualty before the Closing, either party
may, at its option, terminate this Agreement by verbal and written
notice to the other party prior to Closing. If neither party elects to
terminate this Agreement as aforesaid, the parties shall proceed to
close the transactions contemplated hereby, in which event WES shall
assign to the ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners all of WES' right,
title and interest in any claim under any applicable insurance policies
in respect of such casualty. If the total amount of any such insurance
proceeds is not sufficient to
23
fully repair and/or replace the damaged facilities to return them to
their pre-damage or destruction operating condition and repair, the
amount of such shortfall shall, at the option of WES, either be paid by
WES to Energy Partners or will reduce the number of New Units that
Energy Partners is to deliver to WES under Section 2.2 by the number of
such New Units as equal, in value, the shortfall.
If the casualty loss does not involve all or any material portion of
the WPL facilities, then the parties shall be obligated to close the
transaction contemplated herein according to the terms hereof,
notwithstanding such casualty loss, and WES shall, at the election of
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners, either: (a) repair the damages
caused by such casualty loss prior to Closing, at its expense; or (b)
pay the deductible due under the insurance policy or policies insuring
the same and deliver or assign to the other party, at Closing, any and
all insurance proceeds or rights to proceeds attributable to such
casualty loss. For the purposes of this Section, a "material portion"
means any casualty loss which is equal to or greater than Twenty
Million Dollars ($20,000,000.00).
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners
The obligations of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners to proceed with
the Closing contemplated hereby are subject to the satisfaction on or
prior to the Closing Date of all of the following conditions, any one
or more of which may be waived in whole or in part, by ▇▇▇▇▇▇▇▇ ▇▇ LLC
and Energy Partners:
(a) The representations and warranties of WES made in this
Agreement and qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct
in all material respects, as of the date hereof and as of the
time of the Closing as though made as of such time, except to
the extent such representations and warranties expressly
relate to an earlier date (in which case such representations
and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct
in all material respects, on and as of such earlier date). WES
shall have performed or complied in all material respects with
all obligations and covenants required by this Agreement to be
performed or complied with by WES by the time of the Closing.
WES shall have delivered to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy
Partners a certificate, dated as of the Closing Date and
signed by an authorized officer of WES, confirming the
foregoing matters set forth in this Section 6.1(a).
(b) No action or proceeding before a court or other Governmental
Authority shall have been instituted or threatened challenging
or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement.
24
(c) All necessary consents of any third Person required for the
consummation of the transactions contemplated in this
Agreement shall have been made and obtained.
(d) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated,
enforced or issued by any Governmental Authority, or other
legal restraint or prohibition preventing the consummation of
the transactions contemplated hereby shall be in effect.
(e) Execution and delivery by all parties thereto of the Second
Amendment to the Omnibus Agreement substantially in the form
of Exhibit 6.1(e) hereto.
(f) Delivery of a First Amendment, dated as of the Closing Date,
to the Amended and Restated Agreement of Limited Partnership
of Energy Partners which provides for the issuance of the New
Units.
(g) ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners shall have obtained (on
terms satisfactory to them) the third-Person financing
required to satisfy their obligations under Sections
2.2(c)(l)(A) and 2.2(d).
(h) Execution and delivery of a Blending and Storage Services
Agreement between WPL and ▇▇▇▇▇▇▇▇ Terminals Holdings, L.P.,
on the one hand, and WES, on the other.
6.2 Conditions to the Obligation of WES
The obligation of WES to proceed with the Closing contemplated hereby
is subject to the satisfaction on or prior to the Closing Date of all
of the following conditions, any one or more of which may be waived in
writing, in whole or in part, by WES:
(a) The representations and warranties of both ▇▇▇▇▇▇▇▇ ▇▇ LLC and
Energy Partners made in this Agreement qualified as to
materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects,
as of the date hereof and as of the time of the Closing as
though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier
date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all
material respects, on and as of such earlier date). ▇▇▇▇▇▇▇▇
▇▇ LLC and Energy Partners shall have performed or complied in
all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners by the time of the
Closing. ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners shall have
delivered to the WES a certificate, dated as of the Closing
Date and signed by an authorized officer of ▇▇▇▇▇▇▇▇ ▇▇ LLC
and Energy Partners confirming the foregoing matters set forth
in this Section 6.2(a).
25
(b) No action or proceeding before a court or any other
Governmental Authority shall have been instituted or threatened
challenging or seeking to restrain or prohibit the consummation
of the transactions contemplated by this Agreement.
(c) All necessary consents of any Person not a party hereto
required for the consummation of the transactions contemplated
in this Agreement shall have been made and obtained.
(d) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated,
enforced or issued by any Governmental Authority, or other
legal restraint or prohibition preventing the consummation of
the transactions contemplated hereby shall be in effect.
(e) Execution and delivery by all parties thereto of the Second
Amendment to the Omnibus Agreement substantially in the form of
Exhibit 6.1(e) hereto.
(f) Delivery of a First Amendment, dated as of the Closing Date, to
the Amended and Restated Agreement of Limited Partnership of
Energy Partners Which provides for the issuance of the New
Units.
ARTICLE 7
TAX MATTERS
7.1 Liability for Taxes
(a) For purposes of this Agreement:
(1) "Tax" or "Taxes" means all taxes, however
denominated, including any interest, penalties or
other additions to tax that may become payable in
respect thereof, imposed by any federal, state, local
or foreign government or any agency or political
subdivision of any such government, which taxes shall
include, without limiting the generality of the
foregoing, all income or profits taxes (including,
but not limited to, federal income taxes and state
income taxes), gross receipts taxes, net proceeds
taxes, alternative or add-on minimum, sales taxes,
use taxes, real property gains or transfer taxes, ad
valorem taxes, property taxes, value-added taxes,
franchise taxes, production taxes, severance taxes,
windfall profit taxes, withholding taxes, payroll
taxes, employment taxes, excise taxes and other
obligations of the same or similar nature to any of
the foregoing;
26
(2) "Tax Returns" means all reports, estimates,
declarations of estimated Tax, information statements
and returns relating to, or required to be filed in
connection with, any Taxes, including information
returns or reports with respect to backup withholding
and other payments to third parties; and
(3) "Taxing Authority" means, with respect to any Tax,
the governmental body, entity or political
subdivision thereof that imposes such Tax, and the
agency (if any) charged with the collection of such
Tax for such entity or subdivision, including any
governmental or quasi-governmental entity or agency
that imposes, or is charged with collecting, social
security or similar charges or premiums.
(b) ▇▇▇ shall be liable for, and shall indemnify and hold Energy
Partners, WPL and their respective subsidiaries harmless from
any Taxes, together with any costs, expenses, losses or
damages, including reasonable expenses of investigation and
attorneys' and accountants' fees and expenses, arising out of
or incident to the determination, assessment or collection of
such Taxes ("Tax Losses"), (1) imposed on or incurred by WPL
by reason of Treasury Regulations Section 1.1502-6 or any
analogous state, local or foreign law or regulation which is
attributable to WPL or a predecessor to WPL having been a
member of any consolidated, combined or unitary group on or
prior to the Closing Date, (2) imposed on or incurred by WPL
with respect to all periods prior to and including the Closing
Date, or (3) attributable to a breach by ▇▇▇ of any
representation, warranty or covenant with respect to Taxes in
this Agreement.
(c) Energy Partners shall be liable for, and shall indemnify and
hold ▇▇▇ and its affiliates harmless from, any Tax Losses (1)
imposed on or incurred by WPL with respect to the period after
the Closing Date or (2) attributable to a breach by Energy
Partners of any covenant with respect to Taxes in this
Agreement.
(d) Whenever it is necessary for purposes of this Article 7 to
determine the amount of any Taxes imposed on or incurred by
WPL or a predecessor to WPL for a taxable period beginning
before and ending after the Closing Date which is allocable to
the period prior to and including the Closing Date, the
determination shall be made, in the case of property or ad
valorem taxes or franchise taxes (which are measured by, or
based solely upon capital, debt or a combination of capital
and debt), on a per diem basis and, in the case of other
Taxes, by assuming that such pre-Closing Date period
constitutes a separate taxable period of WPL or a predecessor
thereto and by taking into account the actual taxable events
occurring during such period (except that exemptions,
allowances and deductions for a taxable period beginning
before and ending after the Closing Date that are calculated
on an annual or periodic basis, such as the deduction for
depreciation,. shall be apportioned to the period prior to and
including the Closing Date ratably on a per diem basis).
Notwithstanding anything to the contrary herein, any franchise
Tax paid or
27
payable with respect to WPL or a predecessor to WPL shall be
allocated to the taxable period during which the income,
operations, assets or capital comprising the base of such Tax
is measured, regardless of whether the right to do business
for another taxable period is obtained by the payment of such
franchise Tax.
(e) Energy Partners agrees to pay to ▇▇▇ any refund received after
the Closing Date by it or its affiliates, including WPL, in
respect of any Taxes for which ▇▇▇ is liable under clause (b)
of this Section 7.1. ▇▇▇ agrees to pay to Energy Partners any
refund received by ▇▇▇ or their affiliates in respect of any
Taxes for which ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners is liable
under clause (c) of this Section 7.1. The parties shall
cooperate in order to take all steps reasonably necessary to
claim any such refund. Any such refund received by a party or
its affiliate for the account of the other party shall be paid
to such other pasty within 90 days after such refund is
received.
(f) ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners and ▇▇▇ agree not to make
or cause any election (including an election to ratably
allocate items under Treasury Regulations Section 1.1502-76(b)
(2) (ii)) to allocate tax items in a manner inconsistent with
Section 7.1(d) hereof.
7.2 Tax Returns
(a) ▇▇▇ shall cause to be included in the consolidated federal
income Tax Returns (and the state income Tax Returns of any
state that permits consolidated, combined or unitary income
Tax Returns, if any) of the ▇▇▇▇▇▇▇▇ Group (as defined herein)
for all periods ending on or before the Closing Date, all Tax
items of WPL which are required to be included therein, shall
cause such Tax Returns to be timely filed with the appropriate
Taxing Authorities, and shall be responsible for the timely
payment (and entitled to any refund) of all Taxes due with
respect to the periods covered by such Tax Returns. For
purposes of this Agreement, "▇▇▇▇▇▇▇▇ Group" means the
affiliated group of corporations within the meaning of section
1504 of the Internal Revenue Code of 1986, as amended, which
files a consolidated federal income Tax Return and as to which
The ▇▇▇▇▇▇▇▇ Companies, Inc. is the common parent, and, in the
case of any combined or unitary Tax Return, the group of
corporations filing such Tax Return that includes WPL or its
operations.
(b) With respect to any Tax Return covering a taxable period
ending on or before the Closing Date that is required to be
filed after the Closing Date with respect to WPL that is not
described in paragraph (a) above, ▇▇▇ shall cause such Tax
Return to be prepared, shall cause to be included in such Tax
Return all Tax items required to be included therein, shall
cause such Tax Return to be filed timely with the appropriate
Taxing Authority, and shall be responsible for the timely
payment (and entitled to any refund) of all Taxes due with
respect to the period covered by such Tax Return.
28
(c) With respect to any Tax Return covering a taxable period
beginning on or before the Closing Date and ending after the
Closing Date that is required to be filed after the Closing
Date with respect to WPL, Energy Partners shall cause such Tax
Return to be prepared, shall cause to be included in such Tax
Return all Tax items required to be included therein, shall
furnish a copy of such Tax Return to ▇▇▇, shall file timely
such Tax Return with the appropriate Taxing Authority, and
shall be responsible for the timely payment of all Taxes due
with respect to the period covered by such Tax Return. Energy
Partners shall determine, in accordance with the provisions of
Section 7.1(d) of the Agreement, the amount of Tax due with
respect to the period prior to and including the Closing Date
(the "Contributor's Tax") and shall notify ▇▇▇ of its
determination of the Contributor's Tax. ▇▇▇ shall pay to
Energy Partners an amount equal to the Contributor's Tax not
later than five days after the filing of such Tax Return. Any
refund attributable to Tax Returns filed pursuant to this
Section 7.2(c) shall be apportioned between Energy Partners
and ▇▇▇ in a manner consistent with calculation of the
Contributor's Tax.
(d) Energy Partners shall, with respect to any Tax Return for
which Energy Partners is responsible under Section 7.2(c) for
preparing and filing, make such Tax work papers available for
review by ▇▇▇ if the Tax Return is with respect to Taxes for
which ▇▇▇ may. be liable (in whole or in part) hereunder or
under applicable law. Energy Partners shall make such work
papers available for review sufficiently in advance of the due
date for filing such Tax Returns to provide ▇▇▇ with a
meaningful opportunity to analyze and comment on such Tax
Returns and have such Tax Returns modified before filing,
accepting the position of Energy Partners unless such position
is contrary to the provisions of Section 7.2(e) hereof.
(e) Any Tax Return which includes or is based on the operations,
ownership, assets or activities of WPL for any taxable period
beginning before and ending after the Closing Date, and any
Tax Return in respect of any Taxes for which ▇▇▇ may be liable
(in whole or in part) hereunder shall be prepared in
accordance with past Tax accounting practices used with
respect to the Tax Returns in question (unless such past
practices are no longer permissible under the applicable law),
and to the extent any items are not covered by past practices
(or in the event such past practices are no longer permissible
under the applicable tax law), in accordance with reasonable
tax accounting practices selected by the filing party with
respect to such Tax Return under this Agreement with the
consent (not to be unreasonably withheld or delayed) of the
non-filing party.
Unless required by law, Energy Partners shall not file an
amended Tax Return for any period ending on or prior to the
Closing Date without the consent of ▇▇▇.
29
7.3 Tax Proceedings
If Energy Partners receives notice (the 'Proceeding Notice") of any
examination, claim, adjustment, or other proceeding with respect to the
liability of WPL for Taxes for any period for which ▇▇▇ is or may be
liable under Section 7.1, Energy Partners shall notify ▇▇▇ in writing
thereof (the "Energy Partners Notice") no later than the earlier of (a)
thirty (30) days after the receipt by Energy Partners of the Proceeding
Notice or (b) ten (10) days prior to the deadline for responding to the
Proceeding Notice. Such Energy Partners Notice shall contain factual
information describing any asserted liability for Taxes in reasonable
detail and shall be accompanied by copies of any notice or other
documents received from any Taxing Authority with respect to such
matter.
As to any such Taxes for which ▇▇▇ is or may be liable under Section
7.1, ▇▇▇ shall be entitled at its expense to control or settle the
contest of such examination, claim, adjustment, or other proceeding,
provided (a) ▇▇▇ notifies Energy Partners in writing that it desires to
do so no later than the earlier of (1) thirty (30) days after receipt
of the Energy Partners Notice or (2) five (5) days prior to the
deadline for responding to the Proceeding Notice, and (b) ▇▇▇ may not,
without the consent of Energy Partners, agree to any settlement which
would result in an increase in the amount of Taxes for which any of
Energy Partners or WPL or any of WPL's owners is or may be liable under
Section 7.1. ▇▇▇ shall pay any Taxes required to be paid in connection
with any examination, claim, adjustment or other proceeding, including,
without limitation, any prepayment of Tax required to obtain the
jurisdiction of a court.
The parties shall cooperate with each other and with their respective
affiliates, and shall consult with each other, in the negotiation and
settlement of any proceeding described in this Section 7.3. ▇▇▇ shall
pay to Energy Partners the amount of any Tax Losses Energy Partners may
become entitled to by reason of the provisions of this Article 7 within
fifteen (15) days after the extent of any Tax liability has been
determined by a final judgment or decree of a Court or a final and
binding settlement with a governmental authority having jurisdiction
thereof.
7.4 Cooperation and Exchange of Information
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners and ▇▇▇ shall cooperate fully, and
shall cause WPL to cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax
Returns pursuant to this Article 7 and any proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such proceeding and making employees
available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. ▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇ LIC and Energy Partners agree to retain all books and
records in their possession or in the possession of their respective
affiliates with respect to Tax matters pertinent to WPL relating to any
taxable period beginning before the Closing Date until the earlier of
six years after the Closing Date and the expiration of the applicable
statute of limitations of the respective taxable periods, and to abide
by all record retention agreements entered
30
into with any Taxing Authority, and thereafter, upon request, allow
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners to take possession of such books
and records. Each party shall provide the cooperation and information
required by this Section 7.4 at its own expense.
7.5 Survival.
Anything to the contrary in this Agreement notwithstanding, the
representations, warranties, covenants, agreements, rights and
obligations of the parties hereto with respect to any Tax matter
covered by this Agreement shall survive the Closing and shall not
terminate until thirty days after the expiration of the statute of
limitations (including extensions) applicable to such Tax matter.
7.6 Conflict
In the event of a conflict between the provisions of this Article 7 and
any other provisions of this Agreement, the provisions of this Article
7 shall control.
7.7 Miscellaneous
(a) Any payment required under this Article 7 and not made when
due shall bear interest at the rate per annum determined, from
time to time, under the provisions of Section 6621(a)(2) or
6621(c) of the Code, as applicable, for each day until paid.
(b) The indemnification provisions of this Article 7 are in
addition to, and not in derogation of, any statutory,
equitable, or common law remedy the parties may have with
respect to the transactions contemplated by this Agreement.
ARTICLE 8
INVESTIGATION; LIMITATIONS
8.1 Independent Investigation; Limitations
The parties hereto acknowledge that in making the decision to enter
into this Agreement and to consummate the transactions contemplated
hereby, they have relied solely on the basis of their own independent
investigation and analysis, and upon the express written
representations, warranties and covenants in this Agreement. Except for
and without limitation of the scope and effect of the express
representations, warranties, covenants and agreements contained herein,
the parties HEREBY EXPRESSLY DISCLAIM AND NEGATE ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO WPL AND ITS
ASSETS AND OPERATIONS OR TO THE TRANSACTIONS CONTEMPLATED HEREBY, AS
APPLICABLE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS).
31
ARTICLE 9
TERMINATION
9.1 Events of Termination
This Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by either Energy Partners or ▇▇▇ in writing after May 31,
2002, if the Closing has not occurred by such date;
(c) by either Energy Partners or ▇▇▇ in writing (provided the
terminating party and its affiliates are not otherwise in
material default or breach of this Agreement, or have not
failed or refused to close without justification hereunder),
if the other party (1) has materially failed to perform its
covenants or agreements contained herein required to be
performed on or prior to the Closing Date, or (2) has breached
any of its representations or warranties contained herein;
provided, however, that in the case of clause (1) or (2), the
defaulting party shall have a period of ten (10) days
following written notice from the nondefaulting party to cure
any breach of this Agreement, if such breach is curable;
(d) by either Energy Partners or ▇▇▇ in writing if there shall be
any order, writ, injunction or decree of any Governmental
Authority binding on any of the parties, which prohibits or
restrains them from consummating the transactions contemplated
hereby, provided that the parties shall have used their
reasonable best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been
lifted within 30 days after entry by any such Governmental
Authority;
(e) by ▇▇▇ if any of the conditions set forth in Section 6.2 have
become incapable of fulfillment, and, after 10 days following
notice by ▇▇▇, remain incapable of fulfillment and not waived
by ▇▇▇; or
(1) by ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners if any of the
conditions set forth in Section 6.1 have become incapable of
fulfillment, after 10 days following notice by Energy
Partners, remain incapable of fulfillment and not waived by
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners.
32
9.2 Effect of Termination
If a party terminates this Agreement as provided in Section 9.1 above,
termination shall be without liability and none of the provisions of
this Agreement will remain effective or enforceable.
ARTICLE 10
INDEMNIFICATION UPON CLOSING
10.1 Indemnification of ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners upon Closing
Subject to the limitations set forth in this Agreement, ▇▇▇, from and
after the Closing, shall indemnify, defend and hold ▇▇▇▇▇▇▇▇ ▇▇ LLC,
in its capacity as general partner of Energy Partners, and Energy
Partners and its subsidiaries, and their respective shareholders,
members, partners, directors, officers, and employees (the "Energy
Partners Parties") harmless from and against any and all liabilities
and obligations, including without limitation, all losses,
deficiencies, costs, expenses, fines, penalties, interest,
expenditures, investigatory costs, cleanup and remediation costs,
governmental response costs, claims, suits, proceedings, judgments,
settlements, damages, and reasonable attorneys' fees and reasonable
expenses of investigating, defending and prosecuting litigation (all of
the foregoing of which are collectively referred to as the "Damages")
suffered or incurred by the Energy Partners Parties as a result of or
arising out of (a) any breach of a representation or warranty of ▇▇▇ in
this Agreement, or any breach of any agreement or covenant on the part
of ▇▇▇ made under this Agreement or in connection with the transaction
contemplated hereby, (b) any breach of, failure to comply with or
liability arising under any Environmental Laws with respect to the
ownership, operation or conduct of the businesses or affairs of WPL
before the Closing, or (c) the Excluded Assets or the ownership or
operation thereof.
Nothing in this Section 10.1 or in Section 10.8 shall apply to, or
limit, liability with respect to Taxes, for which liability shall be as
set forth in Article 7.
10.2 Indemnification of ▇▇▇
Subject to the limitations set forth in this Agreement, Energy Partners
shall indemnify, defend and hold ▇▇▇ and its Affiliates (other than
any of the Energy Partners Parties), and their respective shareholders,
members, partners, directors, officers, and employees (together with
▇▇▇, the "▇▇▇ Parties") harmless from and against any and all Damages
suffered or incurred by the ▇▇▇ Parties as a result of or arising out
of (a) any breach of a representation or warranty of Energy Partners
in this Agreement and any breach of any agreement or covenant on the
part of Energy Partners made under. this Agreement or in connection
with the transaction contemplated hereby, (b) any breach of, failure
to comply with or liability arising under any Environmental Laws with
respect to the ownership, operation or conduct of the businesses or
affairs of WPL on or after the Closing, or (c) the ownership, operation
or conduct of the business or affairs of WPL on or after the Closing.
33
Nothing in this Section 10.2 or in Section 10.8 shall apply to, or
limit, liability with respect to Taxes, for which liability shall be as
set forth in Article 7.
10.3 Demands
Each indemnified party hereunder agrees that promptly upon its
discovery of facts giving rise to a claim for indemnity under the
provisions of this Agreement, including receipt by it of notice of any
demand, assertion, claim, action or proceeding, judicial or otherwise,
by any third party (such claims for indemnity involving third party
claims being collectively referred to herein as the "Indemnity Claim"),
with respect to any matter as to which it claims to be entitled to
indemnity under the provisions of this Agreement, it will give notice
thereof in writing to the indemnifying party, together with a statement
of such information respecting any of the foregoing as it shall have.
Such notice shall include a formal demand for indemnification under
this Agreement.
If the indemnified party knowingly fails to notify the indemnifying
party thereof in accordance with the provisions of this Agreement in
sufficient time to permit the indemnifying party or its counsel to
defend against an Indemnity Claim and to make a timely response
thereto, the indemnifying party's indemnity obligation relating to such
Indemnity Claim shall be limited to the extent that such failure has
actually prejudiced or damaged the indemnifying party with respect to
that Indemnity Claim.
10.4 Right to Contest and Defend
The indemnifying party shall be entitled, at its cost and expense, to
contest and defend by all appropriate legal proceedings any Indemnity
Claim for which it is called upon to indemnify the indemnified party
under the provisions of this Agreement; provided, that notice of the
intention to so contest shall be delivered by the indemnifying party to
the indemnified party within 20 days from the date of receipt by the
indemnifying party of notice by the indemnified party of the assertion
of the Indemnity Claim. Any such contest may be conducted in the name
and on behalf of the indemnifying party or the indemnified party as may
be appropriate. Such contest shall be conducted by reputable counsel
employed by the indemnifying party and not reasonably objected to by
the indemnified party, but the indemnified party shall have the right
but not the obligation to participate in such proceedings and to be
represented by counsel of its own choosing at its sole cost and
expense.
The indemnifying party shall have full authority to determine all
action to be taken with respect to any Indemnity Claim; provided,
however, that the indemnifying party will not have the authority to
subject the indemnified party to any obligation whatsoever, other than
the performance of purely ministerial tasks. If the indemnifying party
does not elect to contest any such Indemnity Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party. If the indemnifying party assumes the defense of an
Indemnity Claim, the indemnified party shall agree to any settlement,
compromise or
34
discharge of an Indemnity Claim that the indemnifying party may
recommend and that by its terms obligates the indemnifying party to pay
the full amount of the liability in connection with such Indemnity
Claim, which releases the indemnified party completely in connection
with such Indemnity Claim and which would not otherwise adversely
affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Indemnity Claim (and shall be
liable for the reasonable fees and expenses of counsel incurred by the
indemnified party in defending such Indemnity Claim) if the Indemnity
Claim seeks an order, injunction or other equitable relief or relief
for other than money damages against the indemnified party which the
indemnified party reasonably determines, after conferring with its
outside counsel, cannot be separated from any related claim for money
damages. If such equitable relief or other relief portion of the
Indemnity Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the
portion relating to money damages.
10.5 Cooperation
If requested by the indemnifying party, the indemnified party agrees to
cooperate with the indemnifying party and its counsel in contesting any
Indemnity Claim that the indemnifying party elects to contest or, if
appropriate, in making any counterclaim against the person asserting
the Indemnity Claim, or any cross-complaint against any such person,
and the indemnifying party will reimburse the indemnified party for any
expenses incurred by it in so cooperating. At no cost or expense to the
indemnified party, the indemnifying party shall cooperate with the
indemnified party and its counsel in contesting any Indemnity Claim.
10.6 Right to Participate
The indemnified party agrees to afford the indemnifying party and its
counsel the opportunity to be present at, and to participate in,
conferences with all persons, including Governmental Authorities,
asserting any Indemnity Claim against the indemnified party or
conferences with representatives of or counsel for such persons.
10.7 Payment of Damages
The indemnification required hereunder shall be made by payments of the
amount thereof during the course of the investigation or defense,
within thirty (30) days as and when reasonably specific bills are
received or loss, liability, claim, damage or expense is incurred and
reasonable evidence thereof is delivered. In calculating any amount to
be paid by an indemnifying party by reason of the provisions of this
Agreement, the amount shall be reduced by all tax benefits and other
reimbursements (including, without limitation, insurance proceeds)
credited to or received by the indemnified party related to the
Damages.
35
10.8 Limitations on Indemnification
(a) WES' indemnity obligations under this Agreement will apply
only to Damages which are sustained or incurred by the Energy
Partners Parties for which notice in accordance with the
provisions of this Agreement has been given within any
applicable survival period for such indemnity obligations.
(1) WES' indemnity obligations under Section 10.1(a)
(other than such indemnity obligations as arise under
Section 3.12 (Employees and Benefits), Section 3.14
(Environmental), Section 3.19 (Title to Real
Property) and Section 3.27 (Excluded Assets)) will
survive the Closing for a period of one (1) year and
are subject to the Deductible and the Cap as set
forth in Sections 10.8(a)(5) and 10.8(a)(7).
(2) WES' indemnity obligations under Section 10.1(a) that
may arise with respect to Section 3.12 (Employees and
Benefits) will survive the Closing for a period of
time equal to the applicable statute(s) of
limitations and are not subject to any deductible or
cap.
(3) WES' indemnity obligations under Section 10.1(a) that
may arise with respect to Section 3.19 (Title to Real
Property) will survive the Closing for a period of
ten (10) years and are subject to the Deductible and
the Cap as set forth in Sections 10.8(a)(5) and
10.8(a)(7).
(4) WES' indemnity obligations under Section 10.1(c) (the
Excluded Assets or the ownership or operation of the
Excluded Assets) will survive the Closing without
expiration and are not subject to any deductible or
cap.
(5) WES' indemnity obligations under Section 10.1(a)
(other than such indemnity obligations as may arise
under Section 3.12 (Employees and Benefits), and
Section 3.14 (Environmental) and Section 3.27
(Excluded Assets)) will apply only to Damages which,
in the aggregate, exceed $6,000,000 (the
"Deductible").
(6) WES' indemnity obligations that may arise under
Section 10.1(a) for breach of Section 3.14
(Environmental) and Section 10.1(b) will survive the
Closing for a period of six (6) years and will apply
only to such environmental Damages which exceed an
aggregate amount of $2,000,000 (the "Environmental
Deductible").
(7) Except as otherwise provided in this Section 10.8, in
no event shall WES' liability or obligation for
Damages which exceed, in the aggregate, the
applicable Deductible or Environmental Deductible
under Section 10.1 exceed an aggregate amount of $125
million (the "Cap") determined as follows: The first
$110 million of Damages (if any) will be for WES'
sole account; WES will be obligated for fifty percent
36
(50%) of the next $30 million of Damages (if any) on
a dollar-for-dollar basis.
(b) Energy Partners indemnity obligations under this Agreement
will apply only to Damages sustained or incurred by the WES
Parties for which notice in accordance with the provisions of
this Agreement has been given within any applicable survival
period for such indemnity obligations.
(1) Energy Partner's indemnity obligations under Section
10.2(a) will survive the Closing for a period of one
(1) year and shall apply only to Damages which
exceed, in the aggregate, the Deductible. In no event
shall Energy Partners' liability or obligation for
Damages relating to its indemnity obligations under
Section 10.2(a) which exceed, in the aggregate, the
Deductible exceed an aggregate amount of $125 million
determined as follows: The first $110 million of
Damages (if any) will be for Energy Partners' sole
account; Energy Partners will be obligated for fifty
percent (50%) of the next $30 million of Damages (if
any) on a dollar-for-dollar basis.
(2) The indemnity obligations of Energy Partners under
Section 10,2(b) and Section 10.2(c) will survive the
Closing without expiration.
(c) Additionally, neither Energy Partners nor WES will be liable,
as an indemnitor under this Agreement for any consequential,
incidental, special, indirect or exemplary damages suffered or
incurred by the indemnified party or parties except to the
extent recovered against an indemnified party in an Indemnity
Claim.
10.9 Sole Remedy
Should the Closing occur, no party shall have liability under this
Agreement, any of the Constituent Documents (as hereinafter defined) or
the transactions contemplated hereby or thereby except as is provided
in Article 7 or this Article 10.
10.10 Addition to or Substitution of WES as Indemnitor
If, during the term of WES' indemnification obligations under this
Article 10, (a) the shareholder equity in WES falls below $750,000,000,
(b) ▇▇▇' ratio of Consolidated Total Debt (as defined below) to
Consolidated EBITDA (as defined below) for the most recently completed
12 months shall exceed 4.0 to 1.0 or (c) 50% of the equity of WES is
sold to or acquired by any other Person (other than an Affiliate) or
WES otherwise effects or is subject to an Extraordinary Event (as
defined below), WES shall immediately notify Energy Partners of the
occurrence of such event and, at its sole election, provide one or more
of the following (or combinations thereof) to Energy Partners as
additional assurance for the performance of WES' indemnity obligations
under this Agreement: (x) a
37
performance guarantee by The ▇▇▇▇▇▇▇▇ Companies, Inc. or (y) a standby
irrevocable bank letter of credit, in each case in an amount not to exceed the
Maximum Amount and upon standard market terms and conditions reasonably
satisfactory to Energy Partners.
For purposes of this Section 10.10:
"Capital Lease" means any capital lease or sublease which should be capitalized
on a balance sheet in accordance with GAAP.
"Consolidated EBITDA" means, for any period, for WES and its subsidiaries on a
consolidated basis, an amount equal to the sum of (a) Consolidated Net Income,
(b) Consolidated Interest Charges, (c) the amount of taxes, based on or measured
by income, used or included in the determination of such Consolidated Net
Income, and (d) the amount of depreciation and amortization expense deducted in
determining such Consolidated Net Income.
"Consolidated Interest Charges" means, for any period, for WES and its
subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of WES and its subsidiaries in
connection with indebtedness (including capitalized interest), in each case to
the extent treated as interest in accordance with GAAP, and (b) the portion of
rent expense of WES and its subsidiaries with respect to such period under
Capital Leases that is treated as interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for WES and its subsidiaries on
a consolidated basis, the net income or net loss of WES and its subsidiaries
from continuing operations, provided that there shall be excluded from such net
income (to the extent otherwise included therein): (a) the income (or loss) of
any entity other than a subsidiary in which WES or any subsidiary has an
ownership interest, except to the extent that any such income has been actually
received by WES or such subsidiary in the form of cash dividends or similar cash
distributions, (b) net extraordinary gains and losses (other than, in the case
of losses, losses resulting from charges against net income to establish or
increase reserves for potential environmental liabilities and reserves for
exposure under rate cases), (c) any gains or losses attributable to non-cash
write-ups or write-downs of assets, and (d) proceeds of any insurance on
property, plant or equipment other than business interruption insurance.
"Consolidated Total Debt" means, at any date, the aggregate principal amount of
all indebtedness of WES and its subsidiaries at such date, determined on a
consolidated basis in accordance with OAAP.
"Extraordinary Event" means a sale, exchange or dividend or other distribution
or liquidation of all or substantially all WES' assets in one or a series of
transactions.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other principles as may be approved
by a significant
38
segment of the accounting profession, that are applicable to the circumstances
as of the date of determination, consistently applied.
"Maximum Amount" shall mean the lesser of (a) the remaining about of potential
indemnification obligations of WES under the
Contribution Agreement or (b)
$125,000,000.
10.11 Express Negligence
THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN
EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND
LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES,
OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN
QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY
INDEMNIFIED PARTY (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).
▇▇▇▇▇▇▇▇ ▇▇ LLC AND ENERGY PARTNERS AND WES ACKNOWLEDGE THAT THIS
STATEMENT CONSTITUTES CONSPICUOUS NOTICE. NOTHING IN THIS CONSPICUOUS
NOTICE IS INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF
THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses
Regardless of whether the transactions contemplated hereby are
consummated, each party hereto shall pay its own expenses incident to
this Agreement and all action taken in preparation for carrying this
Agreement into effect.
11.2 Notices
Any notice, request, instruction, correspondence or other document to
be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or by
telecopier, as follows:
If to the WES, addressed to:
39
▇▇▇▇▇▇▇▇ Energy Services, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Energy Services, LLC
Legal Department
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners, addressed to:
▇▇▇▇▇▇▇▇ Energy Partners L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇-▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Energy Partners L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notice given by personal delivery or courier service shall be effective
upon actual receipt. Notice given by telecopier shall, subject to
confirmation of uninterrupted transmission by a transmission report, be
effective upon actual receipt if received during the recipient's normal
business hours, or at the beginning of the recipient's next business
day after receipt if not received during the recipient's normal
business hours. Any party may change any address to which Notice is to
be given to it by giving Notice as provided above of such change of
address.
11.3 No Negotiations
Until the first to occur of the Closing or termination of this Agreement
pursuant to the provisions of Article 9, WES will not initiate or participate in
discussions with, or otherwise solicit from or provide information to, any
Person not a party hereto with respect to any proposals or offers relating to
the acquisition of WPL or substantially all of its assets.
40
11.4 Governing Law
This Agreement shall be governed and construed in accordance with the
substantive laws of the State of
Oklahoma without reference to
principles of conflicts of law.
11.5 Public Statements
The parties hereto shall consult with each other and no party shall
issue any public announcement or statement with respect to the
transactions contemplated hereby without the consent of the other
party, unless the party desiring to make such announcement or
statement, after seeking such consent from the other parties, obtains
advice from legal counsel that a public announcement or statement is
required by applicable law or stock exchange regulations.
11.6 Form of Payment
All cash payments hereunder shall be made in United States dollars and,
unless the parties making and receiving such payments shall agree
otherwise or the provisions hereof provide otherwise, shall be made by
wire or interbank transfer of immediately available funds by 12:00 Noon
Tulsa,
Oklahoma time on the date such payment is due to such account as
the party receiving payment may designate at least three business days
prior to the proposed date of payment.
11.7 Entire Agreement; Amendments and Waivers
This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including
the exhibits and Disclosure Letter hereto but excluding the Second
Amendment to Omnibus Agreement and the First Amendment, dated as of the
Closing Date, to the Amended and Restated Agreement of Limited
Partnership of Energy Partners (collectively, the "Constituent
Documents") (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) do not confer upon any other
Person or entity any rights or remedies hereunder; and (c) shall not be
assigned by operation of law or otherwise. Each party to this Agreement
agrees that (1) no other party to this Agreement (including its agents
and representatives) has made any representation, warranty, covenant or
agreement to or with such party relating to this Agreement or the
transactions contemplated hereby, other than those expressly set forth
in the Constituent Documents, and (2) such party has not relied upon
any representation, warranty, covenant or agreement relating to the
transactions contemplated by the Constituent Documents, other than
those referred to in clause (1) above. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by
each party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (regardless of whether similar), nor shall any
such waiver constitute a continuing waiver unless otherwise expressly
provided.
41
11.8 Conflicting Provisions
This Agreement and the other Constituent Documents, read as a whole,
set forth the parties' rights, responsibilities and liabilities with
respect to the transactions contemplated by this Agreement. In the
Agreement and the Constituent Documents, and as between them, specific
provisions prevail over general provisions. In the event of a conflict
between this Agreement and the Constituent Documents, this Agreement
shall control.
11.9 Binding Effect and Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns;
but neither this Agreement nor any of the rights, benefits or
obligations hereunder shall be assigned or transferred, by operation of
law or otherwise, by any party hereto without the prior written consent
of the other parties. Nothing in this Agreement, express or implied, is
intended to confer upon any Person or entity other than the parties
hereto and their respective permitted successors and assigns, any
rights, benefits or obligations hereunder. The provisions of this
Agreement are enforceable solely by the Parties, and no limited
partner, assignee or other Person shall have the right, separate and
apart from Energy Partners to enforce any provision of this Agreement
or to compel any Party to comply with the terms of this Agreement.
11.10 WES Right of First Refusal
If, pursuant to a bona fide offer from a Person (other than a Person
controlled by The ▇▇▇▇▇▇▇▇ Companies, Inc.), Energy Partners desires to
make a Transfer (as that term is defined in this section), on terms and
conditions acceptable to Energy Partners, Energy Partners shall
thereupon promptly give WES written notice of the proposed Transfer,
which notice must provide: (a) a description of the assets, rights,
ownership or other interests proposed to be Transferred (b) the
consideration to be paid, and (c) the material terms and conditions
upon which the proposed Transfer is to be made.
WES will have an option for a period of sixty (60) days from the date
of its actual receipt of such notice to elect to purchase or acquire
the assets, rights, ownership or other interests proposed to be
Transferred for the same consideration and subject to the same material
terms and conditions as described in Energy Partners' written notice of
the proposed Transfer. Additionally, if the consideration identified in
the notice is other than ▇▇▇▇, ▇▇▇ will have the right to pay the
purchase price in the form of cash equal in amount to the reasonable
and justified value of such non-cash consideration. Any disputes
regarding the cash value so assigned shall be referred to an
independent investment banker or accounting firm, who shall take into
consideration the strategic value, if any, of the non-cash
consideration to Energy Partners.
42
Upon WES' election to make such purchase or acquisition, WES shall
close such transaction within one hundred and twenty (120) days after
its receipt of actual notice of the proposed Transfer, subject only to
extensions beyond that time as are provided for in the material terms
and conditions of the proposed Transfer being met by WES or are caused
by any delay in obtaining required governmental approvals. WES' failure
to respond to Energy Partners' notice within its allotted thirty-day
period will be deemed its election not to purchase the proposed
Transfer. If WES elects not to make such purchase, Energy Partners may
effect such Transfer in accordance with all terms set forth in the
written notice of the proposed Transfer previously given to WES. If
Energy Partners fails to close such proposed Transfer within one
hundred eighty (180) days of WES' election not to purchase (subject
only to an extension for any delay in obtaining required governmental
approvals) or if any material terms and conditions of the proposed
Transfer are changed after WES' election to not make the purchase,
Energy Partners shall be obligated to repeat the steps of this
provision.
As used in this Section 11.10, a "Transfer" refers to any of the
following events (in one transaction or in a series of related
transactions): An assignment, sale, lease, conveyance, contribution,
exchange, transfer or other disposition of WPL (including by
application of law and/or by consolidation or merger of WPL wherein WPL
is not the survivor) or of a material portion of its assets.
11.11 Severability
If any provision of the Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted
legislation or by decree of a court of last resort, the WES and
▇▇▇▇▇▇▇▇ ▇▇ LLC and Energy Partners shall promptly meet and negotiate
substitute provisions for those rendered or declared illegal or
unenforceable, but all of the remaining provisions of this Agreement
shall remain in full force and effect.
11.12 Interpretation
The parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore waive the
application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.
11.13 Headings and Schedules
The headings of the several Articles and Sections herein are inserted
for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The
schedules referred to herein are attached hereto and incorporated
herein by this reference, and unless the context expressly requires
otherwise, such schedules are incorporated in the definition of
"Agreement."
43
11.14 Multiple Counterparts
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
EXECUTED as of the date first set forth above.
▇▇▇▇▇▇▇▇ ENERGY SERVICES, LLC THE ▇▇▇▇▇▇▇▇ COMPANIES, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President Title: Vice President
▇▇▇▇▇▇▇▇ ENERGY PARTNERS L.P (Executed solely with respect to its agreement
under Section 10.10 of this Agreement to
By ▇▇▇▇▇▇▇▇ ▇▇ LLC, its general partner provide a performance guaranty pursuant to
the conditions of that section in support of
By: /s/ Don R. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇' indemnity obligations hereunder. No
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ other rights, obligations or relationships are
Title: CFO created or shall be deemed to be created
hereby)
▇▇▇▇▇▇▇▇ ▇▇ LLC
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: CFO
44