Exhibit 10(j)
PURCHASE AND SALE AGREEMENT
between
TXU Fuel Company
and
Energy Transfer Partners, L.P.
dated
April 25, 2004
TABLE OF CONTENTS
Page
1. DEFINITIONS..............................................................................................1
1.1. Defined Terms...................................................................................1
1.2. References......................................................................................1
1.3. Articles and Sections...........................................................................1
1.4. Number and Gender...............................................................................1
1.5. Construction....................................................................................2
2. BASIC TRANSACTION........................................................................................2
2.1. Transaction.....................................................................................2
2.2. Assets..........................................................................................2
2.3. Excluded Assets.................................................................................3
2.4. Purchase Price..................................................................................4
2.5. Consents to Assignment..........................................................................4
2.6. Closing.........................................................................................5
2.7. Closing Deliveries..............................................................................5
2.8. Books and Records Transfer......................................................................6
2.9. Transition Services Agreements and Gas Transportation Agreements................................6
2.10. Revenues and Expenses...........................................................................6
2.11. Adjustments to Purchase Price...................................................................7
2.12. Preliminary Settlement Statement................................................................8
2.13. Post-Closing Adjustments........................................................................8
3. REPRESENTATIONS AND WARRANTIES OF TXU....................................................................9
3.1. Organization and Corporate Power................................................................9
3.2. Authorization of Agreement and Transaction......................................................9
3.3. No Contravention................................................................................9
3.4. Financial Statements; Absence of Certain Changes...............................................10
3.5. Permits........................................................................................10
3.6. Title to the Assets............................................................................10
3.7. Condition of Property..........................................................................10
3.8. Material Contracts.............................................................................11
3.9. Environmental Matters..........................................................................11
3.10. Litigation.....................................................................................12
3.11. Gas Regulatory Matters.........................................................................12
3.12. Brokers' Fees..................................................................................12
3.13. TXU's Status...................................................................................12
3.14. No Bankruptcy..................................................................................12
3.15. Labor Matters..................................................................................12
3.16. Certain Transfer Requirements..................................................................12
3.17. Tax Matters....................................................................................12
3.18. Compliance With Laws...........................................................................13
3.19. No Adverse Change..............................................................................13
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3.20. Affiliate Agreements...........................................................................13
3.21. No Affiliate Ownership.........................................................................13
3.22. Advance Receipts/Purchase; Suspended Funds.....................................................14
3.23. Environmental Reports..........................................................................14
3.24. Employee Benefit Plans; ERISA..................................................................14
3.25. Insurance......................................................................................14
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................14
4.1. Organization and Corporate Power...............................................................14
4.2. Authorization of Agreement and Transaction.....................................................14
4.3. No Contravention...............................................................................15
5. COVENANTS AND AGREEMENTS................................................................................15
5.1. Joint Covenants and Agreements Pending Closing.................................................15
5.2. Joint Covenants: Publicity....................................................................17
5.3. Joint Covenants: Confidentiality..............................................................17
5.4. Employment of Employees by Buyer...............................................................17
5.5. Affiliate Agreements...........................................................................19
5.6. Books and Records: Access to Employees........................................................19
5.7. Further Assurances.............................................................................19
5.8. Notices of Certain Events......................................................................20
5.9. Damage or Condemnation.........................................................................20
5.10. Fees and Expenses..............................................................................21
5.11. Taxes and Other Charges........................................................................21
5.12. Amendment of Schedules.........................................................................21
5.13. No Shopping....................................................................................21
5.14. HSR Filing.....................................................................................22
5.15. TXU Signs......................................................................................22
5.16. Cooperation....................................................................................22
6. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES TO CLOSE...................................................22
6.1. Conditions to the Obligations of Buyer.........................................................22
6.2. Conditions to the Obligations of TXU...........................................................23
7. INDEMNIFICATION AND ASSUMPTION..........................................................................23
7.1. By TXU.........................................................................................23
7.2. Limitations on TXU's Indemnity.................................................................24
7.3. By Buyer.......................................................................................24
7.4. Express Negligence Rule........................................................................24
7.5. Notice of Claim................................................................................25
7.6. Third Party Claims.............................................................................25
7.7. Subrogation....................................................................................26
7.8. Exclusive Remedies; Survival of Representations and Warranties; Limitation of Certain
Liabilities....................................................................................26
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8. TERMINATION.............................................................................................27
8.1. Termination Events.............................................................................27
8.2. Effect of Termination..........................................................................27
9. MISCELLANEOUS...........................................................................................27
9.1. Entire Agreement...............................................................................27
9.2. No Reliance on External Representations........................................................27
9.3. Amendments.....................................................................................28
9.4. Waivers........................................................................................28
9.5. Parties in Interest............................................................................28
9.6. Notices........................................................................................28
9.7. Costs..........................................................................................30
9.8. Governing Law and Jurisdiction.................................................................30
9.9. Incorporation of Exhibits and Schedules........................................................30
9.10. Counterparts...................................................................................30
9.11. Severability...................................................................................30
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Appendices:
-----------
Appendix A: Defined Terms
Exhibits:
---------
Exhibit A: Conveyance Document
Exhibit B-1: Transition Services Agreement (Software Related
Services)
Exhibit B-2: Transition Services Agreement (Engineering)
Exhibit C-1: Natural Gas Transportation Agreement
Exhibit C-2: Gas Storage Contract (Bethel)
Exhibit C-3: Gas Storage Contract (▇▇▇▇▇▇)
Exhibit D: Legal Opinion
Schedules:
----------
Schedule 2.2(a) - Real Property
Schedule 2.2(b) - Personal Property
Schedule 2.2(c) - Assigned Contracts
Schedule 2.3 - Excluded Assets
Schedule 2.4 - Allocation Schedule
Schedule 2.11(a)(v) - Inventory Valuation
Schedule 3.5 - Permits
Schedule 3.6 - Title to TXU Assets
Schedule 3.8 - Material Contract Obligations
Schedule 3.9 - Environmental Matters and Specified Persons
Schedule 3.10 - Litigation
Schedule 3.16 - Certain Transfer Requirements
Schedule 3.17 - Tax Matters
Schedule 3.19 - Adverse Changes
Schedule 3.20 - Affiliate Agreements
Schedule 3.21 - Affiliate Ownership
Schedule 3.22 - Suspended Funds
Schedule 3.24 - Employee Benefit Plans; ERISA
Schedule 3.25 - Insurance Schedule 5.4(a) - Employee Matters
Schedule 5.4(b) - Agreement and Release
Schedule 5.4(c)(v) - Severance Benefits
Schedule 5.5 - Permitted Affiliate Agreements
Schedule 6.1(g) - Required Consents
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PURCHASE AND SALE AGREEMENT
---------------------------
April 25, 2004
--------------
This Purchase and Sale Agreement ("Agreement"), is between TXU Fuel
Company ("TXU"), a Texas corporation, and Energy Transfer Partners, L.P., a
Delaware limited partnership (the "Buyer"). TXU and the Buyer are referred to
herein individually as a "Party" and collectively as the "Parties."
RECITALS:
TXU has agreed to sell to Buyer, and Buyer has agreed to purchase from
TXU, all of TXU's interest in the Assets on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual obligations made in this
Agreement, the Parties agree as follows:
1. DEFINITIONS
1.1. Defined Terms. In addition to the terms defined in the
introductory paragraph and the Recitals, this Agreement uses certain other
defined terms and expressions. The definitions of capitalized terms are set
forth in the text of this Agreement or in Appendix A.
1.2. References. The words "hereby," "herein," "hereof," "hereto," and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular article, section, or provision of
this Agreement. References in this Agreement to articles, sections, exhibits, or
schedules are to such articles, sections, exhibits, or schedules of this
Agreement, unless otherwise specified.
1.3. Articles and Sections. This Agreement is divided into articles and
sections, and includes section and article headings. These divisions and
headings are for convenience only, and the Parties' rights and obligations
will be determined from this Agreement as a whole, unless otherwise specified,
and without regard to the divisions and headings.
1.4. Number and Gender. Whenever the context requires, reference to a
single number will include the plural, and the plural will include the singular.
Words denoting gender will include the masculine, feminine, and neuter, when
appropriate; and specific enumeration will not exclude the general, but will
be construed as cumulative. Definitions of terms defined in the singular or
plural are equally applicable to the plural or singular, as applicable, unless
otherwise specified.
1.5. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Parties, and no presumption or burden of proof will arise
favoring or disfavoring either Party by virtue of the authorship of any part of
this Agreement.
2. BASIC TRANSACTION
2.1. Transaction. Effective for all purposes as of the Effective Time,
TXU shall sell, transfer and convey to Buyer the Assets, and Buyer shall assume
the Assumed Obligations.
2.2. Assets. The following items constitute the Assets:
(a) All right, title and interest of TXU in the real property,
rights-of-way, easements, pipelines and gas storage facilities, as more
particularly described in Schedule 2.2(a) ("Real Property");
(b) All right, title and interest of TXU in all equipment
(including, without limitation, compressors and treaters, vehicles, tools,
lubricants, supplies and spare-parts inventory and computer hardware, but
specifically excluding any equipment leased by TXU), pipelines, fixtures and
improvements and other items of tangible personal property currently owned by
TXU located on or primarily used in connection with the ownership or operation
of the Real Property, including (without limitation) those described in Schedule
2.2(b) (all personal property described in this clause (b) is the "Personal
Property");
(c) All right, title and interest of TXU in and to any and all of
the following types of contracts and agreements entered or held in connection
with TXU's ownership or operation of the Real Property or the Personal Property:
gas purchase agreements, plant construction and operating agreements, gas sales
contracts, gas gathering agreements, gas transportation contracts, gas
processing agreements, natural gas liquids sales, transportation and
fractionation agreements, and assignable equipment lease agreements, and any and
all other related contracts and agreements, currently held by TXU, including
(without limitation) those described in Schedule 2.2(c) (all of the contracts
and agreements described in this clause (c) are the "Assigned Contracts");
(d) All right, title and interest of TXU in and to all of the
natural gas and natural gas liquids and products located at the Real Property
and in the Personal Property as of the Effective Time (collectively, the
"Inventory");
(e) To the extent transferable, all Permits owned or otherwise
held by TXU for the operation of the Real Property or Personal Property
including those described in Schedule 3.5;
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(f) To the extent transferable, all right, title and interest of
TXU in and to any computer software and licenses related thereto that are
presently used with the Personal Property and other Assets ("Other Intellectual
Property");
(g) All suspense funds held by TXU arising from the Assigned
Contracts, except funds (if any) held by TXU that are the subject of the
litigation disclosed in Schedule 3.10 ("Transferred Suspense Funds");
(h) All existing financial, engineering, operating, accounting,
tax, contract, environmental, safety, legal (other than those protected by legal
privilege or that pertain to liabilities or litigation retained by TXU
hereunder), marketing, and other data, files, computer tapes and discs,
documents, instruments, notes, papers, books and records of TXU in TXU's
possession that relate materially to the ownership or operation of the Assets,
including (without limitation) deeds, property records, title policies,
drawings, records, maps, charts, surveys, prints, franchises, permits,
certificates, filings with Governmental Authorities, reports, process safety
management (PSM) records, and records regarding the construction, maintenance
and testing of the Assets, together with copies of budgets, journals, ledgers
and customer lists that relate solely to the ownership and operation of the
Assets (collectively, "Books and Records");
(i) To the extent that they relate to Assumed Obligations, all of
TXU's causes of action, judgments, claims and demands of whatever nature against
third parties (including, without limitation, unexpired manufacturer's equipment
or construction warranties) and attributable to the period before the Effective
Time; and
(j) All other assets, property and rights of TXU not expressly
identified as an Excluded Asset.
2.3. Excluded Assets. The following items (the "Excluded Assets") are
not included as part of the Assets and are not being transferred to the Buyer:
(a) The name "TXU Fuel Company," "TUFCO" or any variations
thereof;
(b) Any cash other than the Transferred Suspense Funds;
(c) Any refunds from tax authorities attributable to any period
before the Effective Time;
(d) Any intercompany account accrued before the Effective Time
that reflects any amount due and owing to TXU by any of TXU's Affiliates;
(e) Except to the extent that they relate to any Assumed
Obligations, all of TXU's causes of action, judgments, claims and demands of
whatever nature against third parties and attributable to the period prior to
the Effective Time; including those applicable to any period or periods
extending both before and after the Effective Time;
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(f) Any litigation described in Schedule 3.10 and not related to
an Assumed Obligation pursuant to Section 2.2(i);
(g) Except as provided in Section 5.9 or as provided in the
Transition Services Agreement, all insurance policies, and benefits thereunder,
of TXU;
(h) All of TXU's credit files, employee and payroll records, books
of account, budgets and financial records and customer lists;
(i) All Imbalance Receivables and Imbalance Payables as of the
Effective Time;
(j) Provided that such use does not interfere with Buyer's
business, and subject to Buyer's consent which may not be unreasonably withheld,
a perpetual, paid up license to use any right of way or easement, whether or not
currently in writing or recorded, upon which Excluded Assets are located or upon
which pipelines or other facilities of TXU's Affiliates are located, for the
continued use, operation, installation and replacement of pipelines or any other
facilities on such properties; and
(k) All assets identified on Schedule 2.3.
In case of any inconsistency between this Section 2.3 and Section 2.2,
Section 2.2 shall prevail.
2.4. Purchase Price. In consideration for the sale, assignment,
transfer and conveyance of the Assets to Buyer, Buyer shall pay to TXU the
amount of Five Hundred Million Dollars ($500,000,000) (the "Purchase Price").
The Purchase Price as adjusted pursuant to Section 2.11 shall be paid at Closing
by wire transfer of immediately available funds to the account specified by TXU
in writing three (3) Business Days before Closing. The Parties agree to report
the federal, state and other tax consequences of the transactions contemplated
by this Agreement in a manner consistent with the purchase price allocation set
forth on Schedule 2.4 (the "Allocation Schedule").
2.5. Consents to Assignment. This Agreement does not constitute an
agreement to assign any asset, right-of-way, easement, contract, agreement, or
Permit constituting Assets or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof at Closing
would: (i) cause TXU or the Buyer to be in violation of any licensing or other
law, or (ii) be in violation of any prohibition on assignment of any Asset
(herein called a "Transfer Requirement"). TXU and Buyer will use Reasonable
Efforts to obtain all necessary consents or waivers to transfer any such Asset
or any claim or right or any benefit arising thereunder or resulting therefrom.
Nevertheless, if despite such Reasonable Efforts, TXU is unable to satisfy a
Transfer Requirement necessary for the transfer of any such Asset, or any claim
or right or any benefit arising thereunder or resulting therefrom by Closing,
TXU and Buyer will cooperate in a mutually agreeable arrangement such that: (a)
from and after the Closing, Buyer will receive the revenues and other benefits
from, and pay the costs and expenses required to be paid with respect to, such
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Asset, (b) Buyer hereby assumes the responsibility to discharge TXU's
obligations to the extent they are Assumed Obligations with respect to such
Asset, (c) upon Buyer's written request, TXU will enforce for the benefit of
Buyer, as necessary, and at Buyer's sole cost and expense, any and all rights of
TXU against a third party with respect to such Asset, and (d) Buyer will
indemnify and hold TXU harmless with respect to any Assumed Obligations arising
with respect to such Asset.
2.6. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at 10:00 a.m. at the office of Hunton
& ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the first
(1st) day of the month following the date upon which all of the conditions to
the Closing set forth in Sections 6.1 and 6.2 have been satisfied. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
The effective time of the Closing and transfers made at the Closing will be at
9:00 a.m. on the Closing Date ("Effective Time").
2.7. Closing Deliveries. At Closing, TXU shall deliver to Buyer:
(i) the various certificates, instruments and documents
referred to in Section 6.1;
(ii) signed and acknowledged (if appropriate) bills of sale,
assignments of easements and rights-of-way, and deeds (with a special
warranty of title except for Permitted Encumbrances) in the form
attached as Exhibit A (the "Conveyance Documents") which, collectively,
transfer to Buyer all of TXU's right, title and interest in and to the
Assets (subject to Section 2.5 hereof);
(iii) original counterparts of each of the Transition Services
Agreements in the forms attached as Exhibit B-1 and B-2, signed by
TXU Gas Company, an Affiliate of TXU;
(iv) original counterparts of the Gas Transportation
Agreements in the forms attached as Exhibit C-1, C-2 and C-3, signed by
TXU Portfolio Management Company LP, an Affiliate of TXU; and
(v) a FIRPTA Affidavit in customary form; and
(vi) any other duly signed and acknowledged (if appropriate)
agreements and instruments provided for in this Agreement or reasonably
necessary or desirable by both Parties to effectuate the transactions
contemplated hereby.
(b) At the Closing, Buyer shall deliver to TXU:
(i) the various certificates, instruments and documents
referred to in Section 6.2;
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(ii) duly signed and acknowledged (if appropriate)
counterparts of the Conveyance Documents, which collectively, will
transfer to Buyer all Assumed Obligations;
(iii) original counterparts of the Transition Services
Agreements in the forms attached as Exhibit B-1 and Exhibit B-2,
signed by Buyer;
(iv) original counterparts of the Gas Transportation
Agreements in the forms attached as Exhibit C-1, Exhibit C-2 and
Exhibit C-3, signed by Buyer; and
(v) any other duly executed and acknowledged (if
appropriate) agreements or instruments provided for in this Agreement
or reasonably necessary or desirable by both Parties to effectuate the
transactions contemplated hereby.
2.8. Books and Records Transfer. TXU shall deliver all Books and
Records in its possession with respect to the Assets to Buyer as soon as
possible after Closing, but in any event not later than 30 days after Closing,
subject to the following provisions:
(a) TXU may retain copies of all Books and Records that are
delivered to Buyer;
(b) TXU may retain (with Buyer to have access thereto and the
right to make copies thereof) all consolidating and consolidated financial
information and all other accounting Books and Records prepared or used
in connection with: (1) the preparation of financial statements of TXU
and/or its Affiliates and (2) the preparation and filing of any Tax
Returns; and
(c) TXU is not obligated to deliver files, records or documents
that are protected by legal privilege or that relate to matters or issues for
which TXU has retained sole responsibility.
2.9. Transition Services Agreements and Gas Transportation Agreements.
At Closing, Affiliates of TXU and Buyer shall execute agreements substantially
in the form attached hereto as Exhibit "B-1" and "B-2" (the "Transition Services
Agreements") and the agreements substantially in the form attached hereto as
Exhibit "C-1," "C-2" and "C-3" (the "Gas Transportation Agreements").
2.10. Revenues and Expenses. TXU shall be: (i) entitled to all
operating revenues (and related accounts receivable) attributable to the Assets,
and (ii) responsible for the payment of all costs and expenses (and related
accounts payable), including the payment of ad valorem taxes then due and owing,
attributable to the Assets, in each case to the extent the foregoing relate to
the period of time prior to the Effective Time. Buyer shall be: (i) entitled to
all operating revenues (and related accounts receivable) attributable to the
Assets, and (ii) responsible for the payment of all costs and expenses (and
related accounts payable), including the payment of ad valorem taxes,
attributable to the Assets, in each case to the extent the foregoing either
relate to the period occurring on and after the Effective Time.
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(b) To the extent that Buyer receives any funds from third
parties to which TXU is entitled pursuant to Section 2.10(a), Buyer shall
promptly deliver such funds to TXU. To the extent that TXU receives any funds to
which Buyer is entitled pursuant to Section 2.10(a), TXU shall promptly deliver
such funds to Buyer. If any Party pays any cost or expense (or related account
payable) that is properly borne by the other Party pursuant to Section 2.10(a),
the Party responsible for such cost or expense (or related account payable)
pursuant to Section 2.10(a) shall promptly reimburse the Party who made such
payment. The obligations of Buyer and TXU hereunder shall be performed without
any right of setoff.
(c) Except as expressly set forth in this Section 2.10 with
respect to liability of the Parties for the reimbursement of operating revenues
(and related accounts receivable) or for the payment of costs and expenses (and
related accounts payable), or the reimbursement of certain accrued or pre-paid
operating expenses, in the event of any conflict between the provisions of this
Section 2.10 and the provisions of Section 7, the provisions of Section 7 shall
control.
2.11. Adjustments to Purchase Price. (a) At Closing, the Purchase Price
will be increased by the following amounts:
(i) the amount as of the Effective Time of all prepaid ad
valorem, property or similar taxes and assessments based upon or
measured by ownership of the Assets, insofar as such prepaid taxes
relate to periods after the Effective Time;
(ii) all costs and expenses (including rentals and
operating expenses) incurred in the Ordinary Course of Business and
approved by Buyer that are paid by TXU and are attributable to the
Assets and attributable to the period from and after the Effective
Time;
(iii) any amounts prepaid in the Ordinary Course of Business
for any leases, permits, rights-of-way or other costs paid by TXU and
attributable to the operation of the Assets after the Effective Time;
(iv) any other amount agreed upon by the Parties; and
(v) if positive, the Gas Inventory Account, as calculated
in accordance with Schedule 2.11.
(b) At Closing, the Purchase Price will be decreased by the
following amounts:
(i) an amount equal to all unpaid ad valorem, property or
similar taxes and assessments based upon or measured by ownership of
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the Assets that are attributable to periods of time prior to the
Effective Time, which amounts shall, to the extent not actually
assessed, be computed based on such taxes and assessments for the
preceding tax year (such amount to be prorated for the period of TXU's
and Buyer's ownership before and after the Effective Time);
(ii) an amount equal to all revenues collected by TXU with
respect to the Assets and attributable to the period of time after the
Effective Time;
(iii) any amount required pursuant to Section 5.9;
(iv) any other amount agreed upon by the Parties; and
(v) if negative, the Gas Inventory Account, as calculated
in accordance with Schedule 2.11.
2.12. Preliminary Settlement Statement. TXU shall prepare and deliver
to Buyer at least 5 business days before the Closing Date a statement (the
"Preliminary Settlement Statement"): (a) setting forth the amount of each
adjustment estimated by TXU in good faith to the Purchase Price to be made at
the Closing under Sections 2.10 and 2.11 hereof, and (b) describing any
adjustments that TXU believes cannot be determined until after the Closing in
accordance with Section 2.13.
2.13. Post-Closing Adjustments. Within 90 days after the Closing, TXU
shall prepare and deliver to Buyer, in accordance with this Agreement and
generally accepted accounting principles, a statement (herein called the "Final
Settlement Statement"), setting forth each adjustment of the type described in
Sections 2.10 and 2.11 which was not taken into account in determining the
Purchase Price at Closing and showing the calculation of such adjustments.
Within 30 days after receipt of the Final Settlement Statement, Buyer shall
deliver to TXU a written report containing any changes that Buyer proposes be
made to the Final Settlement Statement. The Parties shall undertake to agree to
the amounts due pursuant to such adjustments no later than 90 days after Buyer's
receipt of the Final Settlement Statement, and the date upon which such
agreement is reached is the "Final Settlement Date." Buyer or TXU (as
applicable) will promptly pay amounts due in accordance with the Final
Settlement Statement. If TXU and Buyer are unable to agree upon the Final
Settlement Statement within 90 days after Buyer's receipt of same, the Parties
will retain a nationally recognized independent public accounting firm agreed
upon by Buyer and TXU to audit the Final Settlement Statement and determine any
amounts due thereunder. The decision of the independent accounting firm that
conducts the audit will be binding on Buyer and TXU, and the fees and expenses
of the independent accounting firm will be borne one-half each by Buyer and TXU.
The Parties will, and will cause their representatives to, cooperate and assist
in the preparation of the Final Settlement Statement and the conduct of the
reviews and audits referred to in this Section 2.13, including (without
limitation) making available books, records and personnel as required.
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3. REPRESENTATIONS AND WARRANTIES OF TXU
Except as set forth in the schedules attached to this Agreement, TXU
represents and warrants to Buyer that the statements contained in this Section 3
are true and correct as of the date of this Agreement and that such statements,
as of the Closing Date (as though made on the Closing Date), to the extent not
qualified by materiality, will be true and correct in all material respects,
and, to the extent qualified by materiality, will be true and correct.
Disclosure of an item in any Schedule is disclosure of such item for any other
purpose under this Agreement. The Schedules will be updated and revised as of
the Closing Date in accordance with Section 5.12.
3.1. Organization and Corporate Power. TXU is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. TXU has full power and authority to own, lease or otherwise hold and
operate its properties and assets and to carry on its business as presently
conducted. TXU is duly qualified to do business and is in good standing in
Texas. TXU has full power and authority to carry on its business and to execute
and deliver and carry out the transactions contemplated by this Agreement.
3.2. Authorization of Agreement and Transaction. TXU has full power and
authority to execute, deliver and perform this Agreement and the other
Conveyance Documents (collectively, the "TXU Documents") to which they are a
party, and to consummate the transactions contemplated thereby. The execution,
delivery and performance of this Agreement by TXU has been duly authorized by
all necessary corporate action on the part of TXU. This Agreement has been duly
executed and delivered by TXU and constitutes, and each of the TXU Documents and
each other agreement, instrument or document executed or to be executed by TXU
in connection with the transactions contemplated by the TXU Documents has been,
or when executed will be, duly executed and delivered by TXU and constitutes, or
when executed and delivered will constitute, a valid and binding obligation of
TXU, enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles (whether considered in a proceeding at law or in equity).
3.3. No Contravention. (a) Neither the execution and delivery of this
Agreement by TXU, nor the consummation of the transactions contemplated hereby
by TXU will (assuming compliance with all Transfer Requirements): (i) violate or
breach the terms of, cause a default under, conflict with, result in
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under: (A) any applicable Legal Requirement,
(B) the charter or bylaws of TXU, or (C) any contract, agreement, lease, license
or other arrangement to which TXU is a party or by which it, or any of its
properties, is bound, including, without limitation, any Assigned Contracts;
(ii) result in the creation or imposition of any Encumbrance (other than a
Permitted Encumbrance) on any of the Assets; (iii) result in the cancellation,
forfeiture, revocation, suspension or adverse modification of any existing
Permit or order of any Governmental Authority having jurisdiction over TXU; or
(iv) with the passage of time or the giving of notice or the taking of any
action of any third party have any of the effects set forth in clause (i), (ii)
or (iii) of this Section 3.3, except, in the case of clauses (i) through (iii),
where such violation, conflict, breach, default, acceleration, termination,
modification, cancellation, claim, encumbrance, forfeiture, suspension,
revocation or lien is not reasonably likely to be material to the ownership or
operation of the Assets or materially impair the ability of TXU to consummate
the transactions contemplated by this Agreement.
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(b) Except any Transfer Requirement related to Permits and the
required filings under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Act, TXU is not
required to make any filing with or obtain any authorization, consent or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
failure to take such action would not be material to the ownership or
operation of the Assets or materially impair the ability of the Parties to
consummate the transactions contemplated by this Agreement.
3.4. Financial Statements; Absence of Certain Changes. TXU has
delivered to Buyer unaudited statements of income, balance sheets and cash flow
reports for the Assets for the calendar years 2002 and 2003 (the "Financial
Statements"). The Financial Statements are true, correct and complete in all
material respects, except as noted thereon, have been prepared in accordance
with principles consistently followed throughout the periods represented and
fairly present the results of the Asset's operations for the periods covered
thereby, except that: (i) the Financial Statements lack footnotes and certain
other presentations, and (ii) the Financial Statements are subject to normal
year-end adjustments.
3.5. Permits. TXU owns or holds all franchises, licenses, permits,
consents, approvals and authorizations of all Governmental Authorities necessary
for the ownership and operation of the Assets (collectively, the "Permits")
including, without limitation, those identified in Schedule 3.5, except for
those Permits which the failure to own or hold are not reasonably likely to have
a Material Adverse Effect. Each Permit is in full force and effect, and TXU is
in compliance with all of its obligations with respect thereto, except where the
failure to be in full force and effect or to be in compliance does not have a
Material Adverse Effect. To the Knowledge of TXU, no event has occurred that
causes, or upon the giving of notice or the lapse of time or otherwise would
cause, revocation or termination of any Permit, except such as in the aggregate
would not have a Material Adverse Effect. All Permits shall be, subject to the
Permitted Encumbrances: (i) owned or held as of the Closing by TXU, and (ii)
transferred by TXU to Buyer, subject to receipt (or other disposition as
permitted hereunder) of all consents, approvals, authorizations, and waivers
applicable to such Permits.
3.6. Title to the Assets. Except as set forth in Schedule 3.6, the Real
Property and Personal Property are free and clear of all Encumbrances arising
by, through and under TXU, other than Permitted Encumbrances.
3.7. Condition of Property. The Assets are being contributed by TXU
and, at Closing, will be accepted by Buyer AS IS, WHERE IS, WITH ALL FAULTS,
WITHOUT ANY EXPRESS OR IMPLIED COVENANT, WARRANTY AS TO MERCHANTABILITY,
PERFORMANCE, FITNESS (BOTH GENERALLY AND FOR ANY PARTICULAR PURPOSE) OR
OTHERWISE (WHICH WARRANTIES TXU HEREBY EXPRESSLY DISCLAIMS), OR RECOURSE, OTHER
THAN AS EXPRESSLY SET FORTH HEREIN.
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3.8. Material Contracts. The Assigned Contracts listed in Schedule 2.2
(c) include all material contracts, agreements and leases relating to the
continued ownership and operation of the Assets: (i) which provide for receipt
or payment, contingent or otherwise, of $100,000 or more per month; or (ii)
which may not be terminated without payment or penalty with notice of 90 days or
less and provide for the aggregate payment or receipt of more than $100,000 over
its term (the "Material Contracts"). TXU has made available to the Buyer a true
and correct copy (or, if oral, a written summary) of each such contract. Except
as set forth in Schedule 3.8, each Material Contract is in full force and
effect, except for such matters in respect of all Material Contracts that
individually, or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. TXU has in all respects performed all obligations required to be
performed by it to date under the Material Contracts, and is not in default
under any obligation of any Material Contracts, except where the failure to
perform or default is not reasonably likely to have a Material Adverse Effect.
To the Knowledge of TXU, no other party to any Material Contract is in default
thereunder. TXU has not assigned to any other Person any of its rights under the
Material Contracts.
3.9. Environmental Matters. Except as listed or described in Schedule
3.9, to TXU's Knowledge and the Knowledge of the Specified Persons listed on
Schedule 3.9:
(a) the Assets and TXU's operation of the Assets are: (i) not in
violation of any Environmental Laws, nor is there any outstanding liability
arising from any violation of any Environmental Law, in connection with the
ownership, use, maintenance or operation of the Assets, and (ii) not subject
to any remedial obligations or other Environmental Liabilities and Costs under
any Environmental Laws, other than such violations, obligations or other
Environmental Liabilities and Costs that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect;
(b) TXU possesses all Permits required by Environmental Laws for
the operation and ownership of the Assets, except where the failure to possess
such Permits is not reasonably likely to have a Material Adverse Effect, and
TXU is not in violation of the terms and conditions of such Permits, other
than such violations that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect;
(c) TXU: (i) is not subject to any consent decree, compliance
order or administrative order issued pursuant to Environmental Laws or any
written request for information, notice of violation, demand letter,
administrative inquiry, complaint or claim from any Governmental Authority
pursuant to Environmental Laws; (ii) has not received written notice under
the citizen suit provision of any Environmental Law; other than such of the
foregoing that are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect; and (iii) there are no facts which are
reasonably likely to give rise to any such claims; and
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(d) there are no Hazardous Substances existing on, in or under any
of the Assets other than Hazardous Substances maintained or handled in the
Ordinary Course of Business of TXU and in compliance with all Environmental
Laws, and no Hazardous Substances have been released or discharged into the
environment from any of the Assets in violation of any Environmental Law for
which TXU has any outstanding liability.
3.10. Litigation. Except as disclosed in Schedule 3.10, there are no
actions at law, suits in equity, investigations, proceedings or claims pending
(or, to the Knowledge of TXU, threatened) against TXU or any of the Assets and
attributable to TXU before or by any federal, state, foreign or local court,
tribunal or governmental agency or authority, or any other Person, except such
as in the aggregate are not reasonably likely to have a Material Adverse
Effect, and to TXU's Knowledge, there are no matters which are reasonably
likely to result in such action, suit or proceeding.
3.11. Gas Regulatory Matters. TXU is not subject to the jurisdiction of
the Federal Energy Regulatory Commission ("FERC") under the Natural Gas Act of
1938, as amended.
3.12. Brokers' Fees. TXU has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement that will be binding on Buyer or the Assets.
3.13. TXU's Status. TXU is not a non-resident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate (as those
terms are defined in the IRC and the rules and regulations promulgated
thereunder), and TXU shall deliver to Buyer at Closing affidavits of non-foreign
ownership confirming such ownership status at the Closing.
3.14. No Bankruptcy. There is no bankruptcy, reorganization, or
receivership proceedings pending, being contemplated by, or threatened against
TXU.
3.15. Labor Matters. TXU is not a party to, or bound by, any written or
oral collective bargaining agreement or other agreement with any labor union or
organization. To the Knowledge of TXU, there are currently no labor disputes
(other than routine individual grievances) or any union or other labor
organization activities with respect to TXU's employees operating the Assets.
3.16. Certain Transfer Requirements. To TXU's Knowledge, Schedule 3.16
sets forth each Material Contract and each material Permit that may require a
consent or other similar action by any Person as a result of the execution,
delivery and performance of the transactions contemplated hereby.
3.17. Tax Matters. Except as set forth in Schedule 3.17: (i) TXU has
filed (or has had filed on its behalf) all Tax Returns required to be filed and
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has paid all Taxes due as reflected on such Tax Returns; (ii) there is no
action, suit, investigation, audit, or written claim or assessment pending, or
to TXU's Knowledge, threatened, with respect to Taxes the non-payment of which
could give rise to a Lien upon, any of the Assets; (iii) there is not in force
any waiver of any statute of limitations in respect of such Taxes, or any
outstanding request for such a waiver; (iv) there is not in force any extension
of time for the assessment or payment of any such Tax; and (v) there are no
Liens with respect to Taxes upon the Assets except for Liens for Taxes not yet
due.
3.18. Compliance With Laws. Subject to the specific representations and
warranties in this Agreement, which representations and warranties shall
govern the subject matter thereof, to TXU's Knowledge, TXU has complied in all
material respects with all Applicable Laws relating to the ownership or
operation of the Assets and the conduct of business in connection with the
Assets, except for non-compliance that does not have a Material Adverse
Effect. TXU is not charged or, to the Knowledge of TXU, threatened with, or
under investigation with respect to, any violation of any Applicable Law
relating to any aspect of the ownership or operation of the Assets.
3.19. No Adverse Change. Except as set forth on Schedule 3.19, since the
date of the most recent Financial Statements through the date hereof, outside
the Ordinary Course of Business, there has not been:
(a) A sale, lease or other disposition of any Assets having a
value, individually, in excess of $500,000;
(b) A mortgage, pledge or grant of a lien or security interest in
any of the Assets, other than Permitted Encumbrances;
(c) Any loss, damage, condemnation or destruction to any of the
Assets in excess of $500,000, or that would have a Material Adverse Effect
on the business or financial condition of the Assets;
(d) A change in methods of accounting or accounting practices of
TXU, except as required by law or GAAP; or
(e) A contract or commitment to do any of the foregoing.
3.20. Affiliate Agreements. Except as set forth on Schedule 3.20, the
Assets are not the subject of or subject to any agreement or arrangement with
any TXU Affiliate.
3.21. No Affiliate Ownership. Except as set forth on Schedule 3.21, no
Affiliate of TXU owns any interest in any of the Assets.
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3.22. Advance Receipts/Purchase; Suspended Funds.
(a) Except as set forth on Schedule 3.22, TXU has not with respect
to the Assigned Contracts: (i) received any quantity of natural gas or liquids
to be paid for thereafter other than in the normal cycle of billing; or (ii)
received prepayments, advance payments, or loans which will require the Buyer
to perform services or provide natural gas or liquids under such Assigned
Contracts on or after the Effective Time without being currently paid
therefore; and
(b) Except as set forth in Schedule 3.22 (which TXU will update as
of the Effective Time promptly after Closing), as of the date hereof, TXU
holds no amounts in suspense (whether due to title failure or any other cause)
with respect to any of the Assigned Contracts.
3.23. Environmental Reports. There has been no environmental
investigation, study, audit, test, review or other analysis conducted, of which
TXU has Knowledge, in relation to any of the Assets, or any other property or
facility now or previously owned or leased by TXU in connection with the Assets,
which have not been delivered to the Buyer.
3.24. Employee Benefit Plans; ERISA. Except as set forth on Schedule
3.24, there are no pending or, to the Knowledge of TXU, threatened claims and
no pending or, to the Knowledge of TXU, threatened litigation with respect to
any employee benefit plans of TXU, other than ordinary and usual claims for
benefits by participants and beneficiaries. Except as set forth in Schedule
3.24, no audit or investigation by a Governmental Authority with respect to
any of such employee benefit plans is pending nor has TXU received formal
notice of any such audit or investigation.
3.25. Insurance. Schedule 3.25 sets forth a complete and correct list of
all of the policies of insurance carried on the date of this Agreement by TXU
for the benefit of or in connection with the business of the Assets which
policies shall remain in full force and effect through the date of Closing, or
as set forth in the Transition Services Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to TXU that the statements contained in
this Section 4 are true and correct as of the date of this Agreement and will be
true and correct as of the Closing Date (as though made on the Closing Date).
4.1. Organization and Corporate Power. Buyer is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has full power and authority to carry on the business
in which it is engaged and to execute and deliver and carry out the transactions
contemplated by this Agreement.
4.2. Authorization of Agreement and Transaction. The execution,
delivery and performance of this Agreement by Buyer has been duly authorized by
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all necessary action on the part of Buyer, and this Agreement constitutes a
valid and binding obligation of Buyer, enforceable in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance and other laws affecting creditors' rights generally
from time to time in effect and to general equitable principles (whether
considered in a proceeding at law or in equity).
4.3. No Contravention.
(a) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will violate
any provisions of Buyer's organizational documents, or of any agreement,
instrument or understanding, or any statute, law, judgment, decree, rule or
regulation, to which Buyer is a party or by which Buyer is bound.
(b) Except for the required filings under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Antitrust Act, Buyer does not need to give any notice to, make any filing
with, or obtain any authorization, consent or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to take such action
would not materially impair the ability of the Parties to consummate the
transactions contemplated by this Agreement.
5. COVENANTS AND AGREEMENTS
5.1. Joint Covenants and Agreements Pending Closing. TXU shall permit
Buyer and its representatives after the date of this Agreement and before
Closing to have reasonable access, during normal business hours, upon reasonable
advance notice, to the Assets and the contracts, books, records and data of TXU
related thereto, as well as employees of TXU who are knowledgeable with respect
to the same. Any review by Buyer and its representatives pursuant to such access
shall be for the reasonable and legitimate due diligence requirements of Buyer
and shall be conducted in such a manner as not to interfere unreasonably with
the businesses or operations of TXU. All activities of Buyer under this Section
5.1(a) will be conducted in accordance with all applicable laws, and Buyer will
indemnify and hold harmless TXU and its Affiliates from and against all Losses
incurred as a result of the performance of such activities.
(b) From and after the date hereof, and until the Closing, TXU
shall:
(i) except as otherwise contemplated by this Agreement, or
consented to or approved by Buyer, cause the Assets to be operated in
all material respects in the Ordinary Course of Business;
(ii) cooperate with Buyer to effect an orderly transition in
the operation of the Assets;
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(iii) endeavor to maintain existing relationships with
producers, suppliers, contractors, distributors, customers, licensors,
and others having business relationships with TXU or any of its
Affiliates with respect to the Assets;
(iv) without the consent of Buyer (which consent will not be
unreasonably withheld or delayed): (A) not sell, lease, license or
otherwise dispose of any Assets, other than natural gas liquids and
products pursuant to existing contracts or commitments, or otherwise in
the Ordinary Course of Business, (B) not make material changes in the
ongoing operations or engage in operating activities with respect to
the Assets that are not in the Ordinary Course of Business, (C) not
create, incur, guarantee or assume any indebtedness for borrowed money
outside the Ordinary Course of Business that the Buyer would be liable
for, (D) not mortgage or pledge any of the Assets or create any
encumbrance thereupon, other than a Permitted Encumbrance, (E) not
enter into any contracts, agreements, leases, licenses, commitments,
sale or purchase orders that are performable after the Closing other
than: (I) contracts which have terms of 31 days or less and are entered
into in the Ordinary Course of Business or (II) those which have
obligations of less than $250,000 and are entered into in the Ordinary
Course of Business, (F) not amend any Material Contract, other than in
the Ordinary Course of Business, (G) not waive, release, grant or
transfer any rights of value relating to the Assets other than in the
Ordinary Course of Business, (H) not hire any new employees, recall any
laid-off employees or award additional compensation, in the form of an
increase in wages, salaries, or otherwise, (I) not create any employee
benefit plans (within the meaning of Section 3.3 of ERISA) or any other
employee benefit plan or program not subject to ERISA, except as
required by law, (J) not merge into or with consolidate with any other
entity, (K) not take no other material action outside of the Ordinary
Course of Business concerning the Assets, other than such
actions as are required by applicable law or to respond to an
emergency, or (L) not agree or commit to do any of the actions
described in clauses (A) - (J) herein.
(c) Buyer has or will conduct and complete a due diligence
investigation of the Assets, and will make an independent evaluation of the
Assets. Buyer acknowledges it is not relying on any statements or
representations of TXU or any representative of TXU, other than as set forth
herein, concerning the condition of any of the Assets, the present or future
value of the Assets, or the anticipated income, costs, or profits, if any, to be
derived from the Assets. Except as expressly provided in this Agreement, Buyer
acknowledges that TXU makes no representation or warranty as to the Assets.
Buyer will rely upon its independent examination of the Assets and its
independent estimates, computations, evaluations, reports and studies based
thereon. Subject only to the warranties and representations contained in this
Agreement, Buyer must satisfy itself prior to the Closing as to the type,
condition, quality and extent of the Assets and the value thereof.
(d) TXU will reasonably cooperate with Buyer for the Buyer to
obtain licenses and permits (including, without limitation, the Permits) that
it may need in order to operate the Assets after Closing.
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(e) Buyer and TXU shall cooperate with one another: (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, or
waivers are required to be obtained from parties to any Material Contracts, in
connection with the consummation of the transactions contemplated by this
Agreement, and (ii) in taking such actions or making such filings, furnishing
information required in connection therewith and seeking timely to obtain such
actions, consents, approvals, or waivers.
(f) Subject to the terms and conditions of this Agreement, each
Party will use its Reasonable Efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
5.2. Joint Covenants: Publicity. The Parties agree that a press release
may be issued by either Party on or after the execution of this Agreement, and
upon or after Closing, in either case upon prior notification to and
consultation with the other Party.
5.3. Joint Covenants: Confidentiality. Prior to the execution of this
Agreement, Energy Transfer Company, an Affiliate of Buyer and TXU Energy Trading
Company LP, an Affiliate of TXU entered into that certain Confidentiality
Agreement, dated January 8, 2003 (the "Confidentiality Agreement"), the
provisions of which are hereby adopted by the Parties and incorporated into this
Agreement by reference. At Closing, the Confidentiality Agreement shall
terminate.
5.4. Employment of Employees by Buyer.
(a) Offers and Employment.
(i) Buyer Offers of Employment. Buyer shall, prior to the
Closing extend offers of employment to all employees identified on
Schedule 5.4(a) and shall waive any preconditions to such offers,
including background checks, drug testing and/or medical examinations.
Such offers shall be for employment with Buyer in positions comparable
to those held by such employees at TXU, with initial base wages or
salaries comparable to wages and salaries currently paid to those
employees. Buyer agrees not to decrease such wages and salaries for a
period of one year after the Closing Date. Unless otherwise specified
in Schedule 5.4(a) or agreed by the Parties, TXU employees accepting
such offers shall be considered to have resigned from TXU and hired by
Buyer effective as of the Closing Date.
(ii) On-Leave Employees. With respect to any employee
identified on Schedule 5.4(a) who is on leave status, including medical
(FMLA or otherwise), disability, salary continuation, sick leave, or
other leave of absence, which has been approved by TXU or is
contemplated under TXU policies, such employee shall remain an employee
of TXU until such employee returns to work or his/her employment is
otherwise terminated. If any such employee returns to work within
six (6) months after the Closing Date, Buyer shall promptly extend an
offer of employment to such employee on the terms and conditions of
employment described in this Section 5.4. If any such employee does not
return within such six (6) month period, Buyer shall be under no
obligation to offer employment to such employee or to treat such
employee as a Transitioned Employee hereunder.
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(iii) Employment Effective Date. All TXU employees who accept
Buyer's offer of employment and begin work with Buyer pursuant to the
foregoing paragraphs are referred to in this Section 5.4 as
"Transitioned Employees." Each such Transitioned Employee's "Employment
Effective Date" shall be the effective date on which Buyer actually
employs such employee.
(b) Minimum Retention. With respect to each Transitioned Employee
who signs, in a timely manner, an Agreement and Release in the form attached
as Schedule 5.4(b) to this Agreement or such other form as TXU shall require
("Agreement and Release"), Buyer shall not terminate such Transitioned
Employee within the first ninety (90) days after such Transitioned Employee's
Employment Effective Date for any reason other than "cause". For purposes of
this provision, "cause" shall mean intentional or gross disregard of a
material Buyer rule relating to employee conduct, or gross misconduct
resulting, in either case, in material economic harm to Buyer, or conviction
for a felony or other crime involving moral turpitude. TXU shall notify Buyer
in writing of each Transitioned Employee who executes the Agreement and
Release in a timely manner.
(c) Compensation and Employee Benefit Plans for Transitioned
Employees.
(i) General. Except as otherwise provided in this Section
5.4, each Transitioned Employee and his or her dependents, shall,
effective as of his or her Employment Effective Date, to the extent
permitted under such plans or to the extent that Buyer can reasonably
amend the plans to so permit, be immediately eligible to participate in
all employee benefit plans, programs and employee policies of Buyer
that are made available to similarly situated employees of Buyer and
Buyer's Affiliates. Compensation and benefits provided by Buyer to
Transitioned Employees will be no less favorable than the compensation
and benefits generally available to similarly situated Buyer employees.
(ii) Years of Service Credit. With respect to each
Transitioned Employee who executes the Agreement and Release, in a
timely manner, Buyer shall recognize all such Transitioned Employee's
service, which is recognized by TXU, or by an employee plan of TXU, for
purposes of vesting, participation, eligibility for benefits, benefit
accrual, optional forms of payment, and any other right,
benefit or feature under each employee benefit plan, program and policy
of Buyer.
(iii) Employee Welfare Benefit Plans. Each Transitioned
Employee shall be eligible effective as of his or her Employment
Effective Date to participate immediately in Buyer's employee welfare
benefit plans, including medical, prescription drug, dental, group life
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insurance, accidental death and dismemberment, short term disability,
long term disability, long term care, and flexible spending accounts.
With respect to all such welfare plans, Buyer shall, or shall cause its
insurance carrier to: (i) waive all pre-existing condition
limitations, waiting periods, insurability requirements or similar
limitations so that each Transitioned Employee will be fully eligible
to participate in each welfare plan of Buyer as of his or her
Employment Effective Date; and (ii) grant credit toward applicable
deductibles attained for each Transitioned Employee under the
comparable plan of TXU.
(iv) Retirement Plans. Each Transitioned Employee shall be
eligible to participate in Buyer's 401(k) and/or other employee pension
benefit plans effective as of such Transitioned Employee's Employment
Effective Date on a basis comparable with similarly situated employees
of Buyer. Buyer's plan shall permit, in accordance with applicable law,
direct trustee-to-trustee transfers and rollovers, as contemplated
under Section 402(c) of the Internal Revenue Code of Transitioned
Employees' TXU Thrift Plan account balances, including all outstanding
loans made under such plan.
(v) Severance Plan. Buyer agrees that, with respect to any
Transitioned Employee who executes the Agreement and Release, it
terminates such Transitioned Employee following the ninetieth (90th)
day of, and within the twelve (12)month period after, such Transitioned
Employee's Employment Effective Date for any reason other than cause
(as defined above), Buyer shall provide such Transitioned Employee
with severance benefits, in accordance with Schedule 5.4(c)(v).
(d) Buyer Acknowledgement. Buyer acknowledges that the terms of
this Agreement as they apply to Transitioned Employees who execute the
Agreement and Release are being relied upon, in part, by such Transitioned
Employees and TXU as consideration for the Agreement and Release.
5.5. Affiliate Agreements. Prior to Closing, TXU may enter into
agreements and other arrangements with its Affiliates related to the shared use
of certain facilities and shared services as described in Schedule 5.5.
5.6. Books and Records: Access to Employees. TXU shall make available
to Buyer and its representatives information and employees of TXU necessary or
reasonably deemed desirable by Buyer in preparing its Tax Returns and
financial statements and conducting any audits in connection therewith and
asserting or defending any claims.
5.7. Further Assurances. At the Closing and from time to time after the
Closing: (i) TXU, at the reasonable request of Buyer and without further
consideration, shall promptly execute and deliver to Buyer such certificates and
other instruments of sale, conveyance, assignment and transfer, and take such
other action as may reasonably be requested by Buyer to more effectively sell,
convey, assign and transfer title to and vest title in Buyer or to put Buyer in
possession of the Assets, and (ii) Buyer, at the request of TXU and without
further consideration, shall promptly execute and deliver to TXU such
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certificates and other instruments of assumption, and take such other action, as
may reasonably be requested by TXU, to more effectively confirm and effect the
assumption by Buyer of the Assumed Obligations.
5.8. Notices of Certain Events. Each of Buyer and TXU shall promptly
notify the other Party hereto of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement
or the Assets;
(c) any Claim commenced or, to its Knowledge, threatened against,
relating to, or involving or otherwise affecting such Party that, if pending
on the date of this Agreement, would have been required to be disclosed
pursuant to any provision of this Agreement, or that relate to the
consummation of the transactions contemplated by this Agreement; and
(d) any of the following: (i) the discovery by such Party that any
representation or warranty of either Party contained in this Agreement is
untrue or inaccurate in any material respect, or (ii) the occurrence or
failure to occur of any event which occurrence or failure to occur would be
likely to cause any of the representations or warranties in this Agreement to
be untrue or incorrect in any material respect as of the date made, and (iii)
any material failure on its part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
5.9. Damage or Condemnation. If, before Closing, any part of the Assets
are damaged or destroyed by fire or other casualty, or if any part of the Assets
are condemned, or if proceedings are filed for condemnation or under the right
of eminent domain, the result of which will have a Material Adverse Effect,
Buyer may elect: (i) to proceed to Closing with a reduction in the Purchase
Price reasonably determined by the Buyer to equal the fair value of the damage
or taking (which amount may not exceed either the cost to replace or repair the
property damaged or destroyed, or the value of the property condemned); or (ii)
offer to extend the date for Closing to allow TXU the opportunity to repair or
replace any damaged or destroyed Asset; (iii) accept the Assets, notwithstanding
any such destruction, taking, or pending or threatened taking (without reduction
of the Purchase Price therefor), in which case TXU shall pay to Buyer all sums
paid to TXU by third parties (including insurance providers of TXU and its
Affiliates) by reason of the destruction, or taking of such portion of the
Assets, to the extent such sums are not committed, used or applied by TXU prior
to the Closing Date to repair, restore or replace such damaged or taken Asset,
and shall assign and transfer to Buyer, or subrogate Buyer to, all of the right,
title and interest of TXU in and to any unpaid awards or other payments from
third parties (including insurance providers of TXU and its Affiliates) arising
out of the destruction, taking, or pending or threatened taking. If any such
payments are not assignable, TXU will collect such payments at Buyer's expense
and remit all such amounts, less any related expenses, to Buyer as such are
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collected. Prior to Closing, TXU shall not compromise, settle or adjust any
amounts payable by reason of any destruction, taking, or pending or threatened
taking, as to such portion of the Assets as to which Buyer has elected the
option set forth in clause (iii) above, without first obtaining the written
consent of Buyer, which consent shall not be unreasonably withheld or delayed.
TXU shall promptly notify Buyer of any destruction or taking of the type
described in this Section 5.9.
5.10. Fees and Expenses. Except as otherwise expressly provided in this
Agreement, TXU shall pay the fees and expenses of TXU and that relate to the
Assets, and the Buyer shall pay its fees and expenses incurred in connection
with the negotiation, execution and delivery of this Agreement and the
transactions contemplated hereby, whether or not the Closing shall have
occurred.
5.11. Taxes and Other Charges. All sales, use, registration, stamp,
property transfer, transfer and similar Taxes incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be borne
by the person upon whom such Tax is imposed by Applicable Law. Each Party
agrees to cooperate in the filing of all necessary documentation and returns
with respect to all such Taxes.
5.12. Amendment of Schedules. The Buyer and TXU will, promptly upon
becoming aware of any fact, matter, circumstance or event, which fact, matter,
circumstance or event arose either (i) on or prior to the date hereof (a
"Pre-Signing Event") or (ii) after the date hereof but prior to the Closing (a
"Post-Signing Event"), in any case, requiring supplementation or amendment of
the schedules provided by the Parties attached hereto, supplement or amend such
schedules to this Agreement to reflect any fact, matter, circumstance or event,
which, if existing, occurring or known on the date of this Agreement, would have
been required to be set forth or described in such schedules which were or have
been rendered inaccurate thereby. If Closing occurs, all supplements and
amendments to the schedules provided by the Parties are effective for all
purposes, including to (i) amend or supplement the representations and
warranties (and corresponding schedules) made as of the date hereof, and (ii)
for the purpose of determining (A) satisfaction of the conditions set forth in
Section 5.12 hereof, and (B) compliance by the Parties with their respective
covenants and agreements set forth herein.
5.13. No Shopping. From and after the date of this Agreement, neither
TXU, its Affiliates nor any of their respective officers, directors, employees,
representatives, agents or anyone acting on behalf of any of them shall,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any non-public information to, any Person (other
than the Buyer, its Affiliates and their representatives) with respect to any
merger, purchase or sale of assets, purchase or sale of equity interests or
any similar transaction involving any of the Assets unless this Agreement is
terminated in accordance with Section 8 hereof.
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5.14. HSR Filing. Within 5 Business Days after the date of this
Agreement, each Party will make the required filings under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Antitrust Act. Seller will pay, or reimburse Buyer if paid by Buyer, the filing
fees for the transaction.
5.15. TXU Signs. Within six (6) months after Closing, Buyer will remove
all marks on signs and other markers from any of the Assets bearing the name of
TXU or any derivative thereof, and change the color of any Assets that are
painted with TXU proprietary colors.
5.16. Cooperation. After Closing, TXU shall undertake reasonable
efforts to facilitate an audit of the Assets as requested by Buyer, and Buyer
shall compensate TXU for all reasonable associated internal and external costs.
6. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES TO CLOSE
6.1. Conditions to the Obligations of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the
Closing are subject to the satisfaction of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
(a) All of TXU's representations and warranties in Section 3 of
this Agreement that are not qualified by materiality must be true and correct
in all material respects, and those that are qualified by materiality must be
true and correct, in each case, at and as of Closing;
(b) TXU must have performed and complied with all of its covenants
hereunder in all material respects through the Closing, including the delivery
of all documents required under Section 2.7(a);
(c) TXU must have delivered a certificate to Buyer which certifies
that conditions (a) and (b) have been satisfied;
(d) No action, suit or proceeding is pending before any court or
quasi-judicial or administrative agency wherein TXU is a party, if an
unfavorable injunction, judgment, order, decree or ruling would prevent the
consummation of any of the transactions contemplated by this Agreement, or
would cause such transactions to be rescinded following consummation, or would
adversely affect the right of Buyer to own and to operate the Assets;
(e) The Buyer shall have received the written opinion of Hunton
& ▇▇▇▇▇▇▇▇ LLP substantially in the form of Exhibit D hereto;
(f) If applicable, the waiting period under the HSR Act applicable
to the consummation of the transactions contemplated herein shall have expired
or been terminated without any adverse condition attached thereto; and
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(g) All consents, authorizations, orders and approvals, required
pursuant to this Agreement and set forth on Schedule 6.1(g), including those
of any Governmental Authority, shall have been obtained or made and shall be
in full force and effect at the time of the Closing.
6.2. Conditions to the Obligations of TXU. The obligation of TXU to
consummate the transactions to be performed by it in connection with the Closing
are subject to the satisfaction of each of the following conditions (any of
which may be waived by TXU, in whole or in part):
(a) All of Buyer's representations and warranties as set forth in
Section 4 that are not qualified by materiality must be true and correct in
all material respects, and those that are qualified by materiality must be
true and correct, in each case, at and as of the Closing Date;
(b) Buyer must have performed and complied with all of its
covenants hereunder in all material respects through the Closing, including
the delivery of all of the documents required under Section 2.7(b);
(c) Buyer must have delivered a certificate to TXU that certifies
that conditions (a) and (b) have been satisfied;
(d) No action, suit or proceeding is pending before any court or
quasi-judicial or administrative agency if an unfavorable injunction,
judgment, order, decree or ruling would prevent consummation of any of the
transactions contemplated by this Agreement, or would cause such transactions
to be rescinded following consummation, or would adversely affect the right
of TXU to contribute the Assets and the Assumed Obligations to Buyer under
the terms of this Agreement; and
(e) If applicable, the waiting period under the HSR Act applicable
to the consummation of the transactions contemplated herein shall have expired
or been terminated without any adverse condition attached thereto.
7. INDEMNIFICATION AND ASSUMPTION
7.1. By TXU. Subject to the terms and conditions of this Section 7,
TXU shall indemnify and defend Buyer, its Affiliates and their respective
directors, officers, employees, contractors, agents and other representatives
(each such Person being herein called a "Buyer Indemnified Party", and all such
Persons being collectively herein called the "Buyer Indemnified Parties")
against, and hold each Buyer Indemnified Party harmless from, any loss,
liability, damage, cost, expense, action, award, suit, proceedings, hearing,
investigation, charge, complaint, Claim, demand, injunction, judgment, order,
decree, ruling, taxes, or liens (including reasonable costs of defense and
investigations, settlements, and fees, and further including court costs and
reasonable attorneys' and witness fees) or penalties or fines (collectively,
"Losses") that such Buyer Indemnified Party incurs to the extent arising out of
or resulting from any of the following, and in each case whether known or
unknown (unless and to the extent as to particular warranties and
representations such matter is expressly limited herein by Knowledge)
(collectively, the "Buyer Indemnified Liabilities"):
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(a) the failure of any of the representations and warranties of TXU
contained in this Agreement to be true and correct as of the date made
(including the Closing Date for those representations and warranties that are
also made as of the Closing Date);
(b) the failure of TXU to perform any covenant or agreement of TXU
in this Agreement; and
(c) the Retained Liabilities, except to the extent that Buyer or
its actions have caused additional liability from TXU.
7.2. Limitations on TXU's Indemnity. TXU shall not be liable under
Section 7.1(a) unless the aggregate amount of Losses with respect to such
matters exceeds 5% of the Purchase Price, and then only with respect to the
losses over that amount, and (ii) TXU's maximum liability under this Section 7.1
will never exceed 20% of the Purchase Price.
7.3. By Buyer. Subject to the terms and conditions of this Section 7,
Buyer shall indemnify and defend TXU, its Affiliates, and each of their
respective directors, officers, employees, contractors, agents and other
representatives (each such Person being herein called a "TXU Indemnified Party",
and all such Persons being collectively herein called the "TXU Indemnified
Parties") against, and hold each TXU Indemnified Party harmless from, any Losses
that such TXU Indemnified Party incurs to the extent arising out of or resulting
from any of the following, and in each case whether known or unknown (unless and
to the extent as to particular warranties and representations such matter is
expressly limited herein by Knowledge) (collectively, the "TXU Indemnified
Liabilities"):
(a) the failure of any of the representations and warranties of
Buyer contained in this Agreement to be true and correct as of the date made
(including the Closing Date for those representations and warranties that are
also made as of the Closing Date);
(b) the failure of Buyer to perform any covenant or agreement of
Buyer in this Agreement; and
(c) the Assumed Obligations.
7.4. Express Negligence Rule. WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED
PARTY IS ENTITLED TO INDEMNIFICATION, REGARDLESS OF WHETHER THE LOSS OR CLAIM
GIVING RISE TO THE INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW
OF OR BY THE INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.
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7.5. Notice of Claim. For purposes of this Section 7, the term
"Indemnifying Party" when used in connection with a particular Claim shall mean
the Party having an obligation to indemnify another party with respect to such
Claim pursuant to this Section 7, and the term "Indemnified Party" when used in
connection with a particular Claim shall mean the party having the right to be
indemnified with respect to such Claim by another Party pursuant to this
Section 7.
(b) Promptly after any Indemnified Party becomes aware of facts
giving rise to a Claim by it for indemnification pursuant to this Section 7,
such Indemnified Party will provide notice thereof in writing to the
Indemnifying Party (a "Claim Notice") specifying the nature and specific basis
for such Claim and a copy of all papers served with respect to such Claim
(if any). For purposes of this Section 7.5(b), receipt by a Party of written
notice of any demand, assertion, claim, action or proceeding (judicial,
administrative or otherwise) by or from any Person other than a Party to this
Agreement which gives rise to a Claim on behalf of such Party shall constitute
the discovery of facts giving rise to a Claim by it and shall require prompt
notice of the receipt of such matter as provided in the first sentence of this
Section 7.5(b); provided that, the failure to give notice in a timely manner
as required shall not negate or otherwise affect the indemnification
obligation of the Indemnifying Party except: (i) to the extent, if any, the
Indemnifying Party is actually prejudiced by the failure to give such timely
notice, and (ii) as provided in Section 7.8. Each Claim Notice shall set forth
a reasonable description of the Claim as the Indemnified Party shall then have
and shall contain a statement to the effect that the Indemnified Party giving
the notice is making a claim and formal demand for indemnification under this
Section 7.
7.6. Third Party Claims. If any third Person shall notify an
Indemnified Party with respect to any matter which gives rise to a claim for
indemnification against the Indemnifying Party under this Section, then the
Indemnified Party promptly shall transmit to the Indemnifying Party a Claim
Notice relating to such Third Party Claim. The failure to give notice in a
timely manner as required by the preceding sentence shall not negate or
otherwise affect the indemnification obligation of the Indemnifying Party
except: (i) to the extent, if any, the Indemnifying Party is actually prejudiced
by the failure to give such timely notice, and (ii) as provided in Section 7.8.
Prior to the expiration of the 45-day period following the Indemnifying Party's
receipt of such notice (the "Election Period"), the Indemnifying Party shall
notify the Indemnified Party: (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Section 7, with respect
to such Third Party Claim; and (ii) whether the Indemnifying Party elects, at
the sole cost and expense of such Indemnifying Party, to defend the Indemnified
Party against such Third Party Claim.
(b) If an Indemnifying Party notifies an Indemnified Party within
the Election Period that the Indemnifying Party does not dispute its potential
liability to the Indemnified Party under this Section 7 and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a
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final conclusion or settled at the discretion of the Indemnifying Party in
accordance with this Section 7.6(b). The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or
settlement thereof; provided that, without the consent of the Indemnified
Party, the Indemnifying Party may not admit or stipulate the liability of any
Indemnified Party. If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate fully with the Indemnifying Party and its counsel
at the Indemnifying Party's expense in contesting any Third Party Claim that
the Indemnifying Party elects to contest. The Indemnified Party shall have the
right to participate in, but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 7.6(b) and shall bear its own costs and expenses with respect to any
such participation.
(c) Unless and until an Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 7.6 above, the Indemnified Party
may defend itself against the Third Party Claim in any manner it reasonably
may deem appropriate. In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (which
consent will not be unreasonably withheld), unless the Indemnified Party
waives indemnification with respect to the Third Party Claim so settled and
adjudicated.
7.7. Subrogation. If any Indemnified Party has a right against a third
party (other than an insurance provider of the Indemnified Party and its
Affiliates) with respect to any Losses paid to such Indemnified Party by an
Indemnifying Party, then such Indemnifying Party shall, to the extent of such
payment, be subrogated to the right of such Indemnified Party.
7.8. Exclusive Remedies; Survival of Representations and Warranties;
Limitation of Certain Liabilities. (a) The Parties: (i) agree that only actual
damages shall be recoverable under this Agreement and (ii) hereby waive any
right to recover special, punitive, consequential, incidental or exemplary
damages, except to the extent any such Party suffers such damages to an
unaffiliated third party in connection with a Third Party Claim, in which event
such damages shall be recoverable. Notwithstanding anything to the contrary in
this Agreement, the indemnification provisions of this Agreement shall be the
exclusive remedies for any Claim based upon this Agreement or the transactions
described herein following Closing. In furtherance of the foregoing, all other
remedies available at law or in equity, in tort, contract or otherwise are
hereby waived, released and discharged by each Party.
(b) Notwithstanding anything to the contrary in this Agreement,
neither Party has any indemnification obligation under this Agreement arising
from the failure of a representation or warranty made by such Party unless the
Claim Notice relevant thereto is delivered to the Indemnifying Party prior to
the end of the survival period with respect to such representation and
warranty as set forth in Section 7.8(c).
(c) Except as provided below, each of the Parties' representations
and warranties set forth in this Agreement and any certificate or instrument
delivered in connection herewith terminate on the first (1st) anniversary of
the Closing Date. After termination, neither Party may bring any action or
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present any Claim for a breach of any representation or warranty. However, a
Party's rights to indemnity will not expire with respect to a bona fide Claim
properly asserted in writing before the first (1st) anniversary of the Closing
Date. The covenants and obligations of each of the Parties under this
Agreement survive the Closing.
8. TERMINATION
8.1. Termination Events. This Agreement may be terminated by written
notice given prior to or at the Closing, such termination to be effective as of
the time and date of the other Party's receipt thereof:
(a) by Buyer or TXU 30 days after giving written notice to the
other Party of a material breach of any provision of this Agreement, if the
breach has not been cured or waived;
(b) by mutual consent of Buyer and TXU; or
(c) by either Buyer or TXU if the Closing has not occurred (other
than through its failure to comply fully with its obligations under this
Agreement) on or before June 15, 2004.
8.2. Effect of Termination. The following provisions apply if this
Agreement is terminated:
(a) If this Agreement is terminated by either Party for any reason
except pursuant to an express right as set forth herein, the non-terminating
Party will be entitled to exercise all rights and remedies available at law or
in equity as a result of such wrongful termination; subject, however, to the
provisions of Section 7.8.
(b) The Parties agree that the provisions of this Section 8.2 will
survive any termination of this Agreement.
9. MISCELLANEOUS
9.1. Entire Agreement. This Agreement, including all exhibits and
schedules hereto, supersedes any and all other agreements, oral or written,
between the Parties with respect to the subject matter hereof and contains the
entire agreement between the Parties with respect to the transactions
contemplated hereby.
9.2. No Reliance on External Representations. Buyer acknowledges that,
in determining whether to purchase the Assets, it has not relied on any
representation, warranty or other statement of TXU or any officer, director,
employee, representative or agent of TXU, other than those representations,
warranties and statements as set forth in this Agreement (including the exhibits
and schedules hereto) and the certificates and other instruments delivered
pursuant to this Agreement. TXU shall have no liability to Buyer or any other
Person resulting from the distribution to Buyer, or Buyer's use of, any such
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information relating to TXU, or prepared by or on behalf of TXU, and supplied to
Buyer before the date hereof, or any information, documents or materials made
available to Buyer in any data rooms, any presentation or in any other form
relating to the business of TXU in connection with the transactions contemplated
hereby.
9.3. Amendments. This Agreement may only be amended in writing signed
by Buyer and TXU.
9.4. Waivers. The delay or failure of a Party to exercise any right or
to insist on performance of any obligations is not a waiver of that right or
obligation, or any similar right or obligation. Waivers are only effective if
in writing.
9.5. Parties in Interest. This Agreement is binding upon and will
inure to the benefit of the Parties hereto and may not be assigned by either
Party, without the prior written consent of the other Party; provided, however,
that after written notice to Seller, Buyer may assign its rights and obligations
under this Agreement to an Affiliate of Buyer without the consent of Seller, but
no such assignment shall release Buyer of its liability hereunder. Nothing
expressed or referred to in this Agreement will be construed to give any
Person other than the Parties to this Agreement any legal or equitable right,
remedy or claim under or with respect to this Agreement, or any provision of
this Agreement.
9.6. Notices. All notices, consents, waivers and other communications
to be given or made hereunder by any Party to the other Parties ("Notices") must
be in writing and: (i) delivered by hand, (ii) mailed by certified mail, postage
prepaid, return receipt requested, (iii) sent by telecopy or facsimile
transmission, answer back requested, or (iv) sent by express mail, Federal
Express, or other express delivery service or courier service, to each Party
at its address or telecopy number set forth below (or to such other addresses
and telecopier numbers as a Party may designate by notice to the other
Parties):
If to TXU:
TXU Fuel Company
Energy Plaza
1601 ▇▇▇▇▇, [Suite 4200]
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
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with copies to:
Hunton & ▇▇▇▇▇▇▇▇ LLP
Energy Plaza
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
If to Buyer:
Energy Transfer Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with copies to:
Energy Transfer Partners, L.P.
▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & Knight LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Notices are be effective: (i) if delivered in person or by courier, upon receipt
at the address referred to above by the intended recipient, (ii) if sent by
telecopy or facsimile transmission, when the answer back is received; provided,
however, if the transmission is not received during normal business hours on a
business day, the notice will be effective as of the next succeeding business
day, or (iii) if mailed, the date of delivery as shown by the return receipt
therefor. If the date specified in this Agreement for giving any notice or
taking any action is not a business day (or if the period during which any
notices required to be given or any action taken expires on a date which is not
a business day), then the date for giving such notice or taking such action (and
the expiration date for such period during which notice is required to be given
or action taken) shall be the next day which is a business day.
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9.7. Costs. TXU and Buyer will each bear its own fees and expenses
incurred in connection with the transactions described in this Agreement.
9.8. Governing Law and Jurisdiction. This Agreement is governed by and
will be construed in accordance with the laws of the State of Texas.
9.9. Incorporation of Exhibits and Schedules. The annexes and schedules
attached to the Agreement or identified in this Agreement are incorporated by
this reference and are a part of the Agreement for all purposes.
9.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
9.11. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement will continue in full force and effect and will
in no way be affected, impaired or invalidated.
[Remainder of Page Intentionally Left Blank.]
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SIGNED THIS 25th day of April, 2004.
TXU FUEL COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
ENERGY TRANSFER PARTNERS, L.P.
By: U.S. Propane, L.P.,
its general partner
By: U.S. Propane, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Co-Chairman and Co-Chief Executive Officer
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APPENDIX A
Certain Defined Terms
"Affiliate" means, with respect to any Person, one that, directly or
indirectly, controls, is controlled by, or is under common control with, another
Person. The term "control" (including the terms "controlled by" and "under
common control with") as used in the preceding sentence means possession,
directly or indirectly, of the power to direct or cause the direction of
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreed Value" is defined in Section 2.4.
"Allocation Schedule" is defined in Section 2.4.
"Applicable Law" shall mean any law to which a specified Person or
property is subject.
"Assets" is defined in Section 2.2.
"Assigned Contracts" is defined in Section 2.2(c).
"Assumed Obligations" means: (i) all Losses and obligations arising out
of or relating to the ownership, use, construction, maintenance or operation of
the Assets before or after the Effective Time, except for: (A) any Retained
Liabilities for which TXU is indemnifying Buyer pursuant to Section 7.1, and (B)
any Losses as a result of the failure of any representations and warranties
contained in Section 3 to be true and correct (provided that Buyer timely
provides notice in the manner, and within the survival period, specified in
Section 7.8); (ii) all Losses and obligations expressly assumed by the Buyer
pursuant to Section 2.7(b)(ii); and (iii) all Losses and Obligations arising out
of Buyers', its representatives', agents' or contractors' presence on or access
to any of the Assets before the Closing.
"Books and Records" is defined in Section 2.2(h).
"Buyer Indemnified Party" and "Buyer Indemnified Parties" is defined in
Section 8.1.
"Buyer Indemnified Liabilities" is defined in Section 7.1.
"Cash" means cash, or cash equivalents.
"Claim" means all demands, claims, actions, investigations, causes of
action, proceedings and arbitrations, whether or not ultimately determined to be
valid.
"Claim Notice" is defined in Section 7.5(b).
"Closing" is defined in Section 2.6.
Appendix A - Page 1
"Closing Date" is defined in Section 2.6.
"Confidentiality Agreement" is defined in Section 5.3.
"Conveyance Documents" is defined in Section 2.7(a).
"Effective Time" is defined in Section 2.6.
"Election Period" is defined in Section 7.6(a).
"Encumbrance" means any lien, pledge, security interest, mortgage,
encumbrance, defect in title or any similar matter that would create an
impairment of use and enjoyment of, or loss of interest in the relevant asset.
"Environmental Laws" means all federal, state, local and foreign laws
or statutes, regulations, rules, codes, ordinances, treaties, orders, decrees,
judgments, written agreements entered into with Governmental Authorities, or
injunctions issued, promulgated, approved or entered relating to pollution, or
protection of the environment or occupational health and safety, including
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes (including,
without limitation, oil, asbestos and radiation) into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of or exposure to pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances, material or wastes, or designed to provide safe
and healthful working or living conditions or to reduce occupational or other
safety and health hazards.
"Environmental Liabilities and Costs" means any costs, damages,
expenses, liabilities, obligations or other responsibilities arising from or
under Environmental Law and consisting of or relating to:
(a) any environmental, health or safety matters or condition
(including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or
products);
(b) civil fines or, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses, claims,
demands and response action, investigative, remedial, removal
or inspection costs and expenses;
(c) financial responsibility for any required compliance,
corrective, investigative or remedial measures;
(d) natural resource damages; or
Appendix A - Page 2
(e) all costs and expenses incurred as to any inquiry,
investigation or judicial or regulatory action or proceeding
relating to any of items (a) through (d) above.
The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et. seq., as
amended (CERCLA).
"Excluded Assets" is defined in Section 2.3.
"Execution Date" means the later of: (i) the date on which TXU executes
this Agreement and (ii) the date on which Buyer executes this Agreement.
"Final Settlement Date" is defined in Section 2.13.
"Final Settlement Statement" is defined in Section 2.13.
"Financial Statements" is defined in Section 3.4.
"Gas Inventory Account" is defined in Schedule 2.11.
"Gas Transportation Agreements" is defined in Section 2.9.
"Governmental Authority" means the United States and any state, county,
city or other political subdivision, agency, court or instrumentality.
"Hazardous Substance" shall mean any substance or material which if
present in the environment would under applicable Law require assessment,
remediation, or corrective action including, without limitation, chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products which are classified as hazardous, toxic, radioactive, dangerous, or
otherwise regulated by or form the basis for liability under any Environmental
Law, whether or not identified as hazardous wastes under RCRA or hazardous
substances under CERCLA.
"Imbalance Payable" means that quantity of gas owed by TXU to another
party with respect to the Assets applicable to any period before the Effective
Time.
"Imbalance Receivable" means that quantity of gas owed to TXU with
respect to the Assets applicable to any period before the Effective Time.
"Indemnified Party" is defined in Section 7.5(a).
"Indemnifying Party" is defined in Section 7.5(a).
"Inventory" is defined in Section 2.2(d).
"IRC" means the Internal Revenue Code of 1986, as amended.
Appendix A - Page 3
"Knowledge" means, with respect to a Party hereto, the actual knowledge
of any officer or manager of such Party in charge of a discrete business area or
function having responsibility for the referenced matter, without further
inquiry or investigation of such officer or manager.
"Losses" is defined in Section 7.1.
"Material Adverse Effect" means a material adverse effect on the
Assets, taken as a whole.
"Material Contracts" is defined in Section 3.8.
"Notices" is defined in Section 9.6.
"Ordinary Course of Business" means the ordinary course of the
business, consistent with the referenced Party's past custom and practice.
"Other Intellectual Property" is defined in Section 2.2(f).
"Permits" is defined in Section 3.5.
"Permitted Encumbrance" means any of the following: (i) any liens for
taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith and for which the applicable Party is responsible; (ii)
any obligations or duties reserved to or vested in any Governmental Authority to
regulate any Asset in any manner; (iii) the terms and conditions of the Assigned
Contracts, to the extent that the terms thereof may be interpreted as an
Encumbrance on any other Asset; (iv) all rights to consent by, required notices
to, filings with or other actions by, Governmental Authorities in connection
with the sale of any Assets to the extent such consents are customary after
Closing; (v) any required third-party consents to assignment and similar
agreements and obligations with respect to which, prior to the Closing: (A)
waivers or consents have been obtained from the appropriate party, (B) the
applicable period of time for asserting such rights has expired without any
exercise of such rights, or (C) arrangements reasonably satisfactory to Buyer
have been made to allow Buyer to receive substantially the same economic
benefits as if all such waivers and consents had been obtained; (vi) easements,
rights-of-way, servitudes, permits, surface leases and other rights with respect
to surface obligations, including (without limitation): pipelines, grazing,
canals, ditches, reservoirs, or the like, conditions, covenants or other
restrictions, and easements of or for streets, alleys, highways, pipelines,
telephone lines, power lines, railways, and any other easements and
rights-of-way on, over or in respect of any of the Assets; and (vii)
materialmen's, mechanics', repairmen's, employees', contractors', operators',
tax and other similar liens or charges arising in the Ordinary Course of
Business incidental to construction, maintenance or operation of any of the
Assets: (A) if they have not been filed pursuant to law, (B) if filed, they have
not yet become due and payable, or payment is being withheld as provided by law,
or (C) if their validity is being contested in good faith in the Ordinary Course
of Business by appropriate action and for which the referenced Party is
responsible.
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"Person" means any natural person, firm, partnership, association,
corporation, limited liability company, trust, entity, public body or
government.
"Personal Property" is defined in Section 2.2(b).
"Preliminary Settlement Statement" is defined in Section 2.12.
"Purchase Price" is defined in Section 2.4.
"Real Property" is defined in Section 2.2(a).
"Reasonable Efforts" means the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved expeditiously; provided, however, that an obligation to use
Reasonable Efforts under this Agreement does not require the applicable Party to
incur any unreasonable cost or expense in connection therewith.
"Retained Liabilities" means: (i) all liabilities and obligations
arising out of or relating to the ownership, use, construction, maintenance or
operation of the Excluded Assets; (ii) all operating expenses arising out of the
ownership of the Assets and incurred in the Ordinary Course of Business before
the Effective Time; (iii) the matters (if any) disclosed on Schedule 3.9 and the
litigation (if any) disclosed in Schedule 3.10; (iv) all fines and penalties
incurred before the Effective Time and assessed by a Governmental Authority
(whether assessed before or after the Effective Time); (v) any tax owed by TXU
or any of its Affiliates attributable to the ownership or operation of the
Assets prior to the Effective Time, including (without limitation) TXU's
proportionate share of ad valorem taxes under Section 2.10, to the extent
attributable to the taxable periods or portions thereof ending before the
Effective Time; (vi) all federal and state income tax obligations of TXU and its
Affiliates; and (vii) except as otherwise provided in this Agreement, all
employee benefit and welfare plan liabilities and obligations for the employees
of TXU and its Affiliates, or TXU's termination of employment of any of such
employees, including (without limitation) all pension, retirement, severance,
health, vacation and other benefit liabilities and obligations, and compliance
with all laws in connection therewith.
"Specified Persons" means those persons identified on Schedule 3.9
under the heading "Specified Persons."
"TXU Documents" is defined in Section 3.2.
"TXU Indemnified Party" and "TXU Indemnified Parties" is defined in
Section 7.3.
"TXU Indemnified Liabilities" is defined in Section 7.3.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, excise, stamp, real or personal property, ad valorem, withholding,
estimated, social security, unemployment, occupation, use, sales, service,
service use, license, net worth, payroll, franchise, severance, transfer,
recording or other taxes, assessments or charges imposed by any Governmental
Entity and any interest, penalties, or additions to tax attributable thereto.
Appendix A - Page 5
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
"Third Party Claim" means a Claim asserted against an Indemnified Party
by a Person other than a Party to this Agreement or any Affiliate thereof.
"Transfer Requirement" is defined in Section 2.5.
"Transferred Suspense Funds" is defined in Section 2.2(g).
"Transition Services Agreement" is defined in Section 2.9.
Appendix A - Page 6