EXHIBIT 99.1
PURCHASE AND SALE AGREEMENT
BETWEEN
BURLINGTON RESOURCES GATHERING INC.
AS SELLER
AND
TEPPCO PARTNERS, L.P.
AS BUYER
DATED
MAY 24, 2002
TABLE OF CONTENTS
1. The Interests...........................................................................................1
2. Purchase and Sale; Consideration........................................................................3
3. Purchase Price Allocation...............................................................................4
4. Title Defects...........................................................................................4
5. Conditions of Closing by Seller.........................................................................7
6. Conditions of Closing by Buyer..........................................................................7
7. Representations and Warranties of Seller................................................................8
8. Representations and Warranties of Buyer................................................................15
9. Imbalances.............................................................................................17
10. Indemnities of Seller..................................................................................17
11. Indemnities of Buyer; Assumption of Obligations........................................................19
12. Due Diligence Review...................................................................................22
13. Pre-Closing Environmental Defects......................................................................23
14. Environmental Insurance................................................................................26
15. Confidentiality........................................................................................28
16. DISCLAIMERS............................................................................................28
17. DTPA Waiver............................................................................................29
18. Covenants of Seller....................................................................................29
19. Casualty Loss..........................................................................................31
20. Post-Closing Consents and Required Consents............................................................31
21. Closing................................................................................................33
22. Transactions at Closing................................................................................34
23. Further Assurances.....................................................................................35
24. Proration of Taxes.....................................................................................35
25. Credits and Receipts...................................................................................36
26. Notices................................................................................................36
27. Transfer Taxes.........................................................................................37
28. Recording Documents....................................................................................37
29. Announcements..........................................................................................37
30. Survival of Representations, Warranties and Covenants..................................................37
31. Reliance...............................................................................................38
32. Dispute Resolution.....................................................................................38
33. Failure to Close.......................................................................................38
34. Use of Seller Names....................................................................................38
35. Regulatory Filings; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing...........................................................38
36. Preservation of Records................................................................................39
37. Right of First Refusal.................................................................................40
38. Supplements to Disclosure Schedules....................................................................40
39. Buyer's Post-Closing Covenant..........................................................................41
40. Miscellaneous..........................................................................................41
ii
Schedules
Schedule 1(a) System Map
Schedule 1 (a)(i) Plant Facility
Schedule 1(a)(ii) Real Property
Schedule 1(a)(iii) Lines
Schedule 1(a)(iv) Central Point Deliveries
Schedule 1(a)(v) Custody Transfer Facilities
Schedule 1(a)(vi) Stations
Schedule 1(a)(vii) Equipment/Machinery
Schedule 1(a)(viii) Computer Equipment and Telecommunications Equipment
Schedule 1(a)(ix) ROW Agreements
Schedule 1(a)(x) Equipment Leases/Rental Contracts
Schedule 1(a)(xi) Gathering and Treating Agreements
Schedule 1(a)(xii) Service Agreements
Schedule 1(a)(xiii) Electricity Purchase and Sale Contracts
Schedule 1(a)(xvi) Intellectual Property Rights and Computer Software
Schedule 1(a)(xviii) Permits and Licenses
Schedule 1(a)(xix) Listed Third Party Assets
Schedule 1(a)(xx) Excluded Assets
Schedule 1(b) Joint Use ROW Agreements
Schedule 3 Allocation of Purchase Price
Schedule 4(a)(ii)(L) Other Liens
Schedule 4(c)(iii) Title Defect Dispute Resolution Procedures
Schedule 7(e) Consents
Schedule 7(i) Non-Compliance
Schedule 7(j) Absence of Material Changes
Schedule 7(k) Condemnation
Schedule 7(m) Labor Matters
Schedule 7(n) Contract Compliance
Schedule 7(o) Authorized Expenditures
Schedule 7(p) Material Contracts
Schedule 7(w) Environmental Matters
Schedule 7(w)(vi) Scheduled Disposal Sites
Schedule 13(c) Environmental Defect Dispute Resolution Procedures
Schedule 14(e) Post Closing Environmental Indemnity
iii
Exhibits
Exhibit A Joint Use and Occupancy Agreement
Exhibit B Gas Gathering and Treating Agreement
Exhibit C Legal Opinion - Buyer's Counsel
Exhibit D-1 Legal Opinion - Seller's Counsel
Exhibit D-2 Legal Opinion - Guarantor's Counsel
Exhibit E Special Warranty Deed - Plant Site
Exhibit F Special Warranty Deed - Other Tracts
Exhibit G Assignment of Rights-of-Way
Exhibit H Assignment and ▇▇▇▇ of Sale
Exhibit I Employee Matters Agreement
Exhibit J BROG Guaranty
Exhibit K Memorandum of Gas Gathering and Treating Agreement
Exhibit L Memorandum of Joint Use and Occupancy Agreement
Exhibit M Transition Services Agreement
Exhibit N Water Disposal Agreement
Exhibit O Site Assessment Plan
Exhibit P Cathodic Protection Agreement
Exhibit Q Memorandum of Right of First Refusal
Exhibit R Volume Deficiency Agreement
Exhibit S Put Agreement
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated this 24th day of May, 2002, is between BURLINGTON
RESOURCES GATHERING INC., a Delaware corporation ("Seller"), with offices at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and TEPPCO PARTNERS,
L.P., a Delaware limited partnership ("Buyer"), with offices at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Buyer and Seller are sometimes
referred to individually as a "Party" and collectively as "Parties".
WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon
and subject to the terms and conditions hereinafter set forth, all of Seller's
right, title, and interest in and to that portion of the natural gas gathering
and treating system generally known as the Val Verde System located in San ▇▇▇▇
and Rio Arriba Counties, New Mexico (the "Val Verde System") and described in
Section 1 below and generally shown on the System Map, a copy of which is
included in Schedule 1(a) of the Seller Disclosure Schedule attached to this
Agreement and made a part hereof (the "Seller Disclosure Schedule").
NOW, THEREFORE, in consideration of the above recitals and of the
covenants and agreements herein contained, Seller and Buyer agree as follows:
1. The Interests.
(a) The Interests shall include all of the assets and properties
owned or used or held for use by Seller in the operation of
the Val Verde System, including the following assets and
properties but excluding the "Excluded Assets":
(i) the Val Verde plant, including eight individual
treating trains, power supply system, glycol recovery
pipeline, distribution lines, residue piping, vacuum
amine reclaimer, warehouse, office, control building
and other associated plant facility assets described
on Schedule 1(a)(i) of the Seller Disclosure Schedule
(collectively the "Plant Facility");
(ii) the real property (excluding all oil, gas and other
minerals) described on Schedule 1(a)(ii) of the
Seller Disclosure Schedule (the "Real Property") and
all fixtures and appurtenances to such real property;
(iii) gathering pipelines, including gas well tie lines,
lateral lines and main trunk lines described on
Schedule 1(a)(iii) of the Seller Disclosure Schedule;
(iv) central point deliveries, meter tube banks and
associated equipment described on Schedule 1(a)(iv)
of the Seller Disclosure Schedule;
(v) custody transfer facilities relating to the ▇▇▇▇▇
described on Schedule 1(a)(v) of the Seller
Disclosure Schedule;
(vi) compressor stations and compressor packages and
associated equipment, and dehydration facilities
described on Schedule 1(a)(vi) of the Seller
Disclosure Schedule (the "Stations");
(vii) equipment, fixtures, tools, instruments, spare parts,
machinery, supplies and materials located at the
Plant Facility, the Stations or the Gathering System
or on the Plant Site or appurtenant thereto,
including those items described on Schedule 1(a)(vii)
of the Seller Disclosure Schedule but excluding the
assets of third parties located at such locations;
(viii) computer equipment and telecommunications equipment
on Schedule 1(a)(viii) of the Seller Disclosure
Schedule;
(ix) agreements, leases, rights-of-way, easements,
property use agreements, permits (including
right-of-way permits from railroads and road crossing
permits or other right-of-way permits from
governmental entities), and other contracts and
agreements of a similar nature used primarily in
connection with the Val Verde System described on
Schedule 1(a)(ix) of the Seller Disclosure Schedule
subject to the reservation of rights described below
in paragraph 1(b) of this Agreement (collectively the
"ROW Agreements");
(x) equipment leases and rental contracts described on
Schedule 1(a)(x) of the Seller Disclosure Schedule;
(xi) gathering and treating agreements, interconnect
agreements and other agreements of a similar nature
described on Schedule 1(a)(xi) of the Seller
Disclosure Schedule;
(xii) compression service agreements and other service
agreements described on Schedule 1(a)(xii) of the
Seller Disclosure Schedule;
(xiii) electricity purchase and sale contracts and
agreements described on Schedule 1(a)(xiii) of the
Seller Disclosure Schedule;
(xiv) the Records;
(xv) all Imbalances existing at the Effective Time in
favor of Seller;
(xvi) intellectual property rights and computer software
described on Schedule 1(a)(xvi) of the Seller
Disclosure Schedule;
(xvii) line fill which is located in the Gathering System
and is owned by Seller; and
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(xviii) permits, licenses, authorizations, registrations and
approvals granted by any Government Entity described
on Schedule 1(a)(xviii) of the Seller Disclosure
Schedule (to the extent assignable).
The foregoing assets (whether or not specifically described on Seller
Disclosure Schedule) are herein collectively referred to as the
"Interests"; provided, however, the Interests shall not include (1)
those certain assets owned by third parties, which may be located at
the Plant Facility, the Stations, the Plant Site or on other of the
Interests, which assets are described in Schedule 1(a)(xix) of the
Seller Disclosure Schedule ("Third Party Assets"), (2) the property and
assets set forth on Schedule 1(a)(xx) of the Seller Disclosure Schedule
(the "Excluded Assets") and (3) the easements, rights-of-way, pipeline
assets and other foregoing assets to the extent on or attributable to
the portion of the Val Verde System located on the Southern Ute Indian
Tribe Reservation in the State of Colorado (the "Colorado Segment
Assets"). The pipelines, central delivery points, meter tubes, custody
transfer facilities, Stations and associated equipment and facilities
which are included in the Val Verde System, but do not constitute part
of the Plant Facility, are referred to herein as the "Gathering
System."
(b) With respect to the ROW Agreements in which both Buyer and
Burlington Resources Oil & Gas Company LP ("BROG") or
Affiliates of BROG will have pipeline assets from and after
the Closing (the "Joint Use ROW Agreements"), such ROW
Agreements being those listed on Schedule 1(b) of the Seller
Disclosure Schedule and such other ROW Agreements as may be
specified by Seller to Buyer prior to the Effective Time, at
the Closing (1) BROG shall, for itself and its Affiliates,
receive an interest in and right to use the leases, licenses,
rights-of-way, easements, permits and assets and rights
covered by the Joint Use ROW Agreements to the extent such
interest and right to use are permitted under the Joint Use
ROW Agreements and will not impair or terminate the rights of
Buyer in, to and under the Joint Use ROW Agreements or the
leases, licenses, rights-of-way, easements, permits and assets
and rights covered by the Joint Use ROW Agreements, and (2)
Buyer and BROG shall execute and deliver a Joint Use and
Occupancy Agreement in the form attached hereto as Exhibit "A"
(the "Joint Use and Occupancy Agreement") to evidence such
interest in favor of BROG.
2. Purchase and Sale; Consideration.
(a) Subject to and upon the terms and conditions herein set forth,
Seller shall sell, transfer, assign, convey, and deliver the
Interests to Buyer, and Buyer shall purchase, receive, pay
for, and accept the Interests from Seller, effective as of
11:59 p.m., New Mexico Time, on June 30, 2002 (the "Effective
Time").
(b) As consideration for the conveyance and delivery from Seller
to Buyer of the Interests, the purchase price for the
Interests shall be Four Hundred Forty-Four Million Dollars
($444,000,000) (the "Base Purchase Price"), subject to any
applicable purchase price adjustment as provided for herein.
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3. Purchase Price Allocation. Seller and Buyer hereby agree that they will
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 3 of the Seller
Disclosure Schedule. The Parties acknowledge that the purchase price
allocation pursuant to Schedule 3 of the Seller Disclosure Schedule is
solely for income tax purposes.
4. Title Defects.
(a) The provisions of this Section 4 are the exclusive provisions
of this Agreement relating to title matters affecting the
Interests. As used in this Agreement, the following terms
shall have the meanings prescribed below:
(i) "Defensible Title" shall mean, as to the Interests,
(x) such title to the Interests that vests Seller
(and upon Closing will vest Buyer) with good and
indefeasible title in and to the Interests that,
subject to and except for Permitted Encumbrances, is
free and clear of any and all Liens, and (y) that the
Interests on which the Gathering System (other than
pump stations, leased compressor stations, storage
sites or work sites adjacent to or near the Gathering
System) is located are contiguous, subject to and
except for Permitted Encumbrances.
(ii) "Permitted Encumbrances" shall mean:
(A) Preferential purchase rights and Required
Consents with respect to which (i) waivers
or consents have been obtained from the
appropriate parties, or (ii) required
notices have been given to the holders of
such rights and the appropriate time period
for asserting such rights has expired
without an exercise of such rights;
(B) Liens for Taxes or assessments not due or
not delinquent on the Closing Date, or that
are being contested in good faith with any
action to foreclose on or attach any
Interests on account thereof properly
stayed; provided that, Seller shall be
responsible for and promptly pay when due,
all amounts finally determined to be owed
that are the subject of such contest and are
attributable to the period prior to the
Effective Time and any interest accruing on
such amounts before or after the Effective
Time;
(C) All rights to consent by, required notices
to, filings with, or other actions by
Governmental Entities in connection with the
sale or conveyance of the Interests, if the
same are customarily obtained subsequent to
the sale or conveyance of assets of such
nature;
(D) Easements, rights-of-way, servitudes,
permits, surface leases, and other rights in
respect of surface operations on or over any
Interest which individually or in the
aggregate do not materially interfere
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with or adversely affect current or
reasonably anticipated future operation, use
or ownership of such Interest or the
Business or materially impair the value of
such Interest or the Business;
(E) All federal, state or local laws, rules of
law or laws or regulations that govern or
apply to the operation of such property;
(F) Materialmen's, mechanic's, repairmen's,
employee's, contractor's, and other similar
Liens or charges arising in the ordinary
course of business for obligations that are
not delinquent and that will be paid and
discharged in the ordinary course of
business or, if delinquent, that are being
contested in good faith with any action to
foreclose on or attach any Interests on
account thereof properly stayed; provided,
that, Seller shall be responsible for and
promptly pay when due all amounts finally
determined to be owed that are the subject
of such contest and are attributable to the
period prior to the Effective Time and any
interest accruing on such amounts before or
after the Effective Time;
(G) Rights reserved for or vested in any
Governmental Entity to control or restrict
any of the real property interest
constituting a part of the Interests;
(H) Liens created by Buyer or its successors or
assigns;
(I) Imperfections or defects of title (including
failures to have contiguous easements or
properties) which individually or in the
aggregate do not materially interfere with
or adversely affect current or anticipated
future operation, use or ownership of such
Interest or the Business or materially
impair the value of such Interest or the
Business;
(J) Any Title Defects waived by Buyer pursuant
to the terms of this Agreement;
(K) Defects of title (including failure to have
contiguous easements or properties) which
are of an immaterial nature and, in light of
the circumstances, are of a nature that
would be reasonably acceptable to a prudent
pipeline operator; and
(L) Any other Liens listed on Schedule
4(a)(ii)(L) of the Seller Disclosure
Schedule.
5
(b) The Interests shall be deemed to have a "Title
Defect" if Seller has less than Defensible Title to
the Interests.
(c) Purchase Price adjustments or claims for Title
Defects shall be made in accordance with the
following procedures:
(i) All Title Defect notices by Buyer must be
delivered to Seller, in writing, on or
before 150 days following the Closing. Buyer
may, by timely delivery of one or more
written notices to Seller of the existence
of alleged Title Defects, request reduction
of the Base Purchase Price by, or seek
indemnification for, an amount equal to the
lesser of the cost to cure such Title Defect
(if the same can be cured) or the reduction
in value of the Val Verde System resulting
from the existence of such Title Defect. To
the extent reasonably necessary for Seller
to become apprised of and evaluate the
asserted Title Defect, each Title Defect
notice shall clearly indicate the nature of
the Title Defect, the Interest to which it
relates, an explanation of the Title Defect
including the supporting legal theories, and
the amount by which Buyer, in good faith,
believes the Base Purchase Price should be
reduced or a payment made to Buyer because
of the Title Defect, with the computation
and information upon which Buyer's belief is
based. In determining whether a portion of
an Interest contains a Title Defect, it is
the intent of the Parties to include, when
possible, only that portion of such Interest
materially and adversely affected.
(ii) Seller shall have the right, but not the
obligation, to attempt to cure any alleged
Title Defect. In this connection Seller may,
in its discretion, extend the Closing Date
for up to 45 days to effect such cure with
respect to Title Defect claims made prior to
Closing. In the event Seller is unable or
unwilling to cure an alleged Title Defect,
Buyer and Seller shall meet and endeavor to
agree on the validity of the Title Defect
claim and the amount of any required
purchase price adjustment. In evaluating the
significance of a fact, circumstance or
condition for purposes of determining an
alleged Title Defect, due consideration
shall be given to the length of time that
the particular Interest has been in
existence with the defect in place and
whether such fact, circumstance or condition
would be reasonably acceptable to prudent
persons engaged in the business of the
ownership, development, and operation of
gathering pipelines and treating plants with
knowledge of all of the facts and
appreciation of their legal significance.
(iii) In the event the Parties cannot mutually
agree on a purchase price adjustment for
Title Defects which are timely and properly
noticed by Buyer pursuant to this Section 4,
then either Buyer or Seller may, subject to
subsections (iv) and (v) below, submit the
disputed Title Defect to dispute resolution
pursuant to the procedures in Schedule
4(c)(iii) of the Seller Disclosure Schedule.
6
(iv) There shall be no purchase price adjustment
or indemnification claim made by Buyer under
this Agreement for any individual Title
Defect unless such individual Title Defect
involves an amount payable by or liability
of Seller which is in excess of $25,000
("Qualified Title Defect Claims") and there
shall be no purchase price adjustment or
indemnification made for Title Defects until
all Qualified Title Defect Claims exceed
$500,000 in the aggregate. A series of
related Title Defects arising out of
substantially the same facts and
circumstances may be considered an
individual Title Defect for purposes of
meeting the foregoing $25,000 threshold
amount.
(v) After the $500,000 threshold in subsection
(iv) has been reached, there shall be no
purchase price adjustment or indemnification
claim made for Qualified Title Defect Claims
unless all Qualified Title Defect Claims
exceed $350,000 in the aggregate and then
only to the extent in excess of such
$350,000 deductible.
5. Conditions of Closing by Seller. The obligation of Seller to close is
subject to the satisfaction of the following conditions:
(a) The representations of Buyer contained in Section 8 hereof are
true, in all material respects, on and as of the Closing Date;
(b) Buyer shall have performed in all material respects the
obligations, covenants and agreements of Buyer contained
herein;
(c) Buyer shall have delivered to Seller a certificate of a
corporate officer or other authorized person dated the Closing
Date certifying on behalf of Buyer that the conditions in
Sections 5(a) and (b) have been fulfilled;
(d) Buyer shall have delivered to Seller a legal opinion rendered
by Buyer's corporate counsel in substantially the form
attached as Exhibit "C";
(e) No suit in law or in equity, administrative action or other
proceeding by a third party or a Governmental Entity shall be
pending or threatened which would have a material adverse
affect on the Interests or seeks to restrain, enjoin or
otherwise prohibit the consummation of the transactions
contemplated by this Agreement; and
(f) All consents, approvals and waivers listed on Schedule 7(e) to
the Seller Disclosure Schedule from third parties shall have
been obtained except for consents, approvals or waivers which
constitute Permitted Encumbrances or where the failure to
obtain such consent would not otherwise have a material
adverse effect on the Interests.
6. Conditions of Closing by Buyer. The obligation of Buyer to close is
subject to the satisfaction of the following conditions:
7
(a) The representations of Seller contained in Section 7 shall be
true, in all material respects, on and as of the Closing Date;
(b) Seller shall have performed, in all material respects, the
obligations, covenants and agreements of Seller contained
herein;
(c) Seller shall have delivered to Buyer a certificate of a
corporate officer or other authorized person dated the Closing
Date, certifying on behalf of Seller that the conditions in
Sections 6(a) and (b) have been fulfilled.
(d) Seller shall have delivered to Buyer legal opinions rendered
by Seller's and BROG's respective corporate counsel in
substantially the forms attached as Exhibits "D-1" and "D-2";
(e) No suit in law or in equity, administrative action or other
proceeding by a third party or a Governmental Entity shall be
pending or threatened which would have a material adverse
affect on the Interests or seeks to restrain, enjoin or
otherwise prohibit, the consummation of the transactions
contemplated by this Agreement; and
(f) All consents, approvals and waivers listed on Schedule 7(e) to
the Seller Disclosure Schedule from third parties shall have
been obtained except for consents, approvals, or waiver which
constitute Permitted Encumbrances or where the failure to
obtain such consent would not otherwise have a material
adverse effect on the Interests or Business.
7. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that:
(a) Existence and Good Standing: Seller is a corporation validly
existing and in good standing under the laws of the State of
Delaware and is duly qualified and has all requisite corporate
power and authority to own its properties and assets and to
carry on its business, including the Business, as now being
conducted;
(b) Requisite Authority: Seller has the requisite corporate power
and authority to execute, deliver, and perform this Agreement
and the Transaction Agreements required to be executed by
Seller hereunder and to consummate the transactions
contemplated hereby or thereby. The execution and delivery by
Seller of this Agreement and the Transaction Agreements
required to be executed by Seller hereunder and the
consummation by Seller of the transactions contemplated hereby
or thereby have been duly authorized;
(c) Execution and Enforceability: This Agreement has been, and the
Transaction Agreements required to be executed by Seller
hereunder upon their execution will be, duly executed and
delivered by Seller and constitute the valid and binding
obligations of Seller, enforceable against it in accordance
with their respective terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights. No other corporate
act,
8
approval or proceeding on the part of Seller is required to
authorize the execution and delivery by Seller of this
Agreement and the Transaction Agreements required to be
executed by Seller hereunder or the consummation by Seller of
the transactions contemplated hereby or thereby;
(d) No Conflicts: This Agreement and the Transaction Agreements
required to be executed by Seller hereunder, and the execution
and delivery thereof by Seller, do not and the consummation by
Seller of the transactions contemplated hereby or thereby will
not (i) conflict with or result in a breach of the charter or
bylaws of Seller or any other governing documents of Seller,
(ii) violate, or conflict with, or constitute a default under,
or result in the creation or imposition of any Lien upon any
property or assets of Seller or the loss of any material right
under any mortgage, indenture or agreement to which it is a
party or by which the Interests are bound, which violation,
conflict or default might adversely affect the ability of
Seller to perform its obligations under this Agreement or the
Transaction Agreements required to be executed by Seller
hereunder, or (iii) violate any statute or law or any
judgment, decree, order, writ, injunction, regulation, permit
or rule of any court or Governmental Entity, which violation
might adversely affect the ability of Seller to perform its
obligations under this Agreement or the Transaction Agreements
required to be executed by Seller hereunder;
(e) Consents: Except as set forth in Schedule 7(e) of the Seller
Disclosure Schedule, the execution and delivery by Seller of
this Agreement and the Transaction Agreements required to be
executed by Seller hereunder, the performance of Seller's
respective obligations hereunder and thereunder, or the
consummation on the part of Seller or its Affiliates of the
transactions contemplated hereby or thereby will not require
any consent, approval, or authorization of or filing with or
notice to any third party (including any Governmental Entity)
except for consents, approvals, waivers or authorizations
which if not obtained would not individually or in the
aggregate have a material adverse effect on the Interests or
the Business or which otherwise constitutes a Permitted
Encumbrance under Sections 4(a)(ii)(A) and 4(a)(ii)(C).
(f) No Brokers: Seller has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement or the Transaction
Agreements for which Buyer shall have any responsibility
whatsoever;
(g) No Judgments, Lawsuits or Claims: There are no claims,
actions, suits or proceedings (including condemnation or
similar proceedings) filed or, to the knowledge of Seller,
threatened against the Interests or any material portion
thereof or against Seller or its Affiliates with respect to
the Business or the Interests or any material portion thereof;
(h) No Foreign Person: Seller is not a "foreign person" as defined
in Section 1445 of the Code and in any regulations promulgated
thereunder;
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(i) Laws, Permits, Licenses and Authorizations:
(i) Seller has not violated any laws, statutes, rules,
regulations or orders applicable to the Business or
the Interests or the operation thereof (other than
laws, statutes, regulations or orders applicable to
environmental matters which are exclusively addressed
by Sections 7(w), 13 and 14 of this Agreement) which
violation (i) would have a material adverse effect on
the Business or the Interests or, (ii) have not been
remedied;
(ii) Except as set forth on Schedule 7(i) to the Seller
Disclosure Schedule, (i) neither Seller nor any of
its Affiliates has received any written communication
from any Governmental Entity or any third party that
alleges that the Business may not be in compliance in
any material respect with, or may be subject to any
material liability under, any law, statute, rule,
regulation, order, permit, license or authorization,
(ii) to Seller's knowledge, there are no
investigations or reviews pending or threatened by
any Governmental Entity relating to any alleged
violation arising out of the Business, and (iii)
there is no outstanding writ, judgment, stipulation,
injunction, decree, determination, award or other
order of any Governmental Entity specifically against
Seller or any of its Affiliates that relates to the
Business that has had, or is reasonably expected to
have, individually or in the aggregate, a material
adverse effect on the Business.
(iii) Schedule 1(a)(xviii) to the Seller Disclosure
Schedule sets forth a true and complete list, as of
the date of this Agreement, of all licenses, permits
and authorizations (other than environmental permits
which are exclusively addressed by Section 13 and
licenses or permits for the use of land) issued or
granted to Seller (or any of its Affiliates with
respect to the Business) by any Governmental Entity
that are used by Seller in the conduct of the
Business, except for such licenses, permits and
authorizations, the failure of which to have, could
not individually or in the aggregate reasonably be
expected to have a material adverse effect on the
Business. Except as set forth on Schedule 1(a)(xviii)
to the Seller Disclosure Schedule, all such licenses,
permits and authorizations are validly held by
Seller, except for such failures that, individually
or in the aggregate, could not reasonably be expected
to have a material adverse effect on the Business. To
the knowledge of Seller, the licenses, permits and
authorizations listed on Schedule 1(a)(xviii) are all
of the licenses, permits and authorizations necessary
or required for Seller to conduct the Business.
(j) Changes to Business: Except as disclosed in Schedule 7(j) to
the Seller Disclosure Schedule, since January 1, 2002:
(i) there has not been any material adverse change in the
makeup, condition or composition of the Interests or
the Business, whether taken as a whole or as to any
material part thereof, other than changes resulting
from
10
developments generally affecting the natural gas
products pipeline industry;
(ii) there has not been any damage, destruction or loss,
whether covered by insurance or not, to the Interests
that has had or is reasonably likely to have, a
material adverse effect on the Business or the
Interests;
(iii) there has not been any waiver by Seller of any rights
that, individually or in the aggregate, has had, or
is reasonably likely to have, a material adverse
effect on the Business or the Interests; and
(iv) except to the extent the failure to do so has not
had, and is not reasonably likely to have, a material
adverse effect on the Business or the Interests,
Seller has operated the Business and the Interests in
the ordinary course of business consistent with past
practices;
(k) Real Property: Except as set forth on Schedule 7(k) to the
Seller Disclosure Schedule, there is not pending or, to the
knowledge of Seller, threatened any condemnation or eminent
domain proceedings affecting the real property included in the
Interests, nor has Seller received written notification that
any such proceeding or assessment is contemplated;
(l) Public Utility Holding Company Act, etc.: Seller is exempt
from, or is otherwise not subject to regulation as, (i) a
"public utility company," as such term is defined in the
Public Utility Holding Company Act of 1935, as amended, and
the rules and regulations thereunder, (ii) an investment
company or a company controlled by an investment company
within the meaning of the Investment Company Act of 1940, as
amended, or (iii) a "public utility" within the meaning of the
Federal Power Act, as amended, and the rules and regulations
thereunder;
(m) Labor Matters: Except as set forth on Schedule 7(m) to the
Seller Disclosure Schedule, there are no agreements with labor
unions or associations representing employees of Seller
involved in the Business. Except as set forth on Schedule 7(m)
to the Seller Disclosure Schedule, Seller is not involved in
or, to Seller's knowledge, threatened with any labor dispute,
arbitration, lawsuit or administrative proceeding relating to
labor matters involving the employees of Seller who are
involved in the Business (excluding routine workers'
compensation claims) other than disputes, arbitrations,
lawsuits and proceedings which, individually or in the
aggregate, would not individually or in the aggregate be
material to the ownership or use of the Interests.
(n) Compliance with Contracts: Except as set forth in Schedule
7(n) to the Seller Disclosure Schedule, (A) all Material
Contracts are legal, valid, binding, enforceable, and in full
force and effect; and (B) Seller is not in material breach or
default, and is not aware of any Person claiming there is a
material breach or default under the Material Contracts.
11
(o) Authorized Expenditures: Except as set forth on Schedule 7(o)
to the Seller Disclosure Schedule, there are no outstanding
authorizations for capital expenditures respecting the
Interests for which Buyer will be liable other than ordinary
trade payables pursuant to which such expenditures are or may
be required to be made.
(p) Material Contracts: Schedule 7(p) to the Seller Disclosure
Schedule sets forth a list of the following contracts,
agreements or commitments (the "Material Contracts") which are
included in the Interests:
(i) any contract or agreement with Seller or any of its
Affiliates relating to the provision of goods or
services to or by Seller or any of its Affiliates
which will survive the Closing;
(ii) any contract, agreement or commitment that commits
Seller to aggregate expenditures or that gives rise
to anticipated receipts with respect to the Business
of more than $50,000 in any calendar year;
(iii) any gathering, treating or interconnect agreements or
commitments;
(iv) any indenture, trust agreement, loan agreement or
note relating to indebtedness for borrowed money or
the guarantee of the obligations of any other Person
for borrowed money;
(v) any agreement of surety, guarantee or indemnification
other than in the ordinary course of the Business;
(vi) any covenant not to compete in any area or in any
business which will be binding on Buyer following the
Closing;
(vii) any joint venture, partnership or similar
organizational contract involving a sharing of
profits or losses relating to all or any portion of
the Business;
(viii) any royalty agreement that commits Seller to
anticipated aggregate royalties of more than $25,000
in any calendar year; and
(ix) any management service, consulting or other similar
type contract or agreement that commits Seller to
aggregate fees or other compensation of more than
$100,000 in the aggregate during its term.
(q) Personal Property: To the knowledge of Seller, there are no
defects in the physical condition of any personal property
which is included in the Gathering System or Plant Facility,
which would materially and adversely impair Seller's ability
to maintain normal operations in a manner consistent with
Seller's recent practices.
12
(r) Sufficiency of Assets: The Interests, the Third Party Assets
and the Excluded Assets include all of the assets used by
Seller in the conduct of the Business, as such Business is
conducted on the date of this Agreement. To the knowledge of
Seller, the Interests are all of the assets required or
necessary for Seller to conduct the Business in the manner in
which it is currently being conducted, except for the Third
Party Assets and the Excluded Assets.
(s) Imbalances: The Imbalances as reflected on the books and
records of Seller, at Closing, will accurately reflect all of
the Imbalances affecting the Business and existing as of the
Closing Date and will represent a net imbalance which is not
in excess of 15,000 MCF.
(t) Taxes: All Tax returns required to be filed by Seller, or
Seller's Affiliates, have been timely filed, and all Taxes
reflected on such Tax returns have been paid. All such returns
are accurate and complete. There are no Tax liens or other
encumbrances relating to Taxes on any of the Assets other than
Taxes the payment of which is not delinquent. No assessments
or other claims for Taxes related to the Business or the
Interests has been made by any taxing authority or, to the
best knowledge of Seller, threatened by any taxing authority.
(u) No Preferential Rights: None of the Interests is subject to
any preferential right of purchase which would have a material
adverse effect on the Business or the value thereof.
(v) Employee Benefits: No pension benefit plan as defined in
Section 3(2) of ERISA that is maintained or contributed to by
Seller or any ERISA Affiliate or with respect to which Seller
or an ERISA Affiliate may have any liability had an
accumulated funding deficiency as defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, as
of the last day of the most recent fiscal year of the plan
ending on or prior to the Closing Date. Neither Seller nor any
entity that was at any time during the six-year period ending
on the Closing Date an ERISA Affiliate has ever maintained,
contributed to, had an obligation to contribute to, or
incurred any liability with respect to a plan that is both a
pension benefit plan (as defined in Section 3(2) of ERISA) and
a multiemployer plan (as defined in Section 3(37) of ERISA).
(w) Environmental Matters. Except as set forth in Schedule 7(w) to
the Seller Disclosure Schedule of the Seller Disclosure
Schedule:
(i) To Seller's knowledge as existed as of the date of
execution of this Agreement ("Seller's Current
Knowledge") and except as would not have an
Environmental Material Adverse Effect, the Interests
and the Business are in compliance with all
applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations
of Environmental Laws;
13
(ii) To Seller's Current Knowledge and except as would not
have an Environmental Material Adverse Effect, there
are no Environmental Liabilities pending or
threatened by or before any Governmental Entity
directed against Seller relating to the Business that
pertain or relate to (A) any remedial obligations
presently required under any applicable Environmental
Law, (B) violations by Seller of any Environmental
Law, (C) personal injury or property damage claims
relating to a release of Hazardous Materials, or (iv)
response, removal, or remedial costs under CERCLA,
RCRA or any similar state laws;
(iii) To Seller's Current Knowledge and except as would not
have an Environmental Material Adverse Effect, all
environmental permits required under Environmental
Laws that are necessary to the operation of the
Interests by Seller have been obtained and are in
full force and effect and there is no basis for
revocation or suspension of any such environmental
permits;
(iv) No portion of any of the Interests is listed on the
National Priorities List or the Comprehensive
Environmental Response, Compensation, and Liability
Information System list under CERCLA, or any similar
ranking or listing under any state law;
(v) To Seller's Current Knowledge and except as would not
have an Environmental Material Adverse Effect, there
has been no disposal or release of any Hazardous
Materials on, at, or under any properties included in
the Interests;
(vi) All off-site facilities to which Seller has sent
Hazardous Materials (other than products) for storage
or disposal in connection with the operation of the
Business before Closing are scheduled listed in
Schedule 7(w)(vi) hereto ("Scheduled Disposal
Sites"); and
(vii) To Seller's Current Knowledge, and except as
heretofore furnished to Buyer, there are no written
notices of violation, non-compliance, or similar
notifications relating to Environmental Liabilities
currently pending or, to Seller's knowledge,
threatened, relating or pertaining to the Interests
that would reasonably be expected to have an
Environmental Material Adverse Effect.
For the purpose of this subsection 7(w), the term "Environmental
Material Adverse Effect" shall mean any Environmental Liabilities that
are reasonably expected to exceed $100,000 per occurrence or series of
related occurrences.
As used in this Agreement, including any Schedules hereto, "Seller's
knowledge" or "known to Seller" shall mean the actual knowledge of
Seller's or any of its Affiliate's
14
personnel at or above the supervisory level (including field
supervisors), without any investigation.
8. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller that:
(a) Existence and Good Standing: Buyer is a Delaware limited
partnership validly existing and in good standing under the
laws of the State of Delaware and is duly qualified and has
all partnership power and authority to own its properties and
assets and to carry on its business as now being conducted;
(b) Requisite Authority: Buyer has the requisite partnership power
and authority to execute, deliver, and perform this Agreement
and the Transaction Agreements required to be executed by
Buyer hereunder and to consummate the transactions
contemplated hereby or thereby. The execution and delivery by
Buyer of this Agreement and the Transaction Agreements
required to be executed by Buyer hereunder and the
consummation by Buyer of the transactions contemplated hereby
or thereby have been duly authorized;
(c) Execution and Enforceability: This Agreement has been, and the
Transaction Agreements required to be executed by Buyer
hereunder upon their execution will be, duly executed and
delivered by Buyer and constitute the valid and binding
obligations of Buyer, enforceable against it in accordance
with their respective terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights. No other partnership
act, approval or proceeding on the part of Buyer is required
to authorize the execution and delivery by Buyer of this
Agreement and the Transaction Agreements required to be
executed by Buyer hereunder or the consummation by Buyer of
the transactions contemplated hereby or thereby;
(d) No Conflicts: This Agreement and the Transaction Agreements
required to be executed by Buyer hereunder, and the execution
and delivery hereof or thereof by Buyer, do not and the
consummation by Buyer of the transactions contemplated hereby
or thereby will not (i) conflict with or result in a breach of
the charter or bylaws of Buyer or any other governing
documents of Buyer, (ii) except for required consents or
waivers under the "Multi-Year Amended and Restated Credit
Agreement, Dated as of March 28, 2002" (also known as the
$500,000,000 Revolving Facility) and the "364-Day Credit
Agreement, Dated March 28, 2002" (also known as the
$200,000,000 Revolving Facility) which Buyer represents it
will obtain at or prior to Closing, violate, or constitute a
default under any mortgage, indenture or agreement to which
Buyer is a party or which it is bound, which violation,
conflict or default might adversely affect the ability of
Seller to perform its obligations under this Agreement, or
(iii) violate any statute or law or any judgment, decree,
order, writ, injunction, regulation, permit or rule of any
court or Governmental Entity, which violation might adversely
affect the ability of Buyer to perform its obligations under
this Agreement or the Transaction Agreements required to be
executed by Buyer hereunder;
15
(e) Required Bonds and Licenses: Buyer possesses (or will possess
as soon as practical after Closing) all required governmental
licenses, permits, bonds, certificates, orders, and
authorizations necessary to own or operate the Interests;
(f) Available Funds: Buyer will have on the Closing Date,
sufficient cash to enable it to make payment in immediately
available funds of the purchase price when due and any other
amounts to be paid by it hereunder;
(g) Buyer's Reliance: Buyer is experienced and knowledgeable in
the transactions of the type contemplated by this Agreement
and has undertaken such investigation, and has been provided
with and has evaluated such documents and information, as
Buyer and its advisors have deemed necessary to enable it to
make an informed and intelligent decision with respect to the
execution, delivery and performance of this Agreement. Buyer
acknowledges that Buyer is acquiring the Interests without any
representation or warranty, express or implied, by Seller or
any of its Affiliates except as expressly set forth herein and
not in limitation thereof, Buyer acknowledges that neither
Seller nor any of its Affiliates or representatives has made
any representation or warranty (express or implied) with
respect to, and Buyer is not relying upon, any financial
projection or forecast delivered to Buyer with respect to the
revenues, profitability, cash flow, capital expenditures or
other financial or operating aspects that may arise from the
Interests either before or after the Closing Date. With
respect to any projection or forecast delivered by or on
behalf of Seller or its Affiliates to Buyer, Buyer
acknowledges that (i) there are uncertainties inherent in
attempting to make such projections and forecasts, (ii) Buyer
is familiar with such uncertainties, (iii) Buyer is taking
full responsibility for making its own evaluation of the
adequacy and accuracy of all such projections and forecasts
furnished to Buyer and (iv) Buyer will not have a claim
against Seller or any of its advisors or Affiliates with
respect to such projections or forecasts or with respect to
any related matter;
(h) No Brokers: Buyer has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement or the Transaction
Agreements for which Seller shall have any responsibility
whatsoever.
(i) Environmental Defects: To Buyer's knowledge, there are no
Environmental Defects other than as will be disclosed by Buyer
in writing to Seller prior to Closing.
As used in this Agreement, including any Schedules hereto, "Buyer's
knowledge" or "known to Buyer" shall mean the actual knowledge of Buyer's or any
of its Affiliate's personnel at or above the supervisory level (including field
supervisors), without any investigation.
16
9. Imbalances.
(a) For purpose of this Section 9, the term "Imbalance" shall mean
all contractual natural gas imbalances relating to the
Interests existing as of the Effective Time between Seller, on
the one hand, and gas shippers and interconnect receipt or
delivery points, on the other hand.
(b) At Closing, Buyer shall be conveyed all rights to the
Imbalances and shall assume and be responsible for all
obligations with respect to the Imbalances attributable, in
each case, to the period up to and including the Effective
Time.
10. Indemnities of Seller.
(a) Seller shall, to the fullest extent permitted by law and
subject to the limitations provided in this Agreement,
protect, defend, indemnify, and hold Buyer and its Affiliates,
including its directors, officers, members, partners, and
representatives of each of them (the "Buyer Parties"),
harmless from and against any and all Claims attributable to
or arising out of (i) the breach by Seller of the
representations or warranties contained in Section 7 hereof,
(ii) the breach by Seller of any of its agreements or
covenants contained in this Agreement, (iii) any Claim by any
of Seller's or its Affiliate's officers, directors, employees
or shareholders, made in such capacity, against Seller or any
of its Affiliates relating to the Interests or the Business
attributable to the period prior to the Closing (excluding
Claims relating to environmental matters) and any Claims
relating to the Employee Benefit Plans (excluding any matters
which have been expressly assumed by Buyer in the Employee
Matters Agreement), (iv) any Taxes of Seller relating to the
conduct of the Business prior to the Closing, including
Seller's proportionate amount of those Taxes described in
Section 24, (v) the fuel and losses allocation to shipper
under the December 17, 1990 Gathering and Treating Contract
between Seller and Vastar Resources that relates to the time
period prior to the Effective Time, (vi) Punitive Damages
Claims, (vii) Personal Injury and Property Damage Claims,
(viii) Unscheduled Offsite Disposal Site Claims, (ix) Criminal
Fines and Penalties and (x) the Excluded Assets; provided,
however, that Seller shall, except as otherwise provided
herein, not be obligated under this Agreement to protect,
defend, indemnify or hold Buyer Parties harmless from and
against any Claims attributable to or arising out of any of
the Transaction Agreements, recourse with respect to any
matters under or in connection a Transaction Agreement being
under the terms of such Transaction Agreement.
(b) After Closing, any assertion by Buyer that Seller is liable
under the terms of the indemnities provided under Section
10(a) must be made by Buyer in writing and (1), in the case of
a Claim based on a breach of a representation and warranty in
Section 7 of this Agreement, must be given to Seller on or
prior to one year after Closing (except with respect to the
representations and warranties in Sections 7(a), (b), (c),
(f), (n), (p), (q), (r), (s), (u) and (w)); (2) in the case of
a Claim based on a breach of the representations and
warranties contained in
17
Sections 7(n), (p), (q), (r) and (s) of this Agreement must be
given to Seller on or prior to six months after Closing); (3)
in the case of a Claim based upon a breach of the
representative and warranty in Section 7(u) or based upon
Sections 10(a)(v) or 10(a)(vii), must be given to Seller on or
prior to two years after Closing; (4) in the case of a Claim
under Section 10(a)(vi) or 10(a)(viii) must be given to Seller
on or before 3 years following Closing, (5) in the case of a
Claim based upon a breach of the representations and
warranties in Sections 7(a), (b), (c) or (f) or based upon
Sections 10(a)(iii), 10(a)(iv), 10(a)(ix) and 10(a)(x) shall
not be limited as to time as between Buyer Parties and Seller
Parties and (6) in the case of a claim based upon Section
10(a)(ii) shall not be limited as to time between Buyer
Parties and Seller Parties unless otherwise specifically
provided in the Agreement. Any notice to Seller shall state
the facts known to Buyer that give rise to such notice in
sufficient detail to allow Seller to evaluate the assertion.
If such notice is timely given, all Claims attributable to or
arising out of the event, breach, occurrence or other
circumstance of which notice is given in such notice shall not
be barred by the time limitations in this subsection.
(c) Solely for purposes of indemnification in this Section 10, the
representations and warranties of Seller made in this Section
7 of Agreement (other than Seller's representation set forth
in Section 7(w)) shall be deemed to have been made without
regard to any materiality qualifications, provided that none
of the Buyer Indemnitees shall be entitled to assert any right
to indemnification under Section 10(a) of this Agreement
unless the individual claim or series of related claims which
arise out of substantially the same facts and circumstances
exceeds $50,000; provided that any claim for a breach of the
representations and warranties in Sections 7(a), (b), (c) (f)
and (s) and any claim for indemnification under Sections
10(a)(ii), 10(a)(iii), 10(a)(iv), 10(a)(v), 10(a)(ix) and
10(a)(x) shall not be subject to such $50,000 threshold.
(d) Buyer shall not be entitled to assert any right to
indemnification with respect to any Claims under Section 10(a)
hereof, Schedule 14(e) or otherwise under this Agreement
(other than Sections 1(b), 3 and 4) unless such claims exceed
$5.0 million in the aggregate, and then only to the extent
that all such Claims exceed such amount; provided that such
deductible basket shall not be applicable to Seller's
indemnification obligations (1) under Sections 10(a)(ii),
10(a)(iii), 10(a)(iv), 10(a)(v), 10(a)(ix) or 10(a)(x) and (2)
under Section 10(a)(i) to the extent arising out of any breach
or violation of the representations and warranties contained
in Sections 7(a), (b), (c), (f) or (s) of this Agreement.
(e) In no event shall Seller ever be required to indemnify Buyer
under this Section 10 or to pay other amounts in connection
with or with respect to the transactions contemplated by this
Agreement in an amount exceeding in the aggregate $50,000,000
provided that Seller's obligations in Sections 10(a)(ix) or
10(a)(x) will not be subject to the $50,000,000 ceiling.
18
(f) If a claim arises for which Buyer intends to seek indemnity
under this Section 10, Buyer shall promptly notify Seller of
such claim. Seller shall have thirty (30) days after receipt
of such notice to undertake, conduct and control, through
counsel of its own choosing and at its own expense, the
settlement or defense thereof, and Buyer shall cooperate with
Seller in connection therewith. Buyer shall have the right to
pay or settle any such claim, provided that in such event it
shall waive any right to indemnity by Seller for such claim;
and provided further, that Buyer shall not enter into any
settlement agreement (or settle or compromise any such claim
in a manner) which provides for or results in any payment by
or liability of any of the Seller Parties of or for any
damages or other amount, any lien, charge or encumbrance on
any property of any of the Seller Parties, any finding of
responsibility or liability on the part of any of the Seller
Parties or any sanction or restriction upon the conduct of any
business by any of the Seller Parties without such Seller
Party's express written consent, which consent shall not be
unreasonably withheld. If Seller does not notify Buyer within
thirty (30) days after the receipt of Buyer's notice of a
claim of indemnity hereunder that it elects to undertake the
defense thereof, then Buyer shall have the right to contest,
settle or compromise the claim, but shall not thereby waive
any right to indemnity therefor pursuant to this Section 10.
(g) The amount of any Claim for which Buyer claims indemnity shall
be reduced by (a) any net insurance proceeds actually received
by Buyer from a non-Affiliated third party with respect to a
Claim, after deducting all costs incurred by Buyer or its
Affiliates in recovering such proceeds and the present value
of reasonably expected increases in Buyer's or any of its
Affiliate's insurance premiums resulting from such Claims, and
(b) indemnity payments which Buyer receives from any Person
(other than Seller or any Affiliate, successor or assign of
Buyer).
(h) THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED FOR IN
THIS AGREEMENT (EXCLUDING, HOWEVER, ANY TRANSACTION AGREEMENT,
EACH OF WHICH SHALL BE GOVERNED BY ITS RESPECTIVE TERMS AND
CONDITIONS) SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN
PART FROM THE ACTIVE, PASSIVE, COMPARATIVE, OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF BUYER PARTIES,
BUT ONLY TO THE EXTENT NOT ATTRIBUTABLE TO FUTURE ACTS OR
OMISSIONS OF BUYER PARTIES.
11. Indemnities of Buyer; Assumption of Obligations.
(a) As of the Effective Time, except for liabilities and
obligations for which Seller has provided any of the Buyer
Parties an express indemnity pursuant to Section 10 or
elsewhere in this Agreement (including Schedule 14(e) if same
becomes effective or in a Transaction Agreement), Buyer agrees
to assume and perform any and all of the liabilities and
obligations or alleged or threatened liabilities and
19
obligations attributable to, affecting or otherwise relating
to the Interests or the Business arising out of or resulting
from Seller's or its Affiliates ownership, operation or use of
the Interests and conduct of the Business prior to the
Effective Time, including, but not limited to, (i) any and all
liabilities and obligations necessary to comply with all laws
and governmental regulations with respect to the Interests or
the Business, including, but not limited to, any request of a
Governmental Entity or other requirement to abandon any
pipeline or facility or take any clean-up, remedial or other
action with respect to the Interests or the Business,
regardless of when the events occurred that caused such
condition to exist or the obligation to arise, (ii) any and
all liabilities and obligations relating to the Imbalances and
(iii) any obligations or liabilities arising, from and after
the Closing, under or in connection with the contracts and
agreements included in the Interests; provided however, that
Buyer does not agree to assume or perform any liabilities or
obligations of Seller (1) to Seller's or its Affiliate's
respective directors, officers, employees or shareholders
acting in such capacities (including liabilities or
obligations under any Employee Benefit Plan except as
otherwise provided in the Employee Matters Agreement) or (2)
for any indebtedness relating to borrowed money, and provided
further that Buyer does not agree to assume any liabilities
relating to (i) Seller's or Seller's Affiliates' storage or
disposal of Hazardous Materials at offsite disposal sites,
which storage or disposal is not related to the Interests or
(ii) Seller's and its Affiliates' businesses or operations
that are separate from the Business (including the saltwater
disposal lines which will be owned by Seller's Affiliates
following the Closing and are covered by the Joint Use and
Occupancy Agreement).
(b) Buyer shall, to the fullest extent permitted by law, protect,
defend, indemnify, and hold Seller and its Affiliates,
including the directors, officers, members, partners, and
representatives of each of them (the "Seller Parties"),
harmless from and against any and all Claims attributable to
or arising out of (i) a Third Party Claim to the extent
arising out of or attributable to Buyer's ownership or
operation of the Interests or conduct of the Business
subsequent to the Effective Time unless caused by an act or
omission of a Seller Party after the Closing, (ii) Buyer's
assumption of any obligation or liability contained in this
Section 11 (but only to the extent Seller has not expressly
agreed to provide Buyer with indemnity with respect to such
obligation or liability pursuant to Section 10 hereof, other
sections of this Agreement (including Schedule 14(e) if same
becomes effective) or in the Transaction Agreements, (iii) the
breach by Buyer of the representations contained in Section 8
hereof; and (iv) the breach by Buyer of any of its agreements
and covenants contained in this Agreement; provided, however,
that Buyer shall not, except as otherwise provided herein, be
obligated under this Agreement to protect, defend, indemnify
or hold Seller Parties harmless from and against any Claims
attributable to or arising out of any of the Transaction
Agreements, recourse with respect to any matters under or in
connection with a Transaction Agreement being under the terms
of such Transaction Agreement.
20
(c) If a claim arises for which Seller intends to seek indemnity
with respect thereto under this Section 11, Seller shall
promptly notify Buyer of such claim. Buyer shall have thirty
(30) days after receipt of such notice to undertake, conduct
and control, through counsel of its own choosing and at its
own expense, the settlement or defense thereof, and Seller
shall cooperate with Buyer in connection therewith. Seller
shall have the right to pay or settle any such claim, provided
that in such event it shall waive any right to indemnity by
Buyer for such claim; and provided further, that Seller shall
not enter into any settlement agreement (or settle or
compromise any such claim in a manner) which provides for or
results in any payment by or liability of any of the Buyer
Parties of or for any damages or other amount, any lien,
charge or encumbrance on any property of any of the Buyer
Parties, any finding of responsibility or liability on the
part of any of the Buyer Parties or any sanction or
restriction upon the conduct of any business by any of the
Buyer Parties without such Buyer Party's express written
consent, which consent shall not be unreasonably withheld. If
Buyer does not notify Seller within thirty (30) days after the
receipt of Seller's notice of a claim of indemnity hereunder
that it elects to undertake the defense thereof, then Seller
shall have the right to contest, settle or compromise the
claim, but shall not thereby waive any right to indemnity
therefor pursuant to this Section 11.
(d) After Closing, any assertion by Seller that Buyer is liable
under the terms of the indemnities provided under Section
11(b) must be made by Seller in writing. Any notice to Buyer
shall state the facts known to Seller that give rise to such
notice in sufficient detail to allow Buyer to evaluate the
assertion.
(e) The amount of any Claim for which Seller claims indemnity
shall be reduced by (a) any net insurance proceeds actually
received by Seller from a non-Affiliated third party with
respect to a Claim, after deducting all costs incurred by
Seller or its Affiliates in recovering such proceeds and the
present value of reasonably expected increases in Seller's or
any of its Affiliate's insurance premiums resulting from such
Claims, and (b) indemnity payments which Seller receives from
any Person (other than Buyer or any of its Affiliates).
(f) THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED FOR IN
THIS AGREEMENT (EXCLUDING, HOWEVER, ANY TRANSACTION AGREEMENT,
EACH OF WHICH SHALL BE GOVERNED BY ITS RESPECTIVE TERMS AND
CONDITIONS) SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN
PART FROM THE ACTIVE, PASSIVE, COMPARATIVE, OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF SELLER PARTIES,
BUT ONLY TO THE EXTENT NOT ATTRIBUTABLE TO FUTURE ACTS OR
OMISSIONS OF SELLER PARTIES.
21
12. Due Diligence Review.
(a) Prior to Closing, Seller, in Seller's offices, will make
available to Buyer and Buyer's authorized representatives for
examination as Buyer may reasonably request, all physical land
files, regulatory files, abstracts, title opinions,
engineering data, reports, maps, drawings, surveys, books,
accounting records, and agreements contained in Seller's files
relating to the Interests (collectively the "Records");
provided, however, the Records shall not include (i) any
proprietary data which relates to another business of Seller
and is not needed in connection with the continued operation
of the Business, (ii) any information subject to third party
confidentiality agreements for which a consent or waiver
cannot be secured by Seller after reasonable efforts, or (iii)
any information which, if disclosed, would violate an
attorney-client privilege.
(b) Subject to subsection (a) above, Seller shall permit Buyer and
Buyer's authorized representatives to consult with Seller's
employees during reasonable business hours (including 7:00
a.m. to 6:00 p.m. (New Mexico time) Monday through Friday) and
to conduct, at Buyer's sole risk and expense, inspections and
inventories of the Interests and to examine all Records at the
Plant Facility. Seller shall also coordinate, in advance, with
Buyer to allow site visits and inspections at the field sites
on Saturdays unless operational conditions would reasonably
prohibit such access. During such inspections, Buyer shall
have the right to review the Interests to determine the
environmental and other condition of the Interests. To the
extent Buyer desires access to Seller's Interests located on
other's property or to any Records located at such location,
Seller shall assist Buyer in obtaining such access; provided,
however, Buyer shall not contact the owner of the property
directly.
(c) Buyer agrees to protect, defend, indemnify and hold Seller
Parties harmless from and against any and all Claims occurring
on or to the Interests caused by the acts or omissions of
Buyer, Buyer's Affiliates or any Person acting on Buyer's or
its Affiliate's behalf in connection with any due diligence
conducted pursuant to or in connection with this Agreement,
including any site visits and environmental sampling. Buyer
agrees to comply fully with all rules, regulations and
instructions issued by Seller (to the extent reasonable notice
thereof has been given to Buyer) regarding Buyer's actions
while upon, entering or leaving any property included in the
Interests, including any insurance requirements that Seller
may impose on contractors authorized to perform work on any
property owned or operated by Seller.
(d) Buyer shall not be entitled to perform any environmental
diligence beyond a Phase I environmental analysis nor any
subsurface investigation or invasive or destructive sampling
without the prior written consent of Seller, which consent
will not be unreasonably withheld. Prior to the date hereof,
Buyer and Seller have agreed upon and approved the site
assessment plan attached hereto as "Exhibit O." Buyer and
Seller agree to cooperate with respect to the prompt
22
implementation and completion of the activities described in
Exhibit O. Buyer and Seller acknowledge that additional
Pre-Closing investigation and site assessment may be conducted
if reasonably required by the selected insurance carrier to
secure the Environmental Insurance described in Section 14 or
if Buyer is not reasonably certain that it will be able to
obtain the Environmental Insurance. In each such case, the
scope of any subsequent environmental investigation and site
assessment shall be subject to the prior written approval of
Seller, which will not be unreasonably withheld. Seller agrees
to cooperate, in good faith, with Buyer and with any
representatives of the selected insurer to determine the scope
of additional environmental investigation (including sampling)
which may be required in connection with the application for
Environmental Insurance or Buyer's due diligence efforts if
the Environmental Insurance is not obtainable. Buyer shall
furnish Seller copies of all environmental and other reports
obtained by, or prepared by or for Buyer or its Affiliates and
their respective agents in connection with any of the
foregoing inspections. All such environmental reports shall be
deemed to be "Evaluation Material" under the Confidentiality
Agreement and will be held in confidence in accordance with
the terms thereof and, if the transactions contemplated herein
are not consummated, will be delivered to Seller in accordance
with the terms of the Confidentiality Agreement.
13. Pre-Closing Environmental Defects.
(a) As used in this Agreement, the following terms shall have the
meanings prescribed below:
(i) "Environmental Defect" shall mean a claim or
condition attributable to or arising out of (1) a
violation of any Environmental Law applicable to the
Interests occurring prior to the Closing Date or (2)
any Existing Environmental Condition.
(ii) "Environmental Law" shall mean any and all laws,
statutes, ordinances, rules, regulations, or orders
of any Governmental Entity pertaining to the
protection of the environment or natural resources or
to Hazardous Materials in any and all jurisdictions
in which the party in question owns property or
conducts business, including the Clean Air Act, the
Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA"), the Federal
Water Pollution Control Act, the Occupational Safety
and Health Act of 1970, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), the Safe Drinking
Water Act, the Toxic Substances Control Act, the
Hazardous & Solid Waste Amendments Act of 1984, the
Superfund Amendments and Reauthorization Act of 1986,
the Hazardous Materials Transportation Act, the Oil
Pollution Act of 1990, any state or local laws
implementing or substantially equivalent to the
foregoing federal laws, and any state or local laws
pertaining to the handling of oil and gas
exploration, production, gathering, and processing
wastes or the use, maintenance, and closure of pits
and impoundments,
23
and all other environmental conservation or
protection laws all as amended from time to time from
enactment or adoption through the date of this
Agreement.
(iii) "Existing Environmental Condition" shall mean (1) any
environmental pollution, contamination, degradation,
damage or injury caused by, related to, arising from,
or in connection with the generation, handling, use,
treatment, storage, transportation, disposal,
discharge, release or emission of any Hazardous
Materials occurring on or prior to the Closing Date
and for which prompt remedial action is presently
required (or if known, would be presently required)
under Environmental Laws in effect on the Closing
Date or (2) any third party claim which is brought
against Seller and based on the release or migration
of Hazardous Materials prior to the Closing Date from
any of the Interests to such third party's property
as a result of or in connection with Seller's conduct
of the Business.
(iv) "Hazardous Materials" shall mean: (1) any chemicals,
materials or substances defined or included in the
definition of "hazardous substances," "hazardous
materials," "toxic substances," "solid wastes,"
"pollutants," "contaminants," or words of similar
import, under any Environmental Law; (2) radioactive
materials (other than naturally occurring radioactive
materials), friable asbestos, and polychlorinated
biphenyls; (c) any other chemical, material or
substance, exposure to which is prohibited, limited
or regulated by any Governmental Entity; or (d)
regulated constituents or substances in
concentrations or levels that exceed numeric or
risk-based standards established pursuant to
Environmental Laws.
(b) Any Environmental Defect notice by Buyer under this Section 13
must be delivered to Seller on or before June 20, 2002. Buyer
may, by timely delivery of written notice under this Section
13 to Seller of the existence of an alleged Environmental
Defect, request reduction of the purchase price. The
Environmental Defect notice shall clearly indicate the nature
of and include a detailed description of the Environmental
Defect, the Interest to which it relates, and the net present
value of the cost of curing or remediating the Environmental
Defect using the Cost Effective Remedy. The Environmental
Defect notice shall include a complete copy of all written
information furnished to or in the possession of Buyer or its
Affiliates relating to the alleged Environmental Defect
(excluding such information as was contained in Seller's data
room or otherwise in the possession of Seller or its
Affiliates) and all environmental reports, data, valuations,
damage assessments and conclusions associated with the
Environmental Defect. The Environmental Defect notice shall
also provide documentation and calculations reasonably
substantiating the existence of the Environmental Defect and
supporting the estimate of the net present value of the Cost
Effective Remedy. In the event any such notice is not timely
delivered, all Environmental Defects known to Buyer as of such
date shall be deemed waived and Buyer shall thereafter have no
right to or seek a purchase price adjustment or,
24
otherwise seek indemnification for such Environmental Defects.
Seller shall have the right, but not the obligation, to
attempt to cure any alleged Environmental Defect prior to
Closing at Seller's sole cost and expense. In this connection,
Seller may, in its discretion, extend the Closing Date for up
to 45 days to effect such cure. In the event Seller is unable
or unwilling to cure an alleged Environmental Defect, Buyer
and Seller shall meet and endeavor to agree on the validity of
the claimed Environmental Defect and the amount of any
required purchase price adjustment. In considering the
significance of a fact, circumstance or condition for purposes
of determining an alleged Environmental Defect, due
consideration shall be given to whether such fact,
circumstance or condition would be acceptable to reasonable
and prudent persons engaged in the business of ownership,
development and operation of gathering pipelines and treating
plants. To the extent that Buyer receives a Purchase Price
reduction for a Pre-Closing Environmental Defect, then such
Purchase Price reduction shall result in a waiver with respect
to such Pre-Closing Environmental Defect notwithstanding that
the actual remediation costs subsequently incurred by Buyer
exceeded the Purchase Price reduction.
(c) Seller may elect, at its option, (i) to cure the Environmental
Defect at its cost prior to Closing, but only if the
Environmental Defect following such curative actions meets the
requirements of applicable Environmental Laws or (ii) reduce
the Base Purchase Price by the agreed upon value of the
Environmental Defect, in which event Buyer will assume all
curative, investigative, remedial or corrective action
requirements ("Environmental Corrective Costs") with respect
to such Environmental Defects. In the event the Parties cannot
mutually agree on a purchase price adjustment for
Environmental Defects alleged by Buyer pursuant to this
Section 13, then Buyer and Seller shall, subject to subsection
(d) below, proceed with Closing and the disputed Environmental
Defect shall be submitted to dispute resolution pursuant to
the procedure in Schedule 13(c) of the Seller Disclosure
Schedule.
(d) To the extent necessary to be able to comply with its
indemnification obligations hereunder, (A) Seller shall have
the right, from time to time, to review all environmental
reports and records related to the Interests to the extent
related to any Pre-Closing environmental issues, and to have
access to the Real Property from time to time and (B) Seller
shall have the right to participate in and comment on (1) any
remedial action, including determining the scope, extent,
duration and cost of such remedial action, and (2) all
discussions, negotiations and proceedings with Governmental
Entities and third parties in connection therewith.
(e) Buyer shall not be entitled to assert any Environmental Defect
under this Section 13 unless the claim is timely made in
accordance with the provisions of this Section 13 and the net
present value of the Cost Effective Remedy exceeds $35,000 (a
"Qualified Environmental Claim") and then only when the sum of
all such Qualified Environmental Claims exceeds $500,000 in
the aggregate (the "Environmental Threshold").
25
(f) After the Environmental Threshold has been reached, Buyer
shall be entitled to a purchase price adjustment for Qualified
Environmental Claims only to the extent of the amount in
excess of $350,000 (the "Environmental Deductible").
(g) After the Environmental Threshold has been reached, Buyer
shall be entitled to a purchase price adjustment for Qualified
Environmental Claims exceeding the Environmental Deductible
referenced in subsection (f) above up to an aggregate of
$1,150,000. Buyer shall not be entitled to any purchase price
adjustment for the next $1,000,000 in Qualified Environmental
Claims, but shall be entitled to claim an additional reduction
in the purchase price to the extent that Qualified
Environmental Claims in excess of the Environmental Deductible
exceed $2,150,000 in the aggregate.
(h) Buyer agrees that it will have responsibility for and will
indemnify and hold harmless Seller Parties from and against
Pre-Closing Environmental Defects that form the basis for any
purchase price adjustment claimed by Buyer, including any
Qualified Environmental Claims that are counted toward the
Environmental Deductible.
(i) Notwithstanding any provision herein to the contrary, in the
event that the Pre-Closing Environmental Defects and Title
Defects asserted by Buyer prior to the Closing exceed
$10,000,000 in the aggregate, then Seller may at its option,
terminate this Agreement by providing written notice of
termination to Buyer.
14. Environmental Insurance.
(a) Buyer and Seller intend to obtain environmental insurance to
address environmental matters arising out of the Interests or
the Business, other than those environmental matters for which
indemnification is specifically provided by Seller to Buyer in
the Agreement, and the Transaction Agreements. Buyer agrees
that it will use reasonable commercial efforts to initially
obtain and will coordinate with Seller in an effort to obtain
a quotation for a policy having $35 million of coverage, a $1
million aggregate deductible and a 10 year term (the "Baseline
Policy"). The parties shall cooperate in a collective effort
to obtain policy terms which would result in Seller's
indemnity referenced in Schedule 14(e) hereto not being
required. Furthermore, Buyer agrees that it will use
reasonable commercial efforts to eliminate exclusions from the
policy, where possible, and to coordinate with Seller in such
efforts to eliminate policy exclusions. Buyer and Seller agree
that once the quote for the Baseline Policy has been obtained,
the Parties will, collectively, attempt on a commercially
reasonable basis to acquire endorsements to eliminate policy
exclusions for Third Party Claims, Civil Fines and Penalties
and Scheduled Offsite Disposal Sites up to the limitations
imposed by the $1,500,000 premium limit. This effort to
eliminate policy exclusions will be made prior to Buyer
attempting to reduce the policy deductible or increase policy
limits as provided in subsection (d) below.
26
(b) In this connection Buyer agrees to use reasonable best efforts
to obtain, within two weeks from the date hereof, a commitment
from an insurer to provide environmental insurance (the
"Environmental Insurance") at the Closing under the following
parameters: (1) the insurance is under written by an insurer
reasonably acceptable to Buyer and Seller provided that AIG,
Chubb, XL and ▇▇▇▇▇▇ and other similarly positioned insurance
companies shall be deemed to be acceptable insurers; (2) the
insurance policy shall provide for $35 million of coverage, a
minimum 10 year term (unless Buyer agrees to a lesser term),
and a maximum aggregate deductible of $1,000,000 (unless Buyer
agrees to a higher maximum aggregate deductible); (3) Seller
and its Affiliates will be named as an additional insured and
Duke Energy Field Services, LP will be an additional named
insured and (4) the policy will be in a form and scope
reasonably acceptable to Buyer and Seller (e.g., coverage for
historical matters other than Criminal Fines and Penalties and
Punitive Damages) and have exclusions which are customary and
of a nature which should be reasonably acceptable to a prudent
pipeline operator similarly situated. Buyer further agrees to
promptly provide Seller with copies of all correspondence
between potential carriers and Buyer with respect to the
efforts to obtain such insurance including copies of all
requests for information and proposals and requests to conduct
environmental assessments. Seller shall, furthermore, be
entitled to participate in all conferences, meetings and site
visits with representatives of the potential insurers.
(c) The premium for the Environmental Insurance shall be borne
one-half by Seller and one-half by Buyer provided that neither
Buyer nor Seller will be required to contribute in excess of
$750,000 toward payment of such premium.
(d) Buyer has the right to reduce the aggregate maximum policy
deductible below $1.0 million or increase the policy limits
above $35 million provided that Buyer shall pay any policy
premiums in excess of $1.0 million to the extent that such
excess is attributable to such items.
(e) In the event that a commitment for Environmental Insurance is
not obtained by Buyer on or prior to June 5, 2002 (or such
later date as may be agreed by Seller), then Seller, at its
option, may: (i) pay any additional premium required to obtain
the Environmental Insurance, (ii) terminate this Agreement or
(iii) provide the environmental indemnity contained in
Schedule 14(e) hereto which indemnity shall survive the
Closing in accordance with the provisions set forth in
Schedule 14(e); provided that in the event Environmental
Insurance is obtained then Schedule 14(e) shall not become
effective, except as otherwise provided in such Schedule.
(f) In the event that Seller elects to proceed with the Closing
and to provide the environmental indemnity in subsection
14(e)(iii) above, then Buyer and Seller agree for a period of
90 days following the Closing to cooperate with each other and
to continue to use reasonable best efforts to complete any
environmental inspections required by the potential insurers
and to obtain the Environmental Insurance. In the event that
Buyer fails to obtain the Environmental Insurance, Seller,
within nine months, following Closing may obtain the
Environmental
27
Insurance and at such time as the policy is effective the
environmental indemnity provided by Seller pursuant to
subsection 14(e)(iii) above shall terminate except with
respect to claims made under such indemnity prior to the
effective date of the Policy.
(g) If Buyer, in its sole discretion, elects to exclude from
coverage under the Baseline Policy the gathering lines that
comprise a portion of the Gathering System (other than the
Stations, the Plant Facility and other above ground facilities
adjacent thereto and that portion of the gathering pipeline
thereunder), such gathering lines, excluding such other
facilities, being referred to as the "Pipeline," Seller will
have no indemnification obligations under Schedule 14(e)
arising out of or attributable to the Pipeline.
15. Confidentiality. All Records and all other confidential data provided
to Buyer, whether before or after the date of this Agreement, and all
non-public title matters and environmental reports prepared by Buyer or
Buyer's representatives relating to the Interests, shall be treated by
Buyer as strictly confidential, and shall not be disclosed to any
Person, without the prior written consent of Seller unless required by
law or regulation. All notices of Environmental Defects, environmental
assessments and other environmental information prepared by Buyer or
Buyer's representatives relating to the Interests shall be treated by
Seller as strictly confidential, and shall not be disclosed to any
Person, without the prior written consent of Buyer unless required by
law or regulation. In the event this purchase and sale does not close,
this covenant shall survive termination of this Agreement for a period
of two years; and in the event this purchase and sale closes, Buyer's
covenant shall terminate at Closing, but Seller's covenants relating to
Environmental Defects, environmental assessments and other
environmental information shall continue for two years. In the event
this purchase and sale closes, all Records and all other confidential
data relating to the Interests or the Business, and all non-public
title matters relating to the Interests, shall be treated by Seller as
strictly confidential, and shall not be disclosed to any Person for a
period of two years after Closing, without the prior written consent of
Seller unless required by law or regulation.
16. DISCLAIMERS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
THE INTERESTS ARE BEING CONVEYED AND ASSIGNED TO AND ACCEPTED BY BUYER
IN THEIR "AS IS, WHERE IS" CONDITION AND STATE OF REPAIR, AND WITH ALL
FAULTS AND DEFECTS, WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT OF
ANY KIND OR NATURE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, CONFORMITY
TO SAMPLES, MERCHANTABILITY, AND/OR FITNESS FOR A PARTICULAR PURPOSE,
ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY SELLER AND WAIVED BY BUYER.
THE INTERESTS HAVE BEEN USED FOR GAS PIPELINE, TRANSPORTATION,
TREATING, STORAGE AND RELATED OPERATIONS. PHYSICAL CHANGES IN THE
INTERESTS AND IN THE LANDS BURDENED THEREBY MAY HAVE OCCURRED AS A
RESULT OF SUCH USES. THE INTERESTS MAY ALSO INCLUDE BURIED PIPELINES
AND
28
OTHER EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT BE KNOWN BY SELLER OR
READILY APPARENT BY A PHYSICAL INSPECTION OF THE INTERESTS. IT IS
UNDERSTOOD AND AGREED THAT BUYER SHALL HAVE INSPECTED PRIOR TO CLOSING
(OR SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO INSPECT) THE INTERESTS
AND THE ASSOCIATED PREMISES, AND SATISFIED ITSELF AS TO THEIR PHYSICAL
AND ENVIRONMENTAL CONDITION, AND THAT BUYER SHALL ACCEPT ALL OF THE
SAME IN THEIR "AS IS, WHERE IS" CONDITION AND STATE OF REPAIR, AND WITH
ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE OF
MAN-MADE MATERIAL FIBERS (MMMF) AND THE PRESENCE, RELEASE OR DISPOSAL
OF HAZARDOUS SUBSTANCES. IN ADDITION, SELLER MAKES NO REPRESENTATION,
COVENANT OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY
OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO BUYER WITH RESPECT
TO THE INTERESTS, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE
INTERESTS, PRICING ASSUMPTIONS OR QUALITY OR QUANTITY OF THE INTERESTS.
ANY RELIANCE ON OR USE OF SUCH INFORMATION SHALL BE AT BUYER'S SOLE
RISK. THIS SECTION SHALL NOT OPERATE TO WAIVE OR RELEASE, AND IS
EXPRESSLY SUBJECT TO, ALL REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF SELLER CONTAINED IN THIS AGREEMENT. THIS SECTION SHALL
NOT OPERATE TO WAIVE OR RELEASE ANY REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF SELLER CONTAINED IN THE TRANSACTION
AGREEMENTS.
17. DTPA Waiver. TO THE EXTENT APPLICABLE TO THE INTERESTS OR ANY PORTION
THEREOF, BUYER HEREBY WAIVES ITS RIGHTS UNDER THE PROVISIONS OF THE
TEXAS DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS
17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT
WAIVED), OF THE TEXAS BUSINESS & COMMERCIAL CODE (A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS). AFTER CONSULTATION WITH AN
ATTORNEY OF ITS CHOICE, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER.
18. Covenants of Seller. Seller covenants and agrees that from and after
the execution of this Agreement and until the Closing Date:
(a) Seller will not sell, transfer, assign, convey or otherwise
dispose of any Interests other than personal property and
equipment which is of a nature which is disposed of, from time
to time, in the ordinary course of business which is replaced
with property and equipment of comparable or better value and
utility in the ordinary and routine maintenance and operation
of the Interests;
(b) Seller will not create or knowingly permit the creation of any
Lien on any Interest other than a Permitted Encumbrance
reflected in Sections 4(a)(ii)(B), 4(a)(ii)(D) (other than
Liens granted to or created in favor of Seller or any of its
Affiliates), 4(a)(ii)(E), 4(a)(ii)(F), or 4(a)(ii)(G) hereof;
29
(c) If Seller becomes aware of (i) any major event or development
which reasonably may materially and adversely affect any of
the Interests or the Business or impede the transaction
contemplated by this Agreement, or (ii) any suit, action or
other proceeding before any court or governmental agency which
relates to the Interests or which might result in impairment
or loss of Seller's title to any of the Interests or the value
thereof, or which might hinder or impede the operation of the
Interests, it will give prompt written notice to Buyer; and
(d) Seller agrees to:
(i) cause the Interests to be maintained and operated in
the ordinary course of business in accordance with
the past operating and maintenance practices of
Seller, including regular scheduled maintenance plans
and capital expenditures, and pay or cause to be paid
all costs and expenses in connection therewith;
(ii) carry on its business with respect to the Interests
in substantially the same manner as it has
heretofore, not introducing any new method of
management, operation or accounting with respect to
the Interests; and
(iii) use reasonable efforts to preserve the business
involving the Interests intact, to keep available the
services of the employees involved in the conduct of
business involving the Interests and to preserve the
goodwill of customers having business relations with
Seller relating to the Interests, in all material
respects.
(e) Seller will not, without the consent of Buyer which will not
be unreasonably withheld, attempt to renegotiate any amounts
paid by or payable to Seller under any of the Material
Contracts.
(f) As soon as possible after execution of this Agreement, Seller
will promptly cooperate with Pricewaterhouse Coopers ("PWC")
to enable PWC to provide to Buyer the following financial
information for the Business: (1) a balance sheet as of
December 31, 2001 and income and cash flow statements for the
twelve month period then ended, audited at Buyer's expense by
PWC with an unqualified opinion from PWC on such audited
statements (collectively, the "Audited Statements"); (2)
unaudited income statements for each of the three month
periods ended March 31, June 30 and September 30, 2001 and
March 31, 2002 (collectively, the "Unaudited Statements").
Seller agrees to use reasonable efforts to facilitate the
preparation of such financial statements prior to Closing
which fairly present the results of operations of the Business
for the referenced periods. In addition to the above audit
fees, Buyer would pay to Seller an amount not to exceed
$50,000 for the reimbursement of incremental costs (e.g.,
overtime and consulting fees) incurred by Seller in connection
with the preparation of the Audited Statements and the
Unaudited Statements to the extent all of such statements are
delivered to Buyer no later than June 14, 2002.
30
19. Casualty Loss.
(a) As used herein, the term "Casualty Loss" shall mean, with
respect to all or any portion of the Interests, any
destruction by fire, storm or other casualty, or any
condemnation or taking or threatened condemnation or taking,
of all or any portion of the Interests from and after the date
of the execution of this Agreement and until the Closing Date.
Seller shall promptly notify Buyer of any Casualty Loss of
which Seller becomes aware. If a Casualty Loss occurs that
would reasonably be expected to have a material adverse effect
on the Business, Seller will have the right to attempt to cure
such Casualty Loss prior to Closing and to extend the Closing
Date for up to 45 days for such purpose. If Seller refuses or
is unable to cure such Casualty Loss prior to the Closing or
to reduce the Purchase Price by the amount as agreed to by
Buyer and Seller, Buyer may terminate this Agreement by
providing to Seller 15 days written notice.
(b) Except as provided in subsection (a) above, if any Casualty
Loss occurs prior to Closing to any of the Interests and such
Casualty Loss may be repaired prior to Closing and, when
repaired, the value of such Interests shall not be materially
diminished, then Seller may repair such Casualty Loss prior to
Closing at Seller's cost and shall immediately notify Buyer of
such election. If a Casualty Loss occurs prior to Closing,
Buyer does not elect to terminate this Agreement pursuant to
subsection (a) above and the Purchase Price is not reduced
under subsection (a) above, and such repair is not completed
by Seller prior to Closing, then Buyer may elect to (i) reduce
the Base Purchase Price by an amount estimated by Seller and
agreed to by Buyer to be equal to the repair costs of the
Casualty Loss; provided that, if the Parties cannot agree,
then either Party may submit the determination of the repair
costs of the Casualty Loss to arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association, and the repair costs as determined pursuant to
such arbitration shall be the repair costs of the Casualty
Loss for purposes of this clause (i), or (ii) accept the
Interests with the Casualty Loss with no adjustment to the
Base Purchase Price, but with Buyer being entitled to receive
as Buyer's sole property all insurance proceeds, condemnation
or taking proceeds, and other proceeds or recoveries on
account of such Casualty Loss. Notwithstanding the foregoing,
if the Casualty Loss is in excess of $5,000,000 then Seller
may elect to terminate this Agreement upon 15 days written
notice to Buyer.
20. Post-Closing Consents and Required Consents.
(a) "Post-Closing Consents" means any consent, approval or permit
of, or filing with or notice to, any third party that is
customarily obtained or made after closing in connection with
transactions similar in nature to the transactions
contemplated hereby.
(b) "Required Consent" shall mean any rights to consent to an
assignment or transfer of an Interest (other than Post-Closing
Consents) where the failure to receive such
31
consent could materially and adversely affect, prevent or
interfere with the ownership, operation, value or use of any
Interest and the Business or cause Buyer to suffer or incur
any material loss or damage, due consideration being given to
whether same is usual and customarily acceptable to reasonable
and prudent persons engaged in the business of ownership and
operation of gathering systems with knowledge of all of the
facts and appreciation of their legal significance. Seller
shall promptly give notices to all third parties holding any
Required Consents known to Seller or identified to Seller by
Buyer prior to Closing. Seller shall use all reasonable
efforts, but without obligation to incur any unreasonable cost
or expense, to obtain such Required Consents. Unless waived in
writing by Buyer, if a Required Consent with respect to an
Interest is not obtained prior to Closing unless Seller
(without infringing upon the legal rights of any third party
or outside party or violating any law, rule, regulation or
permit) shall provide to Buyer an alternative arrangement
which provides to Buyer the equivalent benefits of such
nonassigned Interest (at no additional cost to Buyer other
than the assumption with respect to such period of any related
liability and the performance and compliance by Buyer with the
terms of such Interest), then (x) the purchase price shall be
reduced prior to the Closing by the mutually agreed reduction
in the value of the Val Verde System resulting from the loss
of the affected Interest, and such Interest shall be excluded
from the purchase and sale under this Agreement, or (y) Buyer
may terminate this Agreement if the Parties are unable to
agree to a mutually acceptable purchase price reduction
pursuant (x) and the failure to obtain such Required Consent
would have an Adverse Title Effect. Any Required Consent
waived in writing by Buyer shall be deemed a Permitted
Encumbrance.
(c) "Adverse Title Effect" with respect to an Interest shall mean
that the failure to obtain a Required Consent with respect to
such Interest will materially and adversely affect, prevent or
interfere with the operation, value or use of the Business or
cause Buyer to suffer or incur a material loss or damage.
(d) If any Required Consent exists with respect to any of the
Interests, then until such Required Consent is obtained and
such Interest is assigned by Seller to Buyer:
(i) Seller agrees to use its commercially reasonable
efforts (without infringing upon the legal rights of
any third party or outside party or violating any
law, rule, regulation or permit) to provide Buyer
with the equivalent assets or benefits of such
retained Interest by subcontract or otherwise, at no
additional cost to Buyer (other than the assumption
with respect to such period of any related liability
and the performance and compliance by Buyer with the
terms of such permit, license, easement, contract or
other property) effective as of the Closing Date; and
(ii) Buyer agrees (without infringing upon the legal
rights of such third party or outside party or
violating any law, rule, regulation or permit) to
bear with respect to such period the economic burden
of any related liability
32
and of the performance and compliance with the terms
of the permit, license, easement, contract or other
property subject to the Required Consent, at no
additional cost to Seller, effective as of the
Closing Date to the same extent as Buyer would have
borne such liability and other obligations if such
Required Consent had been obtained and such retained
Interest had been assigned by Seller to Buyer
effective as of the Closing Date.
Seller agrees (without infringing upon the legal rights of
such third party or outside party or violating any law, rule,
regulation or permit) to exercise its rights with respect to
such retained Interest at the direction and/or for the benefit
of Buyer. Notwithstanding the foregoing, nothing in this
subsection (d) or subsection (e) below shall require or
obligate Seller or Buyer to purchase or pay consideration to
acquire any new or additional permit, license, easement,
contract or other property right or interest.
(e) Any failure of Seller to obtain a Required Consent shall be
handled exclusively under this Section 20 and will not be
treated as a Title Defect under Article 4 or a breach of any
other sections of this Agreement.
(f) Without waiving any of the Parties' rights hereunder, this
Agreement shall not operate as an assignment by Seller to
Buyer of any contract, permit, franchise, claim or asset
included in the Interests that is by its valid and enforceable
terms or by law nonassignable, without the consent of any
other party or parties to such Interest or a Governmental
Entity, unless such consent or approval shall have been given
21. Closing. Subject to the terms and conditions of this Agreement, the
Closing shall occur effective at 11:59 p.m. (New Mexico Time) on June
30, 2002 at the offices of Seller at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other time and place as Seller and Buyer may
mutually agree in writing (the "Closing" or the "Closing Date"). If all
conditions to Closing have been satisfied or waived, a pre-closing will
occur on June 28, 2002 at which time all Transaction Agreements and
other closing documents will be executed and deposited into escrow with
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. ("▇▇▇▇▇▇ & ▇▇▇▇▇▇") and the Purchase Price,
reduced by 3 days of interest at 4% per annum if the Purchase Price is
wired by Buyer to Seller prior to 12:00 p.m. (Houston, Texas Time) on
June 28, 2002 (and 2 days of interest if the Purchase Price is wired by
Buyer to Seller after 12:00 p.m. Eastern time on June 28, 2002 unless
the delay results from the activities of Seller), will be paid to
Seller. The closing documents will be released by ▇▇▇▇▇▇ & ▇▇▇▇▇▇ to
Buyer and Seller, respectively, on July 1, 2002 provided that no
"termination event" as defined in the escrow agreement among ▇▇▇▇▇▇ &
▇▇▇▇▇▇, Buyer and Seller has occurred. If a "termination event" as
defined in the escrow agreement among ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Buyer and Seller
has occurred, then ▇▇▇▇▇▇ & ▇▇▇▇▇▇ will promptly destroy the closing
documents and within one Business Day thereafter Seller will wire back
to Buyer in immediately available funds the amount wired by Buyer in
connection with the Pre-Closing.
33
22. Transactions at Closing.
(a) Buyer, BROG and Burlington Resources Trading Inc. shall enter
into a Gas Gathering and Treating Agreement dated as of the
Closing Date (the "Gas Gathering and Treating Agreement"), in
substantially the form attached as Exhibit "B";
(b) Buyer and Seller shall execute and deliver a Transition
Services Agreement in substantially the form attached as
Exhibit "M";
(c) Seller shall execute, acknowledge, and deliver to Buyer
instruments of conveyance in the form as set forth on the
Special Warranty Deed with respect to the Plant Site in
substantially the form attached as Exhibit "E", the Special
Warranty Deed with respect to the other real property tract(s)
in substantially the form attached as Exhibit "F", an
Assignment of Rights-of-Way in substantially the form attached
as Exhibit "G", the Assignment and ▇▇▇▇ of Sale with respect
to personalty included in the Interests in substantially the
form attached as Exhibit "H", and such other instruments of
conveyance as may be reasonably required to convey the
Interests to Buyer;
(d) Seller shall deliver to Buyer the Records within ten days
after the Closing Date but Seller shall be authorized to keep
a copy of the Records;
(e) Seller shall deliver to Buyer the certificate referenced in
Section 6(c) hereof;
(f) Seller shall deliver to Buyer the legal opinions referenced in
Section 6(d) hereof;
(g) Buyer shall deliver to Seller the certificate referenced in
Section 5(c) hereof;
(h) Buyer shall deliver to Seller the legal opinion referenced in
Section 5(d) hereof;
(i) Seller and Buyer (or Buyer's Affiliate) shall execute and
deliver the Employee Matters Agreement in substantially the
form attached as Exhibit "I";
(j) Buyer and BROG shall enter into a Joint Use and Occupancy
Agreement dated as of the Closing Date, in substantially the
form attached as Exhibit "A";
(k) BROG shall execute and deliver to Buyer the BROG Guaranty in
substantially the form attached as Exhibit "J";
(l) Buyer and Seller shall enter into a Memorandum of Gas
Gathering and Treating Agreement dated as of the Closing Date,
in substantially the form attached as Exhibit "K";
(m) Buyer and BROG shall enter into a Memorandum of Joint Use and
Occupancy Agreement dated as of the Closing Date, in
substantially the form attached as Exhibit "L";
34
(n) Buyer and BROG shall have entered into a Water Disposal
Agreement in substantially the form attached as Exhibit "N";
(o) Buyer shall deliver to Seller cash by wire transfer in the
amount of the Base Purchase Price (less any agreed adjustments
and any amount required to be paid by Seller to Buyer in the
Employee Matters Agreement) to the following account:
Bank: Mellon Bank, Pittsburgh, PA.
ABA/Routing Number: ▇▇▇-▇▇▇-▇▇▇
Account: 104-9050
For Credit To: Burlington Resources Services Inc.
(p) Buyer and BROG shall enter into a Cathodic Protection
Agreement in substantially the form attached as Exhibit "P";
and
(q) Buyer and Seller, if requested by Seller, shall enter into a
Memorandum of Right of First Refusal in substantially the form
attached as Exhibit "Q".
(r) Buyer and Seller shall enter into a Volume Deficiency
Agreement in substantially the form attached as Exhibit "R".
(s) Buyer and Seller shall enter into a Put Agreement in
substantially the form attached as Exhibit "S".
23. Further Assurances. Seller and Buyer shall execute, acknowledge, and
deliver as appropriate (i) separate transfer documents for individual
assets as may be reasonably required given the nature of an individual
asset and (ii) separate transfer documents of assets on approved forms
as may be necessary to satisfy applicable statutory and regulatory
requirements. All such separate transfer documents, if any, shall be
subject to the provisions of this Agreement. Incidental and subsequent
to Closing, each of the Parties shall execute, acknowledge, and deliver
to the other such further instruments, and take such other actions as
may be reasonably necessary to carry out the provisions of this
Agreement.
24. Proration of Taxes. All ad valorem Taxes, real property Taxes, and
similar obligations attributable to the Interests with respect to the
tax period in which the Effective Time occurs (the "current tax
period") shall be apportioned between Seller and Buyer as of the
Effective Time with Seller being obligated to pay a proportionate share
of the actual amount of such Taxes for the current tax period
determined by multiplying such actual Taxes by a fraction, the
numerator of which is the number of days in the current tax period
prior to the Effective Time and the denominator of which is the total
number of days in the current tax period. An estimate of Seller's share
of such actual Taxes for the current tax period shall be based on the
immediately preceding tax period assessment, and the Base Purchase
Price paid at Closing shall be reduced by the amount of such estimated
Taxes owed by Seller for that portion of the current tax period prior
to the Effective Time. When the actual amount of any such Taxes for the
current tax period is
35
known, Buyer shall promptly advise Seller of the proportionate share of
such actual Taxes for which Seller is obligated. If the estimate of
Seller's share of such actual Taxes made pursuant to this Section was
less than Seller's share of such actual Taxes, Seller shall pay Buyer
such deficiency within 10 days of receipt of such notice, and if such
estimate was more than Seller's share of such actual Taxes, Buyer will
refund such excess to Seller at the time such notice is given. Except
for the ad valorem Taxes, real property Taxes, and similar obligations
for the current tax period which are prorated between Buyer and Seller
pursuant to this Section, (i) Seller shall be obligated for, and shall
indemnify Buyer and its Affiliates from and against, all other Taxes
relating to the ownership of the Interests or conduct of the Business
which are attributable to the period prior to the Effective Time, all
Claims with respect to such other Taxes, and all Claims with respect to
Seller's share of Taxes for the current tax period and (ii) Buyer shall
be obligated for, and shall indemnify Seller and its Affiliates from
and against, all other Taxes relating to the ownership of the Interests
or conduct of the Business which are attributable to the period forward
after the Effective Time, all Claims with respect to such other Taxes
and all Claims with respect to Buyer's share of Taxes for the current
tax period. Except as specifically provided in this Section 24 or in
Section 27, Buyer is not assuming responsibility for any Taxes for
which Seller or any of its Affiliates are liable and, subject to that
exception, (i) Seller shall defend, indemnify and hold harmless Buyer
from and against all Taxes for which Seller is liable and (ii) Buyer
shall defend, indemnify and hold harmless Seller from and against all
Taxes for which Buyer is liable.
25. Credits and Receipts. Subject to the terms hereof (including the
indemnification provisions hereof), all monies, proceeds, receipts,
credits and income attributable to the Interests (as determined in
accordance with GAAP) (i) for all periods of time from and after the
Effective Time, shall be the sole property and entitlement of Buyer,
and, to the extent received by Seller or one of its Affiliates, shall
be promptly accounted for and transmitted to Buyer and (ii) for all
periods of time prior to the Effective Time, shall be the sole property
and entitlement of Seller and, to the extent received by Buyer, shall
be promptly accounted for and transmitted to Seller. After Closing,
regardless of when and by whom the actual invoice or demand for payment
is received, (a) Seller shall pay and be responsible for all accounts
payable or overhead or administrative costs incurred in the ordinary
course of business with respect to the Interests or the Business and
attributable to any period of time before the Effective Time and (b)
Buyer shall pay and be responsible for all accounts payable or overhead
or administrative costs incurred in the ordinary course of business
with respect to the Interests or the Business and attributable to any
period of time after the Effective Time. Seller shall pay and be
responsible for the amounts for which Seller is responsible under
Sections 4(a)(ii)(B) and 4(a)(ii)(F).
26. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, or to the
extent receipt is confirmed by the Party charged with notice, sent by
documented overnight delivery service, by United States mail, telecopy,
telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller or Buyer shall
be addressed to:
36
SELLER BUYER
------ -----
Burlington Resources Gathering Inc. TEPPCO Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attn: President
Attn: ▇▇▇▇▇ ▇▇▇▇ Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Burlington Resources Oil & Gas Company LP With copy to:
5051 Westheimer
Suite 1400 TEPPCO Partners, L.P.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Attn: General Counsel
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
27. Transfer Taxes. Seller and Buyer believe that this purchase and sale of
the Interests constitutes an isolated or occasional sale and is not
subject to sales Tax; provided, however, if any sales, transfers, use
Taxes or other similar Taxes are due or should hereafter become due
(including penalty and interest thereon) by reason of this transaction,
Buyer shall timely pay and solely bear all such Taxes.
28. Recording Documents. Buyer shall pay all documentary, filing, and
recording fees incurred in connection with the filing and recording of
the instruments of conveyance. As soon as practicable after Closing,
Buyer shall provide Seller with recorded copies of all documents
conveying the Interests to Buyer.
29. Announcements. Seller and Buyer shall consult with each other prior to
the release of any press releases and other announcements concerning
this Agreement or the transactions contemplated hereby. Nothing herein
shall prohibit a Party from making a press release or other
announcement if required by applicable law or the rules or regulations
of a stock exchange; however, the Party required to make the
announcement agrees to use reasonable efforts to consult with the other
Party in connection with such release or filing. Any press release or
other announcement shall be at a time and in a form reasonably
acceptable to Seller and Buyer.
30. Survival of Representations, Warranties and Covenants. Except as
otherwise provided herein, all covenants of the Parties to the extent
not fully performed or waived prior to Closing shall survive the
Closing; except to the extent their survival is expressly limited by
another provision of this Agreement, including Section 10(b) above. All
representations and warranties of the Parties (except for the
representation and warranty of Seller in Section 7(w)) shall survive
the Closing subject to the limitations set forth in Section 10(b) and
except that Section 8 (other than subsection (b), (c) and (h) thereof)
shall survive Closing until two years after Closing. The representation
and warranty of Seller in Section 7(w) shall not survive the Closing
and shall have no force and effect following the Closing; provided,
that in the event that breaches of Section
37
7(w) at Closing represent Environmental Liabilities in excess of
$5,000,000, in the aggregate, then Buyer can terminate this Agreement
by written notice to Seller.
31. Reliance. Prior to executing and closing this Agreement, Buyer has been
afforded an opportunity to (i) examine the Interests and such materials
as it has requested to be provided to it by Seller, (ii) to discuss
with representatives of Seller such materials and the nature and
operation of the Interests and (iii) to investigate the condition of
the Interests. In entering into and closing this Agreement, Buyer has
relied solely on the express representations and covenants of Seller in
this Agreement and the instruments of conveyance, its independent
investigation of, and judgment with respect to, the Interests, and the
advice of its own legal, tax, economic, environmental, engineering,
pipeline and treating plant advisors, and not on any comments or
statements of Seller or any representatives or agents of, or
consultants or advisors engaged by, Seller.
32. Dispute Resolution. The Parties shall attempt to promptly resolve any
controversy or claim between the Parties hereto arising out of or
relating to this Agreement or any related agreements, transactions, or
instruments. If any controversy or claim should arise, the Parties
shall meet and attempt to resolve the matter by negotiation. Such
negotiation shall be held between officers of both Parties, each having
the authority to settle the controversy or claim. If any such
controversy or claim is not resolved by negotiation, the Parties will
attempt to negotiate an agreement for alternate method resolution (such
as mediation) before initiating an action for judicial relief.
33. Failure to Close. Subject to the other provisions of this Section, if
all of the conditions to Closing set forth in Sections 5, 6 and 35
hereof have not been satisfied or waived by the respective Parties on
or before August 31, 2002 (or such later date as this Agreement may be
extended by Buyer or Seller pursuant to the express terms hereof, or as
hereafter may be mutually agreed upon by the Parties in writing), this
Agreement shall terminate automatically, and no Party hereto shall have
any further obligations or any liability to the other Party pursuant to
this Agreement; provided, however, that nothing herein shall relieve
any Party from liability for the willful failure to satisfy any
conditions to Closing required to be satisfied by it. Upon any
termination of this Agreement, Seller shall be free immediately to
enjoy all rights of ownership of the Interests and to sell, transfer,
encumber or otherwise dispose of the Interests to any Person without
any restriction under this Agreement.
34. Use of Seller Names. Buyer agrees that, as soon as practicable after
Closing (and in any event within 120 days), it will remove or cause to
be removed the names and marks Burlington Resources, Meridian Oil, El
Paso Production, or Southland Royalty where and if they exist, and all
variations and derivatives thereof and logos relating thereto from the
Interests and will not thereafter make any use whatsoever of such
names, marks, and logos.
35. Regulatory Filings; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing.
(a) Buyer and Seller will take all commercially reasonable actions
necessary or desirable, and proceed diligently and in good
faith and use all commercially reasonable efforts, as promptly
as practicable to obtain all consents, approvals or
38
actions of, to make all filings with, and to give all notices
to, Governmental Entities required to accomplish the
transactions contemplated by this Agreement.
(b) This Agreement is subject in all respects to and conditioned
upon compliance by the Parties with the HSR Act, to the extent
that the HSR Act is applicable to the transactions
contemplated by this Agreement. The Parties shall make such
filings on or prior to May 24, 2002 and provide such
information to the Federal Trade Commission ("FTC") and their
attorneys as is required in connection with the HSR Act as
soon as practicable after a request therefor. In no event will
Buyer or any Affiliate of Buyer be obligated to divest any
assets in connection with obtaining any waiver or approval
under the HSR Act.
(c) Notwithstanding any provision herein to the contrary, each of
the Parties will (i) use reasonable efforts to comply as
expeditiously as possible with all lawful requests of
government entities for additional information and documents
pursuant to the HSR Act, (ii) not (A) extend any waiting
period under the HSR Act or (B) enter into any voluntary
agreement with any Governmental Entity not to consummate the
transactions contemplated by this Agreement, except with the
prior consent of the other Party, and (iii) cooperate with
each other and use reasonable efforts to obtain the requisite
approval of the FTC and Justice Department, including without
limitation (A) the execution, delivery and performance by the
appropriate entity of such divestiture agreements or other
actions, as the case may be, as may be reasonably necessary to
secure the expiration or termination of the applicable waiting
periods under the HSR Act, (B) the removal, dissolution, stay
or dismissal of any temporary restraining order, preliminary
injunction or other judicial or administrative order which
prevents the consummation of the transactions contemplated
hereby or requires as a condition thereto that all or any part
of the Business be held separate or (C) the pursuit of
necessary litigation or administrative proceedings (including,
if necessary, participation in proceedings through the trial
court level).
(d) Each Party will be responsible for paying its respective
filing fees required with respect to any filing under the HSR
Act.
36. Preservation of Records. For a period of seven (7) years after the
Closing Date, the Party in possession of the originals of the Records
will retain such Records and will make such Records available to the
other Party upon reasonable notice for inspection and/or copying, at
the expense of the requesting Party, at the headquarters of the Party
in possession (or at such other location in the United States as the
Party in possession may designate in writing to the other Party) at
reasonable times and during regular office hours. Neither Party shall
have any liability to the other Party for the inadvertent destruction
by mistake or oversight of any Records required to be preserved
pursuant to this Section. If Buyer, at any time, proposes to transfer
the Interests directly or indirectly, to a third party, then Buyer will
provide notice of such proposal to Seller and permit Seller a
reasonable opportunity to make copies of the Records.
39
37. Right of First Refusal. Buyer shall not sell, transfer, assign,
exchange, voluntarily surrender or otherwise dispose of the Val Verde
System or any part thereof to any Person, other than a Permitted
Transferee, except after strict compliance with the terms hereof (any
such disposition being herein referred to as a "Subject Transfer"). For
the purposes hereof, a Subject Transfer shall (i) include any sale or
transfer to any Person, whether by merger, business combination,
transfer of securities or otherwise or any sale or transfer of any
entity all or substantially all of whose assets consist of the Val
Verde System; and (ii) exclude any sale, transfer, assignment,
exchange, abandonment, surrender or other disposition in the ordinary
course of business of any real property, personal property, contracts,
well ties, equipment, materials and supplies not constituting a
material part of the Val Verde System. Any assignee of the Interests or
any part thereof (except for the exclusions specified above or as may
otherwise be agreed by Seller in writing) shall receive the Interests
subject to this continuing right of first refusal and shall be required
to enter into and deliver to Seller a letter acknowledging the
agreement of such assignee that the Interests will remain subject to
this right of first refusal following such assignment. In the event
that Buyer plans to pursue a Subject Transfer it will provide written
notice to Seller of such intentions at least 30 days prior to accepting
any Subject Transfer proposal. Furthermore, at least 10 days prior to
consummating a Subject Transfer, Buyer shall deliver to Seller a notice
(a "Transfer Notice") containing full information concerning the
Subject Transfer that it proposes to make, including the purchase price
and all other material terms on which Buyer proposes to make the
Subject Transfer. Seller shall have a period of ten days after receipt
of the Transfer Notice from Buyer to exercise its option to purchase on
the same terms and conditions. If Seller does not timely elect to
exercise its option to purchase on the terms and conditions set forth
in said Transfer Notice in accordance with the foregoing, then, Buyer
may make a Subject Transfer for the same or a higher purchase price
and, in all material respects, on the same or clearly better terms than
were specified in such Transfer Notice at any time within three months
(as may be extended by any delay in obtaining regulatory approvals but
not beyond an additional three months) after the expiration of Seller's
10-day option period, but any later sale or any sale for a different
purchase price or on different terms than permitted above must again be
offered to Seller in accordance with the above terms of this Section.
Copies of all agreements and other documentation evidencing any Subject
Transfer to any Person other than Seller must be furnished to Seller no
later than 15 Business Days after the date such Subject Transfer is
completed. A Permitted Transferee shall be Duke Energy Field Services,
LLC or its direct or indirect subsidiaries, Texas Eastern Products
Pipeline Company, LLC or its direct or indirect subsidiaries, and
TEPPCO Partners, L.P. or its direct or indirect subsidiaries.
38. Supplements to Disclosure Schedules. If, to Seller's knowledge, after
the date hereof and prior to Closing any event occurs or condition
changes that causes any of their representations or warranties in this
Agreement to be inaccurate, Seller will promptly notify Buyer thereof
in writing. Such supplement and disclosure shall not be deemed to be a
part of Seller's Disclosure Schedule for purposes of determining if the
conditions to Closing have been satisfied but shall be deemed to be
included in Seller Disclosure Schedule if Closing shall occur;
provided, however, that such supplement and disclosure shall not be
deemed to be a part of Seller's Disclosure Schedule if such event or
change (i) arises from a breach by Seller of any of its covenants under
this Agreement, (ii) has a material adverse effect on the Business or
the Interests, or (iii)
40
constitutes a matter which a reasonable and prudent similarly situated
pipeline operator would not have accepted had it known about the same
at the time of execution of this Agreement.
39. Buyer's Post-Closing Covenant. Buyer agrees that it shall not, and
shall not permit any of its Affiliates to conduct any invasive
environmental site assessments (other than for those areas or
conditions identified in Schedule O) for two years following the
Closing, the effect of which would reasonably be expected to impose any
additional material obligation on Seller under Schedule 14(e) to the
Seller Disclosure Schedule, unless conducting such site assessment
would be in the ordinary course of business of Buyer or its Affiliates
pursuant to Buyer's adopted operating policies applicable generally to
the Val Verde System and to other similar assets owned by Buyer or its
Affiliates as opposed to a policy directed primarily at the Val Verde
System or any part thereof or consistent with good industry practice.
40. Miscellaneous
(a) Capitalized terms as used in this Agreement shall have the
meanings prescribed in Annex A attached hereto and
incorporated by reference.
(b) This Agreement may be executed by Buyer and Seller in any
number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall
constitute one and the same instrument.
(c) Time is of the essence in this Agreement.
(d) Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived only by a
written instrument executed by the Party waiving compliance.
The failure of any Party at any time or times to require
performance of any provisions hereof shall in no manner affect
such Party's right to enforce the same. No waiver of any of
the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
(e) This instrument states the entire agreement and supersedes all
prior agreements (except the Confidentiality Agreement)
between the Parties concerning the subject matter hereof. This
Agreement may be supplemented, altered, amended, modified or
revoked by writing only, signed by both Parties.
(f) This Agreement and the rights and obligations of the Parties
hereto shall be governed, construed, and enforced in
accordance with the laws of the State of Texas, except as the
laws of any other jurisdiction mandatorily apply. The Parties
agree that any litigation relating directly or indirectly to
this Agreement must be brought before and determined by a
court of competent jurisdiction within ▇▇▇▇▇▇ County, Texas.
(g) This Agreement is not intended to confer upon any person not a
Party hereto any rights or remedies hereunder, and no person,
other than the Parties hereto, is
41
entitled to rely on any representation, covenant, or agreement
contained herein. The Seller Parties and the Buyer Parties are
not third party beneficiaries of this Agreement. Any claim on
behalf of a Seller Party for indemnification under this
Agreement can only be made and administered by Seller and any
claim on behalf of a Buyer Party for indemnification under
this Agreement can only be made and administered by Buyer.
(h) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any adverse manner to
any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced,
the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the extent possible.
(i) All the terms, provisions, covenants, representations, and
conditions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the Parties hereto and
their respective successors; provided, however, this Agreement
or any portion thereof and the rights and obligations
hereunder shall not be assignable or delegable by any Party,
without the express prior written consent of the non-assigning
or non-delegating Party; provided, however, Buyer may, without
consent, make any such assignment or delegation to any
Permitted Transferee. All assignments permitted or consented
to hereunder (i) shall be, and by their terms shall expressly
provide that they are, subject to the rights of the other
Party under this Agreement, (ii) shall require that the
assignee agree to be bound by and perform all obligations of
the assigning Party hereunder with respect to the interest so
assigned, and (iii) shall not release the assigning Party or
its predecessor Parties in interest under this Agreement from
their obligations under this Agreement.
(j) Should either Party default in the performance of this
Agreement, the other Party shall be entitled to enforce
specific performance of this Agreement, or exercise any other
right or remedy it may have at law or in equity by reason of
such default.
(k) The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. 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
42
period during which notice is required to be given or action
taken) shall be the next day which is a Business Day.
(l) Unless the context requires otherwise: (i) the gender (or lack
of gender) of all words used in this Agreement includes the
masculine and feminine; (ii) references to Articles and
Sections refer to Articles and Sections of this Agreement;
(iii) references to Attachments, Schedules or Exhibits refer
to the Attachments, Schedules and Exhibits attached to this
Agreement, each of which is made a part hereof for all
purposes; (iv) the word "including" and any derivatives
thereof means "including, without limitation," and (v) the
word "day" means any calendar day.
(m) IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO ANY OTHER
PARTY HERETO FOR ANY SPECIAL, PUNITIVE, CONSEQUENTIAL,
INCIDENTAL OR EXEMPLARY DAMAGES (IN TORT, CONTRACT OR
OTHERWISE) OF SUCH PARTY UNDER OR IN RESPECT OF THIS AGREEMENT
OR FOR ANY FAILURE OF PERFORMANCE RELATED HERETO HOWSOEVER
CAUSED, WHETHER OR NOT ARISING FROM SUCH PARTY'S SOLE, JOINT
OR CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE, WILLFUL
MISCONDUCT, OR BAD FAITH. This Section shall not prevent a
Party's indemnification obligations under this Agreement from
including consequential, special, incidental, exemplary or
punitive damages to the extent (i) the injuries or losses
resulting or giving rise to such damages are incurred or
suffered by a third party who is not an Affiliate of a Party
and (ii) such damages are recovered by a third party who is
not an Affiliate of a Party against a Person indemnified under
this Agreement.
(n) Each Party shall bear its respective costs and expenses
incurred in connection with the preparation, negotiation and
execution of this Agreement and the consummation of the
transactions contemplated herewith.
(o) The indemnification provisions of this Agreement shall be the
sole and exclusive remedy of each Party (including Seller
Parties and Buyer Parties) after the Closing (i) for any
breach of a Party's representations and warranties contained
in this Agreement or (ii) otherwise with respect to this
Agreement and the transactions contemplated hereby, excluding
the Transaction Agreements and the transactions contemplated
thereby.
(p) If, at any time following the Closing, Buyer determines that
any Person who might have entered into a confidentiality
agreement with Seller in connection with the sale of the Val
Verde System may be releasing or utilizing in the conduct of
its or its Affiliate's business confidential and proprietary
information pertaining to the Business in violation of such
confidentiality agreement, Buyer may notify Seller and Seller
will either assign the applicable confidentiality agreement to
Buyer or enforce Seller's right to require such Person to
maintain the confidentiality of such information under such
confidentiality agreement.
43
(q) Unless otherwise herein stated or provided in a Transaction
Agreement, each Transaction Agreement shall be an independent
and separate obligation of the parties thereto and the rights
and obligations of such parties under the Transaction
Agreements will not be subject to the provisions of this
Agreement, including the limitations in Sections 10 and 11
hereof.
44
EXECUTED as of the date first above mentioned.
SELLER
BURLINGTON RESOURCES GATHERING INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
------------------------------------
Title: Vice President
-----------------------------------
BUYER
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline
Company, LLC, its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Vice President
-----------------------------------
45
ANNEX A
DEFINITIONS AND TERMS
Capitalized terms used in the Agreement shall have the meanings
prescribed below or the meanings as prescribed in other parts of this Agreement
where such capitalized terms are defined:
"Adverse Title Effect" has the meaning specified in Section 20(c).
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such Person, by contract or
otherwise.
"Agreement" means this
Purchase and Sale Agreement, as the same may be
amended or supplemented from time to time.
"Baseline Policy" has the meaning specified in Section 14(a).
"Base Purchase Price" has the meaning specified in Section 2(b).
"Business" means the business of owning, operating and using, the Val
Verde System and the Interests.
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday on which banks in Houston, Texas are authorized or obligated by law to
close.
"Buyer" has the meaning specified in the introductory paragraph of this
Agreement.
"Buyer Indemnitees" has the meaning specified in Section 10(c).
"Buyer Parties" has the meaning specified in Section 10(a).
"Buyer's knowledge" and "known to Buyer" have the meaning specified in
Section 8.
"Casualty Loss" has the meaning specified in Section 19(a).
"Cathodic Protection Agreement" has the meaning specified in Section
22(q).
"Civil Fines and Penalties" means civil fines and penalties asserted or
imposed against Seller Parties or Buyer Parties by any Governmental Entity which
relate to or are attributable to any Environmental Defect.
"Claims" shall mean any and all claims, losses, damages, costs,
expenses, fines, suits, causes of action or judgments of any kind or character
or requirements, obligations or directives
A-1
embodied in any Environmental Laws that mandate and require prompt remedial
action at the present time, with respect to any and all liabilities and
obligations or alleged or threatened liabilities and obligations, including, but
not limited to, any interest, penalty, and any attorneys' fees and other costs
and expenses incurred in connection with investigating or defending any claims
or actions, whether or not resulting in any liability.
"Closing" means the closing of the transactions provided for in this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Colorado Segment Assets" has the meaning specified in Section 1(a).
"Confidentiality Agreement" means the Confidentiality Agreement, dated
March 1, 2002, between Seller and Duke Energy Field Services, LLC.
"Cost Effective Remedy" means the most cost effective remedy available
that meets the requirements of applicable Environmental Law and is consistent
with reasonable operating practices of a prudent pipeline operator similarly
situated.
"Criminal Fines and Penalties" means criminal fines and penalties
asserted and imposed against Seller Parties or Buyer Parties by any Governmental
Entity which relate to or are attributable to any Environmental Defect.
"current tax period" has the meaning specified in Section 24.
"Defensible Title" has the meaning specified in Section 4(a)(i).
"Effective Time" has the meaning specified in Section 2(a).
"Employee Benefit Plan" shall mean (1) any employee welfare benefit
plan or employee pension benefit plan as defined in sections 3(1) and 3(2) of
ERISA, including, but not limited to, a plan that provides retirement income or
results in deferrals of income by employees for periods extending to their
terminations of employment or beyond, and a plan that provides medical, surgical
or hospital care benefits or benefits in the event of sickness, accident,
disability, death or unemployment and (2) any other material employee benefit
agreement or arrangement that is not an ERISA plan, including without
limitation, any deferred compensation plan, incentive plan, bonus plan or
arrangement, stock option plan, stock purchase plan, stock award plan, golden
parachute agreement, severance pay plan, dependent care plan, cafeteria plan,
employee assistance program, scholarship program, retention incentive agreement,
vacation policy, or other similar plan or agreement or arrangement that is
maintained by Seller for the benefit of its current or former employees or
directors or their beneficiaries, or with respect to which Seller may have any
liability.
"Employee Matters Agreement" has the meaning specified in Section
22(i).
A-2
"Environmental Corrective Costs" has the meaning specified in Section
13(c).
"Environmental Deductible" has the meaning specified in Section 13(f).
"Environmental Defect" has the meaning specified in Section 13(a)(i).
"Environmental Insurance" has the meaning specified in Section 14(b).
"Environmental Law" has the meaning specified in Section 13(a)(ii).
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative, or monitoring costs and any other
related costs and expenses), other causes of action, damages, settlements,
expenses, charges, assessments, liens, penalties, fines, pre-judgment and
post-judgment interest, attorneys' fees and other legal fees (a) pursuant to any
agreement, order, notice, or responsibility, directive (including directives
embodied in Environmental Laws) that mandate and require prompt remedial action
at the present time, injunction, judgment, or similar documents (including
settlements), arising out of or in connection with any Environmental Laws, or
(b) pursuant to any claim by a Governmental Entity or other person for personal
injury or property damage to the extent arising out of any release of Hazardous
Materials, damage to natural resources, remediation, or payment or reimbursement
of response costs incurred or expended by the Governmental Entity or person
pursuant to common law or statute.
"Environmental Material Adverse Effect" has the meaning specified in
Section 7(w).
"Environmental Threshold" has the meaning specified in Section 13(e).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean an entity that is required to be treated
as a single employer together with Seller for certain employee benefit plan
purposes under section 414 of the Code.
"Existing Environmental Condition" has the meaning specified in Section
13(a)(iii).
"Excluded Assets" has the meaning specified in Section 1.
"FTC" has the meaning specified in Section 35(b).
"GAAP" means the United States generally accepted accounting
principles.
"Gas Gathering and Treating Agreement" has the meaning specified in
Section 22(a).
"Gathering System" has the meaning specified in Section 1(a).
"Governmental Entity" shall mean any federal, state or local
governmental entity, agency or authority.
"Hazardous Materials" has the meaning specified in Section 13(a)(iv).
▇-▇
"▇▇▇ ▇▇▇" means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Imbalance" has the meaning specified in Section 9.
"Interests" has the meaning specified in Section 1.
"Joint Use and Occupancy Agreement" has the meaning specified in
Section 1(b).
"Joint Use ROW Agreements" has the meaning specified in Section 1(b).
"Lien" means mortgages, deeds of trust, liens, pledges, security
interests, leases, claims, options, charges, liabilities, obligations,
agreements, privileges, liberties, restrictions and other encumbrances of any
kind.
"Material Contracts" has the meaning specified in Section 7(p).
"Party" or "Parties" has the meaning specified in the introductory
paragraph of this Agreement.
"Permitted Encumbrances" has the meaning specified in Section 4(a)(ii).
"Permitted Transferee" has the meaning specified in Section 37.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or other entity or organization,
including a Governmental Entity.
"Personal Injury and Property Damage Claims" means Claims incurred or
imposed as a result of a Third Party Claim or a claim by a Seller Party for (a)
any personal injury, death or damage to person or property of a Third Party or a
Seller Party (not including claims arising out of environmental matters
including releases, discharges or migration of Hazardous Materials which are
addressed exclusively in Sections 10, 13 and 14 of this Agreement) occurring
prior to the Closing to the extent arising out of or attributable to the
operation or use of the Interests or conduct of the Business by Seller or any of
its Affiliates prior to the Closing, it being agreed that such injuries and
damages, which are of a continuous or ongoing nature and extend over the Closing
shall be apportioned on the basis of the respective portions of the injury or
damage suffered before or after the Closing, with Pre-Closing Liabilities
including only that portion of the injury or damage suffered or the liability
accrued before the Closing; provided, however, that Pre-Closing Liabilities
shall not in any event include (i) any Claim for any injury, death or damage to
person or property of any Person, presently or hereafter employed in the
operation of the Interests which arises out of and is attributable to such
person's employment in the operation of the Interests after the Closing, (ii)
any loss or lack of, or defect in, or encumbrance against title to any Interest,
(iii) any Claim resulting from Buyer's access to and inspection of the Interests
prior to the Closing and (iv) any other Claim to the extent it arises from the
actions of Buyer or its Affiliates.
"Pipeline" has the meaning specified in Section 14(g).
A-4
"Plant Facility" has the meaning specified in Section 1(a)(i).
"Plant Site" means the 79 acre tract included in the Real Property and
on which the Plant Facility is located.
"Post-Closing Consents" has the meaning specified in Section 20(a).
"Pre-Closing Environmental Defect" means an Environmental Defect for
which Buyer provides timely and proper notice to Seller prior to the Closing
pursuant to Article 13.
"Punitive Damage Claims" means Claims by a Third Party or a Seller
Party for punitive, exemplary or multiplied damages arising out of or resulting
from any Seller Party's operation or use of the Interests or conduct of the
Business prior to the Effective Time.
"Qualified Environmental Claim" has the meaning specified in Section
13(e).
"Qualified Title Defect Claims" has the meaning specified in Section
4(c)(iv).
"Real Property" has the meaning specified in Section 1(a)(ii).
"Records" has the meaning specified in Section 12(a).
"Required Consent" has the meaning specified in Section 20(b).
"ROW Agreements" has the meaning specified in Section 1(a)(ix).
"ROW Property" has the meaning specified in Section 1(b)(i).
"Scheduled Disposal Sites" has the meaning specified in Section
7(w)(vi).
"Seller" has the meaning specified in the introductory paragraph of
this Agreement.
"Seller Disclosure Memorandum" means the disclosure memorandum
delivered by Seller to Purchaser upon execution of this Agreement containing the
disclosures contemplated by this Agreement, as the same may be amended pursuant
to the terms of this Agreement.
"Seller Disclosure Schedule" has the meaning specified in the preamble
of this Agreement.
"Seller Parties" has the meaning specified in Section 11(b).
"Seller's Current Knowledge" has the meaning specified in Section 7(w).
"Seller's knowledge" and "known to Seller" have the meaning specified
in Section 7.
"Stations" has the meaning specified in Section 1(a)(vi).
"Subject Transfer" has the meaning specified in Section 37.
A-5
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any
and all taxes, including without limitation, any income, profits, alternative or
add-on minimum tax, gross receipts, sales, use, value-added, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, net worth, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Entity
responsible for the imposition of any such tax (domestic or foreign).
"Title Defect" has the meaning specified in Section 4(b).
"Third Party" means a Person which is not (i) Seller or an Affiliate of
Seller, (ii) Buyer or an Affiliate of Buyer, or (iii) a Person that, after the
Closing, becomes a successor entity of Seller, Buyer, or any of their respective
Affiliates. An employee of Seller or Buyer shall not be deemed an Affiliate
thereof.
"Third-Party Claim" means (i) any written claim asserted against any
Seller Parties or Buyer Parties by a Third Party, (ii) any written assertion by
a Third Party of any right of a Third Party against any Seller Parties or Buyer
Parties, or (iii) any written allegation, claim or assertion by a Third Party of
claims of, or amounts payable by any Seller Parties or Buyer Parties to, a Third
Party arising out of clauses (i) or (ii).
"Transaction Agreements" means the Gas Gathering and Treating
Agreement, the Transition Services Agreement, the assignments and conveyances,
the Joint Use and Occupancy Agreement, the Guaranty of Burlington Resources Oil
& Gas Company LP, the Employee Matters Agreement, the Water Disposal Agreement,
the Volume Deficiency Agreement, the Put Agreement, the Cathodic Protection
Agreement and any other agreements executed and delivered by either Party (or
their respective Affiliates) to the other pursuant to this Agreement.
"Transfer Notice" has the meaning specified in Section 37.
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
"Unscheduled Offsite Disposal Site Claims" means any claim against
Seller or Buyer Parties arising out of any Pre-Closing storage or disposal by
Seller or its Affiliates of Hazardous Materials arising out of the Business at
offsite disposal sites other than those listed on Schedule 7(w)(vi) to the
Seller Disclosure Schedule.
"Val Verde System" has the meaning specified in the preamble of this
Agreement.
"Water Disposal Agreement" has the meaning specified in Section 22(o).
A-6