EXECUTION COPY
Exhibit 2.4
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PURCHASE AND SALE AGREEMENT
(GAS PLANTS)
By and Between
EL PASO CORPORATION
(Seller Parent)
and
EL PASO FIELD SERVICES MANAGEMENT, INC.
EL PASO TRANSMISSION, L.L.C.,
EL PASO FIELD SERVICES HOLDING COMPANY
(Seller)
and
ENTERPRISE PRODUCTS OPERATING L.P.
(Buyer)
Covering the Acquisition of
THE FOLLOWING EQUITY INTERESTS IN
(Acquired Company Equity Interests)
100% of El Paso Hydrocarbons, L.P.
100% of El Paso NGL Marketing Company, L.P.
(the Acquired Companies)
December 15, 2003
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TABLE OF CONTENTS
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1. Definitions..............................................................................................2
2. The Transaction.........................................................................................10
(a) Sale of Acquired Company Equity Interests......................................................10
(b) Consideration..................................................................................10
(c) The Closing....................................................................................10
(d) Deliveries at the Closing......................................................................10
(e) Proposed Closing Statement and Post-Closing Adjustment.........................................12
3. Representations and Warranties Concerning the Transaction...............................................14
(a) Representations and Warranties of the Seller...................................................14
(b) Representations and Warranties of the Buyer....................................................15
4. Representations and Warranties Concerning the Acquired Company Equity Interests, Acquired Companies and
Acquired Company Assets.................................................................................16
(a) Organization, Qualification, and Company Power.................................................16
(b) Noncontravention...............................................................................16
(c) Title to and Condition of Acquired Company Assets..............................................17
(d) Material Change................................................................................18
(e) Legal Compliance...............................................................................19
(f) Tax Matters....................................................................................19
(g) Contracts and Commitments......................................................................19
(h) Litigation.....................................................................................20
(i) Environmental Matters..........................................................................20
(j) Preferential Purchase Rights...................................................................21
(k) Financial Information..........................................................................21
(l) Employee Matters...............................................................................22
(m) Prohibited Events..............................................................................22
(n) Regulatory Matters.............................................................................22
(o) Disclaimer of Representations and Warranties Concerning Personal Property, Equipment, and
Fixtures.......................................................................................22
5. Pre-Closing Covenants...................................................................................22
(a) General........................................................................................22
(b) Notices and Consents...........................................................................23
(c) Operation of Business..........................................................................23
(d) Intentionally Omitted..........................................................................24
(e) Full Access....................................................................................24
(f) Liens and Encumbrance..........................................................................24
(g) HSR Act........................................................................................24
(h) Notice of Developments.........................................................................25
(i) Various Agreements.............................................................................25
(j) 2004 Maintenance...............................................................................25
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6. Post-Closing Covenants..................................................................................26
(a) General........................................................................................26
(b) Litigation Support.............................................................................26
(c) Surety Bonds; Guarantees.......................................................................26
(d) Delivery and Retention of Records..............................................................27
7. Conditions to Obligation to Close.......................................................................27
(a) Conditions to Obligation of the Buyer..........................................................27
(b) Conditions to Obligation of the Seller.........................................................28
(c) Effect of Supplements to Schedules.............................................................29
8. Remedies for Breaches of this Agreement.................................................................29
(a) Survival of Representations and Warranties.....................................................29
(b) Indemnification Provisions for Benefit of the Buyer............................................29
(c) Indemnification Provisions for Benefit of the Seller...........................................32
(d) Matters Involving Third Parties................................................................32
(e) Determination of Amount of Adverse Consequences................................................33
(f) Tax Treatment of Indemnity Payments............................................................33
9. Tax Matters.............................................................................................33
(a) Post-Closing Tax Returns.......................................................................33
(b) Pre-Closing Tax Returns........................................................................34
(c) Straddle Periods...............................................................................34
(d) Straddle Returns...............................................................................34
(e) Claims for Refund..............................................................................35
(f) Indemnification................................................................................35
(g) Cooperation on Tax Matters.....................................................................35
(h) Certain Taxes..................................................................................35
(i) Confidentiality................................................................................36
(j) Audits.........................................................................................36
(k) Control of Proceedings.........................................................................36
(l) Powers of Attorney.............................................................................36
(m) Remittance of Refunds..........................................................................37
(n) Purchase Price Allocation......................................................................37
(o) Closing Tax Certificate........................................................................37
(p) Like Kind Exchanges............................................................................37
10. Termination.............................................................................................38
(a) Termination of Agreement.......................................................................38
(b) Effect of Termination..........................................................................39
11. Miscellaneous...........................................................................................39
(a) Public Announcements...........................................................................39
(b) Insurance......................................................................................39
(c) No Third Party Beneficiaries...................................................................39
(d) Succession and Assignment......................................................................39
(e) Counterparts...................................................................................40
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(f) Headings.......................................................................................40
(g) Notices........................................................................................40
(h) Governing Law..................................................................................41
(i) Amendments and Waivers.........................................................................41
(j) Severability...................................................................................41
(k) Transaction Expenses...........................................................................41
(l) Construction...................................................................................42
(m) Incorporation of Exhibits and Schedules........................................................42
(n) Entire Agreement...............................................................................42
(o) Transition Services and Miscellaneous Assets...................................................42
(p) Conversion.....................................................................................43
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Exhibits and Schedules
Exhibit A Acquired Company Assets
Exhibit B Acquired Company Equity Interests Assignment
Exhibit C Retained Items
Exhibit D Closing Tax Certificate
Schedule 1(a) Knowledge Individuals
Schedule 1(b) Permitted Encumbrances
Schedule 3(a)(ii) Consents (Seller Parties)
Schedule 3(a)(iii) Noncontravention (Seller Parties)
Schedule 3(b)(ii) Consents (Buyer)
Schedule 3(b)(iii) Noncontravention (Buyer)
Schedule 4(b) Noncontravention (Acquired Companies)
Schedule 4(c)(ii) Condition of Acquired Company Assets
Schedule 4(d) Material Changes
Schedule 4(f) Tax Matters
Schedule 4(g)(i) Subject Contracts
Schedule 4(h) Litigation
Schedule 4(i) Environmental Matters
Schedule 4(j) Preferential Purchase Rights
Schedule 4(k)(i) Financial Information
Schedule 4(n) Regulatory Matters
Schedule 5(i)(i) Other Agreements
Schedule 5(j)(i) 2004 Revised Maintenance Budget
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PURCHASE AND SALE AGREEMENT
(GAS PLANTS)
THIS PURCHASE AND SALE AGREEMENT (Gas Plants) (this "AGREEMENT"), dated as
of December 15, 2003, is by and between El Paso Corporation, a Delaware
corporation (the "SELLER PARENT"), El Paso Field Services Management, Inc., a
Delaware corporation, El Paso Transmission, L.L.C., a Delaware limited liability
company, El Paso Field Services Holding Company, a Delaware corporation
(individually and collectively, the "SELLER") and Enterprise Products Operating
L.P., a Delaware limited partnership (the "BUYER"). The Seller Parent, the
Seller and the Buyer are sometimes referred to collectively herein as the
"PARTIES" and individually as a "PARTY."
INTRODUCTION
1. The Acquired Companies own all of the interest in the assets/facilities
described on Exhibit A, which assets/facilities consist of various natural gas
processing plants, a treating plant, a gathering system, and related assets and
rights.
2. The Seller owns all of the beneficial interests in the assets
referenced in item 1 above through the Seller's ownership of the following
equity interests:
Partnership
Partnership Percentage
Acquired Companies GP Interest LP Interest
------------------ -- -------- -- --------
El Paso Hydrocarbons, L.P. El Paso Field 1.00% El Paso Transmission, 90.00%
Services Management, L.L.C.
Inc. El Paso Field Services 9.00%
Holding Company
El Paso NGL Marketing El Paso Field 1.00% El Paso Transmission, 99.00%
Company, L.P. Services Management, L.L.C.
Inc.
3. Subject to the terms and conditions set forth in this Agreement, the
Seller will sell to the Buyer, and the Buyer will purchase and
acquire from the Seller, the Seller's beneficial interest in such
assets/facilities in a transaction pursuant to which:
- the Seller would transfer record and beneficial ownership of
such equity interests to the Buyer (or its designee); and
- the Buyer would pay to the Seller the consideration described
in this Agreement.
In consideration of the premises and the mutual promises herein made, and
in consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows:
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AGREEMENT
1. Definitions.
"ACQUIRED COMPANIES" means El Paso Hydrocarbons, L.P. and El Paso
NGL Marketing Company, L.P., each a Delaware limited partnership.
"ACQUIRED COMPANY ASSETS" means all assets and rights owned by each
of the Acquired Companies, with the material real property interests, gas
plants, pipeline gathering systems and tangible personal property comprising
such assets being generally described on Exhibit A.
"ACQUIRED COMPANY EQUITY INTERESTS" means the Hydrocarbons GP
Interest, the Hydrocarbons LP Interest, the Marketing GP Interest and the
Marketing LP Interest, all of which are being acquired by the Buyer pursuant to
this Agreement through the Acquired Company Equity Interests Assignment.
"ACQUIRED COMPANY EQUITY INTERESTS ASSIGNMENT" means the assignment
of equity interests in the form of Exhibit B.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses, but
excluding punitive (except as provided in Section 8), exemplary, special or
consequential damages.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act; provided, however,
that the Acquired Companies shall be deemed to be Affiliates (i) prior to the
Closing, of the Seller and the Seller Parent and (ii) on and after the Closing,
of the Buyer.
"AGREEMENT" has the meaning set forth in the preface.
"BEST EFFORTS" means the efforts, time, and costs that a prudent
Person desirous of achieving a result would use, expend, or incur in similar
circumstances to ensure that such result is achieved as expeditiously as
possible; provided, however, that no such use, expenditure, or incurrence shall
be required if it could reasonably be expected to have an adverse effect on such
Person and would require an expense of such Person in excess of $250,000.
"BUYER" has the meaning set forth in the preface.
"BUYER GP" means Enterprise Products OLPGP, Inc. , a Delaware
corporation and the general partner of the Buyer.
"BUYER INDEMNITEES" means, collectively, the Buyer and its
Affiliates and each of their respective officers (or natural persons performing
similar functions),
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directors (or natural persons performing similar functions), employees, agents
and representatives to the extent acting in such capacity.
"BUYER PARTY" means each of (i) the Buyer, (ii) each Affiliate of
the Buyer (other than, prior to Closing, the Acquired Companies) in which the
Buyer owns (directly or indirectly) an Equity Interest and which is a party to
any Transaction Agreement and (iii) immediately after the Closing, each of the
Acquired Companies.
"CLOSING" has the meaning set forth in Section 2(c).
"CLOSING DATE" has the meaning set forth in Section 2(c).
"CLOSING STATEMENT" has the meaning set forth in Section 2(e)(i).
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor Law.
"COMMITMENT" means (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange rights
or other contracts that could require a Person to issue any of its Equity
Interests or to sell any Equity Interest it owns in another Person; (b) any
other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person's Organizational Documents; and (d) stock appreciation rights,
phantom stock, profit participation, or other similar rights with respect to a
Person.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in the Merger
Agreement.
"DELAWARE LLC ACT" means the Delaware Limited Liability Company Act
as in effect on the date of this Agreement and as amended, restated or replaced
from time to time thereafter.
"DELAWARE LP ACT" means the Delaware Revised Uniform Limited
Partnership Act as in effect on the date of this Agreement and as amended,
restated or replaced from time to time thereafter.
"EFFECTIVE TIME" means the point in time immediately following the
last day of the calendar month immediately preceding the calendar month in which
the Closing occurs.
"ENCUMBRANCE" means any mortgage, pledge, lien, encumbrance, charge,
security interest, purchase or preferential right, right of first refusal,
option or other defect in title.
"ENVIRONMENTAL LAW" and "ENVIRONMENTAL LAWS" means any and all
applicable laws, statutes, regulations, rules, orders, ordinances, and legally
enforceable directives of and agreements between a person that is subject to the
applicable
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representation and any Governmental Authority and rules of common law pertaining
to protection of human health (to the extent arising from exposure to Hazardous
Substances) or the environment (including any generation, use, storage,
treatment, or Release of Hazardous Substances into the environment) including
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq., the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq., the Atomic Energy Act, 42 U.S.C. Section 2014 et seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et
seq., and the Federal Hazardous Materials Transportation Law, 49 U.S.C. Section
5101 et seq., as each has been amended from time to time, and all other
environmental conservation and protection laws.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section 4(i).
"EQUITY INTEREST" means (a) with respect to a corporation, any and
all shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership, limited liability company,
trust or similar interests, and any Commitments with respect thereto, and (c)
any other direct equity ownership or participation in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE AGREEMENT" has the meaning set forth in Section 9(p).
"FIELD SERVICES" means El Paso Field Services Management, Inc., a
Delaware corporation.
"FINANCIAL INFORMATION" has the meaning set forth in Section
4(k)(i).
"FUNDAMENTAL REPRESENTATIONS" means those representations and
warranties contained in Sections 3(a)(i) (Organization and Good Standing),
3(a)(ii) (Authorization of Transaction), 3(a)(iii)(A) (Noncontravention),
3(b)(i) (Organization of the Buyer), 3(b)(ii) (Authorization of Transaction),
3(b)(iii)(A) (Noncontravention) and 4(c)(iii) (Capitalization of Acquired
Companies).
"GAAP" means accounting principles generally accepted in the United
States consistently applied.
"GOVERNMENTAL AUTHORITY" means the United States or any agency
thereof and any state, county, city or other political subdivision, agency,
court or instrumentality.
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"HAZARDOUS SUBSTANCES" means any (i) chemical, product, substance,
waste, material, pollutant, or contaminant that is defined or listed as
hazardous or toxic or that is otherwise regulated under any Environmental Law;
(ii) asbestos containing materials, whether in a friable or non-friable
condition, polychlorinated biphenyls, naturally occurring radioactive materials
or radon; and (iii) any oil or gas exploration or production waste or any
petroleum, petroleum hydrocarbons, petroleum products, crude oil and natural gas
and any components, fractions, or derivatives thereof.
"HOLDING" means El Paso Field Services Holding Company, a Delaware
corporation.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the regulations thereunder.
"HYDROCARBONS" means El Paso Hydrocarbons, L.P., a Delaware limited
partnership.
"HYDROCARBONS GP INTEREST" means the entire general partnership
interest in Hydrocarbons which has a percentage interest in Hydrocarbons equal
to 1.00%.
"HYDROCARBONS LP INTEREST" means the entire limited partnership
interest in Hydrocarbons which has a percentage interest in Hydrocarbons equal
to 99.00%.
"INDEBTEDNESS" means, with respect to any Person, on a consolidated
basis, all Obligations of the Person to other Persons (including Affiliates) for
(a) borrowed money, (b) any capital lease Obligation, (c) any Obligation
(whether fixed or contingent) to reimburse any bank or other Person in respect
of amounts paid or payable under a standby letter of credit, and (d) any
guarantee with respect to indebtedness (of the kind otherwise described in this
definition) of any Person.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d).
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(d).
"INTERIM PERIOD" has the meaning set forth in Section 5(j).
"INVENTORY" means, collectively, the volume of natural gas, natural
gas liquids, and condensate that are owned by the Acquired Companies as of the
Effective Time, whether held in storage facilities, as pipeline linefill or as
fractionator retainage.
"KNOWLEDGE" means as to each individual listed on Schedule 1(a) as
follows: such individual shall be deemed to have "Knowledge" of a particular
fact or other matter if such individual is consciously aware of such fact or
other matter at the time of determination; and in the case of ▇▇▇▇ ▇. ▇▇▇▇▇▇
only, after due inquiry by ▇▇▇▇ ▇. ▇▇▇▇▇▇.
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"LAW" or "LAWS" means any statute, code, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
applicable Governmental Authority.
"LEGAL RIGHT" means the legal authority and right (without risk of
liability, criminal, civil or otherwise), such that the contemplated conduct
would not constitute a violation, termination or breach of, or require any
payment under, or cause or permit any termination under, any contract or
agreement; arrangement; or applicable Law.
"MAINTENANCE CAPITAL COSTS" has the meaning set forth in Section
5(j).
"MAINTENANCE COMPARISON AMOUNT" has the meaning set forth in Section
5(j).
"MAINTENANCE EXCESS" has the meaning set forth in Section 5(j).
"MAINTENANCE SHORTFALL" has the meaning set forth in Section 5(j).
"MARKETING" means El Paso NGL Marketing Company, L.P., a Delaware
limited partnership.
"MARKETING GP INTEREST" means the entire general partnership
interest in Marketing which has a percentage interest in Marketing equal to
1.00%.
"MARKETING LP INTEREST" means the entire limited partnership
interests in Marketing which has a combined percentage interest in Marketing
equal to 99.00%
"MATERIAL ADVERSE EFFECT" means any change, effect, event or
occurrence with respect to the condition (financial or otherwise), properties,
assets, earnings, Obligations, businesses, operations or results of operations
of the Acquired Companies that is, or could be reasonably expected to be,
material and adverse to the Acquired Companies taken as a whole, provided that
in determining whether a Material Adverse Effect has occurred, changes or
effects relating to (i) the natural gas pipeline, treating and processing
industry generally (including the price of natural gas and the costs associated
with the drilling and/or production of natural gas), (ii) United States or
global economic conditions or financial markets in general, or (iii) the
transactions contemplated by this Agreement, shall not be considered.
"MERGER AGREEMENT" means that certain Merger Agreement, dated as of
December 15, 2003, by and among Enterprise Products Partners L.P., Enterprise
Products GP, LLC, Enterprise Products Management LLC, GulfTerra Energy Partners,
L.P. and GulfTerra Energy Company, L.L.C.
"MERGER CLOSING" means the consummation of the transactions
contemplated by the Merger Agreement, as evidenced by the execution and filing
with the Office of the Secretary of the State of Delaware of the Articles of
Merger referenced in such Merger Agreement.
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"MISCELLANEOUS ASSETS" has the meaning set forth in Section
11(o)(ii).
"OBLIGATIONS" means duties, liabilities and obligations, whether
vested, absolute or contingent, asserted or unasserted, accrued or unaccrued,
liquidated or unliquidated, due or to become due, and whether contractual,
statutory or otherwise.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with the applicable Person's past custom and practice (including with
respect to quantity and frequency).
"ORGANIZATIONAL DOCUMENTS" means the articles of incorporation,
certificate of incorporation, charter, bylaws, articles or certificate of
formation, regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any amendments thereto.
"PARENT COMPANY AGREEMENT" means the Parent Company Agreement dated
December 15, 2003, by and among the Seller Parent, Enterprise Products Partners
L.P. and various other parties.
"PARTY" and "PARTIES" have the meanings set forth in the preface.
"PERMITTED ENCUMBRANCES" means any of the following: (i) any liens
for Taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith in the Ordinary Course of Business, provided that
adequate reserve accounts have been established in accordance with GAAP; (ii)
inchoate, mechanic's, materialmen's, and similar liens; provided that such liens
were incurred either (a) in the Ordinary Course of Business, (b) for which
adequate reserve accounts have been established in accordance with GAAP or (c)
the amounts that are secured by such liens as of the Effective Time are included
in the Working Capital calculation; (iii) any inchoate liens or other
Encumbrances created pursuant to any operating, farmout, construction, operation
and maintenance, co-owners, cotenancy, lease or similar agreements listed on
Schedule 1(b) for which amounts are not due; and (iv) easements, rights-of-way,
restrictions and other similar Encumbrances incurred in the Ordinary Course of
Business which, in the aggregate, are not substantial in amount and which do not
in any case materially detract from the value of the property subject thereto as
it is currently being used or materially interfere with the ordinary conduct of
the business.
"PERSON" means an individual or entity, including any partnership,
corporation, association, joint stock company, trust, joint venture, limited
liability company, unincorporated organization, or Governmental Authority (or
any department, agency or political subdivision thereof).
"POST-CLOSING TAX PERIOD" means any Tax period beginning after the
Effective Time.
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"POST-CLOSING TAX RETURN" means any Tax Return that is required to
be filed for any of the Acquired Companies, the Seller or any of its Affiliates
with respect to a Post-Closing Tax Period.
"PRE-CLOSING OBLIGATIONS" mean (other than Obligations for which the
Buyer Indemnitees are entitled to be indemnified under Sections 8(b)(iii)-(iv))
all Obligations associated with, arising out of, or related to the ownership or
operation of the Acquired Company Assets and attributable to the period ending
immediately prior to Closing, but excluding Obligations attributable to the
period commencing on or after the Effective Time. The provisions of the
preceding sentence shall not constitute any amendment or modification of Section
8 other than Section 8(b)(v).
"PRE-CLOSING TAX PERIOD" means any Tax periods or portions thereof
ending on or before the Effective Time.
"PRE-CLOSING TAX RETURN" means any Tax Return that is required to be
filed for any Acquired Companies, the Seller or any of its Affiliates with
respect to a Pre-Closing Tax Period.
"PREFERENTIAL RIGHTS" has the meaning set forth in Section 4(j).
"PRIME RATE" means the prime rate reported in The Wall Street
Journal at the time such rate must be determined under the terms of this
Agreement.
"PROPOSED CLOSING STATEMENT" has the meaning set forth in Section
2(e)(i).
"PURCHASE PRICE" means $150 million plus (i) the amount, if any, by
which the total of the Purchase Price Increases exceeds the total of the
Purchase Price Decreases, or minus (ii) the amount, if any, by which the total
of the Purchase Price Decreases exceeds the total of the Purchase Price
Increases.
"PURCHASE PRICE DECREASES" means, without duplication, (i) 100% of
all cash distributions made by the Acquired Companies after the Effective Time
(exclusive of cash distributions pertaining to Retained Items) and (ii) the
amount of the Maintenance Shortfall (if any).
"PURCHASE PRICE INCREASES" means, without duplication, the
following: (i) the interest on the Purchase Price from and including the
Effective Time to, but excluding, the Closing Date at a rate per annum equal to
the Prime Rate plus two percent, calculated on the basis of a year of 365 days,
(ii) 100% of all cash contributions made by Seller to the Acquired Companies
after the Effective Time (exclusive of cash contributions used to pay any
Retained Obligations or Indebtedness), (iii) the amount of the Maintenance
Excess (if any), and (iv) the value of all Inventory owned by the Acquired
Companies as of the Effective Time, as such value is determined in accordance
with Section 2(e)(vi).
"RECORDS" has the meaning set forth in Section 6(d).
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"RELEASE" means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing.
"RETAINED ITEMS" means the Working Capital (exclusive of Inventory),
agreements and other items described on Exhibit C.
"RETAINED OBLIGATIONS" means all Obligations, regardless of when
such Obligations actually arise or arose, associated with, arising out of, or
related to the ownership, operation or existence of the Retained Items.
"RIGHTS OF WAY" means any and all rights-of-way, easements, surface
leases, fee properties, permits, licenses, franchises or other rights of
ingress, egress and use of land associated with, arising out of, or related to
the ownership or operation of the Acquired Company Assets.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended from time to time.
"SELLER" has the meaning set forth in the preface.
"SELLER'S DISCLOSURE SCHEDULES" is defined in Section 5(h).
"SELLER INDEMNITEES" means, collectively, the Seller and its
Affiliates and each of their respective officers (or Persons performing similar
functions), directors (or Persons performing similar functions), employees,
agents, and representatives.
"SELLER PARENT" has the meaning set forth in the preface.
"SELLER PARTY" means each of (i) the Seller, (ii) the Seller Parent,
(iii) each Affiliate of the Seller (other than, after the Closing, the Acquired
Companies) in which the Seller owns (directly or indirectly) an Equity Interest
and which is a party to any Transaction Agreement and (iv) up to and through the
Closing, each of the Acquired Companies.
"STRADDLE PERIOD" means a Tax period or year commencing before and
ending after the Effective Time.
"STRADDLE RETURN" means a Tax Return for a Straddle Period.
"SUBJECT CONTRACTS" has the meaning set forth in Section 4(g).
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), custom duties,
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capital stock, franchise, profits, withholding, social security (or similar
excises), unemployment, disability, ad valorem, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"TAX RECORDS" means all Tax Returns and Tax-related work papers
relating to any Acquired Company Asset.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(d).
"TRANSACTION AGREEMENTS" means this Agreement, the Acquired Company
Equity Interests Assignments, the Exchange Agreement (if applicable), and all
other agreements, documents, certificates or instruments executed and delivered
in connection with the transactions contemplated herein.
"TRANSMISSION" means El Paso Transmission, L.L.C., a Delaware
limited liability company.
"WORKING CAPITAL" means current assets and current liabilities as of
the Effective Time as determined in accordance with GAAP.
2. The Transaction.
(a) Sale of Acquired Company Equity Interests. Subject to the terms and
conditions of this Agreement, the Seller agrees to sell to the Buyer (or its
designee(s)) the Acquired Company Equity Interests, free and clear of any
Encumbrances, and the Buyer agrees (or agrees to cause its designee(s)) to
purchase the Acquired Company Equity Interests.
(b) Consideration. In consideration for the assignment of the Acquired
Company Equity Interests, the Buyer agrees to pay the Seller the Purchase Price
in cash by wire transfer of immediately available federal funds.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of the Seller,
commencing at 10:00 a.m., local time, on the earlier to occur of (i) the date of
the Merger Closing or (ii) such other date as the Parties may mutually determine
(the "CLOSING DATE").
(d) Deliveries at the Closing. At the Closing,
(i) the Seller shall deliver to the Buyer the various certificates,
instruments, and documents referred to in Sections 7(a) and 9(o);
10
(ii) the Buyer shall deliver to the Seller the various certificates,
instruments, and documents referred to in Section 7(b);
(iii) the Seller shall execute and deliver the Acquired Company
Equity Interests Assignment covering the Acquired Company Equity Interests;
(iv) the Seller shall deliver to the Buyer an assignment in a form
reasonably acceptable to the Buyer, duly executed by all parties thereto,
whereby all of the Retained Items are assigned by the Acquired Companies to the
Seller (or its designee) effective as of a date prior to the Closing Date;
(v) the Seller shall deliver to the Buyer true and complete copies
of the agreements referenced in Section 5(i), executed by all parties thereto;
(vi) the Seller shall deliver to the Buyer the Proposed Closing
Statement;
(vii) the Seller shall have delivered to the Buyer certified copies
of the Organizational Documents of each of the Acquired Companies and
certificates of good standing for each of the Acquired Companies as of the
Closing Date from the applicable Governmental Authorities in Delaware, Texas and
each other jurisdiction that requires qualification for such Acquired Companies;
(viii) the Seller shall have delivered to the Buyer a certificate
attesting:
(A) that each of the conditions specified in Sections
7(a)(i)-7(a)(vi) is satisfied in all respects,
(B) to the resolutions of the respective Board of Directors
(or general partner, in the case of any limited partnership) of the Seller
Parent and Seller authorizing the execution and delivery of this Agreement by
Seller Parent and Seller and the consummation by Seller Parent and Seller of the
transactions contemplated hereby, and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date, and
(C) to the incumbency and signature of each officer of Seller
Parent or Seller who has executed this Agreement.
(ix) the Buyer shall have delivered to the Seller a certificate of
good standing for the Buyer and its designee from the Secretary of State of
Delaware; and
(x) the Buyer shall have delivered to the Seller a certificate
attesting:
(A) that each of the conditions specified in Section
7(b)(i)-7(b)(vi) is satisfied in all respects
11
(B) to the resolutions of the Board of Directors of the Buyer
GP authorizing the execution and delivery of this Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby, and
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of the Closing Date, and
(C) to the incumbency and signature of each officer of the
Buyer who has executed this Agreement.
(xi) the Seller shall deliver to the Buyer, if applicable, documents
necessary to release the Acquired Companies, Acquired Company Equity Interests
and Acquired Company Assets from Obligations and liens related to Indebtedness
of any Seller Party; and
(xii) the Parties shall execute and/or deliver, or cause to be
executed and/or delivered, to each other the other Transaction Agreements
(including the Exchange Agreement, if applicable).
(e) Proposed Closing Statement and Post-Closing Adjustment.
(i) On or prior to the Closing Date, the Seller shall cause to be
prepared and delivered to the Buyer a statement (the "PROPOSED CLOSING
STATEMENT"), as prepared and determined in accordance with GAAP to the extent
applicable, setting forth the Seller's good faith estimate, including reasonable
detail, of the Purchase Price. As soon as practicable, but in any event no later
than 60 days following the Closing Date, the Buyer shall cause to be prepared
and delivered to the Seller a statement, including reasonable detail, of the
actual Purchase Price (such statement, as it may be adjusted pursuant to Section
2(e)(ii), the "CLOSING STATEMENT").
(ii) Upon receipt of the Closing Statement, the Seller and the
Seller's independent accountants shall be permitted during the succeeding 60-day
period to examine the work papers used or generated in connection with the
preparation of the Closing Statement and such other documents as the Seller may
reasonably request in connection with its review of the Closing Statement.
Within 60 days of receipt of the Closing Statement, the Seller shall deliver to
the Buyer a written statement describing in reasonable detail its objections (if
any) to any amounts or items set forth on the Closing Statement. If the Seller
does not raise objections within such period, then, the Closing Statement shall
become final and binding upon all Parties at the end of such period. If the
Seller raises objections, the Parties shall negotiate in good faith to resolve
any such objections. If the Parties are unable to resolve any disputed item
within 60 days after the Seller's receipt of the Closing Statement, any such
disputed item shall be submitted to an independent "Big-Four" accounting firm
mutually agreeable to the Parties who shall be instructed to resolve such
disputed item within 30 days. The resolution of disputes by the accounting firm
so selected shall be set forth in writing and shall be conclusive, binding and
non-appealable upon the Parties and the Closing Statement shall become final and
binding upon the date of such resolution. The fees and expenses of such
accounting firm shall be paid one-half by the Buyer and one-half by the Seller.
12
(iii) If the Purchase Price as set forth on the Closing Statement
exceeds the estimated Purchase Price as set forth on the Proposed Closing
Statement, the Buyer shall pay the Seller in cash the amount of such excess. If
the estimated Purchase Price as set forth on the Proposed Closing Statement
exceeds the Purchase Price as set forth on the Closing Statement, the Seller
shall pay to the Buyer (or its designee) in cash the amount of such excess.
After giving effect to the foregoing adjustments, any amount to be paid by the
Buyer to the Seller, or to be paid by the Seller to the Buyer, as the case may
be, shall be paid in the manner and with interest as provided in Section
2(e)(iv) at a mutually convenient time and place within five business days after
the later of acceptance of the Closing Statement or the resolution of the
Seller's objections thereto pursuant to Section 2(e)(ii)).
(iv) Any payments pursuant to this Section 2(e) shall be made by
causing such payments to be credited in immediately available funds to such
account or accounts of the Buyer or the Seller, as the case may be, as may be
designated by the Buyer or the Seller, as the case may be. If payment is being
made after the fifth business day referred to in Section 2(e)(iii), the amount
of the payment to be made pursuant to this Section 2(e) shall bear interest from
and including such fifth business day to, but excluding, the date of payment at
a rate per annum equal to the Prime Rate plus two percent. Such interest shall
be payable at the same time as the payment to which it relates and shall be
calculated on the basis of a year of 365 days and the actual number of days for
which due.
(v) The Seller shall cooperate in the preparation of the Closing
Statement, including providing customary certifications to the Buyer, and, if
requested, to the Seller's independent accountants or the accounting firm
selected by mutual agreement of the Parties pursuant to Section 2(e)(ii).
(vi) The value of the Inventory, as of the Effective Time, shall be
mutually determined by the Seller and the Buyer, each acting reasonably, and
shall be adjusted to take into account (i) the market valuation of contracts of
the Acquired Companies for the fixed price forward sale of propane that are in
effect as of the Effective Time using a mutually determined ▇▇▇▇-to-market
valuation, less an amount equal to the prepaid purchase price associated with
the propane inventory corresponding to such contracts, and (ii) any physical
exchange imbalances of natural gas, natural gas liquids, and condensates
attributable to the Acquired Companies as of the Effective Time. If within 45
days following the Closing Date the Seller and the Buyer have not reached an
agreement with regard to the value of any such Inventory, then the Seller and
the Buyer shall engage an independent "Big-Four" accounting firm to determine
such value and the determination by such accounting firm shall be binding upon
the Parties. Each of the Seller and the Buyer shall bear and pay one-half of the
fees and expenses of such accounting firm arising out of such engagement.
(vii) Except as set forth in Sections 2(e)(ii) and 2(e)(vi), each
Party shall bear its own expenses incurred in connection with the preparation
and review of the Closing Statement.
13
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller and the
Seller Parent hereby jointly and severally represent and warrant to the Buyer as
follows:
(i) Organization and Good Standing. Each of Seller and Seller Parent
is an entity duly organized, validly existing, and in good standing under the
Laws of the State of Delaware. Seller is in good standing under the Laws of
jurisdictions which require such qualification, except where the lack of such
qualification would not have a Material Adverse Effect.
(ii) Authorization of Transaction. Each Seller Party has full power
and authority (including full entity power and authority) to execute and deliver
each Transaction Agreement to which such Seller Party is a party and to perform
its obligations thereunder. Each Transaction Agreement to which any Seller Party
is a party constitutes the valid and legally binding obligation of such Seller
Party, enforceable against such Seller Party in accordance with its terms and
conditions, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights
generally, and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except as
contemplated by Section 5(g) and as set forth on Schedule 3(a)(ii), no Seller
Party need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or any other
Person in order to consummate the transactions contemplated by this Agreement or
any other Transaction Agreement to which such Seller Party is a party.
(iii) Noncontravention. Except as contemplated by Section 5(g) and
filings specified in Schedule 3(a)(ii) or as set forth in Schedule 3(a)(iii),
neither the execution and delivery of any Transaction Agreement to which any
Seller Party is a party, nor the consummation of any of the transactions
contemplated thereby, shall (A) violate any Law to which any Seller Party is
subject or any provision of its Organizational Documents or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify, cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which any Seller Party is a party or by which it is bound
or to which any of its assets or any of the Acquired Company Assets are subject,
except for such violations, defaults, breaches, or other occurrences that do
not, individually or in the aggregate, have a Material Adverse Effect on the
ability of the Seller or any other Seller Party to consummate the transactions
contemplated by such Transaction Agreement.
(iv) Brokers' Fees. No Seller Party has any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
14
(v) Taxes. To the Knowledge of each Seller Party, the Seller has (i)
duly filed all material Tax Returns required to be filed by or with respect to
the Seller or its assets or operations with the Internal Revenue Service or
other applicable taxing authority, (ii) paid, or adequately reserved against,
all Taxes due or claimed due by a taxing authority and (iii) made all material
deposits required with respect to Taxes. To the Knowledge of each Seller Party,
there has been no material issue raised or material adjustment proposed (and
none is pending) by the Internal Revenue Service or any other taxing authority
in connection with any Tax Returns relating to the operations of the Acquired
Companies, and no waiver or extension of any statute of limitations as to any
federal, state, local or foreign tax matter relating to the operations of the
Acquired Companies has been given by or requested from Seller with respect to
any Tax year.
(b) Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(i) Organization of the Buyer. Each Buyer Party is a limited
liability company, limited partnership or corporation duly organized, validly
existing, and in good standing under the Laws of the State of Delaware. Each
Buyer Party is in good standing under the Laws of the State of Texas and each
other jurisdiction which requires such qualification, except where the lack of
such qualification would not have a material adverse effect on its business,
operations or financial condition.
(ii) Authorization of Transaction. Each Buyer Party has full power
and authority (including full entity power and authority) to execute and deliver
each Transaction Agreement to which it is a party and to perform its obligations
thereunder. Each Transaction Agreement to which such Buyer Party is a party
constitutes the valid and legally binding obligation of such Buyer Party,
enforceable against such Buyer Party in accordance with its terms and
conditions, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights
generally, and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except as
contemplated by Section 5(g) and as set forth on Schedule 3(b)(ii), no Buyer
Party needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or any other
Person in order to consummate the transactions contemplated by this Agreement or
any other Transaction Agreement.
(iii) Noncontravention. Except as contemplated by Section 5(g) and
filings specified in Schedule 3(b)(ii) or as set forth in Schedule 3(b)(iii),
neither the execution and delivery of any Transaction Agreement to which any
Buyer Party is a party, nor the consummation of any of the transactions
contemplated thereby, shall (A) violate any Law to which such Buyer Party is
subject or any provision of its Organizational Documents or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify, or cancel,
or require any notice, approval or consent under any agreement, contract, lease,
license, instrument, or other arrangement to which any Buyer Party is a party or
by which it is bound or to which any of its assets is subject, except for such
violations, defaults, breaches, or other occurrences that do not, individually
or in the
15
aggregate, have a material adverse effect on the ability of any Buyer Party to
consummate the transactions contemplated by such Transaction Agreement.
(iv) Brokers' Fees. No Buyer Party has any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
(v) Investment. The Buyer is not acquiring the Acquired Company
Equity Interests with a view to or for sale in connection with any distribution
thereof or any other security related thereto within the meaning of the
Securities Act. The Buyer is familiar with investments of the nature of the
Acquired Company Equity Interests, understands that this investment involves
substantial risks, has adequately investigated the Acquired Company Equity
Interests, and has substantial knowledge and experience in financial and
business matters such that it is capable of evaluating, and has evaluated, the
merits and risks inherent in purchasing the Acquired Company Equity Interests,
and is able to bear the economic risks of such investment. The Buyer has had the
opportunity to visit with the Seller and its applicable Affiliates and meet with
their representative officers and other representatives to discuss the business,
assets, liabilities, financial condition, and operations of the Acquired
Companies, has received all materials, documents and other information that the
Buyer deems necessary or advisable to evaluate the Acquired Companies, and has
made its own independent examination, investigation, analysis and evaluation of
the Acquired Companies, including its own estimate of the value of the Acquired
Companies. The Buyer has undertaken such due diligence (including a review of
the properties, liabilities, books, records and contracts of the Acquired
Companies) as the Buyer deems adequate.
4. Representations and Warranties Concerning the Acquired Company Equity
Interests, Acquired Companies and Acquired Company Assets. The Seller and the
Seller Parent hereby jointly and severally represent and warrant to the Buyer as
follows:
(a) Organization, Qualification, and Company Power. Each of the Acquired
Companies (x) is a limited partnership duly organized, validly existing, and in
good standing under the Laws of the State of Delaware, except where the lack of
such organization, existence or good standing would not have a Material Adverse
Effect; (y) is in good standing under the Laws of the State of Texas and each
other jurisdiction which requires qualification, except where the lack of such
qualification would not have a Material Adverse Effect; and (z) has full power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it, except where the lack of such power and
authority would not have a Material Adverse Effect.
(b) Noncontravention. Except as contemplated by Section 5(g) or as set
forth in Schedule 4(b), neither the execution and delivery of any Transaction
Agreement, nor the consummation of any of the transactions contemplated thereby,
shall (i) violate any Law to which any of the Acquired Companies, any of the
Acquired Company Equity Interests or any of the Acquired Company Assets is
subject or any provision of the Organizational Documents of any of the Acquired
Companies or (ii) conflict with, result
16
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
require any notice or trigger any rights to payment or other compensation, or
result in the imposition of any Encumbrance on any of the Acquired Companies,
any of the Acquired Company Equity Interests or any of the Acquired Company
Assets under, any agreement, contract, lease, license, instrument, or other
arrangement to which any of the Acquired Companies, any of the Acquired Company
Equity Interests or any of the Acquired Company Assets is subject, except where
the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, right to payment or other
compensation, or Encumbrance would not have a Material Adverse Effect, or would
not materially adversely affect the ability of any Seller Party to consummate
the transactions contemplated by such Transaction Agreement.
(c) Title to and Condition of Acquired Company Assets.
(i) Each of the Acquired Companies has good, marketable and
indefeasible title to all of its respective Acquired Company Assets in each case
free and clear of all Encumbrances, except for Permitted Encumbrances, and the
Acquired Company Assets and the Miscellaneous Assets constitute all of the
assets and rights necessary for the operation and business of the Acquired
Companies in order to generate the financial results set forth in the Financial
Statements. The material real property interests, gas plants, pipeline gathering
systems and other material assets comprising the Acquired Company Assets are
described on Exhibit A. The operations of the Acquired Company Assets are the
only operations reflected in the Financial Statements.
(ii) To the Seller's Knowledge, except as disclosed in Schedule
4(c)(ii), the Acquired Company Assets are in good operating condition and repair
(normal wear and tear excepted), are free from defects (patent and latent), are
suitable for the purposes for which they are currently used and are not in need
of maintenance or repairs except for ordinary routine maintenance and repairs in
the Ordinary Course of Business and the repairs contemplated by Section 5(j).
(iii) Capitalization of the Acquired Companies.
(A) The capitalization of the Acquired Companies is as \
follows:
(1) The Hydrocarbons GP Interest and Hydrocarbons LP
Interest constitute all of the Equity Interests of Hydrocarbons. Field Services
owns (beneficially and of record) 100% of the Hydrocarbons GP Interest, and
Transmission and Holding collectively own (beneficially and of record) 100% of
the Hydrocarbons LP Interest.
(2) The Marketing GP Interest and Marketing LP Interest
constitute all of the Equity Interests of Marketing. Field Services owns
(beneficially and of record) 100% of the Marketing GP Interest, and Transmission
owns (beneficially and of record) 100% of the Marketing LP Interest.
17
(B) The Seller Parent directly or indirectly owns 100% of each
Seller. All of the Acquired Company Equity Interests are uncertificated. The
Acquired Company Equity Interests constitute 100% of the issued and outstanding
Equity Interests of the Acquired Companies, and have been duly authorized, and
are validly issued and fully paid and (except (i) as set forth to the contrary
in the applicable governing documents and (ii) as set forth in Sections
17-303(a) and 17-607 of the Delaware LP Act with respect to limited partnership
interests) non-assessable. Except to the extent created under the Securities
Act, state securities Laws, limited liability company Laws, limited partnership
Laws, partnership and joint venture Laws and general corporation Laws of the
Acquired Companies' jurisdiction of formation, and as created by the Acquired
Companies' Organizational Documents, (x) the Acquired Company Equity Interests
are held as set forth above, free and clear of any Encumbrances and (y) there
are no Commitments with respect to any Equity Interest of any of the Acquired
Companies. No Seller Party is party to any voting trusts, proxies, or other
agreements or understandings with respect to voting any Equity Interest of any
of the Acquired Companies.
(C) After the consummation of the transactions contemplated in
this Agreement, the Buyer or its designees shall own, directly or indirectly,
100% of the Acquired Company Equity Interests.
(iv) Acquired Company Asset Ownership. Other than the limited
partnership interests described on Exhibit B, none of the Acquired Companies
own, directly or indirectly (and the Acquired Company Assets do not include), an
Equity Interest in any other Person. The Acquired Companies own no assets other
than the Acquired Company Assets and the Retained Items and have no operations
or Obligations other than those directly related to the operation of the
Acquired Company Assets and the Retained Items.
(v) Encumbrances for Borrowed Money. Except for those Obligations
and liens to be released prior to the Closing or related to the operation of the
Acquired Company Assets, the Acquired Companies are not a party or subject to
any borrowings, loan agreements, promissory notes, pledges, mortgages,
guaranties, liens and similar liabilities (direct and indirect), or Encumbrances
which are secured by or constitute an Encumbrance on the Acquired Company Equity
Interests or the Acquired Company Assets.
(d) Material Change. Except as set forth in Schedule 4(d), since October
31, 2003 (and except as expressly set forth in the Financial Statements):
(i) there has not been any Material Adverse Effect;
(ii) the Acquired Company Assets have been operated and maintained
in the Ordinary Course of Business;
(iii) there has not been any damage, destruction or loss to any
portion of the Acquired Company Assets, whether or not covered by insurance,
that would have a Material Adverse Effect;
18
(iv) there has been no purchase, sale or lease of any material asset
included in the Acquired Company Assets;
(v) there has been no actual, pending, or, to the Seller's
Knowledge, threatened change affecting any of the Acquired Company Assets with
any customers, licensors, suppliers, distributors or sales representatives of or
working for the benefit of any of the Acquired Companies, except for changes
that do not have a Material Adverse Effect;
(vi) there has been no (x) amendment or modification in any material
respect to any Subject Contract or any other contract or agreement material to
the Acquired Company Assets, or (y) termination of any Subject Contract or any
other contract or agreement material to the Acquired Company Assets before the
expiration of the term thereof other than to the extent any such material
contract or agreement terminated pursuant to its terms in the Ordinary Course of
Business; except for amendment, modifications or terminations that do not have a
Material Adverse Effect;
(vii) except in the Ordinary Course of Business, none of the
Acquired Companies have incurred (or assumed responsibility for or guaranteed)
any Indebtedness other than Indebtedness to be retired prior to or in connection
with the Closing; and
(viii) there is no contract, commitment or agreement to do any of
the foregoing, except as expressly permitted hereby.
(e) Legal Compliance. Each of the Acquired Companies are in compliance,
and at all times since January 1, 2001, have complied with all applicable Laws
of all Governmental Authorities, except where the failure to comply would not
have a Material Adverse Effect. Neither Seller nor Seller Parent makes any
representations or warranties in this Section 4(e) with respect to Taxes or
Environmental Laws, for which the sole representations and warranties of the
Seller are set forth in Sections 4(f) and 4(i), respectively.
(f) Tax Matters. Each of the Acquired Companies have been classified as a
partnership for U.S. federal income tax purposes from its inception. Except as
set forth in Schedule 4(f) or as would not have a Material Adverse Effect, the
Acquired Companies have timely filed all Tax Returns with respect to the
Acquired Companies and the Acquired Company Assets that they were required to
file and such Tax Returns are accurate in all material respects. All Taxes shown
as due by any of the Acquired Companies or with respect to the Acquired Company
Assets on any such Tax Returns have been paid. Additionally, there is no dispute
or claim concerning any Tax liability of the Acquired Companies related to the
Acquired Companies or the Acquired Company Assets claimed or raised in writing
by any Governmental Authority.
(g) Contracts and Commitments. Except for contracts entered into after the
date hereof as permitted pursuant to Section 5(c)(v) and those identified in
Section 5(i), Schedule 4(g)(i) contains a list of the contracts, agreements and
commitments having a
19
remaining term of more than one month to which any of the Acquired Companies are
a party and which provide for a material amount of revenues to be paid to any of
the Acquired Companies or which impose on any of the Acquired Companies any
material Obligation (the "SUBJECT CONTRACTS"), and each such Subject Contract is
in full force and effect, except where the failure to be in full force and
effect would not have a Material Adverse Effect. The Subject Contracts
constitute all of the material contracts, agreements, and commitments, in effect
as of October 1, 2003, necessary for the operation and business of the Acquired
Companies and the Acquired Company Assets, as applicable, in order to generate
the financial results set forth in the Financial Statements. The Seller Parties
have performed all material obligations required to be performed by them to date
under the Subject Contracts, and are not in default under any obligation of any
such contract, except when such default would not have a Material Adverse
Effect. To the Seller's Knowledge, no other party to any Subject Contract is in
default thereunder.
(h) Litigation.
(i) Schedule 4(h) sets forth each instance in which any of the
Acquired Companies or any of the Acquired Company Assets (A) is subject to any
outstanding injunction, judgment, order, decree, ruling, settlement agreement,
deficiency letter or charge or (B) is the subject of any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, or is the subject of any pending or, to the Seller's Knowledge,
threatened claim, demand, or notice of violation or liability from any Person,
except where any of the foregoing would not have a Material Adverse Effect.
(ii) No Seller Party has Knowledge of any facts that such relevant
Persons reasonably believe are likely to give rise to any present or future
injunction, judgment, order, decree, ruling, or charge or action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, against any of the them giving rise to any Obligation to which any
of the Acquired Companies or any of the Acquired Company Assets would be subject
that could reasonably be expected to result in a Material Adverse Effect.
(i) Environmental Matters. Except as set forth in Schedule 4(i):
Except for matters that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (a) the Acquired
Companies and their respective businesses, operations, and properties have been
and are in compliance with all Environmental Laws and all permits,
registrations, licenses, approvals, exemptions, variances, and other
authorizations required of the Acquired Companies under Environmental Laws (the
"ENVIRONMENTAL PERMITS"); (b) the Acquired Companies have obtained or filed for
all Environmental Permits for their respective businesses, operations, and
properties as they currently exist and all such Environmental Permits are
currently in full force and effect; (c) the Acquired Companies and their
respective businesses, operations, and properties are not subject to any pending
or, to the Seller's Knowledge,
20
threatened claims, actions, suits, investigations, inquiries or proceedings
under Environmental Laws; (d) there have been no Releases or, to the Seller's
Knowledge, threatened Releases of Hazardous Substances on, under or from the
properties of the Acquired Companies; (e) the Acquired Companies have not
received, to the Seller's Knowledge, any written notice asserting an alleged
liability or obligation under any Environmental Laws against the Acquired
Companies with respect to the actual or alleged Hazardous Substance
contamination of any property offsite of the properties of the Acquired
Companies; (f) to the Seller's Knowledge, there has been no exposure of any
person or property to Hazardous Substances in connection with the Acquired
Companies' businesses, operations, or properties that could reasonably be
expected to lead to tort claims by third parties of damages or compensation; and
(g) the Seller has made available (or will make available within 60 days
following the date of this Agreement) to the Buyer complete and correct copies
of all environmental site assessment reports, studies, and correspondence on
environmental matters that are in the possession of the Acquired Companies, the
Seller or any Affiliate of the Seller and relating to the respective businesses,
operations, or properties of the Acquired Companies.
Neither Seller nor Seller Parent makes any representation or warranty regarding
any compliance or failure to comply with, or any actual or contingent liability
under, any Environmental Law, except as expressly set forth in this Section
4(i).
(j) Preferential Purchase Rights. Except as set forth on Schedule 4(j),
there are no preferential purchase rights, options or other rights held by any
Person not a party to this Agreement to purchase or acquire any or all of the
Equity Interest in any of the Acquired Companies, or any of the Acquired Company
Assets, in whole or in part, that would be triggered or otherwise affected as a
result of the transactions contemplated by this Agreement (the "PREFERENTIAL
RIGHTS").
(k) Financial Information.
(i) Attached as Schedule 4(f)(i) are the following (the "FINANCIAL
INFORMATION"):
(A) Balance sheet for El Paso Hydrocarbons, L. P. as of
October 31, 2003:
(B) Income statement for El Paso Hydrocarbons, L.P. for the
ten month period ended October 31, 2003; and
(C) Income statement for El Paso NGL Marketing, L.P. for the
ten month period ended October 31, 2003.
(ii) Financial Information is unaudited financial data for the
Acquired Companies. The Financial Information is derived from the books and
records of the Seller and was prepared on a basis consistent with that of the
audited consolidated financial statements of Seller Parent. However, the
Financial Information does not include all closing adjustments or disclosures
required to be included in conformity with
21
GAAP. The Financial Information is true, correct and complete and fairly
presents in all material respects the results of the operations and the
financial Obligations and financial condition of the Acquired Companies for the
periods covered thereby.
(l) Employee Matters. None of the Acquired Companies have had employees
since December 22, 2000.
(m) Prohibited Events. None of the matters described in Section 5(c) have
occurred since October 31, 2003.
(n) Regulatory Matters. No Seller Party or any of the Acquired Companies
is (i) a "holding company," a "subsidiary company" of a "holding company," an
"affiliate" of a "holding company," or a "public utility," as each such term is
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii)
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder. Except as set forth on Schedule
4(n), none of the Acquired Company Assets are subject to regulation by the
Federal Energy Regulatory Commission or rate regulation or comprehensive
nondiscriminatory access regulation under any federal laws or the laws of any
state or other local jurisdiction.
(o) Disclaimer of Representations and Warranties Concerning Personal
Property, Equipment, and Fixtures. The Buyer acknowledges that (i) it has had
and pursuant to this Agreement shall have before Closing access to the Acquired
Companies and the Acquired Company Assets and the officers of the Seller and
(ii) in making the decision to enter into this Agreement and consummate the
transactions contemplated hereby, the Buyer has relied solely on the basis of
its own independent investigation and upon the express representations,
warranties, covenants, and agreements set forth in this Agreement and the other
Transaction Agreements. Accordingly, the Buyer acknowledges that, except as
expressly set forth in this Agreement, the Seller has not made, and THE SELLER
MAKES NO AND DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR
IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE, REGARDING (i) THE
QUALITY, CONDITION, OR OPERABILITY OF ANY PERSONAL PROPERTY, EQUIPMENT, OR
FIXTURES, (ii) THEIR MERCHANTABILITY, (iii) THEIR FITNESS FOR ANY PARTICULAR
PURPOSE, OR (iv) THEIR CONFORMITY TO MODELS, SAMPLES OF MATERIALS OR
MANUFACTURER DESIGN, AND ALL PERSONAL PROPERTY AND EQUIPMENT IS DELIVERED "AS
IS, WHERE IS" IN THE CONDITION IN WHICH THE SAME EXISTS.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the date of this Agreement and the Closing:
(a) General. The Buyer shall use its Best Efforts to take all action and
to do all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement, including the
Seller's conditions to closing in Section 7(b). The Seller and the Seller Parent
shall use their Best Efforts to take all
22
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement,
including the Buyer's conditions to closing in Section 7(a).
(b) Notices and Consents. Each of the Parties shall give any notices to,
make any filings with, and use its Best Efforts to obtain any authorizations,
consents, and approvals of Governmental Authorities and third parties it is
required to obtain in connection with the matters referred to in Sections
3(a)(ii), 3(a)(iii), 3(b)(ii), and 3(b)(iii) including the corresponding
Schedules, so as to permit the Closing to occur simultaneously with the Merger
Closing.
(c) Operation of Business. The Seller and the Seller Parent shall not,
without the consent of the Buyer (which consent shall not be unreasonably
withheld or delayed), except as expressly contemplated by this Agreement, cause
or (to the extent any Seller Party or its Affiliate has the Legal Right) permit
any of the Acquired Companies to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business or, with
respect to the Acquired Company Assets, engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, without the consent of the Buyer
(which consent shall not be unreasonably withheld or delayed as to the matters
addressed in clauses (ii), (iii), (iv), (v) (B), (C) and (D), and (vii) below),
the Seller and the Seller Parent shall not, and shall not cause or (to the
extent any Seller Party has the Legal Right) permit any of the Acquired
Companies to, do any of the following:
(i) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, or grant of any Equity Interest of any
of the Acquired Companies or any Commitments with respect to any Equity Interest
of any of the Acquired Companies;
(ii) cause or allow any part of the Acquired Company Assets to
become subject to an Encumbrance, except for Permitted Encumbrances;
(iii) amend in any material respect any contract or agreement
material to the Acquired Company Assets or any of the Acquired Companies (or any
of the Acquired Companies' Organizational Documents) or terminate any such
material contract or agreement before the expiration of the term thereof other
than to the extent any such material contract or agreement expires in accordance
with its terms in the Ordinary Course of Business;
(iv) except as required by Law, make, change or revoke any Tax
election relevant to any of the Acquired Companies or Acquired Company Asset;
(v) (A) acquire (including by merger, consolidation or acquisition
of Equity Interest or assets) any corporation, partnership, limited liability
company or other business organization or any division thereof or any material
amount of assets on behalf of the Acquired Companies; (B) on behalf of the
Acquired Companies, incur any Indebtedness or issue any debt securities or
assume, guarantee, endorse, or otherwise as
23
an accommodation become responsible for, the obligations of any Person, or make
any loans or advances except for intercompany borrowing among the Acquired
Companies in the Ordinary Course of Business; (C) sell, lease or otherwise
dispose of any property or assets of the Acquired Companies, other than sales of
goods or services in the Ordinary Course of Business; or (D) enter into or amend
a material contract, agreement, commitment, or arrangement with respect to any
matter set forth in this Section 5(c)(v) or otherwise not in the Ordinary Course
of Business;
(vi) change any Acquired Companies' accounting practices in any
material respect; or
(vii) initiate or settle any litigation, complaint, rate filing or
administrative proceeding related to the Acquired Companies.
(d) Intentionally Omitted.
(e) Full Access. To the extent they have the Legal Right, the Seller and
the Seller Parent shall permit, and shall cause their Affiliates to permit,
representatives of the Buyer to have full access at all reasonable times and
upon reasonable notice, and in a manner so as not to interfere with the normal
business operations of the Seller and its Affiliates, to all premises,
properties, personnel, books, records (including Tax records), contracts, and
documents of or pertaining to any of the Acquired Companies or any of the
Acquired Company Assets.
(f) Liens and Encumbrance. Prior to the Closing, the Seller shall obtain
releases of all liens on any Acquired Company Equity Interest or Acquired
Company Asset securing, and Acquired Company Obligations relating to
Indebtedness, without any post-Closing liability or expense to any of the
Acquired Companies, Acquired Company Asset, or any Buyer Party, and shall
provide proof of such releases to the Buyer at the Closing.
(g) HSR Act. The Parties shall prepare, as soon as is practical following
the execution of this Agreement, all necessary filings in connection with the
transactions contemplated by this Agreement that may be required under the HSR
Act. The Parties shall submit such filings to the appropriate Governmental
Authority as soon as practicable after the execution hereof for filings under
the HSR Act. The Parties shall request early termination of the waiting period
under the HSR Act for the HSR Act filing, shall promptly make any appropriate or
necessary subsequent or supplemental filings and shall cooperate in the
preparation of such filings as is reasonably necessary and appropriate. The
Parties shall use their respective commercially reasonable efforts to resolve
such objections, if any, as may be asserted with respect to the transactions
contemplated hereby under any antitrust or trade regulatory laws of any
Governmental Authority. Anything herein to the contrary notwithstanding,
however, nothing in this Agreement shall require the Buyer or any of its
Affiliates to sell, hold separate or otherwise dispose of or conduct its
business in a specified manner, or agree to sell, hold separate or otherwise
dispose of or conduct its business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of the Buyer or its
Affiliates,
24
whether as a condition of obtaining any approval from a Governmental Authority
or any other Person or for any other reason.
(h) Notice of Developments. The Seller will give prompt written notice to
the Buyer and supplement or amend Seller's disclosure schedules attached hereto
(the "SELLER'S DISCLOSURE SCHEDULES") with respect to any applicable development
occurring after the date of this Agreement, or any applicable item about which
the Seller did not have Knowledge on the date of this Agreement. The Seller will
also promptly supplement Schedule 4(g)(i) with respect to any contract entered
into after the date hereof pursuant to Section 5(c)(v). The Buyer will give
prompt written notice to the Seller of any applicable development (including any
actual or anticipated breach or violation of any representation, warranty or
covenant herein) occurring after the date of this Agreement, or any applicable
item about which the Buyer did not have Knowledge on the date of this Agreement.
(i) Various Agreements. Prior to the Closing Date, the Seller and the
Seller Parent shall cause the following to occur:
(i) Hydrocarbons shall enter into agreements with the counterparties
described in Schedule 5(i)(i) and shall provide a copy of such agreements to the
Buyer, each such agreement to contain terms no less favorable to Hydrocarbons
than the terms applicable to such agreement set forth in Schedule 5(i)(i);
(ii) Marketing shall assign to the Seller (or its designee), and
such assignee shall assume all obligations of Marketing under, those agreements
listed in Exhibit C labeled as "Agreements to be Assigned;" ---------
(iii) Termination of that certain Operating Agreement for the
Delmita gathering system between El Paso Field Services, L.P. and the Acquired
Companies; and
(iv) Consents executed by Transmission, Field Services and Holding
whereby such parties consent to the assignment of the general and limited
partnerships in Hydrocarbons and Marketing as contemplated by this Agreement.
(j) 2004 Maintenance.
(i) Commencing as of January 1, 2004, the Seller and the Seller
Parent shall cause the Acquired Company Assets to be maintained and repaired at
the level that a prudent operator of similar assets would maintain and repair
the Acquired Company Assets. The Seller shall maintain or cause to be maintained
accurate and complete records regarding Maintenance Capital Costs (hereinafter
defined) incurred by the Acquired Companies with respect to the period beginning
January 1, 2004 and ending as of the day preceding the Effective Time (the
"INTERIM PERIOD"). As used herein the term "MAINTENANCE CAPITAL COSTS" means (A)
expenditures incurred by the Acquired Companies during the Interim Period that
are classified as capitalized maintenance costs in accordance with GAAP and (B)
expenditures covered by the 2004 Revised Maintenance Budget attached as Schedule
5(j)(i).
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(ii) As used herein the term "MAINTENANCE COMPARISON AMOUNT" means
the sum of the product of $666,666 multiplied by the number of months falling
between the beginning of calendar year 2004 and the Effective Time; provided, if
the Effective Time occurs after January 1, 2005, for each month in 2005 the
preceding reference to "$666,666" shall be deemed to be "366,666". If the total
Maintenance Capital Costs exceed the Maintenance Comparison Amount, then such
excess shall be referred to herein as the "MAINTENANCE EXCESS"; and if the
Maintenance Capital Costs are less than the Maintenance Comparison Amount, then
such deficiency shall be referred to herein as the "MAINTENANCE SHORTFALL".
6. Post-Closing Covenants. The Parties agree as follows:
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties shall
take such further action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 8).
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or before the Closing Date
involving any of the Acquired Companies or the Acquired Company Assets, the
other Party shall cooperate with the contesting or defending Party and its
counsel in the defense or contest, make available its personnel, and provide
such testimony and access to its books and records (other than books and records
which are subject to privilege or to confidentiality restrictions) as shall be
necessary in connection with the defense or contest, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under Section 8).
(c) Surety Bonds; Guarantees. The Buyer agrees to be substituted as the
surety or guarantor of any surety bonds or guarantees issued by the Seller or
any of its Affiliates with respect to the Acquired Companies or the Acquired
Company Assets. The Buyer and the Seller shall cooperate to effect all such
substitutions within 90 days of the Closing Date and the Buyer shall indemnify
and hold the Seller harmless from and against any Adverse Consequences
(including the costs to the Seller of maintaining such surety bonds and
guarantees) arising from the failure of the Buyer to be so substituted. The
Buyer shall use commercially reasonable efforts to obtain a release of the
Seller from any surety or guaranty obligations with respect to the Acquired
Companies or the Acquired Company Assets.
(d) Delivery and Retention of Records. On or promptly after the Closing
Date, the Seller shall deliver or cause to be delivered to the Buyer, copies of
Tax Records which are relevant to Post-Closing Tax Periods and all other files,
books, records,
26
information and data relating to the Acquired Companies or the Acquired Company
Assets that are in the possession or control of the Seller or any of its
Affiliates (the "RECORDS"). The Buyer agrees to (i) hold the Records and not to
destroy or dispose of any thereof for a period of ten years from the Closing
Date or such longer time as may be required by Law, provided that, if it desires
to destroy or dispose of such Records during such period, it shall first offer
in writing at least 60 days before such destruction or disposition to surrender
them to the Seller and if the Seller does not accept such offer within 20 days
after receipt of such offer, the Buyer may take such action and (ii) following
the Closing Date to afford the Seller, its accountants, and counsel, during
normal business hours, upon reasonable request, at any time, full access to the
Records and to the Buyer's employees to the extent that such access may be
requested for any legitimate purpose at no cost to the Seller (other than for
reasonable out-of-pocket expenses); provided that such access shall not be
construed to require the disclosure of Records that would cause the waiver of
any attorney-client, work product, or like privilege; provided, further that in
the event of any litigation nothing herein shall limit any Party's rights of
discovery under applicable Law.
7. Conditions to Obligation to Close. All proceedings to be taken and all
documents to be exchanged and delivered by all parties at the Closing shall be
deemed to have been taken and executed simultaneously unless otherwise provided
in this Agreement, and no proceedings shall be deemed taken nor any documents
executed or delivered until all have been taken, executed, and delivered.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties of the Seller and the Seller
Parent contained in Sections 3(a) and 4 must be true and correct in all respects
and the Seller must have performed and complied in all respects with its
covenants hereunder (without giving effect to any supplement to the Schedules,
any qualification as to materiality, Material Adverse Effect or concepts of
similar import, or any qualification or limitation as to monetary amount or
value) as of the date of this Agreement and at Closing (except for those which
refer to a specific date, which must be true and correct as of such date),
except for any breach of any such representations and warranties as of the
Closing (rather than the date of this Agreement) due to actions taken by the
Seller in compliance with Sections 5(c) or 11(p) and except where the failure of
such representations and warranties to be correct and the failure of such
obligations to be performed (combined with any similar failures under the Merger
Agreement) could not, in the aggregate, reasonably be expected to result in a
GulfTerra Material Adverse Effect (as defined in the Merger Agreement);
(ii) there must not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement or any suit or action pending by a Governmental
Authority to enjoin the consummation of any of the transactions, contemplated by
this Agreement;
27
(iii) the Seller must have obtained all material Governmental
Authority and third party consents, including any material consents specified in
Sections 3(a)(ii), 3(a)(iii) and 4(b) and including the corresponding Schedules,
except where such failure could not reasonably be expected to result in a
GulfTerra Material Adverse Effect;
(iv) any required waiting period under the HSR Act shall have
expired or early termination shall have been granted with respect to such
period;
(v) delivery by Seller of resignations by (or evidence of removal
of) all officers, managers and members of the Board of Directors or similar
governing board of each of the Acquired Companies from such positions (unless
otherwise directed by the Buyer) except where such failure could not reasonably
be expected to result in a GulfTerra Material Adverse Effect; and
(vi) the Merger Closing shall have occurred.
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or before the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of the Buyer contained in
Section 3(b) must be true and correct in all respects (without giving effect to
any supplement to the Schedules, any qualification as to materiality, Material
Adverse Effect or concepts of similar import, or any qualification or limitation
as to monetary amount or value) as of the date of this Agreement and at Closing
(except for those which refer to a specific date, which must be true and correct
as of such date), except where all breaches of such representations and
warranties would (or reasonably could be expected to) result in Adverse
Consequences of less than $2 million in the aggregate;
(ii) the Buyer must have performed and complied in all respects with
each of its covenants hereunder through the Closing (without giving effect to
any supplement to the Schedules, any qualification as to materiality, Material
Adverse Effect or concepts of similar import, or any qualification or limitation
as to monetary amount or value), except where all breaches of such covenants
would (or reasonably could be expected to) result in Adverse Consequences of
less than $2 million in the aggregate;
(iii) there must not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement or any suit or action pending by a Governmental
Authority to enjoin the consummation of any of the transactions, contemplated by
this Agreement;
28
(iv) the Seller must have obtained all material Governmental
Authority and third party consents, including material consents specified in
Sections 3(a)(ii), 3(a)(iii) and 4(b) and including the corresponding Schedules;
(v) intentionally omitted;
(vi) any required waiting period under the HSR Act shall have
expired or early termination shall have been granted with respect to such
period; and
(vii) the Merger Closing shall have occurred.
The Seller may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or before the Closing.
(c) Effect of Supplements to Schedules. For the purpose of determining
whether the conditions set forth in this Section 7 have been fulfilled, the
Seller's Disclosure Schedules shall be deemed to include all information
contained therein on the date of this Agreement and shall be deemed to exclude
all information contained in any supplement or amendment thereto.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. (i) All of the
representations contained in Sections 3 and 4 (other than the Fundamental
Representations and Sections 4(c)(i) (Title to Assets), 4(c)(ii) (Condition of
Assets) and 4(f) (Tax Matters)) shall survive the Closing for a period of two
years after the Closing Date; (ii) the representations and warranties contained
in Sections 4(c)(i) (Title to Assets) and 4(c)(ii) (Condition of Assets) shall
survive the Closing for a period of three years after the Closing Date; (iii)
the Fundamental Representations shall survive the Closing indefinitely; and (iv)
the representations and warranties contained in Section 4(f) (Tax Matters) shall
survive the Closing with respect to any given claim that would constitute a
breach of such representation or warranty until 90 days after the expiration of
the statute of limitations applicable to the underlying Tax matter giving rise
to that claim. The covenants and obligations contained in Sections 2 and 6 and
all other covenants and obligations contained in this Agreement (other than
those contained in Section 8(b)(iv) (Litigation) and the indemnities covering a
breach of the Fundamental Representations or Section 4(f) (Tax Matters)) shall
survive the Closing for a period of three years after the Closing Date. The
covenants and obligations contained in Section 8(b)(iv) (Litigation) shall
survive the Closing until 90 days after the expiration of the statute of
limitations applicable to the applicable claim.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) General Representations and Warranties. In the event: (x) any of
the representations or warranties of the Seller or the Seller Parent is breached
(without giving effect to any supplement to the Schedules, any qualification as
to materiality, Material Adverse Effect or concepts of similar import, or any
qualification or limitation as to monetary amount or value contained herein
(other than a Fundamental
29
Representation or a representation or warranty contained in Section 4(f) (Tax
Matters), for which an aggregate deductible or aggregate ceiling set forth in
this subsection will not apply); and (y) the Buyer makes a written claim for
indemnification against the Seller and the Seller Parent pursuant to Section
11(g) within the applicable survival period specified in Section 8(a), then the
Seller and the Seller Parent jointly and severally agree to release, indemnify
and hold harmless the Buyer Indemnitees from and against any Adverse
Consequences suffered by the Buyer Indemnitees by reason of each such breach;
provided, that the Seller and the Seller Parent shall not have any obligation to
indemnify the Buyer Indemnitees from and against any such Adverse Consequences
by reason of such breaches (A) until the Buyer Indemnitees, in the aggregate,
have suffered Adverse Consequences by reason of all such breaches in excess of
an aggregate deductible amount equal to 1.00% of the Purchase Price (except with
respect to breaches of Section 4(c)(i) (Title to Assets), in which case the
deductible amount shall be 0.1% of the Purchase Price) (after which point the
Seller and the Seller Parent shall be obligated only to indemnify the Buyer
Indemnitees from and against further such Adverse Consequences) or thereafter
(B) to the extent the Adverse Consequences the Buyer Indemnitees, in the
aggregate, have suffered by reason of all such breaches exceeds an aggregate
ceiling amount equal to 50% of the Purchase Price (after which point the Seller
and the Seller Parent shall have no obligation to indemnify the Buyer
Indemnitees from and against further such Adverse Consequences).
(ii) Covenants and Obligations and Other Representations and
Warranties. In the event: (x) any of the covenants or obligations of the Seller
or the Seller Parent in Sections 2 or 6 or any other covenants or obligations of
the Seller or the Seller Parent in this Agreement, or any Fundamental
Representation or representation or warranty contained in Section 4(f) (Tax
Matters) by the Seller or the Seller Parent is breached (in each case without
giving effect to any supplement to the Schedules, any qualification as to
materiality, Material Adverse Effect or concepts of similar import, or any
qualification or limitation as to monetary amount or value); and (y) the Buyer
makes a written claim for indemnification against the Seller and the Seller
Parent pursuant to Section 11(g) within the applicable survival period specified
in Section 8(a), then (subject to the limitations in Section 8(b)(vi)) the
Seller and the Seller Parent jointly and severally agree to release, indemnify
and hold harmless the Buyer Indemnitees from and against the entirety of any
Adverse Consequences suffered by the Buyer Indemnitees by reason of such
breaches.
(iii) ERISA. Subject to the limitations in Section 8(b)(vi), the
Seller and the Seller Parent jointly and severally shall release, indemnify and
hold harmless the Buyer Indemnitees against any and all Adverse Consequences
resulting by reason of any of the Buyer Indemnitees having been aggregated with
the Seller, the Seller Parent or any Affiliate of the Seller Parent under
Section 414(o) of the Code, or having been under "common control" with the
Seller, the Seller Parent or such Affiliate within the meaning of Section
4001(a)(14) of ERISA.
(iv) Litigation. Subject to the limitations in Section 8(b)(vi), in
the event the Buyer makes a written claim for indemnification against the Seller
and the Seller Parent within the applicable survival period specified in Section
8(a), then the
30
Seller and the Seller Parent jointly and severally shall release, indemnify and
hold harmless the Buyer Indemnitees against any and all Adverse Consequences
suffered by the Buyer Indemnitees with respect to, any outstanding injunction,
judgment, order, decree, ruling, or charge, or any pending or threatened action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, relating to any of the Acquired Companies or any of the Acquired
Company Assets on the Closing Date, including the matters listed on Schedule
4(h).
(v) Retained and Pre-Closing Obligations. (A) The Seller and the
Seller Parent jointly and severally agree to release, indemnify and hold
harmless the Buyer Indemnitees against any and all Adverse Consequences with
respect to the Retained Obligations, including any Tax attributable thereto. (B)
The Seller and the Seller Parent jointly and severally agree to release,
indemnify and hold harmless the Buyer Indemnitees against any and all Adverse
Consequences with respect to the Pre-Closing Obligations; provided, however,
that the Seller and the Seller Parent shall have no obligation to indemnify any
Buyer Indemnified Indemnitee against any and all Adverse Consequences with
respect to the Pre-Closing Obligations (i) unless Seller and Seller Parent has
received a written claim for indemnification pursuant to Section 11(g) on or
before the third anniversary of this Agreement and (ii) to the extent that the
aggregate payments by the Seller and the Seller Parent with respect to such
Pre-Closing Obligations would exceed 100% of the Purchase Price.
(vi) Notwithstanding anything to the contrary contained in Sections
8(b)(i)-(v) with the exception of the Seller's and Seller Parent's indemnity
obligations under Section 8(b)(ii) (with respect to the Fundamental
Representations), and Section 8(b)(v) (Retained Obligations), the Seller and the
Seller Parent shall not have any obligation to indemnify any Buyer Indemnitee
under this Agreement to the extent that the payment thereof would cause the
aggregate indemnity payments by the Seller and the Seller Parent under this
Agreement to exceed 100% of the Purchase Price.
(vii) To the extent any Buyer Indemnitee becomes liable to, and is
ordered to and does pay to any third party, punitive, exemplary, special or
consequential damages caused by a breach by the Seller or the Seller Parent of
any representation, warranty or covenant contained in this Agreement, then such
punitive, exemplary, special or consequential damages shall be deemed actual
damages to such Buyer Indemnitee and included within the definition of Adverse
Consequences for purposes of this Section 8.
(viii) Except for the rights of indemnification provided in this
Section 8, the Buyer hereby waives any claim or cause of action pursuant to
common or statutory law or otherwise against the Seller or the Seller Parent
arising from any breach by the Seller or the Seller Parent of any of its
representations, warranties or covenants under this Agreement or the
transactions contemplated hereby.
31
(c) Indemnification Provisions for Benefit of the Seller.
(i) In the event: (x) the Buyer breaches any of its representations,
warranties or covenants contained herein (without giving effect to any
supplement to the Schedules, any qualification as to materiality, Material
Adverse Effect or concepts of similar import, or any qualification or limitation
as to monetary amount or value); and (y) the Seller makes a written claim for
indemnification against the Buyer pursuant to Section 11(g) within the
applicable survival period specified in Section 8(a), then the Buyer agrees to
release, indemnify and hold harmless the Seller Indemnitees from and against the
entirety of any Adverse Consequences suffered by such Seller Indemnitees by
reason of all such breaches.
(ii) Except to the extent the Seller and the Seller Parent are
obligated to indemnify Buyer pursuant to Section 8(b), the Buyer agrees to
release, indemnify and hold harmless the Seller Indemnitees from and against the
entirety of any Adverse Consequences relating to the ownership and operation of
each of the Acquired Companies and each Acquired Company Asset (including those
arising during, related to or otherwise attributable to the period commencing
with the Effective Time).
(iii) To the extent any Seller Indemnitee becomes liable to, and is
ordered to and does pay to any third party, punitive, exemplary, special or
consequential damages caused by a breach by the Buyer of any representation,
warranty or covenant contained in this Agreement, then such punitive, exemplary,
special or consequential damages shall be deemed actual damages to such Seller
Indemnitee and included within the definition of Adverse Consequences for
purposes of this Section 8.
(iv) Except for the rights of indemnification provided in this
Section 8, the Seller hereby waives any claim or cause of action pursuant to
common or statutory law or otherwise against the Buyer arising from any breach
by the Buyer of any of its representations, warranties or covenants under this
Agreement or the transactions contemplated hereby.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") that may give rise to
a claim for indemnification against any other Party (the "INDEMNIFYING PARTY")
under this Section 8, then the Indemnified Party shall promptly (and in any
event within five business days after receiving notice of the Third Party Claim)
notify the Indemnifying Party thereof in writing.
(ii) The Indemnifying Party shall have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party and the Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the Indemnifying Party
shall not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim which
32
provides for or results in any payment by or Obligation of the Indemnified Party
of or for any damages or other amount, any Encumbrance on any property of the
Indemnified Party, any finding of responsibility or liability on the part of the
Indemnified Party or any sanction or injunction of, restriction upon the conduct
of any business by, or other equitable relief upon the Indemnified Party without
the prior written consent of the Indemnified Party (not to be withheld
unreasonably).
(iii) Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 8(d)(ii), the Indemnified Party may
defend against the Third Party Claim in any manner it reasonably may deem
appropriate.
(iv) In no event shall the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party which consent shall
not be withheld unreasonably.
(e) Determination of Amount of Adverse Consequences. The Adverse
Consequences giving rise to any indemnification obligation hereunder shall be
limited to the actual loss suffered by the Indemnified Party (i.e. reduced by
any insurance proceeds or other payment or recoupment received, realized or
retained by the Indemnified Party as a result of the events giving rise to the
claim for indemnification net of any expenses related to the receipt of such
proceeds, payment or recoupment, including retrospective premium adjustments, if
any), but not any reduction in Taxes of the Indemnified Party (or the affiliated
group of which it is a member) occasioned by such loss or damage. The amount of
the actual loss and the amount of the indemnity payment shall be computed by
taking into account the timing of the loss or payment, as applicable, using a
Prime Rate plus two percent interest or discount rate, as appropriate. Upon the
request of the Indemnifying Party, the Indemnified Party shall provide the
Indemnifying Party with information sufficient to allow the Indemnifying Party
to calculate the amount of the indemnity payment in accordance with this Section
8(e). An Indemnified Party shall take all reasonable steps to mitigate damages
in respect of any claim for which it is seeking indemnification and shall use
reasonable efforts to avoid any costs or expenses associated with such claim
and, if such costs and expenses cannot be avoided, to minimize the amount
thereof.
(f) Tax Treatment of Indemnity Payments. All indemnification payments made
under this Agreement, including any payment made under Section 9, shall be made
in cash and treated as purchase price adjustments for Tax purposes.
9. Tax Matters.
(a) Post-Closing Tax Returns. The Buyer shall prepare or cause to be
prepared and file or cause to be filed any Post-Closing Tax Returns with respect
to the Acquired Company Assets or the Acquired Companies. The Buyer shall pay
(or cause to be paid) any Taxes due with respect to such Tax Returns.
33
(b) Pre-Closing Tax Returns. The Seller shall prepare or cause to be
prepared and file or cause to be filed all Pre-Closing Tax Returns with respect
to the Acquired Company Assets or Acquired Companies. The Seller shall pay or
cause to be paid any Taxes due with respect to such Tax Returns.
(c) Straddle Periods. The Buyer shall be responsible for Taxes of the
Acquired Company Assets and the Acquired Companies related to the portion of any
Straddle Period occurring after the Effective Time. The Seller shall be
responsible for Taxes of the Acquired Company Assets and the Acquired Companies
relating to the portion of any Straddle Period occurring before and on the
Effective Time. With respect to any Straddle Period, to the extent permitted by
applicable Law, the Seller or the Buyer shall elect to treat the Effective Time
as the last day of the Tax period. If applicable Law shall not permit the
Effective Time to be the last day of a period, then (i) real or personal
property Taxes with respect to the Acquired Company Assets and the Acquired
Companies shall be allocated based on the number of days in the partial period
before and after the Effective Time, (ii) in the case of all other Taxes based
on or in respect of income, the Tax computed on the basis of the taxable income
or loss attributable to the Acquired Company Assets and the Acquired Companies
for each partial period as determined from their books and records, and (iii) in
the case of all other Taxes, on the basis of the actual activities or attributes
of the Acquired Company Assets and the Acquired Companies for each partial
period as determined from their books and records.
(d) Straddle Returns. The Buyer shall prepare any Straddle Returns. The
Buyer shall deliver, at least 45 days prior to the due date for filing such
Straddle Return (including any extension) to the Seller a statement setting
forth the amount of Tax that the Seller owes, including the allocation of
taxable income and Taxes under Section 9(c), and copies of such Straddle Return.
The Seller shall have the right to review such Straddle Returns and the
allocation of taxable income and liability for Taxes and to suggest to the Buyer
any reasonable changes to such Straddle Returns no later than 15 days prior to
the date for the filing of such Straddle Returns. The Seller and the Buyer agree
to consult and to attempt to resolve in good faith any issue arising as a result
of the review of such Straddle Returns and allocation of taxable income and
liability for Taxes and mutually to consent to the filing as promptly as
possible of such Straddle Returns. Not later than five days before the due date
for the payment of Taxes with respect to such Straddle Returns, the Seller shall
pay or cause to be paid to the Buyer an amount equal to the Taxes as agreed to
by the Buyer and the Seller as being owed by the Seller. If the Buyer and the
Seller cannot agree on the amount of Taxes owed by the Seller with respect to a
Straddle Return, the Seller shall pay or cause to be paid to the Buyer the
amount of Taxes reasonably determined by the Seller to be owed by the Seller.
Within ten days after such payment, the Seller and the Buyer shall refer the
matter to an independent "Big-Four" accounting firm agreed to by the Buyer and
the Seller to arbitrate the dispute. The Seller and the Buyer shall equally
share the fees and expenses of such accounting firm and its determination as to
the amount owing by the Seller with respect to a Straddle Return shall be
binding on the Seller and the Buyer. Within five days after the determination by
such accounting firm, if necessary, the appropriate Party shall pay the other
Party any amount which is determined by such accounting firm to be owed. The
Seller shall be entitled to reduce its obligation to pay Taxes with respect to a
34
Straddle Return by the amount of any estimated Taxes paid with respect to such
Taxes on or before the Effective Time.
(e) Claims for Refund. The Buyer shall not, and shall cause the Acquired
Companies and any of their Affiliates not to, file any claim for refund of Taxes
with respect to the Acquired Company Assets and the Acquired Companies for whole
or partial taxable periods on or before the Effective Time.
(f) Indemnification. The Buyer agrees to indemnify the Seller against all
Taxes of or with respect to the Acquired Company Assets and the Acquired
Companies for any Post-Closing Tax Period and the portion of any Straddle Period
occurring after the Effective Time. The Seller and the Seller parent jointly and
severally agree to indemnify the Buyer against all Taxes of or with respect to
the Acquired Company Assets and the Acquired Companies for any Pre-Closing Tax
Period and the portion of any Straddle Period occurring on or before the
Effective Time, and the Buyer Parties against all Taxes of or with respect to
the Retained Items.
(g) Cooperation on Tax Matters.
(i) The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other Party, in connection with the filing of
Tax Returns pursuant to this Section 9(g) and any audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.
(ii) The Buyer and the Seller further agree, upon request, to use
their Best Efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
transactions contemplated hereby).
(iii) The Buyer and the Seller agree, upon request, to provide the
other Parties with all information that such other Parties may be required to
report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
(h) Certain Taxes. The Seller shall file all necessary Tax Returns and
other documentation with respect to all transfer, documentary, sales, use,
stamp, registration and other similar Taxes and fees, pay the related Tax, and,
if required by applicable Law, the Buyer shall, and shall cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
Notwithstanding anything set forth in this Agreement to the contrary, the Buyer
shall pay to the Seller, on or before the date such payments are due from the
Seller, any transfer, documentary, sales, use, stamp, registration and other
Taxes and fees incurred in connection with this Agreement and the transactions
contemplated hereby.
(i) Confidentiality. Any information shared in connection with Taxes shall
be kept confidential, except as may otherwise be necessary in connection with
the filing
35
of Tax Returns or reports, refund claims, tax audits, tax claims and tax
litigation, or as required by Law.
(j) Audits. The Seller or the Buyer, as applicable, shall provide prompt
written notice to the other Parties of any pending or threatened tax audit,
assessment or proceeding that it becomes aware of related to the Acquired
Company Assets or the Acquired Companies for whole or partial periods for which
it is indemnified by any other Party hereunder. Such notice shall contain
factual information (to the extent known) describing the asserted tax liability
in reasonable detail and shall be accompanied by copies of any notice or other
document received from or with any tax authority in respect of any such matters.
If an indemnified party has Knowledge of an asserted tax liability with respect
to a matter for which it is to be indemnified hereunder and such party fails to
give the indemnifying party prompt notice of such asserted tax liability, then
(I) if the indemnifying party is precluded by the failure to give prompt notice
from contesting the asserted tax liability in any forum, the indemnifying party
shall have no obligation to indemnify the indemnified party for any Taxes
arising out of such asserted tax liability, and (II) if the indemnifying party
is not so precluded from contesting, but such failure to give prompt notice
results in a detriment to the indemnifying party, then any amount which the
indemnifying party is otherwise required to pay the indemnified party pursuant
to this Section 9(j) shall be reduced by the amount of such detriment, provided,
the indemnified party shall nevertheless be entitled to full indemnification
hereunder to the extent, and only to the extent, that such party can establish
that the indemnifying party was not prejudiced by such failure. This Section
9(j) shall control the procedure for Tax indemnification matters to the extent
it is inconsistent with any other provision of this Agreement.
(k) Control of Proceedings. The party responsible for the Tax under this
Agreement shall control audits and disputes related to such Taxes (including
action taken to pay, compromise or settle such Taxes). The Seller and the Buyer
shall jointly control, in good faith with each other, audits and disputes
relating to Straddle Periods. Reasonable out-of-pocket expenses with respect to
such contests shall be borne by the Seller and the Buyer in proportion to their
responsibility for such Taxes as set forth in this Agreement. Except as
otherwise provided by this Agreement, the noncontrolling party shall be afforded
a reasonable opportunity to participate in such proceedings at its own expense.
(l) Powers of Attorney. The Buyer, the Acquired Companies and their
respective Affiliates shall provide the Seller and its Affiliates with such
powers of attorney or other authorizing documentation as are reasonably
necessary to empower them to execute and file returns they are responsible for
hereunder, file refund and equivalent claims for Taxes they are responsible for,
and contest, settle, and resolve any audits and disputes that they have control
over under Section 9(k) (including any refund claims which turn into audits or
disputes).
(m) Remittance of Refunds. If the Buyer or any Affiliate of the Buyer
receives a refund of any Taxes that the Seller is responsible for hereunder, or
if the Seller or any Affiliate of the Seller receives a refund of any Taxes that
the Buyer is responsible for
36
hereunder, the party receiving such refund shall, within 30 days after receipt
of such refund, remit it to the party who has responsibility for such Taxes
hereunder. For the purpose of this Section 9(m), the term "refund" shall include
a reduction in Tax and the use of an overpayment as a credit or other Tax
offset, and receipt of a refund shall occur upon the filing of a Tax Return or
an adjustment thereto using such reduction, overpayment or offset or upon the
receipt of cash.
(n) Purchase Price Allocation. The Seller and the Buyer agree that the
actual Purchase Price allocable to the Acquired Company Assets shall be
allocated to the Acquired Company Assets for all purposes (including Tax and
financial accounting purposes) as jointly agreed between the Buyer and the
Seller within 90 days after the Closing Date. The Seller and the Buyer agree (i)
to report the federal, state and local income and other Tax consequences of the
transactions contemplated herein, and in particular to report the information
required by Section 1060(b) of the Code, and to jointly prepare Form 8594 (Asset
Acquisition Statement under Section 1060) in a manner consistent with such
allocation and (ii) without the consent of the other Party, not to take any
position inconsistent therewith upon examination of any Tax return, in any
refund claim, in any litigation, investigation or otherwise. The Seller and the
Buyer agree that each will furnish the other a copy of Form 8594 (Asset
Acquisition Statement under Section 1060) proposed to be filed with the Internal
Revenue Service by such Party or any Affiliate thereof within ten days prior to
the filing of such form with the Internal Revenue Service.
(o) Closing Tax Certificate. At the Closing, the Seller shall deliver to
the Buyer a certificate, in the form of Exhibit D, signed under penalties of
perjury (i) stating it is not a foreign corporation, foreign partnership,
foreign trust or foreign estate, (ii) providing its U.S. Employer Identification
Number, and (iii) providing its address, all pursuant to Section 1445 of the
Code.
(p) Like Kind Exchanges. Each of the Buyer and the Seller shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with enabling the transactions contemplated herein to qualify in
whole or in part as a "like-kind exchange" pursuant to Section 1031 of the Code.
Each of the Buyer and the Seller agree to indemnify the other Party against any
and all costs and expenses incurred with respect to furnishing such cooperation.
Each Party may assign all or a portion of its rights under this Agreement to a
"qualified intermediary" to facilitate a like-kind exchange. The agreement
between the applicable Party and the qualified intermediary (the "EXCHANGE
AGREEMENT") shall be reasonably acceptable to both Parties.
10. Termination.
(a) Termination of Agreement. The Parties may terminate this Agreement, as
provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time before the Closing;
37
(ii) Seller, Seller Parent or Buyer may terminate this Agreement if
the Merger Agreement is terminated pursuant to the terms thereof;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller and the Seller Parent at any time before Closing in the
event the Seller or the Seller Parent has breached any representation or
warranty set forth in Section 3(a) or Section 4 or any covenant contained in
this Agreement, the Buyer has notified the Seller and the Seller Parent of the
breach, the breach is not curable, or, if curable, has continued without cure
for a period of 90 days after the written notice of breach and such breach would
result in a failure to satisfy a condition to the Buyer's obligation to
consummate the transactions contemplated hereby; provided, that the right to
terminate this Agreement pursuant to this Section 10(a)(iii) shall not be
available to Buyer if, at such time, Buyer has breached any representation or
warranty set forth in Section 3(b) or any covenant contained in this Agreement
and such breach would result in a failure to satisfy a condition to Seller's
obligation to consummate the transactions contemplated hereby;
(iv) the Seller and the Seller Parent may terminate this Agreement
by giving written notice to the Buyer at any time before the Closing in the
event the Buyer has breached any representation or warranties set forth in
Section 3(b) or any covenant contained in this Agreement, the Seller has
notified the Buyer of the breach, the breach is not curable, or, if curable, has
continued without cure for a period of 90 days after the written notice of
breach and such breach would result in a failure to satisfy a condition to the
Seller's obligation to consummate the transactions contemplated hereby; provided
that the right to terminate this Agreement pursuant to this Section 10(a)(iv)
shall not be available to Seller and the Seller Parent if, at such time, Seller
or the Seller Parent has breached any representation or warranties set forth in
Section 3(a) or Section 4 or any covenant contained in this Agreement and such
breach would result in a failure to satisfy a condition to Buyer's obligation to
consummate the transactions contemplated hereby; and
(v) the Parties may terminate this Agreement if any court of
competent jurisdiction or any governmental, administrative or regulatory
authority, agency or body shall have issued an order, decree or ruling or shall
have taken any other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated hereby and such order, decree, ruling
or other action shall have become final and nonappealable; provided that the
person seeking to terminate this Agreement pursuant to this Section 10(a)(v)
shall have complied with Section 5(a), Section 5(b) and Section 5(g).
(b) Effect of Termination. Except for the obligations under Sections 8, 10
and 11, if any Party terminates this Agreement pursuant to Section 10(a), all
rights and obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability of any Party
then in breach).
11. Miscellaneous.
38
(a) Public Announcements. Any Party is permitted to issue a press release
or make a public announcement concerning this Agreement without the other
Parties' consents, in which case the disclosing Party shall provide an advance
copy of the proposed public disclosure to the non-disclosing Parties and permit
the non-disclosing Parties the opportunity to reasonably comment on such
proposed disclosure. The Parties agree to cooperate in good faith to issue
separate and simultaneous press releases within 24 hours following the execution
of this Agreement by all Parties.
(b) Insurance. The Buyer acknowledges and agrees that, following the
Closing, any insurance policies maintained by any Seller Party shall be
terminated or modified to exclude coverage of all or any portion of the Acquired
Company Assets or Acquired Companies by the Seller or any of its Affiliates,
and, as a result, the Buyer shall be obligated at or before Closing to obtain at
its sole cost and expense replacement insurance, including insurance required by
any third party to be maintained for or by the Acquired Company Assets or the
Acquired Companies. The Buyer further acknowledges and agrees that the Buyer may
need to provide to certain Governmental Authorities and third parties evidence
of such replacement or substitute insurance coverage for the continued
operations or businesses of the Acquired Company Assets or the Acquired
Companies. If any claims are made or losses occur prior to the Closing Date that
relate solely to the Acquired Company Assets or the business activities of the
Acquired Companies and such claims, or the claims associated with such losses,
properly may be made against the policies retained by the Seller or their
Affiliates after the Closing, then the Seller shall use its Best Efforts so that
the Buyer can file notice, and otherwise continue to pursue these claims
pursuant to the terms of such policies; provided, however, nothing in this
Agreement shall require the Seller to maintain or to refrain from asserting
claims against or exhausting any retained policies.
(c) No Third Party Beneficiaries. Except for the indemnification
provisions, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and permitted
assigns.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Prior to the Closing, the Buyer may not assign this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the Seller; provided, however, without the prior
written approval of the Seller, the Buyer and its permitted successors and
assigns may assign any or all of its rights, interests or obligations under this
Agreement (i) to an Affiliate of the Buyer, including designating one or more
Affiliates of the Buyer to be the assignee of some or any portion of the
Acquired Company Equity Interests, (ii) in connection with granting a lien,
pledge, mortgage or other security interest pursuant to a bona fide lending
transaction, or (iii) pursuant to the foreclosure or settlement of any
assignment made pursuant to (ii) above; provided the Buyer is not released from
any of its obligations or liabilities hereunder. Each Party may assign either
this Agreement or any of its rights, interests or obligations hereunder, without
the prior written approval of the other Party, to a qualified intermediary in
connection with any transaction described in Section 9(p); provided,
39
however, that no such assignment shall relieve any Party from any of its
obligations or liabilities under this Agreement.
(e) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given two business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
If to either Seller: c/o El Paso Corporation
Attention: General Counsel
El Paso Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Seller Parent: El Paso Corporation
Attention: General Counsel
El Paso Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Buyer: Enterprise Products Operating L.P.
Attention: President
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Enterprise Products Operating L.P.
Attention: Legal Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the addresses set forth above using any
other means other than electronic mail (including personal delivery, expedited
courier, messenger service, telecopy or ordinary mail), but no such notice,
request, demand, claim, or other
40
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient; provided, if notice is sent by
telecopy and such telecopy is received during non-business hours of the
addressee, then such notice shall be deemed received on the next business day of
the addressee. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO
ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF TEXAS
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF TEXAS. VENUE FOR ANY ACTION ARISING UNDER
THIS AGREEMENT SHALL LIE EXCLUSIVELY IN ANY STATE OR FEDERAL COURT IN ▇▇▇▇▇▇
COUNTY, TEXAS.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer, the Seller and the Seller Parent. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Transaction Expenses. Each of the Buyer, on the one hand, and the
Seller and the Seller Parent, on the other hand, shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(l) Construction. 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. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. All personal pronouns
used in this Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall include the plural,
and vice versa. All references herein
41
to Exhibits, Schedules, Articles, Sections or subdivisions thereof shall refer
to the corresponding Exhibits, Schedules, Article, Section or subdivision
thereof of this Agreement unless specific reference is made to such exhibits,
articles, sections or subdivisions of another document or instrument. The terms
"herein," "hereby," "hereunder," "hereof," "hereinafter," and other equivalent
words refer to this Agreement in its entirety and not solely to the particular
portion of the Agreement in which such word is used. Each certificate delivered
pursuant to this Agreement shall be deemed a part hereof, and any
representation, warranty or covenant herein referenced or affirmed in such
certificate shall be treated as a representation, warranty or covenant given in
the correlated Section hereof on the date of such certificate. Additionally, any
representation, warranty or covenant made in any such certificate shall be
deemed to be made herein.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Entire Agreement. THIS AGREEMENT (INCLUDING THE DOCUMENTS REFERRED TO
HEREIN) CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES AND SUPERSEDES ANY
PRIOR UNDERSTANDINGS, AGREEMENTS, OR REPRESENTATIONS BY OR AMONG THE PARTIES,
WRITTEN OR ORAL, TO THE EXTENT THEY HAVE RELATED IN ANY WAY TO THE SUBJECT
MATTER HEREOF, EXCEPT FOR THE CONFIDENTIALITY AGREEMENT.
(o) Transition Services and Miscellaneous Assets.
(i) Transition Services. Reference is made to Section 4.15 of the
Parent Company Agreement which provides for certain transition services to be
provided by the Seller Parent or its Affiliates for a period of time following
the Merger Closing. Following the Closing, the Seller and the Seller Parent
agree to provide or cause to be provided transition services to the Buyer with
respect to the Acquired Companies and Acquired Company Assets that are
substantially similar to those to be provided pursuant to the Merger Agreement,
such services to be provided for the same period as the similar services that
are provided under the Merger Agreement and the reimbursements/fees to be paid
by the Buyer for such services shall be determined in the same manner as
reimbursement/fees are determined pursuant to the Parent Company Agreement.
(ii) Miscellaneous Assets. Following the Closing Date, Seller Parent
shall, and shall cause its applicable Affiliates to, execute and deliver, or
cause to be executed and delivered, such instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and take such other action
as may be necessary to transfer to the Acquired Companies title to assets of the
type listed and described in Section 5.9 of the GulfTerra Disclosure Letter (as
such term is defined in the Merger Agreement) to the Merger Agreement that are
used in the business of the Acquired Companies but owned by the Seller or any
Affiliate of the Seller (other than the Acquired Companies) (the assets so
transferred to the Acquired Companies being herein referred to
42
as the "MISCELLANEOUS ASSETS"). The consideration for the transfer contemplated
in the preceding sentence is included as part of the Purchase Price.
(p) Conversion. Transmission shall have the right, without the consent of
the Buyer, to convert to a corporation at any time prior to the Closing.
[SIGNATURE PAGES FOLLOW]
43
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth in the preamble.
EL PASO CORPORATION
BY: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
NAME: D. ▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: Executive Vice President and
Chief Financial Officer
EL PASO FIELD SERVICES
MANAGEMENT, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇▇
TITLE: Vice President
EL PASO TRANSMISSION, L.L.C.
BY: EL PASO CORPORATION,
MEMBER
BY: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
NAME: D. ▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: Executive Vice President and
Chief Financial Officer
EL PASO FIELD SERVICES
HOLDING COMPANY
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇▇
TITLE: Vice President
ENTERPRISE PRODUCTS
OPERATING L.P.
BY: ENTERPRISE PRODUCTS OLPGP, INC.,
GENERAL PARTNER
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
TITLE: Executive Vice President and
Chief Financial Officer