AMENDED AND RESTATED
Purchase and Sale Agreement
by and between
GAS SOLUTIONS, LTD.,
a Texas Limited Partnership ,
Seller,
and
MNW PARTNERS, LLC
a Texas Limited Liability Company,
Buyer
Dated September 23, 2004
Execution Copy
AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
This Amended and Restated Purchase and Sale Agreement (this
"Agreement") dated as of the 23rd day of September, 2004, is made and entered
into by and between GAS SOLUTIONS, LTD., a Texas limited partnership ("Seller"),
and MNW PARTNERS, LLC, a Texas limited liability company ("Buyer").
RECITALS
WHEREAS, Seller and MNW Acquisition, LP, a Texas limited partnership
("Original Buyer") entered into that certain Purchase and Sale Agreement dated
July 29, 2004 (the "Original Agreement").
WHEREAS, Original Buyer assigned its rights and obligation under the
Original Agreement to Buyer pursuant to that certain Assignment of Contract
dated as of September 23, 2004.
WHEREAS, Seller and Buyer desire to amend and restate the Original
Agreement to make certain revisions, changes and corrections to such Original
Agreement as have come to the parties' attention during the due diligence review
period.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the benefits to be derived by each party hereunder and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.01 Description of Assets. Subject to the terms and conditions of this
Agreement, Seller agrees to sell and convey to Buyer, and Buyer agrees to
purchase and pay for, all of Seller's right, title and interest in and to the
following described assets (herein called the "Assets"), to-wit:
(a) All real property, including without limitation, lands,
rights-of-way, servitudes, easements, buildings and other permanent improvements
used or held for use for Seller's benefit in connection with Seller's ownership
or operation of the Longview Gas Plant in ▇▇▇▇▇ County, Texas (the "Longview
Facility"), and the Chapel Hill Gas Plant in ▇▇▇▇▇ County, Texas (along with the
Longview Facility, the "Plants"), including, but not limited to, those
properties, rights and interests more particularly described on Exhibit "A-1"
and Exhibit "A-2" attached hereto (the "Real Property");
(b) All tangible personal property relating to the maintenance,
use or operation of the Plants, including without limitation, the compression
equipment, processing equipment, injection equipment, gathering systems, residue
return lines, truck loading facilities, regulators, meters, measurement
equipment, measurement telemetry, valves, plant stock, vehicles, trucks,
warehouse inventory, parts, supplies, office furniture, fixtures and equipment,
computers, printers, software (but only to the extent actually owned by Seller),
telephone systems and all other tangible assets used or held for use for
Seller's benefit solely in connection with Seller's ownership or operation of
the Plants including, but not limited to, the vehicles listed on Exhibit "A-3"
attached hereto (the "Personal Property");
(c) All intangible property such as trademarks, service marks,
logos, contracts, agreements, construction and operating agreements, permits,
licenses and all other instruments, used or held for use for Seller's benefit in
connection with Seller's ownership or operation of the Plants (including, but
not limited to, any assignable contracts providing third party indemnification
for environmental liabilities) all as more particularly described on Exhibit "B"
attached hereto (the "Contracts"); and
(d) All of Seller's books, records, files, documents and data
related to the Plants, including tax information and records relating to ad
valorem, property and similar taxes and assessments based on or measured by the
ownership and/or assessed value of property with respect to the Assets, but
excluding previous offers and economic analysis associated with the purchase
and/or sale of the Assets, proprietary information, process licenses,
information covered by non-disclosure obligations, information covered by legal
privilege and tax information and records relating to income, franchise and
other taxes assessed with respect to Seller's general operations and not
specifically limited to or based on the Assets to be transferred to Buyer as
herein provided (the "Records"); provided, however, Seller shall retain the
originals of all historical accounting, insurance, employee and environmental
Records, but Buyer shall be entitled to copy all such original Records retained
by Seller at Closing.
SAVE AND EXCEPT the assets and properties described in Exhibit "C" attached
hereto (the "Excluded Assets").
1.02 LaSalle Street Natural Resources Corporation Net Profits Royalty
Interest. Seller and Buyer acknowledge that LaSalle Street Natural Resources
Corporation, a Delaware corporation, owns a four percent (4%) net profits
royalty interest limited to the Longview Facility (the "LaSalle NPI") pursuant
to the terms of the following documents (the "NPI Documents"):
(a) Assignment and Conveyance of Net Profits Royalty Interest
dated February 26, 1999, from Gas Solutions, Ltd. to LaSalle Street Natural
Resources Corporation;
(b) Certificate as to Net Profits Royalty Interests dated February
26, 1999, made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President of Danmark Energy Services,
Inc., the sole general partner of Gas Solutions, Ltd. as of that date;
(c) Agreement Concerning NPI Interests between Gas Solutions, Ltd.
and LaSalle Street Natural Resources Corporation; and
(d) Agreement as to Certain Tax Matters dated February 26, 1999,
among Bank of America National Trust and Savings Association, LaSalle Street
Natural Resources Corporation and Gas Solutions, Ltd.
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The sale and conveyance of the Assets by Seller to Buyer is expressly
subject to the LaSalle NPI and all of the terms, conditions, covenants and
agreements contained in or referenced in the related NPI Documents. Upon
Closing, Buyer shall assume and agree to perform all duties, obligations and
responsibilities related to or arising out of the LaSalle NPI and/or the NPI
Documents attributable to the period of time on and after the Effective Time.
1.03 Effective Time. The purchase and sale of the Assets shall be
effective as of 7:00 a.m. local time at the location of the Assets on the second
day of the calendar month in which Closing (as herein defined) actually occurs
(herein called the "Effective Time").
1.04 Disclosure of Relationship. Seller and Buyer acknowledge that
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), a limited partner in Seller, has served as a
consultant to the general partner of Seller concerning the day-to-day business
operations of Seller and has been paid a consulting fee by Seller for his
services in that regard. A copy of the agreement containing the terms and
conditions of ▇▇▇▇▇▇▇▇'▇ consulting arrangement with Buyer following the Closing
Date is attached hereto as Exhibit "D".
ARTICLE II.
PURCHASE PRICE
2.01 Purchase Price. The purchase price payable by Buyer for the Assets
shall be $25,475,000.00 in immediately available funds (the "Purchase Price").
2.02 Adjustments to Purchase Price. The Purchase Price shall be subject
to adjustment as follows:
(a) The Purchase Price shall be increased by the following:
(i) The amount of all verifiable expenditures (net to Seller's
interest) incurred and paid or to be paid by or on behalf of Seller that are
attributable to the ownership or operation of the Assets and to the period of
time from and after the Effective Time, including without limitation, capital
expenditures, royalties, ad valorem and property taxes and assessments,
severance taxes, sales taxes, production taxes, rentals and similar charges and
amounts billed under applicable operating agreements or other similar
arrangements or agreements and, in the absence of such agreements, such expenses
of the sort customarily billed thereunder;
(ii) An amount equal to all prepaid expenses attributable to
the Assets that are paid by Seller or any affiliate of Seller that inure to the
benefit of Buyer and that are, in accordance with generally accepted accounting
principles, attributable to the period after the Effective Time, including,
without limitation, prepaid ad valorem, property, production, severance and
similar taxes (but not including income taxes) based upon or measured by the
ownership of property or the production of hydrocarbons or the receipt of
proceeds therefrom;
(iii) The amount of all third party costs incurred and paid by
Seller in connection with the agreements with ExxonMobil described in Section
4.01(d) as budgeted in writing or as otherwise approved by Buyer, whose approval
shall not be unreasonably withheld; and
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(iv) Any other amount mutually agreed upon by Seller and
Buyer.
(b) The Purchase Price shall be reduced by the following:
(i) Proceeds (net to Seller's interest) earned and received or
to be received by or on behalf of Seller that are attributable to the ownership
or operation of the Assets and to the period of time from and after the
Effective Time;
(ii) An amount equal to all unpaid ad valorem, property and
similar taxes and assessments (but not including income or franchise taxes)
based upon or measured by the ownership and/or assessed value of property
accruing to the Assets prior to the Effective Time;
(iii) An amount equal to all rent, utilities, third party
services, or any other expenses incurred, in part or entirely, prior to the
Effective Time and paid by Buyer;
(iv) The amount of all verifiable expenditures paid by Buyer
for work actually done and performed in connection with the Assets prior to the
Effective Time; and
(v) Any other amount mutually agreed upon by Seller and Buyer.
2.03 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth in Exhibit "E" hereto (the "Allocated
Value"), and Seller and Buyer agree to file their tax returns in accordance with
the allocations set forth on Exhibit "E".
2.04 Performance Deposit. If Buyer does not elect to terminate this
Agreement in accordance with Section 6.02, Buyer shall deposit with Seller on or
before September 3, 2004, at 4:00 p.m. C.D.T., a performance deposit in the
amount of $500,000.00 (the "Performance Deposit"). The Performance Deposit will
be credited against the Closing Amount (as defined in Section 8.02(b)) at
Closing, will not bear interest and is not refundable except as expressly
provided in this Agreement. Once Buyer has deposited the Performance Deposit
with Seller, Buyer shall not be entitled to a return or refund of the
Performance Deposit unless Seller is in material default under this Agreement as
provided in Section 11.02.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Except as provided
below, Seller represents and warrants to Buyer as follows:
(a) Seller is a limited partnership duly organized and validly
existing under the laws of the State of Texas, and has all requisite power and
authority to own and lease the properties and assets it currently owns and
leases and to carry on its business as such business is currently conducted. SB
Gas Services, LLC is a limited liability company duly organized and validly
existing under the laws of the State of Texas, and has all requisite power and
authority to own and lease the properties and assets it currently owns and
leases and to carry on its business as such business is currently conducted.
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(b) Seller has all requisite power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform all the terms and conditions hereof to be performed by it. The
execution and delivery of this Agreement by Seller, the performance by Seller of
all the terms and conditions hereof to be performed by it and the consummation
of the transactions contemplated hereby have been, or will be, duly authorized
and approved by the appropriate governing body of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
laws relating to or affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) This Agreement and the execution and delivery hereof by Seller
does not, and the fulfillment and compliance with the terms and conditions
hereof and the consummation of the transactions contemplated hereby will not
conflict with, or require the consent of any person under, any of the terms,
conditions or provisions of the partnership agreement of Seller, or any law,
order, contract or permit to which Seller is subject or a party.
(d) Seller is not in default in any material respect under, and to
the knowledge of Seller, no condition exists that with notice or lapse of time
or both would constitute a material default under (i) any mortgage, indenture,
loan, credit agreement or other agreement or instrument evidencing indebtedness
for borrowed money to which Seller is a party or by which Seller is bound or to
which any of the Assets are subject, or any other agreement, contract, lease,
license or other instrument, or (ii) any order, judgment or decree of any court,
commission, board, agency or other governmental body, if such default would have
a material adverse effect upon the Assets.
(e) Exhibit "B" hereto sets forth a list of all material Contracts
affecting the Assets. To the best of Seller's knowledge, all of such Contracts
are in full force and effect and are the valid and legally binding obligations
of the parties thereto. Seller is not in breach or default with respect to any
material obligations pursuant to any material Contract. To the best of Seller's
knowledge, no other party to any Contract (or any successor in interest thereto)
is in breach or default with respect to any of its material obligations
thereunder. Seller has not given nor received notice of any action to terminate,
cancel, rescind or procure a judicial reformation of any material Contract.
(f) To the best of Seller's knowledge, all ad valorem, property
and similar taxes and assessments based on or measured by the ownership of
property with respect to the Assets which are currently due have been properly
paid.
(g) To the best of Seller's knowledge, all valid laws, regulations
and orders of all governmental agencies having jurisdiction over the Assets have
been and shall continue to be complied with in all respects until the Closing,
all material necessary permits from and reports to governmental agencies having
jurisdiction in connection with the Assets have been obtained and have been
timely, properly and accurately made and will continue to be timely, properly
and accurately made through Closing, if the failure to comply or obtain the
permit in question would have a material adverse effect upon the Assets or their
operation. No governmental consents are
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required to effect the sale of the Assets to Buyer. To Seller's actual
knowledge, there are no material violations of any law pertaining to
environmental protection or protection of human health or safety, including
without limitation those arising under the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Water Pollution Control Act, the Solid Waste Disposal Act, as amended,
the Federal Clean Air Act or the Toxic Substances Control Act.
(h) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Buyer shall have any responsibility whatsoever.
(i) Except as may be set forth in Exhibit "F" hereto, on the date
hereof no suit, action or other proceeding is pending before any court or
governmental agency to which Seller is a party and which might result in
impairment or loss of Seller's title to any part of the Assets or that might
hinder or impede operation of the Assets and, to the knowledge of Seller, no
such suit, action or other proceeding is threatened. Seller shall promptly
notify Buyer of any such proceeding which comes to Seller's attention after the
date of this Agreement.
(j) Schedule 3.01(j) lists each non-qualified deferred
compensation plan, qualified defined contribution retirement plan, qualified
defined benefit retirement plan or other material fringe benefit plan or program
that Seller maintains or to which Seller contributes. With respect to any
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), which is subject to ERISA and
which is sponsored, maintained or contributed to, or has been sponsored,
maintained or contributed to, within six years prior to the Closing Date, by
Seller or any person deemed to be affiliated or aggregated with Seller under
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986 (the
"Code") or Section 4001(a)(14) of ERISA, (a) no unsatisfied withdrawal liability
or obligation, within the meaning of Section 4201 of ERISA, has been incurred,
(b) no unsatisfied liability or obligation to the Pension Benefit Guaranty
Corporation has been incurred by any Seller Party or any ERISA Affiliate, (c) no
accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred and (d) all
contributions (including installments) to such plan required by Section 302 of
ERISA and Section 412 of the Code have been timely made. With respect to any
kind of employee benefit plan, such plan has been funded and maintained in
compliance with all Laws applicable thereto and the requirements of such plan's
governing documents.
(k) Set forth on Schedule 3.01(k) are the following financial
statements (the "Financial Statements") of Seller: (a) audited balance sheets
and statements of income, changes in partners' capital and cash flow as of and
for the fiscal years ended December 31, 2001, 2002, and 2003; and (b) unaudited
balance sheet (the "Most Recent Balance Sheet") and statements of income (the
"Interim Financial Statements") as of and for the five months ended May 31, 2004
(the "Balance Sheet Date"). The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby, present
fairly Seller's financial condition as of such dates and Seller's results of
operations for such periods and are consistent with Seller's books and records;
provided, however, that the Interim Financial Statements are
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subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items. Seller is
not now insolvent, nor will Seller be rendered insolvent by any of the
Transactions. A person is "insolvent" for purposes of this Section when the sum
of its liabilities and obligations is greater than a fair valuation of all of
its property.
(l) Except as set forth in Schedule 3.01(l), since the Balance
Sheet Date, Seller has operated in the ordinary course of business consistent
with past custom and practice (including with respect to quantity, quality and
frequency) ("Ordinary Course of Business"), and, from the Balance Sheet Date to
the Closing Date, there have been no events, series of events, or the lack of
occurrence thereof with respect to the Assets that, singularly or in the
aggregate, could reasonably be expected to have a material adverse effect on the
Business or Assets.
(m) Except as set forth on Schedule 3.01(m), (a) the Assets
constitute and include all the assets necessary for the conduct of the business
as currently conducted and as currently proposed to be conducted, and (b) there
are no material assets used in or relied upon for the conduct of the business
other than the Assets.
(n) Seller is not subject to any liability or obligation for any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, occupation, customs, ad valorem, duties, franchise,
withholding, social security, unemployment, real property, personal property,
sales, use, transfer, registration, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, the nonpayment of which could be the basis for a lien upon the
Assets to be transferred to Buyer ("Taxes"), including Taxes relating to prior
periods, other than those reflected or reserved against on the Most Recent
Balance Sheet (rather than disclosed in any notes thereto) or those incurred
since the Balance Sheet Date in Seller's Ordinary Course of Business. Except for
Permitted Encumbrances, there are no encumbrances for Taxes upon, or pending or
threatened against, any Asset.
3.02 Representations and Warranties of Buyer. Except as provided below,
Buyer hereby represents and warrants to the Seller as follows:
(a) Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Texas.
(b) Buyer has all requisite power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform all the terms and conditions hereof to be performed by it. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions hereof to be performed by it and the consummation
of the transactions contemplated hereby have been duly authorized and approved
by the appropriate governing body of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the valid and binding obligation
of Buyer, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws relating
to or affecting the enforcement of creditors' rights
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generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) This Agreement and the execution and delivery hereof by Buyer
does not, and the fulfillment and compliance with the terms and conditions
hereof and the consummation of the transactions contemplated hereby will not
conflict with, or require the consent of any person under, any of the terms,
conditions or provisions of the articles of incorporation, articles of
organization, partnership agreement, bylaws, regulations or other organizational
document of Buyer as the case may be.
(d) Buyer has or will have prior to the Closing Date, sufficient
cash, available lines of credit or other sources of immediately available funds
to enable it to make payment of the Purchase Price at the Closing.
(e) There is no action, suit, proceeding or governmental
investigation or inquiry pending, or to the knowledge of Buyer, threatened
against Buyer or its subsidiaries or any of its properties that might delay,
prevent or hinder the consummation of the transactions contemplated hereby.
(f) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever.
(g) Buyer acknowledges that the Assets which are the subject of
this Agreement have been utilized by Seller and its predecessors for the
purposes of processing, transporting and storage of hydrocarbons and related
products and associated oil field operations, possibly including the storage and
disposal of waste materials or hazardous substances. Buyer acknowledges that in
the past there may have been spills of wastes, crude oil, produced water or
other materials including, without limitation, any toxic, hazardous or extremely
hazardous substances, onto the Assets. In addition, some of the Assets may
contain asbestos and/or naturally occurring radioactive material ("NORM"). Buyer
expressly understands that NORM may affix or attach itself to the inside of
materials and equipment as scale or in other forms, that said materials and
equipment located on or included in the Assets may contain NORM and that
NORM-containing material may have been buried or otherwise disposed of on the
Assets. Buyer also expressly understands that special procedures may be required
for the remediation, removal, transportation and disposal of asbestos, NORM or
other materials from the Assets where such material may be found and that Buyer
assumes all liability for or in connection with the assessment, containment,
removal, remediation, transportation and disposal of any such materials in
accordance with (i) all past, present or future applicable laws, rules,
regulations and other requirements of any governmental or judicial entities
having jurisdiction, and (ii) the terms and conditions of the Contracts.
(h) Except as otherwise set forth in this Agreement, Buyer
acknowledges and agrees that Buyer shall acquire the Assets (including Assets
for which a notice is given under Section 6.02) in an "AS IS, WHERE IS"
condition and shall assume all risks that the Assets may contain waste materials
(whether toxic, hazardous, extremely hazardous or otherwise) or other adverse
physical conditions, including, but not limited to, the presence of unknown
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abandoned ▇▇▇▇▇, sumps, pits, pipelines or other waste or spill sites which may
not have been revealed by Buyer's investigation. ON AND AFTER THE EFFECTIVE
TIME, ALL RESPONSIBILITY AND LIABILITY RELATED TO THE CONDITION OF THE ASSETS,
WHETHER KNOWN OR UNKNOWN, FIXED OR CONTINGENT, SHALL BE TRANSFERRED FROM SELLER
TO BUYER WITHOUT RECOURSE ON SELLER. WITHOUT LIMITING THE FOREGOING, BUYER
WAIVES ITS RIGHT TO RECOVER FROM SELLER AND FOREVER RELEASES AND DISCHARGES
SELLER AND AGREES TO DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS FROM ANY AND ALL
DAMAGES, CLAIMS, LOSSES, LIABILITIES, PENALTIES, FINES, LIENS, JUDGEMENTS, COSTS
AND EXPENSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEY'S FEES AND
COSTS), WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
THAT MAY ARISE OR MAY HAVE ARISEN PRIOR TO, ON OR AFTER THE EFFECTIVE TIME ON
ACCOUNT OF OR IN ANY WAY CONNECTED WITH THE ENVIRONMENTAL OR OTHER PHYSICAL
CONDITION OF THE ASSETS OR ANY VIOLATION BY SELLER, BUYER OR ANY OTHER PARTY OF
ANY APPLICABLE EXISTING OR FUTURE LAW, REGULATION, ORDER OR OTHER DIRECTIVE OF
ANY GOVERNMENTAL OR JUDICIAL ENTITY, HAVING JURISDICTION APPLICABLE THERETO,
INCLUDING WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE RESOURCE CONSERVATION
AND RECOVERY ACT OF 1976, THE CLEAN WATER ACT, THE SAFE DRINKING WATER ACT, THE
HAZARDOUS MATERIALS TRANSPORTATION ACT, THE TOXIC SUBSTANCE CONTROL ACT, THE
CLEAN AIR ACT, AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL STATE
AND LOCAL LAWS, AND ANY REPLACEMENT OR SUCCESSOR LEGISLATION OR REGULATION
THERETO.
(i) Buyer has the right under this Agreement to conduct, at its
sole cost, such title examination or investigation, environmental assessments,
physical inspections and other due diligence examinations and investigations, as
it may choose to conduct with respect to the Assets to satisfy itself as to the
condition of the Assets and the legal, contractual and other obligations related
to the ownership and operation of the Assets which will or may have an effect on
Buyer's operations following Closing.
ARTICLE IV.
COVENANTS
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) Prior to Closing, Seller will make available to Buyer for
examination at Seller's offices in White Oak, Texas, title, legal, engineering,
accounting and other information relating to the ownership and operation of the
Assets insofar as the same are in Seller's possession and will cooperate with
Buyer in Buyer's efforts to obtain from third parties, at Buyer's expense, such
additional information relating to the Assets as Buyer may reasonably request.
Seller shall permit Buyer, at Buyer's expense, to inspect and photocopy such
information and records at any reasonable time, but only to the extent, in each
case, that Seller may do so without violating any contractual commitment to a
third party. Seller shall not be
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obligated to furnish any updates of abstracts, title opinions or additional
title information, but shall cooperate with Buyer in Buyer's efforts to obtain,
at Buyer's expense, such additional title information as Buyer may reasonably
request.
(b) After the Effective Time and prior to Closing, Seller has and
will continue to cause the Assets operated by Seller to be produced, operated
and maintained in a good and workmanlike manner consistent with prior practices,
will not abandon any of the Assets, will maintain insurance now in force with
respect to the Assets, will pay or cause to be paid all costs and expenses due
to be paid in connection therewith, will keep the Contracts in full force and
effect and will perform and comply with all the material covenants and
conditions contained in the Contracts and all agreements relating to the Assets.
(c) Seller shall permit Buyer's authorized representatives to
consult with Seller and its agents and employees during reasonable business
hours and to conduct, at Buyer's sole risk and expense, on-site inspections,
tests and inventories of the Assets. During any such inspections of the Assets,
Buyer and Buyer's representatives shall have the right to review the Assets and
all facilities used in connection with the operation thereof, and to conduct
such assessments and investigations as Buyer may deem reasonably necessary or
appropriate to determine the condition of the Assets.
(d) Seller has negotiated agreements with ExxonMobil Gas & Power
Marketing Company ("ExxonMobil") whereby Seller will construct a natural gas
liquids pipeline, at Seller's expense, from the ExxonMobil facilities in the
▇▇▇▇▇▇▇ Field in Wood County, Texas, to the Longview Facility for processing and
further disposition of natural gas liquids pursuant to an Agreement for the
Exchange of Natural Gas Liquids, an Ethane/Propane Mix Sale Agreement and
related agreements between Seller and ExxonMobil, all of which are included as
part of the Contracts listed on Exhibit "B". Seller and ExxonMobil are in the
process of executing the final versions of those agreements as of the date of
this Agreement. The agreements with ExxonMobil require Seller to make
expenditures for land and title research, pipeline right-of-way acquisition and
construction of the liquids pipeline, and Seller has commenced those activities
and begun incurring associated costs prior to the date of this Agreement. Seller
agrees to continue to perform the necessary actions required under the terms of
the agreements with ExxonMobil in the ordinary course of business from the date
of this Agreement to the Closing Date in exchange for Buyer's agreement to
reimburse Seller for all reasonable out-of-pocket third party costs incurred and
paid by Seller in connection therewith, regardless of whether incurred or paid
before or after the date of this Agreement or before or after the Effective
Time. At or prior to Closing, Seller shall obtain the written consent of
ExxonMobil to the assignment to Buyer at Closing of Seller's interests under
said agreements.
(e) Seller will use its best efforts to obtain the satisfaction of
the conditions to Closing set forth in Section 7.01 hereof.
(f) Seller may solicit and receive any back up proposal or offer
from any existing interested parties relating to the acquisition of the equity
interests or the assets of Seller. Notwithstanding the foregoing, Seller may not
execute any agreement or enter into formal negotiations regarding a term sheet,
letter of intent or other binding contractual arrangement (including, but not
limited to, a back up contract) related to the equity interests or the assets of
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Seller. Furthermore, Seller may not permit any third party to initiate due
diligence (legal, financial or otherwise).
(g) Seller hereby expressly consents to Buyer changing its legal
name to "Gas Solutions Partnership II, L.P." following the Closing. Seller
acknowledges and agrees that all intellectual property rights and goodwill
associated with the name "Gas Solutions" including, but not limited to, any
registered or unregistered trademarks, logos, service marks, and other graphical
items are transferred to Buyer pursuant to Section 1.01 and Seller hereby waives
any residual right to bring any claim for infringement with the name "Gas
Solutions, Ltd." Goodwill arising out of Seller's use of the name "Gas
Solutions, Ltd" or any similar name shall inure to the benefit of Buyer, and
Seller hereby assigns to Buyer any rights to such goodwill that inure to it, if
any. Seller is expressly prohibited from assigning, transferring or conveying
any rights in the name "Gas Solutions, Ltd." If Seller dissolves or abandons the
name "Gas Solutions, Ltd.", all rights and title to such name shall be
immediately assigned and transferred to Buyer pursuant to this Section 4.01(g).
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer will use its best efforts to obtain the satisfaction of
the conditions to Closing set forth in Section 7.02 hereof.
(b) In the event that this Agreement is terminated or, if not
terminated, until the Closing, the confidentiality of any data or information
received by Buyer regarding the business and assets of Seller shall be
maintained by Buyer and its representatives in accordance with any applicable
confidentiality agreements executed by Buyer.
(c) Buyer shall release, indemnify, defend and hold Seller
harmless from any claim, cause of action, judgment, liability, loss, damage or
other cost whatsoever brought by or in favor of any person for injury, illness
or death or damage to or loss of property caused by or resulting from Buyer's
access to the Assets for purposes of conducting Buyer's due diligence
investigations contemplated by this Agreement.
(d) From and after Closing, Buyer shall properly handle, remove,
transport and dispose of any material, substance or waste (whether toxic,
hazardous, extremely hazardous or otherwise) from the Assets (including, but not
limited to, produced water, drilling fluids and other associated wastes),
whether present before or after the Effective Time, in accordance with
applicable local, state and federal laws and regulations. To the extent that the
Assets are not sold in fee to Buyer, Buyer shall keep records of the types,
amounts and location of materials, substances and wastes which are transported,
handled, discharged, released or disposed onsite and offsite. When and if any
portion of the Assets is abandoned or Buyer's rights to use and occupy same are
terminated, Buyer shall take whatever additional testing, assessment, closure,
reporting or remedial action with respect to the affected Assets as is necessary
to meet any local, state or federal requirements directed at protecting human
health or the environment in effect at that time, and any other action as
necessary to restore the Assets to an acceptable condition in accordance with
applicable law and the Contracts.
(e) Buyer hereby expressly consents to Seller's use of the name
"Gas Solutions, Ltd." following the Closing.
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ARTICLE V.
DISCLAIMER OF WARRANTIES
5.01 SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY AND ALL REPRESENTATIONS
AND WARRANTIES, EXPRESS AND IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE
RELATING TO (i) THE CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY
EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OR ENVIRONMENTAL
CONDITION, (ii) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR PROPRIETARY RIGHT OF
ANY THIRD PARTY, AND (iii) ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR
ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER, INCLUDING, WITHOUT
LIMITATION, PRICING ASSUMPTIONS, ABILITY TO RENEW OR CONTINUE EXISTING CONTRACTS
UPON THEIR EXPIRATION OR TERMINATION, THE RIGHT TO CONTINUE TO USE EXISTING
PIPELINE AND GATHERING SYSTEMS OR ANY OTHER MATTER. BUYER SHALL ASSUME ALL RISKS
AND HAVE SOLE RESPONSIBILITY FOR ANY ACTIONS TAKEN BY OR ON BEHALF OF BUYER IN
RELIANCE ON ANY INFORMATION, RECORDS AND DATA, IF ANY, TRANSFERRED OR PROVIDED
TO BUYER PURSUANT TO THIS AGREEMENT.
ARTICLE VI.
BUYER'S DUE DILIGENCE INVESTIGATIONS AND REVIEW
6.01 Due Diligence Review Period . Buyer shall have the right for a
period commencing upon execution of this Agreement by both parties and ending on
the Closing Date, to conduct such title review and research, environmental
assessment, physical inspections, contract and other records review, financial
review and other due diligence investigations, inspections and review with
respect to the Assets as Buyer deems advisable, necessary and/or appropriate to
satisfy itself as to the condition of the Assets and the title thereto and the
legal, contractual and other obligations related to the ownership and operation
of the Assets which will or may have an effect on Buyer's ownership and
operation of the Assets after Closing. Seller agrees to cooperate, as reasonably
requested by Buyer, in providing Buyer and Buyer's representatives access to the
Assets and Records in connection with such due diligence activities by Buyer.
With respect to any physical inspections or on-site environmental assessment
activities, Buyer shall provide Seller three (3) days prior written notice of a
desired date(s) for such inspections and/or assessments and Seller shall have
the right to have a representative present during any inspection and/or
assessment and, if any testing is conducted, Seller may require splitting of all
samples. Buyer shall treat all information regarding the Assets as confidential,
whether material or not, and shall not make any contact with any governmental
authority or third party regarding same without Seller's written consent, unless
required by applicable law or other directive.
6.02 Termination if Buyer Dissatisfied. On or before September 3, 2004,
at 4:00 p.m. C.D.T., Buyer shall advise Seller in writing if Buyer is
dissatisfied with the results of its due diligence review of the Assets and
elects to terminate this Agreement. If Buyer delivers to Seller written notice
of Buyer's election to terminate this Agreement prior to the above deadline,
then
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Seller and Buyer shall be released from all further obligations under this
Agreement; provided, however Buyer shall continue to be obligated to (i) comply
with any applicable confidentiality agreements with Seller concerning the
Assets, and (ii) indemnify Seller as provided in Section 10.04(b). If Buyer does
not deliver to Seller written notice of termination prior to the above deadline,
then Buyer shall have no further right to terminate this Agreement pursuant to
this Article VI or Section 11.01(b), and Buyer shall be obligated to purchase
the Assets in an "AS IS, WHERE IS, WITH ALL FAULTS" condition without right of
recourse against Seller or adjustment to the Purchase Price, excepting only
matters arising out of a material default by Seller under this Agreement or any
Contract occurring during the period of time from September 3, 2004 until the
Closing Date.
ARTICLE VII.
CONDITIONS TO CLOSING
7.01 Conditions to the Obligations of Buyer. The obligations of Buyer
to proceed with the Closing contemplated hereby are subject to the satisfaction
on or prior to the Closing of all of the following conditions, any one or more
of which may be waived, in whole or in part, in writing by Buyer:
(a) The representations and warranties made herein by Seller shall
be correct in all material respects at and as of the Closing as though such
representations and warranties were made at and as of the Closing, and Seller
shall have complied in all material respects with all the covenants hereof
required by this Agreement to be performed by Seller at or prior to the Closing.
(b) The Closing hereunder shall not violate any order or decree of
any court, agency, commission, tribunal or other governmental authority having
competent jurisdiction over the transactions contemplated by this Agreement.
(c) There has been no material adverse change in the condition of
the Assets which is not covered by insurance. For purposes of this subsection
(c), a "material adverse change" is any one or more acts, omissions, occurrences
or conditions with respect to the Assets which, in the aggregate, would
reasonably be expected to impair or diminish the value of the Assets in the
amount of $100,000.00 or more.
(d) Delivery to Buyer of a legal opinion of counsel to Seller
reasonable acceptable to Buyer, which counsel shall have professional liability
insurance, substantially in the form attached hereto as Exhibit "H".
7.02 Conditions to the Obligations of Seller. The obligations of Seller
to proceed with the Closing contemplated hereby are subject to the satisfaction
on or prior to the Closing of all of the following conditions, any one or more
of which may be waived, in whole or in part, in writing by Seller:
(a) The representations and warranties made hereby by Buyer shall
be correct in all material respects at and as of the Closing as though such
representations and warranties
13
were made at and as of the Closing, and Buyer shall have complied in all
material respects with all the covenants hereof required by this Agreement to be
performed by Buyer at or prior to the Closing.
(b) The Closing hereunder shall not violate any order or decree of
any court, agency, commission, tribunal or other governmental authority having
competent jurisdiction over the transactions contemplated by this Agreement.
(c) Delivery to Seller of a legal opinion of counsel to Buyer
substantially in the form attached hereto as Exhibit "I".
ARTICLE VIII.
CLOSING
8.01 Time and Place of Closing. Unless the parties agree otherwise and
subject to the conditions stated in this Agreement, the consummation of the
transactions contemplated hereby (herein called the "Closing") shall be held at
the offices of Seller's general partner in Dallas, Texas, on September 23, 2004.
The date on which Closing occurs is referred to herein as the "Closing Date."
8.02 Closing Obligations. At the Closing, the following events shall
occur, each being a condition precedent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall assign, transfer and convey the Assets to Buyer.
Seller shall execute one or more assignments of all or part of the Assets to be
conveyed by it, as may be reasonably requested by Buyer, on the form of
"Assignment, Conveyance and ▇▇▇▇ of Sale" attached hereto as Exhibit "J" and
made a part hereof. Seller shall also execute such additional deeds (including,
but not limited to, special warranty deeds for each of the Plants), conveyances
and bills of sale as may be necessary to convey the Assets to Buyer; provided
that any such additional deeds, conveyances or bills of sale shall not warrant
the condition of the Assets, and shall warrant title only against claims made by
persons claiming by, through or under Seller, but not otherwise. In addition to
the foregoing, the instruments executed pursuant to this Section 8.02(a) shall
be executed in multiple originals and counterparts sufficient to facilitate
recording.
(b) Seller and Buyer shall execute and deliver a settlement
statement prepared by Seller and approved by Buyer (herein called the
"Preliminary Settlement Statement") that shall set forth the Closing Amount (as
hereinafter defined) and each adjustment and the calculation of such adjustments
used to determine such amount. The term "Closing Amount" shall mean the Purchase
Price less the Performance Deposit, adjusted in accordance with Section 2.02
using for such adjustments the best information (including estimated data) then
available.
(c) Buyer shall pay the Closing Amount to Seller by wire transfer
in immediately available funds to the account or accounts designated by Seller
in writing.
(d) Seller shall deliver to Buyer exclusive possession of the
Assets, subject to the rights of third parties under operating agreements and
similar arrangements.
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(e) Buyer shall deliver evidence reasonably satisfactory to Seller
that Buyer is a qualified operator in the State of Texas and has satisfied all
bonding and other requirements established by the Railroad Commission of Texas
with regard to abandonment and restoration obligations associated with the
Assets.
(f) Seller, if it has not previously done so, shall resign as
operator of any of the Assets which it operates. Seller and Buyer shall execute
all necessary or appropriate forms to provide for the change of operator and
cause such forms to be filed with the Railroad Commission of Texas and other
appropriate governmental bodies, if applicable.
(g) Seller and Buyer shall execute transfer orders or
letters-in-lieu thereof in form and substance reasonably acceptable to both
parties directing all purchasers of production to make payment to Buyer of
proceeds attributable to the Assets assigned to Buyer from and after the
Effective Time to the extent such payments have not already been made by such
purchasers.
(h) Seller and Buyer shall each deliver to the other party
certified copies of corporate resolutions, partner consents and similar
documentation reasonably requested by the other party to evidence the proper
authorization of the transactions contemplated by this Agreement and the
execution and delivery of all documents contemplated hereby by a duly authorized
officer, agent or representative.
(i) Seller and Buyer shall each deliver to the other party a bring
down certificate as of the Closing Date duly executed by its chief executive
officer.
ARTICLE IX.
OBLIGATIONS AFTER CLOSING
9.01 Post-Closing Adjustments. As soon as practicable after the
Closing, but not later than ninety (90) days after the Closing, Seller shall
prepare and deliver to Buyer, in accordance with this Agreement and generally
accepted accounting principles, a statement (the "Final Settlement Statement")
setting forth each adjustment to Purchase Price that was not finally determined
as of the Closing and showing the calculation of such adjustments. As soon as
practicable after receipt of such Final Settlement Statement from Seller, and no
later than thirty (30) days thereafter, Buyer shall deliver to Seller a written
report containing any changes that Buyer proposes be made to the Final
Settlement Statement proposed by Seller. The parties shall undertake to agree
with respect to the amounts due pursuant to such Final Settlement Statement not
later than one hundred fifty (150) days after the Closing Date. The final agreed
price paid by Buyer to Seller for the Assets after all adjustments is
hereinafter referred to as the "Final Purchase Price." The date upon which such
agreement is reached or upon which the Final Purchase Price is established,
shall be herein called the "Final Settlement Date." If the Buyer and Seller are
unable to agree upon a Final Purchase Price within one hundred fifty (150) days
from the Closing Date, Seller shall select an independent accounting firm from a
list of three (3) such firms provided by Buyer, which firm shall audit the
disputed items on the Final Settlement Statement and determine the Final
Purchase Price. The decision of such independent accounting firm shall be
binding on Buyer and Seller, and the fees and expenses of such independent
accounting firm shall be borne one-half (1/2) by each of Buyer and Seller.
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9.02 Sales Taxes and Recording Fees. Buyer shall pay all sales taxes
occasioned by the sale of the Assets and all documentary, filing and recording
fees required in connection with the filing and recording of any documents of
conveyance.
9.03 Further Assurances. After Closing, Seller and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action, including payment of monies, as may be
necessary or advisable to carry out their obligations under this Agreement and
under any document, certificate or other instrument delivered pursuant hereto or
required by law.
9.04 Buyer's Post-Closing Obligations. Except to the extent such items
have already been taken into account as an adjustment to the Purchase Price, all
monies, proceeds, receipts, credits and income attributable to the Assets for
all periods of time prior to the Effective Time shall be the property of Seller.
If, at any time subsequent to the Closing, Buyer comes into possession of money
or property belonging to the Seller attributable to ownership or operation of
the Assets prior to the Effective Time, Buyer shall promptly deliver such money
or other property to the Seller. Buyer shall allow Seller access to the Records
pertaining to the period of time prior to the Effective Time during Buyer's
normal business hours after Closing in connection with any rights which Seller
has retained under this Agreement, for the purpose of filing or amending a tax
return, responding to a governmental inquiry, third party litigation or any
other legitimate business purpose; provided that any copies of Records made by
Seller shall be at the sole expense of Seller.
9.05 Seller's Post-Closing Obligations. Except to the extent such items
have already been taken into account as an adjustment to the Purchase Price, all
monies, proceeds, receipts, credits and income attributable to the Assets for
all periods of time after the Effective Time shall be the property of Buyer. If,
at any time subsequent to the Closing, Seller comes into possession of money or
property belonging to the Buyer attributable to ownership or operation of the
Assets after the Effective Time, Seller shall promptly deliver such money or
other property to the Buyer.
9.06 Files and Records. At Closing, Seller shall deliver the Records to
Buyer.
9.07 Survival. The representations and warranties by Seller and Buyer
in this Agreement shall survive the Closing for a period of twelve (12) months
from the Closing Date. All covenants and agreements contained in this Agreement
shall survive the Closing indefinitely.
ARTICLE X.
ASSUMPTION AND INDEMNIFICATION
10.01 Definitions.
(a) "Assumed Obligations" means, except as constitutes Retained
Obligations, (i) all liabilities, duties, and obligations that arise from the
ownership or operation of the Assets after the Effective Time; (ii) all
liabilities and obligations with respect to Abandonment; (iii) all duties,
liabilities and obligations under the Contracts and the NPI Documents arising
after the Effective Time; (iv) the Environmental Obligations; and (v) all other
duties, liabilities and obligations assumed by Buyer under this Agreement.
16
(b) "Environmental Law" means any laws, statutes, treaties, rules,
codes, ordinances, regulations, certificates, orders, interpretations, licenses
and permits of any governmental body, including the common or civil law,
(including, without limitation, those pertaining to occupational health and
safety, consumer product safety, employee benefits, the environment, securities
or zoning) and all judgments, decrees, injunctions, writs, orders or like action
of any court, arbitrator or other governmental body of competent jurisdiction
relating to pollution of air, soil or water, the protection of the environment,
or the handling, release or disposal of hazardous, toxic or waste materials.
(c) "Environmental Obligations" means, except for Abandonment, any
Losses or obligations arising from the following occurrences, conditions, events
and activities on or related to the Assets, regardless of whether resulting from
acts or omissions prior to the Effective Time or the Closing Date, or the
condition of the Assets at Closing: (i) any condition, environmental pollution
or contamination with respect to the air, land, soil, surface, subsurface
strata, surface water, ground water, or sediments, (ii) underground injection
activities and waste disposal; or (iii) necessary remediation, and the cost of
such remediation, or any control, assessment, or compliance with respect to any
pollution, contamination or condition which causes an Asset to not be in
compliance with an Environmental Law or Contract.
(d) "Losses" means any and all losses, liabilities, claims,
demands, penalties, fines, settlements, damages, actions, or suits of whatsoever
kind and nature (but expressly excluding punitive and consequential damages),
whether or not subject to litigation, including, without limitation (i) claims
or penalties arising from products liability, negligence, statutory liability or
violation of any applicable law, statute, treaty, rule, code, ordinance,
regulation, certificate, order, interpretation, license or permit of any
governmental body, or in tort (strict, absolute or otherwise), and (ii) loss of
or damage to any property, and all reasonable out-of-pocket costs, disbursements
and expenses (including, without limitation, legal, accounting, consulting and
investigation expenses and litigation costs).
(e) "Abandonment" means all abandonment, removal, disposal or
restoration associated with the Assets, including, but not limited to, all
abandonment, removal, surface restoration (including without limitation wetlands
and ▇▇▇▇▇ restoration), site clearance and disposal of the Plants, facilities,
structures, fixtures and personal property located on or associated with the
Assets (whether placed on an Asset prior to or after the Effective Time), the
removal and capping of all associated pipelines, gathering lines and flow lines,
the restoration of the surface, site clearance, and any disposal of related
waste materials, including without limitation naturally occurring radioactive
material (NORM) and asbestos, all in accordance with any applicable law,
statute, treaty, rule, code, ordinance, regulation, certificate, order,
interpretation, license or permit of any governmental body and the terms and
conditions of the Contracts.
(f) "Retained Obligations" means, with respect to any Asset,
except as constitutes Environmental Obligations, any liabilities and obligations
of Seller (i) arising from the payment of the costs and expenses of operation of
the Assets prior to the Effective Time; (ii) due, accrued or owed prior to the
Effective Time to third Persons arising from property damage or personal injury
sustained prior to the Effective Time; (iii) arising from any existing
litigation disclosed on Exhibit "F" pending as of the Effective Time; (iv)
arising from or
17
attributable to any Excluded Asset; and (v) to be retained by Seller as
expressly provided in this Agreement.
10.02 Assumption of Assumed Obligations by Buyer. Upon Closing, Buyer
shall be deemed to have assumed all of the Assumed Obligations. From and after
the Closing Date, Buyer covenants and agrees to perform all duties and
responsibilities related to or arising out of the Assumed Obligations.
10.03 Indemnification by Seller. Seller shall indemnify, defend and
hold Buyer and Buyer's officers, directors, partners, members, managers,
employees, agents and representatives harmless from and against all Losses based
upon, arising out of, in connection with, or relating to the following, provided
that Buyer has delivered to Seller a Claim Notice in compliance with Section
10.07 on or before the expiration of twelve (12) months following the Closing
Date:
(a) any breach of any representation, warranty, covenant or
agreement of Seller contained in this Agreement; and
(b) if the Closing occurs, the Retained Obligations .
10.04 Indemnification by Buyer. Buyer shall indemnify, defend and hold
Seller and Seller's officers, directors, partners, members, managers, employees,
agents and representatives harmless from and against all Losses based upon,
arising out of, in connection with, or relating to the following, provided that
Seller has delivered to Buyer a Claim Notice in compliance with Section 10.07 on
or before the expiration of twelve (12) months following the Closing Date with
respect to claims under subsection (a) below, or at any time with respect to
claims under subsections (b), (c) or (d) below:
(a) any breach of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement;
(b) Buyer's inspection and environmental assessment of the Assets
prior to Closing ;
(c) if the Closing occurs, any Environmental Obligations owed to
third parties, regardless of whether any act, omission or occurrence which is
the basis for the subject claim or other matter took place before or after the
Effective Time or the Closing Date; and
(d) if the Closing occurs, the Assumed Obligations.
10.05 Limitations on Indemnification Obligations. The indemnity
obligations of Seller and Buyer contained in Sections 10.03 and 10.04 are
subject to the following limitations:
(a) Neither Seller nor Buyer shall be liable to the other for any
punitive, exemplary, consequential or special damages, provided that such
limitation shall not apply to assumption and indemnity obligations with respect
to claims made by any third party;
(b) Except as provided in Section 10.05(d), neither Seller nor
Buyer shall be liable to, nor have any obligation to indemnify the other party
unless and until the other party has
18
incurred aggregate Losses arising out of the matters described in Section 10.03
or 10.04 of this Agreement, as the case may be, in excess of a deductible of
$100,000.00, after which the indemnifying party shall be obligated to indemnify
the other party from and against any further Losses which are in excess of such
deductible amount up to, but not exceeding, an aggregate amount of $1,000,000.00
for all Losses incurred by the other party; and
(c) Except as provided in Section 10.05(d), no Party shall be
obligated to indemnify the other for the breach of any representation or
warranty, or for any other matter, to the extent that the Party claiming a Loss
as a result thereof had actual knowledge of such breach or other matter at or
prior to the Closing; and
(d) The limitations set forth in subsections (b) and (c) of this
Section 10.05 shall not be applicable to (i) third party claims arising out of
Buyer's assumption and indemnity obligations with respect to Abandonment and/or
Environmental Obligations, (ii) claims related to the adjustments to and final
settlement of the Purchase Price pursuant to Sections 2.02, 8.02(b) and 9.01,
nor (iii) claims arising out of Buyer's failure to pay or otherwise satisfy
obligations arising under the Contracts, the NPI Documents or other obligations
of Seller which are assumed by Buyer pursuant to this Agreement attributable to
the period of time after the Effective Time.
10.06 Indemnity of a Party for Its Negligence. EACH PARTY'S INDEMNITY
OBLIGATIONS UNDER SECTIONS 10.03 and 10.04 SHALL APPLY REGARDLESS OF THE FAULT
OR NEGLIGENCE OF THE INDEMNIFIED PARTY, INCLUDING STRICT OR STATUTORY LIABILITY
OF SUCH INDEMNIFIED PARTY UNDER ANY APPLICABLE LAW.
10.07 Procedures for Asserting Claims. All claims for indemnification
under this Agreement shall be asserted and resolved as follows, provided that
the provisions of this Section 10.07 shall be covenants and not conditions to
the defense and indemnity obligations to which they apply:
(a) Third Person Claims. In the event that any claim for which a
party providing indemnification (the "Indemnifying Party") would be liable to a
party or any of its officers, directors, partners, employees, agents or
representatives entitled to indemnification hereunder (the "Indemnified Party")
is asserted against or sought to be collected by a third person, the Indemnified
Party shall promptly notify the Indemnifying Party of such claim, specifying the
nature of such claim and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final amount
of such claim) (the "Claim Notice"). The Indemnifying Party shall have thirty
(30) days from its receipt of the Claim Notice (the "Notice Period") to notify
the Indemnified Party (i) whether or not it disputes its liability to the
Indemnified Party hereunder with respect to such claim; and (ii) if it does not
dispute such liability, whether or not it desires, at its sole cost and expense,
to defend the Indemnified Party against such claim; provided, however, that the
Indemnified party is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading, submission or document which it shall
deem necessary or appropriate to protect its interests. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
it does not dispute such liability and desires to defend against such claim or
demand, then, except as hereinafter provided, the Indemnifying Party shall have
the right to defend such claim or
19
demand by appropriate proceedings, which proceedings shall be promptly settled
or prosecuted to a final conclusion, in such a manner as to avoid any risk of
the Indemnified Party becoming subject to liability. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement, it
may do so at its own cost and expense. If the Indemnifying Party disputes its
liability with respect to such claim, or elects not to defend against such
claim, whether by not giving timely notice as provided above or otherwise, the
Indemnified Party shall have the right but not the obligation to defend against
such claim, and the amount of any such claim, or if the same be contested by the
Indemnifying Party or by the Indemnified Party, then that portion thereof as to
which such defense is unsuccessful, shall be conclusively deemed to be a
liability of the Indemnifying Party hereunder (subject, if it has timely
disputed liability, to a determination that the disputed liability is covered by
this Article X).
(b) Other Claims. In the event that the Indemnified Party shall
have a claim against the Indemnifying Party hereunder which does not involve a
claim or demand being asserted or sought to be collected from it by a third
person, the Indemnified Party shall promptly send a Claim Notice with respect to
such claim to the Indemnifying Party. If the Indemnifying Party does not notify
the Indemnified Party within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
(c) Payment of Undisputed Amount. In the event that the
Indemnifying Party is required to make any payment under this Article X, the
Indemnifying Party shall promptly pay the Indemnified Party the amount so
determined. If there should be dispute as to the amount or manner of
determination of any indemnity obligation owed under this Article X, the
Indemnifying Party shall nevertheless pay when due such portion, if any, of the
obligation as shall not be subject to dispute. The difference, if any, between
the amount of the obligation ultimately determined as properly payable under
this Article X and the portion, if any theretofore paid, shall bear interest as
provided in Section 10.07(d). Upon the payment in full of any claim, the
Indemnifying Party shall be subrogated to the rights of the Indemnified Party
against any Person or other entity with respect to the subject matter of this
claim.
(d) Interest. If all or part of any indemnification obligation
under this Agreement is not paid when due upon resolution of the claim, then the
Indemnifying Party shall pay upon demand to the Indemnified Party interest at a
per annum rate equal to the post-judgment interest rate determined in accordance
with Texas Finance Code Section 304.003 (or any successor statute) on the unpaid
amount of the obligation for each day from the date the amount became due until
payment in full; provided, however, in no event shall such rate of interest so
determined exceed the highest lawful rate which may be charged and received with
respect to an obligation of the type described in this Agreement.
(e) Disputed Claims. If the Indemnifying Party notifies the
Indemnified Party during the Notice Period that it disputes any claim under
subsections (a) or (b) above, then either party shall have the right to
institute an action in a Texas state court of competent jurisdiction for a
judicial determination of the validity of and responsibility for the disputed
claim in accordance with the allocation of risk set forth in this Agreement.
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ARTICLE XI.
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated
hereby may be terminated prior to Closing in the following instances:
(a) By Buyer, if the conditions set forth in Section 7.01 are not
satisfied in all material respects or waived by Buyer prior to the Closing Date,
or pursuant to any provision of this Agreement expressly permitting such
termination by Buyer;
(b) By Buyer, if Buyer, as determined in its own discretion, is
not wholly satisfied with the results of, and its due diligence investigations
with respect to, the operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits or condition (financial
or otherwise) of the business and the Assets and Buyer delivers written notice
of termination to Seller on or before September 3, 2004, at 4:00 p.m. C.D.T.;
(c) By Seller, if the conditions set forth in Section 7.02 are not
satisfied in all material respects or waived by Seller prior to the Closing
Date, or pursuant to any provision of this Agreement expressly permitting such
termination by Seller; or
(d) At any time by the mutual written agreement of Buyer and
Seller.
11.02 Liabilities Upon Termination. If Closing does not occur due
solely to Seller's violation of the terms of this Agreement, then Buyer shall be
entitled to receive a refund of the Performance Deposit and may seek such legal
or equitable remedies as Buyer may desire, including, without limitation,
damages for the breach or failure of any representation, warranty, covenant or
agreement of Seller contained herein and the right to enforce specific
performance of this Agreement. If Closing does not occur due to Buyer's
violation of the terms of this Agreement, Seller shall be entitled to retain the
entire Performance Deposit and may seek such legal or equitable remedies as
Seller may desire, including, without limitation, damages for the breach or
failure of any representation, warranty, covenant or agreement of Buyer
contained herein and the right to enforce specific performance of this
Agreement. The covenant of Buyer set forth in Section 12.16 shall survive the
termination of this Agreement pursuant to this Article XI.
ARTICLE XII.
GENERAL
12.01 Claims. Buyer shall be entitled to the rights and benefits of all
claims Seller may have against third parties with respect to the Assets arising
out of events occurring subsequent to the Effective Time. Seller shall cooperate
with Buyer in the prosecution of such claims, but Buyer shall bear all expenses
related to the prosecution of such claims.
12.02 Expenses. All fees, costs and expenses incurred by Buyer or
Seller in negotiating this Agreement or in consummating the transactions
contemplated by this Agreement shall be paid by the party incurring the same
including, without limitation, legal and accounting fees, costs and expenses.
21
12.03 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly made if delivered by (i) personal delivery, (ii) recognized third
party messenger or overnight delivery service, (iii) telecopy or facsimile
transmission, or (iv) deposit into the custody of the United States Postal
Service, postage prepaid, first class certified mail, return receipt requested.
Notice given in accordance herewith shall be effective upon receipt at the
address of the addressee. For purposes of notice, the addresses of the parties
shall be as follows unless and until changed by written notice to the other
party in accordance herewith:
All notices to Seller shall be delivered to:
Gas Solutions, Ltd.
c/o SB Gas Services, LLC, General Partner
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices to Buyer shall be delivered to:
MNW Partners, LLC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.04 Amendments. This Agreement may not be amended nor any rights
hereunder waived except by an instrument in writing signed by the party to be
charged with such amendment or waiver and delivered by such party to the party
claiming the benefit of such amendment or waiver.
22
12.05 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.
12.06 Counterparts. This Agreement may be executed by Buyer and Seller
via facsimile and in any number of counterparts, each of which shall be deemed
an original instrument, but all of which together shall constitute but one and
the same instrument.
12.07 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include, where applicable, masculine, feminine,
neuter, singular or plural, individuals, partnerships or corporations. As used
in this Agreement, "person" shall mean any natural person, corporation,
partnership, trust, estate or other entity.
12.08 Governing Law and Venue. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Texas, and exclusive venue for any judicial action or
proceeding relating to or arising out of the transactions contemplated by this
Agreement shall be in ▇▇▇▇▇ County, Texas.
12.09 Entire Agreement. This Agreement (including the Exhibits hereto
and any confidentiality agreements referenced in Section 4.02(b) hereof)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter.
12.10 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of, the parties hereto and, except as otherwise
prohibited, their respective successors and assigns; and except as otherwise
stated herein, nothing contained in this Agreement, or implied herefrom, is
intended to confer upon any other person or entity any benefits, rights or
remedies.
12.11 Assignments. Except as otherwise provided herein, Buyer and
Seller may assign all or any portion of their respective rights or delegate any
portion of their duties hereunder, so long as the respective assigning parties
remain liable for the performance of their obligations hereunder.
12.12 Public Announcements. The parties hereto agree that prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto and exercise
their best efforts to agree upon the text of a joint public announcement or
statement to be made solely by Seller or Buyer, as the case may be; provided,
however, if either Seller or Buyer are required by law, by a listing agreement,
or by the rules and regulations of any securities exchange to make such public
announcement or statement, then the same may be made without the approval of the
other party. The opinion of counsel of either party shall be conclusive evidence
of such requirement.
12.13 Notices After Closing. Buyer and Seller hereby agree that each
party shall notify the other of its receipt, after the Closing Date, of any
instrument, notification or other document affecting the Assets while owned by
such other party.
23
12.14 Severability. If a court of competent jurisdiction determines
that any clause or provision of this agreement is void, illegal or
unenforceable, the other clauses and provisions of the Agreement shall remain in
full force and effect and the clauses and provisions which are determined to be
void, illegal unenforceable shall be limited so that they shall remain in effect
to the extent permissible by law.
12.15 Waiver of Right to Recover Certain Damages. As a material part of
the consideration for the execution and delivery of this Agreement, Seller and
Buyer, respectively, each hereby waive, release and relinquish the right to
recover any punitive, exemplary, consequential or special damages from the other
party to this Agreement in connection with the transactions contemplated by this
Agreement and the respective rights and obligations of the parties under this
Agreement, provided that such waiver by Seller shall not apply to a failure by
Buyer to satisfy its assumption and indemnity obligations with respect to
Environmental Obligations.
12.16 Seller's Employees. In the event Buyer fails to close the
transactions contemplated by this Agreement for any reason, Buyer agrees not to
hire any employee of Seller for a term of one (1) year after the date of
termination of this Agreement.
[The remainder of this page is intentionally left blank.]
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
GAS SOLUTIONS, LTD.
By: SB Gas Services, LLC, its
General Partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Manager
BUYER:
MNW PARTNERS, LLC
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Manager
Schedule of attached exhibits:
-----------------------------
Exhibit "A-1" - Rights-of-Way and Easements
Exhibit "A-2" - Description of the Real Property Deeds and Leases
Exhibit "A-3" - List of Vehicles Being Transferred
Exhibit "B" - Contracts
Exhibit "C" - Excluded Assets
Exhibit "D" - ▇▇▇▇▇▇▇▇ Consulting Agreement
Exhibit "E" - Allocated Value
Exhibit "F" - Pending Litigation and Other Proceedings
Exhibit "G" - Seller's Revenue Interest and Cost Interest
Exhibit "H" - Form of Opinion of Counsel to Seller
Exhibit "I" - Form of Opinion of Counsel to Buyer
Exhibit "J" - Form of Assignment, Conveyance and ▇▇▇▇ of Sale
Schedule of attached exhibits:
-----------------------------
Schedule 3.01(j) - ERISA
Schedule 3.01(k) - Financial Statements
Schedule 3.01(l) - Material Adverse Effect
Schedule 3.01(m) - Other Assets
S-1