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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "AGREEMENT") is dated as of
November 24, 1997, and is entered into by and among Coda Energy, Inc., a
Delaware corporation ("CODA"), Taurus Holdings Corp., a Delaware corporation
("HOLDINGS"), Continental Natural Gas, Inc., an Oklahoma corporation ("CNG"),
Continental/Taurus Holdings Company, L.L.C., an Oklahoma limited liability
company ("ACQUISITION 'A'"), Continental/Taurus Acquisition Corp., a Delaware
corporation ("ACQUISITION 'B'"), and Continental Holdings Company, an Oklahoma
corporation ("CHC").
R E C I T A L S
WHEREAS, Coda is the owner of Holdings, and Holdings and Coda are the
owners of Taurus Energy Corp., a Texas corporation ("TAURUS CORP."); and
WHEREAS, CHC and Acquisition "B" desire to purchase, and Coda and
Holdings desire to sell, Taurus Corp.; and
WHEREAS, Coda and Holdings are the owners of Continental/Taurus Energy
Company, L.P., a Delaware limited partnership ("TAURUS L.P."), with Coda being
designated the general partner thereof and holding a 1% equity interest therein
and Holdings owning a 99% equity interest as sole limited partner; and
WHEREAS, prior to the transaction contemplated by this Agreement, Coda
and Holdings shall cause Taurus Corp. to merge into Taurus L.P. (unless
otherwise stated herein "TAURUS" shall mean Taurus Corp. prior to its merger
into Taurus L.P. and Taurus L.P. after said merger); and
WHEREAS, CNG is the owner of Acquisition "A" and Acquisition "A" is
the owner of Acquisition "B"; and
WHEREAS, the parties intend that Holdings shall merge with and into
Acquisition "B" and CHC shall acquire Coda's general partner interest in Taurus
L.P.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Coda, Holdings, CNG, CHC, Acquisition "A" and Acquisition "B" hereby
agree as follows:
A G R E E M E N T
1. MERGER OF TAURUS AND ACQUISITION
1.01 The Merger. (a) Upon the terms and subject to the
satisfaction or, if permissible, waiver of the conditions of this Agreement, at
the Effective Time (as defined below), Holdings shall merge (the "MERGER") with
and into Acquisition "B" in accordance with the applicable provisions of the
Delaware General Corporation Law, as amended (the "DGCL"), and the separate
existence of Holdings shall thereupon cease, and Acquisition "B", which shall
be and which is hereinafter sometimes referred to as the "SURVIVING
CORPORATION," shall continue its corporate existence under the laws of the
State of Delaware. From and after the Effective Time, the Surviving
Corporation shall possess all of the rights, privileges, powers and franchises
of a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the constituent entities, all
as set forth in Section 259 of the DGCL.
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(b) In connection with the Merger, CHC shall acquire the
general partnership interest in Taurus L.P. held by Coda and shall assume all
liabilities, duties and rights of a general partner therein.
1.02 Effective Time. On the date of the closing of the Merger
referred to in Section 1.07 hereof, a certificate of merger (the "CERTIFICATE
OF MERGER") in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL shall be filed with the Secretary of State of
Delaware. The Merger shall become effective at the time (the "EFFECTIVE TIME")
of such filing or at such later time as the parties hereto shall have provided
in such certificate.
1.03 Certificate of Incorporation and Bylaws of the Surviving
Corporation. The Certificate of Incorporation and Bylaws of Acquisition "B,"
each as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by law.
1.04 Directors and Officers. The persons set forth on Schedule
1.04 shall be the directors and officers of the Surviving Corporation, each of
such directors and officers to hold office, subject to the applicable
provisions of the Bylaws of the Surviving Corporation, until their successors
are duly elected and qualified, or their earlier death, resignation or removal.
1.05 Conversion of Holdings Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof, the common stock, par value $.01 per share (the "HOLDINGS SHARES"), of
Holdings outstanding immediately prior to the Effective Time shall be canceled
and extinguished and be converted into the right to receive cash in the amount
of $41,580,000 cash (the "HOLDINGS CONSIDERATION").
1.06 Payment for Partnership Interest. At the Closing, Coda shall
convey and assign its partnership interest in Taurus L.P. to CHC for $420,000
cash (the "GP CONSIDERATION").
The GP Consideration and the Holdings Consideration shall be collectively
referred to herein as the "MERGER CONSIDERATION."
1.07 Closing. A closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at 10:00 a.m., Central Time, in the
offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, on November 25, 1997 (the "CLOSING DATE").
1.08 Closing Obligations. At the Closing:
(a) Coda shall deliver or cause to be delivered to CNG (i)
resignations of each of the officers and directors of Holdings, (ii) a
certificate evidencing the Holdings Shares, (iii) an assignment of Coda's
partnership interest in Taurus L.P., and (iv) all other certificates, documents
or materials required pursuant to the terms of this Agreement.
(b) CNG shall deliver or cause to be delivered to Coda (i) the
Merger Consideration by wire transfer to an account designated by Coda, (ii) an
assumption agreement of CHC assuming all of Coda's duties, obligations and
liabilities as general partner of Taurus L.P., and (iii) all other
certificates, documents or materials required pursuant to the terms of this
Agreement.
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2. REPRESENTATIONS AND WARRANTIES OF CODA
2.01 Coda hereby represents and warrants to CNG and Acquisition "A"
as of the date hereof as follows:
(a) Organization and Good Standing. Coda is a duly incorporated,
validly existing corporation in good standing under the laws of the State of
Delaware and have all requisite corporate power and authority to own, lease or
operate all properties and assets now owned, leased or operated by it and to
carry on its respective business as it is now being conducted. Coda has not
received any notice of proceedings and there are no threatened proceedings
relating to the revocation or modification of any such power or authority.
(b) Authority Relative to this Agreement. Coda and Holdings have
the requisite corporate power and authority to execute and deliver this
Agreement and all other agreements, instruments, documents and certificates
executed and delivered (or to be executed and delivered) by it or on its behalf
at or before Closing pursuant to this Agreement and to consummate and perform
the transactions contemplated hereby. The execution and delivery of this
Agreement by Coda and Holdings and the consummation by Coda and Holdings of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Coda and Holdings and no other
corporate proceedings on the part of Coda and Holdings are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Coda and
Holdings and constitutes the legal, valid and binding obligation of Coda and
Holdings enforceable against Coda and Holdings in accordance with its terms.
(c) Ownership. At the Closing Date, Coda is the sole general
partner of Taurus L.P. and has good and marketable title to such partnership
interest and the absolute right to sell, transfer, assign and deliver its
partnership interest to CHC in accordance with the terms hereof, free and clear
of all liens, pledges, encumbrances and/or adverse claims of any kind. Coda is
the sole stockholder (record and beneficial) of Holdings and has good and
marketable title to the Holdings Shares and the absolute right to exchange the
Holdings Shares held by Coda for the GP Consideration in accordance with the
terms hereof, free and clear of all liens, pledges, encumbrances and/or adverse
claims of any kind. Holdings is the sole limited partner of Taurus L.P. and
has good and marketable title to such partnership interest and the absolute
right to exchange the partnership interest for the Holdings Consideration.
Each of the partnership interests described are herein referred to collectively
as the "PARTNERSHIP INTERESTS".
(d) Organization and Good Standing of Taurus and Holdings. Taurus
Corp. is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Texas and has all requisite power and authority
to own, lease, or operate all properties and assets now owned, leased or
operated by it and to carry on its business as it is now being conducted.
Taurus Corp. currently does business only in the State of Texas. Taurus Corp.
has not received any notice of proceedings and there are no threatened
proceedings relating to the revocation or modification of any such power or
authority. Holdings is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority (i) to own, lease or operate all properties and
assets then owned, leased or operated by it and (ii) to consummate the
transactions contemplated by this Agreement. Holdings has not received any
notice of proceedings and there are no threatened proceedings relating to the
modification of any such power or authority. Taurus L.P. is a limited
partnership duly formed, validly existing and in good standing under the laws
of the State of Delaware and has all requisite partnership power and lawful
authority (i) to own, lease or operate all properties and assets owned, leased
or operated by it and (ii) to consummate the transactions contemplated by this
Agreement. Taurus L.P. has conducted business solely within the State of
Texas. Taurus L.P. has not received any notice of proceedings and there is no
threatened proceedings relating to the modification of any such power or
authority.
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(e) Capitalization of Taurus and Holdings.
(i) The total authorized capital stock of Taurus Corp.
consists of 1,000 shares of common stock, par value $1.00 per share
(the "TAURUS SHARES"). All of the Taurus Shares are outstanding, are
held of record and beneficially owned by Coda and have been duly
authorized and validly issued and are fully paid and non-assessable,
and no person has any preemptive or preferential rights in respect
thereof. Taurus holds no treasury stock. The Partnership Interests
constitute all of the issued and outstanding equity interests in
Taurus L.P. and are fully paid and non-assessable, and no person has
any preemptive or preferential rights in respect thereof.
(ii) Taurus Corp. does not have authorized, outstanding or
reserved for issuance any securities convertible into or exchangeable
or exercisable for any shares of its capital stock, nor are there any
outstanding, reserved or authorized subscriptions, options, warrants,
calls, rights, commitments, conversion or exchange rights, redemption
or repurchase rights or any other agreements, understandings, or
arrangements of any character (other than those contemplated by this
Agreement) obligating Taurus to issue or acquire, redeem or repurchase
any shares of its capital stock or any other securities convertible
into, exchangeable or exercisable for, or evidencing the right to
subscribe for, any shares of its capital stock, nor are there any
agreements or understandings with respect to the voting of its capital
stock.
(iii) The total authorized capital stock of Holdings
consists of 1,000 shares of common stock, par value $0.01 per share
(the "HOLDINGS SHARES"). All of the Holdings Shares are outstanding,
are held of record and beneficially owned by Coda and have been duly
authorized and validly issued and are fully paid and non- assessable,
and no person has any preemptive or preferential rights in respect
thereof. Holdings holds no treasury stock. Holdings does not have
any outstanding, reserved or authorized subscriptions, options,
warrants, calls, rights, commitments, conversion or exchange rights,
redemption or repurchase rights or any other agreements of any
character relating to its capital stock (except as contemplated by
this Agreement). There are no buy-sell or cross-purchase agreements,
options or rights of refusal or purchase agreements of any kind
relating to the Holdings Shares (other than as contemplated by this
Agreement).
(iv) Neither Coda nor Taurus is a party to or bound by any
oral or written agreement, contract, arrangement or understanding (A)
to issue or transfer any shares of Holdings capital stock or the
Partnership Interests, other than in connection with the consummation
of the transactions contemplated by this Agreement, (B) giving any
person or entity any interest in, or any right to share, participate
in, or receive any portion of the revenues, income or profits of
Taurus or Holdings or (C) obligating Taurus or Holdings to distribute
any portion of any of its revenues, income or profit.
(v) None of the Taurus Shares, the Holdings Shares or the
Partnership Interests has been issued in violation of federal or state
securities laws.
(f) Equity Interests.
(i) Immediately after Closing, Acquisition "B" shall own
Holdings' partnership interest in Taurus free and clear of all liens,
mortgages, pledges, encumbrances, charges, agreements, preferential
rights of purchase, claims, restrictions and defects of title (other
than those created by CNG, Acquisition "A," CHC or Acquisition "B"),
and there shall be no outstanding options, warrants or rights to
purchase any equity interest of Taurus L.P. (other than those created
by CNG, CHC, Acquisition "A" or Acquisition "B"). Immediately after
Closing, CHC shall own Coda's partnership interest in Taurus free and
clear of all liens, mortgages, pledges, encumbrances, charges,
agreements, preferential rights
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of purchase, claims, restrictions and defects of title (other than those
created by CNG, CHC or Acquisition "A"). Neither Coda, Acquisition "A,"
Acquisition "B" nor Holdings has or will have any obligation to issue or
transfer any interest in Taurus L.P. (other than those created by CNG, CHC,
Acquisition "A" or Acquisition "B"and other than as contemplated by this
Agreement).
(ii) Coda does not have any obligation to issue or
transfer any shares of Holdings' capital stock (other than those
contemplated by this Agreement).
(iii) Taurus does not own any subsidiaries.
(iv) The sole asset of Holdings is its 99% limited
partner's interest in Taurus, L.P. Holdings has no other assets and
Holdings has no liabilities whatsoever.
(g) No Conflict; Governmental Notices and Consents. For purposes
of this Agreement, the term "MATERIAL ADVERSE EFFECT" means any change, effect
or matter that is or is reasonably likely to be materially adverse to the
indicated person's business, operations, properties (including intangible
properties), condition (financial or otherwise), assets or liabilities
(including contingent liabilities), taken as a whole. "LOSS" shall mean the
amount that would be required to be contributed to the affected person at the
Closing Date so that the affected person would be in the same economic position
as it would have been if such adverse change, effect or matter had not occurred
and would not occur.
(i) Except as disclosed in Schedule 2.01(g)(i) or
elsewhere in this Agreement and except for the transactions
contemplated by this Agreement, the execution and delivery of this
Agreement by Coda does not, and the consummation of the transactions
contemplated hereunder by Coda, Holdings and Taurus and compliance by
Coda, Holdings and Taurus with the provisions hereof shall not, (A)
conflict with or violate the respective charter, Bylaws, or
resolutions of the Board of Directors or stockholders, each as
amended, of Coda, Holdings or Taurus, (B) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Coda,
Holdings or Taurus or by which any of them or Taurus' properties, the
Taurus Shares, the Holdings Shares or the Partnership Interests are
bound or specifically affected, (C) give any governmental authority
the right to revoke, withdraw, suspend, cancel, terminate or modify
any Permit (defined below), or (D) conflict with, require any consent,
waiver, approval, notice, authorization or action under, violate or
result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under,
accelerate or permit the acceleration under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of Taurus, the Taurus Shares, the Holdings Shares
or the Partnership Interests pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, deed, assignment, conveyance,
license, permit, franchise or other instrument or obligation to which
Taurus is bound or a party, or to which any of the assets of Taurus,
the Taurus Shares, the Holdings Shares or the Partnership Interests is
bound or specifically affected, except for, in the case of clauses
(B), (C) and (D), any such conflicts, violations, breaches, defaults
or other occurrences that would not, individually or in the aggregate,
have a Material Adverse Effect.
(ii) Except as set forth herein and except for the
pre-merger notification and clearance required under the HSR Act (as
defined herein), the execution and delivery of this Agreement by Coda
does not, and the performance of this Agreement by Coda shall not,
require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority,
domestic or foreign.
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(h) Financial Statements. True and correct copies of the
unaudited balance sheets of Taurus as of December 31, 1995 and 1996 (the
"TAURUS BALANCE SHEETS") and the unaudited statements of operations, cash flows
and stockholder's equity for the years ended December 31, 1995 and 1996 (the
Taurus Balance Sheets and such other statements being referred to herein as the
"TAURUS FINANCIAL STATEMENTS"), have been delivered to CNG. True and correct
copies of the unaudited balance sheet of Taurus as of September 30, 1997 (the
"TAURUS INTERIM BALANCE SHEET") and the unaudited statements of operations,
cash flows and stockholder's equity for the nine months ended September 30,
1997, have been delivered to CNG prior to the date hereof (the Taurus Interim
Balance Sheet and such other statements being referred to herein as the "TAURUS
INTERIM FINANCIAL STATEMENTS"). The Taurus Financial Statements and the Taurus
Interim Financial Statements (collectively, the "FINANCIAL STATEMENTS") were
prepared in accordance with the books and records of Taurus and are complete
and correct in all material respects and present fairly, in all material
respects, the financial position, results of operations, changes in
stockholder's equity and cash flows of Taurus as of the dates and for the
periods indicated, in each case in conformity with Generally Accepted
Accounting Principles ("GAAP") applied on a basis consistent with preceding
years and throughout the periods involved, except as otherwise disclosed in
such Financial Statements.
(i) Basic Documents. For purposes of this Agreement, the term
"TAURUS PROPERTIES" shall mean all gas processing or liquids extraction plants
and facilities, gas gathering systems, pipelines, and associated equipment,
materials, and other real and personal property relating or pertaining thereto
owned or leased (or purported to be owned or leased) by Taurus, and all related
real property interests, facilities and production therefrom and all other
assets currently owned or leased by Taurus in connection with the operation of
its business (excluding the Excluded Taurus Assets (as defined herein) and
including the Additional Taurus Assets (as defined herein), when acquired);
"TAURUS BASIC DOCUMENTS" shall mean all contracts, agreements, leases, deeds,
assignments, conveyances, transfers and other documents or instruments under
and by virtue of which Taurus owns, operates, and/or acquired (or claims to
own, operate or have acquired) the Taurus Properties or which relate to the
Taurus Properties, and all contractually binding arrangements to which the
Taurus Properties may be subject and which shall be binding on Taurus after the
Closing, including the documents set forth on Schedule 2.01(i). Set forth on
Schedule 2.01(i) is a list of all gas purchase agreements, gas sales
agreements, gas processing agreements, gas transportation agreements, natural
gas liquids sales agreements and equipment operating leases currently in effect
to which Taurus is a party. (i) All Taurus Basic Documents are in full force
and effect and are the valid and legally binding obligations of the parties
thereof and are enforceable in accordance with their respective terms, except
where a failure of any of the above, singly or in the aggregate, would not have
a Material Adverse Effect; (ii) Taurus is not in breach or default with respect
to any of its obligations pursuant to any such Taurus Basic Document or any
laws, rules or regulations incorporated therein or governing same, except where
such breach or default would not have a Material Adverse Effect; (iii) all
payments due under the Taurus Basic Documents have been made by Taurus, except
where a failure to make any such payment, singly or in the aggregate, would not
have a Material Adverse Effect; (iv) there has not occurred any event, fact or
circumstance which would constitute a breach or default on the part of Taurus
or, on the part of any other party thereto, of its obligations under any Taurus
Basic Document, except where such breach or default, singly or in the
aggregate, would not have a Material Adverse Effect; and (v) neither Taurus nor
any other party to any Taurus Basic Document has given or threatened to give
notice of any legal action to terminate, cancel, rescind or procure a judicial
reformation of any Taurus Basic Document or any provision thereof, except where
the effect of such termination, cancellation, rescission or procurement, singly
or in the aggregate, would not have a Material Adverse Effect.
(j) Books and Records. The books of account, minute books, stock
record books and other records of Taurus have been maintained in accordance
with applicable legal and accounting requirements and good business practices,
reflect only valid, bona fide transactions, and are complete and correct in all
material respects,
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and accurately reflect in all material respects the basis for the financial
condition and results of operations of Taurus as set forth in the Financial
Statements (excluding the treatment of administrative services fees charged by
Coda and the related tax effect thereof). Taurus has heretofore delivered or
made available to CNG true and correct copies of the Articles of Incorporation
and Bylaws (each as amended), minute book and stock records of Taurus. Prior
to Closing, Coda shall make available to CNG true and correct copies of the
formation and governing instruments of Taurus L.P. and Holdings.
(k) Tax Matters. Except as disclosed in Schedule 2.01(k), all
United States federal, state and local tax and other returns and reports that
were required to be filed for all taxes (including employment and withholding
taxes), levies, premium taxes and assessments, fees, license and registration
fees or charges of any nature whatsoever (hereinafter collectively, "TAXES")
owed by Taurus have been accurately prepared and duly and timely filed (and
through the Closing Date shall be timely filed) and reflect or shall reflect
the liability of Taurus for Taxes in all material respects, and all Taxes of
Taurus shown thereby to be payable have been paid or shall be paid when due.
No waivers of statutes of limitations are in effect with respect to any United
States federal income, employment or excise taxes, or state income or franchise
taxes, for Taurus. Except as disclosed in Schedule 2.01 (k), Taurus is not
delinquent in the payment of any tax, assessment or governmental charge, there
is no tax deficiency asserted against Taurus, and there is no unpaid
assessment, deficiency or delinquency in the payment of any Taxes, or any
proposal for additional Taxes or any violation of any federal, state, local or
foreign tax law that could be asserted by any taxing authority. There are no
tax liens upon any material properties or assets of Taurus or any of the Taurus
Shares. No Internal Revenue Service, state or local audit, investigation or
proceeding regarding Taurus is pending or, to the knowledge of Coda,
threatened. All monies required to be withheld by Taurus from employees or
collected from customers for income taxes, social security and employment
insurance taxes and sales, excise, severance and use taxes, and the portion of
any such taxes to be paid by Taurus to governmental agencies or set aside in
accounts for such purpose have been approved, reserved against and are entered
upon the books of Taurus and reflected on the Financial Statements. Taurus has
not filed a consent under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "CODE"), concerning collapsible corporations. Taurus has not
made any material payments, is not obligated to make any material payments, and
is not a party to any agreement that under any circumstances could obligate it
to make any material payments that would not be deductible under Code Section
280G. Taurus has not been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). Taurus is not a party to any tax
allocation or sharing agreement except for its obligations to Coda under Coda's
consolidated federal income tax return and except as otherwise contemplated by
this Agreement. Taurus (i) has not been a member of an affiliated group filing
a consolidated federal income tax return (other than a group the common parent
of which was Coda) and (ii) has no liability for the taxes of any person under
Treas. Reg. 1.1502-6 (or any similar provision, state or foreign law), as a
transferee or successor, by contract, or otherwise.
(l) Absence of Changes. Since September 30, 1997, the business of
Taurus has been operated in the ordinary course, and except as disclosed in
Schedule 2.01(l) or as contemplated by this Agreement, there has not been since
September 30, 1997:
(i) any adverse change in the condition (financial or
other), operations, assets, liabilities or business of Taurus, except
changes arising in the ordinary course of business;
(ii) any material damage, destruction or loss (whether or
not covered by insurance) affecting the Taurus Properties or the
business prospects of Taurus;
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(iii) any change in the financial or tax accounting methods,
principles, procedures, or practices (including but not limited to
depreciation, amortization or inventory valuation policies or rates)
followed by Taurus;
(iv) any settlement, release or forgiveness of any
material claim or litigation or waiver of any material right by Taurus
other than in the ordinary course of business;
(v) any declaration, setting aside, or payment of, any
dividend or other distribution on or in respect of shares of the
capital stock of Taurus or any direct or indirect redemption,
retirement, purchase or other acquisition of any such shares or any
amendment of any term of any outstanding equity security;
(vi) any sale, lease, assignment, license, transfer,
distribution, abandonment or other disposition of any interest in any
material asset of Taurus, or any agreement or proposal with respect
thereto except for those in the ordinary course of business;
(vii) the incurrence or discharge by Taurus of any material
indebtedness, obligation, or liability other than those arising in the
ordinary course of business (whether direct or indirect, and including
without limitation indebtedness for borrowed money, absolute and
contingent lease obligations, purchases on a credit or installment
basis, assumptions, guaranties and endorsements) or any material
amendment of any term of any such outstanding indebtedness;
(viii) any capital expenditures (other than capital
expenditures set forth on Schedule 2.01(l)) made by Taurus, or any
agreement or commitment by Taurus to make capital expenditures for
additions to property, plant or equipment, except for expenditures,
agreements and commitments not exceeding $50,000 in the aggregate;
(ix) any increase in the amount of fees, salaries, bonuses
or other compensation paid, payable or to become payable by Taurus to
any of its officers, directors, employees or agents, or any agreement
with respect thereto;
(x) the commencement of providing, or any increase in,
any benefits by Taurus under any compensation, bonus, insurance,
retirement or other employee benefit plan;
(xi) the occurrence of any transaction or event in which
Taurus entered into, modified, renewed, extended, or terminated any
material agreement to which it is a party other than (A) as expressly
permitted by this Agreement or (B) in the ordinary course of business;
(xii) the occurrence of any transaction or event in which
Taurus proposed, entered into or adopted any new benefit plan for its
employees;
(xiii) any employment, compensation, consulting or
collective bargaining agreements entered into by Taurus with any
person or group;
(xiv) any lien, security interest, or other encumbrance or
claim created on or arising with respect to any material property or
assets of Taurus;
(xv) any failure of Taurus to pay or discharge any
current, material liability within ninety (90) days after it became
due and payable;
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(xvi) the occurrence of any transaction or event in which
any material rights or claims of Taurus were forgiven, compromised,
canceled, released, waived, or permitted to lapse;
(xvii) the occurrence of any event in which the book value
of any material amount of the assets of Taurus has been written up,
written down, or written off;
(xviii) acceleration, termination, material modification to,
or cancellation of any material agreement, contract, lease or license
to which Taurus is a party or by which it is bound, other than in
accordance with its terms or in the ordinary course of business;
(xix) any mortgage, pledge, lien, encumbrance, charge or
other security interest, other than (i) mechanics, materialmans and
similar liens, (ii) liens for taxes not yet due and payable, (iii)
purchase money liens and liens securing rental payments under capital
lease arrangements and (iv) other liens arising in the ordinary course
of business and not incurred in connection with the borrowing of money
upon any of its assets, tangible or intangible;
(xx) any material capital investment in, or any material
loan to, any other person by Taurus outside the ordinary course of
business;
(xxi) creation, incurrence, assumption or guaranty by
Taurus of more than $25,000 in aggregate indebtedness for capitalized
lease obligations except for intercompany borrowings from Coda
incurred in the ordinary course of business;
(xxii) any change made or authorized in the Articles of
Incorporation or Bylaws of Taurus;
(xxiii) issuance, sale or other disposition of any of Taurus'
capital stock or grant of any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise)
any of Taurus' capital stock;
(xxiv) any loan by Taurus to, or any other transaction by
Taurus with, any of its directors, officers and employees outside the
ordinary course of business;
(xxv) to the knowledge of Coda, any material decline in the
stockholder's equity shown on the Taurus Interim Balance Sheet,
determined using the same accounting principles applied in the
preparation of the Taurus Interim Balance Sheet;
(xxvi) any other action taken by Taurus which has had or
reasonably could be expected to have a Material Adverse Effect and
that was not (A) in the ordinary course of business, (B) in accordance
with past practices consistently applied or (C) expressly permitted by
this Agreement.
(m) Governmental Permits. (i) Taurus has all governmental bonds,
licenses, permits, approvals, authorizations, exemptions, registrations,
variances, franchises, privileges, immunities, grants, ordinances,
classifications and certificates (hereinafter collectively, "PERMITS")
necessary to conduct its operations in a lawful manner and in the manner that
it is currently conducted, other than any failure which would not have a
Material Adverse Effect, (ii) all such Permits are valid, in full force and
effect and enforceable by Taurus, and there does not exist under any of them
any default or violation, or event which, with notice or lapse of time or both,
would constitute any default or violation, other than any such default or event
which would not have any Material Adverse Effect, (iii) none of the rights of
Taurus under any Permits shall be impaired by the consummation of
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the transactions contemplated by this Agreement, and all of the rights of
Taurus thereunder shall be enforceable by Taurus after the Closing Date without
the consent or agreement of any party, and (iv) Taurus has not received any
written notice that any of such Permits have been or are threatened to be, and
to the knowledge of Coda such Permits have not been threatened to be, revoked,
canceled, suspended or modified.
(n) Employee Benefits.
(i) Except as disclosed in Schedule 2.01(n), Taurus does
not maintain or sponsor, nor is it required to make contributions to
nor does it otherwise have any liability with respect to, any pension,
profit sharing, thrift, or other retirement plan, employee stock
ownership plan, deferred compensation, stock purchase, performance
share, bonus or other incentive or compensation plan, severance plan,
health or group insurance plan, welfare plan, or other similar
arrangement or plan (each a "PLAN" and collectively, the "PLANS"),
whether or not such plan is intended to be qualified under the Code,
including, without limitation, any employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which Plan covers any employee or
former employee of Taurus or any other person who performs services
to, in the name of or on behalf of Taurus or its business.
(ii) Each Plan has been administered in compliance with
all federal and state laws and in accordance with the terms of such
Plan, other than violations which would not reasonably be expected to
have a Material Adverse Effect. The consummation of the transactions
contemplated by this Agreement shall not result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing
of payment of any benefits or compensation payable by Taurus in
respect of any employee.
(o) Employment Agreements and Labor Relations.
(i) Taurus has no employment, consulting or collective
bargaining agreements and has no obligations, contingent or otherwise,
under any employment or consulting agreement, or collective bargaining
agreement or other contract with a labor union or employee group.
(ii) There exists (A) no charges of discrimination or
lawsuits involving alleged violations of any fair employment law, wage
payment law or occupational safety and health law, and (B) no pending
or, to the knowledge of Coda, threatened litigation arising out of
employment relationships or practices by any applicant, employee or
former employee of Taurus or any representative of any such person or
persons.
(iii) Coda, for the account of and solely with respect to
Taurus, complies in all material respects with all applicable laws,
rules and regulations relating to the employment of labor, including
without limitation those relating to wages, hours, concerted activity,
non-discrimination and the payment and withholding of taxes, and
Taurus has no accrued liability for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing.
(iv) No unfair labor practice complaint against Taurus is
pending or, to the knowledge of Coda, threatened before the National
Labor Relations Board or any other court, tribunal or agency. No
collective bargaining agreement is currently being negotiated by
Taurus, and Taurus has not experienced any material labor difficulty.
(v) To the knowledge of Coda, (A) no employee of Taurus
is in violation of any term of any employment contract, or any other
contract or agreement or any other common law obligation to a former
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employer relating to the right of any such employee to be employed by
Taurus; and, (B) the employment of Taurus' employees does not subject
Taurus to liability in connection with such covenants or agreements.
(p) Litigation. There is (i) no suit, proceeding, action or claim
pending or, to the knowledge of Coda, threatened, (ii) no investigation or
inquiry by any administrative agency or governmental body pending or, to the
knowledge of Coda, threatened, and (iii) no legal, administrative or
arbitration proceeding pending or, to the knowledge of Coda, threatened, to
which Taurus is or might become a party or which relates to or affects the
business or assets of Taurus or the Taurus Shares and, to the knowledge of
Coda, there exists no reasonable basis or grounds for any such suit, action,
claim, investigation, inquiry or proceeding. There is no outstanding order,
writ, injunction or decree of any court, administrative agency, governmental
body or arbitration tribunal against or affecting the capital stock, assets or
business of Taurus that could have a Material Adverse Effect.
(q) Environmental Matters. Except as disclosed in Schedule
2.01(q), to the knowledge of Coda (i) Taurus (A) is not in violation of and has
complied with Environmental Laws (as defined herein) in all respects, other
than where any such violation or failure of compliance would not have a
Material Adverse Effect, (B) has obtained and been in substantial compliance
with all of the terms and conditions of all material Permits, which are
required under Environmental Laws, other than where any failure to do so would
not have a Material Adverse Effect, and (C) has complied in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in the Environmental Laws, other than where any failure to do so
would not have a Material Adverse Effect; (ii) Taurus has no material
liability, and Taurus has not handled or disposed of any substance, arranged
for the disposal of any substance, or owned or operated any property or
facility in any manner that could give rise to any material liability, for
damage to any site, location, or body of water, or for any reason under any
Environmental Law; (iii) there are no underground storage tanks (as defined
under Environmental Laws) located under any Taurus Site (as defined below); and
(iv) there are no obligations, undertakings or liabilities of third parties
arising out of or relating to Environmental Laws which Taurus has agreed to
assume or retain, by contract or otherwise. Taurus has not been named as a
potentially responsible party under, and no facility or property owned, leased
or operated by Taurus (each, a "TAURUS SITE") has been nominated or identified
as a facility which is subject to an existing or potential claim under, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), or comparable Environmental Laws, and none of the Taurus
Sites is subject to a lien arising under any Environmental Laws. Except as
disclosed in Schedule 2.01(q), neither Coda nor Taurus has received any notices
of any violation of, noncompliance with, or remedial obligation under,
Environmental Laws, relating to the ownership, use, maintenance, operation of,
or conduct of business related to, any Taurus Site or assets of Taurus, nor are
there any writs, injunctions, decrees, orders or judgments outstanding, or
lawsuits, claims, proceedings or investigations pending or, to the knowledge of
Coda, threatened, relating to the ownership, use, maintenance, operation of, or
conduct of business related to, any Taurus Site or assets of Taurus. For
purposes of this Agreement, "ENVIRONMENTAL LAWS" means any applicable federal,
state, or local laws, rules or regulations, common law or strict liability
provisions, and any judicial or administrative interpretations thereof,
including any judicial or administrative orders or judgments, relating to
health, safety, industrial hygiene, pollution or environmental matters in
effect as of the execution date of this Agreement.
(r) Undisclosed Liabilities. To the knowledge of Coda, Taurus
does not have any material debts, guarantees, liabilities or obligations,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, (i) that, as of the date of the Financial Statements, were not accrued or
reserved against in the Financial Statements or disclosed in the notes thereto;
(ii) that were incurred after the date of the latest Financial Statements other
than in the ordinary course of business; or (iii) that singly or in the
aggregate have or can reasonably be expected to have a Material Adverse Effect.
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(s) Title. Taurus has good and defensible title to or a valid
leasehold interest in all personal property and real property interests,
excluding rights of way and easements, comprising any material portion of the
Taurus Properties. Except as disclosed on Schedule 2.01(s), all such personal
property and real property interests, including rights of way and easements,
are free and clear of all material mortgages, liens, pledges, security
interests and encumbrances, except as set forth in the Financial Statements.
Such title is not subject to being reduced by virtue of any reversionary or
back-in interests. To the knowledge of Coda, (i) Taurus' easements and
rights-of-way (the "RIGHTS OF WAY") constitute all of the rights of way and
easements necessary for the operation of Taurus' business consistent with past
practices; (ii) each of the Rights of Way material to the operation of Taurus'
business was duly and validly granted or otherwise created by the grantor
thereof, is a valid and binding easement, and is in full force and effect in
accordance with its terms; (iii) the Rights of Way material to the operation of
Taurus' business include all of the rights necessary for the use, operation and
maintenance of Taurus' business in accordance with past practices; and, (iv)
there is no default by Taurus under, nor has any event occurred which with
notice or the passage of time would constitute a default under, any Rights of
Way material to the operation of Taurus' business.
(t) Plants, Facilities and Equipment. All gas processing plants,
gas gathering systems and other material improvements, fixtures and equipment
owned in whole or part by Taurus that are necessary to conduct normal
operations have been maintained in a condition adequate to conduct normal
operations and in a manner consistent with past practices.
(u) Compliance with Laws. Except with respect to Environmental
Laws (which are addressed solely in Section 2.01(q)), Taurus is not in
violation of, nor are any of its assets subject to any claim or liability,
pending or, to the knowledge of Coda, threatened criminal or civil, arising out
of any violation of, any national, state, local or other law, ordinance,
regulation, writ, injunction, order or decree, restrictive covenant, deed,
leases or restrictions relating to the Taurus Properties or the operations or
conduct of Taurus' business, except where any such violation, singly or in the
aggregate, would not have a Material Adverse Effect. To the knowledge of Coda,
no event has occurred that has resulted or would reasonably be expected to
result in a claim by, or which may entitle any officer, director, employee or
agent of Taurus to indemnification under the provisions of the Articles of
Incorporation or Bylaws (each as amended) of Taurus, any agreement of or with
Taurus, or applicable Texas law.
(v) Powers of Attorney. Taurus does not have any powers of
attorney, whether tax or otherwise, or similar authorizations outstanding,
other than those associated with any registration statement filed with the
Securities and Exchange Commission.
(w) Eminent Domain. Except as disclosed in Schedule 2.01(w),
there are no pending or, to the knowledge of Coda, threatened proceedings
before any governmental authority to take all or any part of the assets of
Taurus (whether leased or owned) by condemnation or right of eminent domain.
(x) Absence of Certain Business Practices. To the knowledge of
Coda, none of Taurus or any officer or director of Taurus, nor any employee,
agent or representative of Taurus has made, directly or indirectly, with
respect to the business of Taurus, any illegal political contributions from
Taurus corporate funds, payments from Taurus corporate funds not recorded on
the books and records of Taurus, payments from Taurus corporate funds that were
falsely recorded on the books and records of Taurus, payments from Taurus
corporate funds to governmental officials in their individual capacities for
the purpose of affecting their action or the action of the government they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions or illegal payments from corporate funds to obtain
or retain business.
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(y) Brokers. No person or entity is entitled to any brokerage,
finder's fee or other fee or commission payable by Taurus or Coda in connection
with the transactions contemplated by this Agreement for which CNG, CHC,
Acquisition "A," Acquisition "B," Holdings or Taurus could be or could become
liable or obligated to pay.
(z) Bank Debt. There is no outstanding indebtedness of Taurus to
banks or other financial institutions, at the date of this Agreement.
(aa) Accounts Receivable. Schedule 2.01(aa) contains a complete
and accurate list of all receivables as of the date of the Taurus Interim
Balance Sheet, which list sets forth the aging of such receivables. Except as
disclosed in Schedule 2.01(aa), the trade accounts and other receivables of
Taurus which are classified as current assets on the Financial Statements are
bona fide receivables, were acquired in the ordinary course of business, and
are stated in accordance with GAAP (applied on a consistent basis in accordance
with past practices). There is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any contract with any
obligor of any receivable.
(bb) No Default. Taurus is not in default under and no condition
exists that with notice or lapse of time or both would constitute a default
under (i) its organizational documents, (ii) (except for the Taurus Basic
Documents which are addressed solely in Section 2.01(i)) any mortgage, loan,
agreement, contract, arrangement, lease, lease purchase, indenture or other
evidences of indebtedness for borrowed money or other instrument to which
Taurus is now a party or by which Taurus or any of the assets of Taurus is
bound, or (iii) any judgment, order, writ, injunction, or decree, of any court,
arbitrator, agency, official, authority, or other governmental body, except
where such default or condition, singly or in the aggregate, would not have a
Material Adverse Effect.
(cc) Filings. Taurus has filed all reports required to be filed by
it with any regulatory authority to which it must report, except where such
failure, singly or in the aggregate, would not have a Material Adverse Effect,
and such filed reports have been true and correct in all material respects and
been completed in each case in accordance with applicable regulations and
requirements. None of the information supplied by Taurus for inclusion, or
actually included in any documents previously filed with any federal or state
regulatory authority, was, at the respective times those documents were filed
with such regulatory authority, knowingly false or misleading with respect to
any material fact or knowingly omitted to state any material fact necessary in
order to make the statements therein not misleading.
(dd) Intellectual Property Rights. Taurus owns no patents,
copyrights, trademarks, service marks or trade names, nor has it made any
applications therefor or registrations thereof. To the knowledge of Coda, (A)
Taurus has not interfered with, infringed upon, or misappropriated or otherwise
come into conflict with any intellectual property rights of any other person;
and, (B) Taurus is not a party to, either as licensor or licensee, and is not
bound by or subject to, any license agreement for any patent, process,
trademark, service ▇▇▇▇, trade name, copyright, trade secret, know how,
invention or devices, excluding any software licensing agreements.
(ee) Full Disclosure. No statement contained in this Agreement or
in any Schedule hereto contains or shall contain any untrue statement of a
material fact or omits or shall omit to state any material fact necessary, in
the light of the circumstances under which was made, in order to make the
statements herein or therein not misleading.
(ff) Insurance Policies. Schedule 2.01(ff) contains a list of
insurance policies covering Taurus or its employees currently in effect.
Taurus is not in material default with respect to any insurance policy
maintained by Taurus (including without limitation, insurance providing
benefits for employees), has not failed to give any notice or present any claim
under any such insurance policy in due and timely fashion and has not waived or
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released any rights thereunder. Taurus has not received notice from any
insurance carrier of the intention of such carrier to discontinue any insurance
coverage afforded to Taurus.
3. REPRESENTATIONS AND WARRANTIES OF CNG, ACQUISITION "A" AND ACQUISITION
"B"
3.01 CNG, Acquisition "A" and Acquisition "B" hereby represent and
warrant to Coda as follows:
(a) Organization and Good Standing of CNG, Acquisition "A," CHC
and Acquisition "B". CNG and CHC are duly incorporated, validly existing
corporations in good standing under the laws of the State of Oklahoma and have
all requisite power and lawful authority to own, lease or operate all
properties and assets now owned, leased or operated by them and to carry on
their businesses as they are now being conducted. CNG and CHC have not
received any notice of proceedings and there are no threatened proceedings
relating to the revocation or modification of any such power or authority.
Acquisition "A" is a duly formed, validly existing limited liability company in
good standing under the laws of the State of Oklahoma and has all requisite
power and lawful authority to own, lease or operate all properties and assets
now owned, leased or operated by it and to carry on its business as it is now
being conducted. Acquisition "A" has not received any notice of proceedings
and there are no threatened proceedings relating to the revocation or
modification of any such power or authority. Acquisition "B" is a duly
incorporated, validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite power and lawful authority to own,
lease or operate all properties and assets owned, leased or operated by it and
to carry on its business. Acquisition "B" has not received any notice of
proceedings and there are no threatened proceedings relating to the revocation
or modification of any such power or authority.
(b) Authority Relative to this Agreement. CNG, CHC, Acquisition
"A" and Acquisition "B" each have the requisite power and authority to execute
and deliver this Agreement and all other agreements, instruments, documents and
certificates executed and delivered (or to be executed and delivered) by them
or on their behalf at or before Closing pursuant to this Agreement and to
consummate and perform the transactions contemplated hereby. The execution and
delivery of this Agreement by CNG, CHC and Acquisition "A" and the consummation
by CNG, CHC, Acquisition "A" and Acquisition "B" of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action on the part of CNG, CHC, Acquisition "A" and Acquisition "B" and no
other proceedings on the part of CNG, CHC, Acquisition "A" and Acquisition "B"
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by CNG, CHC and Acquisition "A" and constitutes the legal, valid and binding
obligation of CNG and Acquisition "A" enforceable against CNG, CHC and
Acquisition "A" in accordance with its terms.
(c) No Conflict; Governmental Notices and Consents.
(i) The execution and delivery of this Agreement by CNG,
CHC and Acquisition "A" does not and the consummation of the
transactions contemplated hereunder by CNG, CHC, Acquisition "A" and
Acquisition "B" and compliance by CNG, CHC, Acquisition "A" and
Acquisition "B" with the provisions hereof shall not, (A) conflict
with or violate the organizational or governance instruments of CNG,
CHC, Acquisition "A" and Acquisition "B", or (B) conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to CNG, CHC, Acquisition "A" and Acquisition "B" or by
which CNG, CHC, Acquisition "A" and Acquisition "B" is bound or
affected.
(ii) The execution and delivery of this Agreement by CNG,
CHC and Acquisition "A" and the performance of this Agreement by CNG,
CHC, Acquisition "A" and Acquisition "B" shall not require any
consent, approval, authorization or permit of, or filing with or
notification to, any
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governmental or regulatory authority, domestic or foreign, other than
the pre-merger notification and clearance under the HSR Act.
(d) Brokers. CNG, CHC, Acquisition "A" and Acquisition "B" have no
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for which
Coda, Holdings or Taurus could be or become liable or obligated in any way.
(e) Investment Purposes. Acquisition "B" is acquiring the
Holdings Shares for its own account for investment purposes and not with a view
to or in connection with any resale, transfer or distribution thereof. CHC is
acquiring the Taurus L.P. general partnership interest for its own account for
investment purposes and not with a view to or in connection with any resale,
transfer or distribution thereof. Neither CNG, CHC, Acquisition "A" or
Acquisition "B" has or will have entered into any contract, undertaking,
agreement or arrangement providing for the resale, transfer or distribution of
the Partnership Interests or the Holdings Shares, nor have CNG, CHC,
Acquisition "A" or Acquisition "B" made any proposal to or had any discussions
with any person or entity with a view to entering into any such contract,
undertaking, agreement or arrangement.
4. CONDUCT OF BUSINESS PRIOR TO CLOSING
4.01 Conduct of Business by Taurus Prior to Closing. Coda
covenants and agrees that, except as set forth in Schedule 4.01 or as otherwise
described in or contemplated by this Agreement, after the date of this
Agreement and prior to the Closing Date, unless CNG shall otherwise agree in
writing, Coda shall cause Taurus to conduct its business only in, and Coda
shall cause Taurus not to take any action except in, the ordinary course of
business; Coda shall cause Taurus to use its reasonable efforts to preserve
substantially intact the business organization and properties of Taurus, and to
preserve the present relationships of Taurus with producers, suppliers and
other persons with which Taurus has significant business relations; and, by way
of amplification of the foregoing and not limitation, except as set forth in
Schedule 4.01 or as contemplated by this Agreement, Coda shall cause Taurus not
to directly or indirectly do, or propose to do, any of the following without
the prior written consent of CNG (which consent shall not be unreasonably
withheld):
(a) amend or otherwise change its existing Articles of
Incorporation or Bylaws, each as amended;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, lease, pledge, disposition or encumbrance of, (A) any shares of
capital stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any other
ownership interest, of Taurus or (B) any assets of Taurus (except for sales or
leases of assets in the ordinary course of Taurus' business as currently
conducted and except for assets to be conveyed or assigned pursuant to Section
5.05);
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock, except for assets to be conveyed or assigned pursuant
to Section 5.05;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money, except
through intercompany transactions made in the ordinary course of business, or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any other person, or
make any loans or advances, other than in the ordinary course of business;
(iii) enter into any
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contract or agreement other than in the ordinary course of business; (iv)
authorize capital expenditures which in the aggregate exceed $50,000 for any
one project; or (v) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this subsection,
other than in the ordinary course of business;
(f) increase the compensation payable or to become payable to
Taurus' officers or employees, or grant any severance or termination pay or
stock options to, or enter into any employment or severance agreement with, any
director, officer or other employee of Taurus, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees;
(g) take any action other than in the ordinary course of business
and in a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(h) make any tax election inconsistent with prior practices or
settle or compromise any material federal, state, or local income tax
liability;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than to Coda in the ordinary course of business consistent
with past practice, or the payment, discharge or satisfaction in the ordinary
course of business of liabilities (i) reflected or reserved against in the
financial statements of Taurus or (ii) incurred in the ordinary course of
business; or
(j) fail to pay its payables promptly as they become due or to
make timely payment of any Taxes due, except where the same is contested in
good faith.
5. ADDITIONAL AGREEMENTS
5.01 Access to Information; Confidentiality. Coda shall, and shall
cause Taurus to, allow CNG and its representatives to conduct such due
diligence review, inspection, testing and investigation of Taurus and the
Additional Taurus Assets as CNG or its representatives deem necessary or
advisable and permit and cause Taurus to permit CNG and its representatives on
prior notice and during normal business hours to have full access to all books,
data and records of Taurus, including but not limited to financial, tax,
accounting, personnel, land, contracts, litigation and claims, insurance,
environmental, and corporate, and furnish all such information as CNG or its
representatives may reasonably request; provided, however, that such due
diligence review, inspection, testing and investigation shall have been
completed on or before November 24, 1997. CNG and its representatives shall
have the right to make copies of any such books, data, records and other
information but shall maintain the confidentiality of any of the same it
obtains in accordance with that certain Confidentiality Agreement between the
parties dated as of September 25, 1997 (the "CONFIDENTIALITY AGREEMENT"). Coda
shall cause Taurus to permit CNG's representatives to consult with Taurus'
officers, employees and agents, to inspect, test and inventory all of Taurus'
assets, and to otherwise permit CNG to investigate Taurus (and the Additional
Taurus Assets) and its business for all purposes of this Agreement.
5.02 Notification of Certain Matters. Coda shall give prompt
written notice to CNG, and CNG shall give prompt written notice to Coda, prior
to Closing, of (i) the occurrence or non-occurrence prior to Closing of any
event, the occurrence or non-occurrence of which would, with or without notice
or lapse of time or both, be likely to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate, and (ii) any
failure of Coda or CNG, as the case may be, to materially comply with or
satisfy any covenant,
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condition or agreement to be complied with or satisfied by it hereunder. Coda
shall give prompt written notice to CNG, and CNG shall give prompt written
notice to Coda, of any notice or other communication from any third party
(including any governmental agency) alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement. After the date of this Agreement and up to Closing, promptly
after any party hereto becomes aware of any event which changes in any material
respect any representation or warranty made by such party in this Agreement or
any statement made in any schedule hereto or in any supplemental schedule, such
party shall deliver to the other parties a supplement to the appropriate
schedule (or, if no appropriate schedule exists, a new schedule).
5.03 Further Action; Further Assurances. Upon the terms and
subject to the conditions hereof, Coda and CNG shall each use all reasonable
efforts to take, or cause to be taken, all appropriate action, and to do or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, effecting the merger of Taurus Corp. into Taurus L.P. and
using all reasonable efforts to obtain any licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities and third parties as may be necessary for the consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to
the transactions contemplated by this Agreement. After the Closing Date, Coda
and CNG shall each, from time to time and upon request, take or cause to be
taken such further action as the requesting party may reasonably request for
the purpose of giving effect to or in order to carry out the transactions
contemplated by this Agreement.
5.04 Public Announcements. Coda and CNG shall consult with each
other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law in the opinion of
counsel or by any listing or similar agreement with a securities exchange or
quotation system. Any press release or other public statement shall be
mutually agreed upon by CNG and Coda in advance of its release.
5.05 Transfers of Certain Assets.
(a) Prior to the Closing Date, (i) Taurus shall convey to Coda or
Coda's nominee those assets described on Schedule 5.05(a)(i) (collectively, the
"EXCLUDED TAURUS ASSETS"), which assets include, without limitation, all assets
relating to the Taurus Electra Plant and associated gathering facilities and
that certain promissory note, dated June 15, 1997, in the original principal
amount of $175,000 made by Electron 4/NW, Inc. payable to Taurus; and (ii) Coda
shall convey to Taurus all of Coda's right, title and interest in and to those
assets described on Schedule 5.05(a)(ii), being an approximately twelve (12)
mile natural gas gathering line located in ▇▇▇▇▇▇ and ▇▇▇▇▇ Counties, Texas and
associated equipment and materials (the "ADDITIONAL TAURUS ASSETS"). Transfer
of the Additional Taurus Assets shall be on terms which are mutually acceptable
to Coda and CNG.
(b) Upon transfer of the Excluded Taurus Assets to Coda or Coda's
nominee, all liabilities (whether arising before or after the date of transfer)
associated with the Excluded Taurus Assets shall be assumed by Coda.
(c) The net book value of the assets transferred pursuant to
Section 5.05(a)(i) and (a)(ii), adjusted for depreciation and capital
expenditures to the effective date of transfer, shall be applied to reduce and
increase, respectively, the outstanding balance of the long term debt due Coda
from Taurus (the "INTERCOMPANY PAYABLE"). Immediately prior to Closing, Coda
shall make a contribution to the equity of Taurus in an amount equal to the
outstanding balance of the Intercompany Payable.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the representations and warranties set forth in Section 2.01 and the
provisions of Section 4.01 shall have no application to and shall not
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otherwise cover or relate in any way to the Excluded Taurus Assets and shall
apply to the Additional Taurus Assets for the period of time owned by Coda.
5.06 Accounting Services. At the request of CNG, through January
31, 1998, Coda shall continue to perform, for Taurus' account, all gas
accounting services necessary or required by Taurus in connection with its
operations in the ordinary course of business, and CNG shall be responsible for
providing all data to Coda necessary or required in connection with the
performance of such services; provided that, Coda shall have no liability to
CNG, Taurus or any other party resulting from or arising out of the performance
or nonperformance of such services, except that Coda shall be liable to CNG or
Taurus resulting from or arising out of Coda's gross negligence or willful
misconduct. As compensation for such services, CNG shall pay or cause to be
paid to Coda a fee of $40,000, paid contemporaneously with the payment of the
Working Capital (as defined herein) adjustment described in Section 5.09(b).
5.07 Files. Subject to fulfillment of any obligations arising
under Section 5.06, on or within a period of thirty (30) days after the Closing
Date, Coda shall transfer or cause to be transferred to CNG any files, books,
records or other documents relating to Taurus' business which are possessed by
Coda and not already in the possession of CNG. Coda may make and retain copies
of any of such files, books, records and documents, and CNG shall maintain or
cause to be maintained the originals or photocopies thereof within its
possession and control for a period of six years after Closing. Coda and Joint
Energy Development Investments Limited Partnership, a Delaware limited
partnership ("JEDI"), shall be afforded reasonable access by CNG to such files,
books, records or other documents of Taurus.
5.08 Cooperation in Post-Closing Matters. Coda and CNG shall each
cooperate with the other in connection with the defense by either of any suit,
action, claim or proceeding, or in connection with any audit or request for
information by any taxing authority, arising out of the conduct of Taurus'
business prior to or after the Closing. Such cooperation shall include, at the
expense of the requesting party, supplying such factual and technical
information as one party shall possess and another party may reasonably require
in connection with any such defense, audit or request for information or to
respond to discovery proceedings in any such suit, action, claim or proceeding,
and providing access to books and records as the requesting party may
reasonably require. No party, however, shall be required to so cooperate if
such cooperation would prejudice the rights of the party called upon to provide
the information. Reimbursement of expenses hereunder shall be limited to
reasonable and necessary out-of-pocket charges and expenses, including wages
and salaries. Without limitation of the foregoing, each party shall give the
other party all reasonable cooperation to conduct an audit of Taurus for the
purpose of preparing financial statements required in connection with any
filing made by such party with the Securities and Exchange Commission, annual
reports to shareholders or similar reports which require audited financial
statements.
5.09 Post Closing Adjustment.
(a) Development Capital Expenditures. For purposes of this
Agreement, the term "DEVELOPMENT CAPITAL EXPENDITURE" shall mean any capital
expenditure for gas processing plant and gathering system expansions,
extensions, enlargements, improvements or construction, including but not
limited to expenditures associated with the connection of additional supplies
of natural gas to any gathering system, but excluding expenditures associated
with maintenance, replacement or repair and related expenditures.
Notwithstanding anything to the contrary contained in this Agreement, CNG and
Acquisition "A" shall be jointly and severally liable to Coda and shall
reimburse Coda for all Development Capital Expenditures actually paid by or for
the account of Taurus after June 30, 1997 and prior to November 30, 1997,
excluding therefrom any Development Capital Expenditures (i) in excess of the
amount stated in Section 4.01(e)(iv) that are not expressly consented to by
CNG, which consent shall not be unreasonably withheld, and (ii) associated with
the Excluded Taurus
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Assets (the total sum of such Development Capital Expenditures to be reimbursed
to Coda is hereinafter referred to as the "REIMBURSED CAPITAL EXPENDITURES").
As soon as practicable after the Closing Date, Coda shall prepare and submit to
CNG a statement describing and calculating the Reimbursed Capital Expenditures.
The Reimbursed Capital Expenditures shall be reimbursed to Coda in immediately
available funds simultaneously with the payment due on the Working Capital
adjustment described in Section 5.09(b) below.
(b) Working Capital Adjustment. For purposes of this Agreement,
"CLOSING WORKING CAPITAL" means the Working Capital of Taurus as of November
30, 1997; "WORKING CAPITAL" means (i) current assets, determined on a basis
consistent with the Taurus Interim Financial Statements and in accordance with
GAAP, minus (ii) current liabilities, determined on a basis consistent with the
Taurus Interim Financial Statements and in accordance with GAAP (excluding all
Development Capital Expenditures, other than Development Capital Expenditures
associated with the Excluded Taurus Assets). As soon as practicable, but in no
event not later than January 29, 1998, CNG shall cause to be prepared a
calculation of the Closing Working Capital and deliver such calculation to Coda
for review. Coda shall notify CNG within ten (10) business days of receipt
thereof whether it agrees with such calculation and, if not, shall specify in
reasonable detail the points of disagreement. If any such disagreement cannot
be resolved within ten (10) business days thereafter, Coda and CNG shall
mutually agree upon a reputable firm of independent public accountants which
has not performed any services since January 1, 1997 for Coda, Taurus, or CNG
or its affiliates to resolve all points of disagreement with respect to the
Closing Working Capital. The fees of such third party accounting firm shall be
borne one-half by Coda and one-half by CNG, and all determinations made by such
firm shall be final, conclusive, and binding with respect to the calculation of
the Closing Working Capital. If the Closing Working Capital position is less
than zero, the amount by which it is less shall be paid promptly by Coda to CNG
in immediately available funds; if such Closing Working Capital position is
greater than zero, the amount by which it is greater shall be paid promptly by
CNG to Coda in immediately available funds.
5.10 Schedules. Disclosure of any fact or item in this Agreement
or in any schedule hereto referenced to a particular section or paragraph in
this Agreement (i) shall, should the existence of the fact or item or its
contents be relevant to any other section or paragraph herein, be deemed to be
disclosed with respect to all such other sections or paragraphs of this
Agreement, whether or not an explicit cross-reference appears; and, (ii) shall
not be deemed an admission, representation or warranty as to the materiality of
such fact or item.
5.11 Tax Matters. Coda will be responsible for any payment of, or
receive any benefit from, federal income taxes resulting from Taurus'
operations prior to Closing. Coda will be responsible for the payment of Texas
franchise taxes owed by Taurus or Coda with respect to Taurus' normal business
operations prior to Closing. CNG shall be responsible for the payment of Texas
franchise taxes, if any, owed by Holdings. CNG shall be responsible for any
Texas franchise taxes which are imposed on Taurus solely as a result of the
transactions contemplated by this Agreement or operations of Taurus subsequent
to Closing. Coda shall be responsible for any tax imposed under any other
state (excluding Texas franchise tax) and federal laws to which Coda, Taurus
and/or Holdings are subject as a result of any "gain" realized (or deemed to be
realized under the Code and corresponding provisions of state law as if Coda
had sold the Taurus Shares to Acquisition "B" in a stock sale subject to a
Section 338(h)(10) election under the Code). CNG shall be responsible for any
additional federal or state income, franchise, sales, excise or similar taxes
which Coda, Taurus or Holdings are required to pay in excess of the amounts
contemplated in the immediately preceding sentence solely as a result of the
structure of this transaction. Except as contemplated in this Section 5.11,
all remaining taxes shall be discharged by the party incurring such tax.
5.12 Taurus Personnel. In the event CNG notifies Coda in writing
at least one business day prior to Closing that the employment of any Taurus
Dallas office employee will not be continued after Closing, Coda shall
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cause Taurus to notify such individual of the termination of their employment
effective as of Closing. Coda shall, at its own cost and expense, pay
severance benefits to eligible individuals in accordance with Exhibit 1 hereto.
5.13 Non-Competition. Coda agrees that until the second
anniversary of the Closing Date, neither it nor any of its subsidiaries shall
engage or agree to engage, either directly or indirectly, as a principal or for
its own account or solely or jointly with others, or as stockholders owning
more than ten percent (10%) in any corporation or joint stock association, in
any business that gathers, transports or processes natural gas within a thirty
(30) mile radius of the processing plants currently owned by Taurus (excluding
the Excluded Taurus Assets and excluding any gathering, transportation or
processing lines and equipment acquired in connection with any acquisition of
oil or gas properties by Coda or its subsidiaries).
If any provision contained in this Section 5.13 shall for any reason
be held invalid, illegal or unenforceable in any respect, such invalidity,
illegality of unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of
no effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Coda acknowledges that CNG would be irreparably harmed by any breach of this
Section and that there would be no adequate remedy at law or in damages to
compensate CNG for any such breach. Coda agrees that CNG shall be entitled to
injunctive relief requiring specific performance by Coda of this Section, and
Coda consents to the entry thereof.
5.14 No Negotiation. Until Closing or such time, if any, as this
Agreement is terminated pursuant to Section 8 hereof, Coda, Taurus and their
respective officers, directors, employees and agents will not, directly or
indirectly, solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non- public information to, or consider
the merits of any unsolicited inquiries or proposals from any person (other
than CNG) relating to any transaction involving the sale of the business or all
or substantially all of the assets of Taurus or any of the capital stock of
Taurus, or any merger, consolidation, business combination or similar
transaction involving Taurus.
5.15 CNG and Coda to Cause Performance. CNG agrees to take all
action necessary to cause CHC, Acquisition "A" and Acquisition "B" to perform
all of their respective agreements, covenants and obligations under this
Agreement and to consummate the transactions contemplated by this Agreement on
the terms and conditions set forth in this Agreement. CNG shall be liable for
any breach of any representation, warranty, covenant or agreement of CHC,
Acquisition "A" and Acquisition "B" and for any breach of this covenant. Coda
agrees to take all action necessary to cause Holdings to perform all of
Holdings' agreements, covenants and obligations under this Agreement and to
consummate the transaction contemplated by this Agreement on the terms and
conditions set forth in this Agreement. Coda shall be liable for any breach of
any representation, warranty, covenant and agreement of Taurus (provided that
Coda shall not be liable for post-Closing covenants and agreements of Taurus)
and Holdings and for any breach of this covenant.
5.16 Merger. Immediately prior to Closing Coda shall have caused
Taurus Corp. to merge into and with Taurus L.P. pursuant to the terms of an
Agreement of Merger reasonably acceptable to CNG. The Certificate of Limited
Partnership and Agreement of Limited Partnership for Taurus L.P. shall be in
form and substance reasonably acceptable to CNG.
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6. CONDITIONS OF CLOSING
6.01 Conditions to Obligation of Each Party to Effect the Closing.
The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders of or from any governmental body or third party
required to be obtained, and any filings required to be made by Coda or CNG for
the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained
and made by Coda or CNG.
(b) No Injunction. No court having jurisdiction shall have
issued, to the knowledge of Coda or CNG, an injunction preventing the
consummation of the transactions contemplated hereby that shall not have been
dissolved at the Closing Date.
(c) No Material Adverse Change. CNG shall have reasonably
determined in good faith, on or before November 24, 1997, by written notice to
Coda, that, had the representations and warranties of Coda in this Agreement
been made without any materiality or knowledge qualifications, CNG would suffer
or experience claims, losses, damages, liabilities, diminution in value of the
business, assets or operations of Taurus or other adverse economic impact from
one or more breaches of such representations and warranties that in the
aggregate would not exceed $300,000 if the Merger were to be consummated;
provided that, in the event that Coda has provided any amendment to any Coda
disclosure schedule as contemplated by Section 5.02, any such amendment or
amendments to such Coda schedule shall not be considered to have amended such
schedule for purposes of this subsection (c). The phrase "without regard to
any materiality or knowledge qualifications" shall mean that (i) references to
"material" and words of similar import shall, for purposes of this Section
6.01(c), be considered to have been deleted from the text of the
representations and warranties of Coda in this Agreement, (ii) references to
exclusions or other qualifications for items that would not, individually or in
the aggregate, have or cause, or which could reasonably be expected to have, a
Material Adverse Effect or phrases of similar import, shall, for such purposes,
be considered to have been deleted from the text of the representations and
warranties of Coda in this Agreement, and (iii) references to "to the knowledge
of Coda" and words of similar import shall, for such purposes, be considered to
have been deleted from the text of the representations and warranties of Coda
in this Agreement.
(d) No Laws or Regulations Affecting. No law or legally binding
regulation shall have been enacted that does or would prohibit, restrict or
delay the consummation of the transactions contemplated hereby or any of the
conditions to consummate the transactions contemplated hereby.
(e) Certificate of Merger. The Certificate of Merger in respect
of the Merger shall have been filed with and accepted by the Secretary of State
of Delaware.
6.02 Additional Conditions to Obligations of CNG, CHC, Acquisition
"A" and Acquisition "B". The obligations of CNG, CHC, Acquisition "A" and
Acquisition "B" to effect the transactions contemplated by this Agreement are
subject to fulfillment or waiver by CNG, CHC, Acquisition "A" and Acquisition
"B" of the following conditions at or prior to the Closing:
(a) Representations and Warranties. The representations and
warranties of Coda contained in this Agreement shall be true and correct in all
material respects on and as of November 24, 1997, except for changes
contemplated by this Agreement, and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
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made on and as of November 24, 1997 and except for the representations and
warranties contained in Sections 2.01(a) through 2.01(f) which shall be true
and correct on the Closing Date.
(b) Agreements and Covenants. Coda and Holdings shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing.
(c) No Challenge. There shall not be pending any action,
proceeding or investigation before any court or administrative agency or by any
government agency or any other person (i) challenging, affecting, impairing or
seeking material damages in connection with the transactions contemplated by
this Agreement, or (ii) seeking to restrain, prohibit or limit the exercise of
full rights of ownership or operation by Taurus of all or any portion of its
business or assets, in either case (i) or (ii) having a Material Adverse Effect
on Taurus.
(d) Documents to be Delivered by Coda. Coda shall have delivered
to CNG the following:
(i) the opinion of Coda's General Counsel, dated as of
the Closing Date, addressed to CNG, in form and substance reasonably
satisfactory to CNG, to the effect that:
(A) (1) Coda is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to
own, operate and lease its properties and to carry on its
business as now being conducted, (2) Holdings is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power
and authority to own, operate and lease its properties and to
carry on its business as now being conducted, and (3) Taurus
L.P. is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware
and has the partnership power and authority to own, operate
and lease its properties and to carry on its business as now
being conducted;
(B) prior to the merger of Taurus Corp. with and
into Taurus L.P., the authorized capital stock of Taurus
consisted of 1,000 shares of common stock, par value $1.00 per
share, all of which were outstanding; the Taurus Shares were
duly authorized and validly issued, fully paid and
non-assessable and, to the knowledge of such counsel after due
investigation, have not been issued in violation of any
preemptive right of shareholders;
(C) the outstanding interests in Taurus L.P.
consist solely of the Partnership Interests; the Partnership
Interests were not issued in violation of any preemptive
rights and there is no option, warrant, call, subscription or
other agreement relating to the Partnership Interests;
(D) this Agreement has been duly authorized,
executed and delivered by Coda and, subject to due execution
by CNG and Acquisition "A," constitutes a legal, valid and
binding agreement of Coda and is enforceable against Coda (and
its successors and assigns) in accordance with its terms,
subject to appropriate exceptions for bankruptcy and
creditors' rights matters and equitable principles;
(E) Coda has the corporate right and authority to
enter into and perform this Agreement and execute the
documents to be delivered by Coda pursuant hereto;
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(F) no consent or approval by the stockholders of
Coda is or shall be required for the execution, delivery and
performance by Coda of the Agreement or compliance with the
terms thereof;
(G) the execution, delivery and performance of
the Agreement by Coda and the consummation by Coda of all of
the transactions contemplated thereby will not conflict with
or violate any provisions of the charter or bylaws, as
amended, of Coda, or any statute, rule, or regulation
applicable to Coda or, to the knowledge of such counsel after
due investigation, any law, rule, regulation, order, judgment
or decree to which Coda or Taurus is a party or by which Coda
or Taurus or the properties or assets of Taurus or the
Partnership Interests are bound;
(ii) a certificate of Coda, executed by an authorized
officer of Coda, to the effect that each of the conditions specified
above in Sections 6.02(a) and (b) are satisfied in all material
respects;
(iii) a certificate of merger executed by Holdings in
respect of the Merger;
(iv) an assignment of partnership interest evidencing the
assignment of Coda's partnership interest in Taurus L.P. to CHC;
(v) such other documents as CNG may reasonably request
for the purpose of evidencing the accuracy of Coda's representations
and warranties, Coda's performance of or compliance with any covenant
or obligation to be performed or complied with hereunder, or the
satisfaction by Coda of any condition set forth herein, or to
otherwise facilitate the consummation of the transactions contemplated
by this Agreement.
(e) No Casualty Loss. Taurus' assets, taken as a whole, shall not
have been damaged, lost or destroyed (whether or not any such damage, loss or
destruction is covered by an applicable policy of insurance) after the
execution and delivery of this Agreement and prior to November 24, 1997 where
the cost to repair or replace such assets exceeds $250,000.
6.03 Additional Conditions to Obligations of Coda and Holdings.
The obligation of Coda and Holdings to effect the transactions contemplated by
this Agreement is subject to fulfillment or waiver by Coda and Holdings of the
following conditions at or prior to the Closing:
(a) Representations and Warranties. The representations and
warranties of CNG, CHC, Acquisition "A" and Acquisition "B" contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, except for changes contemplated by this Agreement and except for
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) with the
same force and effect as if made on and as of the Closing Date.
(b) Agreements and Covenants. CNG shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(c) No Challenge. There shall not be pending any action,
proceeding or investigation before any court or administrative agency or by any
government agency or any other person challenging, affecting, impairing or
seeking material damages in connection with the transactions contemplated by
this Agreement.
(d) Delivery of Purchase Consideration. CNG shall have delivered
or caused to be delivered to Coda the Merger Consideration by wire transfer.
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(e) Documents to be Delivered by CNG. CNG shall have delivered to
Coda the following:
(i) the opinion of counsel to CNG, dated as of the
Closing Date, addressed to Coda, in form and substance reasonably
satisfactory to Coda, to the effect that:
(A) (1) CNG is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Oklahoma and has the corporate power and
authority to own, operate and lease its properties and to
carry on its business as now being conducted, (2) CHC is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Oklahoma and has the
power and authority to own, operate and lease its properties
and to carry on its business as now being conducted, (3)
Acquisition "A" is a limited liability company duly formed,
validly existing and in good standing under the laws of the
State of Oklahoma and has the power and authority to own,
operate and lease its properties and to carry on its business
as now being conducted, (4) Acquisition "B" is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the power and
authority to own, operate and lease its properties and to
carry on its business as now being conducted;
(B) this Agreement has been duly authorized,
executed and delivered by CNG, CHC, Acquisition "A" and
Acquisition "B" and subject to due execution by Coda,
constitutes a valid and binding agreement of CNG, CHC,
Acquisition "A" and Acquisition "B" and is enforceable against
CNG, CHC, Acquisition "A" and Acquisition "B" (and their
successors and assigns) in accordance with its terms, subject
to appropriate exceptions for bankruptcy and creditors' rights
matters and equitable principles;
(C) CNG, CHC, Acquisition "A" and Acquisition "B"
have the right and authority to enter into and perform this
Agreement and execute the documents to be delivered by CNG,
CHC, Acquisition "A" and Acquisition "B" pursuant hereto;
(D) no consent or approval by the shareholders of
CNG, CHC, Acquisition "A" or Acquisition "B" is or shall be
required for the execution, delivery and performance by CNG,
CHC, Acquisition "A" and Acquisition "B" of the Agreement or
compliance with the terms thereof;
(E) the execution, delivery and performance of
the Agreement by CNG, CHC, Acquisition "A" and Acquisition
"B" and the consummation by CNG, CHC, Acquisition "A" and
Acquisition "B" of all of the transactions contemplated
thereby will not conflict with or violate any provisions of
the organizational or governance instruments of CNG, CHC,
Acquisition "A" and Acquisition "B" or any statute, rule, or
regulation applicable to CNG, CHC, Acquisition "A" and
Acquisition "B" or, to the knowledge of such counsel after due
investigation, any law, rule, regulation, order, judgment or
decree to which CNG, CHC, Acquisition "A" and Acquisition "B"
is a party or by which CNG, CHC, Acquisition "A" and
Acquisition "B" is bound;
(ii) certificates of CNG, CHC, Acquisition "A" and
Acquisition "B" executed by a duly authorized party, to the effect
that each of the conditions specified above in Section 6.03(a) and (b)
is satisfied in all material respects;
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(iii) a certificate of merger executed by Acquisition "B"
in respect of the Merger;
(iv) an assumption agreement evidencing the assumption by
CHC of Coda's general partner duties, obligations and liabilities in
respect of Taurus L.P.; and
(v) such other documents as Coda may reasonably request
for the purpose of evidencing the accuracy of CNG's, CHC's,
Acquisition "A"'s and Acquisition "B'"s representations and
warranties, CNG's, CHC's, Acquisition "A"'s and Acquisition "B"'s
performance of or compliance with any covenant or obligation to be
performed or complied with hereunder, or the satisfaction by CNG, CHC,
Acquisition "A" and Acquisition "B" of any condition set forth herein,
or to otherwise facilitate the consummation of the transactions
contemplated by this Agreement.
(f) Consents, Waivers. Coda shall have obtained any and all
consents, waivers or other approvals required for the transactions contemplated
by this Agreement, in form and substance satisfactory to Coda, under its (i)
March 18, 1996 Indenture, as modified or amended, covering Coda's 10 1/2%
Senior Subordinated Notes due 2006 and (ii) February 14, 1996 Revolving Credit
Facility, as modified or amended, with NationsBank of Texas, N.A., and other
lenders.
7. INDEMNITIES
7.01 INDEMNIFICATION OF CNG, CHC, ACQUISITION "A" AND ACQUISITION
"B". SUBJECT TO THE OTHER PROVISIONS OF THIS ARTICLE 7, CODA AGREES TO DEFEND,
INDEMNIFY, AND HOLD CNG, CHC, ACQUISITION "A" AND ACQUISITION "B" AND THEIR
SUCCESSORS AND ASSIGNS, AND THEIR OFFICERS, DIRECTORS, AFFILIATES, AGENTS AND
EMPLOYEES, HARMLESS FROM AND AGAINST, AND PROMPTLY REIMBURSE THEM FOR, ANY AND
ALL LOSSES, EXPENSES, DAMAGES, DEFICIENCIES, LIABILITIES, PAYMENTS, PENALTIES,
LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, PROCEEDINGS, COSTS, OBLIGATIONS,
SETTLEMENT COSTS, AND ATTORNEYS', ACCOUNTANTS' AND OTHER PROFESSIONAL ADVISORS'
FEES (INCLUDING REASONABLE COSTS OF INVESTIGATION AND PREPARATION) OF ANY KIND
OR NATURE WHATSOEVER (COLLECTIVELY, "LOSS" OR "LOSSES") NET OF ANY INCOME TAX
EFFECT THEREOF THEREAFTER REALIZED BY CNG, ACQUISITION "A", ACQUISITION "B" OR
TAURUS WITH RESPECT TO, AND IN, THE TAX YEAR IN WHICH THE LOSS OCCURS, AND NET
OF ANY RECOVERIES FROM THIRD PARTIES AS CONTEMPLATED IN SECTION 7.05 (INCLUDING
RECOVERIES UNDER ANY INSURANCE POLICIES MAINTAINED BY TAURUS), DIRECTLY OR
INDIRECTLY ARISING OUT OF, RESULTING FROM, RELATING TO OR IN CONNECTION WITH
(i) ANY BREACH OF, INACCURACY IN, OR NONPERFORMANCE OF, ANY REPRESENTATION,
WARRANTY, COVENANT, OR AGREEMENT OF CODA CONTAINED IN THIS AGREEMENT, AND (ii)
THE OWNERSHIP OR OPERATION OF THE EXCLUDED TAURUS ASSETS; PROVIDED, HOWEVER,
THAT CNG, CHC, ACQUISITION "A," AND ACQUISITION "B" SHALL BE INDEMNIFIED FOR A
BREACH OF NOT MORE THAN ONE REPRESENTATION AND WARRANTY CONTAINED IN SECTION
2.01 HEREUNDER (WITHOUT DUPLICATION) IN RESPECT OF EACH SPECIFIC LOSS WHICH IS
INDEMNIFIABLE UNDER THIS SECTION 7.01. WITH RESPECT TO ANY LOSSES ARISING BY
REASON OF A BREACH OF ANY OF CODA'S REPRESENTATIONS AND WARRANTIES MADE IN
SECTION 2.01, ALL OF SAID REPRESENTATIONS AND WARRANTIES SHALL BE DEEMED TO
HAVE BEEN MADE WITHOUT ANY MATERIALITY OR KNOWLEDGE QUALIFICATIONS. THE PHRASE
"WITHOUT ANY MATERIALITY OR KNOWLEDGE QUALIFICATIONS" SHALL MEAN THAT (i)
REFERENCES TO "MATERIAL" AND WORDS OF SIMILAR IMPORT SHALL, FOR PURPOSES OF
THIS SECTION 7.01, BE CONSIDERED TO HAVE BEEN DELETED FROM THE TEXT OF THE
REPRESENTATIONS AND WARRANTIES OF CODA IN
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THIS AGREEMENT, (ii) REFERENCES TO EXCLUSIONS OR OTHER QUALIFICATIONS FOR ITEMS
THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, OR WHICH COULD REASONABLY BE
EXPECTED TO HAVE, A MATERIAL ADVERSE EFFECT, OR PHRASES OF SIMILAR IMPORT,
SHALL, FOR SUCH PURPOSES, BE CONSIDERED TO HAVE BEEN DELETED FROM THE TEXT OF
THE REPRESENTATIONS AND WARRANTIES OF CODA IN THIS AGREEMENT, AND (iii)
REFERENCES TO "TO THE KNOWLEDGE OF CODA" AND WORDS OF SIMILAR IMPORT SHALL, FOR
PURPOSES OF THIS SECTION 7.01, BE CONSIDERED TO HAVE BEEN DELETED FROM THE TEXT
OF THE REPRESENTATIONS AND WARRANTIES OF CODA AND HOLDINGS IN THIS AGREEMENT.
7.02 INDEMNIFICATION OF CODA. SUBJECT TO THE OTHER PROVISIONS OF
THIS ARTICLE 7, CNG, CHC, ACQUISITION "A" AND ACQUISITION "B", JOINTLY AND
SEVERALLY, AGREE TO DEFEND, INDEMNIFY, AND HOLD CODA, ITS SUCCESSORS AND
ASSIGNS, AND ITS OFFICERS, DIRECTORS, AFFILIATES, AGENTS AND EMPLOYEES,
HARMLESS FROM AND AGAINST, AND PROMPTLY REIMBURSE IT FOR, ANY AND ALL LOSSES,
NET OF ANY INCOME TAX EFFECT THEREOF REALIZED BY CODA WITH RESPECT TO, AND IN,
THE TAX YEAR IN WHICH THE LOSS OCCURS, AND NET OF ANY RECOVERIES FROM THIRD
PARTIES, DIRECTLY OR INDIRECTLY ARISING OUT OF, RESULTING FROM, RELATING TO OR
IN CONNECTION WITH (i) ANY BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT OF CNG, CHC, ACQUISITION "A" OR ACQUISITION "B" CONTAINED IN THIS
AGREEMENT, (ii) THE BUSINESS, OPERATIONS AND ASSETS OF TAURUS ARISING IN WHOLE
OR IN PART AFTER THE CLOSING DATE, BUT EXCLUDING ANY LOSSES DIRECTLY OR
INDIRECTLY ARISING OUT OF, RESULTING FROM, RELATING TO OR IN CONNECTION WITH
THE OWNERSHIP OR OPERATION OF THE EXCLUDED TAURUS ASSETS AND (iii) ANY LOSSES
IN RESPECT OF FEDERAL, STATE OR LOCAL TAX LIABILITIES AS SET FORTH IN SECTION
5.11; PROVIDED, HOWEVER, THAT CODA SHALL BE INDEMNIFIED FOR A BREACH OF NOT
MORE THAN ONE REPRESENTATION AND WARRANTY CONTAINED IN SECTION 2.01 HEREUNDER
(WITHOUT DUPLICATION) IN RESPECT OF EACH SPECIFIC LOSS WHICH IS INDEMNIFIABLE
UNDER THIS SECTION 7.02. WITH RESPECT TO ANY LOSSES ARISING BY REASON OF A
BREACH OF ANY REPRESENTATIONS AND WARRANTIES MADE BY CNG OR ACQUISITION "A" IN
SECTION 3.01, ALL OF SAID REPRESENTATIONS AND WARRANTIES SHALL BE DEEMED TO
HAVE BEEN MADE WITHOUT ANY MATERIALITY OR KNOWLEDGE QUALIFICATIONS. THE PHRASE
"WITHOUT ANY MATERIALITY OR KNOWLEDGE QUALIFICATIONS" SHALL MEAN THAT (i)
REFERENCES TO "MATERIAL" AND WORDS OF SIMILAR IMPORT SHALL, FOR PURPOSES OF
THIS SECTION 7.01, BE CONSIDERED TO HAVE BEEN DELETED FROM THE TEXT OF THE
REPRESENTATIONS AND WARRANTIES OF CNG, CHC, ACQUISITION "A" AND ACQUISITION "B"
IN THIS AGREEMENT, (ii) REFERENCES TO EXCLUSIONS OR OTHER QUALIFICATIONS FOR
ITEMS THAT WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, OR WHICH COULD
REASONABLY BE EXPECTED TO HAVE, A MATERIAL ADVERSE EFFECT, OR PHRASES OF
SIMILAR IMPORT, SHALL, FOR SUCH PURPOSES, BE CONSIDERED TO HAVE BEEN DELETED
FROM THE TEXT OF THE REPRESENTATIONS AND WARRANTIES OF CNG, CHC, ACQUISITION
"A" AND ACQUISITION "B" IN THIS AGREEMENT, AND (iii) REFERENCES TO "TO THE
KNOWLEDGE OF CNG" AND WORDS OF SIMILAR IMPORT SHALL, FOR PURPOSES OF THIS
SECTION 7.01, BE CONSIDERED TO HAVE BEEN DELETED FROM THE TEXT OF THE
REPRESENTATIONS AND WARRANTIES OF CNG, CHC, ACQUISITION "A" AND ACQUISITION "B"
IN THIS AGREEMENT.
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7.03 Limitation on Indemnity.
(a) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of the indemnity of CNG, CHC, Acquisition "A" and
Acquisition "B" by Coda provided for in Section 7.01: (i) the aggregate of all
Losses as hereinabove defined (other than Losses arising from a breach of the
representation in Section 2.01(q) (an "ENVIRONMENTAL LOSS")) (net of income tax
effects and net of any recoveries from third parties (including recoveries
under insurance policies) as described in Section 7.05) shall not exceed
$3,000,000; and (ii) the indemnity in Section 7.01 shall be subject to
deductibles for certain Losses (net of income tax effects and net of any
recoveries from third parties (including recoveries under insurance policies)
as described in Section 7.05) as set forth below. Notwithstanding anything to
the contrary contained in this Agreement, for purposes of the indemnity of CNG,
CHC, Acquisition "A" and Acquisition "B" by Coda provided for in Section 7.01
with respect to any Environmental Loss: (x) the aggregate of all Environmental
Losses (net of income tax effects and net of any recoveries from third parties
(including recoveries under insurance policies) as described in Section 7.05)
shall not exceed $5,000,000; (y) the indemnity in Section 7.01 shall be subject
to deductibles for Environmental Losses arising from a breach of the
representation in Section 2.01(q) (net of income tax effects and net of any
recoveries from third parties (including recoveries under insurance policies)
as described in Section 7.05) as set forth below; and (z) Environmental Losses
shall not be recoverable from the breach of any other representation or
warranty contained in Section 2.01. The deductibles for those Losses other than
Environmental Losses (net of income tax effects and net of any recoveries from
third parties (including recoveries under insurance policies) as described in
Section 7.05) described in clause (ii) above shall be $100,000, in the
aggregate, for breach of each representation and warranty in Section 2.01 which
are to be construed, for purposes of such deductibles, as follows: (A) Sections
2.01(g), (i), (l) and (aa) shall each be construed as a single representation
and warranty, (B) Sections 2.01(h), (j) and (r) read together as if they were
one representation and warranty, (C) Sections 2.01(m), (u) and (cc) read
together as if they were one representation and warranty, and (D) all other
subsections of Section 2.01 read together as if they were one representation
and warranty. The deductible for Environmental Losses (net of income tax
effects and net of any recoveries from third parties (including recoveries
under insurance policies) as described in Section 7.05) as described in clause
(y) above shall be $50,000 in the aggregate. With respect to the deductibles
set forth in the immediately preceding sentence, Coda may not assert that any
single occurrence (or closely related set of occurrences) is subject to more
than one deductible. Except as described on Schedule 7.03(a), Coda will not be
responsible for any indemnification in respect of any claim for a breach by
Coda or Holdings of any representation, warranty, covenant or agreement herein
that is known to CNG, CHC, Acquisition "A" and Acquisition "B" at the date of
this Agreement. The limitations on indemnity contained in clauses (i) and (ii)
of this Section 7.03 shall not apply to breaches of the representation
contained in Section 2.01(k) and the agreement of Coda set forth in Section
5.11 (provided, however, any breach thereof may only relate to the tax period
ending on or prior to the Closing Date as set forth in Section 5.11). The
indemnity provided in Section 7.01, as hereinabove limited, shall be the sole
remedy of CNG, CHC, Acquisition "A" and Acquisition "B" against Coda with
respect to any breach or inaccuracy of any representation or warranty of Coda
contained in Section 2.01 of this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of the indemnity of Coda by CNG, CHC, Acquisition "A"
and Acquisition "B" provided for in Section 7.02: (i) the aggregate of all
Losses as hereinabove defined (net of income tax effects and net of any
recoveries from third parties (including recoveries under insurance policies)
as described in Section 7.02) shall not exceed $3,000,000; (ii) such indemnity
shall only be made once the aggregate of all Losses under Section 7.02 exceed
$300,000, (iii) the limits on indemnity contained in clauses (i) and (ii) of
this Section 7.03(b) shall not apply to the indemnity contained in Section
7.02(iii) and the agreement of CNG set forth in Section 5.11; and (iv) the
indemnity provided in Section 7.02, as hereinabove limited, shall be the sole
remedy of Coda (or its affiliates) against CNG, CHC, Acquisition "A" and
Acquisition "B" with respect to any breach or inaccuracy of any representation
or warranty of CNG, CHC, Acquisition "A" and Acquisition "B" contained in
Section 3.01 of this Agreement.
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(c) Notwithstanding anything to the contrary contained herein, the
indemnity and hold harmless obligations provided for in Sections 7.01 and 7.02
shall terminate on the second anniversary of the Closing Date; provided,
however, that the obligations under Sections 7.01 and 7.02 shall not terminate
with respect to any item as to which the person entitled to indemnification
shall have, before the expiration of such applicable period, delivered notice
pursuant to Section 7.04; and provided, further, that the indemnity for taxes
due or payable shall not terminate until the expiration of the applicable
statute of limitations.
7.04 Notice and Opportunity to Defend.
(a) If any of the persons entitled to indemnification hereunder
(the "INDEMNITEE") receives notice of any claim or commencement of any action
or proceeding (an "ASSERTED LIABILITY") with respect to which another party
(the "INDEMNITOR") is or may be obligated to provide indemnification pursuant
to Sections 7.01 or 7.02 hereof, the Indemnitee shall promptly notify the
Indemnitor, describing the Asserted Liability in reasonable detail and
indicating the amount (which may be estimated) of the loss, expense, damage,
liability, or obligation that has been or may be asserted by the Indemnitee
against the Indemnitor; provided, however, that the failure to give such notice
shall not result in a loss of the Indemnitee's right to indemnification under
this Article 7 unless and to the extent such failure materially prejudices the
Indemnitor's ability to defend against the Asserted Liability.
(b) No settlement or compromise of an Asserted Liability may be
made by the Indemnitee without the written consent of the Indemnitor. No
settlement or compromise of an Asserted Liability may be made by Indemnitor
without the written consent of Indemnitee unless such settlement includes as an
unconditional term thereof, a full release of all Indemnitees by the claimant
or plaintiff from all liability with respect to the Asserted Liability.
(c) If the Indemnitor so elects, the Indemnitor, at the
Indemnitor's expense, shall assume the defense of the Asserted Liability and
shall have the right to settle or compromise the same, except that if the
Indemnitee's counsel reasonably objects to such assumption on the ground that
there may be legal defenses available to the Indemnitee that are different from
or in addition to those available to the Indemnitor, then the Indemnitee shall
have the right to employ separate counsel approved by the Indemnitor. In order
to assume such defense, the Indemnitor must notify the Indemnitee in writing of
its election to do so within ten (10) business days of receipt of notice of the
Asserted Liability from the Indemnitee; in the event the Indemnitor does not so
notify the Indemnitee within such ten (10) business day period, the Indemnitor
shall be deemed to have elected to not assume such defense.
(d) If the Indemnitor assumes the defense of the Asserted
Liability, the Indemnitor shall not be liable for the fees and expenses of the
Indemnitee's counsel incurred thereafter in connection with the Asserted
Liability. As to those Asserted Liabilities with respect to which the
Indemnitor does not elect to assume control or defense (i) the Indemnitee shall
afford the Indemnitor an opportunity to participate in such defense, at the
Indemnitor's own cost and expense and (ii) the Indemnitor agrees to reasonably
cooperate in such defense.
(e) In no event shall the Indemnitor be liable for the fees and
expenses of more than one counsel for any, some or all Indemnitees in any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, unless in the
reasonable opinion of such counsel, there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two Indemnitees.
7.05 Insurance, Etc. Following Closing, CNG, CHC, Acquisition "A"
and Acquisition "B" shall use or cause to be used commercially reasonable
efforts, and shall cause Taurus to use commercially reasonable
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efforts, to (i) file (or cause to be filed) claims under all insurance policies
held by Taurus immediately prior to the Closing Date that may be recoverable in
respect of any indemnified Losses thereunder, (ii) pursue all claims for
indemnification, contribution or other recoveries (whether for breach of
contract or otherwise) under agreements with third parties, and (iii) pursue
all rights for contribution or other recoveries against third parties afforded
under applicable law (including, but not limited to, remedies afforded under
CERCLA); provided, however, CNG, CHC, Acquisition "A" and Acquisition "B" shall
not be obligated to make out-of-pocket payments on any Loss pending resolution
of any claims for indemnity, contribution or other recoveries against third
parties, it being agreed that Coda shall make such payment and CNG, CHC,
Acquisition "A" and Acquisition "B" shall cause Taurus, Acquisition "A" or
Acquisition "B" to reimburse Coda for any indemnity payment made by it that is
later recovered from a third party. Coda (through counsel retained by Coda at
Coda's expense) shall be afforded the opportunity to consult with such
insurer(s) and any settlement with any insurer in respect of any indemnified
Losses may only be made with the consent of Coda. CNG, Acquisition "A" and
Acquisition "B" shall cause Taurus to maintain in full force and effect all
existing policies of insurance coverages currently in effect in accordance with
the custom of similarly situated companies in the same industry. In the event
CNG, CHC, Acquisition "A" or Acquisition "B" determine to cancel or not renew
any of such insurance policies pursuant to the foregoing sentence, CNG shall
give Coda written notice the earlier of twenty (20) days prior to the effective
date of such cancellation or expiration or five (5) days after receipt of a
written notice of cancellation. Coda shall be afforded the opportunity to
renew any such policy at its own cost. CNG, CHC, Acquisition "A" and
Acquisition "B" shall cooperate, and shall cause Taurus to cooperate, with Coda
in respect of the renewal or extension of such insurance or in securing a
replacement policy therefor.
No right of subrogation shall accrue hereunder to any insurer or other
party. There shall be no third party beneficiaries of any provision of this
Section 7.06 (other than the Indemnitee under Section 7.01).
8. TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) By mutual written consent of Coda and CNG;
(b) By Coda or CNG, if Closing has not occurred by November 25,
1997, so long as the failure to consummate the transaction contemplated by this
Agreement does not result from a breach of this Agreement by the party seeking
termination of this Agreement;
(c) By Coda or CNG, if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
(d) By CNG, if Coda breaches in any material respect any of its
agreements or covenants contained herein, and such breach is not waived or
cured within ten (10) days after written notice from CNG; provided that, if
such agreement or covenant cannot reasonably be cured within ten (10) days
after written notice, then an additional reasonable period of time shall be
permitted, not to exceed twenty (20) days, provided the breaching party is
continually and diligently pursuing such cure.
(e) By Coda, if CNG, CHC, Acquisition "A" or Acquisition "B"
breaches in any material respect any of its agreements or covenants contained
herein, and such breach is not waived or cured within ten (10) days after
written notice from Coda; provided that, if such agreement or covenant cannot
reasonably be cured within ten (10) days after written notice, then an
additional reasonable period of time shall be permitted, not to exceed twenty
(20) days, provided the breaching party is continually and diligently pursuing
such cure.
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(f) By CNG, if there shall have occurred, after the execution and
delivery of this Agreement and prior to November 24, 1997, a casualty loss in
respect of the property, plant or equipment of Taurus in excess of $250,000.
8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Sections 8.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except (i)
as set forth in Sections 8.05 and 9.01 hereof, and (ii) nothing herein shall
relieve any party from liability for any willful breach hereof and for any
breach giving rise to a termination under Sections 8.01(d) or (e).
8.03 Amendment. This Agreement may be amended by an instrument in
writing, signed by the parties hereto.
8.04 Waiver. At any time prior to Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions contained
herein; provided that, any such extension or waiver shall be valid and
enforceable only if set forth in an instrument in writing signed by the party
to be bound thereby.
8.05 Fees and Expenses. Except as otherwise expressly provided in
this Agreement, each party hereto agrees to pay, without right of reimbursement
from the other party, the costs incurred by it incident to the performance of
its obligations hereunder, whether or not the transactions contemplated hereby
shall be consummated, including, without limitation, those incident to the
preparation and negotiation of this Agreement, and the fees and disbursements
of counsel, accountants and consultants employed by it in connection with the
transactions contemplated hereby.
9. MISCELLANEOUS
9.01 Survival of Representations, Warranties, Covenants and
Agreements. Following Closing, (i) except as otherwise provided in clause (ii)
of this Section 9.01 all representations and warranties set forth in Articles 2
and 3 hereof shall survive until the second anniversary of the Closing Date;
and (ii) the representation contained in Section 2.01(k) (but only as to
liabilities for taxes accrued or due for any Taurus Corp. tax period prior to
the Closing Date) and the covenants and agreements set forth in Articles 7 and
9 and Sections 5.03, 5.04, 5.05(b), 5.05(d), 5.06, 5.07, 5.08, 5.09, 5.10,
5.11, 5.12, 5.13, 5.15 and 8.05 shall continue in force and effect
indefinitely, except as may be otherwise provided pursuant to the respective
terms and provisions thereof. In the event of termination of this Agreement
pursuant to Section 8.01, those covenants and agreements set forth in Article 9
and Sections 5.01 (with respect to the obligations contained in the
Confidentiality Agreement) 5.04, 8.02 and 8.05 shall continue in force and
effect indefinitely.
9.02 Knowledge. For purposes of this Agreement, the phrase "TO THE
KNOWLEDGE OF" any party shall mean to the knowledge of the officers of such
party; provided that, the phrase "TO THE KNOWLEDGE OF CODA" shall also include
the knowledge of the officers of Taurus.
9.03 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or telecopied if delivered personally
or mailed by registered or certified mail (postage prepaid, return receipt
requested), delivered by
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overnight courier service or sent by facsimile (with receipt mechanically or
telephonically confirmed) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) If to Coda or Holdings:
Coda Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to CNG, CHC, Acquisition "A" or Acquisition "B":
Continental Natural Gas, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
9.04 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural, the male gender shall include
the female gender and the neuter, and vice versa.
9.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
9.06 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
This Agreement has been executed by the respective parties hereto as of the
date first written above. References in this Agreement to "THIS AGREEMENT" or
words of similar import shall be deemed to include all exhibits, schedules, and
certificates furnished pursuant hereto.
9.07 Assignment. This Agreement and all the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, provided that no such assignment
shall release the assigning party from its obligations hereunder.
Notwithstanding the second sentence of this Section 9.07, Coda may, prior to
the Closing Date, and without the consent of CNG, Acquisition "A" and/or CHC
(i) convey Taurus in its entirety to JEDI or its designee, (ii) assign all of
their rights, duties, obligations and liabilities under this Agreement to JEDI
(other than
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the agreements of Coda in Sections 5.01, 5.03, 5.05, 5.06, 5.07, 5.08, 5.09 and
5.13 which shall remain obligations or rights of Coda) and (iii) the parties
hereto agree to make such modifications to this Agreement as are reasonable and
necessary in respect of such assignment.
9.08 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person (other than JEDI)
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
9.09 Choice of Forum; Consent to Service of Process. The parties
hereto agree that any suit, action or proceeding arising out of or relating to
this Agreement or any agreement or obligation delivered in connection with this
Agreement or any judgment entered by any court in respect thereof shall be
brought in the courts of the State of Texas, County of Dallas or in the United
States District Court for the Northern District of Texas and each such party
hereby submits to the exclusive jurisdiction of such courts for the purpose of
any such suit, action or proceeding relating to this Agreement or any related
agreement or obligation.
Each party hereto hereby irrevocably waives any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any agreement or obligation
delivered in connection with this Agreement, brought in the courts of the State
of Texas, County of Dallas or the United States District Court for the Northern
District of Texas, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.
9.10 Governing Law. THIS AGREEMENT IS MADE PURSUANT TO, SHALL BE
CONSTRUED UNDER, AND SHALL BE CONCLUSIVELY DEEMED FOR ALL PURPOSES TO HAVE BEEN
EXECUTED AND DELIVERED UNDER, THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS. THE OBLIGATIONS AND
UNDERTAKINGS OF EACH OF THE PARTIES TO THIS AGREEMENT SHALL BE PERFORMABLE IN
DALLAS COUNTY, TEXAS.
9.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
9.12 Arbitration. Any and all claims, demands, causes of action,
disputes, controversies and other matters in question arising out of or
relating to this Agreement (except disputes arising under Section 5.09(b) which
shall be resolved as set forth therein), the alleged breach thereof, or in any
way relating to the subject matter of this Agreement ("CLAIMS"), even though
some or all of such Claims allegedly are extracontractual in nature, whether
such Claims sound in contract, tort or otherwise, at law or in equity, under
state or federal law, whether provided by statute or the common law, for
damages or any other relief, shall be resolved and decided exclusively by
binding arbitration pursuant to the Federal Arbitration Act in accordance with
the Commercial Arbitration Rules then in effect with the American Arbitration
Association. The arbitration proceeding shall be conducted in Dallas, Texas.
The arbitration shall be before a panel of three arbitrators. Each party to
such dispute shall select one arbitrator and the two arbitrators selected by
the parties shall select the third arbitrator. The arbitrators are authorized
to issue subpoenas for depositions and other discovery mechanisms, as well as
trial subpoenas, in accordance with the Federal Rules of Civil Procedure.
Either party may initiate a proceeding in the appropriate United States
District Court to enforce this provision. This agreement to arbitrate shall be
enforceable in either federal or state court. Judgment upon any award rendered
in any such arbitration proceeding may be entered by any federal or state court
having jurisdiction. The enforcement of this agreement to arbitrate and all
procedural aspects of this agreement to arbitrate, including the construction
and interpretation of this
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agreement to arbitrate, the scope of the arbitrable issues, allegations of
waiver, delay or defenses to arbitrability, and the rules governing the conduct
of the arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances, the
parties hereby waiving their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs
of the arbitration and attorney's fees as they deem appropriate. Prior to any
person instituting a Claim under this Agreement, such person shall provide to
the other party hereto a written notice specifying the nature and basis of the
Claim. The persons who are the subject of any Claim shall be given thirty
(30) days to cure any breach before any Claim is filed. It is further agreed
that prior to such Claims being submitted to the arbitrators on such Claims,
the parties to the Claims shall attempt to resolve such Claims through
non-binding mediation of such Claims for a period not in excess of 30 days
commencing after assertion of a Claim.
* * * * *
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IN WITNESS WHEREOF, Coda, Holdings, CNG, Acquisition "A," Acquisition
"B" and CHC have caused this Agreement to be executed as of the date first
written above.
CODA ENERGY, INC.
By:
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and CFO
TAURUS HOLDINGS CORP.
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
CONTINENTAL NATURAL GAS, INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
CONTINENTAL/TAURUS HOLDINGS
COMPANY, L.L.C.
BY: CONTINENTAL HOLDINGS
COMPANY, MANAGER
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CONTINENTAL HOLDINGS COMPANY
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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CONTINENTAL/TAURUS ACQUISITION
CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
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ATTACHMENT TO EXHIBIT 2.1
LIST OF OMITTED SCHEDULES
Schedule 1.04 List of Officers and Directors
Schedule 2.01(g)(i) No Conflict: Governmental Notices and Consents
Schedule 2.01(i) Basic Documents
Schedule 2.01(k) Tax Matters
Schedule 2.01(l) Absence of Charges
Schedule 2.01(n) Employee Benefit Plans
Schedule 2.01(q) Environmental Matters
Schedule 2.01(s) Title Matters
Schedule 2.01(w) Eminent Domain
Schedule 2.01(aa) Accounts Receivable
Schedule 2.01(ff) Insurance Policies
Schedule 4.01 Conduct of Business Prior to Closing
Schedule 5.05(a)(i) Transfer of Certain Assets
and 5.05(a)(ii)
Schedule 7.03(a) Environmental Indemnity Matters
Exhibit 1 Taurus Personnel Severance Benefits