EXHIBIT 10.31
CONFORMED COPY
PURCHASE AND SALE AGREEMENT
BY AND AMONG
GREEN RIVER PIPELINE, LLC
AND
▇▇▇▇▇▇▇ OIL COMPANY, SELLERS
AND
TEPPCO PARTNERS, L.P., BUYER
SEPTEMBER 7, 2001
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS ........................................................... 1
1.1 Certain Defined Terms ................................................. 1
ARTICLE 2 SALE AND PURCHASE OF THE COMPANY ...................................... 1
2.1 Sale and Purchase of the Company ...................................... 1
2.2 Assumption of Liabilities ............................................. 1
2.3 Retention of Liabilities .............................................. 2
2.4 Expansion Project ..................................................... 3
2.5 Gas Imbalances ........................................................ 3
ARTICLE 3 PURCHASE PRICE ........................................................ 4
3.1 Purchase Price ........................................................ 4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES ........................................ 4
4.1 Representations and Warranties of Sellers ............................. 4
4.2 Representations and Warranties of Buyer .............................. 9
ARTICLE 5 ACCESS TO INFORMATION; ENVIRONMENTAL MATTERS .......................... 10
5.1 Access ................................................................ 10
5.2 Environmental Inspection .............................................. 10
5.3 Environmental Conditions .............................................. 11
5.4 Waiver and Release .................................................... 11
5.5 Confidential Information .............................................. 11
ARTICLE 6 TITLE ................................................................. 12
6.1 Title Warranty ........................................................ 12
6.2 Buyer's Title Review .................................................. 12
6.3 Title Defect Disputes ................................................. 12
ARTICLE 7 COVENANTS OF SELLER AND BUYER ......................................... 12
7.1 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act ................................................. 12
7.2 Conduct of Business Pending Closing ................................... 13
7.3 Gas Gathering Agreements; Gas Purchase Agreements ..................... 13
7.4 Employees ............................................................. 14
7.5 Public Announcements .................................................. 14
7.6 Actions by Parties .................................................... 15
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7.7 Further Assurances .................................................. 15
7.8 Records ............................................................. 15
7.9 No Shop ............................................................. 15
7.10 Casualty Loss ....................................................... 15
7.11 Radio Frequencies ................................................... 16
7.12 ▇▇▇▇▇▇ ROC RTUs ..................................................... 16
7.13 Transition Services Agreement ....................................... 16
ARTICLE 8 CLOSING CONDITIONS .................................................. 16
8.1 Sellers' Closing Conditions ......................................... 16
8.2 Buyer's Closing Conditions .......................................... 17
ARTICLE 9 CLOSING ............................................................. 17
9.1 Closing ............................................................. 17
9.2 Sellers' Closing Obligations ........................................ 17
9.3 Buyer's Closing Obligations ......................................... 17
ARTICLE 10 POST-CLOSING MATTERS ................................................ 18
10.1 Final Settlement Statement .......................................... 18
10.2 Adjustments ......................................................... 18
ARTICLE 11 LIMITATIONS ......................................................... 19
11.1 Disclaimer of Warranties ............................................ 19
11.2 Damages ............................................................. 20
ARTICLE 12 TAXES ............................................................... 20
12.1 Taxes ............................................................... 20
ARTICLE 13 INDEMNITY ........................................................... 21
13.1 Obligation of Parties to Indemnify .................................. 21
13.2 Indemnification Procedures - Third Party Claims ..................... 21
13.3 Direct Claims ....................................................... 22
13.4 Survival of Representations and Warranties .......................... 22
ARTICLE 14 RELEASE ............................................................. 23
14.1 Asbestos and NORM ................................................... 23
ARTICLE 15 TERMINATION; REMEDIES; LIMITATIONS .................................. 23
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15.1 Termination ............................................................................ 23
15.2 Remedies ............................................................................... 24
ARTICLE 16 MISCELLANEOUS .......................................................................... 24
16.1 Counterparts ........................................................................... 24
16.2 Governing Law; Jurisdiction; Process ................................................... 24
16.3 Entire Agreement ....................................................................... 25
16.4 Expenses ............................................................................... 25
16.5 Notices ................................................................................ 25
16.6 Successors and Assigns ................................................................. 26
16.7 Amendments and Waivers ................................................................. 26
16.8 Arbitration ............................................................................ 26
16.9 Preferential Rights .................................................................... 27
16.10 Severability ........................................................................... 27
16.11 Time of Essence ........................................................................ 27
LIST OF EXHIBITS
Exhibit A Definitions
Exhibit B Pipelines, Compressor Stations and Metering Stations
Exhibit B-1 Maps of Pipelines, Compressor Stations and Metering Stations
Exhibit C Property
Exhibit C-1 Permits
Exhibit D Related Facilities
Exhibit E Related Agreements
LIST OF SCHEDULES
Schedule 2.4 Expansion Project
Schedule 4.1(g) Related Agreements
Schedule 4.1(i) Litigation and Claims
Schedule 4.1(p) Authorized Expenditures
Schedule 4.1(q) Environmental Matters
Schedule 4.1(t) Balance Sheet of Jonah Gas Gathering Company
Schedule 4.2(e) Consents
Schedule 7.4 Transferred Employees
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PURCHASE AND SALE AGREEMENT
This
Purchase and Sale Agreement (this "Agreement"), dated September 7,
2001, is by and among Green River Pipeline, LLC, a
Wyoming limited liability
company ("Green River"), and ▇▇▇▇▇▇▇ Oil Company, a
Wyoming corporation ("MOC")
(Green River and MOC are referred to herein individually as a "Seller" and
collectively as the "Sellers") and TEPPCO Partners, L.P., a Delaware limited
partnership ("Buyer"). Buyer and each Seller are referred to herein individually
as a "Party" and Buyer and Sellers are referred to herein collectively as the
"Parties."
RECITALS:
A. Sellers own 100% of the partnership interests in the Jonah Gas
Gathering Company, a
Wyoming general partnership (the
"Company"). The Company operates a natural gas gathering
system and conducts related activities through the Assets
located in and around Sublette, Lincoln and Sweetwater
Counties,
Wyoming (the "Business").
▇. ▇▇▇▇▇▇▇ desire to sell and Buyer desires to purchase all of
the partnership interests in the Company (the "Partnership
Interests") under the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and the
representations, warranties and covenants herein made, the Parties agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. Defined terms used in this Agreement shall
have the meanings set forth herein or on Exhibit A hereto.
ARTICLE 2
SALE AND PURCHASE OF THE COMPANY
2.1 SALE AND PURCHASE OF THE COMPANY. Subject to the terms and
conditions of this Agreement, Sellers agree to sell and convey to Buyer, and
Buyer agrees to purchase from Sellers, 100% of the Partnership Interests.
2.2 ASSUMPTION OF LIABILITIES. Effective as of the Closing, but subject
to the Retained Liabilities and indemnity obligations of Sellers in Section
13.1(a), Buyer shall cause the Company to be responsible for and to pay, honor
and discharge when due and payable all of
the obligations, liabilities and commitments attributable to the Company
accruing after the Closing Date ("Assumed Liabilities"), including, but not
limited to, the following:
(a) except to the extent otherwise expressly provided in Section 5.3,
all Losses of the Company arising from, or alleged to be arising from or
attributable to a violation of, or the failure to perform any obligation imposed
by, Environmental Laws in effect where the Assets are located, regardless of
whether arising from or attributable to the ownership of the Assets before or
after the Closing Date, and regardless of whether resulting from any acts or
omissions of the Company or the condition of the Property when acquired except
for (i) fines and penalties asserted against the Company by any governmental
authority attributable to a violation of, or the failure to perform any
obligation imposed by, Environmental Laws attributable to time periods on or
prior to the Closing Date; (ii) liabilities arising out of or related to any
Offsite Environmental Matter attributable to time periods on or prior to the
Closing Date; and (iii) any third party claims for personal injury, property
damage, damage to natural resources arising out of or related to Environmental
Conditions disclosed by Sellers or the Company or identified in the
Environmental Review;
(b) all Losses under the terms of the Related Agreements, Property or
Permits attributable to time periods after the Effective Date;
(c) all Losses attributable to litigation filed or claims made against
the Company attributable to time periods after the Closing Date;
(d) all Losses occurring, arising out of or related to Transferred
Employees or employment matters attributable to time periods after the Closing
Date; and
(e) all Losses related to Taxes due or payable by the Company with
respect to time periods after the Effective Date but subject to Section 12.1(a).
2.3 RETENTION OF LIABILITIES. Except for the Assumed Liabilities,
Sellers retain and agree to pay, honor and discharge all of the obligations,
liabilities and commitments of the Company attributable to time periods on or
prior to the Closing Date (the "Retained Liabilities"), including, but not
limited to, the following:
(a) all Losses with respect to (i) fines and penalties asserted against
the Company by any governmental authority attributable to a violation of, or the
failure to perform any obligation imposed by, Environmental Laws attributable to
time periods on or prior to the Closing Date; (ii) liabilities arising out of or
related to any Offsite Environmental Matter attributable to time periods on or
prior to the Closing Date; and (iii) any third party claims for personal injury,
property damage, damage to natural resources arising out of or related to
Environmental Conditions disclosed by Sellers or the Company or identified in
the Environmental Review;
(b) all Losses under the terms of the Related Agreements, Property or
Permits attributable to time periods on or prior to the Effective Date including
accounts payable and receivable of the Company;
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(c) all Losses attributable to litigation filed or claims made against
the Company related to time periods on or prior to the Closing Date, including
those matters identified on Schedule 4.1(i);
(d) all Losses occurring, arising out of or related to Transferred
Employees or employment matters with respect to the Company attributable to time
periods on or before the Closing Date including, without limitation, severance
payments, benefits or ERISA obligations or EEOC or other employment type claims
asserted against the Company;
(e) all Losses related to Taxes due or payable by the Company with
respect to time periods on or prior to the Effective Date but subject to Section
12.1(a);
(f) all Losses arising out of or related to assets previously owned by
the Company that are not owned by the Company as of the Closing Date or that are
not related to the Business;
(g) all Losses arising out of the underpayment (or claimed
underpayment) of any royalties or similar payments to third parties (or any
claims relating thereto) resulting from Affiliate transactions involving the
Company prior to the Closing Date; and
(h) all Losses relating to inter-company accounts payable or
receivable, which shall be satisfied prior to the Closing Date.
2.4 EXPANSION PROJECT. Buyer acknowledges that the Company is in the
process of expanding a portion of the pipeline that is included in the Assets
and is more particularly described in Schedule 2.4 (the "Expansion Project").
The estimated aggregate cost incurred or to be incurred by the Company related
to the Expansion Project up to and including the Effective Date (the "Estimated
Expansion Costs") is Nine Million Dollars ($9,000,000). The Parties agree that
an adjustment shall be made pursuant to the Final Settlement Statement referred
to in Section 10.1 to reflect the difference between such actual costs incurred
prior to the Effective Date and the Estimated Expansion Costs so that Sellers
shall receive a credit if such actual costs exceed the Estimated Expansion Costs
and Buyer shall receive a credit if such actual costs are less than the
Estimated Expansion Costs. Buyer acknowledges that the Company has not acquired
as of the date of this Agreement, all of the rights-of-way and easements
required for the Expansion Project and that Buyer may have to acquire additional
rights-of-way and easements necessary to complete the Expansion Project. Buyer
and Sellers agree that the estimated costs to complete the entire Expansion
Project described above, including contingency costs identified by Buyer in the
amount of One Million Dollars ($1,000,000), have been included in the
calculation of the Purchase Price. Buyer agrees to cause the Company to pay for
the costs incurred by the Company to complete the Expansion Project after the
Effective Date and to indemnify Sellers from and against all such costs incurred
after the Effective Date. The in-service dates and associated commitments with
respect to the Expansion Project are set forth on Schedule 2.4.
2.5 GAS IMBALANCES. Sellers shall be responsible for, and shall
indemnify the Company and Buyer from and against, any gas imbalances for which
the Company has any liability as of the Effective Date.
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ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price for the sale and conveyance of
the Partnership Interests to Buyer is Three Hundred Fifty-Nine Million Eight
Hundred Thirty-Three Thousand Seven Hundred Dollars ($359,833,700) (the
"Purchase Price"), subject to adjustment pursuant to the Final Settlement
Statement referred to in Article 10.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers agree, represent
and warrant to Buyer as follows:
(a) Organization and Qualification of the Company. The Company is a
general partnership, duly organized, validly existing and in good standing under
the laws of the State of
Wyoming and has the requisite power to carry on its
business as it is now being conducted. The Partnership Agreement referred to in
Exhibit E is the Company's partnership agreement, as currently in effect and as
will be in effect as of the Closing Date. There are no other similar agreements
or other governing documents under which the Company is currently, or at Closing
will be, operating or governed.
(b) Authority. Green River is a limited liability company and MOC is a
corporation, each duly organized, validly existing and in good standing under
the laws of the State of
Wyoming and have the power and authority to enter into
and perform this Agreement and to carry out the transaction contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation by
Sellers of the transactions contemplated herein have been duly and validly
authorized by all necessary action on the part of Sellers.
(c) Enforceability. This Agreement constitutes a valid and binding
agreement of Sellers and is enforceable against Sellers in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
(d) No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transaction and performance of the
terms and conditions contemplated hereby by Sellers will (i) conflict with or
result in a violation or breach of any provision of the certificate of
incorporation, bylaws, partnership agreement or other similar governing
documents of Sellers or the Company, or any material agreement, indenture or
other instrument under which Sellers or the Company are bound or to which the
Assets are subject; or (ii) violate or conflict with any law applicable to
Sellers or the properties or assets of Sellers or the Company.
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(e) Ownership. Sellers has good and marketable title to 100% of the
Partnership Interests, free and clear of any liens and encumbrances. There are
no agreements or other commitments relating to any rights, options, warrants,
right of first refusal, or agreements binding upon the Sellers or the Company
for the acquisition of ownership interests in the Company, including the
Partnership Interests. As of the date hereof and as of Closing, the Company owns
the Assets.
(f) No Subsidiaries. The Company does not own, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity or ownership interest in any other entity.
(g) Related Agreements. The Related Agreements include (as of the date
of this Agreement) all of the following contracts and all other agreements to
which the Company is a party:
(i) any agreement (or group of related agreements) (A) for the
purchase or sale of gas, raw materials, commodities, supplies,
products, or other personal property, (B) for the furnishing or receipt
of services, or (C) that is a gas exchange agreement, gas gathering
agreement, gas transportation agreement, gas balancing agreement,
transportation service agreement, tariff, or other related agreement;
(ii) any agreement creating or concerning a partnership, joint
venture, or similar entity and any operating agreement, undivided
ownership agreement, or similar agreement;
(iii) any agreement (or group of related agreements) (A) under
which the Company has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, (B) for any capitalized lease
obligation, or (C) under which the Company has imposed a security
interest on any of its assets, tangible or intangible;
(iv) any agreement concerning non-competition;
(v) any collective bargaining agreement or other union
contract;
(vi) any preferential purchase right, right of first refusal,
restriction on assignability, or similar right that would be applicable
to or invoked by the consummation of the transaction contemplated by
this Agreement or that would otherwise apply to the Assets;
(vii) any lease, in either the capacity of lessee or lessor;
and
(viii) any other agreement to which the Company is a party and
is material to the Company's Business, financial condition, operations,
results of operations, or future prospects.
Sellers have delivered to Buyer a correct and complete copy of each
Related Agreement. With respect to each such agreement and except as disclosed
on Schedule 4.1(g), to the Sellers' Knowledge: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect,
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(B) the agreement will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby, (C) the Company is not in breach or default,
and is not aware of any person claiming there is a breach or default, and no
event has occurred of which Sellers are aware that with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement, (D) no party has repudiated any provision of
the agreement, and (E) neither Sellers nor the Company are participating in any
attempts to renegotiate any amounts paid or payable to the Company under any of
the Related Agreements, have not made a specific, written demand for such
renegotiations, and have not received a specific, written demand by another
party to the Related Agreements Contracts for such renegotiations.
(h) Compliance With Laws. To Sellers' Knowledge, except as set forth on
Schedule 4.1(q), (i) the Company is not in violation of any federal, state, or
local law, rule or regulation or any other requirement of any governmental body,
court or arbitrator applicable to the operation of the Assets; and (ii) all
Permits and approvals of any federal, state or local governmental body that are
necessary for operation of the Assets are in full force and effect, and no
proceeding is pending or threatened to revoke or limit any Permit.
(i) Litigation and Claims. Except as shown on Schedule 4.1(i) hereto,
there are no governmental or other legal actions, judgments, liens or other
proceedings, outstanding, pending or, to the knowledge of Sellers, threatened,
to which Sellers or the Company are or would be a party and which relate to the
Assets.
(j) Consents. Except for actions that have been or will be taken prior
to the Closing, including the filings to be made pursuant to Section 7.1 hereof,
or those consents from governmental authorities that are customarily obtained
after Closing, no consent, approval, registration, qualification, or filing
with, any governmental or regulatory authority on the part of Sellers is
required in connection with the consummation of the transaction contemplated by
this Agreement and there are no consents of any third party that are required in
order to consummate such transaction.
(k) Taxes. To Sellers' Knowledge:
(i) all tax returns required to be filed by the Company or
with respect to the Partnership Interests have been duly and timely
filed with the appropriate governmental entity;
(ii) all Taxes owed by the Company or with respect to the
Partnership Interests that are or have become due have been timely paid
in full;
(iii) there is no claim pending or, to the knowledge of the
Sellers, threatened by any applicable governmental authority in
connection with any such Tax;
(iv) none of the Company's tax returns is now under audit or
examination by any Governmental Authority;
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(v) the Company has been treated for federal tax purposes as a
partnership since its inception; and
(vi) the Company has in effect an election to adjust the basis
of the Assets under section 754 of the Code.
(l) Employees. Since Sellers have owned the Company, the Company has
had no employees and, to Sellers' Knowledge, the Company has no obligations
under any Benefits Plan, whether of a legally binding nature or in the nature of
informal understandings.
(m) Advisors' and Brokers' Fees. Sellers and the Company have not
retained any advisor or broker in respect of the transaction contemplated by
this Agreement for which Buyer shall incur any liability.
(n) Information Regarding the Assets. All equipment included in the
Assets is in good working condition and has been maintained in an operable state
of repair adequate to maintain normal operation of the Assets in a manner
consistent with the Company's past practices.
(o) No Foreign Person. Neither Seller is a "foreign person" within the
meaning of Section 1445 of the Code.
(p) Authorized Expenditures. Except with respect to the Expansion
Project and as set forth on Schedule 4.1(p), there are no outstanding
authorizations for capital expenditure respecting the Assets for which Company
or Buyer will be liable other than ordinary trade payables and well connections
made in the ordinary course of business pursuant to which such expenditures are
or may be required to be made.
(q) Environmental Matters. Except as set forth in Schedule 4.1(q), to
Sellers' Knowledge:
(i) there are no Assets which are in violation of
Environmental Laws;
(ii) the Company has in force and effect all permits and
licenses necessary under Environmental Laws, and has operated the
Assets in substantial compliance with such permits and licenses;
(iii) no underground storage tanks, in use or abandoned, have
been placed on the Property during the Company's ownership of the
Property and no underground storage tanks, in use or abandoned, have
been placed on the Property prior to the Company's ownership of the
Property;
(iv) there are no Hazardous Materials present on or in the
environment at the Assets, including hazardous substances contained in
barrels, above or underground storage tanks, landfills, equipment or
other containers; and
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(v) there are no existing or pending actions, suits,
investigations, inquiries, proceedings or clean-up obligations by any
governmental authority or third party against the Company relating to
or arising out of any Environmental Laws with respect to the Assets or
the Company's operation of the Assets, to Sellers' Knowledge, none are
threatened, and no event has occurred or condition exists which can
reasonably be expected to give rise to such an action.
(r) Liens. Except for (i) liens for taxes not yet due and payable or
being contested in good faith, (ii) inchoate mechanics, materialmens or similar
liens arising in the ordinary course of business or being contested in good
faith, and (iii) any customary right reserved to a governmental authority to
regulate the affected property, the Assets are free and clear of liens, pledges,
encumbrances and adverse claims created by, through or under the Company or
Sellers or the Affiliates of any of them, but not otherwise.
(s) Property. Except for matters disclosed by Sellers to Buyer in
writing prior to Closing, to Sellers' Knowledge, (i) the Company is not in
breach or default, (ii) there is no person claiming there is a breach or
default, and (iii) no event has occurred that with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under any agreement or other instruments related to the Property.
Exhibit C lists all of the material Property of the Company related to the
Facilities.
(t) Financial Statements. Set forth on Schedule 4.1(t) are true and
complete copies of the unaudited balance sheet of the Company (the "Balance
Sheet") as of December 31, 2000 (the "Balance Sheet Date") and the unaudited
statements of income of the Company for the respective seven (7) month period
then ended (collectively, with the Balance Sheet, the "Financial Statements").
The Financial Statements fairly present the financial position of the Company as
of its respective date and the results of its respective operations for the
seven (7) month period, respectively, then ended, in the context of its
membership in a consolidated group.
(u) Absence of Certain Changes. Since the Balance Sheet Date:
(i) the Company has not suffered any material loss, damage,
destruction, or other casualty to any of its assets (whether or not
covered by insurance) which would be reasonably expected to have a
Material Adverse Effect;
(ii) the Company has made no capital investment in, any loan
to, or any acquisition of the securities or assets of, any third party
(or series of related capital investments, loans, and acquisitions);
and
(iii) the Company has issued no note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation.
(v) Undisclosed Liabilities. The Company has no liabilities (and there
is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company giving
rise to any liability), except for (i) liabilities set forth on the
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face of the Balance Sheet (rather than in any notes thereto), (ii) liabilities
which have arisen after the Balance Sheet Date in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law), or (iii) as otherwise disclosed in this
Agreement.
(w) Disclosure. The representations and warranties contained in this
Section 4.1 do not contain any untrue statement of a material fact or omit to
state any material fact that, to Sellers' knowledge, is necessary in order to
make the statements and information contained in this Section 4.1 not
misleading.
4.2 REPRESENTATIONS AND WARRANTIES OF BUYER.
(a) Organization and Qualification. Buyer is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has the requisite power to carry on its business as it is
now being conducted.
(b) Authority. Buyer has the power and authority to enter into and
perform this Agreement and to carry out the transaction contemplated herein. The
execution, delivery and performance of this Agreement and the consummation by
the Buyer of the transaction contemplated herein have been duly and validly
authorized by all necessary action on the part of Buyer.
(c) Enforceability. This Agreement constitutes a valid and binding
agreement of Buyer and is enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
(d) No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transaction and performance of the
terms and conditions contemplated hereby by Buyer will (i) conflict with or
result in a violation or breach of any provision of the certificate of
incorporation, bylaws, agreement of limited partnership or other similar
governing documents of Buyer or any material agreement, indenture or other
instrument under which Buyer is bound, or (ii) violate or conflict with any law
applicable to Buyer or the properties or assets of Buyer.
(e) Consents. Except for actions that have been or will be taken prior
to the Closing, including the filings to be made pursuant to Section 7.1 hereof,
or those that are customarily obtained after Closing, to the knowledge of Buyer,
no consent, approval, registration, qualification, or filing with, any
governmental or regulatory authority on the part of Buyer is required in
connection with the consummation of this transaction. To the knowledge of Buyer,
there is no consent of any third party that Buyer will be required to obtain in
order to consummate the transaction contemplated by this Agreement except as set
forth in Schedule 4.2(e).
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(f) Actions. There is no action pending against Buyer or, to the
knowledge of Buyer, threatened against Buyer, which would be likely to have a
material adverse effect on the ability of Buyer to consummate and perform the
transaction contemplated by this Agreement.
(g) Advisors' and Brokers' Fees. Buyer has not retained any advisor or
broker in respect of the transaction contemplated by this Agreement for which
Sellers are liable or shall incur any liability.
(h) Funds. Buyer has, and all times prior to Closing will have,
sufficient funds available to enable Buyer to consummate the transaction
contemplated by this Agreement and to pay the Purchase Price and all related
fees and expenses of Buyer.
ARTICLE 5
ACCESS TO INFORMATION; ENVIRONMENTAL MATTERS
5.1 ACCESS. Prior to and after the execution of this Agreement, Sellers
shall (a) permit Buyer and its representatives access to the Records and
employees involved in the Business (i) insofar as Sellers could do so without
violating legal constraints or any legal obligation, or waiving any
attorney/client work product or like privilege, and (ii) subject to any required
consent of any third person (the "Record Review") and (b) permit Buyer and its
representatives at reasonable times and at Buyer's sole risk, cost and expense
to conduct an inspection of the condition of the Assets ("Inspection").
5.2 ENVIRONMENTAL INSPECTION. Sellers shall provide Buyer with any
environmental audits or reports previously prepared by or for Sellers or the
Company in Sellers' possession that are related to the Assets and shall disclose
the location of any known or suspected environmental conditions promptly after
execution of this Agreement. Sellers shall cause the Company to provide Buyer
with access to the Assets for the purpose of inspecting the environmental
condition of the Assets (the "Environmental Review"). In conducting the
Environmental Review, Buyer shall have the right to conduct tests, including
subsurface sampling, related to the environmental condition of the Assets so
long as the tests do not unreasonably interfere with the operation of the
Assets. Buyer shall furnish Sellers with copies of all reports obtained by, or
prepared by or for Buyer in connection with the foregoing inspections which
shall be kept confidential by both Buyer and Sellers unless disclosure is
required by law. Buyer's access to the Assets shall be at Buyer's risk, cost and
expense, and Buyer shall release the Company and Sellers from and shall fully
protect, indemnify and defend the Company and Sellers and their respective
officers, agents, employees and Affiliates and hold them harmless from and
against any and all Claims relating to, arising out of Buyer's exercise of its
rights under this Section 5.2, including without limitation, claims relating to
(a) injury or death of any person or persons whomsoever (b) damage to or loss of
any property or resource caused by Buyer and not related to existing
environmental conditions (c) common law causes of action of Buyer such as
negligence, gross negligence, strict liability, nuisance or trespass, or (d)
fault imposed by statute, rule, regulation or otherwise unless caused by the
negligence of Sellers.
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5.3 ENVIRONMENTAL CONDITIONS.
(a) As soon as reasonably practical, but in no event later than 5:00
p.m., Mountain Time, on September 21, 2001 (the "Examination Period"), Buyer
shall notify Sellers, in writing, of any Environmental Condition(s) disclosed as
a result of the Environmental Review. Buyer's notice of Environmental
Condition(s) shall include a reasonably complete description of each individual
environmental condition as to which Buyer takes exception (including those
disclosed by Sellers) and the costs which Buyer in good faith attributes to
remediating the same.
(b) Buyer shall be responsible for remediation costs attributable to
the Environmental Condition(s) of the Assets disclosed by Sellers or identified
by Buyer in the Environmental Review that do not exceed in the aggregate one
percent (1%) of the Purchase Price. Sellers shall be responsible for any
remediation costs associated with such Environmental Conditions to the extent
such costs exceed in the aggregate one percent (1%) of the Purchase Price.
Notwithstanding the foregoing, either Buyer or Sellers shall have the right to
terminate this Agreement if Buyer's good-faith estimate of the potential
remediation costs attributable to Environmental Condition(s) exceeds more than
three percent (3%) of the Purchase Price. In the event of termination, Buyer
shall not be responsible for any Environmental Liabilities with respect to the
Assets.
(c) In the event the Parties disagree as to the existence of an
Environmental Condition and/or the remediation costs attributable to such
Environmental Condition, the Parties shall submit the dispute to final and
binding arbitration in accordance with Section 16.8 hereof.
5.4 WAIVER AND RELEASE. All Environmental Conditions not raised by
Buyer prior to Closing shall be waived by Buyer for all purposes, and Buyer
shall have no right to seek an adjustment to the Purchase Price, make a claim
against Sellers or seek indemnification from Sellers associated with the same
except with respect to any breach of Section 4.1(q) or Environmental Liabilities
constituting part of the Retained Liabilities under Section 2.3(a).
5.5 CONFIDENTIAL INFORMATION. Buyer agrees to maintain all information
made available or revealed to it pursuant to the Record Review, Inspection and
Environmental Review, confidential and to cause its officers, employees,
representatives, consultants and advisors to maintain all information made
available to them pursuant to this Agreement confidential in accordance with the
terms of the confidentiality agreement by and between Affiliates of Sellers and
Buyer (the "Confidentiality Agreement"). Buyer's obligations under the
Confidentiality Agreement shall terminate as of the Closing Date. On and after
the Closing Date, Sellers shall maintain all information related to the Company
and the Assets confidential except for financial statement or public reporting
purposes or for filings with governmental authorities and shall not use such
information in a manner detrimental to Buyer or disclose to any third party
without the prior written consent of Buyer.
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ARTICLE 6
TITLE
6.1 TITLE WARRANTY. Sellers represent and warrant that the Company has
good and marketable title to the Facilities and Related Facilities from and
against all persons claiming by through or under the Company, Sellers or their
Affiliates, but not otherwise.
6.2 BUYER'S TITLE REVIEW.
(a) Buyer's Assertion of Title Defects. Prior to the termination of the
Examination Period, Buyer shall have the right to furnish Sellers written notice
meeting the requirements of this Section 6.2(a) (the "Title Defects Notice")
setting forth any matters which, in Buyer's reasonable opinion, constitute Title
Defects. For all purposes of this Agreement, Buyer shall be deemed to have
waived any Title Defect which Buyer fails to assert by a Title Defect Notice
given to Sellers on or before the expiration of the Examination Period. To be
effective, Buyer's Title Defect Notice of a Title Defect must include (i) a
brief description of the matter constituting the asserted Title Defect, (ii) the
estimated cost or other remedial action required to cure such Title Defect, and
(iii) supporting documents reasonably necessary for Sellers (as well as any
title attorney or examiner hired by Sellers) to verify the existence of such
asserted Title Defect.
(b) Sellers' Obligations. If Buyer furnishes to Sellers timely Title
Defect Notice(s), subject to Sellers' continuing right to dispute the existence
of a Title Defect(s) referred to in such Title Defect Notice pursuant to Section
6.3, Sellers shall (i) assume the obligation to cure such Title Defects in a
timely manner following Closing but in no event later than one year from the
Closing Date, or (ii) pay Buyer an agreed upon Purchase Price adjustment to cure
such Title Defect. If Sellers elect to cure a Title Defect, but have not cured
such Title Defect within one (1) year of Closing, Buyer shall have the right to
cure the Title Defect at Sellers' cost and expense. Sellers shall indemnify
Buyer from and against any Losses incurred by the Company with respect any Title
Defects remaining uncured after Closing.
6.3 TITLE DEFECT DISPUTES. In the event that Buyer and Sellers have not
agreed upon the existence of one or more Title Defects, the Parties shall submit
the dispute to final and binding arbitration in accordance with Section 16.8
hereof. In no event shall the existence of a Title Defect or a dispute
concerning such existence postpone Closing.
ARTICLE 7
COVENANTS OF SELLER AND BUYER
7.1 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. Immediately following the execution of this
Agreement, the Parties will file any notification and report forms and related
material that it may be required to file with the Federal Trade Commission and
the Antitrust Division of the United States Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will join in a request for early termination under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will use their best efforts to obtain such early
termination, and will make any further filings pursuant thereto that may be
necessary in connection therewith. Each Party will furnish the other Party(s)
with copies of any of its filings
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under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act at the time such filings are made. Buyer shall
pay the filing fee and all other fees required to be paid in connection with any
such filings.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Subject to the provisions of
the Related Agreements, from the date hereof through the Closing, except as
consented to or approved by Buyer, Sellers covenant and agree that:
(a) Changes in Business Related to the Assets. Subject to continuing to
implement the Expansion Project as described on Schedule 2.4, Sellers shall use
their best efforts to ensure that the Company does not without prior written
consent of Buyer:
(i) make any material change in the conduct of its business or
operations related to the Assets;
(ii) enter into, modify, assign, terminate or amend, in any
material respect, any of the Related Agreements; or
(iii) sell, lease or otherwise dispose of any of the Assets,
except (A) Assets sold, leased or otherwise disposed of in the ordinary
course of business and having a value of less than $25,000, and (B) the
Questar settlement for the remaining portion of the Jonah Gas Gathering
System, not included in the Assets.
(b) Operation of Assets. Subject to continuing to implement the
Expansion Project as described on Schedule 2.4, Sellers shall use their best
efforts to require the Company to:
(i) cause the Assets to be maintained and operated in the
ordinary course of business in accordance with Seller's past practices
(including the repair or replacement of damaged, destroyed, obsolete,
depreciated, non-working or non-economical items of equipment or other
personal property), maintain insurance now in force with respect to the
Assets and pay or cause to be paid all costs and expenses in connection
therewith promptly when due;
(ii) cause the Assets to be maintained and operated in
compliance with all applicable laws;
(iii) use reasonable diligence to maintain its relationships
with suppliers, customers and others having material business relations
with the Seller with respect to the Assets so that they will be
preserved for Buyer on and after the Closing Date; and
(iv) avoid any act, which shall have or cause a Material
Adverse Effect.
7.3 GAS GATHERING AGREEMENTS; GAS PURCHASE AGREEMENTS. That certain Gas
Gathering Agreement dated April 1, 1996 between the Company and MOC, as amended
(the "MOC Gas Gathering Agreement"), is included in the Related Agreements.
Buyer covenants and agrees that following Closing, it will cause the Company to
comply with the terms and conditions of such MOC Gas Gathering Agreement, as so
amended, and with the terms and conditions of the other Related Agreements. The
Parties agree that there also are included in the Related Agreements separate
gas gathering agreements between the Company and ▇▇▇▇▇▇▇ Oil
13
Corp., ▇▇▇▇▇▇▇ Energy Company, ▇▇▇▇▇ Petroleum Corp., and HS Resources, Inc.,
and that separate gas purchase agreements between MOC and the aforementioned
companies and STC Oil Co. are not held by the Company and are not included in
the Related Agreements. MOC or its Affiliates may continue to purchase gas under
such gas purchase agreements and such gas will be gathered by Buyer pursuant to
the MOC Gas Gathering Agreement.
7.4 EMPLOYEES. Buyer or its Affiliates shall be permitted to review
non-confidential employment records of those employees of the Company's
Affiliates identified in Schedule 7.4, and discuss with such employees the terms
and conditions under which Buyer will offer to hire such employees (a
"Transferred Employee"). Buyer will offer all Transferred Employees a salary
equivalent to their current salary as set forth on Schedule 7.4 and, for those
Transferred Employees who accept Buyer's offer, Buyer will provide such
Transferred Employees with the following:
(a) Buyer will pay such Transferred Employee the equivalent of twelve
(12) months salary as severance pay if such Transferred Employee is terminated
without cause prior to the first anniversary of the Closing Date; provided,
however, that the amount of severance pay shall be reduced by the payments made
by Buyer or its Affiliates to such Transferred Employee from Closing until his
or her termination date, but in no case shall the terminated Transferred
Employee receive less than three (3) months severance pay.
(b) Buyer agrees that each Transferred Employee shall be eligible to
participate in Buyer's or its Affiliates' benefit arrangements to the same
extent as other similarly situated employees of Buyer or such Affiliates
including, without limitation, (i) the right to participate in any employee
benefit plans (as that term is defined in Section 3(3) of ERISA), (ii) the right
to participate in group health insurance without any waiting period and without
exclusion or limitation based on pre-existing conditions and with full credit
for then-accumulated deductible and out-of-pocket expenses, and (iii)
preservation (including proper notice) of all benefits under COBRA. Buyer will
give all such Transferred Employees full credit, for purposes of eligibility and
vesting, for such Transferred Employees' service with Sellers or Sellers'
Affiliates.
(c) Buyer shall also pay Transferred Employees a retention bonus funded
by Sellers of no more than three (3) months salary for those Transferred
Employees who remain employed by Buyer for at least three (3) months following
Closing.
7.5 PUBLIC ANNOUNCEMENTS. No Party will issue any press release or
otherwise make any public statements with respect to this Agreement and the
transaction contemplated hereby without the prior consent of the other Party,
which consent shall not be unreasonably withheld. If a Party is required by law
to make any such disclosure, it must first provide to the other Party(s) the
content of the proposed disclosure, the reasons that such disclosure is required
by law and the time and place that the disclosure will be made and afford such
other Party a reasonable opportunity to comment upon and request changes in the
disclosure. Notwithstanding the foregoing, Sellers or Sellers' Affiliates or
Buyer or Buyer's Affiliates shall be permitted in the context of public
financing or otherwise to disclose the details of and information regarding the
transaction contemplated by this Agreement to Canadian and U.S. securities
regulators, stock exchanges, its advisors (including, but not limited to,
underwriters and their counsel), lenders,
14
potential investors or the investing public, whether by way of prospectus,
information memorandum, filing with securities regulatory authorities or
otherwise.
7.6 ACTIONS BY PARTIES. The Parties agree to use reasonable diligence
to satisfy the conditions to Closing set forth in Article 8 and to refrain from
taking any action within their control which would cause a breach by such Party
of a representation or warranty set forth herein; provided, however, that
Sellers shall not be required to expend any funds or incur any costs to prevent
or cure a breach of the representations and warranties set forth in Section 4.1.
7.7 FURTHER ASSURANCES. Sellers and Buyer agree that, from time to time
after the Closing Date, they will execute and deliver such further instruments,
and take or cause to take, such other action, as may be necessary to carry out
the purposes and intents of this Agreement or as a Party may reasonably request
in accordance with the terms of this Agreement. The Parties agree to cooperate
in the preparation and filing of any post-Closing tax returns.
7.8 RECORDS. Buyer agrees to maintain the Records until the fourth
anniversary of the Closing Date (or for such longer period of time as Sellers
shall advise Buyer is necessary in order to have Records available with respect
to open years for tax audit purposes), or, if any of the Records pertain to any
claim or dispute pending on the fourth anniversary of the Closing Date, which
claim Sellers have advised Buyer of in writing, Buyer shall maintain any of the
Records designated by Sellers until such claim or dispute is finally resolved
and the time for all appeals has been exhausted. Buyer shall provide Sellers and
its representatives reasonable access at reasonable times to and the right to
copy all or any portion of the Records.
7.9 NO SHOP. Sellers represent that they have neither entered into nor
executed any instrument with any other person, which would constitute a
currently binding
purchase and sale agreement or right to match relating to the
sale of the Company or the Assets, or any part thereof. Sellers agree promptly
to (a) suspend negotiations with any third parties until this Agreement is
terminated or, if the sale contemplated by this Agreement is culminated,
terminate any and all negotiations and discussions in which Sellers may be
currently involved with any other persons with regard to the sale or
disposition, either directly or indirectly, of all or any part of the Company,
and (b) neither solicit nor evaluate additional bids nor discuss with or provide
information to third persons with respect to the purchase by or sale to any
other person of all or any part of the Company, either directly or indirectly,
until such time, if any, as this Agreement terminates without closing of the
transactions contemplated by this Agreement.
7.10 CASUALTY LOSS. If, prior to the Closing, all or any material
portion of the Assets are destroyed by fire or other casualty, are taken in
condemnation or under the right of eminent domain or proceedings for such
purposes are pending or threatened, Buyer shall purchase the Company
notwithstanding any such destruction, taking or pending or threatened taking and
the Purchase Price shall not be adjusted provided such casualty loss or
condemnation does not have a Material Adverse Effect. In that case, Sellers
shall, at the Closing, pay to Buyer all sums paid to Sellers by third parties by
reason of the destruction or taking of such Assets to be assigned to Sellers,
and shall assign, transfer and set over unto Buyer all of the right, title and
interest of Sellers in and to any unpaid awards or other payments from third
parties arising out of the destruction, taking or pending or threatened taking
as to such Assets to be conveyed to Buyer. Sellers shall not voluntarily
compromise, settle or adjust any material amounts payable by reason
15
of any material destruction, taking or pending or threatened taking as to the
Assets to be conveyed to Buyer without first obtaining the written consent of
Buyer. If the casualty loss has a Material Adverse Effect, the Parties shall
agree on an equitable adjustment to the Purchase Price, which if not agreed upon
by the Parties, shall be determined by arbitration.
7.11 RADIO FREQUENCIES. The Parties will, during the transition period
from the date hereof through Closing, seek to find a solution to share existing
radio frequencies. To the extent frequencies cannot be shared, the Parties will
seek an equitable solution to obtain additional licenses and/or split the
frequencies to accommodate their respective needs.
7.12 ▇▇▇▇▇▇ ROC RTUS. Within sixty (60) days after Closing Sellers will
pay Buyer $250,000 for related metering facilities. During the transition
period, the Parties will seek a solution to utilize existing ▇▇▇▇▇▇ ROC RTUs
jointly. If Buyer is not satisfied with joint use of ▇▇▇▇▇▇ ROC RTUs at any time
during the transition period, Buyer can install total flow meters at Buyer's
sole cost and expense and ownership of the ▇▇▇▇▇▇ ROC RTUs shall revert to
Seller.
7.13 TRANSITION SERVICES AGREEMENT. Prior to Closing, the Parties agree
to enter into a mutually agreeable transition service agreement, including, but
not limited to, IT, accounting and gas control services.
ARTICLE 8
CLOSING CONDITIONS
8.1 SELLERS' CLOSING CONDITIONS. The obligation of Sellers to proceed
with the Closing contemplated hereby is subject, at the option of Sellers, to
the satisfaction on or prior to the Closing Date of all of the following
conditions:
(a) Representations, Warranties and Covenants. The (i) representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, and (ii) covenants and
agreements of Buyer to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects.
(b) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. All applicable waiting periods (and any
extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or
otherwise been terminated.
(c) Buyer's Officer's Certificate. Sellers shall have received a
certificate dated as of the Closing Date, executed by a duly authorized officer
of Buyer, to the effect that to such officer's knowledge the conditions set
forth in this subsection (a) of Section 8.1 have been satisfied.
(d) No Action. On the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by a Seller) shall be pending or threatened
before any court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of the Closing or recover damages
from Seller resulting therefrom.
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8.2 BUYER'S CLOSING CONDITIONS. The obligations of Buyer to proceed
with the Closing contemplated hereby is subject, at the option of Buyer, to the
satisfaction on or prior to the Closing Date of all of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of Sellers contained in this Agreement shall be true and correct
in all material respects as of the Closing Date as though made as of the Closing
Date; and (ii) the covenants and agreements of Sellers to be performed on or
before the Closing Date in accordance with this Agreement shall have been duly
performed in all material respects.
(b) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. All applicable waiting periods (and any
extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or
otherwise been terminated.
(c) Sellers' Certificates. Buyer shall have received certificates dated
as of the Closing Date, executed by a duly authorized officer or manager of each
Seller to the effect that to such officer's or manager's knowledge, the
conditions set forth in subsection (a) of this Section 8.2 have been satisfied.
(d) No Action. On the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Buyer) shall be pending or threatened
before any court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of the Closing or recover damages
from Buyer or resulting therefrom.
ARTICLE 9
CLOSING
9.1 CLOSING. The Closing shall be held on the Closing Date at 10:00
a.m., Mountain Time, at the offices of Sellers, Denver, Colorado, or at such
other time or place as Sellers and Buyer may otherwise agree in writing.
9.2 SELLERS' CLOSING OBLIGATIONS. At Closing, Sellers shall execute and
deliver, or cause to be executed and delivered, to Buyer the following:
(a) an Assignment of the Partnership Interests in mutually agreeable
form;
(b) the Sellers' certificates referred to in Section 8.2(c); and
(c) non-foreign affidavits, as such affidavit is referred to in Section
1445(b)(2) of the Code, dated as of the Closing Date.
9.3 BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall execute and
deliver, or cause to be executed and delivered, to Sellers the following:
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(a) an amount equal to the Purchase Price, as adjusted, to Sellers in
immediately available funds to Sellers' designated bank account; and
(b) the officer's certificate of Buyer referred to in Section 8.1(c).
ARTICLE 10
POST-CLOSING MATTERS
10.1 FINAL SETTLEMENT STATEMENT. At Closing, Sellers and Buyer shall
agree upon an interim Statement of Adjustments setting out, to the extent
reasonably practicable, based on information reasonably available, the
adjustments to the Purchase Price pursuant to this Article 10. The net amount of
the interim Statement of Adjustments will be added to or deducted from the
amount payable under Section 3.1 by Buyer to Sellers at Closing (the "Closing
Purchase Price"). As soon as practicable after Closing, but in no event later
than sixty (60) days after Closing, Sellers shall prepare and deliver to Buyer,
in accordance with this Agreement and generally accepted accounting principles,
a statement ("Final Settlement Statement") setting forth each adjustment to the
Closing Purchase Price determined as of the Effective Date and showing the
calculation of such adjustments. Within thirty (30) days after receipt of the
Final Settlement Statement, Buyer shall have the right to audit such Final
Settlement Statement, will have access to Sellers' books and will deliver to
Sellers a written report containing any changes that Buyer proposes be made in
good faith to resolve any questions with respect to the amounts due pursuant to
such Final Settlement Statement and to establish the final Purchase Price (the
"Final Purchase Price") no later than one hundred twenty (120) days after
Closing. Within five (5) days after the Final Purchase Price has been agreed
upon by the Parties, the difference between the Closing Purchase Price and the
Final Purchase Price shall be (i) paid by Buyer to Sellers, if the Final
Purchase Price is greater than the Closing Purchase Price or (ii) paid by
Sellers to Buyer, if the Closing Purchase Price paid is greater than the Final
Purchase Price, in each case in immediately available funds with interest
calculated from the Effective Date through the date of payment at the prime rate
in effect as of the Closing Date as published in the Wall Street Journal. If the
Parties cannot agree on the Final Settlement Statement, the dispute shall be
resolved pursuant to arbitration in accordance with Section 16.8.
10.2 ADJUSTMENTS. Adjustments to the Purchase Price shall be made and
the Final Purchase Price shall be established as follows:
(a) Upward Adjustments. The Purchase Price shall be adjusted upward by
the following:
(i) The amount of all direct expenses, costs, taxes and
charges paid by Sellers or the Company (exclusive of general and
administrative expense) that are attributable to the ownership and
operation of the Assets on or after the Effective Date, including but
not limited to (A) the operation and maintenance of the Assets after
the Effective Date, (B) capital expenditures accrued after the
Effective Date that are directly attributable to the Assets, (C) any
amounts paid for the acquisition, extension or renewal of any Asset
after the Effective Date, (D) any amounts paid for the acquisition of
any asset included
18
within the Assets and approved in writing by Buyer, (E) the aggregate
amount of all other expenditures made by Sellers or the Company prior
to the Effective Date for costs and expenses directly attributable to
the Assets after the Effective Date, and (F) amounts relating to
obligations accruing under the Related Agreements after the Effective
Date;
(ii) the amount of all income, revenues and proceeds received
by Buyer that are attributable to the ownership and operation of the
Assets prior to the Effective Date;
(iii) Expansion Project costs credited to Sellers, if any,
pursuant to Section 2.4; and
(iv) any other amount agreed upon by Sellers and Buyer.
(b) Downward Adjustments. The Purchase Price shall be adjusted downward
by the following:
(i) The amount of all income, revenues and proceeds received
by Sellers that are attributable to the ownership and operation of the
Assets after the Effective Date;
(ii) Expansion Project costs credited to Buyer, if any,
pursuant to Section 2.4;
(iii) Ad valorem or other similar taxes to be paid by the
Company after Closing pursuant to Section 12.1(a);
(iv) the amount of $120,000 provided that Closing occurs on
September 28, 2001 only; and
(v) Any other amount agreed upon by Sellers and Buyer.
ARTICLE 11
LIMITATIONS
11.1 DISCLAIMER OF WARRANTIES. Notwithstanding anything contained to
the contrary in any other provision of this Agreement, it is the explicit intent
of each Party hereto that Sellers are not making any representation or warranty
whatsoever, express, implied, statutory or otherwise, except for those
representations or warranties expressly given in this Agreement, and it is
understood that, subject to such express representations and warranties, Buyer
takes the Company and the Assets "as is" and "where is". Without limiting the
generality of the immediately preceding sentence but subject to the
representations or warranties expressly given in this Agreement, Sellers hereby
(i) expressly disclaim and negate any representation or warranty, express or
implied, at common law, by statute or otherwise, relating to the condition of
the Assets (including, without limitation, any implied or express warranty of
merchantability or fitness for a particular purpose, or of conformity to models
or samples of material, or any infringement by Sellers of any patent or
proprietary right of any third party, and (ii) negates any rights of Buyer under
statutes to claim diminution of consideration, it being the intention of
19
Sellers and Buyer that the Assets are to be accepted by Buyer in their present
condition and state of repair.
11.2 DAMAGES. Notwithstanding anything contained to the contrary in any
other provision of this Agreement, Sellers and Buyer agree that the recovery of
any damages suffered or incurred as a result of any breach by any Party of any
of its representations, warranties or obligations under this Agreement shall be
limited to the actual damages suffered or incurred (which shall include any
indirect, consequential, special, exemplary or punitive damages awarded against,
or paid to any third party by, the indemnified Party) as a result of the breach
by the breaching Party of its representations, warranties or obligations
hereunder and in no event shall the breaching Party be liable to the
non-breaching Party for any indirect, consequential, special, exemplary or
punitive damages (including, without limitation, any damages on account of lost
profits or opportunities or lost or delayed production) suffered or incurred by
the non-breaching Party as a result of the breach by the breaching Party of any
of its representations, warranties or obligations hereunder.
ARTICLE 12
TAXES
12.1 TAXES.
(a) Apportionment of Tax Liability. For the calendar year in which
Closing occurs, all ad valorem or similar Taxes accrued but not yet due and
payable in respect of the Assets shall be prorated between Sellers and Buyer as
of the Effective Date. Such taxes shall be prorated as though payable in twelve
equal monthly installments. Based on the best current information available as
of the Closing Date, which shall not be less than the assessment for the prior
year, the proration shall be made between the Parties as an adjustment to the
Purchase Price pursuant to Section 3.1(a) and shall be deemed a final settlement
of such Taxes between the parties. Accordingly, after Closing, Buyer expressly
assumes all obligations and liabilities for all ad valorum or similar Taxes
payable by the Company in the year of Closing with respect to the Assets.
(b) Tax Proceedings. In the event Buyer receives notice of any
examination, claim, adjustment or other proceeding relating to the liability for
Taxes of or with respect to the Assets for any period prior to the Effective
Date other than obligations and liabilities for Taxes assumed by Buyer in this
Section 12.1 (a), Buyer shall notify Sellers in writing as soon as possible but
in no event later than thirty (30) days of receiving notice thereof. As to any
such Taxes for which Sellers are or may be liable, Sellers shall at Sellers'
expense control or settle the contest of such examination, claim, adjustment or
other proceeding. The Parties shall cooperate with each other and with their
respective Affiliates in the negotiations and settlement of any proceeding
described in this Section 12.1.
(c) Sales Taxes. Buyer shall be liable for all sales taxes, if any,
attributable to the sale of Partnership Interests.
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ARTICLE 13
INDEMNITY
13.1 OBLIGATION OF PARTIES TO INDEMNIFY.
(a) Effective as of the Closing, Sellers hereby indemnify, defend and
hold harmless Buyer, its Affiliates and their respective directors, officers,
employees and agents (the "Buyer Indemnified Parties") from and against any and
all Losses arising out of or resulting from any of the following:
(i) the Retained Liabilities; and
(ii) the breach by Sellers of any representation, warranty,
agreement or covenant of Sellers hereunder.
(b) Buyer, effective as of the Closing, hereby indemnifies, defends and
holds harmless Sellers, their affiliates and their respective directors,
officers, employees, agents and successors and assigns (the "Seller Indemnified
Parties"), from and against any and all Losses arising out of or resulting from
any of the following:
(i) the Assumed Liabilities; and
(ii) the breach by Buyer of any representation, warranty,
agreement or covenant of Buyer hereunder.
13.2 INDEMNIFICATION PROCEDURES - THIRD PARTY CLAIMS.
(a) If any Party (the "Indemnified Party") receives written notice of
the commencement of any action or proceeding or the assertion of any claim by a
third party or the imposition of any penalty or assessment for which indemnity
may be sought under this Article 13 (a "Third Party Claim"), and such
Indemnified Party intends to seek indemnity pursuant to this Article 13, the
Indemnified Party shall promptly provide the other party (the "Indemnifying
Party") with notice of such Third Party Claim. The Indemnifying Party shall be
entitled to participate in or, at its option, assume the defense, appeal or
settlement of such Third Party Claim. Such defense or settlement shall be
conducted through counsel selected by the Indemnifying Party and approved by the
Indemnified Party, which approval shall not be unreasonably withheld or delayed,
and the Indemnified Party shall fully cooperate with the Indemnifying Party in
connection therewith. In the event that the Indemnifying Party fails to assume
the defense or settlement of any Third Party Claim within ten (10) business days
after receipt of notice thereof from the Indemnified Party, the Indemnified
Party shall have the right to undertake the defense, appeal or settlement of
such Third Party Claim at the expense and for the account of the Indemnifying
Party.
(b) The Indemnified Party shall be entitled, at its own expense, to
participate in the defense of such Third Party Claim (provided, however, that
the Indemnifying Parties shall pay the attorneys' fees of the Indemnified Party
if the employment of separate counsel shall have
21
been authorized in writing by any such Indemnifying Party in connection with the
defense of such Third Party Claim, the Indemnifying Parties shall not have
employed counsel reasonably satisfactory to the Indemnified Party to have charge
of such Third Party Claim, the Indemnified Party shall have reasonably concluded
that there may be defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party, or
the Indemnified Party's counsel shall have advised the Indemnified Party in
writing, with a copy delivered to the Indemnifying Party, that there is a
conflict of interest that could make it inappropriate under applicable standards
of professional conduct to have common counsel).
(c) The Indemnifying Party shall obtain the prior written approval of
the Indemnified Party (which approval shall not be unreasonably withheld) before
entering into or making any settlement, compromise, admission, or acknowledgment
of the validity of any Third Party Claim or any liability in respect thereof if,
pursuant to or as a result of such settlement, compromise, admission, or
acknowledgment, injunctive or other equitable relief would be imposed against
the Indemnified Party or if, in the opinion of the Indemnified Party, such
settlement, compromise, admission, or acknowledgment could have an adverse
effect on its business, operations, assets, or financial condition.
(d) No Indemnifying Party shall consent to the entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by each claimant or plaintiff to each Indemnified Party of a release
from all liability in respect of such Third Party Claim.
(e) Notwithstanding Section 13.2(a), the Indemnifying Party shall not
be entitled to control (but shall be entitled to participate at its own expense
in the defense of), and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement, compromise, admission, or
acknowledgment of any Third Party Claim as to which the Indemnifying Party fails
to assume the defense within ten (10) business days after receipt of notice
thereof from the Indemnified Party or to the extent the Third Party Claim seeks
an order, injunction, or other equitable relief against the Indemnified Party
which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
13.3 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 13.2 because no Third
Party Claim is involved, the Indemnified Party shall notify the Indemnifying
Party in writing of any Losses which such Indemnified Party claims are subject
to indemnification under the terms hereof. Subject to the limitations otherwise
set forth in this Section 13, the failure of the Indemnified Party to exercise
promptness in such notification shall not amount to a waiver of such claim
unless and to the extent the resulting delay materially prejudices the position
of the Indemnifying Party with respect to such claim.
13.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Sellers pursuant to this Agreement or any certificate or
other document
22
delivered by Sellers at the Closing shall survive the Closing for a period of
one (1) year following the Closing Date except with respect to Sections 4.1(e)
and 6.1, which shall survive indefinitely. Representations and warranties of
Sellers under this Agreement shall be of no further force or effect after the
expiration date specified above; provided, however, that there shall be no such
termination of any representation and warranty with respect to a bona fide claim
asserted with respect thereto in writing by Buyer with reasonable specificity
prior to such date in accordance with this Section 13. All representations,
warranties, covenants, and indemnities of Buyer shall survive indefinitely. All
covenants and indemnities of Sellers shall survive indefinitely.
ARTICLE 14
RELEASE
14.1 ASBESTOS AND NORM. Buyer acknowledges that the Assets may
currently or have in the past contained asbestos or naturally occurring
radioactive materials ("NORM") and that special procedures may be required for
the assessment, remediation, removal, transportation or disposal of such
asbestos and NORM. Buyer agrees to accept full responsibility, and indemnify
Sellers from and against, any costs and expenses associated with the assessment,
remediation, removal, transportation and disposal of the asbestos or NORM
associated with the Assets.
ARTICLE 15
TERMINATION; REMEDIES; LIMITATIONS
15.1 TERMINATION.
(a) Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time at or prior to the Closing:
(i) by mutual written consent of Sellers and Buyer;
(ii) by Sellers if any condition specified in Section 8.1 has
not been satisfied on or before Closing and shall not have been waived
by Sellers;
(iii) by Buyer if any condition specified in Section 8.2 has
not been satisfied on or before Closing and shall not have been waived
by Buyer; or
(iv) by Sellers or Buyer if Closing has not occurred on or
before October 31, 2001.
(b) Effect of Termination. In the event of termination of this
Agreement by Sellers, on the one hand, or Buyer, on the other hand, pursuant to
Section 15.1(a), written notice thereof shall forthwith be given by the
terminating Party or Parties to the other Party or Parties hereto, and this
Agreement shall thereupon terminate; provided, however, that following such
23
termination Buyer will continue to be bound by its obligations set forth in
Section 5.2. If this Agreement is terminated as provided herein, all filings,
applications and other submissions made to any governmental authority shall, to
the extent practicable, be withdrawn from the governmental authority to which
they were made.
15.2 REMEDIES.
(a) Sellers' Remedies. Notwithstanding anything herein provided to the
contrary, upon the failure by Buyer to satisfy the conditions to Closing or the
Closing obligations, as the case may be, on account of breaches of any of the
representations and warranties made by Buyer in this Agreement, or the failure
by Buyer to comply with the covenants or other obligations of Buyer set forth
herein, Sellers may seek to enforce their legal remedies for Buyer's breach or
default hereunder, including, but not limited, specific performance of this
Agreement.
(b) Buyer's Remedies. Notwithstanding anything herein provided to the
contrary, upon failure of the Sellers to satisfy the conditions to Closing or
the Closing obligations, as the case may be, on account of breaches of any of
the representations and warranties made by Sellers in this Agreement, or the
failure by Sellers to comply with the covenants or other obligations of Sellers
set forth herein, Buyer may seek to enforce its legal remedies for Seller's
breach or default hereunder, including, but not limited to, specific performance
of this Agreement.
ARTICLE 16
MISCELLANEOUS
16.1 COUNTERPARTS. This Agreement and any document or other instrument
delivered hereunder may be executed in counterparts, each of which shall be
deemed an original instrument, but which together shall constitute but one and
the same instrument. Any counterpart of this Agreement or any document or other
instrument delivered hereunder may be delivered by facsimile, which shall be
deemed an original. However, the Parties agree that they will provide original
copies of the Agreement to the other Parties as soon as reasonably practicable.
16.2 GOVERNING LAW; JURISDICTION; PROCESS.
(a) This Agreement and the transaction contemplated hereby shall be
governed by and interpreted in accordance with the laws of the State of
Wyoming
without giving effect to principles thereof relating to conflicts of law rules
that would direct the application of the laws of another jurisdiction.
(b) Subject to the arbitration agreement set forth in Section 16.8,
Buyer and Sellers consent to personal jurisdiction in any legal action, suit or
proceeding with respect to this agreement in the Federal District Court in
Denver, Colorado, and with respect to any such claim, Buyer and Sellers
irrevocably waive, to the fullest extent permitted by law, any claim, or any
objection that Buyer or Sellers may now or hereafter have, that venue or
jurisdiction is not proper with respect to any such legal action, suit or
proceeding brought in such court in the City
24
and County of Denver, Colorado, including any claim that such legal action, suit
or proceeding brought in such court has been brought in an inconvenient forum
and any claim that Buyer or Sellers are not subject to personal jurisdiction or
service of process in such City and County of Denver, Colorado, forum.
16.3 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
hereto and the Confidentiality Agreement contain the entire agreement between
the Parties or their Affiliates with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the Parties concerning such subject matter other than those set forth or
referred to herein.
16.4 EXPENSES. Buyer shall be responsible for all recording, filing or
registration fees for any assignment or conveyance delivered to Buyer under or
pursuant to this Agreement. All other costs and expenses incurred by each Party
hereto in connection with all things required to be done by it hereunder,
including attorneys' fees, accountant fees and the expense of environmental and
title examination, shall be borne by the Party incurring same.
16.5 NOTICES. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, by United
States mail, telecopy, telefax or other electronic transmission service to the
appropriate address or number as set forth below.
To Sellers:
Green River Pipeline, LLC
▇▇▇▇▇▇▇ Oil Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Green River Pipeline, LLC
▇▇▇▇▇▇▇ Oil Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
25
To Buyer:
Teppco Partners, L.P.
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Duke Energy Field Services, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Or at such other address and to the attention of such other person as a Party
may designate by written notice to the other Party.
16.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may be assigned by any Party hereto in whole
or in part to an Affiliate upon written notice to the other Party(s), provided,
however, that such assignment shall not release the assigning Party of its
obligations hereunder. No other assignment shall be permitted by either Party
except with the prior written consent of the other Party. Any prohibited
assignment shall be void and have no force or effect.
16.7 AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the Parties.
Any Party may, only by an instrument in writing, waive compliance by another
Party with any term or provision of this Agreement on the part of such other
Party to be performed or complied with. The waiver by a Party of a breach of any
term or provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
16.8 ARBITRATION. Any dispute, controversy, or claim (a "Dispute")
arising out of or in connection with this Agreement shall be referred to and
determined by binding arbitration, as the sole and exclusive remedy of the
Parties as to the Dispute, conducted in accordance with the American Arbitration
Association ("AAA") arbitration rules for commercial disputes (the "Rules"),
which are deemed to be incorporated by reference, except that in the event of
any conflict between those Rules and the arbitration provisions set forth below,
the provisions set forth below shall govern and control. The arbitral tribunal
(the "Tribunal") shall apply the law referred to in Section 16.2 in resolving
the Dispute. The Tribunal shall be composed of three (3) arbitrators, with Buyer
and Sellers each appointing one arbitrator, and the two (2) arbitrators so
appointed appointing the third arbitrator who shall act as Chairman of the
Tribunal. Should any arbitrator fail to be appointed as aforesaid, then such
arbitrator shall be appointed by the AAA in
26
accordance with the Rules. The arbitration shall be held in Denver, Colorado,
and the proceedings shall be conducted and concluded as soon as reasonably
practicable, based upon the schedule established by the Tribunal, but in any
event the decision of the Tribunal shall be rendered within ninety (90) days
following the selection of the Chairman of the Tribunal. The decision of the
Tribunal shall be final and binding upon the Parties. Judgment upon the award
rendered by the Tribunal may be entered in, and enforced by, any court of
competent jurisdiction. If the arbitration involves the Final Settlement
Statement, the Parties shall each bear their own expenses including attorneys'
fees and share the fees of the Chairman of the Tribunal. If the arbitration
concerns any other disputes then the prevailing Party(s) shall be awarded its
expenses, including attorneys' fees.
16.9 PREFERENTIAL RIGHTS. The Parties do not believe there exist any
preferential rights to purchase with respect to the sale of the Company.
However, if before Closing it is determined that a valid preferential right,
right of first refusal, or similar right exists and such right is exercised, the
Sellers will sell the Company to the holder of such right and Sellers shall pay
Buyer all reasonable costs incurred by Buyer and its Affiliates in connection
with this Agreement and the transaction contemplated hereby. If, following
Closing, it is determined that such a right exists and such right is exercised
and Buyer sells the Company to a holder or holders of such a right, Sellers will
pay Buyer (A) all costs incurred by Buyer and its Affiliates in connection with
this Agreement and the transaction contemplated hereby and (B) forty percent
(40%) of all capital expenditures in excess of the Expansion Project incurred by
Buyer, its Affiliates or Company in connection with the Assets that are not
recovered in such sale of the Company or other resolution of the dispute, but
subject to a maximum amount of $10,000,000.
16.10 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 adverse manner to
either Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
16.11 TIME OF ESSENCE. Time is of the essence in this Agreement. If the
date specified in this Agreement for giving any notice or taking any action is
not a business day, then the date for giving such notice or taking such action
shall be the next day, which is a business day.
27
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the Parties as of the day first above written.
SELLERS:
GREEN RIVER PIPELINE, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President of Fort ▇▇▇▇▇▇▇ Consolidated
Royalties, Inc., Member of Green River Pipeline,
LLC
Date: September 7, 2001
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President of ▇▇▇▇▇▇▇ Oil Company,
Member of Green River Pipeline, LLC
Date: September 7, 2001
▇▇▇▇▇▇▇ OIL COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
BUYER:
TEPPCO PARTNERS, L.P
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Agent and Attorney in Fact
Date: September 7, 2001
28
EXHIBIT A
DEFINITIONS
"AAA" shall be as defined in Section 16.8.
"Affiliate" shall mean, as to the Party specified, any entity controlling,
controlled by or under common control with such specified Party. Control,
controlling or controlled as used herein means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of another, whether through the ownership of voting securities, by
contract or otherwise.
"Assets" shall mean:
(a) the natural gas pipelines and gathering systems, the compressor
stations and metering stations (the "Facilities"), as particularly described by
size and location on Exhibit B hereto and generally described on the maps
attached hereto as Exhibit B-1, and the line pack gas, condensate and inventory
gas included therein;
(b) the surface leases (and other rights to use the surface),
easements, right-of-way, servitudes and similar instruments (the "Property")
described on Exhibit C hereto and the assignable environmental and other
governmental permits, licenses, and related instruments or rights (the
"Permits") described on Exhibit C-1 hereto;
(c) the motor vehicles, equipment, pipes, valves, pumps, compressors,
materials and parts inventory, tools, storage tanks, the Pinedale field office
and office furnishings, computer hardware, storage sheds, and other personal
property, fixtures and improvements used or held primarily for use in the
Business (the "Related Facilities"), including, without limitation, the items
described on Exhibit D hereto; and
(d) the gas gathering agreements, gas purchase agreements, gas
transportation agreements, equipment lease agreements, software agreement for
gas nominations, and the Pinedale field office lease agreement (the "Related
Agreements") described on Exhibit E hereto and the associated contract files and
production records of the Jonah Gas Gathering System (the "Records").
"Assumed Liabilities" shall be as defined in Section 2.2.
"Benefit Plans" means all employee benefit plans or arrangements, including any
stock purchase, stock option, stock bonus, stock ownership, phantom stock or
other stock plan, pension, profit sharing, bonus, deferred compensation,
incentive compensation, severance or termination pay, retirement,
hospitalization or other medical or dental, life or other insurance,
supplemental unemployment benefits plan or agreement or policy or other
arrangement providing employment-related compensation, deferred compensation,
defined benefits, fringe benefits or other benefits and including "employee
benefit plans," "employee pension benefit plans," and "employee welfare benefit
plans as defined in Sections 3(1), 3(2) and 3(3) of ERISA.
29
"Business" shall be as defined in Recital A.
"Closing" shall be the consummation of the transaction contemplated by Article
9.
"Closing Date" shall mean (a) the later of (i) September 28, 2001, or (ii) the
first business day following the expiration or termination of all applicable
waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, or (b) such other date as may
be mutually agreed to by Sellers and Buyer.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1986,
as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall be as defined in Section 5.5.
"Defensible Title" shall mean such title held by the company to a Property that
is free and clear of all claims, liens and encumbrances that materially detract
or could materially detract from the value or interfere or could interfere with
the use of the Property for the purpose for which the Property is presently
used.
"Dispute" shall be as defined in Section 16.8.
"Effective Date" shall be 11:59 p.m. Mountain Time on September 30, 2001.
"Environmental Claim" shall mean any action or written notice threatening same
by a third party alleging potential liability of Sellers arising out of or
resulting from any actual or alleged violation of, or liability under, or any
remedial obligation under, any Environmental Law as a result of an Environmental
Condition with respect to the Assets.
"Environmental Condition" shall mean a condition or circumstance existing at the
Effective Date with respect to the air, soil, subsurface, surface waters,
groundwaters, and/or sediments that causes (i) an Asset or Sellers not to be in
compliance with any Environmental Law, including any permits issued thereunder,
in all material respects, or (ii) an Asset to be required to be remediated (or
other corrective action taken with respect to such Asset) under any
Environmental Law.
"Environmental Laws" shall mean all laws relating to (a) the control of any
potential pollutant, or protection of the air, water, land, wetlands, natural
resources, wildlife and endangered species, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, and (c)
exposure to hazardous, toxic, radioactive or other substances alleged to be
harmful. Environmental Laws shall include, but are not limited to, the Clean Air
Act, the Clean Water Act, the Resource Conservation Recovery Act, the Superfund
Amendments and Reauthorization Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, and CERCLA and shall also include all state, local and
municipal laws dealing with the subject matter of the above listed Federal
statutes or promulgated by any governmental or
30
quasigovernmental agency thereunder in order to carry out the purposes of any
Federal, state, local or municipal law.
"Environmental Liabilities" shall mean any and all costs (including costs of
remediation), damages, settlements, expenses, penalties, fines, taxes,
prejudgment and post-judgment interest, court costs and attorneys' fees incurred
or imposed (i) pursuant to any order, notice of responsibility, directive
(including requirements embodied in Environmental Laws), injunction, judgment or
similar act (including settlements) by any governmental authority to the extent
arising out of or under Environmental Laws or (ii) pursuant to any claim or
cause of action by a governmental authority or third party for personal injury,
property damage, damage to natural resources, remediation or response costs to
the extent arising out of or attributable to any violation of, or any remedial
obligation under, any Environmental Law.
"Environmental Matters" shall mean (i) any order, notice of responsibility,
directive (including requirements embodied in Environmental Laws), injunction,
judgment or similar act (including settlements) by any governmental authority
arising out of or under any Environmental Laws or (ii) any claim or cause of
action by a governmental authority or third party for personal injury, property
damage, damage to natural resources, remediation or response costs arising out
of or attributable to any Hazardous Materials or any violation of, or any
remedial obligation under, any Environmental Law.
"Environmental Review" shall be as defined in Section 5.2.
"Estimated Expansion Costs" shall be as defined in Section 2.4.
"Examination Period" shall be as defined in Section 5.3(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Expansion Project" shall be as defined in Section 2.4.
"Facilities" shall be as defined in the definition of "Assets."
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" shall mean The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act, as amended, 15 U.S.C. Section 18a, and the regulations promulgated
thereunder.
"Hazardous Materials" shall mean any explosives, radioactive materials, asbestos
material, urea formaldehyde, hydrocarbon contaminants, underground tanks,
pollutants, contaminants, hazardous, corrosive or toxic substances, special
waste or waste of any kind, including compounds known as chlorobiophenyls and
any material or substance the storage, manufacture, disposal, treatment,
generation, use, transport, mediation or release into the environment of which
is prohibited, controlled, regulated or licensed under Environmental Laws,
including, but not limited to, (i) all "hazardous substances" as that term is
defined in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and (ii) petroleum and petroleum
products.
31
"Losses" shall mean any and all debts, damages, costs, losses, liabilities,
duties, obligations, commitments, claims (including, without limitation, those
arising out of any demand, cause of action, assessment, settlement, judgment or
compromise relating to any actual or threatened action), taxes, costs and
expenses (including, without limitation, any attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending any
action), matured or unmeasured, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, known or unknown, including, without limitation, any
Environmental Liabilities.
"Material Adverse Effect" shall mean, with respect to the Assets, any adverse
changes, circumstance, effect or condition in or relating to the Assets,
financial condition, prospects, results of operations, business or operations of
the Company that individually or in the aggregate with all other adverse
changes, circumstances, effects or conditions with respect to the ownership, use
or operation of the Assets which result in or could reasonably be expected to
result in a quantifiable diminution in value of the Assets which exceeds an
aggregate of $500,000; provided however, that any prospective change or changes
in financial condition caused by the reduction or depletion of reserves or
decline in deliverability or change in prices of oil, gas, feedstock, ethylene
or other hydrocarbon products, declines in production, general economic
conditions or local, regional, national or international industry conditions
shall not be deemed to constitute a Material Adverse Effect;
"Offsite Environmental Matter" shall mean any Environmental Condition (i)
resulting from Hazardous Materials originating from the Assets that have been
transported for disposal, reclamation or recycling from the Assets prior to the
Effective Date (or prior to the Closing Date as a result of a breach by a
Sellers of Section 8.1) to properties owned by third parties or (ii) arising
from or attributable to property previously owned or operated by the Company and
conveyed or alienated by the Company prior to the Effective Date.
"Partnership Interests" shall be as defined in Recital B.
"Permits" shall be as defined in the definition of "Assets."
"Property" shall be as defined in the definition of "Assets."
"Purchase Price" shall be as defined in Section 3.1.
"Record Review" shall be as defined in Section 5.1.
"Records" shall be as defined in the definition of "Assets."
"Related Agreements" shall be as defined in the definition of "Assets."
"Related Facilities" shall be as defined in the definition of "Assets."
"Retained Liabilities" shall be as defined in Section 2.3.
32
"Sellers' Knowledge" shall mean the knowledge of Sellers and shall include the
knowledge of employees of Sellers' Affiliates involved in the operation of the
Assets.
"Taxes" shall mean any federal, state, local or foreign income, gross receipts,
license, payroll, parking, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated tax or other tax of any kind whatsoever, including any interest,
fines, penalty or other like assessment or addition thereto, whether disputed or
not, including such item for which a liability arises as a transferee or
successor-in-interest.
"Title Defect" shall mean a defect that causes the Company's title to the
affected Property or a portion thereof to be less than Defensible Title.
"Transferred Employee" shall be as defined in Section 7.4.
"Tribunal" shall be as defined in Section 16.8.
33
EXHIBIT B
PIPELINES, COMPRESSOR STATIONS AND METERING STATIONS
34
EXHIBIT B-1
MAPS OF PIPELINES, COMPRESSOR STATIONS AND METERING STATIONS
35
EXHIBIT C
PROPERTY
36
EXHIBIT C-1
PERMITS
37
EXHIBIT D
RELATED FACILITIES
38
EXHIBIT E
RELATED AGREEMENTS
39
SCHEDULE 2.4
EXPANSION PROJECT
40
SCHEDULE 4.1(g)
RELATED AGREEMENTS
41
SCHEDULE 4.1(i)
LITIGATION AND CLAIMS
(1) Litigation between Questar Gas Management Company and Questar Exploration
and Production Company (as plaintiffs) and Ultra Petroleum, Ultra Resources and
Jonah Gas Gathering Company (as defendants) regarding the rights of the parties
for certain gas gathering in the Pinedale/Mesa area.
42
SCHEDULE 4.1(p)
AUTHORIZED EXPENDITURES
43
SCHEDULE 4.1(q)
ENVIRONMENTAL MATTERS
44
SCHEDULE 4.1(t)
BALANCE SHEET OF JONAH GAS GATHERING COMPANY
45
SCHEDULE 4.2(e)
CONSENTS
46
SCHEDULE 7.4
TRANSFERRED EMPLOYEES
47