EXHIBIT 10.2
ASSET
PURCHASE AND SALE AGREEMENT
between
CONOCOPHILLIPS COMPANY
and
DUKE ENERGY FIELD SERVICES, LP
March 10, 2004
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS........................................................ 1
2. PURCHASE AND SALE.................................................. 10
(A) PURCHASE AND SALE OF THE ASSETS.............................. 10
(B) PAYMENT OF PURCHASE PRICE AT CLOSING......................... 10
(C) THE CLOSING.................................................. 10
(D) DELIVERIES AT THE CLOSING.................................... 10
(E) ALLOCATION OF PURCHASE PRICE................................. 11
3. REPRESENTATIONS AND WARRANTIES OF SELLER........................... 11
(A) ORGANIZATION OF SELLER....................................... 11
(B) AUTHORIZATION OF TRANSACTION................................. 11
(C) NONCONTRAVENTION............................................. 12
(D) BROKERS' FEES................................................ 12
(E) LEGAL COMPLIANCE............................................. 12
(F) ENVIRONMENTAL MATTERS........................................ 13
(G) TAX MATTERS.................................................. 13
(H) CONTRACTS.................................................... 14
(I) LITIGATION................................................... 15
(J) EMPLOYEES.................................................... 15
(K) EMPLOYEE BENEFIT PLANS....................................... 15
(L) EASEMENTS.................................................... 15
(M) CONDUCT OF BUSINESS.......................................... 16
(N) AFES AND CAPITAL PROJECTS.................................... 16
(O) SPECIAL WARRANTY OF TITLE.................................... 16
(P) NO CHANGE IN CONDITION....................................... 16
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................ 16
(A) ORGANIZATION OF BUYER........................................ 17
(B) AUTHORIZATION OF TRANSACTION................................. 17
(C) NONCONTRAVENTION............................................. 17
(D) BROKERS' FEES................................................ 18
(E) FINANCIAL CAPABILITY......................................... 18
(F) INVESTMENT INTENT............................................ 18
5. PRE-CLOSING COVENANTS.............................................. 18
(A) GENERAL...................................................... 18
(B) NOTICES AND CONSENTS......................................... 18
(C) OPERATION OF BUSINESS........................................ 20
(D) FULL ACCESS.................................................. 21
(E) NOTICE OF DEVELOPMENTS....................................... 21
(F) ENVIRONMENTAL MATTERS........................................ 21
(G) TITLE MATTERS................................................ 24
(H) CAPITAL EXPENDITURES......................................... 24
(I) EXCLUSIVITY.................................................. 24
i
(J) CERTAIN EXISTING CONTRACTS................................... 25
(K) CASUALTY LOSS................................................ 25
6. CONDITIONS TO OBLIGATION TO CLOSE.................................. 25
(A) CONDITIONS TO OBLIGATION OF BUYER............................ 25
(B) CONDITIONS TO OBLIGATION OF SELLER........................... 26
7. CERTAIN POST-CLOSING OBLIGATIONS................................... 27
(A) POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE................... 28
(B) SUSPENSE ACCOUNT FUNDS....................................... 29
(C) IMBALANCES................................................... 30
(D) COOPERATION.................................................. 30
(E) TAXES........................................................ 31
(F) ACCESS TO CONTRACTS.......................................... 31
(G) CUSTOMARY POST-CLOSING CONSENTS.............................. 31
(H) MISCELLANEOUS EXPENSES....................................... 31
(I) BUYER OBLIGATIONS FOR POST-CLOSING CONTRACTS MATTERS......... 32
8. PURCHASE PRICE ADJUSTMENTS......................................... 33
9. TERMINATION........................................................ 33
(A) TERMINATION OF AGREEMENT..................................... 33
(B) EFFECT OF TERMINATION........................................ 34
10. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES..................... 35
(A) SELLER EXISTING CONTRACT INDEMNITY OBLIGATION................ 35
(B) SELLER COVENANT INDEMNITY OBLIGATION......................... 35
(C) SELLER REPRESENTATION AND WARRANTY INDEMNITY OBLIGATION...... 35
(D) BUYER COVENANT INDEMNITY OBLIGATION.......................... 36
(E) BUYER REPRESENTATION AND WARRANTY INDEMNITY OBLIGATION....... 36
(F) BUYER GENERAL INDEMNITY OBLIGATION........................... 36
(G) NOTICE OF ASSERTED CLAIMS.................................... 36
(H) DEFENSE AND PAYMENT OF ASSERTED CLAIMS....................... 37
11. CLAIM LIMITATIONS.................................................. 37
(A) EXPRESS NEGLIGENCE........................................... 37
(B) SELLER THRESHOLDS AND DEDUCTIBLES............................ 37
(C) BUYER THRESHOLDS AND DEDUCTIBLES............................. 38
(D) EXCLUSIVE REMEDY............................................. 38
(E) NO WARRANTY AND DISCLAIMER................................... 38
(F) SELLER INDEMNITY LIMITATION.................................. 39
(G) BUYER REVIEW................................................. 39
12. EMPLOYEE MATTERS................................................... 40
(A) TRANSFER OF COVERED EMPLOYEES................................ 40
(B) SELLER PLANS................................................. 40
(C) NEW ARRANGEMENTS FOR TRANSFERRED EMPLOYEES................... 40
(D) WELFARE BENEFITS............................................. 42
(E) 401(K) PLAN.................................................. 43
(F) WORKERS' COMPENSATION........................................ 43
(G) NO RESTRICTIONS ON CHANGES................................... 43
ii
(H) CONFLICT..................................................... 43
13. ARBITRATION........................................................ 43
14. MISCELLANEOUS...................................................... 44
(A) NO THIRD PARTY BENEFICIARIES................................. 44
(B) ENTIRE AGREEMENT............................................. 44
(C) SUCCESSION................................................... 44
(D) COUNTERPARTS................................................. 44
(E) NOTICES...................................................... 44
(F) GOVERNING LAW................................................ 45
(G) AMENDMENTS AND WAIVERS....................................... 45
(H) SEVERABILITY................................................. 45
(I) EXPENSES..................................................... 46
(J) CONSTRUCTION................................................. 46
(K) INCORPORATION OF EXHIBITS AND SCHEDULES...................... 47
(L) SALES TAXES.................................................. 47
(M) WAIVER OF CERTAIN DAMAGES.................................... 47
(N) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS...................... 47
(O) LIKE-KIND EXCHANGE........................................... 47
(P) ASSIGNMENT................................................... 48
iii
Exhibits and Schedules to Asset Purchase and Sale Agreement
between ConocoPhillips Company and Duke Energy Field Services, LP
dated March 10, 2004
EXHIBIT A -- Description of Facilities
EXHIBIT A-1 -- Fee Property and Other Real Property
EXHIBIT A-2 -- Easements
EXHIBIT A-3 -- Equipment
EXHIBIT B -- Environmental Permits
EXHIBIT C -- Excluded Assets
EXHIBIT D -- Existing Contracts
EXHIBIT E -- Intentionally Omitted
EXHIBIT F -- Covered Employees
EXHIBIT G -- Form of Conveyance, Assignment and ▇▇▇▇ of Sale
EXHIBIT H -- Matters Excluded From Required Consents
EXHIBIT I -- Like-Kind Assignments
EXHIBIT J -- Arbitration
EXHIBIT K -- Certification of Non-Foreign Status for Entities
EXHIBIT L -- Phase II Agreed Audit Sites
EXHIBIT M -- Grama Ridge Map of Personal Property
EXHIBIT N -- Intentionally Omitted
EXHIBIT O -- Grama Ridge Transaction Confirmations
EXHIBIT P -- Fractionation Contract
EXHIBIT Q -- Grama Ridge Access Agreement
DISCLOSURE SCHEDULE -- Exceptions to Representations, Warranties and Covenants
SECTION 1(A) -- SELLER'S KNOWLEDGE
SECTION 1(C) -- CERTAIN ENVIRONMENTAL SITES
SECTION 2(E) -- ALLOCATION OF PURCHASE PRICE
SECTION 3(C) -- SELLER'S NONCONTRAVENTION
SECTION 3(E) -- LEGAL COMPLIANCE
SECTION 3(F) -- ENVIRONMENTAL MATTERS
SECTION 3(H) -- CONTRACTS
SECTION 3(I) -- LITIGATION
SECTION 3(N) -- AFE'S AND CAPITAL PROJECTS
SECTION 4(C) -- BUYER'S NONCONTRAVENTION
SECTION 7(B) -- SUSPENSE ACCOUNT FUNDS
iv
ASSET
PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into
as of March 10, 2004, by and between CONOCOPHILLIPS COMPANY, a Delaware
corporation ("SELLER") and DUKE ENERGY FIELD SERVICES, LP, a Delaware limited
partnership ("BUYER"). BUYER and SELLER are referred to collectively herein as
the "Parties." Certain capitalized terms are used in the Recitals below in the
manner defined in Section 1 below.
RECITALS:
1. SELLER is the direct or indirect owner of the Assets (as defined
herein).
2. BUYER desires to purchase and SELLER desires to sell the Assets for
cash.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"AFE" means an authorization for expenditure or similar authorization or
approval with respect to funding a particular project or matter.
"Adjustment Time" means 12:01 a.m. (Central Time then in effect) on the
Closing Date.
"Affiliate" means, when used with respect to a specified Person, any other
Person controlling, directly controlled by or under common control with the
specified Person. For purposes of this definition, "control", when used with
respect to any specified Person, means the power to direct the management and
policies of the Person whether through the ownership of voting securities or by
contract; and the term "controlled" has the meanings correlative to the
foregoing. Notwithstanding the foregoing, the term "Affiliate" (i) when applied
to BUYER, shall not include Duke Energy Corporation, a Delaware corporation or
ConocoPhillips, a Delaware corporation, or any entities owned, directly or
indirectly, by Duke Energy Corporation or ConocoPhillips, other than Duke Energy
Field Services, LLC, a Delaware limited liability company and its subsidiaries
(but excluding Texas Eastern Products Pipeline Company, LLC, a Delaware limited
liability company, TEPPCO Partners L.P., a Delaware limited partnership, and any
Person owned, directly or indirectly, by Texas Eastern Products Pipeline
Company, LLC or TEPPCO Partners, L.P.) and (ii) when applied to SELLER, shall
not include Duke Energy Field Services, LLC, a Delaware limited liability
company or any entities owned, directly or indirectly, by Duke Energy Field
Services, LLC.
"Agreement" has the meaning set forth in the preface above.
1
"Allocable Share" means, with respect to any matter relating to the
Facilities, 100% ownership interest in such Facilities; provided, however, with
regard to the Antelope Ridge Gas Processing Plant, Allocable Share shall mean
94.52474%.
"Antitrust Authorities" has the meaning set forth in Section 5(b).
"Applicable Law" means any law (statutory, common, or otherwise),
constitution, treaty, convention, ordinance, equitable principle, code, rule,
regulation, executive order, or other similar authority enacted, adopted,
promulgated, or applied by any Governmental Authority, each as amended and now
and hereinafter in effect.
"Arbitrable Disputes" means any and all disputes, claims, counterclaims,
demands, causes of action and controversies arising out of or relating to this
Agreement (including the alleged breach hereof), or in any way relating to the
subject matter of this Agreement or the relationship between the Parties created
by this Agreement, regardless of whether (a) allegedly extra-contractual in
nature, (b) sounding in contract, tort, or otherwise, (c) provided for by
Applicable Law or otherwise, or (d) seeking damages or any other relief, whether
at law, in equity, or otherwise.
"Asserted Claim" has the meaning set forth in Section 10(g) below.
"Asserted Environmental Defect" means an Environmental Condition asserted
by BUYER in accordance with Section 5(f) that, as of the time of notice thereof,
is not in compliance with the then existing Environmental Laws.
"Assets" means all of the SELLER Interests.
"Assignments" means one or more of a Conveyance, Assignment and ▇▇▇▇ of
Sale substantially in the form of Exhibit G, pursuant to which SELLER (and, if
applicable, its Affiliates) will assign the SELLER Interests (in one or a series
of transactions) to BUYER, and BUYER will assume and agree to perform certain
obligations of SELLER (and, if applicable, its Affiliates) as provided in this
Agreement.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BUYER" has the meaning set forth in the preface above.
"BUYER Group" means BUYER and all Affiliates of BUYER.
"BUYER Indemnified Persons" means (i) BUYER and its Affiliates and (ii)
the directors, officers, employees, agents or other representatives of any such
Person described in clause (i).
"Casualty Loss" shall mean, with respect to all or any portion of the
Facilities, any destruction by fire, storm or other casualty, or any
condemnation or taking or threatened condemnation or taking, of all or any
portion of the Facilities.
"Catastrophic Event" means any catastrophe (natural or man-made) or other
similar circumstance, development, event, or occurrence, whereby one or more of
those facilities
2
referenced at subsection (ii) of the definition of "Related Properties and
Rights" shall be, or shall reasonably be expected to be, for a period of at
least two months after such catastrophe, circumstance, development, event, or
occurrence, incapable of operating substantially similarly to the manner in
which they were operating immediately before such catastrophe, circumstance,
development, event, or occurrence.
"Claim Notice" has the meaning set forth in Section 10(g) below.
"Claims" means any and all claims, demands, suits, causes of action,
losses, damages, Liabilities, fines, penalties, and costs (including attorneys'
fees and costs of litigation), whether known or unknown, that are brought by or
owed to any third Person, including any applicable Governmental Authority.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Confidentiality Agreement,
dated July 30, 2003 between BUYER and SELLER.
"Costs" means, other than Claims, all costs and damages and other amounts
related to the relevant matter; provided, however, that notwithstanding the
foregoing, the term "Costs" shall include reasonable attorney's fees, court
costs, interest, fines, penalties, assessments, and levies.
"Covered Employee" means an individual who is, immediately before the
Closing Date, an employee of SELLER Group principally employed in connection
with the Facilities and whose name is on Exhibit F.
"Customary Post-Closing Consents" has the meaning set forth in Section
3(c) below.
"Defensible Title" means, as to the Assets, such title to the Assets that
vests BUYER with indefeasible title in and to the Assets free and clear of all
Security Interests, other than Permitted Liens.
"Disclosure Schedule" means the disclosure schedule prepared by SELLER
with respect to SELLER's disclosures to this Agreement and by BUYER with respect
to BUYER'S disclosures to this Agreement, together with any supplements or
amendments thereto, provided that (i) with respect to any supplements and
amendments made thereto by SELLER, such supplements and amendments shall,
without prior approval of BUYER, only relate to additional disclosures of
immaterial matters that arise in the Ordinary Course of Business attributable to
the time period from and after the date of this Agreement to the Closing Date
and (ii) with respect to any supplements and amendments made thereto by BUYER,
such supplements and amendments shall, without prior approval of SELLER, only
relate to additional disclosures of immaterial matters that arise in the
Ordinary Course of Business attributable to the time period from and after the
date of this Agreement to the Closing Date. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
(but not sub-paragraphs) contained in this Agreement.
3
"Easement" means an easement, right-of-way, or state or federal land use
permits or permissions.
"Environmental Arbiter" has the meaning set forth in Section 5(f).
"Environmental Audit" means the environmental audit of the Facilities to
be performed by BUYER that is to include a Phase I audit and, to the extent
provided in Section 5(f) below, a Phase II audit.
"Environmental Condition" means any circumstance where there is an actual
or threatened failure to comply with the Environmental Standard.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and the Resource Conservation and
Recovery Act of 1976, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
permits, licenses, franchises, and charges thereunder) of Governmental
Authorities concerning pollution, waste management, or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of Hazardous Substances, pollutants, contaminants, or
chemical, industrial, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Substances, pollutants, contaminants, or chemical,
industrial, or toxic materials or wastes.
"Environmental Notice" has the meaning set forth in Section 5(f)(iii)
below.
"Environmental Permits" means all governmental (whether federal, state or
local) and regulatory permits, licenses, orders, authorizations, and related
instruments or rights used or held for use in connection with the ownership,
operation or use of the Assets issued under Environmental Laws.
"Environmental Standard" means the minimum regulatory standard necessary
to achieve compliance with Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any entity, trade, or business,
any other entity, trade, or business that is a member of a group described in
Code Sec. 414(b), (c), (m), or (o) or ERISA Sec. 4001(b) that includes the first
entity, trade, or business, or that is a member of the same "controlled group"
as the first entity, trade, or business pursuant to ERISA Sec. 4001(a)(14).
"Excluded Assets" means those assets listed on Exhibit C, which assets
will not be transferred to BUYER pursuant to this Agreement.
"Existing Contracts" means: (i) the contracts and other agreements listed
on Exhibit D; and (ii) any other written and fully-executed contracts entered
into in the Ordinary Course of Business in accordance with the terms of this
Agreement between the date of this Agreement and the Closing Time which
constitute a part of the SELLER Interests.
4
"Facilities" means, except for the Excluded Assets, the gas plants,
pipelines and Related Properties and Rights that are either specifically or
generally described in Exhibits ▇, ▇-▇, ▇-▇ and A-3, including, without
limitation, the map attached to Exhibit A.
"Facilities Constitutive Documents" means the Construction and Operating
Agreement dated October 28, 1981 concerning the Antelope Ridge Gas Processing
Plant, as amended prior to the date hereof.
"Fractionation Contract" means that Fractionation Contract between Duke
Energy NGL Services, LP and Gulf Coast Fractionators, a Texas general
partnership, attached hereto as Exhibit P.
"Governmental Authority" means any federal, state, or local governmental
or quasi-governmental authority, body, department, agency, or court, including
any political subdivision thereof.
"Grama Ridge" has the meaning set forth in Section 7(j) below.
"Grama Ridge Access Agreement" means that Access Agreement attached hereto
as Exhibit Q.
"Grama Ridge Transaction Confirmations" mean those transaction
confirmations attached hereto as Exhibit O.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"Hazardous Substance" means (a) any substance, whether solid, liquid, or
gaseous, (i) that is listed, defined, or regulated as a "hazardous material,"
"hazardous waste," "solid waste," "hazardous substance," "toxic substance,"
"pollutant," or "contaminant," or otherwise classified as hazardous or toxic, in
or pursuant to any Environmental Law, (ii) that is or contains asbestos,
polychlorinated biphenyls, radon, urea formaldehyde foam insulation, explosives,
or radioactive materials, or (iii) that causes or threatens to cause
contamination or a hazard to the environment or to the health or safety of
persons on any properties or any adjacent property that may require action in
order to prevent or mitigate such contamination or hazard, or (b) any petroleum,
hydrocarbons, hydrocarbon products, natural gas liquids, crude oil or any
components, fractions, or derivatives thereof, oil or gas exploration or
production waste, natural gas, or synthetic gas, or any mixtures thereof.
"Hazardous Substance Handling" means the offsite disposal, storage,
treatment, recycling, or handling of Hazardous Substances generated, stored,
treated, or disposed of or used on and removed from, any of the Facilities prior
to the Closing Date.
"Imbalance Payable" means that quantity of natural gas or natural gas
liquids as is owed by SELLER with respect to the SELLER Interests under
agreements relating to the Facilities and attributable to time periods prior to
the Adjustment Time.
"Imbalance Receivable" means that quantity of natural gas or natural gas
liquids as is owed SELLER with respect to the SELLER Interests under agreements
relating to the Facilities and attributable to time periods prior to the
Adjustment Time.
5
"includes" has the meaning set forth in Section 14(j) below.
"Indemnified Party" has the meaning set forth in Section 10(g) below.
"Indemnifying Party" has the meaning set forth in Section 10(g) below.
"Independent Accountants" has the meaning set forth in Section 7(a) below.
"Knowledge" means either actual knowledge, or knowledge that would result
from a reasonable internal investigation of the type described in the
immediately succeeding sentence, of (i) with respect to SELLER, current
employees of SELLER listed on Section 1(a) of the Disclosure Schedule and (ii)
with respect to BUYER, current employees of BUYER. The investigation
contemplated by this definition would involve making reasonable inquiries of
personnel employed by, and reviews of books and records owned by and in the
possession of, the Party (including its Affiliates) to which the Knowledge
relates, but would not involve an audit or any inquiry of any non-affiliated
Person, including other owners and/or prior operators of the Facilities or
Governmental Authorities.
"Legal Right" means the legal authority and right, without risk of
criminal or civil Liability to Governmental Authorities, such that the
contemplated conduct would not constitute a violation of Applicable Laws.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means any circumstances, developments, events,
or occurrences that has or could reasonably be expected to have an adverse
effect on the operation of any of the Facilities or the earnings or financial
condition with respect thereto that (insofar as attributable to the SELLER
Interests) individually or in the aggregate would exceed $500,000, in each case
excluding effects attributable to the general state of the energy industry,
including natural gas and natural gas liquid prices, or to general economic
conditions in the United States, including prevailing interest rates and stock
market levels.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"New Arrangements" has the meaning set forth in Section 12(c) below.
"Ordinary Course of Business" means the ordinary conduct of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" has the meaning set forth in the preface above.
"Permitted Liens" means (a) liens for Taxes not yet due or that are being
contested in good faith by appropriate proceedings; (b) carrier's,
warehousemen's', mechanics', materialmen's, repairmen's, employees',
contractors', operators' or other similar liens or charges securing the payment
of expenses not yet due and payable that were incurred in the Ordinary Course of
Business of the Facilities for which BUYER or a third Person is responsible for
payment, that are not delinquent and that will be paid and discharged in the
ordinary course of business or, if delinquent, that are being contested in good
faith with any
6
action to foreclose on or attach any Assets on account thereof properly stayed;
(c) deposits to secure performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds, or other obligations of
a like nature incurred in the Ordinary Course of Business of the Facilities; (d)
any obligations or duties to any Governmental Authority arising in the Ordinary
Course of Business with respect to any franchise, grant, license or permit
constituting a part of the Facilities, and all Applicable Laws, rules,
regulations and orders of any Governmental Authority; (e) Easements encumbering
all or any part of the Facilities that do not materially interfere with the
ownership or operation of the Facilities; (f) required third party consents to
assignments or similar agreements listed on Section 3(c) of the Disclosure
Schedule; (g) all rights to consent by, required notices to, or filings with
Governmental Authorities in connection with the sale or conveyance of the
Facilities or interests therein, including Customary Post-Closing Consents; and
(h) the Facilities' Constitutive Documents.
"Person" means an individual or entity, including a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, a Governmental
Authority, or any other entity.
"Phase I" means the phase of an environmental assessment that (a) is
consistent with ASTM standards for Phase I environmental site assessments (ASTM
E1527-97) and (b) involves a determination of the Facilities' compliance with
Environmental Laws with respect to matters other than soil and groundwater
contamination.
"Phase II" means the phase of an environmental assessment of soil,
groundwater or other environmental media that is consistent with prudent
industry practices for Phase II environmental site assessments (ASTM E1903-97).
"Phase II Audit Sites" has the meaning set forth in Section 5(f) below.
"Purchase Price" means $75,350,000.00.
"Qualified Intermediary " has the meaning set forth in Section 1.1031(k) -
1(g)(4)(v) of regulations promulgated by the United States Treasury Department
and codified in Part 1 of Title 26 of the Code of Federal Regulations.
"Reasonable Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved expeditiously; provided, however, that an obligation to use
Reasonable Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would incur any unreasonable out-of-pocket
cost or expense in connection therewith.
"Related Properties and Rights" means (i) all of the fee property and
leases described on Exhibit A-1 hereto, and Easements permits and licenses
described on Exhibit A-2 hereto, in each case, relating to, or used in
connection with the ownership or operation of, the Facilities; (ii) all of the
buildings, structures, stations, processing facilities, residue gas pipelines,
natural gas liquids pipelines, line pack, spare parts and hydrocarbons inventory
(to the extent stored or located at any of the Facilities as of the Closing
Date), machinery, vehicles, equipment (including the equipment described on
Exhibit A-3 hereto), compressors, tanks, pumps, pipe, engines, heaters, valves,
meters, liquid handling facilities, liquids, tools, fire equipment, parts,
supplies, equipment, computers, software assignable at no out-of-pocket cost to
SELLER (including data relating to TIPS files and supporting
7
schedules in electronic compatible format), tangible personal property, books
and records directly pertaining to the relevant Facility or located upon or
under the property described in subsection (i) above; and (iii) all Existing
Contracts.
"Required Consents" has the meaning set forth in Section 5(b) below.
"Remediation" means those activities required to bring each Asserted
Environmental Defect in compliance with the Environmental Standard in accordance
with: (a) with respect to those Assets located in the state of New Mexico: Title
19 New Mexico Administrative Code Chapter 15 (the "OCD Regulations") or (b) with
respect to those Assets located in the state of Texas, 16 Texas Administrative
Code Part 1, Chapter 3 (the "Texas Regulations"); provided, however, solely with
regard to BUYER's, SELLER's and the Environmental Arbiter's obligations as set
forth in Section 5(f)(iii), 5(f)(iv) and 5(f)(viii), respectively, if the OCD
Regulations or Texas Regulations, as applicable, do not provide for a standard
to which an Asserted Environmental Defect must be corrected, then "Remediation"
shall mean those activities required to bring such Asserted Environmental Defect
in compliance with the Environmental Standard for soil and groundwater.
"Response Notice" has the meaning set forth in Section 5(f).
"Retained Liabilities" means all Costs, Claims and Liabilities arising out
of or attributable to:
(i) Wages, benefits and equal opportunity employment obligations to or
in respect of any current or former employees of SELLER or any of
its ERISA Affiliates, including any such obligations arising under
or in respect of any benefit plan;
(ii) Imbalance Payables and, to the extent not assumed by BUYER, Suspense
Account Funds;
(iii) Administrative, civil and criminal fines and penalties (A) assessed
prior to the Closing Date or (B) to the extent attributable to
periods prior to the Closing Date with respect to (1) Clean Air Act
Title V operating permit for the Antelope Ridge facility, and (2)
those matters set forth on Section 3(f) of the Disclosure Schedule
and those sites on Section 1(c) of the Disclosure Schedule;
(iv) Except for ad valorem Taxes on the Facilities during the year that
Closing occurs, Taxes of SELLER or any of its Affiliates in respect
of periods prior to the Adjustment Time;
(v) Death, personal injury or property damages in respect of the
Facilities or the business to which to Assets relate, to the extent
related to periods of time prior to the Closing Date and, if
property damages, to the extent such property damages were not
caused by or the result or effect of any Environmental Condition;
(vi) Hazardous Substance Handling prior to the Closing Date; (vii)
Excluded Assets;
(viii) Those sites described in Sections 1(c) (Certain Environmental
Sites) of the Disclosure Schedule, and 3(i) (Litigation) of the
Disclosure Schedule;
(ix) Asserted Environmental Defects and those sites described on Section
1(c) of the Disclosure Schedule and for those matters described on
Section 3(f) of the Disclosure Schedule; provided, however, that if
there is a Purchase
8
Price reduction for any of the foregoing sites or matters, then only
to the extent of third Person Claims related to such sites or
matters;
(x) Preemptive rights, rights of first refusal or similar rights with
respect to any of the Assets; and
(xi) Accounts payable incurred before the Closing Date except to the
extent accounted for at Section 7(a)(i)(A).
"Security Interest" means any mortgage, pledge, lien, other security
interest created by, through or under SELLER or any of its Affiliates.
"SELLER" has the meaning set forth in the preface above.
"SELLER Group" means ConocoPhillips Company, its parent and all Affiliates
of both.
"SELLER Indemnified Persons" means (i) each member of the SELLER Group and
(ii) the directors, officers, employees, agents or other representatives of such
members.
"SELLER Interests" means the Allocable Share of the Facilities.
"SELLER Plans" means all employee benefit plans providing benefits to any
Covered Employees that are sponsored or maintained by SELLER Group or to which
SELLER Group contributes or is obligated to contribute on behalf of Covered
Employees, including any employee welfare benefit plan within the meaning of
ERISA Sec. 3(1), any employee pension benefit plan within the meaning of ERISA
Sec. 3(2), and any bonus, incentive, deferred compensation, stock purchase,
stock option, stock appreciation, severance, change of control, or fringe
benefit plan.
"Settlement Date" has the meaning set forth in Section 7(a) below.
"Settlement Notice" has the meaning set forth in Section 7(a) below.
"Settlement Statement" has the meaning set forth in Section 7(a) below.
"Suspense Account Funds" has the meaning set forth in Section 7(b) below.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, ad valorem, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Termination Amount" means the total of Costs, Claims and Liabilities
incurred or reasonably expected to be incurred by SELLER (and its Affiliates)
with respect to (i) breaches by SELLER identified prior to the Closing of its
representations, warranties, and
9
covenants in this Agreement (excluding any breaches intentionally committed by
SELLER in order to invoke the rights of SELLER set forth in Section 9(a)(iv)
below), (ii) the effect of a lack of a material consent from a third Person, and
(iii) Claims asserted with respect to the Facilities prior to the Closing Date.
"Transaction Agreements" means this Agreement, the Assignments, Grama
Ridge Transaction Confirmations, Fractionation Contract, the Grama Ridge Access
Agreement, and the other agreements entered in connection herewith or therewith.
"Transferred Employees" has the meaning set forth in Section 12(a) below.
"Welfare Benefits" has the meaning set forth in Section 12(d) below.
2. PURCHASE AND SALE.
(A) PURCHASE AND SALE OF THE ASSETS
On and subject to the terms and conditions of this Agreement, BUYER agrees
to purchase from SELLER, and SELLER agrees to (or cause its Affiliates to)
sell, transfer and convey to BUYER (and/or to BUYER's designated
Affiliate), all of the Assets at the Closing for the consideration
specified below in this Section 2.
(B) PAYMENT OF PURCHASE PRICE AT CLOSING.
BUYER agrees to pay to SELLER at the Closing the Purchase Price (as may be
adjusted in accordance with Section 5(f)(vii)) by wire transfer or
delivery of immediately available federal funds to the following account
or any other account specified by SELLER to BUYER at least five days prior
to Closing:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, New York, NY
ABA #▇▇▇▇▇▇▇▇▇
Account #9102001659
c/o ConocoPhillips Company
(C) THE CLOSING.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of ConocoPhillips in Houston,
Texas, commencing at 9:00 a.m. local time on the first calendar day of the
month that follows the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated
hereby as set forth in Section 6 below (other than conditions with respect
to actions the respective Parties will take at the Closing itself), or
such other date as the Parties may mutually determine (the "Closing
Date").
(D) DELIVERIES AT THE CLOSING.
At the Closing, (i) SELLER will deliver to BUYER the certificate provided
for in Section 6(a) below; (ii) BUYER will deliver to SELLER the
certificate provided for in Section 6(b) below; (iii) SELLER will execute
and deliver to BUYER (and/or BUYER's Affiliate designated by BUYER) an
assignment of the Assets in the form
10
attached hereto as Exhibit G; (iv) BUYER will deliver to SELLER the
Purchase Price(as may be adjusted in accordance with Section 5(f)(vii));
(v) each Party will execute and deliver (or cause to be executed and
delivered, as applicable) to the other Party (or the other Party's
Affiliate, as applicable) the other Transaction Agreements; and (vi)
SELLER will execute and deliver to BUYER a Certification of Non-Foreign
Status for Entities in the form attached hereto as Exhibit K.
(E) ALLOCATION OF PURCHASE PRICE.
For the purpose of the requisite filings, if any, under Section 1060 of
the Code, the Parties will allocate the Purchase Price as set forth on
Section 2(e) of the Disclosure Schedule. The Parties agree to report the
federal, state, local, or other Tax consequences of the transactions
contemplated by this Agreement in a manner consistent with such allocation
and will not take any position inconsistent therewith. The Parties agree
that each will furnish the other a copy of Form 8594 as filed with the
Internal Revenue Service within 30 days of the filing of such form. Solely
for Tax purposes, the Purchase Price shall be allocated among the
Facilities as set forth on Section 2(e) of the Disclosure Schedule.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
SELLER represents and warrants to BUYER that the statements contained in this
Section 3 are true and correct as of the date of this Agreement and will be true
and correct as of the Closing Date, in each case, except: (i) that the
statements referring to a specific time will be true and correct as of the time
therein indicated, and (ii) as set forth in Section 3 of the Disclosure
Schedule.
(A) ORGANIZATION OF SELLER.
Each member of the SELLER Group that is a party to a Transaction Agreement
is an entity duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its organization, having all necessary
power and authority to carry on its business as presently conducted and to
own, lease, and operate all properties and assets now owned, leased, or
operated by it, and, to the extent necessary, is duly qualified as a
foreign entity and in good standing in the states where the Assets are
located.
(B) AUTHORIZATION OF TRANSACTION.
Each member of the SELLER Group that is a party to a Transaction Agreement
has full power and authority (including full corporate power and
authority) to execute and deliver such Transaction Agreement and to
perform its obligations thereunder. Each Transaction Agreement to which a
member of the SELLER Group is a party constitutes the valid and legally
binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium, or other laws relating to or
affecting the rights of creditors generally, and general principles of
equity.
11
(C) NONCONTRAVENTION.
Except as set forth in Section 3(c) of the Disclosure Schedule, neither
the execution and the delivery of any Transaction Agreement, nor the
consummation of the transactions contemplated thereby, will (i) violate
any constitution, statute, regulation, rule, injunction, order, decree,
ruling, charge, or other restriction of any Governmental Authority to
which any member of the SELLER Group is subject, (ii) violate any
provision of the charter, bylaws, or other organizational document of such
Person or (iii) result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any authorization, consent,
waiver, or approval under any agreement, contract, lease, license,
instrument, decree, judgment, or other arrangement to which such Person is
a party or by which it is bound or to which any of its assets constituting
a part of the SELLER Interests is subject (or result in the imposition of
any Security Interest or encumbrance upon any such assets), except, with
respect to subsections (i) and (iii) above, where such violations,
breaches, defaults or other matters, including the failure to obtain such
authorizations, consents, waivers or approvals, could not reasonably be
expected to have a Material Adverse Effect. Except (1) pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (2) as set forth on Section 3(c) of the Disclosure
Schedule, (3) for those authorizations, consents, waivers or approvals of
Governmental Authorities customarily obtained after the closing of similar
transactions ("Customary Post-Closing Consents") and (4) where the failure
to give such notices, make such filings or obtain such authorizations,
consents, waivers or approvals could not reasonably be expected to have a
Material Adverse Effect, no such Person needs to give any notice, make any
filing with or obtain any authorization, consent, waiver, or approval of
any Governmental Authority in order for the Parties to consummate the
transactions contemplated by this Agreement.
(D) BROKERS' FEES.
Other than to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, SELLER has no Liability
or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(E) LEGAL COMPLIANCE.
With respect to all Applicable Laws other than Environmental Laws, the
Facilities are in compliance with all such laws, other than non-compliance
that could reasonably be expected not to have a Material Adverse Effect,
and SELLER has not received any written notice from any Governmental
Authority of any actual or potential non-compliance with the terms and
conditions of any such laws with respect to any part of the Facilities, or
any written notice of any civil, criminal, or administrative proceeding
involving any part of the Facilities relating in any way to such laws.
Section 3(e) of the Disclosure Schedule lists all permits and licenses
held by SELLER that are required to operate the Facilities, and to the
Knowledge of SELLER, there are no other permits or licenses required to
operate the Facilities. With respect to Environmental Laws:
(i) other than as set forth on Section 3(e) of the Disclosure
Schedule, to the Knowledge of SELLER, the Facilities are in compliance
with all applicable
12
Environmental Laws, other than non-compliance that could reasonably be
expected not to have a Material Adverse Effect;
(ii) other than as set forth on Section 3(e) of the Disclosure
Schedule, to the Knowledge of SELLER, there are no locations or premises
that are a part of the Facilities where Hazardous Substances or other
substances have entered on, under, or into the soil or into groundwater in
violation of applicable Environmental Laws;
(iii) for those Facilities operated by SELLER since August 1, 2003,
SELLER has not received any written notice from any Governmental Authority
of any actual or potential non-compliance with the terms and conditions of
any Environmental Laws with respect to any portion of the Facilities; and
(iv) for those Facilities operated by SELLER since August 1, 2003,
SELLER has not received any written notification of any civil, criminal,
or administrative proceeding involving any portion of the Facilities
relating in any way to applicable Environmental Laws.
(F) ENVIRONMENTAL MATTERS.
To the Knowledge of SELLER, and except (1) as would not have a Material
Adverse Effect or substantially delay the ability of SELLER to consummate
the transactions contemplated hereby, or (2) as set forth in Section 3(f)
of the Disclosure Schedule:
(i) SELLER has in force and effect all Environmental Permits
necessary under Environmental Laws and all such Environmental Permits,
which are annotated as to whether or not they are transferable or
assignable, are listed on Exhibit B hereto;
(ii) There has been no environmental investigation, study, audit,
test, review or other analysis conducted of which SELLER has Knowledge in
relation to the Facilities (as currently or previously conducted) which
has not been delivered to BUYER at least ten (10) days prior to the date
hereof;
(iii) There are no Facilities which are in violation of
Environmental Laws; and
(iv) There are no Hazardous Substances on, under or emanating from
(other than in the Ordinary Course of Business) any of the Facilities.
(G) TAX MATTERS.
Excluding Taxes for which BUYER is responsible pursuant to Section 7(e) of
this Agreement, all Taxes owed by any member of the SELLER Group or based
upon, measured by, or arising by reason of the ownership of the Facilities
that have become due and payable have been duly and timely paid, all
applicable Tax Returns relating the Facilities have been duly and timely
filed, and there is no claim pending or, to the Knowledge of SELLER,
threatened by any applicable Governmental Authority in connection with any
such Taxes, other than those being contested in good faith that are set
forth in the Disclosure Schedule.
13
(H) CONTRACTS.
Exhibit D lists (as of the date of this Agreement) the following contracts
and other agreements to which any member of the SELLER Group is a party
and that constitute any portion of the SELLER Interests:
(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, transportation service agreement, tariff, or
other agreement, the performance of which will extend over a period of
more than one (1) year or involve consideration in excess of $100,000 over
the term of such 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
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, (B) involving
consideration in excess of $250,000 or (C) under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(iv) any agreement concerning noncompetition;
(v) any agreement to which the counterparty is any member of the
SELLER Group;
(vi) any collective bargaining agreement or other union contract;
(vii) any agreement for the employment of any individual on a
full-time or part-time basis (A) providing annual compensation in excess
of $100,000, (B) having a term in excess of one (1) year or (C) providing
severance benefits;
(viii) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business that would be binding upon the BUYER;
(ix) any preferential purchase right, right of first refusal, or
similar right that would be applicable to or invoked by the consummation
of the transactions contemplated by this Agreement;
(x) any lease, in either the capacity of lessee or lessor;
(xi) any futures, swaps or forward contracts or other derivative
based instruments; and
(xii) all other material contracts.
14
SELLER has provided BUYER access to and the opportunity to review a
correct and complete copy of each agreement listed in Exhibit D (as
amended to the date of execution of this Agreement). Except as set forth
in Section 3(h) of the Disclosure Schedule, with respect to each agreement
listed in Exhibit D (and except as could not reasonably be expected to
have a Material Adverse Effect with respect to all such agreements in the
aggregate): (A) the agreement is in full force and effect (except where
the agreement has expired by its own terms, other than as a result of a
breach by any member of the SELLER Group); (B) the transactions
contemplated herein will not cause the agreement to cease to be in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) no party is in breach or default, no
party has claimed there is a breach or default, and, to SELLER's
Knowledge, no event has occurred that with notice or lapse of time would
constitute a breach or default that would permit termination, modification
or acceleration under the agreement; and (D) no party has repudiated in
writing any provision of the agreement.
(I) LITIGATION.
Section 3(i) of the Disclosure Schedule sets forth each instance (that
relates to the Facilities) in which SELLER (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, arbitration or
other award or charge or (ii) is a party or, to the Knowledge of SELLER,
is threatened to be made a party to any action, suit, proceeding, hearing,
or investigation of, in, or before any Governmental Authority or before
any arbitrator.
(J) EMPLOYEES.
Insofar as relating directly to the Facilities, (i) none of SELLER Group
has experienced any material strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes since January 1, 1999,
(ii) SELLER has no Knowledge that any unfair labor practice has been
committed at the Facilities since January 1, 1999, and (iii) SELLER has no
Knowledge of any organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees employed at
the Facilities.
(K) EMPLOYEE BENEFIT PLANS.
(i) As of the date of this Agreement, the SELLER Group is neither
contributing to, nor is it obligated to contribute to, any Multiemployer
Plan providing benefits to any Covered Employees. None of SELLER or any of
its respective ERISA Affiliates has incurred any withdrawal Liability
under Part I of Subtitle E of Title IV of ERISA that has not been
satisfied in full.
(ii) The consummation of the transactions contemplated by this
Agreement will not constitute a "change in ownership or control" of SELLER
within the meaning of Proposed Treasury Reg. Sec. 1.280G-1.
(L) EASEMENTS.
To SELLER's Knowledge, no event has occurred that with notice or lapse of
time would constitute a breach or default that would permit termination,
modification, or
15
acceleration, under any Easement constituting a portion of the SELLER
Interests. Exhibit A-2 lists all of the Easements constituting SELLER
Interests; those Easements that SELLER operates are free and clear of all
Security Interests. EXCEPT AS SET FORTH IN THIS SECTION 3(L), SELLER DOES
NOT OTHERWISE REPRESENT, AND SELLER SPECIFICALLY BY THIS DISCLAIMER DOES
NOT WARRANT, TITLE TO ANY EASEMENT.
(M) CONDUCT OF BUSINESS.
Except as contemplated by this Agreement and the other Transaction
Agreements, at all times since August 1, 2003, each of SELLER and its
Affiliates has conducted its business with respect to the Facilities in
the Ordinary Course of Business.
(N) AFES AND CAPITAL PROJECTS.
Section 3(n) of the Disclosure Schedule lists each AFE or uncompleted
capital or operating project that has not been totally funded, as of the
date of this Agreement, with respect to the Facilities, setting forth a
general description of the circumstances involved, the approximate
unfunded amount of such AFE or unfinished capital project attributable to
the SELLER Interests, and the estimated timing for the payment of such
amount.
(O) SPECIAL WARRANTY OF TITLE.
Except (x) for Permitted Liens and (y) with respect to Easements as set
forth at Section 3(l), the BUYER has good and marketable title (free and
clear of all liens, encumbrances and Security Interests) to the SELLER
Interests.
(P) NO CHANGE IN CONDITION.
Since August 1, 2003, the equipment and other personal property or
fixtures constituting a part of any Facility have been maintained in the
Ordinary Course of Business and in substantially the same working order
and condition as of such date, normal wear and tear excepted.
BUYER acknowledges that if Closing occurs the Assets are being sold to BUYER on
an "AS IS, WHERE IS" basis, without any warranties or representations, either
express or implied, of any nature whatsoever, except as represented and as
warranted above and in Section 10, subject to Section 11, below and as set forth
in the Assignments delivered at Closing. Without limiting the generality of the
foregoing, SELLER makes no representations or warranty with respect to: (a) any
projections, estimates or budgets delivered to or made available to BUYER of
future revenues, future results of operations (or any component thereof), future
cash flows or future financial condition (or any component thereof) of the
Assets or the future business viability and/or operations of the Assets; or (b)
any other information or documents made available to BUYER or BUYER Group and/or
its/their counsel, accountants or advisors with respect to the Assets.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
BUYER represents and warrants to SELLER that the statements contained in this
Section 4 are true and correct as of the date of this Agreement and will be true
and correct as of the
16
Closing Date, in each case, except (i) as set forth in the Disclosure Schedule,
and (ii) that the statements referring to a specific time will be true and
correct as of the time indicated.
(A) ORGANIZATION OF BUYER.
Each member of the BUYER Group that is a party to a Transaction Agreement
is an entity duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its organization, having all necessary
power and authority to carry on its business as presently conducted and to
own, lease, and operate all properties and assets now owned, leased, or
operated by it, and, to the extent necessary, is duly qualified as a
foreign entity and in good standing in the states where the Assets are
located.
(B) AUTHORIZATION OF TRANSACTION.
Each member of the BUYER Group that is a party to a Transaction Agreement
has full power and authority (including full corporate power and
authority) to execute and deliver such Transaction Agreement and to
perform its obligations thereunder. Each Transaction Agreement to which a
member of the BUYER Group is a party constitutes the valid and legally
binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium, or other laws relating to or
affecting the rights of creditors generally, and general principles of
equity.
(C) NONCONTRAVENTION.
Except as set forth in Section 4(c) of the Disclosure Schedule, neither
the execution and the delivery of any Transaction Agreement, nor the
consummation of the transactions contemplated thereby, will (i) violate
any constitution, statute, regulation, rule, injunction, order, decree,
ruling, charge, or other restriction of any Governmental Authority to
which any member of the BUYER Group is subject, (ii) violate any provision
of the charter, bylaws, or other organizational document of such Person or
(iii) result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any authorization, consent, waiver, or
approval under any agreement, contract, lease, license, instrument,
decree, judgment, or other arrangement to which such Person is a party or
by which it is bound or to which any of its assets are subject (or result
in the imposition of any Security Interest or encumbrance upon any such
assets), except, with respect to subsections (i) and (iii) above, where
such violations, breaches, defaults or other matters, including the
failure to obtain such authorizations, consents, waivers or approvals,
could not reasonably be expected to have a Material Adverse Effect on the
transactions contemplated hereby. Except (1) pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (2) as set forth on Section 4(c) of the Disclosure
Schedule, (3) Customary Post-Closing Consents and (4) where the failure to
give such notices, make such filings or obtain such authorizations,
consents, waivers or approvals could not reasonably be expected to have a
Material Adverse Effect on the transactions contemplated hereby, no such
Person needs to give any notice, make any filing with or obtain any
authorization, consent, waiver, or approval of any Governmental Authority
in order for the Parties to consummate the transactions contemplated by
this Agreement.
17
(D) BROKERS' FEES.
BUYER has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by
this Agreement.
(E) FINANCIAL CAPABILITY.
BUYER has and on the Closing Date will have the full financial capability
and access to available funds necessary to consummate the transactions
contemplated by this Agreement.
(F) INVESTMENT INTENT.
BUYER is acquiring the Assets for its own account and not with a view to
the distribution thereof within the meaning of Section 2(11) of the
Securities Act of 1933, as amended.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing:
(A) GENERAL.
Each of the Parties will satisfy its obligations under Section 5(b)(iv)
and will use its Reasonable Efforts to take all action and to do all
things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth in
Section 6 below).
(B) NOTICES AND CONSENTS.
(i) With regard to the following notices and consents:
A. SELLER will give or cause to be given any notices to all third
Persons which are not a Governmental Authority, and SELLER will use
its Reasonable Efforts (which, with respect to landowner consents,
shall not exceed the cost to repurchase the same type of real
property interest at the market rate generally prevailing in the
area, and, further, the Parties agree that the reasonable market
rate for easements and rights-of way shall be deemed to be not more
than $50.00/rod) to obtain any third Person consents, approvals or
authorizations, that must be given or obtained in order for the
Parties to consummate the transaction contemplated by this Agreement
(collectively, except for the Customary Post-Closing Consents, the
"Required Consents") provided, however, and, for the avoidance of
any doubt, the use of the phrase "Person" in this sentence shall
exclude Antitrust Authorities. If SELLER is required to pay an
amount in excess of $50.00/rod to obtain any landowner Required
Consent prior to Closing, then the amount in excess of $50.00/rod
shall be shared equally with each of BUYER and SELLER bearing 50% of
such costs and the amount of BUYER's 50% of such costs shall be paid
to SELLER pursuant to Section 7(a)(i)(C).
18
Notwithstanding anything to the contrary in this Section 5(b)(i)(A),
BUYER shall not be responsible for any costs incurred by SELLER, if
any, to obtain a landowner Required Consent to the extent such costs
are incurred to resolve preexisting dispute(s) between SELLER and
the landowner (other than the consent itself); and
B. Each of the Parties will give any notices to, make any filings
with, Governmental Authorities, and use their Reasonable Efforts to
obtain any authorizations, consents, and approvals of those
Governmental Authorities in connection with the matters referred to
in Sections 3(c) and 4(c) above in order for such Party to perform
its obligations under this Agreement.
(ii) Without limiting the generality of the foregoing, each of the
Parties acknowledges and agrees that this Agreement and the consummation
of the transactions contemplated by this Agreement are subject to and
conditioned upon the following: (A) any applicable waiting period under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act relating to the transactions contemplated by
this Agreement shall have expired or been terminated; and (B) no provision
of any applicable law or regulation, and no judgment, injunction, order or
decree shall prohibit or enjoin the consummation of the transactions
contemplated by this Agreement.
(iii) The Parties further acknowledge and agree that each will use
its Reasonable Efforts to, as promptly as is possible: (A) prepare and
make all filings required of it with, and give all notices to, will file
(to the extent not heretofore filed) any Notification and Report Forms and
related material that it may be required to file with the Federal Trade
Commission, the Antitrust Division of the United States Department of
Justice or any other federal or state antitrust reviewing agency (whether
acting together or independently, "Antitrust Authorities") or any other
Person as is required of such Party in order to consummate the
transactions contemplated hereby under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and will
use its Reasonable Efforts to obtain an early termination of the
applicable waiting period, and will make any further filings pursuant
thereto that may be necessary, proper, or advisable in connection
therewith; (B) provide such other information and communications to such
Antitrust Authorities as such Antitrust Authorities may reasonably request
in connection therewith; and (C) provide reasonable cooperation to each
other in connection with the performance of their obligations under this
Section. The BUYER and the SELLER will provide prompt notification to each
other when any such consent, approval, action, filing or notice referred
to in Section 5(b)(ii)(A), above, is obtained, taken, made or given, as
applicable, and will advise each other of any communications (and, unless
precluded by law, provide copies of any such communications that are in
writing) with any Antitrust Authority regarding any of the transactions
contemplated by this Agreement; provided, however, that competitively
sensitive information may be withheld. SELLER agrees to reimburse BUYER
for those filing fees required by Antitrust Authorities for BUYER's
application under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
(iv) BUYER will undertake commercially reasonable efforts to obtain
all consents, approvals or actions of the Antitrust Authorities and shall
cooperate with SELLER and propose to the relevant Antitrust Authorities
appropriate and reasonable remedies to alleviate potential concerns
generated by the Agreement and the consummation of the transactions
contemplated by this Agreement and
19
shall commit itself to such remedies vis-a-vis the relevant Antitrust
Authorities, with the aim of enabling the completion of the consummation
of the transactions contemplated by this Agreement as soon as practicable;
provided, however, that BUYER will not be required to take any action that
would materially impact this transaction. Such remedies shall not, in any
way, reduce BUYER's obligations to pay the full Purchase Price as required
by this Agreement. Before proposing such remedies to the relevant
Antitrust Authorities, the BUYER shall reveal to SELLER the remedies to be
proposed. The Parties also agree that they will use all Reasonable Efforts
in the defense of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement and the
consummation of the transactions contemplated by this Agreement, including
seeking to have any stay, temporary restraining order, or other injunction
entered by any court or other governmental entity vacated or reversed.
(v) BUYER shall be solely responsible for all filing fees
associated with Easements, including railroad assignments, and for the
cost of obtaining the Customary Post-Closing Consents.
(C) OPERATION OF BUSINESS.
To the extent SELLER has the Legal Right and such action will not cause a
breach by SELLER under the Facilities Constitutive Documents (after using
its Reasonable Efforts to obtain any required consent of the other parties
thereto with respect to such action), SELLER will do the following with
respect to the Facilities:
(A) Continue to operate and maintain such Facilities in the
Ordinary Course of Business, consistent with past practices (including
pipeline line-fill and operating pressures);
(B) Continue in effect all present insurance coverage on such
Facilities;
(C) Cooperate with BUYER to effect an orderly transition in the
ownership of such Facilities; and
(D) Use its Reasonable Efforts to preserve, maintain, and protect
such Facilities, and to protect and preserve the relationships with
existing producers and suppliers associated with such Facilities.
Furthermore, to the extent SELLER has the Legal Right and such action will
not cause a breach by SELLER under the Facilities Constitutive Documents
(after using its Reasonable Efforts to obtain any required consent of the
other parties thereto with respect to such action), SELLER shall not, and
SELLER shall not permit any Affiliate to do any of the following with
respect to the Facilities, without the prior consent of BUYER (which
consent shall not be unreasonably withheld or delayed):
(1) Enter into, terminate, or amend any material agreements;
(2) Grant or abandon any Easements that are a part of or
materially affect such Facilities;
20
(3) Sell, assign, mortgage, pledge, or subject to any encumbrance
or Security Interest (other than Permitted Liens) any of the SELLER
Interests;
(4) Incur any obligation with respect to any capital expenditure
unless the same is fully completed, pre-paid or approved by BUYER prior to
Closing; and
(5) Commit to do any of the foregoing.
(D) FULL ACCESS.
To the extent SELLER has the Legal Right and upon reasonable telephonic
request by BUYER, SELLER will permit representatives of BUYER to have full
access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the premises, properties, personnel
(including personnel knowledgeable about the financial, environmental, and
operating condition of the Facilities), books, records (including Tax
records), contracts, and documents of or pertaining to the SELLER
Interests. This access shall include: (i) providing BUYER with access to
those environmental analyses and reports which are, to the Knowledge of
SELLER, in SELLER's possession; and (ii) access to those Assets for the
purpose of inspecting the Environmental Condition of the Assets and
conducting evaluations related to the Environmental Condition of the
Assets, as set forth in Section 5(f), including, without limitation, the
right to continuously run four (4) drilling rigs in connection with the
Phase II activities; provided, however, SELLER shall have no obligation to
provide BUYER with forecasts, budgets or drafts of any of the foregoing.
BUYER shall maintain same in confidence in accordance with the terms of
the Confidentiality Agreement. To the extent SELLER has the Legal Right
and upon reasonable written request by BUYER, SELLER shall also assist
BUYER in obtaining access to land owned or controlled by third Persons
with respect to BUYER's inspection of the Facilities located thereon and
its environmental review for same.
(E) NOTICE OF DEVELOPMENTS.
Each Party will give prompt notice to the other Party of any development
causing a breach of any of its own representations and warranties in
Section 3 and Section 4 above. SELLER will give prompt notice to BUYER of
the occurrence of any Material Adverse Effect or Catastrophic Event. No
disclosure by any Party shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(F) ENVIRONMENTAL MATTERS.
(i) SELLER has made disclosures to BUYER pursuant to Section 3(f),
at Section 3(f) of the Disclosure Schedule.
(ii) Exhibit L, Phase II Agreed Audit Sites, sets forth the list of
sites (the "Phase II Audit Sites") upon which the Parties have
agreed that BUYER shall be entitled to perform, at its sole
cost, risk and expense, Phase II of the Environmental Audit to
determine if there exists at the time of such Environmental
Audit an Environmental Condition at any of the sites listed on
Exhibit L. The Phase II of
21
the Environmental Audit shall be conducted during the period
ending forty (40) days after the date of this Agreement;
provided, however, that with respect to PCA Junction,
Rattlesnake Compressor Station and Northeast Carlsbad
Compressor Station, said forty-day period shall be extended by
the number of days that lapse from the date of this Agreement
until the date that the U.S. Bureau of Land Management grants
its archeological consent in connection with the Phase II. In
exchange for the permission to conduct the Environmental
Audit, BUYER shall fully protect, defend, indemnify and hold
each SELLER Indemnified Person harmless from and against any
and all Costs and Claims (whenever asserted) the Basis for
which relates to, arises out of or is connected with the
performance by BUYER or by any Person on BUYER's behalf of any
Environmental Audit; and, it is further provided, the
foregoing indemnity shall not apply to Costs or Claims
incurred by BUYER the Basis for which is an Environmental
Condition existing at the time of the Phase II Environmental
Audit as discovered in the Environmental Audit.
(iii) Also within forty (40) days after the date of this Agreement,
BUYER shall notify SELLER, in writing (the "Environmental
Notice"), of any Environmental Condition that BUYER has
discovered in its Phase II Environmental Audit conducted
pursuant to Section 5(f)(ii) as to which BUYER takes exception
(an "Asserted Environmental Defect"). The Environmental Notice
shall include (A) a reasonably complete description of each
individual Environmental Condition as to which BUYER takes
exception (including supporting documentation) and (B) BUYER's
good faith estimate of the third Person costs (excluding Costs
associated with Retained Liabilities) to conduct Remediation.
(iv) Unless SELLER agrees with the matters set forth in the
Environmental Notice, within five (5) business days after
receipt of the Environmental Notice, SELLER shall deliver to
BUYER a written statement (the "Response Notice") that sets
forth (A) a reasonably complete description of each Asserted
Environmental Defect as to which SELLER takes exception
(including supporting documentation and rationale) and (B)
SELLER's good faith estimate of the third Person costs
(excluding Costs associated with Retained Liabilities) to
conduct Remediation.
(v) If a Response Notice was delivered, BUYER and SELLER shall
meet within five (5) business days following BUYER's receipt
of the Response Notice in an attempt to mutually agree on an
acceptable resolution addressing the Asserted Environmental
Defects which remain uncured.
(vi) BUYER shall be entitled to raise an Asserted Environmental
Defect at any Phase II Agreed Audit Site only to the extent
that BUYER's good faith estimate of the third Person costs
(excluding Costs associated with Retained Liabilities) to
conduct the
22
Remediation for such Phase II Agreed Audit Site exceeds
$100,000 in the aggregate; provided, however, that said
$100,000 deductible shall not apply with respect to the PCA
Junction Valve Site and APEX Compressor Station as identified
on Exhibit L.
(vii) With respect to each Asserted Environmental Defect, the
Parties will attempt to reach agreement as to whether such an
Environmental Condition actually exists, the appropriate
method to remediate same and the Allocable Share of the third
Person costs (excluding Costs associated with Retained
Liabilities) to conduct Remediation. In the event the Parties
reach agreement with regard to the matters set forth in the
foregoing sentence, subject to the Retained Liabilities, BUYER
will assume all liability with respect to the costs of such
Asserted Environmental Defect and the Purchase Price shall be
reduced by the agreed costs.
(viii) If the Parties cannot reach agreement with regard to the one
or more of the matters set forth in the first sentence of
Section 5(f)(vii) within five (5) business days from the date
determined by Section 5(f)(v), unless SELLER agrees to
remediate the matter in accordance with Section 5(f)(ix)
below, then the Closing shall occur and BUYER and SELLER shall
render such matters to TRC Companies, Inc. (the "Environmental
Arbiter") for determination. The contacts at TRC Companies,
Inc. are the following two individuals: ▇▇▇ ▇▇▇ @ ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and, ▇▇▇▇▇ ▇▇▇▇ @ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The Parties
hereby request that the Environmental Arbiter makes its
determination within twenty (20) days. If the Environmental
Arbiter determines that an Environmental Condition actually
exists, (A) the Environmental Arbiter shall also determine the
Allocable Share of the third Person costs (excluding Costs
associated with Retained Liabilities) to conduct Remediation,
(B) such amount shall be paid by SELLER to BUYER within five
(5) days after the Environmental Arbiter makes its
determination, and (C) subject to the Retained Liabilities,
BUYER will assume all liability with respect to the costs to
perform the remediation of such Asserted Environmental Defect.
The Parties agree that they and the Environmental Arbiter
shall proceed to reach a determination of the matters
submitted to the Environmental Arbiter in accordance with
Sections 4 through 14, 16 through 18, 21 and 26 of Exhibit J,
wherein the word (A) "Arbitrator" is agreed to mean
Environmental Arbiter, (B) each Party will be both a
Respondent and Claimant, and (C) the word "arbitration" is
agreed to mean "determination." The matters determined
pursuant to this Section 5(f)(vii) shall not be Arbitrable
Disputes for any purpose other than the foregoing referenced
sections of Exhibit J, and shall not be subject to the
provisions of Section 13. The determination of the
Environmental Arbiter shall be in writing and shall be binding
upon the Parties. The Parties shall equally share the cost of
the Environmental Arbiter.
23
(ix) In lieu of the Parties submitting an Asserted Environmental
Defect to dispute resolution in accordance with Section 5(f)
(viii) above, SELLER shall have the right to elect to conduct
the Remediation for such Asserted Environmental Defect at
SELLER's sole cost, risk and expense. In the event, and to the
extent, that prior to Closing SELLER has agreed to conduct
such Remediation, (A) BUYER shall be entitled to participate
with SELLER in any discussions, negotiations and proceedings
with any Governmental Authorities in connection therewith, (B)
SELLER shall reimburse BUYER for actual third Person costs
incurred by BUYER outside of its normal operations and to the
extent necessary for SELLER to conduct Remediation and for the
reasonable cost of supervision and monitoring services
requested of BUYER by SELLER, (C) SELLER SHALL PROTECT,
DEFEND, INDEMNIFY AND HOLD THE BUYER INDEMNITIES HARMLESS FROM
AND AGAINST ANY AND ALL CLAIMS AND COSTS OCCURRING ON OR TO
THE ASSETS CAUSED BY THE ACTS OR OMISSIONS OF SELLER, SELLER'S
AFFILIATES OR ANY PERSON ACTING ON SELLER'S OR SELLER'S
AFFILIATES BEHALF IN CONNECTION WITH ANY REMEDIATION CONDUCTED
PURSUANT TO THIS AGREEMENT, and (D) SELLER shall comply fully
with all rules, regulations, policies and instructions issued
by BUYER or any third Person operator regarding SELLER actions
while upon, entering or leaving any property included in the
Assets, including any insurance requirements. Notwithstanding
the foregoing, BUYER shall not impose rules, regulations or
instructions that unreasonably impede or delay SELLER's
Remediation and BUYER shall give SELLER access to BUYER's
properties for such activities.
(G) TITLE MATTERS.
Prior to Closing and at its sole cost, risk and expense, SELLER shall
obtain a new easement, customary in the industry, that covers SELLER'S
existing twelve-inch (12") gas pipeline to the extent that it is located
in NE/NE, SE/NE, NE/SE, SE/SE Section 36, 16S, 35E and NW/SW ▇▇▇▇▇▇▇ ▇▇,
▇▇▇, ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇; such easement shall be added to Exhibit A-2.
(H) CAPITAL EXPENDITURES.
Notwithstanding anything in this Agreement, SELLER (or its Affiliates, as
applicable) shall be responsible for and pay any and all capital
expenditures (including, without limitation, capital costs relating to any
maintenance, repair or replacement of fixtures, equipment or other
personal property) with respect to the Facilities that are commenced or
contracted for prior to Closing unless the same has been approved by
BUYER.
(I) EXCLUSIVITY.
Prior to Closing, SELLER will not, directly or indirectly, participate in
any discussions regarding, furnish any information with respect to, assist
or participate in, or facilitate
24
in any other manner any effort or attempt by any Person other than BUYER
to acquire the SELLER Interests or any part thereof or any economic
interest therein.
(J) CERTAIN EXISTING CONTRACTS.
SELLER shall notify BUYER in writing regarding any agreement or contract
that will constitute an Existing Contract pursuant to clause (ii) of the
definition of Existing Contract.
(K) CASUALTY LOSS.
(i) SELLER shall promptly notify BUYER of any Casualty Loss of
which SELLER becomes aware prior to the Closing. If a Casualty Loss occurs
that results in destruction of or damage to Facilities in excess of 10% of
the Purchase Price, then either SELLER or BUYER shall have the right to
extend the Closing Date for up to 45 days for the purpose of repairing or
replacing the Facilities destroyed or damaged by the Casualty Loss. If
SELLER does not repair or replace the Facilities destroyed or damaged by
the Casualty Loss prior to the Closing and the Parties are unable to agree
on a reduction to the Purchase Price to compensate BUYER for the Casualty
Loss, BUYER may terminate this Agreement upon fifteen (15) days written
notice to SELLER.
(ii) If this Agreement is not terminated by BUYER as provided in
subsection (i), BUYER's sole remedy with respect to any Casualty Loss in
respect of Facilities which are not repaired or replaced prior to the
Closing is to (A) reduce the Purchase Price by an amount estimated by
SELLER and agreed to by BUYER to be equal to the repair or replacement
cost of the Facilities affected by the Casualty Loss; provided that, if
the Parties cannot agree, then the Closing shall occur and either Party
may submit the determination of the costs of the Casualty Loss for
resolution pursuant to the arbitration provisions of this Agreement, in
which case any insurance, condemnation or taking proceeds with respect to
such Casualty Loss shall be the sole property of SELLER, or (B) accept the
Facilities with no adjustment to the Purchase Price, but with BUYER being
entitled to receive as BUYER's sole property all insurance, condemnation
or taking proceeds, on account of such Casualty Loss.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(A) CONDITIONS TO OBLIGATION OF BUYER.
The obligation of BUYER to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) SELLER shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
25
(iii) SELLER shall have delivered to BUYER a certificate to the
effect that each of the conditions specified above in Section 6(a)(i)-(ii)
is satisfied in all respects;
(iv) no action, suit, or proceeding shall be pending or threatened
before any Governmental Authority wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent, restrain,
prohibit or invalidate or seek damages in connection with the consummation
of any of the transactions contemplated by this Agreement or (B) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and SELLER and BUYER shall have received all other material
authorizations, consents, and approvals of Governmental Authorities
referred to in Section 3(c), except for Customary Post-Closing Consents,
and Section 4(c) above;
(vi) all Persons holding preferential purchase rights, rights of
first refusal, or similar rights referred to in Section 3(h) of the
Disclosure Schedule with respect to any material part of the SELLER
Interests shall have waived such rights in writing;
(vii) Since the date of this Agreement, no Catastrophic Event shall
have occurred;
(viii) if SELLER shall have given any notice pursuant to Section
9(a)(iv) below, either (A) BUYER shall have given its notice therein
referred to or (B) the 15 day period therein referred to shall have ended
(it being understood that, if this clause (B) is applicable, this
Agreement shall terminate and no Closing hereunder shall occur); and
(x) SELLER (or its Affiliates, as applicable) shall have taken all
actions required under Section 2(d) above.
(xi) All of the Required Consents shall have been obtained;
provided, however, excluded from the foregoing are those consents,
approvals or authorizations which are set forth on Exhibit H.
(xii) There shall have been no event or occurrence that has had or
could reasonably be expected to result in a negative impact to Facilities
in excess of 10% of the Purchase Price.
BUYER may, in its sole discretion, waive any condition specified in this
Section 6(a) if it executes a writing so stating at or prior to the
Closing.
(B) CONDITIONS TO OBLIGATION OF SELLER.
The obligation of SELLER to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the
following conditions:
26
(i) The representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) BUYER shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) BUYER shall have delivered to SELLER a certificate to the
effect that each of the conditions specified above in Section 6(b)(i)-(ii)
is satisfied in all respects;
(iv) All of the material third Person consents specified in Section
5(b) above shall have been procured;
(v) no action, suit, or proceeding shall be pending or threatened
before any Governmental Authority wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent, restrain,
prohibit or invalidate or seek damages in connection with the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(vi) all applicable waiting periods (and any extensions thereof)
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated and SELLER and BUYER shall have received all other material
authorizations, consents and approvals of Governmental Authorities
referred to in Section 3(c) and Section 4(c) above;
(vii) all Persons holding preferential purchase rights, rights of
first refusal, or similar rights referred to in Section 3(h) of the
Disclosure Schedule with respect to any part of the SELLER Interests shall
have waived such rights in writing;
(viii) if SELLER shall have given any notice pursuant to Section
9(b)(iv) below, either (A) BUYER shall have given its notice therein
referred to or (B) the 15 day period therein referred to shall have ended
(it being understood that, if this sub-clause (B) is applicable, this
Agreement shall terminate and no Closing hereunder shall occur);
(ix) Since the date of this Agreement, no Catastrophic Event shall
have occurred; and
(x) BUYER (or its Affiliates, as applicable) shall have taken all
actions required under Section 2(d) above.
SELLER may, in its sole discretion, waive any condition specified in this
Section 6(b) if it executes a writing so stating at or prior to the
Closing.
7. CERTAIN POST-CLOSING OBLIGATIONS.
Provided that the Closing occurs, the following shall be applicable:
27
(A) POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE.
(i) After Closing, the Purchase Price shall be increased without
duplication by the following amounts:
(A) the amount of all accounts or trade payables and all
direct operating expenses (other than Taxes) in
connection with the Assets related to time periods after
the Adjustment Time that are incurred and paid by SELLER
or any Affiliate;
(B) all capital expenditures approved by BUYER which are
paid by SELLER on or after the execution date of this
Agreement;
(C) one half of the amount incurred by Seller, if any, in
excess of $50.00/rod to resolve those Required Consents
as provided in Section 5(b)(i)(A); and
(D) any further amounts mutually agreed upon in writing by
the Parties.
(ii) After Closing, the Purchase Price shall be decreased without
duplication by the following amounts:
(A) the amount of all income, revenues and proceeds in
connection with the Assets related to time periods after
the Adjustment Time that are collected by SELLER or any
Affiliate;
(B) the amount of all accounts or trade payables and all
direct operating expenses (other than Taxes) in
connection with the Assets related to time periods prior
to the Adjustment Time that are paid by BUYER or any
Affiliate;
(C) all proceeds received by SELLER in respect of any Assets
sold, leased or otherwise disposed of by SELLER on or
after the Adjustment Time;
(D) any further amounts mutually agreed upon in writing by
the Parties;
(E) the Allocable Share of all unpaid ad valorem or similar
Taxes on the Facilities for the year 2004, prorated to
the Adjustment Time, based on the amount of such Taxes
paid with respect to the year 2003 (with BUYER then to
cause all such Taxes for the year 2004 to be duly paid),
in accordance with Section 7(e);
(F) any amounts agreed to by the Parties with respect to
Asserted Environmental Defects, and Casualty Losses, in
accordance with Sections 5(f) and (k);
28
(G) any obligations with respect to Suspense Account Funds
in accordance with Section 7(b); and
(H) the estimated or agreed upon amount of future costs for
any capital expenditures that are commenced prior to
Closing, which were not approved by BUYER.
(iii) As soon as practicable, but not later than 60 days, after the
Closing Date, SELLER shall prepare and deliver to BUYER a statement (the
"Settlement Statement") setting forth in reasonable detail its calculation
of each adjustment to the Purchase Price contemplated by Section 7(a)(i)
and Section 7(a)(ii) along with any other amounts that are payable or are
to be prorated hereunder as of the Adjustment Time. As may be reasonably
requested by SELLER, BUYER shall promptly furnish all information that it
or its Affiliates may have and that is useful to SELLER in the calculation
or verification of the Settlement Statement. On or before the 30th day
after receipt of the Settlement Statement, BUYER shall deliver to the
SELLER a written report containing any changes that BUYER proposes to be
made to the Settlement Statement. If SELLER does not deliver the
Settlement Statement when required, BUYER may prepare and deliver it to
SELLER, and in such case, SELLER shall have BUYER's objection rights under
this Section .
(iv) The Settlement Statement shall become final and binding on
SELLER and BUYER on the 31st day following the date the Settlement
Statement is received by BUYER, unless prior to such date BUYER proposes
any changes to the accounting set forth in the Settlement Statement (a
"Settlement Notice").
(v) Any Settlement Notice shall set forth BUYER's proposed changes
to the Settlement Statement, including an explanation in reasonable detail
of the basis on which BUYER proposes such changes. If BUYER has timely
delivered a Settlement Notice, BUYER and SELLER shall use good faith
efforts to reach agreement on the disputed items. If the disputed items
have not been resolved by BUYER and SELLER by the 30th day following
SELLER `s receipt of a Settlement Notice, any remaining disputed items
shall be submitted to Ernst & Young (the "Independent Accountants") for
resolution within five (5) Business Days after the end of the foregoing
30-day period. The fees and expenses of the Independent Accountants shall
be borne fifty percent (50%) by SELLER and fifty percent (50%) by BUYER.
The Independent Accountants' determination of the disputed items shall be
final and binding upon BUYER and SELLER and the Parties hereby waive any
and all rights to dispute such resolution in any manner, including in
court, before an arbiter or appeal.
(vi) The date, upon which the Settlement Statement is agreed upon
or is otherwise established hereunder, is hereinafter referred to as the
"Settlement Date". Any payment shall be made within three (3) business
days of the Settlement Date. Nothing contained in this Section 7(a) shall
relieve any Party from any obligation to make any other payments required
by this Agreement.
(B) SUSPENSE ACCOUNT FUNDS.
(i) Certain funds attributable to the Facilities are held in
suspense that would otherwise be payable to operators or interest owners
in ▇▇▇▇▇ connected
29
to the Facilities or other owners delivering natural gas or natural gas
liquids to the Facilities pending resolution of title disputes or
execution of division orders or probate proceedings or similar reasons
(the "Suspense Account Funds"). The amount payable by BUYER to SELLER as
referenced in Section 7(a)(ii)(G) shall be reduced by the amount of
Suspense Account Funds existing on the Closing Date and thereafter BUYER
shall be responsible for the disbursement of the Suspense Account Funds.
(ii) To SELLER's Knowledge, Section 7(b) of the Disclosure Schedule
sets out the actual liability in respect of the Suspense Account Funds as
of the date set forth in such Section 7(b) of the Disclosure Schedule.
SELLER shall make a good faith estimate of its liability in respect of the
Suspense Account Funds as of the date five (5) days prior to the Closing
Date, and shall update Section 7(b) of the Disclosure Schedule to reflect
such estimate. BUYER and SELLER agree to cooperate and to make available
to each other all information necessary to calculate and to confirm and
verify the actual amount of the liability with respect to the Suspense
Account Funds.
(C) IMBALANCES.
The Imbalance Receivable shall be for the sole benefit of SELLER, and the
Imbalance Payable shall be the sole obligation of SELLER.
(D) COOPERATION.
(i) The Parties shall cooperate with each other in all reasonable
ways to effectuate the transition in ownership contemplated by this
Agreement as efficiently, appropriately, and punctually as reasonably
possible, including cooperating with obtaining required third Person
consents and concerning the receipt of revenues and the payment of
expenses. Without limiting the foregoing, the Parties agree (i) that if
SELLER receives any revenues relating to the Facilities that are
attributable to the period on and after the Adjustment Time, or if BUYER
receives any revenues relating to the Facilities that are attributable to
the period prior to the Adjustment Time, then such Party will pay such
amount over to the other Party within 30 days of its receipt of such
revenues, and (ii) that if a Party is notified (including receiving all
reasonable details) of expenses incurred by the other Party for which such
notified Party is responsible in accordance with this Agreement, the
responsible Party shall pay such amount over to the other Party as
promptly as reasonably possible and in any event within 30 days after
receipt.
(ii) Notwithstanding Section 7(d)(i), above, and with regard to
Serial Nos. 23549, 22328, 22300, 22308, 22309, 22310, 22311, and 22303 as
shown on Exhibit A-2, under the heading Partial Assignments, SELLER shall
use Reasonable Efforts to cause the State of New Mexico to change its
records to reflect that SELLER is the record holder of those
aforementioned easement.
(iii) While SELLER intends to convey the Assets at the Closing, in
the event it is determined after the Closing that: (A) any part of the
Assets were not in fact conveyed to BUYER, and that the title to any part
of the Assets is incorrectly in the name of SELLER, or (B) any asset not
an Asset is conveyed to BUYER and that the title to such asset is
incorrectly in the name of BUYER then each Party shall take
30
all such action necessary to correctly convey such Assets to BUYER, or
such assets to SELLER.
(iv) Solely for the purpose of complying with SELLER's obligations
under Section 5(f)(ix), BUYER shall give SELLER and its designees access
to the Assets in order that SELLER may conduct Remediation in accordance
with Section 5(f)(ix).
(E) TAXES.
Ad valorem and similar Taxes for the Facilities for the year 2004 shall be
prorated between SELLER and BUYER as of the Adjustment Time, based on the
amount of such Taxes paid with respect to the year 2003 (with no
subsequent adjustment if the actual amount of such Taxes is different).
SELLER shall be charged for such Taxes prior to such date pursuant to the
adjustment provisions of Section 7(a). Notwithstanding anything in this
Agreement to the contrary, no further adjustment shall be made for such
general property Tax for the year 2004, BUYER hereby agreeing to assume
the payment of all such 2004 general property Tax effective upon the
Closing. SELLER shall pay general property Tax relating to the SELLER
Interests for 2003 and prior years.
(F) ACCESS TO CONTRACTS.
For seven years after the Closing Date, BUYER shall provide SELLER access
(upon reasonable notice and at all reasonable times, and in a manner so as
not to interfere with the normal business operations of BUYER) to and the
right, at SELLER's sole cost, and expense, to copy all books, records,
agreements and other documents relating to the SELLER Interests that were
provided by SELLER to BUYER in connection with this Agreement and the
transactions contemplated herein and that relate to the time period prior
to the Closing Date.
(G) CUSTOMARY POST-CLOSING CONSENTS.
SELLER shall use Reasonable Efforts after Closing to assist BUYER in
obtaining Customary Post-Closing Consents; provided, however, the use of
the phrase "Reasonable Efforts" in this sentence shall not require SELLER
to take actions where it or any of the SELLER Group would incur any
out-of-pocket cost or expense in connection therewith.
(H) MISCELLANEOUS EXPENSES.
BUYER will be responsible for the cost of any recording or filing expenses
incurred in connection with this Agreement and the transactions
contemplated herein and the recording of the Assignments. Within 90 days
after Closing, BUYER shall have (at no cost to SELLER) removed and/or
replaced all SELLER's and SELLER'S Affiliates names and logos from all
signs that constituted part of the SELLER Interests (including signs
displaying a SELLER emergency contact telephone number). As promptly as
practical after the Closing, BUYER shall post BUYER emergency contact
telephone numbers in place of any SELLER emergency contact telephone
number on such signs.
31
(I) BUYER OBLIGATIONS FOR POST-CLOSING CONTRACTS MATTERS.
BUYER shall use its Reasonable Efforts to assure that any audit provision
time period limitations contained in any contracts assigned under this
Agreement are strictly enforced. In the event BUYER fails to use its
Reasonable Efforts to enforce such provisions then BUYER shall,
notwithstanding any other provision of the Agreement, fully protect,
indemnify, and hold each SELLER Indemnified Person harmless from and
against any and all Costs and Claims relating to, arising out of, or
connected with BUYER's failure to enforce such audit provision time period
limitations. The use of the phrase "Reasonable Efforts" in this paragraph
shall not require BUYER to take actions where it or any of its Affiliates
would incur any out-of-pocket cost or expense in connection therewith
(unless SELLER agrees to reimburse BUYER for such costs and expenses).
(J) GRAMA RIDGE #1 SEGREGATION. With respect to the Grama Ridge #1
Facility identified on Exhibit M ("Grama Ridge"):
(i) Grama Ridge shall be separated into two facilities as depicted
on Exhibit M. SELLER shall retain the portion of the facility
used in connection with the injection, storage and withdrawal
of natural gas. The remainder of the facility, as depicted on
Exhibit M, shall be included within the Facilities.
(ii) SELLER's current Emergency Shut Down (ESD) System covers a
single system common to all of Grama Ridge. The Parties will
determine before closing via Hazop study how best to either
separate or to share use of the common system in the future.
(iii) SELLER's current electric power supply is common to all of
Grama Ridge. At its sole, cost, risk and expense, SELLER shall
segregate the electric supply system as necessary to complete
separation of the facility. SELLER and BUYER shall mutually
arrange for separate ▇▇▇▇▇▇▇▇ from electricity supplier for
their respective supplies.
(iv) At its sole, cost, risk and expense, SELLER shall (or shall
cause) pipe to be cut and re-laid as necessary to complete
separation of the facility.
(v) Condensate storage for hydrocarbon scrubber liquids from
various locations that SELLER is retaining and those conveyed
to BUYER hereunder is common to all of Grama Ridge. At BUYER's
option and at its sole cost, risk and expense, BUYER may
install a storage tank in the future as necessary to collect
natural gas liquids that are owned by BUYER. Unless and until
BUYER installs such storage tank, SELLER shall be entitled to
all natural gas liquids collected without obligation to BUYER.
(vi) At its sole, cost, risk and expense, BUYER shall (or shall
cause) a single methanol and waste lube oil tank to be
installed at the location identified on Exhibit M. Capacity,
design and specification of this tank shall be subject to
BUYER's prior written approval.
32
(vii) BUYER shall design, purchase or relocate (or shall cause to be
relocated) custody transfer meters as needed at mutually
acceptable locations to assure measurement of FERC 311 volumes
delivered to SELLER for injection and underground storage and
for underground storage withdrawals (downstream of
dehydration) for redeliveries to BUYER into the FERC 311 line.
BUYER shall deliver the meters to SELLER and SELLER shall
install the meters at the agreed upon locations. SELLER shall
promptly reimburse BUYER 50% of the actual costs of said
design, purchase and/or relocation upon receipt of BUYER's
invoices. BUYER will be solely responsible for the operation,
maintenance and calibration of the meters.
(viii) SELLER shall request the State of New Mexico to convert that
certain surface use right SELLER has on the date of this
Agreement with the State of New Mexico for the use of surface
rights at Grama Ridge into a document (termed by the State of
New Mexico as a Business Lease). If the State of New Mexico
does not issue a Business Lease to SELLER, the Parties will
implement another reasonable alternative to accomplish a
similar result.
(ix) From and after the Closing, each Party shall have access to
Grama Ridge in accordance with the Grama Ridge Access
Agreement. Further, and with regard to the Parties' facilities
shown on Exhibit M, SELLER shall partially assign the Business
Lease to BUYER thereby allocating an undivided right to the
use of approximately thirty percent (30%) of the surface at
the Grama Ridge site to BUYER.
(x) BUYER shall install and/or extend an access road on the south
side of Grama Ridge to allow access to the facilities acquired
by BUYER. The Parties shall cooperate in order that BUYER
shall have access, as necessary, to complete installation of
this road. The future extension to the road and BUYER's access
through the existing fence surrounding the site are generally
shown on Exhibit M, on the south side of the Grama Ridge
property.
8. PURCHASE PRICE ADJUSTMENTS.
The Purchase Price payable at Closing shall be adjusted after Closing in
accordance with Section 7(a).
9. TERMINATION.
(A) TERMINATION OF AGREEMENT.
The Parties may terminate this Agreement as provided below:
(i) BUYER and SELLER may terminate this Agreement by mutual
written consent at any time prior to the Closing;
33
(ii) BUYER may terminate this Agreement by giving notice to SELLER
at any time prior to the Closing (A) in the event SELLER has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, BUYER has notified SELLER in writing of the breach, and
the breach has continued without cure for a period of 15 days after the
notice of breach; or (B) if the Closing shall not have occurred on or
before June 1, 2004 by reason of the failure of any condition precedent
under Section 6(a) above (unless the failure results primarily from BUYER
breaching any representation, warranty, or covenant contained in this
Agreement);
(iii) SELLER may terminate this Agreement by giving notice to BUYER
at any time prior to the Closing (A) in the event BUYER has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, SELLER has notified BUYER in writing of the breach, and
the breach has continued without cure for a period of 15 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before June 1, 2004 by reason of the failure of any condition precedent
under Section 6(b) above (unless the failure results primarily from SELLER
breaching any representation, warranty, or covenant contained in this
Agreement);
(iv) If the Termination Amount exceeds, or could reasonably be
expected to exceed, five percent (5%) of the Purchase Price, SELLER may
terminate this Agreement by giving 15 days' prior notice to BUYER (which
notice shall set forth in reasonable detail SELLER's calculation of each
element of the Termination Amount and the Basis for SELLER's evaluation
and calculation thereof), provided that BUYER shall have the right within
such 15 days to notify SELLER in writing that BUYER is irrevocably
obligating itself to be responsible for the claims and other obligations
underlying such amounts and waiving its rights against SELLER (in the
manner provided in the next sentence) to the extent the Termination Amount
exceeds five percent (5%) of the Purchase Price. Such notice from BUYER
shall be in a form reasonably acceptable to SELLER and shall specify the
extent to which BUYER shall waive its rights to damages from SELLER
(theretofore included in the Termination Amount) resulting from breaches
by SELLER of its representations, warranties, and covenants in this
Agreement, to not more than five percent (5%) of the Purchase Price. If
BUYER provides such notice within such 15-day period, said notice from
SELLER shall be of no further force and effect, and this Agreement shall
not be terminated pursuant to this Section 9(a)(iv), and the obligations
and waivers contained in such notice from BUYER shall be applicable and
effective;
(v) Notwithstanding that Asserted Environmental Defects would be
cured or remediated by SELLER pursuant to this Agreement, if the value of
the Asserted Environmental Defects and Casualty Losses exceed ten percent
(10%) of the Purchase Price, then BUYER or SELLER shall have the right to
terminate this Agreement upon notice to SELLER; and
(vi) In the event of a Casualty Loss in accordance with Section
5(k).
(B) EFFECT OF TERMINATION.
If either Party terminates this Agreement pursuant to Section 9(a) above,
all rights and obligations of the Parties hereunder (except under
provisions of this Agreement
34
that by their nature would continue after such termination) shall
terminate without any Liability of either Party to the other Party (except
for a Liability of a Party then in breach).
10. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES.
Effective upon the Closing and subject to Section 11 below, the following shall
be applicable:
(A) SELLER EXISTING CONTRACT INDEMNITY OBLIGATION.
SELLER releases each BUYER Indemnified Person from and shall fully
protect, defend, indemnify, and hold each BUYER Indemnified Person
harmless from and against the Allocable Share of any and all Claims
(whenever asserted prior to the expiration of the notice periods set forth
in the proviso to this subsection (a)) the Basis for which is attributable
to the period prior to the Closing Date, relating to, arising out of, or
connected with, any Existing Contract; provided that SELLER will have no
obligation to protect, defend, indemnify, and hold any BUYER Indemnified
Person harmless from and against any such Cost or Claim for which BUYER
has not provided SELLER with notice of the Claim in accordance with this
Agreement within two (2) years after the Closing Date.
(B) SELLER COVENANT INDEMNITY OBLIGATION.
SELLER releases each BUYER Indemnified Person from and shall fully
protect, defend, indemnify, and hold each BUYER Indemnified Person
harmless from and against any and all Costs and Claims relating to,
arising out of, or connected with (i) the Retained Liabilities and (ii)
any breach or violation by SELLER of its covenants or agreements under
this Agreement.
(C) SELLER REPRESENTATION AND WARRANTY INDEMNITY OBLIGATION.
SELLER releases each BUYER Indemnified Person from and shall fully
protect, defend, indemnify, and hold each BUYER Indemnified Person
harmless from and against any and all Costs and Claims (whenever asserted
prior to the expiration of the notice period set forth in the proviso to
this subsection (c)) relating to, arising out of, or connected with, any
breach or violation by SELLER of its representations and warranties
contained in this Agreement; provided that SELLER will have no obligation
to protect, defend, indemnify and hold any BUYER Indemnified Person
harmless from and against any such Cost or Claim for which BUYER has not
provided SELLER with notice of the Cost or Claim in accordance with this
Agreement within two (2) years after the Closing Date. For purposes of
this Section 10(c), in determining whether there has occurred a breach of
a representation or warranty of SELLER contained in or made pursuant to
this Agreement, as well as the amount of any Liability resulting
therefrom, to the extent that (a) any Cost or Claim is less than the
threshold set forth in Section 11(b), it shall be deemed that no breach
has occurred with respect to the representation or warranty out of which
such Cost or Claim arose and (b) the provisions of Section 3 are qualified
by materiality or a Material Adverse Effect, such provisions shall be read
and interpreted as if such qualification was not included therein.
35
(D) BUYER COVENANT INDEMNITY OBLIGATION.
BUYER shall fully protect, defend, indemnify, and hold each SELLER
Indemnified Person harmless from and against any and all Costs and Claims
relating to, arising out of, or connected with, any breach or violation by
BUYER of its covenants or agreements under this Agreement.
(E) BUYER REPRESENTATION AND WARRANTY INDEMNITY OBLIGATION.
BUYER shall fully protect, defend, indemnify, and hold each SELLER
Indemnified Person harmless from and against any and all Costs and Claims
(whenever asserted prior to the expiration of the notice periods set forth
in the provisos to this subsection (e)) relating to, arising out of, or
connected with, any breach or violation by BUYER of its representations
and warranties contained in this Agreement; provided that BUYER will have
no obligation to protect, defend, indemnify and hold any SELLER
Indemnified Person harmless from and against any such Cost or Claim for
which SELLER has not provided BUYER with notice of the Cost or Claim in
accordance with this Agreement within two (2) years after the Closing
Date. For purposes of this Section 10(e), in determining whether there has
occurred a breach of a representation or warranty of SELLER contained in
or made pursuant to this Agreement, as well as the amount of any Liability
resulting therefrom, to the extent that (a) any Cost or Claim is less than
the threshold set forth in Section 11(c), it shall be deemed that no
breach has occurred with respect to the representation or warranty out of
which such Cost or Claim arose and (b) the provisions of Section 4 are
qualified by materiality or a Material Adverse Effect, such provisions
shall be read and interpreted as if such qualification was not included
therein.
(F) BUYER GENERAL INDEMNITY OBLIGATION.
Subject to the proviso at the end of this sentence, BUYER releases each
SELLER Indemnified Person from and shall fully protect, defend, indemnify,
and hold each SELLER Indemnified Person harmless from and against any and
all Costs and Claims (whenever asserted) the Basis for which is
attributable to any period of time whether prior to or after the Closing
Date, relating to, arising out of, or connected with, the ownership or
operation of the Assets or any part thereof or interest therein, provided,
however, this release and indemnity shall not apply to or be effective up
to the limits of SELLER's indemnifications of BUYER Indemnified Persons
(other than with respect to any deductible amount applicable to such
indemnity) as specifically set forth at Sections 10(a) and (c), above,
unless and until, pursuant to the express terms of this Agreement, such
indemnity has expired and is no longer in effect.
(G) NOTICE OF ASSERTED CLAIMS.
If a Cost or Claim (either, an "Asserted Claim") is asserted against a
Party for which the other Party may have an obligation of indemnity and
defense under this Agreement, it is a condition precedent to such other
Party's obligations of indemnity and defense under this Agreement that the
Party seeking indemnification (the "Indemnified Party") give the party
from which the Indemnified Party seeks indemnification (the "Indemnifying
Party") reasonably prompt notice of the Asserted Claim setting forth the
particulars associated with the Asserted Claim (including a
36
copy of the Asserted Claim, if any) as then known by the Indemnified Party
(the "Claim Notice").
(H) DEFENSE AND PAYMENT OF ASSERTED CLAIMS.
Within 30 days after the Indemnifying Party receives a Claim Notice, the
Indemnifying Party shall notify in writing the Indemnified Party whether
or not the Indemnifying Party will assume responsibility for the Asserted
Claim referenced in the Claim Notice. With respect to a Claim that is an
Asserted Claim, if the Indemnifying Party refuses or otherwise fails to
assume responsibility for the defense and payment of such Asserted Claim,
the Indemnified Party may defend against, or enter into any settlement
with respect to, such Asserted Claim as it deems appropriate without
relieving the Indemnifying Party of any of the indemnification obligations
with respect to such Asserted Claim. Failure of the Indemnifying Party to
respond in writing to the Claim Notice within such 30-day period will be
deemed a failure by the Indemnifying Party to assume responsibility for
the defense and payment of the Asserted Claim. If the Indemnifying Party
assumes responsibility for the defense and payment of a Claim that is an
Asserted Claim, then (a) the Indemnifying Party shall defend the
Indemnified Party against the Asserted Claim with counsel of the
Indemnifying Party's choice reasonably acceptable to the Indemnified
Party, provided that the Indemnified Party shall cooperate with the
Indemnifying Party in all reasonable respects in such defense, (b) the
Indemnifying Party shall pay any judgment entered or settlement with
respect to such Asserted Claim, (c) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Asserted Claim that does not include a provision whereby
the plaintiff or claimant in the matter releases the Indemnified Party
from all Liability with respect to the Asserted Claim, and (d) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Asserted Claim without the
Indemnifying Party's prior consent, not to be unreasonably withheld or
delayed. In all instances, the Indemnified Party may employ separate
counsel and participate in the defense of an Asserted Claim; provided,
however, the fees and expenses of counsel employed by the Indemnified
Party will be borne solely by the Indemnified Party.
11. CLAIM LIMITATIONS.
(A) EXPRESS NEGLIGENCE.
The Parties indemnity and defense obligations herein shall apply
regardless of cause or any negligent acts or omissions of any Indemnified
Party in connection with the Basis for any Cost or Claim (including the
sole negligence, concurrent negligence, or strict liability of such
Indemnified Party).
(B) SELLER THRESHOLDS AND DEDUCTIBLES.
SELLER shall have no obligation to protect, defend, indemnify, or hold
harmless any BUYER Indemnified Person from or against any claim under
Sections 10(a) or (c) above if the individual claim or series of related
claims which arise out of substantially the same facts and circumstances
involves an amount of less than $150,000; provided, that, the foregoing
threshold and deductible shall not apply to Costs and Claims (i) with
respect to obligations to make payments that are incurred
37
during the period from and after December 1, 2003 until the Adjustment
Time, based upon the failure to make payments when due and in a manner
consistent with SELLER's practices during the two year period prior to the
date hereof or (ii) based upon the failure to correctly calculate and pay
amounts due under Contracts consistent with SELLER's practices during the
two (2) year period prior to the date hereof, but only to the extent that
SELLER received the economic benefit of an underpayment.
(C) BUYER THRESHOLDS AND DEDUCTIBLES.
BUYER shall have no obligation to protect, defend, indemnify, or hold
harmless any SELLER Indemnified Person from or against any Costs and/or
Claims asserted on or after the Closing Date involving an amount of less
than $150,000 under Sections 10(e) or (f) above.
(D) EXCLUSIVE REMEDY.
Notwithstanding anything to the contrary in this Agreement, the
indemnification provisions in Section 10, as modified by Section 11, shall
be the exclusive remedy of BUYER and SELLER with respect to this Agreement
and the transactions contemplated herein and SELLER and BUYER waive their
rights to make any other claims, including those that may be available
under any applicable securities laws. In furtherance of the foregoing, all
other remedies available at law (including independent common-law or
statutory rights or remedies a Party may have) or in equity, in tort,
contract, or otherwise (now and in the future) are hereby waived, released
and discharged by the Parties.
(E) NO WARRANTY AND DISCLAIMER.
BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
AND BUYER HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY,
EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE
ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO
BUYER BY OR ON BEHALF OF SELLER. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, BUT IN NO WAY IN CONTRAVENTION OF SECTION 10, SELLER
EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES, AS TO PERSONAL
PROPERTY, EQUIPMENT AND FIXTURES CONSTITUTING ANY PART OF THE SELLER
INTERESTS (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, (iv) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO
CLAIM DIMINUTION OF CONSIDERATION, (v) ANY CLAIMS BY BUYER FOR DAMAGES
BECAUSE OF ANY LATENT OR PATENT DEFECTS OR OTHER DEFECTS, WHETHER KNOWN OR
UNKNOWN, AND (vi) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE
LAW; IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND SELLER THAT THE
PERSONAL PROPERTY, EQUIPMENT
38
AND FIXTURES INCLUDED WITHIN THE SELLER INTERESTS ARE HEREBY CONVEYED TO
BUYER IN THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE
IS" WITH ALL FAULTS, AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH
INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT, TO
THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF
CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS
FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.
(F) SELLER INDEMNITY LIMITATION.
Notwithstanding anything to the contrary herein expressed or implied:
(i) the maximum aggregate liability of SELLER to BUYER under
Sections 10(a) and (c) of this Agreement shall not exceed
twenty percent (20%) of the Purchase Price; and
(ii) SELLER's obligation to indemnify BUYER with respect to any
site listed in Section 1(c) of the Disclosure Schedule shall
terminate with respect to such of the sites at such time, if
any, that BUYER, its successors, assigns or any lessee,
assignee, purchaser or other Person present on such site at
BUYER's request or knowledge conducts a Phase II environmental
site assessment at such site; provided, however, that the
foregoing termination and waiver shall not apply if such Phase
II is (A) ordered by a Governmental Authority and was not the
result of a request by, or otherwise encouraged by BUYER or
its Affiliates, assignees or designees (excluding from any of
the foregoing notifications, if any, those required by law to
be made to a Governmental Authority), or (B) conducted by or
at the request of a record title owner of an interest in the
real estate at the site and was not the result of a request
by, or otherwise encouraged by BUYER or its Affiliates,
assignees or designees (excluding from any of the foregoing
notifications, if any, those required by law to be made to a
Governmental Authority or those required by an existing
contract or law to be made to the record title owner of an
interest in the real estate).
(G) BUYER REVIEW.
BUYER acknowledges that it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of its investment in the Assets contemplated by this Agreement, and is an
"accredited investor," as defined by the Securities Act of 1933, as
amended, and the rules promulgated thereunder, and is able to bear the
economic risk of such investment for an indefinite period of time. BUYER
acknowledges that it has had the opportunity to conduct due diligence, and
will be permitted to conduct additional due diligence in accordance with
Section 5, with respect to the SELLER Interests.
39
12. EMPLOYEE MATTERS.
(A) TRANSFER OF COVERED EMPLOYEES.
SELLER has provided BUYER with a complete list of the Covered Employees
(determined as of the date of the list), which list shall include each
such Covered Employee's name, job title, and work location. BUYER and
SELLER shall schedule a joint meeting at a mutually agreeable time and
place at least 30 days prior to the Closing Date between representatives
of BUYER and the Covered Employees (determined as of the date of such
meeting). SELLER shall make appropriate arrangements so that all Covered
Employees are available for employment with the BUYER Group on the Closing
Date. BUYER Group shall be under no obligation to offer employment to any
Covered Employee. Nothing herein is intended to create any Claims or any
rights on the part of any employee of SELLER, and no such employee shall
be entitled to assert any Claims or rights hereunder. BUYER shall provide
to SELLER at least five (5) work days prior to the Closing Date a list of
the Covered Employees to whom BUYER Group will offer employment commencing
as of the Closing Date. BUYER shall provide to SELLER on the Closing Date
lists of Covered Employees who: (i) accepted BUYER's offer of employment;
(ii) were offered and did not accept BUYER'S offer of employment, which
shall include base salary; and (iii) were not offered employment. BUYER
shall provide SELLER no more than three (3) days after the Closing Date a
list of the Covered Employees who commenced employment with BUYER. Those
Covered Employees who accept offers of employment with BUYER Group shall
be referred to herein as "Transferred Employees."
(B) SELLER PLANS.
SELLER shall remain solely responsible for all Liabilities with respect to
the SELLER Plans, and BUYER Group shall not assume any SELLER Plan and
shall have no obligations and shall assume no Liabilities with respect to
the SELLER Plans. Without limiting the scope of the preceding sentence,
SELLER shall retain all responsibility and Liabilities for all severance,
benefits, compensation, and employment obligations for the Covered
Employees (regardless of whether they become Transferred Employees) for
the period prior to the Closing and associated with the termination of any
Covered Employee's employment from SELLER Group, including any Claims
relating to continuation of health coverage required pursuant to section
4980B of the Code or part 6 of subtitle B of Title I of ERISA attributable
to "qualifying events" and claims incurred by SELLER's employees or their
covered dependents.
(C) NEW ARRANGEMENTS FOR TRANSFERRED EMPLOYEES.
Effective as of the Closing Date, each of the Transferred Employees and
his or her dependents shall be eligible for coverage under employee
benefit plans, programs, practices, or arrangements as determined and
provided in the sole discretion of BUYER Group (the "New Arrangements").
(i) BUYER acknowledges and agrees that, except as otherwise
specifically provided in this Agreement, each of the Transferred Employees
will be provided with employee pension or retirement benefit plans,
employee welfare
40
benefit plans, and other benefit and compensation plans, programs,
policies, and practices that are offered by BUYER to its newly hired
employees with similar backgrounds and experience. SELLER acknowledges
that the employee benefit plans provided by BUYER may provide different
benefits than are available under SELLER's employee benefit plans.
(ii) If the New Arrangements include a qualified defined benefit
pension plan, each of the Transferred Employees shall be credited with
service under such plan, for eligibility to become a participant and
vesting purposes but not for any other purpose for which service is used
under such plan, with the service credited to the Transferred Employee
under the terms of the SELLER qualified defined benefit pension plan for
such purposes as of the day immediately preceding the Closing Date.
(iii) If the New Arrangements include a qualified defined
contribution plan, each of the Transferred Employees considered shall be
credited with service under such plan, for eligibility to become a
participant and vesting purposes but not for any other purpose for which
service is used under such plan, with the service credited to the
Transferred Employee under the terms of the SELLER qualified defined
contribution plan as of the day immediately preceding the Closing Date.
(iv) If the New Arrangements include a vacation pay plan or policy,
each of the Transferred Employees shall be credited with service under
such plan, for the purpose of determining eligibility to participate and
to determine the amount of vacation they are entitled to receive annually
beginning in 2005 but not for any other purpose for which service is used
under such plan, with the service credited to the Transferred Employee
under the terms of the SELLER vacation plan for such purposes as of the
date immediately preceding the Closing Date; provided, however, that the
New Arrangements shall not be required to take into account any unused
vacation balances under the SELLER vacation plan. SELLER shall be
responsible for all unused vacation balances and there shall be no such
unused vacation balances transferred to BUYER. Transferred Employees will
be granted up to 80 hours of vacation eligibility during 2004 by the BUYER
to be taken no earlier than 30 days after Closing. Up to 40 hours of the
80 hours of vacation granted in 2004 may be carried over into 2005,
pursuant to the terms of the BUYER's vacation policy.
(v) If the New Arrangements include a service anniversary award
program or policy, each of the Transferred Employees shall be credited
with service under such plan, for eligibility to become a participant and
for determining the level of their awards but not for any other purpose
for which service is used under such plan, with the service credited to
the Transferred Employee under the terms of the SELLER service award
program for such purposes as of the day immediately preceding the Closing
Date.
(vi) If the New Arrangements include a severance benefits plan,
program or policy, each of the Transferred Employees shall be credited
with service under such plan, for eligibility to become a participant and
for determining the amount of their benefits but not for any other purpose
for which service is used under such plan, with the service credited to
the Transferred Employee under the terms of the
41
SELLER severance benefit plan for such purposes as of the day immediately
preceding the Closing Day.
(vii) SELLER shall promptly provide BUYER with all necessary
information to enable BUYER Group to provide service credit to each of the
Transferred Employees in accordance with the provisions of this Section
12(c) and Section 12(d).
(D) WELFARE BENEFITS.
The BUYER Group shall waive or cause the plans sponsored or maintained by
the BUYER Group to waive the application of all "prior existing
conditions" provisions of all plans that apply to the Transferred
Employees or their dependants only to the extent that those "prior
existing conditions" were covered under both the SELLER Plans and the New
Arrangements. In addition, BUYER Group shall apply towards any deductible
requirements and out-of-pocket maximum limits under BUYER Group's medical
and dental Welfare Benefits (as hereinafter defined) under the New
Arrangements that are applicable for the plan year in which the Closing
Date occurs, any amounts paid by any of the Transferred Employees toward
such requirements and limits under any similar SELLER Group medical
Welfare Benefits plans in which he or she participated during such plan
year. SELLER shall cause the required information about deductibles and
maximum out-of-pocket expenses incurred for the current calendar year and
prior to Closing to be determined as reflected in the records of its third
party claims administrators as of the end of the calendar month next
following 30 days after Closing. With respect to the immediately preceding
sentence, in accordance with the privacy provisions of the Health
Insurance Portability and Accountability Act pursuant to 45 C.F.R. part
160 and part 164, subparts A and E, SELLER shall instruct the third party
administrators on behalf of the respective plans to transfer the
information about deductible and maximum out-of-pocket expenses incurred
for the current calendar year and prior to the Closing on each Transferred
Employee and his or her covered dependents as reflected in the records of
SELLER's third party administrators as of the end of the calendar month
next following 30 days after Closing to the third party administrators of
the BUYER Group's corresponding plans within fifteen (15) business days
after the end of such calendar month. Claims of Transferred Employees and
their eligible beneficiaries and dependents for medical, dental,
prescription drug, vision care, life insurance and/or short-term
disability benefits ("Welfare Benefits") (other than long-term disability
benefits, which are addressed below) that are incurred before the Closing
Date shall be the sole responsibility of SELLER and the SELLER Plans.
Claims of Transferred Employees and their eligible beneficiaries and
dependents for Welfare Benefits (other than long-term disability benefits,
which are addressed below) that are incurred on or after the Closing Date
shall be the sole responsibility of BUYER Group and the New Arrangements.
For purposes of the preceding provisions of this Section 12(d), a
medical/dental claim shall be considered incurred on the date when the
medical/dental services are rendered or medical/dental supplies are
provided, and not when the condition arose or when the course of treatment
began; provided, however, that claims relating to a hospital confinement
that begins before the Closing Date but continues on the Closing Date or
thereafter shall be treated as incurred before the Closing Date. Claims of
Transferred Employees and their eligible beneficiaries and dependents for
long-term disability Welfare Benefits that arise out of occurrences prior
to the Closing Date shall be the
42
sole responsibility of SELLER and the SELLER Plans. Claims of Transferred
Employees and their eligible beneficiaries and dependents for long-term
disability Welfare Benefits that arise out of occurrences on or after the
Closing Date shall be the sole responsibility of BUYER Group and the New
Arrangements.
(E) 401(K) PLAN.
As soon as administratively feasible after the Closing Date, and subject
to reasonable requirements, the Parties may enter into an agreement
whereby BUYER shall cause the trustee of BUYER's 401(k) plan trust (to the
extent permitted under BUYER' 401(k) plan) to accept direct rollovers from
SELLER's 401(k) plan trust for each of the Transferred Employees electing
the same with respect to a distribution of his or her vested account
thereunder; provided, however, that BUYER shall have no obligation to
cause BUYER's 401(k) plan trust to accept such rollovers if BUYER does not
receive from SELLER proof which is satisfactory to BUYER that the SELLER's
401(k) plan will be fully qualified under section 401(a) of the Code at
the time of such rollovers. Participant promissory notes for any
outstanding loans of Transferred Employees under SELLER's 401(k) plan may
be rolled over to BUYER's 401(k) plan trust along with all or a portion of
their account balance to meet the BUYER plan threshold for loan amount(s)
not exceeding 50% of account balance.
(F) WORKERS' COMPENSATION.
Claims by Transferred Employees for workers' compensation benefits arising
out of occurrences prior to the Closing Date shall be the responsibility
of SELLER. Claims by Transferred Employees for workers' compensation
benefits arising out of occurrences on or after the Closing Date shall be
the responsibility of BUYER.
(G) NO RESTRICTIONS ON CHANGES.
Nothing herein shall be deemed or construed to (i) give rise to any
rights, claims, benefits, or causes of action by any Transferred Employees
or (ii) prevent, restrict, or limit BUYER Group following the Closing from
terminating the employment of any Transferred Employees, modifying the
terms of employment of any Transferred Employees, or modifying,
terminating or replacing any of the New Arrangements as it may deem
appropriate.
(H) CONFLICT.
In the event of any conflict between this Section 12 and Section 10, the
provisions of this Section 12 shall control and prevail.
13. ARBITRATION.
Any Arbitrable Disputes between the Parties shall be handled in accordance with
Exhibit J.
43
14. MISCELLANEOUS.
(A) NO THIRD PARTY BENEFICIARIES.
Except with respect to BUYER Indemnified Persons and with respect to
SELLER Indemnified Persons, this Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(B) ENTIRE AGREEMENT.
Except for the Confidentiality Agreement, this Agreement constitutes the
entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject
matter hereof. To the extent not previously terminated, the Parties hereby
terminate, and each Party hereby waives all rights and claims it may have
against the other Party, under each such understandings, agreements, or
representations (except for the Confidentiality Agreement and this
Agreement) or other instrument. At Closing, the Confidentiality Agreement
and any Site Access Agreement executed in connection therewith shall
terminate.
(C) SUCCESSION.
This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted
assigns.
(D) COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one
and the same instrument.
(E) NOTICES.
All notices, approvals, consents, requests, demands, claims, statements
and other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
addressed to the intended recipient as set forth below:
If to SELLER: ConocoPhillips Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Manager of Business
Development, Land & Gas Activities
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
44
If to BUYER:
Duke Energy Field Services, LP
▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
With a copy to:
Duke Energy Field Services, LP
▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using personal delivery, expedited courier, messenger service, fax
or registered or certified mail, but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(F) GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Texas without giving effect to any choice or
conflict of law provision that would cause the application of the laws of
any jurisdiction other than the State of Texas.
(G) AMENDMENTS AND WAIVERS.
No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by BUYER and SELLER. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
(H) SEVERABILITY.
Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
45
(I) EXPENSES.
Unless specifically provided otherwise in this Agreement, each of BUYER
and SELLER will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. SELLER will pay all costs and expenses of all
investment advisors and brokers that SELLER engaged with respect to the
transactions contemplated herein.
(J) CONSTRUCTION.
In interpreting and construing this Agreement, the following principles
shall be followed:
(i) The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any
federal, state, or local statute or law shall be deemed also
to refer to all amendments thereof and all rules and
regulations promulgated thereunder, unless the context
requires otherwise. Any approval, consent, or waiver by a
Party hereunder may be granted or withheld in its sole
discretion, unless otherwise expressly provided;
(ii) the terms "herein," "hereof," "hereby," and "hereunder," or
other similar terms, refer to this Agreement as a whole and
not only to the particular Article, Section or other
subdivision in which any such terms may be employed;
(iii) references to Articles, Sections, and other subdivisions refer
to the Articles, Sections, and other subdivisions of this
Agreement;
(iv) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(v) no consideration shall be given to the captions of the
articles, Sections, subsections, or clauses, which are
inserted for convenience in locating the provisions of this
Agreement or the Disclosure Schedule and not as an aid in its
construction;
(vi) the word "includes" and its syntactical variants mean
"includes, but is not limited to" and corresponding
syntactical variant expressions;
(vii) the plural shall be deemed to include the singular, and vice
versa;
(viii) each exhibit, attachment, and schedule to this Agreement is a
part of this Agreement and is hereby incorporated by
reference;
(ix) "or" means "either or both";
(x) unless the context otherwise requires, a term has the meaning
assigned to it;
(xi) reference to "day" or "days" shall refer to calendar days
unless otherwise stated; and
(xii) Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this
Agreement.
46
(K) INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(L) SALES TAXES.
While it is the intent and understanding of the Parties that no sales or
use Taxes will be attributable to or incurred in connection with the
transactions contemplated by this Agreement, any such sales or use Taxes
shall be borne by BUYER.
(M) WAIVER OF CERTAIN DAMAGES.
Each of the Parties expressly waives and agrees not to seek indirect,
consequential, punitive or exemplary damages of any kind with respect to
any dispute arising out of or relating to this Agreement or breach hereof;
provided that this Section 14(m) will not diminish or affect in any way
the right of any Party to recover such damages paid to a non-Affiliated
third Person.
(N) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
Neither Party shall, prior to or after the Closing, (i) issue any press
release or make any public announcement relating to the subject matter of
this Agreement, or (ii) disclose to any third Person the economic terms of
the transactions contemplated by this Agreement, without in either case
the prior approval of the other Party; provided, however, that either
Party may make any public disclosure it believes in good faith is required
by Applicable Law or any listing or trading agreement concerning its
publicly-traded securities, in which case the disclosing Party will use
its Reasonable Efforts to advise the other Party prior to making the
disclosure.
(O) LIKE-KIND EXCHANGE.
SELLER shall have the right at any time prior to Closing to assign all or
a portion of its rights (but not its obligations) under this Agreement to
a Qualified Intermediary in order to accomplish the transaction in a
manner that will comply, either in whole or in part, with the requirements
of a like-kind exchange pursuant to Section 1031 of the Code. Likewise,
BUYER shall have the right at any time prior to Closing to assign all or a
portion of its rights (but not its obligations) under this Agreement to a
Qualified Intermediary for the same purpose. In the event either Party
assigns its rights under this Agreement pursuant to this Section 14(o),
such Party agrees to notify the other Party in writing of such assignment
at or before Closing. If SELLER assigns its rights under this Agreement
for this purpose, BUYER agrees to (i) consent to SELLER's assignment of
its rights in this Agreement in the form of Exhibit I, and (ii) pay the
Purchase Price into a qualified escrow or qualified trust account at
Closing as directed in writing. If BUYER assigns its rights under this
Agreement for this purpose, SELLER agrees to (i) consent to BUYER's
assignment of its rights in this Agreement in the form of Exhibit I, (ii)
accept the Purchase Price from the qualified escrow or qualified trust
account at Closing, and (iii) at Closing, convey and assign directly to
BUYER the Assets upon satisfaction of the other conditions to Closing and
other terms and conditions hereof. The Parties acknowledge and agree that
any assignment of this Agreement to a Qualified
47
Intermediary shall not release either Party from any of their respective
liabilities and obligations to each other under this Agreement and that
neither Party represents to the other that any particular tax treatment
will be given to either Party as a result thereof.
(P) ASSIGNMENT
Except as otherwise explicitly provided in this Agreement, no Party may
assign or transfer either this Agreement or any of its rights, interests,
or obligations hereunder without the prior approval of the other Party and
any attempted assignment, delegation or transfer in breach hereof shall be
void ab initio.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
CONOCOPHILLIPS COMPANY DUKE ENERGY FIELD SERVICES, LP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
Title: President - U.S. Lower 48, Latin
America & Midstream
48