Exhibit 2.3
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of July 29, 1998, by and between El Paso Field Services
Company, a Delaware corporation (the "Seller"), and Midcoast Gas
Services, Inc., a Delaware corporation (the "Buyer"). The Seller
and the Buyer are referred to collectively herein as the
"Parties."
RECITALS
WHEREAS, the Seller owns the properties and assets comprising the
Anadarko gas gathering system (collectively, the "Assets")
described in Section 2 hereof;
WHEREAS, this Agreement contemplates a transaction in which the
Buyer will purchase from the Seller, and the Seller will sell to
the Buyer, all of the Assets in return for the consideration
specified herein;
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.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses and fees, including
court costs and attorneys' fees and expenses, but excluding
consequential damages.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Assets" has the meaning set forth in Section 2.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2(f) below.
"Closing Date" has the meaning set forth in Section 2(f) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality Agreement
between the Buyer's parent and the Seller dated May 12, 1998.
"Customary Post-Closing Consents" means consents and approvals
from Governmental Authorities that are customarily obtained after
closing in connection with a sale of ownership interests or
assets of the nature of the Assets.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA section 3(2).
"Encumbrance" means any mortgage, pledge, lien, encumbrance,
charge, other security interest or defect in title.
"Environmental Law" or "Environmental Laws" has the meaning given
to that term in Section 4(i) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" has the meaning set forth in Section 2(b).
"Excluded Liabilities" has the meaning set forth in Section 2(d).
"Governmental Authority" means the United States and any state,
county, city or other political subdivision, agency, court or
instrumentality.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Hazardous Substances" means all materials, substances and wastes
which are regulated under any Environmental Law or which may form
the basis for liability under any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 8(d)
below.
"Indemnifying Party" has the meaning set forth in Section 8(d)
below.
"Knowledge" means, in the case of the Seller, the actual
knowledge of the individuals listed on SCHEDULE 1(a) hereto
without independent investigation and, in the case of the Buyer,
the actual knowledge of the individuals listed on SCHEDULE 1(b)
hereto without independent investigation.
"Laws" means any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other
restriction of any applicable Governmental Authority.
"Material Adverse Effect" means any change or effect that,
individually or in the aggregate with other changes or effects,
is adverse to the business, operations and/or properties
comprising the Assets, in the amount of Twenty-Five Thousand
Dollars ($25,000.00) or more.
"Ordinary Course of Business" means the ordinary course of
business consistent with the affected party's past custom and
practice (including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Permitted Encumbrances" means any of the following: (i) any
liens for taxes and assessments not yet delinquent or, if
delinquent, that are being contested in good faith in the
ordinary course of business; (ii) any obligations or duties
reserved to or vested in any municipality or other Governmental
Authority to regulate any Asset in any manner including all
applicable Laws; (iii) mechanic's, materialmen's, and similar
liens identified in SCHEDULE 1; (iv) purchase money liens and
liens securing rental payments under capital lease arrangements;
and (v) any Customary Post-Closing Consents with respect to the
Assets.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(e) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Seller" has the meaning set forth in the preface above.
"Tax(es)" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code 59A), custom duties, capital stock,
franchise profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d)
below.
"Year 2000 Compliant" means that the Assets and all data
processing related to the Assets will be able to function without
interruption or human intervention with four-digit year
processing on all Date Data, including errors or interruptions
from functions which may involve Date Data from more than one
century or leap years, regardless of the date of processing or
date of Date Data ("Date Data" means any data, input, or output
which includes an indication of date), and provide results from
any operation accurately reflecting any Date Data used in the
operation performed, with output in any form, except graphics,
having four-digit years, or provide data interchange in the ISO
8601:1988 standard of CCYYMMDD.
2. Purchase and Sale of the Assets.
(a) Assets. Subject to the terms and conditions of this
Agreement, the Seller agrees to sell, and the Buyer agrees to
purchase from the Seller, the Assets, consisting of:
(i) the Anadarko gathering system, compression facilities and
dehydration facilities depicted on the maps attached hereto as
SCHEDULE 2(a)(i) together with all valves, taps, interconnections
and flow meters attached thereto or used in connection therewith;
(ii) all equipment whether owned or leased which is routinely
used or held for use in connection with the Anadarko gathering
system and facilities described or referred to in clause (a)(i)
above, including but not limited to the compressor units,
scrubbers, dehydration units, tanks, traps, cathodic protection
equipment, radios (not radio frequencies), remote terminal units,
the communication tower at Canadian, Texas, flow computers,
laptop computers, and other personal property listed on the
attached SCHEDULE 2(a)(ii);
(iii) all real property interests currently used by the
Seller in connection with the Anadarko gathering system and
facilities described or referred to in clause (a)(i) above,
including those fee interests, surface leases, easements, rights-
of-way, surface use agreements and other similar agreements
listed on the attached SCHEDULE 2(a)(iii) (collectively the
"Rights-of-Way");
(iv) the vehicles and heavy motorized equipment, trailers and
like equipment listed on the attached SCHEDULE 2(a)(iv);
(v) the gas purchase contracts, residue gas sales contracts, gas
gathering agreements, processing agreements, treating agreements,
compression agreements and third party contractor or supplier
agreements, together with all amendments thereto and
ratifications thereof, listed on the attached SCHEDULE 2(a)(v)
(collectively, the "Gas Contracts");
(vi) any and all other facilities, equipment, tools, office
furniture and equipment, operating supplies, gasoline or diesel
fuel, spare parts, chemicals and other tangible assets currently
located at or attached or appurtenant to the Anadarko gathering
system and facilities described or referred to in clause (a)(i)
above, whether in use or non-use, and whether specifically
described or not described in the schedules attached to this
Agreement;
(vii) all books, files, maps, records and reports (including
electronic data files that would not violate any license or law)
pertaining primarily to the Anadarko gathering system and
facilities described or referred to in clause (a)(i) above and
the equipment referred to in clause (a)(ii) above, including, but
not limited to, all pipeline and plant construction and testing
records, vessel and pipe certifications and weld x-rays,
equipment specifications and operating manuals and inspection
reports, and reports and filings to and with the U.S. Department
of Transportation, the U.S. Environmental Protection Agency and
the states of Oklahoma and Texas;
(viii) all permits, licenses, orders, certificates of
occupancy and other governmental authorizations obtained by the
Seller pertaining or relating to the Anadarko gathering system
and facilities described or referred to in clause (a)(i) above
set forth on SCHEDULE 2(a)(viii) hereto, to the extent legally
assignable or transferable; and
(ix) the office building and property located
at Xxxxx Xxxxxxx 00, Xxxxxxxx, Xxxxx 00000, and all of
the furnishings, fixtures and equipment therein.
(b) Excluded Assets. Notwithstanding any provision of Section
2(a) hereof, the Assets do not include, and the Seller shall
retain all right, title and interest in and to the following
assets (the "Excluded Assets"):
(i) all cash and cash equivalents of the Seller;
(ii) all accounts and notes receivable arising out of, resulting
from or relating to the business and operations of the Assets for
periods up to the Effective Time, and all claims, causes of
action and rights relating thereto and proceeds thereof, other
than those notes and/or accounts listed on the attached SCHEDULE
2(b) and the claims, causes of action and rights relating thereto
and proceeds thereof to the extent relating to periods after the
Effective Time;
(iii) all rights under insurance policies of the Seller and
its Affiliates relating to the Assets;
(iv) the items listed on SCHEDULE 2(b)(iv);
(v) all computer equipment (except as listed in Section 2(a)
herein);
(vi) Tax credits, Tax refunds or other Tax assets relating
to whole or partial taxable periods on or before the Closing
Date;
(vii) Tax Returns, Tax workpapers and other Tax records and
information;
(ix) all equipment located in the
Seller's offices located in Houston, Texas, El Paso,
Texas, and Farmington, New Mexico; and
(x) that certain payment by Exxon Company,
U.S.A. to the Seller described as the past settlement
for litigation and the purchase of the Northeast
Xxxxxxxx Treating Plant in Beckham County, Oklahoma.
(c) Assumed Liabilities. Except for the liabilities and
obligations described in Section 2(d) below, subject to the terms
and conditions of, and the Closing of, this Agreement, effective
as of the Effective Time, the Buyer shall assume and shall
thereafter be responsible for and shall pay and discharge when
due, all liabilities and obligations arising out of, resulting
from or relating to any of the Assets, whether absolute,
contingent, matured or unmatured, and whether arising prior to,
on or after the Effective Time (collectively, the "Assumed
Liabilities"). The assumption of the Assumed Liabilities by the
Buyer hereunder shall not be deemed to create, confirm or give
rise to any rights of any third party, as third-party beneficiary
or otherwise, or to waive any defenses available to the Seller or
the Buyer with respect to any such liabilities; it being
understood that such assumption is for the purpose of allocating
responsibility between the Seller and the Buyer. Further,
assumption of the Assumed Liabilities by the Buyer hereunder
shall not be deemed a waiver of any breach of any representation,
warranty, covenant, agreement or undertaking of the Seller under
this Agreement even though such breach gives rise to Assumed
Liabilities.
(d) Excluded Liabilities. Notwithstanding Section 2(c) hereof,
the Buyer is not assuming, and the Seller shall retain and be
responsible for and shall pay and discharge when due, the
following liabilities and obligations (collectively, the
"Excluded Liabilities"):
(i) all accounts and notes payable arising out of, resulting
from or relating to the Assets to the extent relating to or for
periods up to and including the Effective Time;
(ii) all indebtedness of the Seller; and
(iii) all Taxes arising out of, resulting from or relating to
the Assets for whole or partial taxable periods on or before the
Closing Date.
(e) Purchase Price. The Buyer agrees to pay to the Seller, at
the Closing, Thirty Five Million Dollars ($35,000,000.00) (the
"Purchase Price"), as adjusted at Closing pursuant to this
Agreement, payable by wire transfer or delivery of other
immediately available funds.
(f) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices
of the Seller, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000,
commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to
actions each Party will take at the Closing itself) or such other
date as the Buyer and the Seller may mutually determine (the
"Closing Date"). Notwithstanding the consummation of the
purchase and sale contemplated by this Agreement on the Closing
Date, the Closing will be deemed to be effective as of 9:00 a.m.
on August 1, 1998 (the "Effective Time").
(g) Deliveries at the Closing. At the Closing, (i) the Seller
will deliver to the Buyer the various certificates, instruments
and documents referred to in Section 7(a) below, (ii) the Buyer
will deliver to the Seller the various certificates, instruments
and documents referred to in Section 7(b) below, (iii) the Seller
will deliver to the Buyer such instruments of assignment,
conveyance and transfer, with special warranty of title as to
all claims by, through and under the Seller only, and otherwise
in form and content mutually acceptable to the Seller and the
Buyer, as shall be necessary to transfer to the Buyer all of the
Assets, and (iv) the Buyer will deliver to the Seller the
Purchase Price specified in Section 2(e) above.
(h) Apportionments. (i) Subject to Section 2(ii) below, all
accounts and notes receivable and accounts and notes payable with
respect to any or all of the Assets shall be prorated between the
Seller and the Buyer as of the Effective Time. Any account or
note receivable shall be deemed to have accrued when it was
earned (whether or not billed); any account or note payable shall
be deemed to have accrued when the event giving rise to such
account or note payable occurred (whether or not such account or
note payable was invoiced or paid at the Effective Time).
(ii) The Buyer shall be responsible for the actual payment
of all ad valorem and property Taxes with respect to the
Assets for the calendar year in which the Closing occurs;
provided, however, that the Seller shall reimburse the Buyer
for its pro rata share of such Taxes to the extent not
previously paid by the Seller. An estimate of such Taxes
shall be made at the Closing and such amount shall be paid
to the Buyer at Closing. The ad valorem and property Taxes
for the year of Closing for which the Seller is responsible
shall be determined by applying a fraction based on the
number of days in the calendar year prior to the Effective
Time to such Taxes for the calendar year. Payment of any
amount owed by the Buyer to the Seller or by the Seller to
the Buyer shall be made within thirty (30) days after the
actual ad valorem and property Taxes with respect to the
Assets for the calendar year in which Closing occurs have
been determined.
(i) Imbalances. The Seller shall make reasonable efforts to
cause the individual physical natural gas cumulative imbalances
with respect to the Assets to be reduced to as close to zero as
possible as of the Closing Date. To the extent all necessary
information is available, a determination of the imbalances
existing on the Assets shall be made as of the Closing Date. To
the extent all necessary information is not available prior to
the Closing Date, such determination of imbalances shall be made
within 180 days after Closing Date (the "Imbalance Adjustment
Period"). The Seller shall prepare a schedule of imbalances as
of the Closing Date, which shall set forth by shipper, estimated
imbalance receivables and imbalance payables. To the extent that
there are any remaining imbalances attributable to actions which
occurred prior to the Closing Date at the end of the Imbalance
Adjustment Period, the Seller and the Buyer shall agree to an
imbalance settlement statement, and based upon such statement
(i) the Buyer shall "cash out" and pay the Seller for any
imbalances due from shippers by multiplying the imbalance
quantity by the "Imbalance Price" set forth below, and (ii) the
Seller shall "cash out" and pay the Buyer for any imbalances due
to shippers by multiplying the imbalance quantity by the
"Imbalance Price" described below. The "Imbalance Price" shall
be arithmetic average of the monthly Index Prices found in the
first issue of the month (pertaining to the last month in the
Imbalance Adjustment Period) of The XxXxxx-Xxxx Companies, Inc.'s
"Inside F.E.R.C.'s Gas Market Report" under the table labeled
PRICES OF SPOT GAS DELIVERED TO PIPELINES for ANR Pipeline Co.
(Oklahoma), Natural Gas Pipeline of America (Mid-Continent Zone),
and Panhandle Eastern Pipe Line Co. (Texas-Oklahoma mainline)
(j) Purchase Price Allocation. For the purpose
of making the requisite filings under Section 1060 of Code and
the regulations thereunder, the Seller and the Buyer will, within
one hundred-twenty (120) days following the Closing Date, agree
to allocate the Purchase Price among the Assets and set forth the
same in a letter agreement between them. The Seller and the
Buyer each agree to report the federal, state and local income
and other Tax consequences of the transactions contemplated
herein, and in particular to report the information required by
Section 1060(b) of the Code, in a manner consistent with such
allocation. The Seller and the Buyer agree that each will
furnish the other a copy of Form 8594 (Asset Acquisition
Statement under Section 1060) as filed with the Internal Revenue
Service by such party or any affiliate thereof within 30 days of
the filing of such form with the Internal Revenue Service.
(k) Adjustments to the Purchase Price. The
Purchase Price shall be increased or decreased by the following
amounts: (a) capital expenditures or acquisitions or
construction of fixed assets agreed to by the Buyer in accordance
with Section 4 (d) (viii); (b) if a positive number increased,
and if a negative number decreased, by the amount of revenues
less Taxes (to the extent such Taxes are the responsibility of
the Buyer under this Agreement and have not previously been paid
by the Seller) and expenses arising out of, resulting from or
relating to the Assets (to the extent such expenses are the
responsibility of the Buyer under this Agreement and have not
previously been paid by the Seller) from the Effective Time to
the Closing Date as agreed in writing by the Seller and the Buyer
on or prior to the Closing and (c) any other amount provided for
in this Agreement or agreed upon in writing by the Buyer and the
Seller.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements
contained in this Section 3(a) are correct and complete as of the
date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section 3(a)), except as set forth in SCHEDULE 3(a) attached
hereto.
(i) Organization of the Seller. The Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Delaware.
(ii) Authorization of Transaction. The Seller has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with
its terms and conditions, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, and to general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Seller
need not give any notice to, make any filing with or obtain any
authorization, consent or approval of, any Governmental Authority
in order to consummate the transactions contemplated by this
Agreement, except for the filings required under the Xxxx-Xxxxx-
Xxxxxx Act and approvals of or filings with the Oklahoma
Corporation Commission and the Texas Railroad Commission.
(iii) Noncontravention. Except for the approvals and filings
specified in Section 3(a)(ii) or as set forth in SCHEDULE
3(a)(iii), neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other
restriction of any Governmental Authority to which the Seller is
subject or any provision of its charter or bylaws or (B) conflict
with, 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 notice
under any agreement, contract, lease, license, instrument or
other arrangement to which the Seller is a party or by which it
is bound or to which any of its assets is subject, except for
such violations, defaults, breaches or other occurrences that do
not, individually or in the aggregate, have a material adverse
effect on the ability of the Seller to consummate the
transactions contemplated by this Agreement.
(iv) Brokers' Fees. The 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 for
which the Buyer could become liable or obligated.
(v) Buyer's Breach of Representation or Warranty. To the
Seller's Knowledge as of the date of this Agreement, there is no
fact or circumstance that would cause the Buyer to be in material
breach of any representation or warranty set forth in this
Agreement.
(b) Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the statements
contained in this Section 3(b) are correct and complete as of the
date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section 3(b)), except as set forth in SCHEDULE 3(b) attached
hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws
of the state of Delaware.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in accordance with
its terms and conditions, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Buyer
need not give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority
in order to consummate the transactions contemplated by this
Agreement, except for the approvals and filings specified in
Section 3(a)(ii).
(iii) Noncontravention. Except for the approvals and filings
specified in Section 3(a)(ii), neither the execution and delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any Governmental Authority to
which the Buyer is subject or any provision of its charter or
bylaws or (B) conflict with, 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 notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Buyer is a party or
by which it is bound or to which any of its assets is subject,
except for such violations, defaults, breaches or other
occurrences that do not, individually or in the aggregate, have a
material adverse effect on the ability of the Buyer to consummate
the transactions contemplated by this Agreement.
(iv) Brokers' Fees. The 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 for
which the Seller could become liable or obligated.
(v) Financing. Buyer has sufficient cash, available lines of
credit or other sources of immediately available funds (excluding
financing tied specifically to or secured primarily by the
Assets) to enable it to make payment of the Purchase Price at
Closing.
(vi) Seller's Breach of Representation or Warranty. To the
Buyer's Knowledge as of the date of this Agreement, there is no
fact or circumstance that would cause the Seller to be in
material breach of any representation or warranty set forth in
this Agreement.
4. Representations and Warranties Concerning the Assets. The
Seller represents and warrants to the Buyer that the statements
contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section 4), except as set forth in SCHEDULE 4.
(a) Noncontravention. Except for the approvals and filings
specified in Section 3(a)(ii) or as set forth in SCHEDULE 4(a),
neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of
any Governmental Authority to which any Asset is subject or (ii)
conflict with, 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 notice or
trigger any rights to payment or other compensation under any
agreement, contract, lease, license, instrument or other
arrangement to which any Asset is subject (or result in the
imposition of any Encumbrance upon any of the Assets), except
where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice,
right to payment or other compensation, or Encumbrance would not
have a Material Adverse Effect, or materially adversely affect
the ability of the Seller to consummate the transactions
contemplated by this Agreement.
(b) Title to Assets; Condition. The Seller owns good title to
all real property included in the Assets, and owns good title or
(in the case of leases and contractual rights) a valid and
subsisting contractual right to its interest in, all of the other
assets included in the Assets, free and clear of all
Encumbrances, except for (1) Permitted Encumbrances, and (2) the
Encumbrances disclosed in SCHEDULE 4(b). The tangible assets
included in the Assets are in good operating condition and
repair, ordinary wear and tear excepted, and are suitable for the
use for which such assets are currently used. Except as set
forth in Schedule 4(b) and except for the Excluded Assets, the
Assets include all assets or rights used primarily by the Seller
in connection with the business and operations conducted with the
Assets.
(c) Financial Statements. SCHEDULE 4(c) sets forth the
unaudited earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the Assets for the period January 1,
1996 through June 30, 1998 (collectively, the "Financial Data").
The Financial Data is derived from the books and records of the
Seller which were prepared in accordance with Generally Accepted
Accounting Principles, has been prepared consistent with the past
practices of the Seller in reporting such Financial Data, and is
true and correct and presents fairly the EBITDA in all material
respects.
(d) Material Change. Except as set forth in SCHEDULE 4(d),
since the date of this Agreement:
(i) there has not been any Material Adverse Effect;
(ii) the Assets have been operated and maintained in the Ordinary
Course of Business;
(iii) there has not been any damage, destruction or loss to
any material portion of the Assets, whether or not covered by
insurance, except as would not have a Material Adverse Effect;
(iv) there has been no purchase, sale or lease of assets included
in the Assets, except as would not have a Material Adverse
Effect;
(v) there has been no actual, pending or, to the Knowledge of
the Seller, threatened change affecting any of the Assets with
any customers, licensors, suppliers, distributors or sales
representatives, except such as has not had a Material Adverse
Effect;
(vi) there has been no contract or commitment entered into
outside the Ordinary Course of Business;
(vii) there has been no contract which grants to a Person a
preferential right to purchase any of the Assets;
(viii) there has been no contract or commitment for capital
expenditures or the acquisition or construction of fixed assets
for which the Buyer shall or may have responsibility after the
Closing, except as agreed to in writing by the Buyer (and where
the Buyer agreed to a capital expenditure or acquisition or
construction of fixed assets in writing, the Purchase Price shall
be adjusted in the amount agreed to in that writing); and
(ix) there is no contract, commitment or agreement to do any of
the foregoing, except as expressly permitted hereby.
(e) Legal Compliance. The Seller (with respect to the Assets)
has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except
where the failure to comply would not have a Material Adverse
Effect.
(f) Tax Matters. Except as set forth in SCHEDULE 4(f),
(i) The Seller (with respect to the Assets) has filed all Tax
Returns due that it was required to file. All Taxes owed by the
Seller (with respect to the Assets) shown on any such Tax Return
have been paid.
(ii) There is no material dispute or claim concerning any Tax
liability of the Seller (with respect to the Assets) either (A)
claimed or raised by any authority in writing or (B) as to which
the Seller has Knowledge.
(g) Contracts and Commitments. SCHEDULE 4(g) includes a list of
all material contracts and commitments (including, without
limitation, any contract, lease, agreement or commitment, written
or oral, providing for receipt or payment, contingent or
otherwise, of Twenty Five Thousand Dollars ($25,000.00) or more
or which may not be terminated without payment or penalty, or
restricting the ability of the owner of the Assets to engage in
any line of business in any geographic area, or containing any
indemnity obligation, or relating to indebtedness or guarantee
obligations) which are included in the Assets, and each such
contract is in full force and effect, except where the failure to
be in full force and effect would not have a Material Adverse
Effect. The Seller has performed all material obligations
required to be performed by it to date under the contracts, and
is not in default under any material obligation of any such
contracts, except when such default would not have a Material
Adverse Affect. To the Knowledge of the Seller, no other party
to any contract is in default thereunder.
(h) Litigation. SCHEDULE 4(h) sets forth each instance in which
any of the Assets (i) is subject to any outstanding injunction,
judgment, order, decree or ruling or (ii) is the subject of any
action, suit, proceeding, hearing or investigation of, in or
before any court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction, or is the
subject of any pending or, to the Knowledge of the Seller,
threatened claim, demand or notice of violation or liability from
any party, except where any of the foregoing would not have a
Material Adverse Effect.
(i) Environmental Matters. Except as set forth in SCHEDULE
4(i),
(i) The Seller (with respect to the Assets) is and has been in
compliance with all applicable federal, state and local laws
(including common law), ordinances, orders, agreements,
decisions, orders, rules and regulations relating to protection
or enhancement of human health or the environment including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
section 9601, et seq., the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. section 6901, et seq., the Clean
Air Act, as amended, 42 U.S.C. section 7401, et seq., the Federal
Water Pollution Control Act, as amended, 33 U.S.C. section 1251,
et seq., and the Oil Pollution Act of 1990, 33 U.S.C. section
2701, et seq. (collectively, the "Environmental Laws" and
individually an "Environmental Law"), except for such instances
of noncompliance that individually or in the aggregate do not
have a Material Adverse Effect.
(ii) The Seller (with respect to the Assets) has obtained all
permits, licenses, franchises, authorities, consents and
approvals, and has made all filings and maintained all material
information, documentation, and records, as necessary under
applicable Environmental Laws for operating the business
conducted with the Assets as it is presently conducted, and all
such permits, licenses, franchises, authorities, consents,
approvals, and filings remain in full force and effect, except
for such matters that individually or in the aggregate do not
have a Material Adverse Effect.
(iii) There are no pending or, to the Seller's Knowledge,
threatened claims, demands, actions, administrative proceedings,
lawsuits or investigations against the Seller (with respect to
the Assets), and the Seller (with respect to the Assets) is not
subject to any injunction, judgment, order, decree or ruling
under any Environmental Laws.
(iv) None of the real property included in the Assets and, to the
Seller's Knowledge, no off-site location used for the treatment,
storage or disposal of waste from any Asset, is: (A) listed on
the National Priorities List or any similar state list of sites
requiring remedial action; (B) to the Knowledge of the Seller,
being considered for possible inclusion on the National
Priorities List or on any such similar state list; or (C) to the
Knowledge of the Seller, the subject of any action or
investigation that may lead to claims under any Environmental
Law.
(v) No part of any of the real property included in the Assets
is now being used, or has been used by the Seller or its
Affiliates or, to the Knowledge of the Seller, by any third
party, as a landfill, dump or other disposal area for Hazardous
Substances.
(vi) The Seller has not received any notice or other
communication that it (with respect to the Assets) is or may be a
potentially responsible party or otherwise liable under any
Environmental Law in connection with any site actually or
allegedly containing or used for the treatment, storage or
disposal of Hazardous Substances.
The Seller makes no representation or warranty regarding any
compliance or failure to comply with, or any actual or contingent
liability under, any Environmental Law, except as expressly set
forth in this Section 4(i), nor does the Seller make any
representation or warranty in this Section 4(i) with respect to
Taxes.
(j) Permits. Except as set forth in SCHEDULE 4(j),
the Seller owns or holds all franchises, licenses, permits,
consents, approvals and authorizations of all Governmental
Authorities necessary for the conduct of the business and
operations conducted with the Assets (collectively, the
"Permits"), except for Permits whose absence would not have a
Material Adverse Effect. Each Permit is in full force and
effect, and the Seller is in compliance with all of its
obligations with respect to each Permit, except where the failure
to be in full force and effect or to be in compliance would not
have a Material Adverse Effect, and (ii) to the Knowledge of the
Seller, no event has occurred that permits, or upon the giving of
notice or the lapse of time or otherwise would permit, revocation
or termination of any Permit except such as in the aggregate
would not have a Material Adverse Effect.
(k) No "Take or Pay". Except as expressly set forth
in SCHEDULE 4(k), there are currently no arrangements under any
of the Gas Contracts by which the Buyer will be obligated by
virtue of a prepayment arrangement, a "take-or-pay" arrangement,
a production payment or any other arrangement, to sell, transport
or deliver hydrocarbons at some future time without then or
thereafter being entitled to receive full payment therefor, or to
make payment at some future time for hydrocarbons or the
transportation or the delivery of hydrocarbons purchased or
transported prior to the date of this Agreement.
(l) Pipeline Rights-of-Way. Except as expressly set
forth in SCHEDULE 4(l), the Seller has not received written
notice from any third party and does not have Knowledge of any
deficiency in any Rights-of-Way with respect to the entire route
of all pipelines owned and used or held for use with respect to
the Assets. Other than sales or assignments to customers, the
Seller has not sold or assigned any Rights-of-Way, in whole or in
part, or any undivided interest therein to any party whatsoever,
except as expressly disclosed in SCHEDULE 4(l).
(m) Tariffs. Except as expressly set forth in SCHEDULE 4(m), to
the extent that the operations with respect to the Assets are
subject to a tariff approved by the Federal Energy Regulating
Commission ("FERC"), those operations are in compliance with each
such tariff, except where such noncompliance would not,
individually or in the aggregate, have a Material Adverse Effect.
The Seller has no Knowledge of any refund claim of any customers
or any refund obligation imposed under an order issued by FERC
and, except as expressly set forth in SCHEDULE 4(m), has no
Knowledge of any facts or circumstance which would give rise to
any such refund claim or refund obligation. Except as expressly
set forth in SCHEDULE 4(m), there are no customer complaints
pending or, to the Seller's Knowledge threatened, before FERC or
any other administrative or regulatory agency, which would,
either individually or in the aggregate, have a Material Adverse
Effect.
(n) No Partnership. The Assets are not subject to any
partnership or joint venture.
(o) Real Property. The Seller has not received written notice
from any third party of any threatened termination or reduction
of the current access to or from the real property comprising a
part of the Assets to existing roads or the sewer or other
utility services presently serving such real property. The
Seller has not received any written notice that its real property
is in violation of any zoning, laws, statutes, ordinances or
building or use restrictions applicable to such real property or
which prohibit the use of such real property for its current use
or uses with respect to the Assets.
(p) Patents, Copyright, Trademarks, Etc. Except as expressly
set forth in SCHEDULE 4(p), to the Seller's Knowledge, the
present conduct of business with respect to the Assets does not
conflict with, infringe upon or violate the patents, trademarks,
servicemarks, trade names, copyrights or trade secrets or other
intangible assets of any other Person, and the Seller has not
received any written notice of any infringement thereof, except
where such conflicts, infringements and violations would not,
either individually or in the aggregate, have a Material Adverse
Effect.
(q) No Leases. Except as expressly set forth in SCHEDULE 4(q),
all the equipment and real property (other than Rights-of-Way,
easements, licenses and permits) which is material to the
operation of the Assets is owned by the Seller and not leased or
rented.
(r) Public Utility Holding Company Act. The Seller is not a
"holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" "of a subsidiary company" of a
"holding company", in each case within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(s) Disclaimer of Representations and Warranties Concerning
Personal Property, Equipment, and Fixtures. The Buyer
acknowledges that (a) it has had and pursuant to this Agreement
will have before Closing access to the Seller and the Assets, and
the officers and employees of the Seller, and (b) in making the
decision to enter into this Agreement and consummate the
transactions contemplated hereby, the Buyer has relied solely on
its own independent investigation and upon the express
representations, warranties, covenants and agreements set forth
in this Agreement. Accordingly, the Buyer acknowledges that,
except as expressly set forth in this Agreement, the Seller has
not made, and THE SELLER MAKES NO AND DISCLAIMS ANY
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND
WHETHER BY COMMON LAW, STATUTE OR OTHERWISE, REGARDING (i) THE
QUALITY, CONDITION OR OPERABILITY OF ANY PERSONAL PROPERTY,
EQUIPMENT OR FIXTURES, (ii) ITS MERCHANTABILITY, (iii) ITS
FITNESS FOR ANY PARTICULAR PURPOSE, (iv) ITS CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS OR (v) AS TO WHETHER ANY ASSET IS YEAR
2000 COMPLIANT, AND ALL PERSONAL PROPERTY AND EQUIPMENT IS
DELIVERED "AS IS, WHERE IS" IN THE CONDITION IN WHICH THE SAME
EXISTS.
(t) Billing Under the Gas Contracts. The Seller has
invoiced for all services (including without limitation for
compression, treating, gathering, and processing services)
provided by the Seller in accordance with the terms and
conditions in the Gas Contracts, and has administered the Gas
Contracts in accordance with their terms and conditions, except
where the failure to do so would not have a Material Adverse
Effect.
5. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the date of this Agreement and the
Closing.
(a) General. Each Party will use its reasonable best efforts to
take all action and to do all things necessary, proper or
advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth
in Section 7 below).
(b) Notices and Consents. The Seller will give any notices to
third parties, and will use its reasonable best efforts to obtain
the third party consents, necessary to effect the assignment of
all Gas Contracts, Rights-of-Way and other Assets to the Buyer,
including those consents listed on the attached SCHEDULE 5(b)(i).
If the Seller is unable to obtain any necessary third party
consents to the assignment of any Gas Contracts or Rights-of-Way,
then the Seller shall retain its interest in such Gas Contract or
Right-of-Way after the Closing and the Buyer shall operate and
maintain such Gas Contract or Right-of-Way as the Seller's
operator under an operating agreement in the form of SCHEDULE
5(b)(ii). Each of the Parties will give any notices to, make any
filings with, and use its reasonable best efforts to obtain any
authorizations, consents and approvals of Governmental
Authorities in connection with the matters referred to in
subsection 3(a)(ii), subsection 3(b)(ii), and section 4(b) above.
Without limiting the generality of the foregoing, each of the
Parties will file any notification, report forms and related
material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the U.S. Department of
Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use its reasonable
best efforts to obtain a waiver from the applicable waiting
period, and will make any further filings pursuant thereto that
may be necessary in connection therewith.
(c) Operation of Business. The Seller will not,
without the consent of the Buyer, engage in any practice, take
any action or enter into any transaction with respect to the
Assets outside the Ordinary Course of Business. Without limiting
the generality of the foregoing, the Seller will not, without the
consent of the Buyer, except as expressly contemplated by this
Agreement or as contemplated by SCHEDULE 5(c), do any of the
following with respect to the Assets:
(i) cause or allow any of the Assets to become subject to an
Encumbrance, except for Permitted Encumbrances;
(ii) (A) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or any division
thereof or any material amount of assets in the Ordinary Course
of Business; (B) sell, lease or otherwise dispose of any property
or assets, other than sales of goods or services in the Ordinary
Course of Business; or (C) enter into or amend a contract,
agreement, commitment or arrangement with respect to any matter
set forth in this paragraph (ii); or
(iii) amend in any material respect any contract or agreement
relating to the Assets, or terminate any such contract or
agreement before the expiration of the term thereof.
(d) Full Access. The Seller will permit representatives of the
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 Seller, to all premises, properties, personnel, books,
records (including tax records), contracts and documents of or
pertaining to the Assets. Any information obtained by the Buyer,
its employees, representatives, consultants, attorneys, agents,
lenders and other advisors under this Section 5(d) shall be
subject to the confidentiality and use restrictions contained in
the Confidentiality Agreement.
(e) Notice of Developments. Each Party will give prompt written
notice to the other of any material adverse development which
would result in the failure to any condition to Closing set forth
in Section 7 hereof. No disclosure by any Party pursuant to this
subsection 5(e), however, shall be deemed to amend or supplement
any Schedule hereto or to prevent or cure any misrepresentation
or breach of warranty.
(f) Casualty Loss. If, prior to the Closing, any portion of the
Assets have been or are damaged or destroyed by fire, flood,
storm or other casualty or shall be taken by condemnation or
under the right of eminent domain (all of which are herein called
"Casualty Loss"), and the Casualty Loss does not have a Material
Adverse Effect, then the Buyer shall bear the risk of loss,
provided, however, that the Seller shall, at the Closing, pay by
means of an adjustment to the Purchase Price to the Buyer all
sums actually received by the Seller (net of actual expenses
incurred by the Seller in connection with such sums received)
from persons or Governmental Authorities by reason of the damage,
destruction or taking of such assets and shall assign, transfer
and set over unto the Buyer all of the right, title and interest
of the Seller in and to any unpaid proceeds or other payments
from third parties (net of any expenses actually incurred by the
Seller in connection with such proceeds or payments) arising out
of such destruction or taking, and all claims and causes of
action with respect to such destruction or taking; further,
provided, however, if the Casualty Loss has a Material Adverse
Effect and such Assets are not repaired or replaced and the
business operation restored to its original state by the Seller
prior to Closing, either the Buyer or the Seller shall have the
right to terminate this Agreement unless the Parties mutually
agree upon an appropriate adjustment to the Purchase Price.
Prior to the Closing, the Seller shall not voluntarily
compromise, settle or adjust any amount payable by reason of any
Casualty Loss which would be assigned to the Buyer pursuant to
the foregoing provisions of this Section 5(f).
6. Post-Closing Covenants. The Parties agree as follows:
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents)
as the other Party reasonably may request, all at the sole cost
and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 8 below).
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint,
claim or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction on or before the Closing Date involving any Asset,
the other Party shall cooperate with the contesting or defending
Party and its counsel in the defense or contest, make available
its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the defense
or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 8 below).
(c) Employee Matters.
(i) Within five (5) business days after the
execution of this Agreement ("Interview Period"), the Buyer
shall have the right to interview the employees listed on
SCHEDULE 6(c). On or before the fifth (5th) business day
after the Interview Period, the Buyer shall deliver to the
Seller a list of any such employees ("Employees") that the
Buyer desires to make an offer of employment. At the
Closing, the Buyer shall make offers of employment to each
Employee at salaries, wages and benefits that are in the
aggregate comparable with the salaries, wages and benefits
as paid by the Seller and its subsidiaries on the Closing
Date. The Buyer shall (i) waive any preexisting condition
limitations applicable to the Employees and any covered
dependents under the group medical plan of the Buyer or its
Affiliates, (ii) ensure that Employees are given full credit
for all copayments and deductibles incurred by such
Employees and covered dependents under the applicable group
medical plan of the Seller and its subsidiaries for the 1998
plan year, and (iii) cause any such plan that is an Employee
Pension Benefit Plan and that is intended to be qualified
under Section 401 of the Code to credit Employees for
participation and vesting purposes only under such plan for
their period of employment with the Seller and its
subsidiaries and their predecessors to the extent such
predecessor employment was recognized by any tax-qualified
pension plan of the Seller and its subsidiaries and credit
Employees for their period of employment with the Seller and
its subsidiaries for purposes of participation or accruals
under any vacation, sick leave or other service-based plan
or policy (other than any severance or pension plan or
policy) of the Buyer or its Affiliates.
(ii) The Buyer agrees that, if any Employee
who accepts employment with the Buyer is terminated from
employment by the Buyer on or after the Closing Date but on
or before the first anniversary thereof for any reason other
than cause, or is required to transfer to a job location
that is more than 50 miles from his or her current job
location or to take a reduction in salary, wages or
benefits, but refuses such transfer or reduction and
terminates his or her employment with the Buyer, the Buyer
shall provide the Employee with (A) a lump sum cash
severance payment equal to the severance to which such
Employee would have been entitled under the severance policy
of the Seller attached as SCHEDULE 6(c)(ii) based upon such
Employee's years of service and salary with the Seller and
its subsidiaries and their predecessors to the extent such
predecessor employment is recognized by such severance
policy, and (B) continued health insurance coverage for the
Employee and his or her dependents under Part 6 of Title I
of ERISA (COBRA) at a cost to the Employee that is not in
excess of the cost of coverage for active employees of the
Buyer or its Affiliates who were formerly employed by the
Seller or its Affiliates. For purposes of this subparagraph
(ii), termination shall be for cause if it is for conduct
such as fraud, embezzlement, theft, commission of a felony
or any other criminal act against the Buyer or its
Affiliates or deliberate and substantial disregard of
assigned duties and responsibilities.
(iii) As of the Closing Date, the Buyer shall make
available (or cause one of its Affiliates to make available)
a defined contribution plan for the benefit of the Employees
(" Buyer DC Plan"). As promptly as practicable after the
Closing Date, the Seller shall cause the trustee of the El
Paso Energy Corporation Retirement Savings Plan ("Seller DC
Plan") to transfer to the trustee of the Buyer DC Plan, and
the Buyer shall cause the trustee of the Buyer DC Plan to
accept, the account balances of each Employee with respect
to whom the Seller DC Plan maintains an account as of the
close of business on the Closing Date. Such transfers shall
be equal to the value of the transferred account balances as
of the close of business on the day preceding the date of
transfer and shall be in cash (or, in the case of
participant loans granted prior to the Closing Date, if any,
such loans and promissory notes or other documents
evidencing such loans). The Buyer DC Plan shall protect,
maintain and continue any rights or features of the Seller
DC Plan that, pursuant to the provisions of Section
411(d)(6) of the Code, are required to be continued for the
benefit of the Employees, but only to the extent required by
Section 411(d)(6).
(d) Replacement Bonds. After Closing, the Buyer shall promptly
replace bonds as set forth in SCHEDULE 6 (d) posted by the Seller
with the Minerals Management Service with respect to the Assets.
(e) Transition. The Seller shall, for a period of not less than
3 months and not more than 6 months after the Closing Date,
provide to the Buyer transition services pursuant to the
Transition Agreement attached as SCHEDULE 6(e).
(f) Delivery and Retention of Records. On or promptly after the
Closing Date, the Seller will deliver or cause to be delivered to
the Buyer all files, records, information and data relating to
the Assets (other than Tax Returns, Tax workpapers and other Tax
records and information) that are in the possession or control of
the Seller and its subsidiaries (together with all of the
Seller's and its subsidiaries' contractual rights to request
other such files, records, information and data from any third
party) (the "Records"). The Buyer agrees to (i) hold the Records
and not to destroy or dispose of any thereof for a period of six
years from the Closing Date or such longer time as may be
required by law, provided that, if it desires to destroy or
dispose of such Records during such period, it will first offer
in writing at least 60 days before such destruction or
disposition to surrender them to the Seller and if the Seller
does not accept such offer within 20 days after receipt of such
offer, the Buyer may take such action and (ii) following the
Closing Date to afford the Seller, its accountants and counsel,
during normal business hours, upon reasonable request, at any
time, full access to the Records and to the Buyer's employees to
the extent that such access may be requested for any legitimate
purpose at no cost to the Seller (other than for reasonable out-
of-pocket expenses); provided, however, that such access will not
be construed to require the disclosure of Records that would
cause the waiver of any attorney-client, work product or like
privilege; provided, further, that in the event of any litigation
nothing herein shall limit either Party's rights of discovery
under applicable law. The Buyer shall have the same rights, and
the Seller shall have the same obligations, as are set forth in
this Section with respect to any copies of the Records of the
Seller pertaining to the Assets that are retained by the Seller,
with the exception of Tax Returns, Tax workpapers and other Tax
records and information retained by the Seller, provided that
such access will not be construed to require the disclosure of
Records that would cause the waiver of any attorney-client, work
product or like privilege.
(g) Mail; Payments. (a) The Seller hereby authorizes the
Buyer from and after the Closing to receive and open all mail and
other communications relating to the business conducted with the
Assets, and to act with respect to such communications in such
manner as the Buyer may elect to the extent that such
communications relate to the rights and obligations of the Buyer
with respect to the Assets. If any communication does not relate
exclusively to the rights and obligations of the Buyer with
respect to the Assets, the Buyer shall forward the original or a
copy of such communication promptly to the Seller. The Buyer
shall promptly deliver to the Seller any moneys, checks or other
instruments of payment received by the Buyer to which the Seller
is entitled hereunder.
(b) The Seller shall promptly deliver to the
Buyer the original or a copy of any mail or other communication
received by it after the Closing pertaining to the Assets. The
Seller shall promptly deliver to the Buyer any moneys, checks or
other instruments of payment received by the Seller to which the
Buyer is entitled hereunder.
(h) Certificate of Non-foreign Status. On or prior to the
Closing Date, the Seller shall provide the Buyer with a properly
executed certificate of non-foreign status in accordance with
Treas. Reg. 1.1445-2(b) (a "FIRPTA Certificate") certifying
under penalties of perjury that the Seller is not a foreign
person within the meaning of Section 1445(f) of the Code and
Treas. Reg. 1.1445-2(b). Provided the Buyer is otherwise
entitled to rely on such Certificate, the Buyer shall not
withhold a portion of the Purchase Price under Section 1445 of
the Code. The Buyer and the Seller acknowledge that unless the
Seller provides the Buyer with such FIRPTA Certificate in the
time and manner described above, the Buyer shall be obligated to
withhold a portion of the Purchase Price in the amount and manner
required under Section 1445 of the Code and the applicable
Treasury Regulations.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in Section 3(a)
and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date, except for such failures
to be true and correct as do not, in the aggregate, result in
Adverse Consequences exceeding One Million Dollars
($1,000,000.00);
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of the
transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in
subsections 7(a)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise
been terminated and the Parties shall have received all other
authorizations, consents, and approvals of Governmental
Authorities referred to in subsection 3(a)(ii), subsection
3(b)(iii), and Section 4(b) above (other than Customary Post-
Closing Consents) or in SCHEDULE 3(a)(ii) or SCHEDULE 4(b) and
consents, approvals and waivers of third parties referred to in
SCHEDULE 5(b)(i); and
(vi) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 7(a)
if it executes a writing so stating at or before the Closing.
(b) Conditions to Obligation of the Seller. The obligation of
the Seller to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of the
transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in
subsections 7(b)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise
been terminated and the Parties shall have received all other
authorizations, consents, and approvals of Governmental
Authorities referred to in subsection 3(a)(ii), subsection
3(b)(ii), and Section 4(b) above (other than Customary Post-
Closing Consents) and consents, approvals and waivers of third
parties referred to in SCHEDULE 5(b)(i); and
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 7(b)
if it executes a writing so stating at or before the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations, Warranties and Certain
Covenants. All of the representations and warranties of the
Seller contained in Sections 3 and 4 above (other than Sections
4(f) and 4(t)) shall survive the Closing hereunder and continue
in full force and effect for a period of eighteen (18) months
after the Closing Date; and (ii) the representations and
warranties in Sections 4(f) and 4(t) shall survive the Closing
indefinitely with respect to any given claim that would
constitute a breach of such representation or warranty. The
representations and warranties of the Buyer contained in Section
3 above shall survive the Closing and continue in full force for
a period of eighteen (18) months after the Closing Date. The
covenants contained in this Agreement to be performed after the
Closing shall survive the Closing indefinitely.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event the Seller breaches any of its representations,
warranties and covenants (it being understood that for purposes
of any claim under this Section 8 for breach of any
representation or warranty, any representation or warranty which
is qualified by materiality, Material Adverse Effect or words of
similar import shall be deemed not to include any such
qualification) contained herein (other than the covenants in
Section 2(d) above and the representations and warranties in
Section 3(a) above) and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that the Buyer
makes a written claim for indemnification against the Seller
pursuant to Section 11(f) below within such survival period, then
the Seller agrees to indemnify the Buyer from and against any
Adverse Consequences to the extent in excess of Ten Thousand
Dollars ($10,000.00) per event that are caused proximately by the
breach and suffered by the Buyer through and after the date of
the claim for indemnification; provided, that the Seller shall
not have any obligation to indemnify the Buyer from and against
any such Adverse Consequences caused by the breach of any
representation or warranty of the Seller contained in Section 4
above (A) until the Buyer has suffered Adverse Consequences by
reason of all such breaches in excess of a One Million Dollar
($1,000,000.00) aggregate deductible (after which point the
Seller will be obligated only to indemnify the Buyer from and
against further such Adverse Consequences) or thereafter (B) to
the extent the Adverse Consequences the Buyer has suffered by
reason of all such breaches exceeds a Six Million Dollars
($6,000,000.00) aggregate ceiling (after which point the Seller
will have no obligation to indemnify the Buyer from and against
further such Adverse Consequences).
(ii) In the event the Seller breaches any of its representations
and warranties in Section 3(a) above, and, if there is an
applicable survival period pursuant to Section 8(a) above,
provided that the Buyer makes a written claim for indemnification
against the Seller pursuant to Section 11(f) below within such
survival period, then the Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse Consequences caused
proximately by the breach and suffered by the Buyer through and
after the date of the claim for indemnification.
(iii) Except for the rights of indemnification provided in
this Section 8 and in Section 11(o), the Buyer hereby waives any
claim or cause of action pursuant to common or statutory law or
otherwise against the Seller or its Affiliates regarding
obligations and liabilities of any nature whatsoever that are
attributable to the Assets, whether arising before or after the
Closing Date.
(c) Indemnification Provisions for Benefit of the Seller. In
the event the Buyer breaches any of its representations,
warranties and covenants contained herein (other than the
covenants in Section 2(c) above), and, if there is an applicable
survival period pursuant to Section 8(a) above, provided that the
Seller makes a written claim for indemnification against the
Buyer pursuant to Section 11(f) below within such survival
period, then the Buyer agrees to indemnify the Seller from and
against the entirety of any Adverse Consequences caused
proximately by the breach and suffered by the Seller through and
after the date of the claim for indemnification.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") that
may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly (and in any event within five
business days after receiving notice of the Third Party Claim)
notify the Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified
Party; provided, however, that the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in subsection
8(d)(ii) above, however, the Indemnified Party may defend against
the Third Party Claim in any manner it reasonably may deem
appropriate.
(iv) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party which consent shall not be withheld
unreasonably.
(e) Determination of Amount of Adverse Consequences. The Adverse
Consequences giving rise to any indemnification obligation
hereunder shall be limited to the actual loss suffered by the
Indemnified Party (i.e., reduced by any insurance proceeds or
other payment or recoupment received, realized or retained by the
Indemnified Party as a result of the events giving rise to the
claim for indemnification net of any expenses related to the
receipt of such proceeds, payment or recoupment, including
retrospective premium adjustments, if any), and any reduction in
federal, state, or local income or franchise tax liability of the
Indemnified Party (or the affiliated group of which it is a
member) occasioned by such loss or damage, but shall include an
amount equal to any increase in federal, state or local income or
franchise tax liability of the Indemnified Party (or the
affiliated group of which it is a member) occasioned by the
indemnity payment. The amount of the actual loss and the amount
of the indemnity payment shall be computed by taking into account
the timing of the loss or payment, as applicable, using a 10
percent interest or discount rate, as appropriate. Upon the
request of the Indemnifying Party, the Indemnified Party shall
provide the Indemnifying Party with information sufficient to
allow the Indemnifying Party to calculate the amount of the
indemnity payment in accordance with this Section 8(e).
(f) Special Indemnification Provisions.
(i) Notwithstanding any terms and provisions of this Agreement
to the contrary, the Seller hereby covenants and agrees to
protect, defend, indemnify and save the Buyer, its successors and
assigns, harmless from and against any and all claims, demands,
actions, causes of action, arbitration proceedings, judgments,
awards, attorneys' fees and costs (including costs of
investigation and defense), and all other costs and expenses
incurred in connection with or arising out of all breaches, if
any, by the Seller of its covenants to the Buyer under Section
2(d) above.
(ii) Notwithstanding any terms and provisions of this Agreement
to the contrary, the Buyer hereby covenants and agrees to
protect, defend, indemnify and save the Seller, its successors
and assigns, harmless from and against any and all claims,
demands, actions, causes of action, arbitration proceedings,
judgments, awards, attorneys' fees and costs (including costs of
investigation and defense), and all other costs and expenses
incurred in connection with or arising out of all breaches, if
any, by the Buyer of its covenants to the Seller under Section
2(c) above.
9. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time before the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time before Closing (A) in the event
the Seller has breached any representation, warranty or covenant
contained in this Agreement in any material respect, the Buyer
has notified the Seller of the breach, and the breach has
continued without cure for a period of 10 days after the notice
of breach or (B) if the Closing shall not have occurred on or
before October 31, 1998 (unless the failure results primarily
from the Buyer itself breaching any representation, warranty or
covenant contained in this Agreement);
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time before the Closing (A) in
the event the Buyer has breached any representation, warranty or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of 10 days after the notice
of breach or (B) if the Closing shall not have occurred on or
before October 31, 1998 (unless the failure results primarily
from the Seller itself breaching any representation, warranty or
covenant contained in this Agreement); and
(iv) either the Seller or the Buyer may terminate this Agreement
under the circumstances provided in Section 5(f).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to Section 9(a) above, all rights and
obligations of the Parties hereunder shall terminate without any
liability of either Party to the other Party (except for any
liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in the Confidentiality
Agreement shall survive termination.
10. Prohibited Activities of the Seller.
In order to protect the goodwill and business interests of the
Buyer as to its utilization of the Assets for a period of
eighteen (18) months following the Closing, the Seller covenants
and agrees that it and its Affiliates, now or hereafter existing,
will not, acting alone or in conjunction with others, directly or
indirectly:
(a) connect or attempt to connect any xxxxx (and the gas
delivered from such xxxxx) that are connected to the Assets as of
the Closing Date to any other pipeline system of the Seller or
its Affiliates; provided, that if the Seller, or any Affiliate of
the Seller, acquires a pipeline or pipelines in connection with
the acquisition of other pipeline assets or a pipeline company,
which pipeline(s) or pipeline company at the time of acquisition
is connected to the Assets or serves any of the present customers
of the Assets, then the Seller or its Affiliate, as applicable,
can conduct business and compete in the ordinary course of
business without being in violation of this covenant;
(b) directly or indirectly, request or advise any
party to any Gas Contract to withdraw, curtail or cancel any
service to or from the Buyer under the terms of such contract;
(c) aid, abet or otherwise assist any person, firm or
corporation seeking to interfere with the Buyer's relationship
with the parties to , or the term of, any Gas Contract.
11. Miscellaneous.
(a) Press Releases and Public Announcements. The Parties may
issue press releases upon the execution of this Agreement,
provided that each Party shall submit to the other Party a copy
of its intended press release not less that forty eight (48)
hours prior to the time of release. No Party shall issue any
press release or make any public announcement relating to the
subject matter of this Agreement during the period after the
press release herein before mentioned and before the Closing
without the prior written approval of the other Party; provided,
however, that any 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 best efforts to advise the other Party before making
the disclosure).
(b) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the
other Party, except that the Buyer may assign its rights
hereunder to any wholly owned subsidiary of the Buyer, provided
that no such assignment shall relieve the Buyer of any of its
liabilities or obligations hereunder.
(d) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed
duly given two business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Buyer: Midcoast Gas Services, Inc.
0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
If to the Seller: El Paso Field Services Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: President
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the
addresses set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic 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.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the state of
Texas without giving effect to any choice or conflict of law
provision or rule (whether of the state of Texas or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the state of Texas.
(h) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the 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.
(i) 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.
(j) Transaction Expenses. Each of the Buyer and the Seller will
bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby, except as provided in paragraph
(k) below.
(k) Certain Taxes. Notwithstanding anything in this Agreement
to the contrary, the Seller will file all necessary Tax Returns
and other documentation with respect to all transfer,
documentary, sales, use, stamp, registration and other Taxes and
fees in connection with this Agreement, and, if required by
applicable law, the Buyer will, and will cause its Affiliates to,
join in the execution of any such Tax Returns and other
documentation. The Buyer will pay to the Seller, on or before
the date such payments are due from the Seller, any transfer,
documentary, sales, use, stamp, registration and other Taxes and
fees incurred in connection with this Agreement.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean
including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) WAIVER OF CONSUMER RIGHTS. IT IS THE INTENT OF THE
PARTIES THAT THE BUYER'S RIGHTS AND REMEDIES WITH RESPECT TO THIS
TRANSACTION AND WITH RESPECT TO ALL ACTS OR PRACTICES OF THE
SELLER, PAST, PRESENT OR FUTURE, IN CONNECTION WITH THIS
TRANSACTION SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER THAN THE
TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, TEX.
BUS. & COM. CODE XXX. SECTION 17.41 ET SEQ. (XXXXXX 1987 AND
SUPP. 1995) (THE "DTPA"). THE BUYER ACKNOWLEDGES, REPRESENTS AND
WARRANTS THAT IT IS NOT A CONSUMER AS DEFINED BY THE DTPA BECAUSE
(i) IT IS A CORPORATION THAT SEEKS TO ACQUIRE THE ASSETS FOR
COMMERCIAL OR BUSINESS USE AND (ii) IT HAS ASSETS OF $25 MILLION
OR MORE OR IS OWNED OR CONTROLLED BY A CORPORATION OR ENTITY WITH
ASSETS OF $25 MILLION OR MORE. IF THE BUYER IS NONETHELESS
DEEMED TO BE A CONSUMER AS DEFINED BY THE DTPA, IT HEREBY WAIVES
ITS RIGHTS UNDER THE DTPA, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF
THE BUYER'S OWN SELECTION, THE BUYER VOLUNTARILY CONSENTS TO THIS
WAIVER. THE BUYER ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT (i)
IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH
THE SELLER; (ii) IT WAS REPRESENTED BY LEGAL COUNSEL IN THIS
TRANSACTION; AND (iii) IT SELECTED ITS OWN LEGAL COUNSEL, WHICH
WAS NOT DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED
BY THE SELLER, A COMPANY OR A SUBSIDIARY OR ANY AGENT THEREOF.
THE BUYER EXPRESSLY RECOGNIZES THAT THE PRICE FOR WHICH THE
SELLER HAS AGREED TO SELL THE ASSETS AND PERFORM ITS OBLIGATIONS
UNDER THIS AGREEMENT HAS BEEN PREDICATED UPON THE INAPPLICABILITY
OF THE DTPA AND THE EFFECTIVENESS OF THIS WAIVER OF THE DTPA.
THE BUYER FURTHER RECOGNIZES THAT THE SELLER, IN DETERMINING TO
ENTER INTO THIS AGREEMENT, HAS EXPRESSLY RELIED ON THIS WAIVER
AND THE INAPPLICABILITY OF THE DTPA.
(o) Bulk Transfers. The Parties waive compliance with the
requirements of the bulk sales law of any jurisdiction in
connection with the sale of the Assets to the Buyer hereunder.
The Seller shall indemnify and hold harmless the Buyer and its
Affiliates against all Adverse Consequences which may be incurred
by the Buyer as a result of noncompliance with any such bulk
sales laws.
(p) ENTIRE AGREEMENT. THIS AGREEMENT (INCLUDING THE DOCUMENTS
REFERRED TO HEREIN) CONSTITUTES THE ENTIRE AGREEMENT AMONG THE
PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDINGS, AGREEMENTS OR
REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN OR ORAL, TO THE
EXTENT THEY HAVE RELATED IN ANY WAY TO THE SUBJECT MATTER HEREOF.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
MIDCOAST GAS SERVICES, INC.
By:
Name: X.X. Xxxxxxxxx, XX
Title: Executive Vice President
EL PASO FIELD SERVICES COMPANY
By:
Name: Xxxxxx X. Xxxxxxxx
Title: President
