AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
DATED AS OF FEBRUARY 14, 1997
BY AND BETWEEN
ENRON LIQUIDS HOLDING CORP.
as Seller
AND
XXXXXX XXXXXX, INC.
as Buyer
Table of Contents
ARTICLE 1..........................................-1-
ARTICLE 2..........................................-5-
2.1 PURCHASE AND SALE.........................-5-
2.2 PURCHASE PRICE............................-6-
2.3 ADJUSTMENTS TO THE PURCHASE PRICE.........-6-
2.4 STATEMENT.................................-7-
2.5 POST-CLOSING ADJUSTMENTS TO THE
PURCHASE PRICE............................-7-
ARTICLE 3..........................................-8-
3.1 TIME AND PLACE OF CLOSING.................-8-
3.2 DELIVERIES BY SELLER AND BUYER AT OR
PRIOR TO CLOSING..........................-8-
ARTICLE 4..........................................-9-
4.1 ORGANIZATION AND GOOD STANDING OF
SELLER AND ELPC...........................-9-
4.2 QUALIFICATION.............................-9-
4.3 CAPITALIZATION OF ELPC....................-9-
4.4 AUTHORIZATION OF AGREEMENT; NO
VIOLATION; NO CONSENTS....................-9-
4.5 GOVERNMENTAL CONSENTS....................-10-
4.6 ENFORCEABILITY...........................-10-
4.7 BALANCE SHEET............................-10-
4.8 ABSENCE OF CHANGES.......................-10-
4.9 CONTRACTS................................-11-
4.10 SUITS....................................-11-
4.11 COMPLIANCE WITH LAWS.....................-11-
4.12 TAX MATTERS..............................-11-
4.13 CONDITION OF THE ASSETS; PREFERENTIAL
RIGHTS TO PURCHASE.......................-12-
4.14 EMPLOYEES AND EMPLOYEE BENEFIT PLANS
AND POLICIES.............................-12-
4.15 EMPLOYEE MATTERS.........................-13-
4.16 PUBLIC FILINGS...........................-14-
4.17 BROKERS..................................-14-
4.18 SUITS AGAINST THE PARTNERSHIPS...........-14-
ARTICLE 5.........................................-14-
5.1 ORGANIZATION AND GOOD STANDING...........-14-
5.2 AUTHORIZATION OF AGREEMENT; NO
VIOLATION; NO CONSENTS...................-15-
5.3 GOVERNMENTAL CONSENTS....................-15-
5.4 ENFORCEABILITY...........................-15-
5.5 SUITS....................................-15-
5.6 FINANCING................................-15-
5.7 VALUE OF BUYER'S ASSETS..................-15-
5.8 PERFORMANCE OF OBLIGATIONS...............-15-
5.9 BROKERS..................................-16-
ARTICLE 6.........................................-16-
6.1 COMMERCIALLY REASONABLE EFFORTS..........-16-
6.2 CONDUCT OF BUSINESS PRIOR TO THE
EFFECTIVE TIME...........................-16-
6.3 DIVIDENDS................................-16-
6.4 CREDIT RATING; LETTERS OF CREDIT.........-16-
6.5 ACCESS...................................-17-
6.6 TRANSITION SERVICES......................-17-
6.7 COMPUTER SOFTWARE........................-17-
6.8 RECORDS: ACCESS AND RETENTION............-18-
6.9 NAMES....................................-18-
6.10 EMPLOYMENT MATTERS.......................-19-
6.11 SUPPLEMENTS TO SCHEDULES.................-21-
6.12 SELLER'S PROPERTY LOCATED ON EASEMENTS
AFTER CLOSING............................-21-
6.13 CURRENT REPORT ON FORM 8-K...............-22-
6.14 BUSINESS OPPORTUNITIES...................-22-
6.15 SALE OF TRANSFERRED LP UNITS.............-23-
6.16 RETAINED LITIGATION......................-23-
ARTICLE 7.........................................-23-
7.1 SECTION 338(H)(10) ELECTIONS.............-23-
7.2 PREPARATION OF TAX RETURNS;
RESPONSIBILITY FOR TAXES.................-24-
7.3 ACCESS TO INFORMATION....................-25-
7.4 TRANSFER TAXES...........................-26-
7.5 TAX SHARING AGREEMENTS...................-26-
7.6 NON-FOREIGN PERSON AFFIDAVIT.............-26-
7.7 ASSISTANCE AND COOPERATION...............-26-
ARTICLE 8.........................................-26-
8.1 REPRESENTATIONS..........................-27-
8.2 PERFORMANCE..............................-27-
8.3 PENDING MATTERS..........................-27-
8.4 ASSUMPTION OF ENRON CORP. OBLIGATIONS....-27-
8.5 RETURN OF ENRON GUARANTY.................-27-
8.6 BANK ONE CONSENT.........................-27-
8.7 SALE OF TRANSFERRED LP UNITS.............-27-
ARTICLE 9.........................................-27-
9.1 REPRESENTATIONS..........................-27-
9.2 PERFORMANCE..............................-27-
9.3 PENDING MATTERS..........................-28-
9.4 RESIGNATION OF OFFICERS AND DIRECTORS....-28-
9.5 SALE OF TRANSFERRED LP UNITS.............-28-
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ARTICLE 10........................................-28-
10.1 TERMINATION AT OR PRIOR TO CLOSING.......-28-
10.2 EFFECT OF TERMINATION....................-28-
ARTICLE 11........................................-28-
11.1 INDEMNIFICATION BY BUYER.................-28-
11.2 INDEMNIFICATION BY SELLER................-29-
11.3 LIMITATION ON DAMAGES; SURVIVAL OF
REPRESENTATIONS..........................-29-
11.4 NOTICE OF ASSERTED LIABILITY;
OPPORTUNITY TO DEFEND....................-31-
11.5 EXCLUSIVE REMEDY.........................-31-
11.6 NEGLIGENCE AND STRICT LIABILITY WAIVER...-31-
ARTICLE 12........................................-32-
12.1 APPLICABLE LAW; ALTERNATIVE DISPUTE
RESOLUTION...............................-32-
12.2 EXPENSES.................................-33-
12.3 INDEPENDENT INVESTIGATION................-33-
12.4 DISCLAIMER REGARDING ASSETS..............-33-
12.5 WAIVER OF TRADE PRACTICES ACTS...........-33-
12.6 NO THIRD PARTY BENEFICIARIES.............-34-
12.7 WAIVER...................................-35-
12.8 ENTIRE AGREEMENT; AMENDMENT..............-35-
12.9 NOTICES..................................-35-
12.10 NO ASSIGNMENT...........................-36-
12.11 SEVERABILITY............................-36-
12.12 PUBLICITY...............................-36-
12.13 CONSTRUCTION............................-36-
12.14 COUNTERPARTS............................-36-
12.15 FURTHER ASSURANCES......................-37-
12.16 PAYMENT OF FUNDS........................-37-
12.17 CERTAIN INTERPRETIVE MATTERS............-37-
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AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT (this "Agreement")
dated as of February 14, 1997, is between ENRON LIQUIDS HOLDING CORP., a
Delaware corporation ("Seller"), as seller, and XXXXXX XXXXXX, INC., a Delaware
corporation ("Buyer"), as buyer. Buyer was previously known as "KC Liquids
Holding Corporation" but has changed its corporate name to "Xxxxxx Xxxxxx, Inc."
WHEREAS, Seller owns all of the outstanding capital stock of Enron Liquids
Pipeline Company, a Delaware corporation ("ELPC");
WHEREAS, ELPC is the general partner of Enron Liquids Pipeline, L.P., Enron
Liquids Pipeline Operating Limited Partnership, and Enron Transportation
Services, L.P. with approximately an aggregate 2% general partner interest and
approximately a 13% limited partner interest in Enron
Liquids Pipeline, L.P.;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to acquire from
Seller, the ELPC Shares (as defined below) pursuant to the terms of this
Agreement;
WHEREAS, pursuant to the terms of a Purchase and Sale Agreement dated
January 8, 1997, between Buyer and Seller (the "Prior Contract"), Seller agreed
to sell to Buyer and Buyer agreed to acquire from Seller the ELPC Shares;
WHEREAS, the parties have determined that it is necessary and appropriate
to supersede and replace the Prior Contract in order to implement certain agreed
changes thereto, including the modification of certain representations and
warranties contained in the Prior Contract; and
WHEREAS, as of the date hereof, this Agreement
replaces and supersedes the Prior Contract in all respects;
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
"Acquired Employees" or "Acquired Employee" shall have the meaning given
such term in Section 6.10.
"Adjusted Purchase Price" shall have the meaning given such term in Section
2.2.
"Affiliate" shall mean with respect to any Person, any Person which
directly or indirectly, controls, is controlled by, or is under a common control
with such Person. The term "control" (including the terms "controlled by" and
"under common control with") as used in the preceding
-1-
sentence means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise, and with respect to
any ERISA regulated Benefit Plan shall have the meaning ascribed thereto in
Section 414 of the IRC and the rules and regulations thereunder.
"API" shall have the meaning given such term in the Partnership Agreement
of ELPLP.
"Applicable Period" shall have the meaning set forth in the Omnibus
Agreement.
"Balance Sheets" shall have the meaning given such term in Section 4.7.
"Benefit Plans" shall mean collectively, the Plans and each other plan,
contract, or arrangement providing for bonuses, pensions, deferred compensation,
retirement plan payments, profit sharing, incentive pay, hospitalization or
medical expenses or insurance for any officer, consultant, director or employee
associated with ELPC's Business and/or their covered dependents (other than
directors' and officers' liability policies), whether or not insured.
"Buyer Controlled Group" shall have the meaning given such term in Section
6.10.
"Buyer Indemnitees" shall have the meaning given such term in Section 11.2.
"Buyer Material Adverse Effect" shall mean any material and adverse effect
on the assets, liabilities, financial condition, business, operations, affairs
or circumstances of Buyer.
"Closing" shall have the meaning given such term in Section 3.1.
"Closing Date" shall have the meaning given such term in Section 3.1.
"Contracts" shall have the meaning given to such term in Section 4.9.
"Customary Post Closing Consents" shall mean consents and approvals from
Governmental Authorities or third parties that are customarily obtained after
Closing in connection with transactions similar in nature to the transactions
contemplated hereby.
"Effective Time" shall mean 11:59 p.m. on the Closing Date.
"ELPC's Business" shall mean the conduct, direction and management of
ELPLP, ELPOLP, ETS and ENGL pursuant to the terms of the Partnership Agreements.
"ELPC Shares" shall mean all of the issued and outstanding shares of common
stock, par value $10.00 per share, of Enron Liquids Pipeline Company, a Delaware
corporation.
"ELPLP" shall mean Enron Liquids Pipeline, L.P.
"ELPOLP" shall mean Enron Liquids Pipeline Operating Limited Partnership.
-2-
"ELSC" shall mean Enron Liquid Services Corp., a Delaware corporation.
"ENGL" shall mean Enron Natural Gas Liquids
Corporation.
"Employee Schedule" shall have the meaning given such term in Section 6.10.
"Encumbrance" shall mean any lien, pledge, condemnation proceeding, claim,
restriction, security interest, mortgage or similar encumbrance.
"Environmental Laws" shall mean, as to any given asset, all laws, statutes,
ordinances, rules and regulations of any Governmental Authority pertaining to
protection of the environment or human health in effect as of the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated and rulings issued thereunder.
"ETS" shall mean Enron Transportation Services, L.P.
"Excluded Affiliate" shall mean those Affiliates which Enron Corp. or its
Affiliates own less than 80% of the outstanding common stock, partnership
interest or joint venture interest, as the case may be.
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles.
"General Partner Interest" shall mean the 1% general partner interest in
ELPLP and the 1.0101% general partner interest in each of ELPOLP and ETS.
"Governmental Authority" shall mean the United States and any state,
county, city or other political subdivision, agency, department, board, court or
instrumentality that exercises jurisdiction over the asset or entity in
question.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 and the rules and regulations adopted pursuant thereto.
"Income Taxes" shall mean federal income taxes as provided in IRC ss.11,
alternative minimum tax as provided in IRC ss.55, and any state taxes measured
by net income, and any interest and penalties thereon.
"IRC" shall mean the Internal Revenue Code.
"JAMS" shall mean Judicial Arbitration & Mediation Services, Inc.
-3-
"Knowledge" or "known" or any similar term shall mean the actual knowledge
of such person's executive officers and key operational and management
personnel.
"Law" shall mean any statute, law, ordinance, rule, regulation or order of
any Governmental Authority.
"Letter of Credit" shall mean an irrevocable standby letter of credit
issued by a bank acceptable to Enron Corp. for the benefit of Enron Corp. in an
amount equal to Enron Corp.'s maximum remaining liability (measured from time to
time) for the purchase of APIs during the "Support Period" (as defined in the
ELPLP Partnership Agreement) having an expiry date of November 21, 1997.
"Limited Partner Interest" shall mean the 860,000 limited partner units in
ELPLP, which represents approximately a 13% limited partner interest in ELPLP,
and includes the Retained LP Units and the Transferred LP Units.
"Losses" shall have the meaning given such term in Section 11.1
"Net Worth Note" shall mean that certain demand promissory note of Enron
Corp. payable to ELPC in the original principal amount of $14.5 million.
"Omnibus Agreement" shall mean that certain Omnibus Agreement, dated as of
August 6, 1992, among Enron Corp., ELPLP, ETS, ELPOLP and ELPC, as amended.
"Partnership Agreements" shall mean the agreements of limited partnership,
as amended from time to time, of ELPLP, ELPOLP and ETS.
"Past Service" shall have the meaning given such term in Section 6.10.
"Pension Plan" shall mean any "employee pension benefit plan" as such term
is defined in Section 3(2) of ERISA which is maintained by, or otherwise
contributed to or sponsored by, Seller or any ERISA Affiliate for the benefit of
the employees associated with ELPC's Business.
"Plan" shall mean any "employee benefit plan" as such term is defined in
Section 3(3) of ERISA which is maintained by, or otherwise contributed to or
sponsored by, Seller or any ERISA Affiliate for the benefit of the employees
associated with ELPC's Business.
"Purchase Price" shall have the meaning given such term in Section 2.2.
"Records" shall have the meaning given such term in Section 6.8.
"Retained Liabilities" shall mean the liabilities, duties and obligations
of ELPC described on Exhibit A.
-4-
"Retained LP Units" shall mean the 431,000 limited partner units in ELPLP
which will be owned by ELPC after sale of the Transferred LP Units.
"Seller Group" shall have the meaning given such term in Section 7.1.
"Seller Indemnitees" shall have the meaning given such term in Section
11.1.
"Seller Material Adverse Effect" shall mean any material and adverse effect
on the use, ownership or operation of ELPC and ELPC's Business, taken as a
whole.
"Tax" or "Taxes" shall mean all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, imposed by any federal, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including, but not limited to, federal income taxes and state income
taxes), real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, and other
obligations of the same or of a similar nature to any of the foregoing.
"Tax Returns" all returns and reports of or with respect to any federal,
state or other tax which are required to be filed with respect to ELPC.
"Transfer Taxes" shall mean all transfer Taxes (excluding Taxes measured by
net income), including without limitation sales, use, excise (including excise
Taxes on petroleum, products of petroleum, petrochemicals and other taxable
substances), stock, stamp, documentary, filing, recording, permit, license,
authorization, and similar Taxes, filing fees and similar charges.
"Transferred LP Units" shall mean the 429,000 limited partner units in
ELPLP which will be sold by ELPC prior to Closing.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Subject to the terms and conditions hereof, at the
Closing (i) Seller agrees to sell to Buyer the ELPC Shares for the payment to
Seller equal to the Purchase Price, and Buyer agrees to purchase from Seller the
ELPC Shares for the Purchase Price.
-5-
2.2 Purchase Price. Buyer agrees to pay an aggregate amount to Seller of
$21,744,981 (the "Purchase Price"), as adjusted at Closing pursuant to Section
2.3 of this Agreement (the "Adjusted Purchase Price") by means of a completed
Federal Funds wire transfer of immediately available funds to an account
designated by Seller.
2.3 Adjustments to the Purchase Price. (a) The Purchase Price shall be
increased by the following amounts:
(i) All capital contributions, including the purchase by ELPC of APIs,
if any, required to be made pursuant to the Partnership Agreement of ELPLP,
made by ELPC with respect to any of the General Partner Interests, which
are attributable to the period of time from and after January 8, 1997 to
the Effective Time;
(ii) all pre-paid items that are attributable to ELPC as of the
Effective Time, such prepaid items to be determined in accordance with GAAP
and in a manner consistent with the accounting practices used in preparing
the historical Balance Sheet, and such increase will be made only to the
extent the prepaid items have not been distributed to Seller in connection
with the transfer of ELPC's current assets to Seller as contemplated in
Section 6.3;
(iii) the pro rata portion of any distributions payable by ELPLP,
ELPOLP or ETS on the General Partner Interests and the Retained LP Units
after the Closing that are attributable to the fourth quarter of 1996
(unless such amount is dividended to Seller pursuant to Section 6.3) and
the first quarter of 1997;
(iv) the distribution payable by ELPLP on the Transferred LP Units
after the Closing that are attributable to the fourth quarter of 1996
(unless such amount is dividended to Seller pursuant to Section 6.3);
(v) if the distribution on the Transferred LP Units with respect to the
first quarter of 1997 exceeds $.63 per Transferred LP Unit, then an amount
equal to (.5) * (x - $.63) * (429,000) where x equal the distribution per
Transferred LP Unit with respect to the first quarter of 1997;
(vi) the amount, if any, of fees, royalties and charges of third
parties incurred by Seller or its Affiliates to obtain consents, additional
licenses or sublicenses and other documentation necessary for Seller or its
Affiliates to transfer, assign or license to Buyer such software determined
by Seller and Buyer as necessary for Buyer to operate ELPC's Business; and
(vii) any other amount specifically provided for in this Agreement or
agreed upon in writing by Buyer and Seller.
(b) The Purchase Price shall be decreased by any amount specifically
provided for in this Agreement or agreed upon in writing by Buyer and Seller.
-6-
(c) The adjustments described in Sections 2.3(a) and (b) are hereinafter
referred to as the "Purchase Price Adjustments".
2.4 Statement. Not later than three (3) business days prior to the Closing
Date, Seller shall prepare and deliver to Buyer a statement (the "Statement") of
the estimated Purchase Price Adjustments and the estimated Adjusted Purchase
Price ("Estimated Adjusted Purchase Price"). At Closing, Buyer shall pay the
Estimated Adjusted Purchase Price.
2.5 Post-Closing Adjustments to the Purchase Price. (a) On or before ninety
(90) days after the Closing Date, Seller shall prepare and deliver to Buyer a
revised Statement setting forth the actual Purchase Price Adjustments. To the
extent reasonably required by Seller, Buyer shall assist in the preparation of
the revised Statement. Seller shall provide Buyer such data and information as
Buyer may reasonably request supporting the amounts reflected on the revised
Statement in order to permit Buyer to perform or cause to be performed an audit.
The revised Statement shall become final and binding upon the parties on the
30th day following receipt thereof by Buyer (the "Final Settlement Date") unless
Buyer gives written notice of its disagreement ("Notice of Disagreement") to
Seller prior to such date. Any Notice of Disagreement shall specify in detail
the dollar amount, nature and basis of any disagreement so asserted. If a Notice
of Disagreement is received by Seller in a timely manner, then the Statement (as
revised in accordance with clause (i) or (ii) below) shall become final and
binding on the parties on, and the Final Settlement Date shall be, the earlier
of (i) the date Seller and Buyer agree in writing with respect to all matters
specified in the Notice of Disagreement or (ii) the date on which the Final
Statement (as hereinafter defined) is issued by the Arbitrator (as hereinafter
defined).
(b) During the thirty (30) days following the date of receipt by Seller of
the Notice of Disagreement, Seller and Buyer shall attempt to resolve in writing
any differences that they may have with respect to all matters specified in the
Notice of Disagreement. If, at the end of such 30 day period (or earlier by
mutual agreement to arbitrate), Buyer and Seller have not reached agreement on
such matters, the matters that remain in dispute may be submitted to an
arbitrator (the "Arbitrator") by either party for review and resolution. The
Arbitrator shall be a nationally recognized independent public accounting firm
as shall be agreed upon by Buyer and Seller in writing. Each party shall, not
later than seven (7) business days prior to the hearing date set by the
Arbitrator, submit a brief with dollar figures for settlement of the disputes as
to the amount of the Adjusted Purchase Price (together with a proposed Statement
that reflects such figures). The figures submitted need not be the figures
offered during prior negotiations. The hearing will be scheduled seven (7)
business days following submission of the settlement figures, or as soon
thereafter as is acceptable to the Arbitrator, and shall be conducted on a
confidential basis without continuance or adjournment. The Arbitrator shall
render a decision resolving the matters in dispute (which decision shall include
a written statement of findings and conclusions) within three (3) business days
after the conclusion of the hearing, unless the parties reach agreement prior
thereto and withdraw the dispute from arbitration. The Arbitrator shall provide
to the parties explanations in writing of the reasons for its decisions
regarding the Adjusted Purchase Price and shall issue the Final Statement
reflecting such decisions. The decision of the Arbitrator shall be final and
binding on the parties. The cost of any arbitration (including the fees and
expenses of the Arbitrator) pursuant to this Section 2.5 shall be borne equally
by Buyer, on the one hand, and Seller, on the other hand. The fees and
disbursements of Seller's independent auditors incurred
-7-
in connection with the procedures performed with respect to the Statement shall
be borne by the Seller and the fees and disbursements of Buyer's independent
auditors incurred in connection with their preparation of the Notice of
Disagreement shall be borne by Buyer. As used in this Agreement the term "Final
Statement" shall mean the revised Statement described in Section 2.5(a), as
prepared by Seller and as may be subsequently adjusted to reflect any subsequent
written agreement between the parties with respect thereto, or if submitted to
the Arbitrator, the Statement issued by the Arbitrator.
(c) If the amount of the Adjusted Purchase Price as set forth on the Final
Statement exceeds the amount of the Estimated Adjusted Purchase Price paid at
Closing, then Buyer shall pay to Seller, within five (5) business days after the
Final Settlement Date, the amount by which the Adjusted Purchase Price as set
forth on the Final Statement exceeds the amount of the Estimated Adjusted
Purchase Price paid at Closing. If the amount of the Adjusted Purchase Price as
set forth on the Final Statement is less than the amount of the Estimated
Adjusted Purchase Price paid at Closing, then Seller shall pay to Buyer, within
five (5) business days after the Final Settlement Date, the amount by which the
Adjusted Purchase Price as set forth on the Final Statement is less than the
amount of the Estimated Adjusted Purchase Price paid at Closing. Any
post-Closing payment made pursuant to this Section 2.5(c) shall be made by means
of a Federal Funds wire transfer of immediately available funds to a bank
account designated by the party receiving the funds.
ARTICLE 3
CLOSING
3.1 Time and Place of Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. in
the offices of Seller at 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, on the last
business day of the month in which all conditions set forth in Articles 8 and 9
have been satisfied or waived by the appropriate party (the "Closing Date"), and
shall be effective as of the Effective Time; provided, however, that the parties
shall have the right to delay the Closing until February 28, 1997.
3.2 Deliveries by Seller and Buyer at or Prior to Closing. At the Closing,
(i) Seller and Buyer will execute and deliver, or cause their respective
Affiliates to execute and deliver, the agreement referred to in Section 8.4(i),
(ii) Seller will deliver to Buyer stock certificates representing all of the
ELPC Shares endorsed in blank or accompanied by duly executed assignment
documents, (iii) Seller and ELPC will execute and deliver an assignment and
assumption agreement, in substantially the form of Exhibit B attached hereto,
pursuant to which the accounts receivable and Retained Liabilities will be
assigned to, and assumed by, Seller; (iv) if agreed to by the parties, Seller
and Buyer will execute and deliver an agreement regarding transition services in
a form mutually agreeable to the parties, (v) Buyer shall deliver to Seller the
Letter of Credit, and (vi) Buyer will deliver to Seller the estimated Adjusted
Purchase Price.
-8-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as of the
Closing Date that:
4.1 Organization and Good Standing of Seller and ELPC. Each of Seller and
ELPC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power, right and
authority to own and lease the properties and assets it currently owns and
leases and to carry on its business as such business is currently being
conducted. On or before the date hereof Seller has delivered to Buyer true and
complete copies of the charter and bylaws of ELPC, each as amended to date and
presently in effect. Section 4.1 of the Disclosure Schedule lists the officers
and directors of ELPC.
4.2 Qualification. Except as set forth in Section 4.2 of the Disclosure
Schedule ELPC is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the nature of ELPC's Business
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Seller Material Adverse Effect.
4.3 Capitalization of ELPC. Section 4.3 of the Disclosure Schedule sets
forth for ELPC, the number of authorized shares of its capital stock, the number
of issued and outstanding shares of its capital stock and the owner thereof. The
issued and outstanding capital stock of ELPC has been duly authorized, validly
issued, fully paid and is nonassessable. There are no preemptive rights with
respect to the issuance of the shares of capital stock of ELPC. There are no
outstanding options, warrants, purchase rights, conversion rights, exchange
rights, or other contracts or commitments that could require ELPC to issue, sell
or otherwise cause to become outstanding any of such entity's capital stock.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of ELPC.
4.4 Authorization of Agreement; No Violation; No Consents. This Agreement
has been duly executed and delivered by Seller. Seller has the full corporate
power and authority to enter into this Agreement, to make the representations,
warranties, covenants and agreements made herein and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action on the part
of Seller. Except as set forth on Section 4.4 of the Disclosure Schedule,
neither the execution and delivery of this Agreement by Seller nor the
consummation by Seller of the transactions contemplated hereby (a) will conflict
with, result in a breach, default or violation of, require consent of any third
party or give rise to a right of acceleration, termination, option to purchase
or sell any asset or otherwise adjust any material term (e.g., any price or
interest rate) (with or without notice, lapse of time, or both) under (i) the
terms, provisions or conditions of the Certificate of Incorporation or Bylaws of
Seller or ELPC or under the Partnership Agreements, or (ii) to the knowledge of
Seller, any judgment, decree, order, governmental permit, certificate, license,
law, statute, rule, regulation or material contract or agreement to which Seller
or ELPC is a party or is subject, or to which ELPC's Business is subject, except
for (A) Customary Post-Closing Consents, and (B) any conflict, breach, default,
violation, or consent that would not have, individually or in the aggregate, a
Seller Material Adverse Effect, or (b) will result in the creation
-9-
of any Encumbrance on the ELPC Shares, the General Partnership Interests or the
Limited Partner Interests or other assets of ELPC, ELPLP, ELPOLP, ETS or ENGL.
4.5 Governmental Consents. To the knowledge of Seller and except as set
forth on Section 4.5 of the Disclosure Schedule, no consent, action, approval or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to authorize, or is otherwise required in connection with,
the execution and delivery of this Agreement by Seller or Seller's performance
of the terms of this Agreement or the validity or enforceability hereof against
Seller, except for Customary Post-Closing Consents.
4.6 Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and general principles
of equity.
4.7 Balance Sheet. Section 4.7 of the Disclosure Schedule sets forth the
unaudited historical and pro forma balance sheets as of September 30, 1996 of
ELPC (the "Balance Sheets"). In the opinion of management of Seller, the
historical Balance Sheet has been prepared in accordance with GAAP, except as
stated therein, and fairly presents in all material respects the financial
position of ELPC at September 30, 1996, and (ii) the pro forma Balance Sheet
includes adjustments, as stated therein, contemplated by this Agreement.
4.8 Absence of Changes. Except as set forth in Section 4.8 of the
Disclosure Schedule, since September 30, 1996:
(a) there has not been any Seller Material Adverse Effect;
(b) there has been no issuance by ELPC of any shares of its capital stock,
or any repurchase or redemption by it of any shares of its capital stock;
(c) there has been no merger or consolidation of ELPC with any other person
or any acquisition by any such entity of the stock or business of any other
person;
(d) there has not been any sale, lease or other disposition of properties
or assets of ELPC, other than those in the ordinary course of business that have
not resulted in a Seller Material Adverse Effect;
(e) there has been no borrowing of funds, agreement to borrow funds or
guaranty by ELPC, other than loans or guaranties in the ordinary course of
business for the benefit of ELPLP, ELPOLP, ETS or ENGL, and transactions with
Seller or its Affiliates (other than ELPLP, ELPOLP, ETS and ENGL), which
transactions with Seller or its Affiliates will be settled at Closing;
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(f) there has been no creation or imposition of any Encumbrance on the
General Partner Interests or the Limited Partner Interests, other than pursuant
to the Partnership Agreements;
(g) ELPC has not made or entered into any employment, consulting, severance
or indemnification agreement with any employees, nor has ELPC incurred or
entered into any collective bargaining agreement or other obligation to any
labor organization or employee;
(h) there is no contract, commitment or agreement to do any of the
foregoing, except as expressly permitted hereby;
(i) ELPC and ELPC's Business have been operated and conducted only in the
ordinary course of business.
4.9 Contracts. (a) Section 4.9 of the Disclosure Schedule includes a list
of all contracts and agreements to which ELPC is a party in its own behalf, and
not solely as the general partner of ELPLP, ELPOLP or ETS (the "Contracts"),
except that the provisions of paragraph (b) of this Section 4.9 shall not apply
to those items marked with an asterisk in Section 4.9 of the Disclosure
Schedule.
(b) Each such Contract is in full force and effect, except where the
failure to be in full force and effect is not reasonably likely to have a Seller
Material Adverse Effect. ELPC has in all respects 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 and no
circumstance or condition exists which with notice or lapse of time, or both,
would constitute a default under any such contract. To the knowledge of Seller,
no other party to any Contract is in default thereunder.
4.10 Suits. Except as set forth in Section 4.10 of the Disclosure Schedule,
there is no legal, administrative or arbitration proceeding pending or, to the
knowledge of Seller, threatened before any Governmental Authority against (a)
Seller (i) in connection with the ownership of the ELPC Shares or (ii) that
would prohibit or delay in any material respect the consummation of the
transactions contemplated hereby, or (b) ELPC.
4.11 Compliance With Laws. To the knowledge of Seller, ELPC is in
substantial compliance with each Law applicable to it and related to ELPC or
ELPC's Business, as the case may be, except for any violation that would not
have a Seller Material Adverse Effect. To the knowledge of Seller, ELPC
possesses all governmental licenses, permits, and certificates necessary for the
current operation of ELPC's Business except to the extent such permits are held
by ELPOLP, ETS or ENGL or that the failure to possess such governmental
licenses, permits, and certificates would not have a Seller Material Adverse
Effect. Nothing in this Section 4.11 shall be deemed or construed to constitute
a representation or warranty with respect to Environmental Laws.
4.12 Tax Matters. Except as set forth in Section 4.12 of the Disclosure
Schedule or as would not have a Seller Material Adverse Effect:
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(a) all returns and reports of or with respect to any Tax which are
required to be filed on or before the Closing Date by or with respect to ELPC
("Tax Returns") have been or will be duly and timely filed;
(b) all Taxes which are shown to be due on such Tax Returns have been or
will be timely paid in full; (c) all Tax withholding requirements imposed on or
with respect to ELPC have been satisfied in full in all respects; (d) no
assessment, deficiency or adjustment has been asserted in writing with respect
to any such Tax Return; and (e) there is not in force any extension of time with
respect to the due date for the filing of any such Tax or any waiver or
agreement for any extension of time for the assessment or payment of any Tax due
with respect to the period covered by any such Tax Return.
(c) ELPC has made valid elections under IRC Section 754 for ELPLP, ELPOLP
and ETS, and such elections have been valid, binding and in force since the
formation date of each of such entities and through the Closing Date.
4.13 Condition of the Assets; Preferential Rights to Purchase. (a) ELPC
owns the General Partner Interests and the Retained L.P. Units free and clear of
all Encumbrances, subject to the terms and provisions of the Partnership
Agreements and the Omnibus Agreement. At the time of the sale of the Transferred
LP Units, ELPC owned such units free and clear of any Encumbrances, subject to
the terms of the Partnership Agreement of ELPLP. Except for applicable
requirements of federal and state securities laws, there are no restrictions
upon the sale, transfer or assignment by ELPC of the Limited Partner Interests.
On the Closing Date immediately after the Closing, all of the conditions and
requirements set forth in the Partnership Agreement of ELPLP will be satisfied
and the Limited Partner Interest will be converted from "Deferred Participation
Units" to "Common Units" (as such terms are defined in the Partnership Agreement
of ELPLP) in the manner described in Section 5.7(c) of such Partnership
Agreement.
(b) Except as listed in Section 4.13 of the Disclosure Schedule or
elsewhere in this Agreement, there are no rights to purchase the General Partner
Interests or the Limited Partner Interests or the ELPC Shares.
(c) Seller is the owner, free and clear of any Encumbrances, of the ELPC
Shares.
4.14 Employees and Employee Benefit Plans and Policies. ELPC in its
capacity as general partner of ETS is a party to a collective bargaining
agreement with Local 318, International Union Of Operating Engineers, AFL-CIO
(the "IUOE Bargaining Agreement"). Seller has provided Buyer with a copy of the
IUOE Bargaining Agreement and a list indicating the job position of each
employee of ELPC who is represented thereby with respect to employment with
ELPC. ELPC is not a party to or bound by any other collective bargaining
agreement with respect to its employees. No material work stoppage affecting
ELPC is pending or, to the knowledge of Seller, threatened. There is no pending
or, to Seller's knowledge, any threatened labor dispute, arbitration, lawsuit,
or administrative proceeding relating to labor matters involving employees of
ELPC (excluding routine workers' compensation claims) that could reasonably be
expected to have a Seller Material Adverse Effect.
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4.15 Employee Matters. (a) Employment Obligations. Part I of Section 4.15
of the Disclosure sets forth a list of each individual employment, consulting,
severance, indemnification, or similar agreement, arrangement or contract
related to employment or personal services that exists between ELPC and any
current or former officer, consultant, director, employee or other person or
entity (all such agreements or contracts are hereinafter referred to as the
"Employment Obligations"), for which ELPC has an existing or future obligation.
True, correct and complete copies of governing documents for each of the
Employment Obligations have been furnished to Buyer.
(b) Company Employees. Except as may occur in the ordinary course of
business, there shall be no change in the job title or position, base salary,
work location or amount of eligible bonus for any of the employees of ELPC (the
"Company Employees") from the date of this Agreement until the Closing. Company
Employees who are not covered under a collective bargaining agreement or Skill
Based Pay are eligible for annual merit increases effective February 1, 1997,
not to exceed a budgeted amount equal to 4.25 percent of aggregate base
salaries.
(c) ELPC's Plans and Compensation Schedule. ELPC is neither the sponsor of
nor a "substantial employer" (as such term is defined in Section 4001(a)(2) of
ERISA) in any "employee benefit plan" (and any related trust or funding
arrangement) as such term is defined in Section 3(3) of ERISA ("Employee Benefit
Plan"). ELPC is a participating employer in certain Employee Benefit Plans
sponsored by an affiliated company of Seller which provide benefits for Company
Employees who are not a members of or represented by a collective bargaining
unit ("Enron's Plans") Except as disclosed on Section 4.15 of the Disclosure
Schedule, no Company Employee who is a member of or represented by a collective
bargaining unit is a participant in any of Enron's Plans. Part II of Section
4.15 of the Disclosure Schedule (the "Compensation Schedule") sets forth a list
identifying each compensation or remuneration plan or program that is not an
Employee Benefit Plan, excluding any collective bargaining agreement, that is
maintained by ELPC for any of ELPC Employees.
(d) No Changes. Except as provided by this Agreement or as required by law,
through the Closing Date, there will be no change in any of the Employment
Obligations or Enron's Plans, or in the administration thereof, that would have
a material adverse effect on ELPC.
(e) Multi-Employer Plans. (i) Part III of Section 4.15 of the Disclosure
Schedule lists each Employee Benefit Plan which is a multi-employer plan (within
the meaning of section 3(37) of ERISA) ("Multi-Employer Plan") to which ELPC has
or has had within the last seven (7) years an obligation to contribute or with
respect to which ELPC has participated, subscribed to or maintained.
(ii) Copies of all current and prior material documents, including all
amendments thereto, in the possession of ELPC with respect to each
Multi-Employer Plan have been delivered to Buyer. These documents include,
but are not limited to, the following: collective bargaining agreements,
plan and trust documents, plan rules with respect to withdrawal, estimates
of withdrawal liability, and statements of unfunded vested benefits and
contribution history.
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(iii) Part IV of Section 4.15 of the Disclosure Schedule sets out the
amount of contributions, and the number of contribution base units with
respect to such contributions, that ELPC has made to each Multi-Employer
Plan for each plan year of such Plan.
(iv) Part V of Section 4.15 of the Disclosure Schedule sets out the
liabilities that ELPC would incur with respect to each Multi-Employer Plan
on a complete withdrawal from each such Plan as of the most recent
calculation, under the applicable terms and conditions of each such Plan
and the applicable provisions of law.
(v) ELPC has not made a complete or partial withdrawal from any
Multi-Employer Plan for which a liability does or shall exist.
(vi) Except with respect to contributions owed under collective
bargaining agreements with respect to each Multi-Employer Plan, ELPC has
and has had no liability to or in connection with any Multi-Employer Plan
and will not incur any such liability on or before the Closing Date. All
obligations of ELPC to contribute to any Multi-Employer Plan incurred or
accrued as of the Closing Date have been or will be paid in full by ELPC.
4.16 Public Filings. There have been no material misstatements or omissions
in any Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current
Report on Form 8-K, or any amendment to any of the foregoing filed by ELPLP with
the Securities and Exchange Commission with respect to its fiscal year ended
December 31, 1993 or thereafter.
4.17 Brokers. No broker or finder who acted on behalf of Seller or any
Affiliate of Seller is entitled to any brokerage or finder's fee, or to any
commission, based in any way on agreements, arrangements or understandings made
by or on behalf of Seller or any Affiliate of Seller for which the Buyer or ELPC
has or will have any liabilities or obligations (contingent or otherwise).
4.18 Suits Against the Partnerships. Except as set forth in Section 4.18 of
the Disclosure Schedule, there is no legal, administrative or arbitration
proceeding pending or, to the knowledge of Seller, threatened before any
Governmental Authority against ELPLP, ELPOLP, ETS or ENGL.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date that:
5.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power, right and authority to own and lease the properties
and assets it currently owns and leases and to carry on its business as such
business is currently being conducted.
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5.2 Authorization of Agreement; No Violation; No Consents. This Agreement
has been duly executed and delivered by Buyer. Buyer has the full corporate
power and authority to enter into this Agreement, to make the representations,
warranties, covenants and agreements made herein and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action on the part
of Buyer. Neither the execution and delivery of this Agreement by Buyer nor the
consummation by Buyer of the transactions contemplated hereby will conflict
with, result in a breach, default or violation of, or require the consent of a
third party under (a) the terms, provisions or conditions of the Certificate of
Incorporation or Bylaws of Buyer or (b) to the knowledge of Buyer, any judgment,
decree, order, governmental permit, certificate, material agreement, license,
law, statute, rule or regulation to which Buyer is a party or is subject, or to
which the business, assets or operations of Buyer are subject, except for (i)
Customary Post-Closing Consents, and (ii) any conflict, breach, default or
violation that is not reasonably likely to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
5.3 Governmental Consents. To the knowledge of Buyer, no consent, action,
approval or authorization of, or registration, declaration, or filing with, any
Governmental Authority is required to authorize, or is otherwise required in
connection with, the execution and delivery of this Agreement by Buyer or
Buyer's performance of the terms of this Agreement or the validity or
enforceability hereof against Buyer, except for Customary Post-Closing Consents.
5.4 Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and general principles
of equity.
5.5 Suits. There is no injunction or restraining order or legal,
administrative or arbitration proceeding pending or, to Buyer's knowledge,
threatened against Buyer which restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
5.6 Financing. Buyer currently has commitments for (including commitments
for funds that can be drawn under existing lines of credit) all funds necessary
to pay the Purchase Price and any other amounts contemplated by this Agreement.
5.7 Value of Buyer's Assets. Buyer represents and warrants that its
"ultimate parent entity" (as that term is defined under the HSR Act) does not
have total assets or annual net sales of $10 million or more so as to require a
filing of the Notification and Report Form under the HSR Act.
5.8 Performance of Obligations. Buyer has reviewed the Partnership
Agreements and the Omnibus Agreement and understands the obligations of ELPC
thereunder. Following the Closing, ELPC will have the ability to perform all of
its obligations under the Partnership Agreement and the Omnibus Agreement to the
same extent it did prior to the Closing.
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5.9 Brokers. No broker or finder has acted for or on behalf of Buyer or any
Affiliate of Buyer in connection with this Agreement or the transactions
contemplated by this Agreement. No broker or finder is entitled to any brokerage
or finder's fee, or to any commission, based in any way on agreements,
arrangements or understandings made by or on behalf of Buyer or any Affiliate of
Buyer for which Seller have or will have any liabilities or obligations
(contingent or otherwise).
ARTICLE 6
COVENANTS
6.1 Commercially Reasonable Efforts. Each of the Buyer and Seller will use
commercially reasonable efforts to obtain the satisfaction of all conditions of
Closing attributable to such party in an expeditious manner.
6.2 Conduct of Business Prior to the Effective Time. (a) ELPC will continue
to operate ELPC's Business in all material respects in the ordinary course of
business and in accordance with the terms and provisions of the Partnership
Agreements and the Omnibus Agreement;
(b) Except as disclosed in Schedule 6.2(b) and except as provided in this
Agreement, Seller will not and will not cause or permit ELPC to, directly or
indirectly, do any of the following: (i) issue, sell, pledge, dispose of or
encumber: (A) any capital stock of ELPC or ENGL or (B) any of the General
Partner Interests, Limited Partner Interests or other general or limited partner
interests in ELPLP, ELPOLP or ETS or (C) any Common Units of ELPLP, (ii) amend
or propose to amend the charter or bylaws of ELPC or ENGL, (iii) amend or
propose to amend the certificate of limited partnership of ELPLP, ELPOLP or ETS,
the Partnership Agreements or the Omnibus Agreement, (iv) split, combine or
reclassify any outstanding capital stock of ELPC or ENGL, (v) redeem, purchase
or acquire or offer to acquire any such capital stock, (vi) incur any
indebtedness for borrowed money other than in the ordinary course of business,
(vii) enter into any transaction with Seller or any of its Affiliates (other
than ELPLP, ELPOLP, ETS or ENGL) other than in the ordinary course of business,
(viii) dividend any property, plant or equipment reflected on the Balance Sheets
(other than cash distributions received in respect of the General Partner
Interests or the Limited Partner Interests and the Net Worth Note) or the
proceeds from the sale thereof, other than proceeds from the sale of assets in
the ordinary course of business, or (ix) enter into any contract, agreement,
commitment or arrangement with respect to any of the matters prohibited by this
Section 6.2(b).
6.3 Dividends. On or before the Closing Date, Seller shall have the right
to cause ELPC to dividend to Seller any or all of the current assets of ELPC,
including distributions received from ELPLP, ELPOLP or ETS with respect to the
fourth (4th) quarter of 1996.
6.4 Credit Rating; Letters of Credit. (a) Buyer shall deliver to Seller the
Letter of Credit. The Letter of Credit will be in a form subject to the
reasonable satisfaction of Seller and Buyer and may only be drawn upon by Enron
Corp. to the extent Buyer fails to make any contributions to ELPLP which are
required under Part B of the Omnibus Agreement, and all proceeds of any such
draw will be contributed to ELPLP in exchange for APIs. All such APIs will be
issued to Buyer, or its designee.
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(b) At Closing, Buyer shall cause to be delivered to Seller an opinion of
legal counsel, in form and substance reasonably satisfactory to Buyer, to the
effect that ELPLP will continue to be classified as a partnership for tax
purposes, notwithstanding the distribution to Seller prior to Closing, of that
certain $14.5 million demand promissory note of Enron Corp. which opinion shall
contain the following assumptions of fact: (i) ELPLP had a reasonable basis
(within the meaning of Section 6662 of the Internal Revenue Code) for its
claimed classification; (ii) ELPLP did not undergo any change in its
classification since the date of formation of ELPLP; (iii) neither ELPLP nor any
partner of ELPLP has been notified in writing on or before the date of this
opinion that the classification of the entity was under examination; and (iv)
ELPC, as general partner, has made a valid protective election on Form 8832,
Entity Classification Election before March 14, 1997 to be effective as of
January 1, 1997. Buyer shall covenant and agree to abide by any conditions or
assumptions upon which such opinion of counsel is based in order to maintain
such tax status.
(c) Buyer shall cause Enron Corp. to be released from that certain
Guaranty, dated June 25, 1996, for the benefit of Wachovia Bank of Georgia by
either (i) delivering a replacement guaranty acceptable to such Bank, or (ii)
delivering a replacement letter of credit to Bank One, Texas, N.A., as Trustee,
for those certain tax exempt bonds issued by Xxxxxxx-Union Counties Regional
Port District due 2024. In either case any fees, charges or expenses to replace
the guaranty or the letter of credit shall be borne by Buyer and not by ETS,
ELPLP, ELPOLP or ENGL.
6.5 Access. Seller will permit Buyer's officers, employees, agents and
advisors to have reasonable access to ELPC and the employees associated with the
operation of ELPC's Business (so long as such access has been arranged through
Seller, occurs during normal business hours and does not unreasonably interfere
with the operation of ELPC's Business) for the following: (a) to inspect
facilities operated by ELPC on behalf of ELPOLP and ETS; (b) to observe the
operation of facilities operated by ELPC on behalf of ELPOLP and ETS and the
performance of duties by the employees associated with the facilities operated
by ELPC on behalf of ELPOLP and ETS prior to the Closing; and (c) related
purposes consistent with this Agreement. Buyer agrees to maintain the
confidentiality of all such information pursuant to the terms of that certain
letter agreement regarding confidentiality dated August 23, 1996, between Enron
Corp. and Xxxxxx Associates, Inc., an Affiliate of Buyer, as amended from time
to time (the "Confidentiality Agreement").
6.6 Transition Services. If deemed appropriate by the parties, Buyer and
Seller agree to negotiate an agreement regarding transition services containing
terms and conditions mutually agreeable to the parties, which agreement may be
executed by the parties and delivered at the Closing.
6.7 Computer Software. Schedule 6.7 sets forth a preliminary list of (i)
computer hardware that will not be transferred to Buyer because it is not used
exclusively in connection with the operation of ELPC's Business, and (ii)
software that Seller does not have the right to transfer, assign or license to
Buyer, which could cost $25,000 or more for Buyer to acquire. Buyer and Seller
will cooperate with each other to (a) identify at least fourteen (14) days prior
to the anticipated Closing Date those computer software systems currently being
used to operate ELPC's Business that will be needed by Buyer to continue such
operations following the Closing or
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following termination of the Transition Services Agreement, as the case may be,
(b) obtain all necessary third party consents, additional licenses and other
documentation necessary (i) for Seller and its Affiliates to provide the
services contemplated by the Transition Services Agreement, and (ii) for Buyer
to obtain the right to use the third party software identified by Buyer in
clause (a) above, through either a transfer, assignment or license by Sellers or
their Affiliates where legally permissible in the judgment of Sellers, or a
direct purchase by Buyer. In the event and to the extent that Seller or its
Affiliates are unable to transfer, assign or license any particular third party
software to Buyer, Buyer shall purchase its own license and make such
modifications or enhancements as may be necessary to carry on the operation of
ELPC's Business. At or as soon as commercially reasonable following the Closing,
Seller shall, or shall cause its Affiliates to, undertake to transfer, assign,
or license, as appropriate, all computer software systems necessary to operate
ELPC's Business, if such transfer, assignment or license is, in the judgment of
Seller, legally possible, provided, however, Buyer acknowledges that it may not
be possible for Seller to transfer, assign or license all such software systems.
The Purchase Price will be increased by the amount of any fees or charges of
third parties incurred by Seller or its Affiliates in order to take the action
specified in clause (b)(ii) above and agreed to by Seller and Buyer as
necessary. NOTWITHSTANDING THE FOREGOING, THE INABILITY OF SELLER OR ITS
AFFILIATES TO TRANSFER, ASSIGN OR LICENSE ANY SOFTWARE TO BUYER SHALL NOT BE
DEEMED UNDER ANY CIRCUMSTANCES TO BE THE FAULT OF, OR CREATE ANY LIABILITY UNDER
ANY LEGAL THEORY FOR SELLER OR ITS AFFILIATES WHETHER UNDER BREACH OF WARRANTY,
CONTRACT, TORT OR STRICT LIABILITY; IT BEING CLEARLY UNDERSTOOD BY BUYER THAT
SUCH MATTERS ARE BEYOND THE CONTROL OF SELLER OR ITS AFFILIATES.
6.8 Records: Access and Retention. (a) As soon as reasonably possible after
the completion of the accounting cycle for the period up to and including the
Closing Date, Seller will deliver to Buyer all files, records, information and
data ("Records") relating to ELPC or ELPC's Business that are in the possession
or control of Seller or ELPC. After the Closing, Buyer shall give Seller and its
authorized representatives such access, during normal business hours, to the
Records, as may be reasonably required by Seller, provided that such access does
not unreasonably interfere with the ongoing operations of Buyer. Seller shall be
entitled to keep or obtain extracts and copies of such Records.
(b) For a period of three (3) years after the Closing Date, Buyer shall
preserve and retain all such Records; provided, however, that in the event that
Buyer transfers all or a portion of the ELPC Shares or the General Partner
Interests to any third party during such period, Buyer may transfer to such
third party all or a portion of the Records related thereto, provided such third
party transferee expressly assumes in writing the obligations of Buyer under
this Section 6.8 and Buyer first offers to Seller the opportunity, at Seller's
expense, to copy the Records to be transferred.
6.9 Names. As soon as reasonably possible after Closing, but in no event
later than ninety (90) days after Closing, Buyer shall remove the names of
Seller and its Affiliates, including "ENRON" and all variations thereof, from
all of the assets and businesses owned by ELPC, ELPLP, ELPOLP, ETS and ENGL and
make the requisite filings with, and provide the requisite notices to, the
appropriate federal, state or local agencies to place the title or other indicia
of ownership, including operation of ELPC's Business, in a name other than any
name of Seller or
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any of its Affiliates, or any variations thereof. Seller shall file amendments
to the charter documents (and foreign qualification documents) of ELPC and ENGL,
and to the certificate of limited partnership (and foreign qualification
documents) of ELPLP, ELPOLP and ETS to remove "Enron" from each entity's name on
the Closing Date. Seller agrees to include in such amendments any name proposed
by Buyer at least five (5) business days prior to the Closing, provided that
where necessary Buyer delivers to Seller consents to use of such names.
6.10 Employment Matters. (a) Schedule 6.10 attached hereto lists by
category of employee, the number of employees employed by, or allocated to, ELPC
and the average base salary earned by such employees. Seller will deliver to
Buyer approximately thirty (30) days prior to the anticipated Closing Date a
schedule (the "Employee Schedule") to the Vice President, Human Resources of
Buyer that will set forth for each of the Company Employees the individual's (i)
date of employment, (ii) job title or position, (iii) base salary on an hourly
or annualized basis, (iv) work location, (v) collective bargaining unit status,
and (vi) if any, the amount of eligible annual bonus. Seller shall also furnish
Buyer with a copy of the relevant information from each Company Employee's
personnel files and historical compensation data, and such other information
that is reasonably requested by Buyer for the purpose of carrying out the
provisions of this Section 6.10, except as may be prohibited by law or
contractual obligation. Upon Closing, Buyer shall cause ELPC to continue the
employment of all Company Employees who are employed by ELPC on the Closing Date
(the "Continuing Employees") at their current base pay as of such date.
(b) Certain individuals who provide support services for ELPC's Business
and are located in the corporate offices of Seller and its Affiliates are
designated by Seller on the Employee Schedule as "Available Employees." Buyer
agrees to cause a member of the controlled group of which Buyer is a member
(including Buyer (and as of the Closing ELPC) the "Buyer Controlled Group") to
make offers of employment as of the Closing Date to all Available Employees.
Seller shall deliver the Employee Schedule for "Available Employees" on a
confidential basis to the Vice President, Human Resources of Buyer at least 30
days before the anticipated Closing Date showing the name, job position, work
location, and years of Past Service credit for all Available Employees. In
addition, Sellers will provide Buyer on a confidential basis with relevant
written information in Seller's possession regarding each individual's work
qualifications, training history, and prior jobs held while employed by Seller
or any Affiliate. All employment offers to Available Employees (i) shall be made
sufficiently in advance of the Closing so as to give each individual reasonable
time to evaluate such offer and shall contain a condition that such offer be
accepted on a date prior to the Closing Date, and (ii) shall be at an annualized
base salary commensurate with that earned by other similarly situated employees
of the Buyer Controlled Group, taking into account such Available Employee's
qualifications and past experience performing the job for which the employment
offer is made. Available Employees listed on the Employee Schedule who accept
offers of employment and who are employed by a member of the Buyer Controlled
Group also are deemed to be Continuing Employees.
(c) As of Closing, the Continuing Employees participation in all Benefit
Plans sponsored by Seller or any of its Affiliates, or in which they are
participating employers, shall cease, and all liability associated with such
Benefit Plans, including but not limited to funding, claims for benefits, fines,
penalties and taxes, shall remain the liability of the Seller and its
Affiliates. Buyer will, or will cause its Affiliates to, take all action
necessary to cause all such Continuing Employees to be covered under the
employee benefit plans of Buyer or its Affiliates
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(including, without limitation, severance plans) and fringe benefit
arrangements, in each case effective as of the Closing Date, on the same basis
as those provided to Buyer's employees in comparable positions. Buyer will, or
will cause its Affiliates to, take all action necessary to give Continuing
Employees credit for their period of employment with Seller or any Affiliate
thereof ("Past Service") in determining (i) eligibility for participation in any
applicable pension, short term disability, severance and vacation plans
(including, without limitation, eligibility for early retirement), (ii) the
duration and amount, if any, of short term disability and severance benefits,
and (iii) vesting under any applicable pension, short term disability, vacation,
and severance plans. Notwithstanding the foregoing, credit for past service
shall not be given or taken into account in determining the level of employer
contributions or accrued benefits under any pension plan. Buyer represents and
warrants that if and to the extent there is currently no preexisting condition
limitation applicable to Continuing Employees under Seller's Benefit Plans,
there will be no such preexisting condition limitations applicable to Continuing
Employees under any medical and dental plans of Buyer or its Affiliates provided
with respect to each Continuing Employee and his or her covered dependents that
such Continuing Employee and each covered dependent enrolls in such plans within
thirty (30) days of the Continuing Employee commencing employment with Buyer or
a member of the Buyer Controlled Group. Additionally, any Continuing Employee or
covered dependent expenses applied toward deductibles in the year in which
Closing occurs and any out-of- pocket limitations under Seller's medical and
dental plans in the year in which Closing occurs shall be recognized under
Buyer's medical and dental plans and applied respectively toward any deductibles
or out-of-pocket limits thereunder in such year.
(d) Continuing Employees who are members of or represented by a collective
bargaining unit will not be eligible to participate in any of Buyer's Plans,
except as may be negotiated by ELPC with the union representative of such
bargaining unit.
(e) Buyer shall cause the Continuing Employees who are not members of a
collective bargaining unit to be eligible for severance benefits, to be paid to
such a Continuing Employee if within one (1) year after the Closing Date the
Continuing Employee either has a reduction in base pay and elects within thirty
(30) days thereof to terminate employment or is terminated by Buyer for a reason
other than termination for cause. Such severance benefits shall be no less than
the severance benefits under the Enron Liquid Services Corp. Divestiture
Severance Plan. "Termination for cause" as used in this paragraph shall mean (i)
the Continuing Employee's gross negligence or willful misconduct in the
performance of the duties and services required of the Continuing Employee, (ii)
the Continuing Employee's final conviction of a felony or of a misdemeanor
involving moral turpitude, or (iii) failure to meet established performance
objectives. Failure to meet established performance expectations shall not be
such a cause for termination with respect to entitlement to severance benefits
unless the expectations are reasonable, have been clearly established and
communicated to the Continuing Employee and the Continuing Employee has been
counseled about the unacceptable performance and coached to improve performance
for at least thirty (30) days.
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(f) Seller, subject to effecting Closing, shall take such action as is
necessary to terminate as of Closing Date the participation of ELPC as a
participating employer in all Benefit Plans. On or before the Closing Date, the
participation of ELPC in all Benefit Plans shall be discontinued and the
interests and the liabilities of ELPC in such Benefit Plans shall be assumed by
Seller, whereupon the assets, liabilities, and obligations of said Benefit Plans
shall be the assets, liabilities, and obligations of Seller. From and after the
Closing Date, ELPC shall not have any interest in rights, responsibility for, or
liability with respect to such Benefit Plans.
(g) Buyer agrees, in the event a member of the Buyer Controlled Group,
within six (6) months following the Closing Date, employs after the Closing Date
any Available Employee who as of the Closing Date does not accept an offer of
employment and become a Continuing Employee (whether or not an offer of
employment was made), to promptly pay to the designated Seller or one of its
Affiliates an amount equal to all or a portion of the severance benefit, if any,
paid to such Available Employee by either Seller of one of its Affiliates in
connection with such employee's termination of employment with either Seller or
one of its Affiliates determined by multiplying the amount of such severance
benefit by a fraction, the numerator of which is the number 6 reduced by the
number of full months that have passed from the Closing Date to the employment
date, and the denominator of which is the number 6; $ = severance amount x (6-
months)/6.
(h) Seller shall (i) cause the Continuing Employees who are employed by
ELPC to be fully vested effective as of the Closing Date in their accrued
benefits under any of Enron's Plans which is an employee pension benefit plan;
and (ii) provide disability benefit coverage under any of Enron's Plans which is
a sick pay, short-term or long-term disability plan for any Continuing Employee
who is a participant in the affected plan and is not actively at work on the
Closing Date in accordance with and to the extent provided in the applicable
plan.
6.11 Supplements to Schedules. Seller may, from time to time, prior to the
Closing, by written notice to Buyer, supplement or amend the Disclosure Schedule
to correct any matter that would constitute a breach of any representation or
warranty of Seller herein contained; provided, however, except as provided in
the following sentence, no such supplement or amendment will affect the rights
and obligations of Buyer under Section 9.1 or Section 9.2 hereof until after the
Closing Date. Notwithstanding any other provision hereof, if the Closing occurs,
any such supplement or amendment of any Schedule will be effective to cure and
correct for indemnification purposes (but only for such purposes) any breach of
any representation, warranty or covenant that would have existed by reason of
Seller not having made such supplement or amendment.
6.12 Seller's Property Located on Easements After Closing. Seller (or its
Affiliates) have facilities located on the real property, easements and leases
owned by ELPOLP or ETS. Except as provided in this Section 6.12, Buyer agrees
that in no event shall Buyer have the right to require Seller or its Affiliates
to remove, relocate, lower or otherwise alter in any respect any of their
respective facilities that are located on any such fee property, easement or
lease, except to the extent that the location, presence or manner of operation
of Seller's or its Affiliates' facilities will violate or result in a default
under any term, condition, covenant, restriction, zoning or other requirement
applicable to such fee property, easement or lease. Prior to Closing, Buyer and
Seller agree to negotiate in good faith to attempt to mutually agree upon the
extent to which block valves, quality measurement and metering facilities and
custody transfer points on the assets
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and properties owned by ELPOLP or ETS and on the interconnecting facilities of
Seller or its Affiliates as to handling of both gas and liquid hydrocarbons need
to be modified, moved, altered or installed, and the location of any such
facilities and custody transfer points. The costs of any such modifications,
alterations and additions will be borne equally by the parties, and to the
extent reasonably feasible such modifications, alterations and additions will be
completed by Closing or promptly thereafter. Prior to Closing, Buyer and Seller
will also negotiate in good faith to attempt to mutually agree upon arrangements
for the sharing of certain facilities (and costs related to the operation
thereof) that will be owned by one party after the Closing, but were used in
connection with both ELPC's Business and Seller's and its Affiliates retained
facilities prior to the Closing, such as cathodic protection equipment, radio
towers, and pigging equipment.
6.13 Current Report on Form 8-K. Buyer shall caused to be filed on behalf
of ELPLP within the time period required by the Securities and Exchange Act of
1934 and the rules and regulation adopted pursuant thereto a Current Report on
Form 8-K to report a change in the ownership of its general partner and a change
in ELPLP's name.
6.14 Business Opportunities. If during the period of three (3) years after
the Closing, Seller or any of its Affiliates (other than Excluded Affiliates)
shall desire to sell to an unaffiliated person any assets which are related to
(a) the natural gas liquid transportation, storage, processing or fractionation
business, or (b) the CO2 transportation business, or (c) the coal terminaling
business (collectively, the "Subject Assets" and individually, a "Subject
Asset") and which in any case are not the subject of Enron's current disposition
of certain of its natural gas liquids business and are not otherwise subject to
a prior preferential right to purchase, right of first refusal or similar right,
Seller shall notify Buyer in writing; provided, however, that the foregoing
shall not apply in any case in which Seller or its Affiliates desires to
transfer or sell a Subject Asset to a person in which Seller or the Affiliate
will retain an ownership interest. During the thirty (30) day period after the
date of such notice, Buyer and Seller (or its Affiliate) shall discuss the
possible sale of such assets to Buyer or its designee. The foregoing does not
constitute a preferential right, right of first refusal or similar right but
merely constitutes an obligation of Seller and its Affiliates (other than
Excluded Affiliates) to provide notice to Buyer and discuss for a thirty (30)
day period a possible transaction for the sale of certain assets to Buyer.
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6.15 Sale of Transferred LP Units. Seller and Buyer have received an
inquiry regarding the possible purchase prior to Closing of the Transferred LP
Units. Buyer hereby consents to the sale of the Transferred LP Units on or prior
to the Closing Date by ELPC for such cash consideration as ELPC shall determine
to be appropriate. Buyer shall have a right of reasonable review and approval of
the form of any contract or agreement under which the Transferred LP Units will
be sold by ELPC, in order to determine the extent of any representations,
warranties and contingent liabilities made or assumed by ELPC in connection with
any such sale. The cash proceeds received by ELPC as a result of the sale of the
Transferred LP Units shall constitute current assets of ELPC which will be
transferred to Seller as a dividend on or before the Closing Date, in accordance
with Seller's rights under Section 6.3 hereof.
6.16 Retained Litigation. Except for the "Excluded Matter" (hereinafter
defined), Seller shall be fully and solely responsible for all of the legal,
administrative and/or arbitration proceedings described in Sections 4.10 and/or
4.18 of the Disclosure Schedule (such matters, the "Retained Litigation"). With
respect to the Retained Litigation, Seller shall be responsible for providing a
defense against all such matters (as if Seller were the party in interest
therein) and Seller shall bear all of the costs and expenses of defending
against the claims presented in the Retained Litigation and the full amount of
any liabilities, losses, damages, judgments or settlements in connection
therewith (including, without limitation, court costs and attorney fees),
provided, however, that at no expense to Seller, Buyer and ELPC agree to
cooperate fully with Seller and its Affiliates with respect to all aspects of
the defense of the Retained Litigation. Without the consent of Buyer, Seller
will not consent to, enter into, or acquiesce in any settlement, finding,
confession of judgment, decree, or similar disposition of any of the Retained
Litigation against ELPC, ELPLP, ELPOLP, ENGL and/or ETS or any of their
operations which includes any terms other than payment of damages in cash, which
payment will be borne entirely by Seller, or which makes any finding which might
interfere with or have an adverse effect on the future business or operations of
ELPC, ELPLP, ELPOLP, ENGL and/or ETS. As used herein, the "Excluded Matter"
(responsibility for which shall be retained by ELPC) is the matter identified in
Sections 4.10 and 4.18 of the Disclosure Schedule as State of Illinois ex rel.
Xxxx, et al. v. Enron Liquids Pipeline Company.
ARTICLE 7
TAX MATTERS
7.1 Section 338(h)(10) Elections. For purposes of this Article 7, the
"Seller Group" means, with respect to Seller, the affiliated group of
corporations filing a consolidated federal income Tax Return of which the Seller
is a member; and "Parent" means Enron Corp., the common parent of the Seller
Group. Parent and Buyer shall make a joint election under section 338(h)(10) of
the Code and a similar election under any applicable state income tax law for
ELPC (the "Section 338(h)(10) Election"). Not later than one hundred eighty
(180) days after the Closing Date, Seller shall prepare and deliver to Buyer an
Internal Revenue Service Form 8023-A and any similar form under applicable state
income tax law (the "Forms") with respect to the Section 338(h)(10) Elections,
together with any completed schedules required to be attached thereto, which
Forms shall have been duly executed by an authorized person for Parent. Within
fifteen (15) days of receipt thereof, Buyer shall cause the Forms to be duly
executed by an authorized person for Buyer, shall provide a copy of the executed
Forms and schedules to Seller, shall duly and timely file the Forms as
prescribed by Treasury Regulation ss.1.338(h)(10)-1 or the
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corresponding provisions of applicable state income tax law. The allocation of
purchase price among the assets of ELPC shall be made in accordance with Code
Sections 338 and 1060 and any comparable provisions of state, local or foreign
law, as appropriate. Seller shall, unless it would be unreasonable to do so,
accept Buyer's determination of such purchase price allocations and shall
report, act, file in all respects and for all purposes consistent with such
determination of Buyer.
7.2 Preparation of Tax Returns; Responsibility for Taxes. (a) Seller shall
cause to be included in the consolidated federal income Tax Returns (and the
state income Tax Returns of any state that permits consolidated, combined or
unitary income Tax Returns, if any) of the Seller Group for all taxable periods
ending on or before the Closing Date ("Pre-Closing Period(s)"), all items of
income, gain, loss, deduction and credit and other tax items ("Tax Items") of
ELPC which are required to be included therein, shall cause such Tax Returns to
be timely filed with the appropriate taxing authorities, and shall be
responsible for the timely payment (and entitled to any refund) of all Taxes due
with respect to the periods covered by such Tax Returns. The Seller Group shall
include (a) any gain attributable to the Section 338(h)(10) deemed asset sale
and (b) any gain attributable to the sale of Transferred LP Units pursuant to
Section 6.15(b) on its consolidated federal income tax return and any applicable
state tax return for the period ending on the Closing Date. At or prior to the
Closing Seller shall: (a) cause ELPC to distribute to Seller assets with a book
value in an amount equal to the liabilities for Accrued Income Taxes and Accrued
Taxes-Other Accounts to the extent not previously distributed to Seller; and (b)
cause ELPC to eliminate any Intercompany Receivables and Deferred Tax Accounts
and any other assets and liabilities of ELPC in a manner which results in a pro
forma balance sheet as of the Closing Date equivalent to that reflected in
Section 4.7 of the Disclosure Schedule. For all purposes of this Agreement,
whenever Seller is authorized or required to transfer, dividend, assign,
distribute or eliminate any asset, liability or capital of ELPC on or prior to
the Closing Date, Seller shall accomplish all such matters in a manner which
results in a pro forma balance sheet as of the Closing Date equivalent to that
reflected in Section 4.7 of the Disclosure Schedule.
(b) With respect to any Tax Return covering a Pre-Closing Period that is
required to be filed after the Closing Date with respect to ELPC that is not
described in paragraph (a) above (other than one-day returns necessitated by a
stand-alone election under Section 338(g) or the corresponding provisions of
applicable state income tax law), Seller shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all Tax Items required
to included therein, shall cause such Tax Return to be filed timely with the
appropriate taxing authority, and shall be responsible for the timely payment
(and entitled to any refund) of all Taxes due with respect to the period covered
by such Tax Return.
(c) With respect to any Tax Return covering a taxable period beginning on
or before the Closing Date and ending after the Closing Date that is required to
be filed after the Closing Date with respect to ELPC (including one-day returns
necessitated by a stand-alone election under Section 338(g) or the corresponding
provisions of applicable state income law), Buyer shall cause such Tax Return to
be prepared, shall cause to be included in such Tax Return all Tax Items
required to be included therein, shall furnish a copy of such Tax Return to
Seller, shall file timely
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such Tax Return with the appropriate taxing authority, and shall be responsible
for the timely payment (and entitled to any refund) of all Taxes due with
respect to the period covered by such Tax Return. Buyer, subject to Seller's
approval, shall determine (by an interim closing of the books of ELPC, ELPLP,
ELPOLP and ETS as of the Closing Date, except for ad valorem Taxes which shall
be prorated on a daily basis) the portion of the Tax due with respect to the
period covered by such Tax Return which is attributable to the Pre-Closing
Period. For all purposes hereof, the Closing Date shall be included in the
Pre-Closing Period. Seller shall pay to Buyer the amount of Tax so determined to
be attributable to the Pre-Closing Period not later than fifteen (15) days after
the filing of such Tax Return. Without limiting the generality of the foregoing,
it is understood that the sale by ELPC of the Transferred LP Units will be
deemed to occur on or prior to the Closing Date and all taxable gain with
respect to such sale will be attributable to the Pre-Closing Period and will be
for the account of Seller and the amount of Tax thereon will be paid to Buyer by
Seller.
(d) Notwithstanding anything to the contrary herein, any franchise Tax paid
or payable with respect to ELPC shall be allocated to the taxable period during
which the right to do business obtained by the payment of such franchise Tax
relates, regardless of whether such franchise Tax is measured by income,
operations, assets or capital relating to another taxable period. With respect
to any franchise Tax so allocated to the taxable period in which the Closing
Date occurs: (i) the amount of such franchise Tax shall be prorated on a daily
basis between the portion of such taxable period ending on the Closing Date and
the remaining portion of such taxable period, and (ii) if the amount of such
franchise Tax paid or provided for as of the Closing Date exceeds the amount so
prorated to the portion of such taxable period ending on the Closing Date, the
Buyer shall pay to Seller such excess amount.
(e) Any Tax Return to be prepared pursuant to the provisions of this
Section 7.2 shall be prepared in a manner consistent with practices followed in
prior years with respect to similar Tax Returns, except for changes required by
changes in law or fact.
(f) Buyer shall not file an amended tax return for any period ending on or
prior to the Closing Date without the consent of Seller.
(g) Any refunds of taxes (except to the extent attributable to net
operating losses carried back from taxable periods after the Closing Date) paid
in Pre-Closing Periods will be for the account of Seller and upon receipt
thereof Buyer shall promptly pay such amounts to Seller.
7.3 Access to Information. (a) Seller and each member of the Seller Group
shall grant to Buyer (or its designees) access at all reasonable times to all of
the information, books and records relating to ELPC within the possession of
Seller or any member of the Seller Group (including work papers and
correspondence with taxing authorities), and shall afford Buyer (or its
designees) the right (at Buyer's expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities.
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(b) Buyer shall grant or cause ELPC to grant to Seller (or its designees)
access at all reasonable times to all of the information, books and records
relating to ELPC within the possession of Buyer or ELPC (including work papers
and correspondence with taxing authorities), and shall afford Seller (or its
designees) the right (at Seller expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Seller(or its
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities.
7.4 Transfer Taxes. Buyer shall be responsible for the payment of all
federal, state and local Transfer Taxes resulting from the transactions
contemplated by this Agreement.
7.5 Tax Sharing Agreements. Seller and ELPC shall, as of the Closing Date,
terminate all tax allocation agreements or tax sharing agreements with respect
to ELPC and shall ensure that such agreements are of no further force or effect
as to ELPC on and after the Closing Date and there shall be no further liability
of ELPC under any such agreement.
7.6 Non-foreign Person Affidavit. Seller shall have delivered to Buyer an
affidavit to the effect that such Seller is not a "foreign person" within the
meaning of Sections 1445 or 7701 of the Code executed under penalty of perjury
and satisfying the requirements of the Treasury Regulations promulgated pursuant
to such Code sections.
7.7 Assistance and Cooperation. After the Closing Date, in the case of any
audit, examination or other proceeding ("Proceeding") with respect to Taxes for
which Seller is or may be liable pursuant to this Agreement, Buyer shall inform
Seller (within ten (10) days of the receipt of a notice of such Proceeding), and
shall afford Seller, at Seller's expense, the opportunity to control the conduct
of such Proceedings. Buyer shall execute or cause to be executed powers of
attorney or other documents necessary to enable Seller to take all actions
desired by Seller with respect to such Proceeding to the extent such Proceeding
may affect either the amount of Taxes for which Seller is liable pursuant to
this Agreement. Seller shall have the right to control any such Proceedings,
and, if there is substantial authority therefor, to initiate any claim for
refund, file any amended return or take any other action which it deems
appropriate with respect to such Taxes. Any Proceeding with respect to Taxes for
a period which includes but does not end on the Closing Date and any Proceeding
with respect to, and to the extent of, basis allocations among assets pursuant
to the Section 338(h)(10) Election shall be controlled jointly by Seller and
Buyer. Notwithstanding any provision of this Section 7.7 to the contrary, Seller
shall not have the right to initiate any claim for refund or to file any amended
return if, as result of such Proceeding, claim for refund or amended return, the
Taxes payable by Buyer or ELPC for a taxable period for which Seller is not
obligated to indemnify Buyer or ELPC pursuant to Section 11.2 would likely be
materially increased.
ARTICLE 8
CONDITIONS TO OBLIGATION OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement at Closing is subject, at the option of Seller, to the following
conditions:
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8.1 Representations. The representations and warranties of Buyer herein
contained shall be made again at Closing and shall be true and correct in all
material respects on the Closing Date.
8.2 Performance. Buyer shall have performed all material obligations,
covenants and agreements contained in this Agreement to be performed or complied
with by it at or prior to the Closing.
8.3 Pending Matters. No suit, action or other proceeding shall be pending
that could reasonably be expected to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement.
8.4 Assumption of Enron Corp. Obligations. Buyer shall have (i) assumed all
obligations of Enron Corp. under the Omnibus Agreement which continue following
termination of the Applicable Period, except that Buyer shall not assume any
other obligations of Enron Corp. under Parts E and F and Sections 1.15 and 1.16
of Part G of the Omnibus Agreement, (ii) caused that certain promissory note of
ETS payable to Enron Corp. in the original principal amount of $4,430,437
million to be purchased from Enron Corp. (or repaid) for a purchase price (or
repayment amount) equal to all principal and interest owing thereon on the
Closing Date, and (iii) delivered to Seller the opinion of counsel referred to
in Section 6.4.
8.5 Return of Enron Guaranty. Wachovia Bank of Georgia, N.A. shall have
released Enron Corp. from its guaranty dated June 25, 1996, of the obligations
of ETS under that certain irrevocable letter of credit issued on June 25, 1996
by such bank.
8.6 Bank One Consent. Bank One, Texas, N.A. shall have delivered the
consent to ELPOLP required pursuant to Section 6.01(R) of that certain Loan
Agreement, dated May 24, 1995, by and between ELPOLP and Bank One, Texas, N.A.
8.7 Sale of Transferred LP Units. ELPC shall have completed the sale of the
Transferred LP Units on terms and conditions and at a price satisfactory to
Seller.
ARTICLE 9
CONDITIONS TO OBLIGATION OF BUYER
The obligation of Buyer to consummate the transactions contemplated by this
Agreement at Closing are subject, at the option of Buyer, to the following
conditions:
9.1 Representations. The representations and warranties of Seller herein
contained (other than the representation and warranty set forth in Section 4.18)
shall be made again at Closing and shall be true and correct in all material
respects on the Closing Date.
9.2 Performance. Seller shall have performed all material obligations,
covenants and agreements contained in this Agreement to be performed or complied
with by it at or prior to the Closing.
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9.3 Pending Matters. No suit, action or other proceeding shall be pending
that could reasonably be expected to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement.
9.4 Resignation of Officers and Directors. Buyer shall have received a copy
of the resignation, effective as of the Closing Date, of each officer and
director of ELPC and ENGL.
9.5 Sale of Transferred LP Units. The form of contract or agreement by
which ELPC has sold the Transferred LP Units (but excluding the price terms
thereof) shall have been approved by Buyer, which approval will not be
unreasonably withheld.
ARTICLE 10
TERMINATION
10.1 Termination At or Prior to Closing. This Agreement may be terminated
and the transactions contemplated hereby abandoned as follows:
(a) Seller and Buyer may elect to terminate this Agreement at any time on
or prior to the Closing Date by mutual written consent of the parties;
(b) either Seller or Buyer may elect to terminate this Agreement if the
Closing shall not have occurred on or before March 31, 1997; provided, however,
that neither Seller nor Buyer can so terminate this Agreement if such party is
at such time in material breach of any provision of this Agreement; or
(c) either Seller or Buyer may elect to terminate this Agreement if any
Governmental Entity shall have issued a final non-appealable order, judgment or
decree or taken any other action challenging, delaying beyond March 31, 1997,
restraining, enjoining, prohibiting or invalidating the consummation of any of
the transactions contemplated herein.
10.2 Effect of Termination. In the event that Closing does not occur as a
result of either party exercising its right to terminate pursuant to Section
10.1, then neither party shall have any further rights or obligations under this
Agreement, except that nothing herein shall relieve either party from any
liability for any willful breach hereof.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification By Buyer. Subject to Section 11.3(a), Buyer shall
indemnify, release, defend, and hold harmless Seller, their officers, directors,
employees, agents, representatives, Affiliates, subsidiaries, successors and
assigns (collectively, the "Seller Indemnitees") from and against any and all
claims, liabilities, losses, causes of actions, costs and expenses (including,
without limitation, court costs and attorneys' fees) ("Losses") asserted
against, resulting from, imposed upon or incurred by any of the Seller
Indemnitees as a result of, or arising out of: (a) the breach of any of the
representations, warranties, covenants or agreements of Buyer contained in this
Agreement, including the reimbursement obligation in Section 6.10(g), or (b) any
liability arising out of the operation, ownership, occupancy, condition or use
of the
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ELPC Shares or ELPC's Business, whether known or unknown, whether attributable
to periods of time before or after the Effective Time or (c) any liability for
Taxes (including interest, penalties or fines related thereto) the
responsibility for payment of which was assumed by Buyer pursuant to Article 7
above, provided, however, that Buyer shall have no obligation to indemnify any
of the Seller Indemnitees with respect to any matter for which Seller is
indemnifying Buyer pursuant to Section 11.2.
11.2 Indemnification By Seller. Subject to Section 11.3(b), Seller shall
indemnify, defend and hold harmless Buyer, its officers, directors, employees,
agents, representatives, Affiliates, subsidiaries, successors and assigns
(collectively, the "Buyer Indemnitees"; provided, however, that Buyer
Indemnitees shall not include ELPLP, ELPOLP, ETS or ENGL) from and against all
Losses asserted against, resulting from, imposed upon or incurred by any of the
Buyer Indemnitees as a result of, or arising out of, (a) the breach of any of
the representations, warranties, covenants or agreements of Seller contained in
this Agreement (other than the representation and warranty set forth in Section
4.18), or (b) ELPC's participation, if any, in the Benefit Plans, or (c) the
Retained Liabilities described on Exhibit A or the Retained Litigation described
in Section 6.16, or (d) any liability for Taxes related to ELPC (including
interest, penalties or fines related thereto) for the Pre-Closing Period other
than those assumed by Buyer pursuant to Article 7 above, or (e) the failure of
Enron Corp. to fully and timely perform, pay and discharge its obligations under
Part F, Indemnification, of the Omnibus Agreement (it being intended that such
obligations remain in full force and effect and are not altered by the
transactions herein contemplated).
11.3 Limitation on Damages; Survival of Representations. (a)
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL
BUYER BE LIABLE TO THE SELLER INDEMNITEES FOR ANY EXEMPLARY, PUNITIVE, REMOTE OR
SPECULATIVE DAMAGES; PROVIDED, HOWEVER, THAT IF ANY SELLER INDEMNITEE IS HELD
LIABLE TO A THIRD PARTY FOR ANY SUCH DAMAGES AND BUYER IS OBLIGATED TO INDEMNIFY
SUCH SELLER INDEMNITEE FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THE BUYER
SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH SELLER INDEMNITEE FOR, SUCH
DAMAGES. The representations and warranties of Buyer set forth in Article 5
shall survive the Closing for a period of three (3) years and such
representations and warranties of Buyer shall terminate at 5:00 p.m., local time
in Houston, Texas, on the third year anniversary of the Closing Date; provided,
however, that any such representation or warranty that is the subject of a
written notice of claim specifying in reasonable detail the specific nature of
the Losses and the estimated amount of such Losses ("Claim Notice") delivered in
good faith shall survive with respect only to the specific matter described in
such claim notice until the earlier to occur of (i) the date on which a final
nonappealable resolution of the matter described in such Claim Notice has been
reached or (ii) the date on which the matter described in such Claim Notice has
otherwise reached final resolution.
(b) Notwithstanding anything to the contrary in this Agreement, the
liability of Seller under this Agreement and any documents delivered in
connection herewith or contemplated hereby shall be limited as follows:
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(i) IN NO EVENT SHALL SELLER BE LIABLE TO THE BUYER INDEMNITEES FOR ANY
EXEMPLARY, PUNITIVE, REMOTE OR SPECULATIVE DAMAGES; PROVIDED, HOWEVER, THAT
IF ANY BUYER INDEMNITEE IS HELD LIABLE TO A THIRD PARTY FOR ANY SUCH
DAMAGES AND EITHER SELLER IS OBLIGATED TO INDEMNIFY SUCH BUYER INDEMNITEE
FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, SUCH SELLER SHALL BE LIABLE
FOR, AND OBLIGATED TO REIMBURSE SUCH BUYER INDEMNITEE FOR, SUCH DAMAGES.
(ii) The representations and warranties of Seller set forth in Article
4 (except for Section 4.13 which shall survive forever and Section 4.18
which shall terminate at Closing) shall survive the Closing for a period of
three (3) years and such representations and warranties shall terminate at
5:00 p.m., local time in Houston, Texas, on the third year anniversary of
the Closing Date; provided, however, that any such representation and
warranty that is the subject of a Claim Notice delivered in good faith
shall survive with respect only to the specific matter described in such
Claim Notice until the earlier to occur of (A) the date on which a final
nonappealable resolution of the matter described in such Claim Notice has
been reached or (B) the date on which the matter described in such Claim
Notice has otherwise reached final resolution.
(iii) Notwithstanding anything to the contrary in this Agreement, in no
event shall Seller indemnify the Buyer Indemnitees, or be otherwise liable
in any way whatsoever to the Buyer Indemnitees, (A) for any individual
Losses not in excess of $10,000 or (B) for any Losses until the Buyer
Indemnitees have suffered Losses (other than Losses excluded pursuant to
clause (A)) in the aggregate in excess of a deductible in an amount equal
to $100,000, after which point Seller will be obligated only to indemnify
the Buyer Indemnitees from and against further Losses in excess of such
deductible (and only to the extent of any such excess).
(iv) Notwithstanding anything to the contrary herein, in no event shall
Seller indemnify the Buyer Indemnitees, or be otherwise liable in any way
whatsoever to the Buyer Indemnitees, for any Losses under Sections 11.2(a)
or 11.2(b) of this Agreement in excess of an amount equal to $2,500,000,
except such limitation shall not apply to Losses related to a breach of
Section 4.13 hereof.
(v) No amount shall be recovered from Seller for the breach or
inaccuracy of any of Seller's representations, warranties, covenants or
agreements, or for any other matter, to the extent that Buyer had actual
knowledge of such breach, inaccuracy or other matter at or prior to the
Closing, nor shall Buyer be entitled to post-Closing rescission with
respect to any such matter.
(vi) Seller shall have no liability for Losses pursuant to this Article
unless a Claim Notice has been delivered to Seller as required by Section
11.4 as follows: (A) within three (3) years after the Effective Time with
respect to any Losses under Sections 11.2(a) (except for Losses under
Section 11.2(a) relating to Section 4.13 which shall survive forever) and
11.2(b); (B) within the period of the applicable statute of limitations
with respect to any Losses under Sections 11.2(c), 11.2(d) and 11.2(e).
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11.4 Notice of Asserted Liability; Opportunity to Defend. All claims for
indemnification under Sections 11.1 and 11.2 shall be asserted and resolved
pursuant to this Section 11.4. Any person claiming indemnification hereunder is
hereinafter referred to as the "Indemnified Party" and any person against whom
such claims are asserted hereunder is hereinafter referred to as the
"Indemnifying Party". In the event that any Losses are asserted against or
sought to be collected from an Indemnified Party by a third party, said
Indemnified Party shall with reasonable promptness provide to the Indemnifying
Party a Claim Notice. The Indemnifying Party shall not be obligated to indemnify
the Indemnified Party with respect to any such Losses if the Indemnified Party
fails to notify the Indemnifying Party thereof in accordance with the provisions
of this Agreement in reasonably sufficient time so that the Indemnifying Party's
ability to defend against the Losses is not prejudiced. The Indemnifying Party
shall have thirty (30) days from the personal delivery or receipt of the Claim
Notice (the "Notice Period") to notify the Indemnified Party (i) whether or not
it disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such Losses and/or (ii) whether or not it desires, at
the sole cost and expense of the Indemnifying Party, to defend the Indemnified
Party against such Losses; provided, however, that any Indemnified Party is
hereby authorized prior to and during the Notice Period to file any motion,
answer or other pleading that it shall deem necessary or appropriate to protect
its interests or those of the Indemnifying Party (and of which it shall have
given notice and opportunity to comment to the Indemnifying Party) and not
prejudicial to the Indemnifying Party. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such Losses, the Indemnifying Party shall
have the right to defend all appropriate proceedings, and with counsel of its
own choosing, which proceedings shall be promptly settled or prosecuted by them
to a final conclusion. If the Indemnified Party desires to participate in, but
not control, any such defense or settlement it may do so at its sole cost and
expense. If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any Losses
that the Indemnifying Party elects to contest or, if appropriate and related to
the claim in question, in making any counterclaim against the person asserting
the third party Losses, or any cross-complaint against any person. No claim may
be settled or otherwise compromised without the prior written consent of the
Indemnifying Party.
11.5 Exclusive Remedy. As between the Buyer Indemnitees and the Seller
Indemnitees the rights and obligations set forth in this Article 11 will be the
exclusive rights and obligations with respect to this Agreement, the events
giving rise to this Agreement, and the transactions provided for herein or
contemplated hereby or thereby. It being understood and agreed between Seller
and Buyer that all other rights and obligations between Seller and its
Affiliates on the one hand and the Buyer and its Affiliates on the other hand
shall be governed by this Agreement.
11.6 NEGLIGENCE AND STRICT LIABILITY WAIVER. WITHOUT LIMITING OR ENLARGING
THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN
INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE
WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO
SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF OR BY SUCH
INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A
CONSPICUOUS LEGEND.
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ARTICLE 12
MISCELLANEOUS
12.1 Applicable Law; Alternative Dispute Resolution. (a) 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.
(a) Except as expressly provided in Section 2.5, any dispute arising under
this Agreement shall be resolved pursuant to this Section 12.1:
(i) Any party has the right to request the other to meet to discuss a
dispute. The party requesting the meeting will give at least ten (10)
business days notice in writing of the subject it wishes to discuss,
provide a written statement of the dispute, and designate an officer of the
company with complete power to resolve the dispute to attend the meeting.
Within three (3) business days after receipt of such request, the party
receiving the request will provide a responsive written statement and will
designate an officer of the company who will attend the meeting with
complete power to resolve the dispute.
(ii) If the meeting fails to resolve the dispute by a signed agreement
among the officers, the dispute shall be submitted for nonappealable,
binding determination through arbitration. The parties agree that an
officer with authority to resolve the dispute for each entity shall attend
the arbitration. The arbitrator chosen from the arbitrators available
through JAMS shall be the arbitrator unless the parties agree on a
substitute arbitrator. Unless otherwise agreed by the parties, the
arbitrator shall be a person with at least eight (8) years of professional
experience in the natural gas industry or the judiciary and who is not, and
within the previous five (5) years has not been, an employee or independent
contractor of either Seller or Buyer (or any affiliate thereof), and does
not have a direct or indirect interest in either Seller or Buyer (or any
affiliate thereof) or the subject matter of the arbitration.
(iii) The parties agree to make discovery and disclosure of all matters
relevant to the dispute to the extent and in the manner provided by the
Federal Rules of Civil Procedure. The arbitrator will rule on all requests
for discovery and disclosure and discovery shall be completed within ninety
(90) days of the date of the first notice pursuant to Section 12.1(b)(i).
The arbitrator shall follow the statutes and decisions of the substantive
law of Texas relevant to the subject. The arbitrator's powers shall be
limited to enforcement of this Agreement as to the issues raised by the
parties, and shall not include tort claims or the power to award punitive
damages. The arbitrator shall not have the authority or power to alter,
amend or modify any of the terms and conditions of the agreement of the
parties. The arbitrator shall issue a final ruling within one hundred
eighty (180) days of the date of the first notice pursuant to Section
12.1(b)(i).
(iv) The ruling of the arbitrator shall be in writing and signed, shall
contain a statement of findings and conclusions and shall be final and
binding upon the parties. The fees and expenses of counsel, witnesses and
employees of the parties and all other costs
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and expenses incurred exclusively for the benefit of the party incurring
the same shall be borne by the party incurring such fees and expenses. All
other fees and expenses including, without limitation, compensation for the
arbitrator shall be divided equally between the parties. All meetings and
arbitration hearings held pursuant to this Section 12.1 shall take place in
Houston, Texas. Judgment on the arbitration award or decision may be
entered in any court having jurisdiction.
12.2 Expenses. Each party shall be solely responsible for all expenses,
including due diligence expenses, incurred by it in connection with this
transaction, and neither party shall be entitled to any reimbursement for such
expenses from the other party hereto. Without limiting the generality of the
foregoing, Buyer will be solely responsible for all recording fees and taxes
relating to the conveyances to be delivered pursuant hereto.
12.3 Independent Investigation. Buyer represents and acknowledges that it
is knowledgeable of ELPC's Business, and in making the decision to enter into
this Agreement and consummate the transactions contemplated hereby, Buyer has
relied solely on the basis of its own independent due diligence investigation
and upon the representations and warranties of Seller made in Article 4 and on
the covenants of Seller in Article 6 and Article 7 of this Agreement.
12.4 Disclaimer Regarding Assets. Except as otherwise expressly provided in
this Agreement, BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS IMPLIED
AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO (I) THE CONDITION OF ELPC'S
ASSETS AND THE ASSETS AND BUSINESSES OF ELPLP, ELPOLP, ETS AND ENGL (INCLUDING,
WITHOUT LIMITATION, (A) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (B)
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (C) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR
(D) ENVIRONMENTAL CONDITION), (II) INFRINGEMENT BY SELLER, ELPC, ELPLP, ELPOLP,
ETS, OR ENGL OF ANY PATENT OR PROPRIETARY RIGHT, AND (III) ANY INFORMATION, DATA
OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF
SELLER. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
12.5 Waiver of Trade Practices Acts. (a) It is the intention of the parties
that Buyer's rights and remedies with respect to this transaction and with
respect to all acts or practices of 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. ss.17.41 et seq. (the "DTPA"). AS SUCH, BUYER HEREBY WAIVES THE
APPLICABILITY OF THE DTPA TO THIS TRANSACTION AND ANY AND ALL DUTIES, RIGHTS OR
REMEDIES THAT MIGHT BE IMPOSED BY THE DTPA, WHETHER SUCH DUTIES, RIGHTS AND
REMEDIES ARE APPLIED DIRECTLY BY THE DTPA ITSELF OR INDIRECTLY IN CONNECTION
WITH OTHER STATUTES; PROVIDED, HOWEVER, BUYER DOES NOT WAIVE ss. 17.555 OF THE
DTPA. BUYER ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IT IS PURCHASING THE
GOODS AND/OR SERVICES COVERED BY THIS AGREEMENT FOR COMMERCIAL OR BUSINESS USE;
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THAT IT HAS ASSETS OF $5 MILLION OR MORE ACCORDING TO ITS MOST RECENT FINANCIAL
STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES;
THAT IT HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT
ENABLE IT TO EVALUATE THE MERITS AND RISKS OF A TRANSACTION SUCH AS THIS; AND
THAT IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH SELLER.
(b) TO THE MAXIMUM EXTENT PERMITTED BY LAW, BUYER HEREBY WAIVES ALL
PROVISIONS OF CONSUMER PROTECTION ACTS, DECEPTIVE TRADE PRACTICE ACTS AND OTHER
ACTS SIMILAR TO THE DTPA IN ALL JURISDICTIONS IN WHICH ANY OF THE ASSETS ARE
LOCATED (SUCH ACTS, TOGETHER WITH THE DTPA, ARE HEREINAFTER COLLECTIVELY
REFERRED TO AS THE "TRADE PRACTICES ACTS").
(c) BUYER EXPRESSLY RECOGNIZES THAT THE PRICE FOR WHICH SELLER HAS AGREED
TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT HAS BEEN PREDICATED UPON THE
INAPPLICABILITY OF THE TRADE PRACTICES ACTS AND THIS WAIVER OF THE TRADE
PRACTICES ACTS. BUYER FURTHER RECOGNIZES THAT SELLER, IN DETERMINING TO PROCEED
WITH THE ENTERING INTO OF THIS AGREEMENT, HAS EXPRESSLY RELIED ON THIS WAIVER
AND THE INAPPLICABILITY OF THE TRADE PRACTICES ACTS.
12.6 No Third Party Beneficiaries. Nothing in this Agreement shall provide
any benefit to any third party or entitle any third party to any claim, cause of
action, remedy or right of any kind, it being the intent of the parties that
this Agreement shall not be construed as a third party beneficiary contract;
provided, however, that the indemnification provisions in Article 11 shall inure
to the benefit of the Buyer Indemnitees and the Seller Indemnitees as provided
therein.
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12.7 Waiver. Except as expressly provided in this Agreement, neither the
failure nor any delay on the part of any party hereto in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, or of any other
right, power or remedy; nor shall any single or partial exercise of any right,
power or remedy preclude any further or other exercise thereof, or the exercise
of any other right, power or remedy. Except as expressly provided herein, no
waiver of any of the provisions of this Agreement shall be valid unless it is in
writing and signed by the party against whom it is sought to be enforced.
12.8 Entire Agreement; Amendment. This Agreement, the Disclosure Schedule
and other Schedules and Exhibits hereto, each of which is deemed to be a part
hereof, and any agreements, instruments or documents executed and delivered by
the parties pursuant to this Agreement, constitute the entire agreement and
understanding between the parties, and all previous undertakings, negotiations
and agreements between the parties regarding the subject matter hereof
(including, without limitation, the Prior Contract) are merged herein; provided
however, that this Agreement does not supersede the Confidentiality Agreement,
which shall not terminate (except in accordance with its terms) unless and until
the Closing occurs, and following the Closing, only to the extent it relates to
the Assets. This Agreement may not be modified orally, but only by an agreement
in writing signed by Buyer and Seller.
12.9 Notices. Any and all notices or other communications required or
permitted under this Agreement shall be given in writing and delivered in person
or sent by United States certified or registered mail, postage prepaid, return
receipt requested, or by overnight express mail, or by telex, facsimile or
telecopy to the address of such party set forth below. Any such notice shall be
effective upon receipt or three (3) days after placed in the mail, whichever is
earlier.
If to Buyer:
By Mail or Hand Delivery:
Xxxxxx Xxxxxx, Inc.
c/x Xxxxxx Associates, Inc.
000 Xxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
If to Seller:
By Mail:
Enron Liquids Holding Corp.
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President and Secretary
With a copy to: Vice President and General Counsel
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By Hand Delivery :
Enron Liquids Holding Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Vice President and Secretary
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
With a copy to: Vice President and General Counsel
Telephone Number (000) 000-0000
Telecopy Number: (000) 000-0000
Any party may, by notice so delivered, change its address for notice purposes
hereunder.
12.10 No Assignment. This Agreement shall not be assigned or transferred in
any way whatsoever by either party hereto except with prior written consent of
the other party hereto, which consent such party shall be under no obligation to
grant, and any assignment or attempted assignment without such consent shall
have no force or effect with respect to the non-assigning party. Subject to the
preceding sentence, this Agreement shall be binding on and inure to the benefit
of the parties hereto and their permitted successors and assigns.
12.11 Severability. If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such invalid,
illegal or unenforceable provision were omitted. If any provision is
inapplicable to any person or circumstance, it shall, nevertheless, remain
applicable to all other persons and circumstances.
12.12 Publicity. Seller and Buyer shall consult with each other with regard
to all publicity and other releases concerning this Agreement and the
transactions contemplated hereby and, except as required by applicable law or
the applicable rules or regulations of any Governmental Entity or stock
exchange, no party shall issue any such publicity or other release without the
prior written consent of the other party, which shall not be unreasonably
withheld.
12.13 Construction. Any section headings in this Agreement are for
convenience of reference only, and shall be given no effect in the construction
or interpretation of this Agreement or any provisions thereof. No provision of
this Agreement will be interpreted in favor of, or against, any party by reason
of the extent to which any such party or its counsel participated in the
drafting thereof.
12.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and which together
shall constitute but one and the same instrument.
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12.15 Further Assurances. After the Closing Date, each party hereto at the
reasonable request of the other and without additional consideration, shall
execute and deliver, or shall cause to be executed and delivered, from time to
time, such further certificates, agreements or instruments of conveyance and
transfer, assumption, release and acquaintance and shall take such other action
as the other party hereto may reasonably request, to convey and deliver the
Assets to Buyer, to assure to Seller the assumption of the liabilities and
obligations intended to be assumed by Buyer hereunder and to otherwise
consummate or implement the transactions contemplated by this Agreement.
12.16 Payment of Funds. The amount of all revenues received by Seller (or
any Affiliates thereof) relating to the ownership or operation of ELPC's Shares
on or after the Effective Time shall be remitted to Buyer in immediately
available funds on a timely basis. The amount of all revenues received by Buyer
(or any Affiliates thereof) relating to the ownership or operation of ELPC's
Shares prior to the Effective Time shall be remitted to Seller in immediately
available funds on a timely basis. Without in any way limiting either party's
obligation to remit such amounts on a timely basis, if any such amounts received
by a party (or any affiliate thereof) are in excess of $25,000 in the aggregate
and have not been remitted to the other party within thirty (30) days of receipt
by the receiving party (or any affiliate thereof), such amounts shall bear
interest from the date of such receipt until the date upon which the other party
receives remittance of such amount in full and in immediately available funds at
an annual rate of 6%.
12.17 Certain Interpretive Matters. The inclusion of any matter on any
Schedule will not be deemed an admission by either party that such listed matter
has or would have a Seller Material Adverse Effect or a Buyer Material Adverse
Effect.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first written above.
SELLER:
ENRON LIQUIDS HOLDING CORP.
By:
Name: Xxxxxxx X. Xxxxx
Title: Vice President
BUYER:
XXXXXX XXXXXX, INC.
By:
Name: Xxxxxxx X. Xxxxxx
Title: President
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Exhibit A
Retained Liabilities
Enron Liquids Pipeline Company
Schedule of Liabilities Retained
1. All deferred income taxes, accounts payable or other current liabilities of
ELPC including but not limitd to the accounts listed below provided,
however, the retained liabilities shall not include any liabilities
associated with the ELPC Job Order designated J00008 Property Xxxx 00000
Xxxxxxxxxxxxxx Xxxxxx 0000.
101 2320 300 Vouchers Payable
101 2320 310 Accounts Payable-O/S Checks
101 2320 999 Accounts Payable-Other
101 2360 100 Accrued Use Taxes
101 2360 801 Accrued State Income Tax
101 2360 300 Accrued Franchise Taxes
101 2830 400 State LT Deferred Income Tax
101 2830 800 Federal LT Deferred Income Tax
2. Those litigation matters marked with an asterisk in Section 4.10 of the
Disclosure Schedule.
Exhibit B
_______________________________________________________________________________
Conveyance, Assignment and Assumption Agreement
EXHIBIT B
CONVEYANCE, ASSIGNMENT, AND
ASSUMPTION AGREEMENT
THIS GENERAL CONVEYANCE, ASSIGNMENT, XXXX OF SALE and ASSUMPTION
AGREEMENT (this "Agreement"), is entered into on February 14, 1997 between Enron
Liquids Pipeline Company, a Delaware corporation ("ELPC"), and Enron Liquids
Holding Corp., a Delaware corporation ("ELHC").
W I T N E S S E T H:
WHEREAS, ELHC and Xxxxxx Xxxxxx, Inc. ("KMI"), a Delaware
corporation, have as of even date herewith entered into that certain Amended
and Restated Purchase and Sale Agreement (the "Purchase Agreement"), providing,
among other things, for the sale by ELHC of the issued and outstanding stock of
ELPC to KMI;
WHEREAS, pursuant to the Purchase Agreement, ELPC and ELHC are required
to execute and deliver this Agreement in connection with the consummation of the
transactions contemplated by the Purchase Agreement; and
WHEREAS, any capitalized term used but not defined in this Agreement
shall have the meaning ascribed to such term in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Conveyance and Assignment of Assets. ELPC hereby grants, conveys,
assigns, transfers, bargains and delivers unto ELHC and its successors and
assigns, all of ELPC's right, title and interest in and to the accounts
receivable and all other current assets of ELPC together with copies of records
maintained by ELPC pertaining to any of the foregoing assets, properties and
rights described in this Paragraph 1 (collectively, the "Conveyed Assets") such
grant, conveyance, assignment and transfer is made without recourse or any
representations or warranties regarding the Conveyed Assets including, the
condition, collectability and adequacy thereof.
2. Subsequent Actions. ELPC hereby covenants to and with ELHC, its
successors and assigns, to execute and deliver to ELHC, its successors and
assigns, all such other and further instruments of conveyance, assignment and
transfer, and all such notices, releases and other documents, that would more
fully and specifically convey, assign, and transfer to and vest in ELHC, its
successors and assigns, the title of ELPC in and to all and singular the
Conveyed Assets hereby conveyed, assigned, and transferred, or intended to be
conveyed, assigned or transferred. To the extent that, with respect to any of
the Conveyed Assets, no assignment document other than this Agreement is
executed, the parties intend that this Agreement constitutes the conveyance,
transfer and assignment of such Conveyed Assets.
3. ELHC Assumption. ELHC has and by these presents does hereby
fully assume all liabilities, duties and obligations related to the Retained
Liabilities.
4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, PERFORMED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS. ALL CLAIMS,
DISPUTES OR CAUSES OF ACTION RELATING TO OR ARISING OUT OF THIS ASSIGNMENT SHALL
BE BROUGHT, HEARD AND RESOLVED SOLELY AND EXCLUSIVELY BY AND IN A FEDERAL OR
STATE COURT SITUATED IN XXXXXX COUNTY, TEXAS.
5. Conflict and Inconsistency; No Merger. To the extent any conflict or
inconsistency exists between the provisions of this Agreement and the Purchase
Agreement, the provisions of the Purchase Agreement shall be controlling. The
terms and provisions of the Purchase Agreement (including, without limitation,
the representations, warranties and covenants therein) shall not merge, be
extinguished or otherwise affected by the delivery and execution of this
Agreement or any other document delivered pursuant to Paragraph 2 of this
Agreement.
6. DISCLAIMER OF WARRANTIES. OTHER THAN AS EXPRESSLY SET FORTH IN THE
PURCHASE AGREEMENT OR THIS AGREEMENT, ELHC ACKNOWLEDGES THAT ELPC HAS NOT MADE,
AND HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY,
EXPRESS IMPLIED AT COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO (I) THE
CONDITION OF CONVEYED ASSETS (INCLUDING, WITHOUT LIMITATION, (A) ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR (D) ENVIRONMENTAL CONDITION),
(II) INFRINGEMENT BY ELPC OF ANY PATENT OR PROPRIETARY RIGHT, AND (III) ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO ELHC BY OR
ON BEHALF OF ELPC. THE PARTIES AGREE THAT THIS PARAGRAPH CONSTITUTES A
CONSPICUOUS LEGEND.
8. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, ELHC and ELPC have executed this Agreement as of
the day and year first above written.
ENRON LIQUIDS HOLDING CORP.
By:
Name:
Title:
ENRON LIQUIDS PIPELINE COMPANY
By:
Name:
Title:
-2-
Disclosure Schedule
for
Amended and Restated Purchase and Sale Agreement
dated as of February 14, 1997
by and among
Enron Liquids Holding Corp.
as Seller
and
Xxxxxx Xxxxxx, Inc.
as Buyer
Section 4.1: Organization and Good Standing of Seller and ELPC
Section 4.2: Qualification
Section 4.3: Capitalization of ELPC
Section 4.4: Authorization of Agreement; No Violation; No Consents
Section 4.5: Governmental Consents
Section 4.6: Enforceability (No schedule required)
Section 4.7: Balance Sheet
Section 4.8: Absence of Changes
Section 4.9: Contracts
Section 4.10: Suits
Section 4.11: Compliance with Laws (No schedule required)
Section 4.12: Tax Matters
Section 4.13: Condition of the Assets; Preferential Rights to Purchase
Section 4.14: Employees and Employee Benefit Plans and Policies
(No schedule required)
Section 4.15: Employee Matters
Section 4.16: Public Filings (No schedule required)
Section 4.17: Brokers (No schedule required)
Section 4.18: Suits Against the Partnerships
Although each item of disclosure set forth in this Disclosure Schedule
specifically refers to the article and section of the Agreement to which such
disclosure responds, it shall also be deemed to be disclosed with respect to any
other article or section of the Agreement.
Section 4.1
------------------------------------------------------------------------------
Officers and Directors of Enron Liquids Pipeline Company,
a Delaware corporation
DIRECTORS:
Xxxxxxx X. Xxxxxxx Director
Xxxxxxx X. Xxxxxx Director
Xxxxxxx X. Xxxxxx Director
Xxxxx X. Xxxxxxx Director
Xxxxxx X. Xxxxxx, III Director
Xxxxxxx X. Xxxxxx Director
Xxxxx X. Xxxxxxxx Director
OFFICERS:
Xxxxxxx X. Xxxxxx Chairman of the Board
Xxxxxxx X. Xxxxxxx President
E. G. Parks Senior Vice President and
Controller
Xxxxxx X. Xxxxx Vice President, Operations
Xxxxx X. Xxxxx Vice President, Communications and
Corporate Secretary
Xxxxxx X. Xxxxxx Vice President
Xxxxxx X. Xxxxxxx Vice President, Tax
Xxxxxxx X. Xxxxxxx Vice President, Finance and
Treasurer
Xxxxxx X. Xxxx Vice President, Midwest Region
Xxxxxxx X. Xxxxx Vice President and General
Counsel
Xxxxxx X. Xxxxxx Vice President, Finance, and
Assistant Secretary
Xxxxxx X. Xxxxxx Vice President, Gulf Coast
Region
Xxxx X. Xxxx Assistant Secretary
Xxxxxx X. Xxxxxx Assistant Secretary
Xxxxx X. Xxxxxxxx Assistant Secretary
Section 4.2
------------------------------------------------------------------------------
Qualification
None
Section 4.3
------------------------------------------------------------------------------
Capitalization of ELPC
Enron Liquids Pipeline Company
COMMON STOCK
Shares Authorized: 1,000,000
Shares Issued: 1,000,000
Shares Outstanding: 1,000,000
Owner of all outstanding shares: Enron Liquids Holding Corp.
Section 4.4
-------------------------------------------------------------------------------
Consents
1. The Pipeage Agreement between Enron Liquids Pipeline
Operating Limited Partnership ("ELPOLP") and an
Investor Shipper provides that the Investor Shipper
will have the right to buy the Cypress Pipeline
(which is owned by ELPOLP) at a price calculated
pursuant to the Pipeage Agreement if there is a sale,
transfer, conveyance or material change of ownership
or control, direct or indirect, of all or
substantially all of the stock of ELPOLP or ELPOLP's
interest in Cypress Pipeline. The Investor Shipper
advised Enron that it may have the right to purchase
the pipeline as a result of the sale of ELPC.
ELPOLP responded by letter dated October 14, 1996, in
which, without acknowledging the existence of the
right claimed by the Investor Shipper, as provided in
the Pipeage Agreement, ELPOLP gave the Investor
Shipper thirty (30) days from receipt of such letter
to exercise any such right, should it exist. As of
this date, the Investor Shipper has acknowledged in
writing in an Amendment to the Pipeage Agreement that
the time period has lapsed for it to exercise its
right, if any, to acquire the Cypress Pipeline
related to the sale of all of the stock of ELPC
pursuant to this Agreement. Pursuant to the
Amendment to the Pipeage Agreement and certain other
ancillary agreements, the Investor Shipper and
ELPOLP agreed to, among other things, make certain
improvements to the Cypress Pipeline to increase
throughput and the commitment by the Investor Shipper
of the transportation through the Cypress Pipeline
of certain minimum volumes of product (Ethane or E/P
Mix) at an agreed upon rate that is in accordance
with the FERC tariff then in force.
2. Pursuant to Section 6.01(R) in that certain Loan
Agreement dated effective May 24, 1995, by and
between ELPOLP, as Borrower, and Bank One, Texas
N.A., as Lender, the consent of the Lender must be
obtained in order for any party that is not an
Affiliate of Enron Corp. to be the general partner
of the Borrower, such consent not to be unreasonably
withheld.
3. Pursuant to Section 2.20 of that certain Credit
Agreement dated December 29, 1994, between Enron
Transportation Services, L.P., as Borrower, and First
Union National Bank of North Carolina, as Lender,
the Applicable Margin, as defined therein, shall be
increased by 0.25% should Enron or a wholly-owned
subsidiary of Enron cease to own a controlling
interest in ELPC.
Section 4.5
------------------------------------------------------------------------------
Governmental Consents
None
Section 4.7
------------------------------------------------------------------------------
Financial Statements
See Attachment No. 1 hereto.
ENRON LIQUIDS PIPELINE COMPANY
BALANCE SHEET
"AT SEPTEMBER 30, 1996"
Historical Adjustments # Pro Forma
ASSETS
Current Assets
Cash and Working Funds 0 0 0
Temporary Cash Investments 0 0 0
Accounts Receivable
- Assoc Co. Other "(104,296)" "104,296 " 1 0
- Assoc Co. Corp "(677,538)" "677,538 " 1 0
- Oper - Co 535 0 0 0
- CAFCO 0 0 0
- Other Trade "1,943,688 " "(1,943,688)" 2 0
Notes Receivable 0 0 0
Inventories 0 0 0
Material and Supplies 0 0 0
Prepayments "155,182 " "(155,182)" 2 0
Commod Exchange Receiv. 0 0 0
Other 0 0 0
Total "1,317,036 " "(1,317,036)" 0
Investments and Other Assets
Investment in Consol Co 0 0 0
Investment in Unconsol Co 23,530,236 " 0 "23,530,236 "
Other 0 0 0
Total "23,530,236 " 0 "23,530,236 "
Plant "76,713 " 0 "76,713 "
Accumulated Depreciation "13,578 " 0 "13,578 "
Net Plant "63,135 " 0 "63,135 "
Deferred Charges
Severance/Relocation Charges 0 0 0
Other "325,275 " "(325,275)" 3 0
Total "325,275 " "(325,275)" 0
Total Assets "25,235,682 " "(1,642,311)" "23,593,371 "
LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable
- Assoc Co. Other 0 0 0
- Assoc Co. Corp 0 0 0
- Other Trade "127,389 " "(127,389)" 2 0
Notes Payable 0 0 0
Accrued Income Taxes "80,766 " "(80,766)" 2 0
Accrued Taxes - Other "38,211 " "12,979 " 2 "51,190 "
Current Deferred Income Taxes 0 0 0
Accrued Interest 0 0 0
Commod Exchange Payable 0 0 0
Current Portion - LT Obligation 0 0 0
Other 0 0 0
Total "246,366 " "(195,176)" "51,190 "
Reserves and Deferred Credits
Long-Term Deferred Income Taxes "28,718,979 " "(28,718,979)" 3 0
Long-Term Obligation-Assoc Co. 0 0 0
Long-Term Obligation-Trade 0 0 0
Minority Interest 0 0 0
Other "(78,000)" "78,000 " 3 0
Total "28,640,979 "(28,640,979)" 0
Capital
Pay to/(Receiv from)-Corp "(83,437,636)" "83,437,636 " 1 0
Common Stock "10,000,000 " 0 "10,000,000 "
Premium On Common Stock "14,500,000 " "(14,500,000)" 4 0
Retained Earnings "55,285,973 " "(41,743,792)" "1,2,3,4" "13,542,181 "
Cumul Foreign Curr Transl Adj 0 0 0
Total "(3,651,663)" "27,193,844 " "23,542,181 "
Total Liabilities and Capital "25,235,682 " "(1,642,311)" "23,593,371 "
Note: Certain information and notes normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted.
ENRON LIQUIDS PIPELINE COMPANY
ADJUSTMENTS TO BALANCE SHEET
AT SEPTEMBER 30, 1996
1 Eliminate Intercompany Receivable/Payable balances.
2 Eliminate Working Capital itmes (excluding Accrued Franchise Taxes).
3 Eliminate Deferred Charges, Deferred Credits, and Deferred Income Taxes.
4 Reclass Note Payable to Retained Earnings
Note: The Pro-Forma Balance Sheet does not reflect the sale of the Transferred
LP Units.
Section 4.8
-------------------------------------------------------------------------------
Absences of Changes
1. Pursuant to Section 2.20 of that certain Credit
Agreement dated December 29, 1994, between
Enron Transportation Services, L.P., as Borrower, and
First Union National Bank of North
Carolina, as Lender, the Applicable Margin, as
defined therein, shall be increased by 0.25%
should Enron or a wholly-owned subsidiary of Enron
cease to own a controlling interest in
ELPC.
2. ELPC has entered into that certain Unit Purchase Agreement
between First Union Investors, Inc. ("First Union") and
ELPC dated as of February 14, 1997 providing for the sale
by ELPC of the Transferred L.P. Units to First Union.
Section 4.9
------------------------------------------------------------------------------
Contracts
1. Amended and Restated Agreement of Limited Partnership of Enron Liquids
Pipeline, L.P., dated as of August 6, 1992, by and among Enron Liquids Pipeline
Company, Enron Gas Production Company, and other persons, with First Amendment
effective as of August 6, 1992, and Second Amendment effective as of September
30, 1993.
2. Amended and Restated Agreement of Limited Partnership of Enron Liquids
Pipeline Operating Limited Partnership, dated as of August 6, 1992, by and among
Enron Liquids Pipeline Company, Enron Liquids Pipeline, L.P. and other persons
who become partners, with First Amendment effective as of August 6, 1992, and
Second Amendment dated as of March 22, 1993, but effective as of August 6, 1992.
3. Omnibus Agreement by and among Enron Corp., Enron Liquids Pipeline, L.P.,
Enron Liquids Pipeline Operating Limited Partnership, and Enron Liquids Pipeline
Company, with First Amendment dated as of September 30, 1993, and Second
Amendment dated as of September 7, 1994.
4. Conveyance, Contribution and Assumption Agreement dated as of August 6, 1992,
by and among Enron Corp., Enron Liquids Pipeline Company, Enron Gas Processing
Company, Enron Gas Liquids, Inc., Enron Liquids Pipeline, L.P., Enron Liquids
Pipeline Operating Limited Partnership, and others, with First Amendment
effective as of August 6, 1992.
5. Amended and Restated Agreement of Limited Partnership of Enron Transportation
Services, L.P., dated as of September 30, 1993, by and among Enron Liquids
Pipeline Company, Enron Liquids Pipeline, L.P., and others.
6. Agency Agreement dated July 19, 1995, by and between Enron Liquids Pipeline
Company and Enron Liquid Fuel Company (the latter by change of name now known as
Enron Liquid Services Corp.).
*7. Unit Purchase Agreement dated as of February 14, 1997 by and between Enron
Liquids Pipeline Company and First Union Investors, Inc.
*8. Unit Registration Rights Agreement dated as of February 14, 1997 by and
among Enron Liquids Pipeline, L.P., Enron Liquids Pipeline Company and First
Union Investors, Inc.
The representations made in Section 4.9(b) of the Agreement are not made with
respect to the items marked with an "*" above.
Section 4.10
------------------------------------------------------------------------------
Litigation
The following litigation is included herein to the extent that it applies to
ELPC as general partner of ELPLP, ELPOLP and/or ETS only. All matters listed
below marked with an "*" will be retained by the Seller.
1. State of Illinois ex rel. Xxxx et al. v. Enron Liquids Pipeline Company.
Circuit Court for Grundy County, Illinois. Docket No. 95-CH-28. (Served November
2, 1995.) The Illinois EPA filed suit on September 13, 1995 against ELPC for
civil penalties and an injunction for events growing out of a fire exactly one
year earlier at ELPC's pipeline terminal at Morris, Ill. The incident occurred
when a sphere containing natural gasoline overfilled and released the product,
which ignited, causing fire and damage to ELPC's facilities, but no damage to
other property. The lawsuit contains five counts: a) air pollution; b) public
nuisance; c) common law public nuisance; d) water pollution, and e) creating a
water pollution hazard.
Counts one, four, and five seek civil damages in the amount of $50,000 for
each count, plus $10,000 per day for any continuing violation, and an injunction
against further violations. The nuisance counts ask for ELPC to be enjoined from
further nuisance activities and to be required to comply with the fire safety
recommendations. Count five also requests the court to order corrective action
in the form of improving the natural gasoline containment area.
On August 22, 1996, the Illinois Attorney General's office proposed a
consent decree that would require ELPC to implement several fire safety and
protection recommendations and pay a $100,000 civil penalty plus a $500/day
penalty for missing certain remedial deadlines. On December 31, 1996, ELPC
responded to the proposal, and negotiations with the OAG have started. ELPC
earlier had filed an answer to the suit.
In December, the U.S. Department of Transportation issued to ELPC a notice
of probable violations (eight) of federal pipeline safety regulations and a
proposed civil penalty of $90,000. DOT extended ELPC's time to respond from 30
days to 60 days.
*2. Xxxxxx x. Xxxxx and others (including Enron Liquids Pipeline Company); Law
Xx. 00000, Xxxxxxxx Xxxxx xxx Xxxxxxx Xxxxxx, Xxxx (served August 20, 1996).
This suit is a suit by the Administrator of the Xxxxxx estate against the
Executor of the Piper estate and ten other defendants for damages of unspecified
amount for death, injury, and loss of income that are asserted to have occurred
in an alleged propane gas explosion in a restaurant in Fredonia, Iowa on
September 17, 1994. Against ELPC, the plaintiff sets up three theories of
recovery: negligence, breach of implied warranty of safety, and strict
liability. ELPC has been impleaded, and its discovery is just commencing.
*3. Xxxxx Xxxxxx v. Enron Liquid Fuels, Inc., (properly Enron Liquids Pipeline
Company); U.S. District Court (S.D., TX.) (Served 12-1-95) This former employee
of Enron Liquids Pipeline Company has sued for compensatory and punitive
damages, back pay, injunctive relief and attorney fees. He asserts that he was
wrongfully terminated by ELPC on August 8, 1994 on the basis of race. An answer
has been filed for ELPC. Trial is set for March 14, 1997.
*4. Xxxxxx X. Xxxx, et al. x. Xxxxxx Petroleum, et al. 344th Judicial District
Court for Xxxxxxxx County, Texas. Cause No. 9648. (Original Petition filed
September 2, 1982) Class action suit seeking unspecified damages alleging that
potential industrial accidents were a nuisance, land prices were depressed, and
brine disposal caused property damage. This case was inactive from 1985 to 1995.
In 1995, it was placed on a dismissal docket for want of prosecution. In 1996,
plaintiffs' counsel entered an appearance and moved for referral to mediation,
which was opposed by defendants and has not been ordered by the court. All
defendants now have filed motions for summary judgment, based on the limitation
of actions. A hearing on those motions is scheduled for January 31, 1997.
*5. Ripplemeyer x. Xxxxxx (and others, including ELPC), Xx. XXXX000000, Xxxxxxxx
Xxxxx xxx Xxxxxxx Xxxxxx, Xxxx (served December 10 and 12, 1996). Ripplemeyer
was the only survivor of the Fredonia explosion (in item 2, above). He has sued
the estate of the restaurant owner, alleging negligence, as well as appliance
and valve-control manufacturers, odorant manufacturers, retain propane dealers,
and pipeline transporters on the theory that they failed to warn him of the
danger of appliances.
The three Xxxxxxxxx Inn cases, Robles, Ripplemeyer, and Piper, have been
consolidated for discovery and trial. In Ripplemeyer, ELPC has moved for
dismissal based on the fact that while the complaint was filed before the
statute of limitations ran, service was not perfected until afterward, and that
failure to attempt service violated Iowa procedural rules. The motion is
scheduled for hearing on January 9, 1997.
*6. Piper v. Farmers Elevator & Exchange (and others, including ELPC); No.
XXXX000000, Xxxxxxxx Xxxxx xx Xxxxxxx Xxxxxx, Xxxx (served September 16, 1996).
This odorization suit arose from the Fredonia, Iowa restaurant explosion on
September 17, 1994. The plaintiffs are the widow and two children of Xxxxx
Xxxxx, deceased owner of the restaurant, and his estate. It seeks damages of
unstated amount for wrongful death and property damage from 12 defendants. As
against ELPC, the complaint asserts theories of recovery including negligence,
failure to warn, strict liability and failure to audit the safety programs of
its customers.
*7. Xxxxxxxxxxx v. Enron Liquids Pipeline Company, L.P. (sic), Enron Corp., and
Enron Operations Company. Kansas Human Rights Commission, Case no. 20616-97W
(served September 18, 1996). The complainant, an employee of ELPC, charges
discrimination and harassment based on age and disability in violation of Kansas
law, and ADEA and ADA. He also asserts that the company retaliated against him
because of disability. According to the Kansas Human Rights Commission, the case
will be handled by the EEOC.
Section 4.12
------------------------------------------------------------------------------
ELPC Group
1995 Income Tax Returns
Enron Liquids Pipeline Company
Federal Income Tax Return: Included in Enron Corp. & Subs Consolidated
Federal Income Tax Return
State Income Tax Returns: Illinois (Included in Unitary Return)
Indiana
Iowa (Included in Unitary Return)
Kansas (Included in Unitary Return)
Louisiana
Missouri
Nebraska (Included in Unitary Return)
New Mexico (Included in Unitary Return)
Texas (Franchise/Earned Surplus)
"Enron Liquids Pipeline, L.P."
Federal Partnership
Return of Income: Prepared by Enron Liquids Pipeline Company
State Partnership Return
of Income Where Business
is Conducted: Illinois Indiana
Iowa Kansas
Louisiana Missouri
Nebraska
State Partnership Return
of Income Where Partnership
has Resident Partners: Delaware Florida
Idaho Maine
New York Oregon
Pennsylvania Utah
West Virginia
Enron Liquids Operating
Limited Partnership
Federal Partnership
Return of Income: Prepared by Enron Liquids Pipeline Company
State Partnership Return
of Income: Illinois Indiana
Iowa Kansas
Louisiana Missouri
Nebraska
"Enron Transportation
Services, L.P."
Federal Partnership
Return of Income: Prepared by Enron Liquids Pipeline Company
State Partnership Return
of Income: Illinois
Enron Natural Gas Liquids
Corporation
Federal Income Tax Return: Deconsolidated entity (owned by Operating
Partnership)
State Income Tax Returns: Texas (Franchise/Earned Surplus)
Mont Belvieu Associates Partnership
Federal Partnership
Return of Income: Prepared by Enron Natural Gas Liquids
Corporation
ENRON LIQUIDS GROUP
FEDERAL AUDIT ACTIVITY FOR ENTITIES
IN THE PROPOSED TRANSACTION
Statute
Company Tax Years Expiration Status
Enron Corp.
and Subsidiaries All tax years Expired Closed for federal
prior to 12/31/91 examinations
Enron Corp.
and Subsidiaries 1992-1994 1992: 9/30/97 Currently under
1993: 9/15/97 federal examination;
1994: 9/15/98 RAR not expected
until end of 1997
"Enron Liquids
Pipeline, L.P." No federal examinations currently in progress
ENRON LIQUIDS GROUP
STATE AUDIT ACTIVITY FOR ENTITIES
IN THE PROPOSED TRANSACTION
Company Tax Years State Statute Expiration Status
Enron Liquids Pipeline Company 1992-1994 Louisiana 12/31/97 Field audit nearing conclusion
Enron Liquids Pipeline Company 1991-1993 Indiana 10/15/96 Just received no-charge assessment
Enron Liquids Pipeline Company 0000-0000 Xxxxxxxx - estimated tax penalty and interest
assessment is $61,000
Enron Liquids Pipeline Operating 1993-96 Kansas - a notice of intent to audit has been
Company filed by the State of Kansas
Enron Corp. and Subsidiaries The following unitary states are in various stages of audit.
No specific issues attributable to the liquids companies have been identified.
1993 - 1984 Illinois 12/31/96 Finalizing settlement
1985 - 1987 Illinois Open until protest resolved Finalizing amended returns
1990 - 1991 Illinois Open until protest resolved Motion for Discovery pending
1992 - 1983 Illinois 10/15/97 Pending 90-91 closure
Section 4.13
------------------------------------------------------------------------------
Condition of Assets
As of even date herewith ELPC has entered into that certain Unit Purchase
Agreement with First Union Investors, Inc. ("First Union") providng for the
sale of the Transferred LP Units to First Union.
Section 4.15
-------------------------------------------------------------------------------
Part I
None
Part II
See Attachment No. 1 hereto.
Part III
The Central Pension Fund -- International Union of
Operating Engineers and Participating Employers,
established in 1960.
Part IV
See Attachment Xx. 0 xxxxxx.
Xxxx X
Xxxx
XXXXXXXXXX XX. 0
TO
SECTION 4.15
=================================================================
| ENRON BENEFIT AND COMPENSATION PLANS |
| MLP EMPLOYEE PARTICIPATION |
=================================================================
(Note: Xxxx Terminal union employees do not participate in Enron's benefit
compensation plans with the exception of the Enron Liquid Services Corp.
Divestiture Plan. The union employees participate in the union welfare and
pension plans as provided and funded by negotiated contract. Xxxx Terminal
non-union employees participate in Enron's benefit and compensation plans along
with all other MLP employees.)
Benefit Plans Compensation Programs
Employee Stock Option Program Skill Based Pay
Savings Plan Merit Pay
Cash Balance Plan Variable Pay
Payroll Deducted Savings and Stock Purchase Bonus Stock Options
Flexible Compensation Plan All-Employee Stock Options
o "Flexdollars" Personal Best Award
o Spending Accounts Executive Compensation
o Medical Plan Executive Compensation
o Dental Plan Bonus Deferral
o Long Term Disability Club Membership
o Employee Life Insurance Enron Liquid Services Corp.
o Spouse Life Insurance Divestiture Plan
o Dependent Child Life Insurance
o Accident Death & Dismemberment Insurance
Business Travel Accident Insurance
Employee Assistance Program (EAP)
Service Awards
Sick Leave Pay Practice
Leaves Of Absence
Vacation
Holidays
Approved Time Off
Discontinued Child Day Care
Credit Union
Savings Bonds
Educational Assistance Program
Scholarship Program
Matching Gift Program
Workers' Compensation
Unemployment Compensation
Attachment No. 2
to
Section 4.15
YEAR RATE TOTAL CONTRIBUTION
1996 (1/1/96-9/30/96)$1.10/HR. $ 36,999.80
1995 $1.00/HR. (1/1/95-8/31/95)
$1.10/HR. (9/1/95-12/31/95) $ 44,208.35
1994 $1.00/HR. $ 28,737.50
1993 $1.00/HR. $ 17,284.70
Section 4.18
--------------------------------------------------------------------------------
Suits Against the Partnerships
The following litigation is included herein to the extent that it applies to
ELPLP, ELPOLP, ENGL and/or ETS only. All matters listed below marked with an
"*" will be retained by the Seller.
1. State of Illinois ex rel. Xxxx et al. v. Enron Liquids Pipeline Company.
Circuit Court for Grundy County, Illinois. Docket No. 95-CH-28. (Served November
2, 1995.) The Illinois EPA filed suit on September 13, 1995 against ELPC for
civil penalties and an injunction for events growing out of a fire exactly one
year earlier at ELPC's pipeline terminal at Morris, Ill. The incident occurred
when a sphere containing natural gasoline overfilled and released the product,
which ignited, causing fire and damage to ELPC's facilities, but no damage to
other property. The lawsuit contains five counts: a) air pollution; b) public
nuisance; c) common law public nuisance; d) water pollution, and e) creating a
water pollution hazard.
Counts one, four, and five seek civil damages in the amount of $50,000 for
each count, plus $10,000 per day for any continuing violation, and an injunction
against further violations. The nuisance counts ask for ELPC to be enjoined from
further nuisance activities and to be required to comply with the fire safety
recommendations. Count five also requests the court to order corrective action
in the form of improving the natural gasoline containment area.
On August 22, 1996, the Illinois Attorney General's office proposed a
consent decree that would require ELPC to implement several fire safety and
protection recommendations and pay a $100,000 civil penalty plus a $500/day
penalty for missing certain remedial deadlines. On December 31, 1996, ELPC
responded to the proposal, and negotiations with the OAG have started. ELPC
earlier had filed an answer to the suit.
In December, the U.S. Department of Transportation issued to ELPC a notice
of probable violations (eight) of federal pipeline safety regulations and a
proposed civil penalty of $90,000. DOT extended ELPC's time to respond from 30
days to 60 days.
*2. Xxxxxx x. Xxxxx and others (including Enron Liquids Pipeline Company); Law
Xx. 00000, Xxxxxxxx Xxxxx xxx Xxxxxxx Xxxxxx, Xxxx (served August 20, 1996).
This suit is a suit by the Administrator of the Xxxxxx estate against the
Executor of the Piper estate and ten other defendants for damages of unspecified
amount for death, injury, and loss of income that are asserted to have occurred
in an alleged propane gas explosion in a restaurant in Fredonia, Iowa on
September 17, 1994. Against ELPC, the plaintiff sets up three theories of
recovery: negligence, breach of implied warranty of safety, and strict
liability. ELPC has been impleaded, and its discovery is just commencing.
*3. Xxxxx Xxxxxx v. Enron Liquid Fuels, Inc., (properly Enron Liquids Pipeline
Company); U.S. District Court (S.D., TX.) (Served 12-1-95) This former employee
of Enron Liquids Pipeline Company
1
has sued for compensatory and punitive damages, back pay, injunctive relief and
attorney fees. He asserts that he was wrongfully terminated by ELPC on August 8,
1994 on the basis of race. An answer has been filed for ELPC. Trial is set for
March 14, 1997.
*4. Xxxxxx X. Xxxx, et al. x. Xxxxxx Petroleum, et al. 344th Judicial District
Court for Xxxxxxxx County, Texas. Cause No. 9648. (Original Petition filed
September 2, 1982) Class action suit seeking unspecified damages alleging that
potential industrial accidents were a nuisance, land prices were depressed, and
brine disposal caused property damage. This case was inactive from 1985 to 1995.
In 1995, it was placed on a dismissal docket for want of prosecution. In 1996,
plaintiffs' counsel entered an appearance and moved for referral to mediation,
which was opposed by defendants and has not been ordered by the court. All
defendants now have filed motions for summary judgment, based on the limitation
of actions. A hearing on those motions is scheduled for January 31, 1997.
*5. Ripplemeyer x. Xxxxxx (and others, including ELPC), Xx. XXXX000000, Xxxxxxxx
Xxxxx xxx Xxxxxxx Xxxxxx, Xxxx (served December 10 and 12, 1996). Ripplemeyer
was the only survivor of the Fredonia explosion (in item 2, above). He has sued
the estate of the restaurant owner, alleging negligence, as well as appliance
and valve-control manufacturers, odorant manufacturers, retain propane dealers,
and pipeline transporters on the theory that they failed to warn him of the
danger of appliances.
The three Xxxxxxxxx Inn cases, Robles, Ripplemeyer, and Piper, have been
consolidated for discovery and trial. In Ripplemeyer, ELPC has moved for
dismissal based on the fact that while the complaint was filed before the
statute of limitations ran, service was not perfected until afterward, and that
failure to attempt service violated Iowa procedural rules. The motion is
scheduled for hearing on January 9, 1997.
*6. Piper v. Farmers Elevator & Exchange (and others, including ELPC); No.
XXXX000000, Xxxxxxxx Xxxxx xx Xxxxxxx Xxxxxx, Xxxx (served September 16, 1996).
This odorization suit arose from the Fredonia, Iowa restaurant explosion on
September 17, 1994. The plaintiffs are the widow and two children of Xxxxx
Xxxxx, deceased owner of the restaurant, and his estate. It seeks damages of
unstated amount for wrongful death and property damage from 12 defendants. As
against ELPC, the complaint asserts theories of recovery including negligence,
failure to warn, strict liability and failure to audit the safety programs of
its customers.
*7. Xxxxxxxxxxx v. Enron Liquids Pipeline Company, L.P. (sic), Enron Corp., and
Enron Operations Company. Kansas Human Rights Commission, Case no. 20616-97W
(served September 18, 1996). The complainant, an employee of ELPC, charges
discrimination and harassment based on age and disability in violation of Kansas
law, and ADEA and ADA. He also asserts that the company retaliated against him
because of disability. According to the Kansas Human Rights Commission, the case
will be handled by the EEOC.
2
Schedule 6.2(b)
Changes in Operations
-------------------------------------------------------------------------------
None
Schedule 6.7
Computer Software
Excluded Software and Hardware
1. ENRON Financial System
This consists of all software and hardware components that make up the
Enron Financial System environment including but not limited to the Dun &
Bradstreet Software and the Oracle Purchasing Software.
2. Environmental Management Information System (EMIS)
3. Envision - Document Imaging & Storage System This consists of all software
and hardware components that make up Envision including but not limited to
the FileNet Software and the HP Unix server.
4. FERA - Cathodic Protection
This consists of the FERA AS3, CISurvey, and PLSurvey software
applications at all ELPC General Partner locations.
5. ENRON Corp. Mainframe and Print Center Environments
This includes but is not limited to the IBM 3090
computers, peripheral hardware,
operating system software, language compilers, database
management software,
fourth generation languages, security software,
utilities, printers, paper and
supplies, LANs, data communications hardware and
software, and application
system software.
6. ENRON OTS VAX Environment
This includes but is not limited to OTS DEC VAX computers, peripheral
hardware, operating system software, language compilers, database
management software, fourth generation languages, security software, and
utilities.
7. ELSC Houston PC LAN Environment
This includes but is not limited to the "NGL" LAN
server which is a Compaq
Proliant 2000, the "ELSC-2" LAN server which is a
Compaq Proliant 1500, the
"RESENG" LAN server which is a Compaq SYSTEMPRO/LT, the
Storage
Dimensions tape backup hardware, other peripheral
hardware, network printers,
network operating system software, and various
networked software applications.
Schedule 6.10
Employment Matters
AVERAGE
NUMBER OF EMPLOYEES SALARY
Available 13 $73,000
Company 128 $45,000
---
Total 141 $48,000
AVERAGE SALARY
EMPLOYEES PER FUNCTION PER FUNCTION
AVAILABLE
BUSINESS DEVELOPMENT 4 $87,000
MARKETING 1 $109,000
ACCOUNTING 6 $52,000
ENGINEERING 1 $110,000
SAFETY & COMPLIANCE 1 $64,000
COMPANY
PIPELINE CONTROLLER (DISPATCHERS) 13 $50,000
FACILITY MANAGEMENT 16 $58,000
CLERICAL 2 $33,000
ENGINEERING 1 $68,000
OPERATIONS & MAINTENANCE 74 $45,000
XXXX TERMINAL-UNION EMPLOYEES 22 $31,000
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