AGREEMENT AND PLAN OF MERGER among NEXUS GAS PARTNERS, LLC, NEXUS GAS HOLDINGS, LLC, REGENCY ENERGY PARTNERS LP and REGENCY NX, LLC February 22, 2008
EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
among
NEXUS
GAS PARTNERS, LLC,
NEXUS
GAS HOLDINGS, LLC,
and
REGENCY
NX, LLC
February
22, 2008
_________________________________
TABLE
OF CONTENTS
Article
I DEFINITIONS AND INTERPRETATIONS
|
2
|
|
1.1
|
Definitions
|
2
|
1.2
|
Interpretations
|
2
|
Article
II THE MERGER; CLOSING
|
2
|
|
2.1
|
The
Merger
|
2
|
2.2
|
Effective
Time; Closing
|
2
|
2.3
|
Effect
of the Merger
|
3
|
2.4
|
Governing
Instruments; Directors and Officers of the Surviving
Company
|
3
|
2.5
|
Conversion
of Securities
|
3
|
2.6
|
Withholding
Taxes
|
4
|
2.7
|
Regency
Payments
|
4
|
2.8
|
Merger
Consideration Adjustments
|
5
|
Article
III REPRESENTATIONS AND WARRANTIES OF MEMBER
|
8
|
|
3.1
|
Member’s
Representations and Warranties
|
8
|
10
|
||
4.1
|
Representations
and Warranties Regarding the Nexus Companies
|
10
|
23
|
||
5.1
|
Representations
and Warranties Regarding Regency and Merger Sub
|
23
|
Article
VI COVENANTS
|
24
|
|
6.1
|
Satisfaction
of Conditions Precedent; Cooperation
|
24
|
6.2
|
Notices
and Consents
|
25
|
6.3
|
Conduct
of Business.
|
25
|
6.4
|
Access
and Information
|
28
|
6.5
|
Evaluation
and Inspection
|
29
|
6.6
|
HSR
Act
|
30
|
6.7
|
Employees
|
31
|
6.8
|
Financial
and Internal Controls Information
|
32
|
6.9
|
Payoff
Letters; Releases
|
32
|
6.10
|
Tax
Matters
|
32
|
6.11
|
Support
of Sonat Abandonment Application
|
35
|
6.12
|
Notice
of Breaches of Representations and Warranties
|
35
|
6.13
|
Auditor
Matters
|
35
|
6.14
|
Termination
of Agreements
|
35
|
6.15
|
Transfer
of Certain Assets of Member
|
36
|
Article
VII CONDITIONS PRECEDENT; CASUALTY LOSS; CLOSING
DELIVERIES
|
36
|
|
7.1
|
Conditions
to Obligation of Regency and Merger Sub
|
36
|
7.2
|
Conditions
to Obligation of Member and Nexus
|
37
|
7.3
|
Casualty
Loss
|
38
|
i
7.4
|
Deliveries
at the Closing
|
39
|
7.5
|
Frustration
of Closing Conditions
|
40
|
Article
VIII POST-CLOSING COVENANTS
|
40
|
|
8.1
|
Further
Assurances; Access to Records and Excluded Records
|
40
|
8.2
|
Permits,
Licenses and Approvals
|
41
|
8.3
|
Removal
of Logos and Signs
|
41
|
8.4
|
Recording
and Regulatory Filings
|
41
|
8.5
|
Post-Closing
Consents
|
42
|
8.6
|
Sonat
Purchase Agreement
|
42
|
8.7
|
Non-Solicitation
|
43
|
Article
IX INDEMNIFICATION
|
44
|
|
9.1
|
Survival
|
44
|
9.2
|
Indemnification
Provisions for Benefit of Regency
|
45
|
9.3
|
Indemnification
Provisions for Benefit of Member
|
48
|
9.4
|
Certain
Limitations
|
49
|
9.5
|
Sonat
Cash Payment Offset
|
51
|
9.6
|
Deduction
of Insurance or Third Party Proceeds, Etc
|
51
|
9.7
|
Subrogation
|
52
|
9.8
|
Inter-Party
Claims
|
53
|
9.9
|
Matters
Involving Third Parties
|
53
|
9.10
|
Recourse
under Prior Acquisition Agreements
|
55
|
9.11
|
Damages
|
55
|
9.12
|
Tax
Treatment of Indemnity Payments
|
55
|
9.13
|
Right
to Indemnification
|
56
|
9.14
|
Control
of Environmental Matters
|
56
|
Article
X TERMINATION OF AGREEMENT
|
57
|
|
10.1
|
Termination
of Agreement
|
57
|
10.2
|
Procedure
for and Effect of Termination
|
58
|
Article XI ESCROW | 59 | |
11.1
|
Escrow
Fund
|
59
|
11.2
|
Release
from Escrow
|
59
|
11.3
|
Escrow
Distribution Date
|
60
|
11.4
|
Subsequent
Distribution(s)
|
60
|
Article
XII MISCELLANEOUS
|
60
|
|
12.1
|
Press
Releases and Public Announcements
|
60
|
12.2
|
No
Third Party Beneficiaries
|
61
|
12.3
|
Succession
and Assignment
|
61
|
12.4
|
Counterparts
|
61
|
12.5
|
Notices
|
61
|
12.6
|
Governing
Law
|
62
|
12.7
|
Entire
Agreement; Amendment
|
63
|
12.8
|
Severability
|
63
|
12.9
|
Transaction
Expenses
|
63
|
ii
12.10
|
Confidentiality
|
63
|
12.11
|
Disclosure
Schedules
|
64
|
12.12
|
Incorporation
of Exhibits and Schedules
|
64
|
12.13
|
Non-Waiver
|
64
|
12.14
|
Captions
|
65
|
12.15
|
No
Affiliate Liability
|
65
|
12.16
|
Time
of the Essence
|
65
|
12.17
|
Specific
Performance
|
65
|
12.18
|
Limitations
|
65
|
12.19
|
Waiver
of Jury Trial
|
66
|
12.20
|
Certain
Understandings
|
66
|
12.21
|
Disclaimer
|
67
|
Schedules
Schedule
A
|
Permitted
Contacts
|
Schedule
B
|
Consents
|
Schedule C
|
Sample
Balance Sheet
|
Schedule
C
|
Prohibited
Actions
|
Schedule
E
|
Permitted
Encumbrances
|
Schedule
F
|
Identified
Member Assets
|
Exhibits
Exhibit
A
|
Definitions
and Interpretations
|
Exhibit
B
|
Certificate
of Merger
|
Exhibit
C
|
Escrow
Agreement
|
Exhibit
D
|
Facilities
|
Exhibit
E
|
Release
|
Exhibit
F
|
System(s)
|
Exhibit
G
|
Application
Parameters
|
Disclosure
Schedules
3.1(b)
|
Member
– Authorization of Transaction; Governmental
Authorizations
|
3.1(d)
|
Member
– Brokers’ Fees
|
3.1(f)
|
Member
– Consents
|
4.1(a)
|
Organization
|
4.1(b)
|
Capitalization
|
4.1(c)
|
Authorization
of Transaction; Governmental
Authorizations
|
4.1(d)
|
Noncontravention
|
4.1(e)
|
Brokers’
Fees
|
4.1(f)
|
Consents
|
iii
4.1(g)
|
Compliance
with Laws; Permits
|
4.1(h)
|
Properties
|
4.1(k)
|
Taxes
|
4.1(l)
|
Material
Contracts
|
4.1(m)
|
Financial
Statements; Undisclosed Liabilities
|
4.1(n)
|
Pipeline
Matters
|
4.1(o)
|
Affiliate
Transactions
|
4.1(r)
|
List
of Employee Benefit Plans and Certain
Contracts
|
4.1(s)
|
Environmental
Matters
|
4.1(t)
|
List
of Insurance Policies
|
4.1(v)
|
List
of Guarantees
|
4.1(w)
|
Labor
Matters
|
4.1(y)
|
Sonat
Matters
|
6.3(a)
|
Conduct
of Business – Exceptions
|
6.3(b)
|
Conduct
of Business – Exceptions (Negative
Covenants)
|
iv
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as
of February 22, 2008, is made and entered into by and among Nexus Gas Partners,
LLC, a Delaware limited liability company (“Member”), Nexus Gas
Holdings, LLC, a Delaware limited liability company (“Nexus”), Regency
Energy Partners LP, a Delaware limited partnership (“Regency”), and
Regency NX, LLC, a Delaware limited liability company (“Merger
Sub”). Member, Nexus, Regency and Merger Sub are sometimes
referred to collectively herein as the “Parties” and individually as a
“Party.”
A. The
board of directors of Regency GP, LLC, on behalf of Regency GP, LLC, in its
capacity as the general partner of Regency GP LP, the general partner of
Regency, has approved this Agreement and the transactions contemplated hereby
whereby Merger Sub will merge with and into Nexus (the “Merger”) upon the
terms and subject to the conditions set forth in this Agreement.
B. Regency
Gas Services LLC, a wholly-owned subsidiary of Regency and the sole member of
Merger Sub, and Member, as the sole member of Nexus, have approved this
Agreement and the Merger.
C. As
a result of the Merger, and in accordance with the Delaware Limited Liability
Company Act (the “DLLCA”), the issued
and outstanding membership interests in Nexus shall be converted into the right
to receive the Merger Consideration as set forth herein.
D. Each
of Xxxxx Xxxxxxxx and Xxxx Xxxxx has executed and delivered to Regency a
Non-Competition Agreement (collectively, the “Non-Competition
Agreements”) simultaneously with the execution of this
Agreement.
E. Each
of Xxxxx Xxxxxxxx, Xxxx Xxxxxx and Xxxx Xxxxx and Member has executed and
delivered to Regency, and each of Regency and Merger Sub has executed and
delivered to Member, a Release simultaneously with the execution of this
Agreement.
F. Each
of Xxxxx Xxxxxxxx, Xxxx Xxxxxx and Xxxx Xxxxx has executed and delivered to
Regency a resignation effective as of Closing from each and every position of
employment and as an officer and each other capacity in which such individual
serves each Nexus Company (collectively, the “Resignations”)
simultaneously with the execution of this Agreement.
G. Each
of Xxxxx Xxxxxxxx, Xxxx Xxxxxx and Xxxx Xxxxx has executed and delivered to
Nexus Gas Gathering, LP and Member an Employment Separation and General Release
Agreement (collectively, the “Separation
Agreements”) simultaneously with the execution of this
Agreement.
H. The
Parties acknowledge that Regency and Merger Sub have determined the value of the
Nexus Companies and the amount of the Merger Consideration based, in part, on
the Audited Financial Statements and the representations and warranties of
Member and the Nexus Companies contained in Section 4.1(m)(i),
(ii), and (iii) of this
Agreement.
1
ARTICLE I
DEFINITIONS
AND INTERPRETATIONS
1.1 Definitions. Capitalized
terms in this Agreement that are not defined in the text of the body of this
Agreement shall have the meanings given such terms as set forth in Exhibit
A attached to this Agreement, which Exhibit
A is incorporated herein by reference with the same force and effect as
is set forth herein in full.
1.2 Interpretations. Unless
expressly provided to the contrary in this Agreement, this Agreement shall be
interpreted in accordance with the provisions set forth in Section 1.2 of Exhibit
A.
ARTICLE
II
2.1 The
Merger. Upon
the terms and subject to the conditions set forth in Article VII, and in
accordance with applicable Laws, at the Effective Time, Merger Sub shall be
merged with and into Nexus. The Merger shall have the effects
specified herein and in the DLLCA. As a result of the Merger, the
separate existence of Merger Sub shall cease and Nexus shall continue as the
surviving entity of the Merger (the “Surviving Company”),
and as an indirect wholly owned subsidiary of Regency.
2.2 Effective Time;
Closing. The
closing of the Merger (the “Closing”) shall take
place at the offices of Xxxxxx & Xxxxxx LLP in Dallas, Texas, at 9:00 a.m.,
Dallas, Texas time, or such other place and time as Member and Regency shall
agree:
(a) on the
second Business Day after the conditions set forth in Article VII have been
satisfied or waived (other than those conditions that are to be satisfied at
Closing, but subject to their satisfaction or waiver) (such second Business Day,
the “Alternative
Satisfaction Date”) if the Alternative Satisfaction Date shall have
occurred on or before April 14, 2008; provided that if HSR Approval
is obtained on any date on or between March 26, 2008, and April 14, 2008, and
all other conditions set forth in Article VII have been
satisfied or waived (other than those conditions that are to be satisfied at
Closing, but subject to their satisfaction or waiver), then, at the election of
Regency, the Closing shall occur on any date from and after the date HSR
Approval is obtained prior to the Alternative Satisfaction Date; or
(b) if the
Alternative Satisfaction Date shall not have occurred on or before April 14,
2008, then, upon the written election of Member requesting an extension of the
Termination Date pursuant to Section 10.1(b), (i) if the
Alternative Satisfaction Date occurs on or after April 15, 2008, and on or
before April 28, 2008, the Closing shall occur on the Alternative Satisfaction
Date, (ii) if the Alternative Satisfaction Date occurs on or after April 29,
2008, and on or before May 1, 2008, the Closing shall occur on
May 1, 2008, or (iii) if the Alternative Satisfaction Date occurs
after May 1, 2008, the Closing shall occur on the Alternative Satisfaction Date,
subject to Section
10.1(b).
The date
of the Closing is herein called the “Closing
Date.” Immediately following the Closing, and on the Closing
Date, the Parties shall cause the Merger to be consummated by duly filing a
certificate of merger (the “Certificate of
Merger”) with the Secretary of State of the State of
2
Delaware
in the form attached hereto as Exhibit
B (the date and time of such filing being the “Effective
Time”).
2.3 Effect of the
Merger. At
the Effective Time, the effect of the Merger shall be as provided in the
applicable Laws of the State of Delaware. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
real estate, property, rights, privileges, powers, franchises and other assets
of Nexus and Merger Sub shall vest in the Surviving Company, and all debts,
liabilities, obligations and duties of Nexus and Merger Sub shall become the
debts, liabilities, obligations and duties of the Surviving
Company.
(a) The
certificate of formation of the Surviving Company shall be amended as set forth
in the Certificate of Merger, and as so amended, shall be the certificate of
formation of the Surviving Company until duly amended in accordance with its
terms and applicable Laws.
(b) The
limited liability company agreement of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the limited liability company agreement of
the Surviving Company until duly amended in accordance with its terms and
applicable Laws.
(c) The
directors and officers of Merger Sub at the Effective Time shall be the initial
directors and officers, respectively, of the Surviving Company from the
Effective Time until their respective successors have been duly elected or
appointed in accordance with the certificate of formation and limited liability
company agreement of the Surviving Company and applicable Laws.
(a) At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder thereof, each limited liability company interest of Merger Sub that
is issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and continue as a limited liability company interest of
the Surviving Company.
(b) At the
Effective Time, by virtue of the Merger and without any action on the part of
Merger Sub or Nexus, all of the issued and outstanding Membership Interests held
by a Person immediately prior to the Effective Time shall be canceled and shall
be converted automatically into the right to receive, subject to the other terms
and conditions of this Agreement, (i) a Pro Rata Portion of the Closing Payment
Amount, (ii) a Pro Rata Portion of the amount, if any, of the Merger
Consideration Surplus in accordance with Section 2.8(d)(ii), (iii) a
Pro Rata Portion of the Sonat Cash Payment, if applicable, and (iv) a Pro Rata
Portion of all amounts, if any, distributable to Member from the Escrow Fund
pursuant to Article
XI and the Escrow Agreement (collectively, the “Merger
Consideration”). From and after the Effective Time, the
holders of Membership Interests outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Membership Interests
except for the right to receive the Merger Consideration in respect of such
Membership Interests and except as otherwise provided herein or by applicable
Laws. At the Effective Time, the transfer books of Nexus shall be
closed and, thereafter, there shall be no further registration of transfers of
membership interests of Nexus on the records of Member.
3
2.6 Withholding
Taxes. Notwithstanding
anything in this Agreement to the contrary, Regency, Merger Sub and the
Surviving Company shall be entitled to deduct and withhold from the
consideration otherwise payable to any former holder of Membership Interests
pursuant to this Agreement any amount required to be deducted and withheld with
respect to the making of such payment under applicable Tax laws. To
the extent that amounts are so withheld by Regency, Merger Sub or the Surviving
Company, as the case may be, and are paid over to the appropriate Governmental
Authority in accordance with applicable Laws, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Membership Interests in respect of which such deduction and withholding was
made.
(a) At the
Closing:
(i) Regency
shall pay to Member, by wire transfer of immediately available funds to the
account designated in writing by Member to Regency at least two Business Days
prior to Closing, an amount in cash equal to the Closing Payment
Amount;
(ii) Regency
shall pay to the Escrow Agent, by wire transfer of immediately available funds,
an amount in cash equal to the Escrow Amount;
(iii) Regency
shall pay to each holder of any Third-Party Debt, by wire transfer of
immediately available funds to the account(s) designated by such Persons in the
applicable Debt Payoff Letters, the amounts specified in the Debt Payoff
Letters; and
(iv) to the
extent unpaid, Regency shall pay to the payees of any Expenses by wire transfer
of immediately available funds to the account(s) designated by such Persons in
the applicable Payoff Letters, the amounts specified in the Payoff Letters less,
to the extent applicable, any Medicaid, Social Security, income tax,
unemployment tax and other amounts required to be withheld.
(b) Subject
to Section
9.5 and
the terms of this Section 2.7(b), if
Regency, the Surviving Company (or any other Affiliate of Regency or any
assignee of the Surviving Company’s rights under the Sonat Purchase Agreement)
consummates the Sonat Acquisition on or prior to the second anniversary of the
Closing Date, then Regency shall pay to Member, within five (5) Business Days
following the date of consummation, the amount of Twenty-Five Million dollars
($25,000,000) in cash (the “Sonat Cash
Payment”). Notwithstanding the foregoing, if (x) the Surviving
Company consummates the Sonat Acquisition on the basis of the receipt by Sonat
of an order or orders from FERC that, collectively, do not constitute a Final
FERC Approval Order and (y) such order or orders from FERC differ from the
Selected Application Parameter and those differences together constitute a
material deviation from the Application Parameters as described on Exhibit
G that is adverse to the Surviving Company and the other Nexus Companies
(taken as a whole), then neither Regency nor the Surviving Company (nor any
other Regency Affiliate) shall be required to pay Member the Sonat Cash
Payment. From and after the Closing, Regency and the Surviving
Company shall use all commercially reasonable efforts (i) to comply with the
terms of, and to perform the Surviving Company’s obligations under, the Sonat
Purchase Agreement and the Sonat CIOM Agreement
4
and (ii)
to satisfy on a timely basis all conditions to the obligations of the Surviving
Company contained in the Sonat Purchase Agreement that are within its control;
provided, however, that the Surviving
Company shall not be required by the provisions of this Agreement to consummate
the transactions contemplated by the Sonat Purchase Agreement unless the parties
to the Sonat Purchase Agreement have received a Final FERC Approval
Order. The foregoing provisions of this subsection (b) shall not
require Regency or the Surviving Company (x) to waive or forego any rights or
benefits available to either of them under any law, regulation or the Sonat
Purchase Agreement, including the right to seek clarification or rehearing
consistent with the Selected Application Parameter of any FERC order or orders
bearing on the Sonat Acquisition, (y) to reject or to seek modification of any
proposed settlement of the Sonat Acquisition consistent with the Selected
Application Parameter, or (z) to expend funds (other than reasonable expenses in
prosecuting the Sonat Abandonment Application) or to sustain financial detriment
in order to obtain the consent, concurrence or agreement of any producer or
shipper on the Sonat Facilities to the Sonat Abandonment Application consistent
with the Selected Application Parameter. Notwithstanding anything
herein to the contrary, Regency shall and, from and after the Closing, shall
cause the Surviving Company and the other Nexus Companies to, act in good faith
(including without limitation without the primary intent to hinder Member’s
ability to receive the Sonat Cash Payment) with respect to consummating the
Sonat Acquisition pursuant to the Sonat Purchase Agreement, the transactions
contemplated thereby and the other provisions hereof relating to the ability of
Member to receive the Sonat Cash Payment.
(c) Regency
shall be entitled to deliver to Member all amounts to which any Person who holds
any Membership Interests immediately prior to the Effective Time shall be
entitled under this Agreement, and, to the extent any such Person shall be
entitled to any amounts so delivered to Member in accordance herewith, Member
shall hold such amounts in trust for such Person and shall be responsible for
delivering such amounts to such Person, and Regency shall have no further
obligation to any such Person for any such amounts.
(a) Preparation of Estimated
Closing Statement. Nexus shall prepare in good faith and
deliver to Regency, at least four (4) Business Days prior to the Closing Date
and at the sole expense of Nexus, a statement (the “Estimated Closing
Statement”), setting forth (i) Expenses, the Debt Payoff Amount and a
reasonably detailed determination of Nexus’ estimate of Net Working Capital,
(ii) based on such Estimated Net Working Capital, the Estimated Working Capital
Adjustment Amount, if any, and (iii) Nexus’ calculation of the Closing Payment
Amount. The Expenses and the Debt Payoff Amount to be set forth on
the Estimated Closing Statement shall be based on amounts set forth in the
Payoff Letters, or, to the extent a Payoff Letter has not been provided for any
Expense or Third Party Debt, Nexus’ good faith estimate of such amount, and in
each case, shall be subject to final determination in the preparation of the
Final Closing Statement. If Regency has any questions or
disagreements regarding the Estimated Closing Statement, Regency shall contact
Member at least two (2) Business Days prior to the Closing Date, and in such
case Member and Regency shall in good faith attempt to resolve any
disagreements. If Regency and Member agree on changes to Nexus’
proposed Estimated Closing Statement (including the Expenses, the Debt Payoff
Amount, the calculation of the Estimated Net Working Capital, Estimated Working
Capital Adjustment
5
Amount or
Closing Payment Amount set forth therein) based on such discussions, then the
Closing Payment Amount to be paid at Closing shall be determined giving effect
to such changes (and the Estimated Closing Statement, as so adjusted, shall be
deemed to be the Estimated Closing Statement for all purposes
herein). If Regency and Member do not agree on changes to such
amounts, then the Closing Payment Amount to be paid at Closing shall be
determined based on the amounts set forth in the Estimated Closing Statement
initially delivered by Nexus. In either such case, appropriate
adjustments to the Merger Consideration shall be made after the Closing pursuant
to Sections
2.8(a),
2.8(b), and
2.8(c).
(b) Preparation of Closing
Statement. As soon as reasonably practicable after the Closing
Date (and, in any event, within 90 days after the Closing Date), Regency shall
prepare and deliver to Member, at the sole expense of Regency, a closing
statement as of 11:59 p.m. on the Measurement Date (the “Proposed Closing
Statement”), setting forth (i) Expenses, the Debt Payoff Amount and a
reasonably detailed proposed final calculation of Net Working Capital and the
Working Capital Adjustment Amount, if any, and (iii) based on such amounts, the
Merger Consideration Surplus or Merger Consideration Deficit. From
the Closing and until the determination of the Final Closing Statement, Regency
shall provide Member and its accountants and other Representatives access,
during normal business hours and upon reasonable prior notice, to the Records
(including the work papers and other accounting documents of the Nexus Companies
related to periods on or prior to the Closing Date) and personnel of the Nexus
Companies in order to review (or, if applicable, prepare as provided in the last
sentence of this Section 2.8(b)) the Proposed
Closing Statement and assist Member in its review of the Final Closing
Statement. If Regency does not deliver the Proposed Closing Statement
when required, Member may, but shall not be required to, prepare and deliver the
Proposed Closing Statement to Regency within 180 days after Closing, and, in
such case, Regency shall have Members’ objection rights under Section 2.8(c) and, if neither
Member nor Regency prepares and delivers a Proposed Closing Statement as
provided herein, then the Estimated Closing Statement shall be deemed also to be
the Final Closing Statement.
(c) Examination of Proposed
Closing Statement. Member shall review the Proposed Closing
Statement to confirm the accuracy of the Proposed Closing Statement and
Regency’s calculations. If Member fails to give Regency written
notice of any disputed amounts within 45 days after Member receives the Proposed
Closing Statement (the “Review Period”), then
the Proposed Closing Statement shall become the Final Closing Statement for
purposes hereof. If Member gives Regency written notice of any
disputed items within the Review Period, Regency and Member shall attempt in
good faith to agree on any adjustments that should be made to the Proposed
Closing Statement. If Regency and Member fail to resolve any disputed
amounts within 30 days after Member gives Regency notice of any disputed amounts
in the Proposed Closing Statement, Regency and Member will engage the Audit Firm
to resolve any such disputed matters in accordance with the terms of this
Agreement, and, in connection with such engagement Regency, the Surviving
Company and Member shall execute any engagement, indemnity and other agreements
as the Audit Firm may require as a condition to such engagement. The
Audit Firm’s engagement shall be limited to the resolution of disputed amounts
set forth in the Proposed Closing Statement that have been identified by Member,
which resolution shall be in accordance with this Agreement including the Sample
Balance Sheet, and no other matter relating to the Proposed Closing Statement
shall be subject to determination by the Audit Firm except to the extent
affected by resolution of the disputed amounts. In
resolving
6
any
disputed item, the Audit Firm shall not assign a value to any item greater than
the greatest value for such item claimed by either Party or less than the
smallest value for such item claimed by either Party. The Parties
agree that the adjustments contemplated by this Section 2.8 are intended to
show the change between the Estimated Net Working Capital and the actual Net
Working Capital and actual Expenses and Debt Payoff Amount as compared to
Expenses and Debt Payoff Amount set forth on the Estimated Closing Statement and
that such change can only be measured if each calculation is done in a manner
consistent with this Agreement. The Parties shall cooperate
diligently with any reasonable request of the Audit Firm in an effort to resolve
any disputed matter as soon as reasonably possible after the Audit Firm is
engaged. If possible, the decision of the Audit Firm shall be made
within 30 days after being engaged. The decision of the Audit Firm
shall be set forth in a written statement delivered to Member and Regency and
shall be final and binding on the Parties, absent fraud or manifest
error. Judgment may be entered on the decision of the Audit Firm in
any court of competent jurisdiction. The Proposed Closing Statement,
in the form agreed to by the Parties as final, in the form deemed in accordance
with the second sentence of this Section 2.8(c) as final or as
revised, if necessary, to reflect the final determination by the Audit Firm, as
applicable, is referred to herein as the “Final Closing
Statement”).
(d) Adjustments.
(i) If the
Final Adjustment Amount is less than the Estimated Adjustment Amount (the amount
of such shortfall, if any, being hereinafter referred to as the “Merger Consideration
Deficit”), Member and Regency shall execute and deliver to the Escrow
Agent Joint Instructions instructing the Escrow Agent to disburse to Regency
from the Escrow Fund an amount in cash equal to the Merger Consideration Deficit
within five Business Days after the final determination of the Final Closing
Statement. By way of example, if the Estimated Adjustment Amount is
negative five and the Final Adjustment Amount is negative nine, the Final
Adjustment Amount shall be less than the Estimated Adjustment Amount by, and the
Merger Consideration Deficit shall be, four.
(ii) If the
Final Adjustment Amount is greater than the Estimated Working Amount (the amount
of such excess being hereinafter referred to as the “Merger Consideration
Surplus”), Regency shall deliver to Member an amount in cash equal to the
Merger Consideration Surplus within five Business Days after the final
determination of the Final Closing Statement. By way of example if
the Estimated Adjustment Amount is negative five and the Final Adjustment Amount
is negative one, the Final Adjustment Amount shall be greater than the Estimated
Adjustment Amount by, and the Merger Consideration Surplus shall be,
four.
(e) No Duplicative
Effect. The provisions of this Section 2.8 and of any other
Transaction Document shall apply in such a manner so as not to give the
components and calculations duplicative effect to any item of adjustment and,
the Parties covenant and agree that no amount shall be (or is intended to be)
included, in whole or in part (either as an increase or reduction) more than
once in the calculation of (including any component of) Net Working Capital or
any other calculated amount pursuant to this Agreement if the effect of such
additional inclusion (either as an increase or reduction) would be to cause such
amount to be overstated or understated for purposes of such
calculation. The Parties acknowledge and agree that, if there
is
7
a
conflict between a determination, calculation or methodology set forth in the
Sample Balance Sheet or the definitions contained in this Agreement, as
applicable, on the one hand, and those provided by GAAP, on the other hand, (i)
the determination, calculation or methodology set forth in the Sample Balance
Sheet or the definitions contained in this Agreement, as applicable, shall
control to the extent that the matter is included in the Sample Balance Sheet or
the definitions contained in this Agreement, as applicable, as a line item or
specific adjustment and (ii) the determination, calculation or methodology
prescribed by GAAP shall control to the extent the matter is not so addressed in
the Sample Balance Sheet or the definitions contained in this Agreement, as
applicable, or requires reclassification as an asset or liability to be included
in a line item or specific adjustment.
(f) Fees and Expenses of the
Audit Firm. If the Parties submit any disputed amounts to the
Audit Firm for resolution as provided in Section 2.8(c) above, the fees
and expenses of the Audit Firm (the “Audit Fees”) will be
paid by and apportioned between Regency and Member based on the aggregate dollar
amount of the amount in dispute and inversely related to the relative recovery
as determined by the Audit Firm of Member and Regency,
respectively. For example, if the aggregate dollar amount of the
amount in dispute is $1,000,000 and the relative recovery of Member and Regency
as determined by the Audit Firm is $900,000 and $100,000, respectively, then
Regency will be apportioned 90% of the Audit Fees and Member will be apportioned
10% of the Audit Fees. Member and Regency shall promptly, and in any
event within five (5) Business Days after the final determination of the Final
Closing Statement, pay to the Audit Firm the amount of Audit Fees payable by
Member and Regency pursuant to this Section 2.8(f).
ARTICLE
III
3.1 Member’s Representations and
Warranties. Member
represents and warrants to Regency and Merger Sub as follows:
(a) Organization of
Member. Member is a limited liability company, which is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Member has full legal power and right to both carry on its
business as such is now being conducted, to own the Membership Interests held by
it and, subject to making or obtaining the notices, filings, authorizations,
consents or approvals set forth in Section 3.1(b) of the Disclosure
Schedule and obtaining the consents set forth in Section 3.1(f) of the Disclosure
Schedule, to perform its obligations under this Agreement.
(b) Authorization of
Transaction; Governmental Authorizations. Member has full
power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is or shall be a party and, subject to making
or obtaining the notices, filings, authorizations, consents or approvals set
forth in Section
3.1(b) of the Disclosure
Schedule and obtaining the consents set forth in Section 3.1(f) of the Disclosure
Schedule, to perform its obligations hereunder and thereunder, and the
execution, delivery and performance by Member of this Agreement and the other
Transaction Documents to which it is or shall be a party have been duly and
validly authorized and approved by all necessary limited liability company
action of Member. This Agreement and the other Transaction Documents
to which it is
8
or shall
be a party constitute (or upon execution will constitute) the valid and legally
binding obligation of Member enforceable in accordance with their respective
terms and conditions, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors’
rights generally, and to general principles of equity (regardless of whether
such enforceability is considered in a Proceeding in equity or at
law). Except for filings under the HSR Act and as set forth in Section 3.1(b) of the Disclosure
Schedule, Member is not required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Governmental
Authority in order to execute this Agreement or the other Transaction Documents
to which it is or shall be a party, consummate the transactions contemplated by,
or otherwise perform its obligations under, this Agreement or the other
Transaction Documents to which it is or shall be a party.
(c) Noncontravention. Neither
the execution and delivery nor performance by Member of this Agreement or the
other Transaction Documents to which Member is or shall be a party, nor the
consummation by Member of the transactions contemplated hereby or thereby, will
(i) subject to obtaining HSR Approval and making or obtaining the notices,
filings, authorizations, consents or approvals set forth in Section 3.1(b) of the Disclosure
Schedule, violate any Law to which Member is subject, (ii) violate any
provision of Member’s Organizational Documents, (iii) result in the creation or
imposition of any Lien on any of the Assets, or (iv) subject to obtaining the
consents set forth in Section 3.1(f) of the Disclosure
Schedule, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract, lease, license, instrument, or other arrangement to which Member is a
party or by which it is bound, except in the case of this clause (iv), for such
violations, defaults, breaches or other occurrences that, individually or in the
aggregate, do not constitute a Material Adverse Effect.
(d) Brokers’
Fees. Except as set forth in Section 3.1(d) of the Disclosure
Schedule, Member does not have any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to
Interests. Member has good and valid record and beneficial
title to all outstanding Membership Interests, free and clear of any and all
Liens (other than any Liens that may arise under this Agreement, be imposed by
applicable state or federal securities Laws or be created by Regency), and such
Membership Interests constitute all of the outstanding Equity Interests of
Nexus. Neither Member nor Nexus is a party to (a) any option,
warrant, purchase right or other Contract (other than this Agreement) that could
require Member, or after the Closing, Regency or any of its Affiliates, to sell,
transfer or otherwise dispose of any Equity Interest of the Surviving Company,
(b) any voting trust, proxy or other Contract with respect to the voting of any
Equity Interest of Nexus.
(f) Consents. Except
as set forth in Section 3.1(f) of the Disclosure
Schedule, no consent, authorization or approval of any third party is
required, under any Contract to which Member is a party or otherwise, for the
execution and delivery by Member of this Agreement or any other Transaction
Document to which Member is or shall be a party, the consummation of the Merger
or the performance by any Member of its obligations hereunder or
thereunder.
9
ARTICLE
IV
4.1 Representations and
Warranties
Regarding the Nexus Companies. Nexus
and Member, jointly and severally, represent and warrant to Regency and Merger
Sub as follows:
(a) Organization of
Nexus. Nexus is a limited liability company, which is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Nexus has full legal power and right to carry on its
business as such is now being conducted. Nexus is duly qualified to
do business in all the jurisdictions set forth opposite its name on Section 4.1(a) of the Disclosure
Schedule, and such jurisdictions constitute all jurisdictions in which
the business Nexus is conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, except jurisdictions in which
the failure to be so qualified does not constitute a Material Adverse
Effect.
(b) Capitalization.
(i) The
Membership Interests held by Member constitute all of the outstanding Equity
Interests of Nexus. All of the outstanding Membership Interests have
been duly authorized and validly issued, are, except as provided in Section
18-607(b) of the DLLCA, fully paid and non-assessable and were not issued in
violation of any preemptive rights or other preferential rights of subscription
or purchase of any Person. Nexus is not obligated, under any Contract
or otherwise, to issue any Equity Interests or Equity Interest
Equivalents.
(ii) Member
has heretofore provided to Regency true and complete copies of the
Organizational Documents of each Nexus Company. Section 4.1(b) of the Disclosure
Schedule sets forth a true and complete list of the Nexus Companies
together with, for each such entity, (A) a specification of the nature of its
legal organization and (B) the jurisdiction of its organization.
(iii) Except as
set forth in Section
4.1(b) of the Disclosure
Schedule, Nexus, directly or indirectly through another Nexus Company,
owns, of record and beneficially, all of the outstanding Equity Interests of
each other Nexus Company free and clear of all Liens (other than any Liens that
may arise under this Agreement, be imposed by applicable state or federal
securities Laws or be created by Regency). The Nexus Companies are
the only corporations, limited partnerships, limited liability companies and
other Persons in which Nexus owns, directly or indirectly, an Equity
Interest. Section 4.1(b) of the Disclosure
Schedule sets forth all of the authorized, issued and outstanding Equity
Interests of each Nexus Company and the record and beneficial owners
thereof. None of the Nexus Companies has any outstanding Equity
Interests Equivalents or is obligated, under any Contract or otherwise, to issue
any Equity Interests or Equity Interest Equivalents.
(iv) Each
Nexus Company is duly organized, validly existing and in good standing under the
Laws of its respective jurisdiction of organization, is duly qualified to do
business as a foreign limited liability company or limited partnership in good
standing to conduct business in each jurisdiction set forth opposite such Nexus
Company’s name in Section 4.1(b) of the Disclosure
Schedule, which are all the jurisdictions in which the business
it
10
is
conducting, or the operation, ownership or leasing of its properties, makes such
qualification necessary, except jurisdictions in which the failure to be so
qualified would not constitute a Material Adverse Effect. Each
Nexus Company has the requisite power and authority (as a limited partnership or
limited liability company) to carry on its respective business as it is now
being conducted and to own, operate and lease the assets it now owns, operates
or holds under lease.
(v) All the
outstanding partnership interests, membership interests and other Equity
Interests of each Nexus Company (other than Nexus) (A) have been duly authorized
and validly issued and, except as provided in Section 18-607(b) of the DLLCA or
Section 607(b) of the Texas Revised Limited Partnership Act, are fully paid and
non assessable and (B) were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any
Person.
(c) Authorization of
Transaction; Governmental Authorizations. Each Nexus Company
has full power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is or shall be a party and to perform such
Nexus Company’s obligations hereunder and thereunder, and the execution,
delivery and performance by such Nexus Company of this Agreement and the other
Transaction Documents to which it is or shall be a party have been duly and
validly authorized and approved by all necessary limited partnership or limited
liability company action of such Nexus Company. This Agreement and
the other Transaction Documents to which it is or shall be a party constitute
(or upon execution will constitute) the valid and legally binding obligation of
each Nexus Company enforceable in accordance with their respective terms and
conditions, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights
generally, and to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at
law). Except for filings under the HSR Act and as set forth in Section 4.1(c) of the Disclosure
Schedule or Section 4.1(f) of the Disclosure
Schedule, no Nexus Company is required to give any notice to, to make any
filing with, to or obtain any authorization, consent, or approval of any
Governmental Authority in order to execute this Agreement or the other
Transaction Documents to which it is or shall be a party, to consummate the
transactions contemplated by, or to otherwise perform such Nexus Company’s
obligations under, this Agreement or the other Transaction Documents to which it
is or shall be a party.
(d) Noncontravention. Neither
the execution and delivery nor performance by any Nexus Company of this
Agreement or the other Transaction Documents to which any Nexus Company is or
shall be a party, nor the consummation by any Nexus Company of the transactions
contemplated hereby or thereby, will (i) subject to obtaining HSR Approval and
making or obtaining the notices, filings, authorizations, consents or approvals
set forth in Section 4.1(c) of the Disclosure
Schedule or Section 4.1(f) of the Disclosure
Schedule, violate any Law to which any Nexus Company is subject, (ii)
violate any provision of any Nexus Company’s Organizational Documents, (iii)
result in the creation or imposition of any Lien on any of the assets of the
Nexus Companies (other than Liens created by Regency or its Affiliates) or (iv)
except as set forth in Section 4.1(d) of the Disclosure
Schedule and subject to obtaining the consents set forth in Section 4.1(f) of the Disclosure
Schedule, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
Contract, lease, license,
11
instrument,
or other arrangement to which any Nexus Company is a party or by which it is
bound, except, in the case of this clause (iv), the occurrence of which or the
failure of which to obtain would not constitute a Material Adverse
Effect.
(e) Brokers’
Fees. Except as set forth in Section 4.1(e) of the Disclosure
Schedule, no Nexus Company has any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) Consents. Except
as set forth in Section 4.1(f) of the Disclosure
Schedule, no material consent, authorization or approval of any third
party is required, under any Contract to which any Nexus Company is a party or
to which any of the Assets are bound or otherwise, for the execution and
delivery by Nexus of this Agreement or any other Transaction Document to which
Nexus is or shall be a Party, the consummation of the Merger or the performance
by Nexus of its obligations hereunder or thereunder.
(g) Compliance with Laws;
Permits. The representations and warranties in this Section 4.1(g) do not cover
environmental matters. Representations and warranties of Nexus and
Member regarding environmental matters are contained solely in Section 4.1(s). Except
as set forth in Section 4.1(g) of the Disclosure
Schedule:
(i) Each
Nexus Company has owned and operated, and currently owns and operates, the
assets held by it in compliance in all material respects with all applicable
Laws.
(ii) Each
Nexus Company is in compliance in all material respects with all Laws applicable
to it.
(iii) The Nexus
Companies, individually and in the aggregate, possess all material licenses,
franchises, permits, certificates, consents, approvals and certificates and
other governmental or quasi-governmental authorizations pertaining to the Assets
necessary for the ownership, use and operation of the Assets or otherwise
necessary for the operation of the business of the Nexus Companies in the
Ordinary Course of Business (collectively, but excluding any such item the
primary purpose of which is to create a Real Property Interest, the “Permits”). Each
Nexus Company is in compliance in all material respects with all terms,
provisions and conditions of the Permits, and no outstanding violations,
assessments, orders or notices of noncompliance issued by any Governmental
Authority exists which affects or relates to the Permits. Section 4.1(g) of the Disclosure
Schedule sets forth a list of all material Permits possessed by the Nexus
Companies.
(h) Properties.
(i) The Nexus
Companies, individually or together, own or hold by valid leaseholds, easements,
agreements providing for rights of use or access or similar agreements all of
the assets reflected in the Consolidated Balance Sheet (other than any assets
reflected in the Consolidated Balance Sheet that have been sold or otherwise
disposed of since the date of the Consolidated Balance Sheet without breaching
Section 4.1(q)(i) or Section 6.3) and all other
assets (including Real Property Interests) (collectively, including the Pipeline
Assets, but, for the avoidance of doubt, excluding any assets that are the
subject matter of the Sonat Purchase Agreement, the “Assets”) other than
the Pipeline Assets, free and clear of all
12
Title
Defects. The Nexus Companies, individually or together, have such
title or interest to or in the Pipeline Assets, as is sufficient to enable them
to conduct their business as conducted with the Pipeline Assets in the Ordinary
Course of Business without material interference. Except as set forth
in Section
4.1(h) of the Disclosure
Schedule, neither Member nor any Nexus Company has received any written
notice of any claim or, to Member’s Knowledge, oral notice of any claim, in each
case asserting the existence of a Title Defect in connection with any material
Assets. To Member’s Knowledge, there are no assessments against the
Assets for public improvements. There has been no actual or, to
Member’s Knowledge, threatened taking (whether permanent, temporary, whole or
partial) of any part of the Assets by reason of condemnation.
(ii) The
Assets constitute all of the material assets, rights and properties, tangible or
intangible, real or personal, that are used in connection with the operation of
the business of the Nexus Companies in the Ordinary Course of
Business. The personal property owned or leased by the Nexus
Companies is sufficient to enable them to conduct their business as currently
conducted. There are no preferential rights, rights to purchase,
rights of first refusal, rights of first offer or similar rights to purchase any
material Asset or material portion of the Assets.
(iii) Neither
Member nor any Nexus Company has received any written notice of default or
termination or, to Member’s Knowledge, oral notice of default or termination or
is in default under the terms of any Real Property Interests that has resulted
in or might result in a material impairment or loss of title to the Real
Property Interests or that has or would hinder or impede in any material respect
the operations of the Pipeline Assets or adversely affect in any material
respect the ability of the Nexus Companies to own and operate the Pipeline
Assets in the Ordinary Course of Business.
(iv) The
Assets of the Nexus Companies, other than the Pipeline Assets, that are tangible
assets are, in all material respects, in good operating and working order,
subject to normal wear and maintenance; and, to Member’s Knowledge, the Pipeline
Assets are in all material respects in good operating and working order, subject
to normal wear and maintenance.
(i) Litigation. The
representations and warranties in this Section 4.1(i) do not cover
environmental matters. Representations and warranties of Nexus and
Member regarding environmental matters are contained solely in Section 4.1(s).
(i) There is
no (A) Proceeding by any Person or Governmental Authority pending or, to
Member’s Knowledge, overtly threatened against Member or any Nexus Company or to
which Member or any Nexus Company is a party, or (B) injunction, judgment, order
or decree to which Member or any Nexus Company is a party, which, in the case of
(A) or (B), (x) if determined adversely to any Nexus Company, reasonably would
be expected to give rise to a material liability of the Nexus Companies, taken
as a whole, or (y) constitutes or, if determined adversely to any Nexus Company,
would constitute a Material Adverse Effect.
13
(ii) There are
no bankruptcy, insolvency, reorganization, or arrangement Proceedings pending,
being contemplated by, or, to Member’s Knowledge, threatened against Member or
any Nexus Company.
(j) FCC
Licenses. Neither
Member nor any Nexus Company holds any FCC Licenses, and no FCC Licenses are
required for the operations of the Nexus Companies in the Ordinary Course of
Business.
(k) Taxes. Except
as disclosed on Section 4.1(k) of the Disclosure
Schedule:
(i) All Tax
Returns required to be filed by or with respect to each Nexus Company have been
duly and timely filed. Each such Tax Return is true, correct and
complete in all material respects. All material Taxes owed by each
Nexus Company, or for which it may be liable, that are or have become due have
been paid in full. All material Tax withholding and deposit
requirements imposed on or with respect to each Nexus Company have been
satisfied in full in all respects. There are no Liens (other than
Permitted Encumbrances) on any of the assets of any Nexus Company that arose in
connection with any failure (or alleged failure) to pay any material
Tax.
(ii) There is
no claim against any Nexus Company for any Taxes, and no assessment, deficiency,
or adjustment has been asserted, proposed, or threatened with respect to any
Taxes or Tax Returns of or with respect to any Nexus Company. No Tax
audits or administrative or judicial Proceedings are being conducted, pending or
threatened with respect to any Nexus Company. No claim has ever been
made by an authority in a jurisdiction where any Nexus Company does not file Tax
Returns that such Nexus Company is or may be subject to taxation in that
jurisdiction.
(iii) There is
not in force any extension of time with respect to the due date for the filing
of any Tax Return of or with respect to any Nexus Company or any waiver or
agreement for any extension of time for the assessment or payment of any Tax of
or with respect to any Nexus Company.
(iv) Member or
Nexus has provided or made available to Regency true and complete copies of all
Income Tax and other material Tax Returns filed by each Nexus Company for the
last three years and all correspondence to each Nexus Company from, or from each
Nexus Company to, a Taxing Authority relating thereto.
(v) No Nexus
Company is a party to or bound by any Tax allocation, sharing or like indemnity
agreement dealing principally with Taxes. No Nexus Company has any
liability for the Taxes of any Person under Treasury Regulations
Section 1.1502-6 (or any corresponding provisions of state, local or
foreign Tax law), or as a transferee or successor, or by contract or otherwise
(other than for another Nexus Company).
(vi) No Nexus
Company has entered into any agreement or arrangement with any Taxing Authority
that requires it to take any action or to refrain from taking any
action. No Nexus Company is a party to any agreement with any Taxing
Authority that would be terminated or adversely affected as a result of the
transactions contemplated by this Agreement.
14
(vii) No power
of attorney that is currently in force has been granted with respect to any
matter relating to Taxes that could affect any Nexus Company.
(viii) All of
the property of each Nexus Company that is subject to property Tax has been
properly listed and described on the property tax rolls of the appropriate
taxing jurisdiction for all periods prior to Closing, and no portion of the
property of any Nexus Company constitutes omitted property for property tax
purposes.
(ix) Immediately
prior to Closing, each Nexus Company will be disregarded as separate from Member
for federal income tax purposes under Treasury Regulation Sections 301.7701-2
and 301.7701-3, and each Nexus Company has at all times since inception been a
partnership or disregarded as separate from Member for federal income tax
purposes under Treasury Regulation Sections 301.7701-2 and
301.7701-3. No Nexus Company has ever owned any interest in any
Person other than another Nexus Company.
(x) Except
for Sections 4.1(k)(v), 4.1(k)(vi) and 4.1(k)(ix), the
representations of the Nexus Companies made by this Section 4.1(k) refer
only the Pre-Closing Periods of the Nexus Companies and may only be relied upon
for these periods, and are not intended to serve as a representation to, or a
guarantee of, nor can they be relied upon for, any Tax position taken after the
Closing Date.
(l) Contracts.
(i) Section 4.1(l) of the Disclosure
Schedule contains a true and complete list of all Material
Contracts. A true, correct and complete copy of each Material
Contract has been made available to Regency. No Nexus Company has
received from any other party to a Material Contract any written notice of any
breach or violation, or, to Member’s Knowledge, oral notice of any material
breach or violation, by any Nexus Company of such Material Contract or
termination or intention to terminate such Material Contract. Each
Nexus Company has performed all of its obligations under the Material Contracts
in accordance with the terms of the Material Contracts in all material respects,
and, to Member’s Knowledge, no event has occurred which (with or without notice
or lapse of time, or both) would constitute a default or an event of default by
a Nexus Company under the terms of any Material Contract such that any other
party to such Material Contract would have the right (with or without notice or
lapse of time or both) to terminate, amend or modify such Material Contract or
be entitled to any material payment under such Material Contract. To
Member’s Knowledge, each of the Material Contracts is enforceable and in full
force and effect and constitutes a legal, valid and binding obligation of each
Nexus Company which is a party thereto and, to Member’s Knowledge, each other
party thereto and, to Member’s Knowledge, no other party to any Material
Contract is in material breach of the terms, provisions or conditions of such
Material Contract.
(ii) Except as
set forth in Section
4.1(l) of the Disclosure Schedule, there are no pending or threatened
claims by any Nexus Company, and there are no pending or, to Member’s Knowledge,
threatened claims against any Nexus Company, for indemnity or otherwise, under,
related to or arising out of the Sonat Purchase Agreement, the Sonat
CIOM
15
Agreement
or either of the Prior Acquisition Agreements or the transactions contemplated
thereby.
(m) Financial Statements;
Absence of Undisclosed Liabilities; Controls and Procedures. Except
as set forth in Section 4.1(m) of the Disclosure
Schedule:
(i) Nexus has
delivered to Regency true and correct copies of the audited consolidated balance
sheet (the “Consolidated Balance
Sheet”) and related audited consolidated statements of operations,
statements of cash flows and statements of changes in members’ capital of Member
and the Nexus Companies for the year ended December 31, 2007, together with the
notes thereto and the related audit report of Xxxx & Associates LLP thereon
(collectively, the “Audited Financial
Statements”).
(ii) The
Audited Financial Statements have been prepared in accordance with the books and
records of the Member and Nexus Companies. The balance sheet included
in the Audited Financial Statements (including any related notes and schedules)
fairly presents in all material respects the consolidated financial position of
the Nexus Companies, as of the date thereof, and each of the consolidated
statements of operations, statements of cash flows and statements of changes in
members’ capital included in the Audited Financial Statements (including any
related notes and schedules) fairly presents in all material respects the
consolidated results of operations, cash flows and members’ capital, as the case
may be, of Member and the Nexus Companies for the periods set forth therein, in
each case in accordance with GAAP.
(iii) There are
no obligations or liabilities (contingent or otherwise) of any Nexus Company
that would be required by GAAP to be reflected or reserved against in a
consolidated balance sheet of the Nexus Companies prepared and audited in
accordance with GAAP other than obligations or liabilities that are (a) so
reflected or reserved on the Consolidated Balance Sheet or obligations or
liabilities incurred since December 31, 2007, in the Ordinary Course of
Business, (b) liabilities or obligations arising out of any Contracts to which
any Nexus Company is a party thereto (except to the extent such liability or
obligation is in respect of a breach or violation of such Contract prior to the
Closing Date), (c) obligations or liabilities under, or expenses incurred in
connection with the transactions contemplated by, this Agreement or the Sonat
Purchase Agreement and Sonat CIOM Agreement, (d) the matters disclosed in or
arising out of matters disclosed in Section 4.1(m) of the
Disclosure Schedule or (e) other liabilities and obligations which do
not, individually or in the aggregate, exceed $25,000.
(iv) All
Records of the Nexus Companies have been prepared, assembled and maintained in
the Ordinary Course of Business. The Nexus Companies maintain books
and records reflecting in all material respects their assets and liabilities
that in reasonable detail accurately and fairly reflect their transactions and
dispositions of their assets, and maintain or cause to be maintained a system of
internal accounting controls sufficient to provide reasonable assurance that:
(A) transactions are accurately recorded in all material respects and as
necessary to permit preparation of the consolidated financial statements of the
Nexus Companies and to maintain accountability for the consolidated assets; (B)
transactions are executed in accordance with management’s authorization; (C)
access to the records of the Nexus Companies
16
is
permitted only in accordance with management’s authorization; (D) the reporting
of the Nexus Companies’ assets is compared with existing assets at regular
intervals; and (E) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
(v) The Nexus
Companies’ accountants have not advised any Nexus Company of any material
deficiencies in the Nexus Companies’ disclosure controls and
procedures.
(vi) Nexus has
made available to Regency a summary of (A) any significant deficiencies in the
design or operation of internal controls that would, to Member’s Knowledge,
reasonably be expected to adversely affect the Nexus Companies’ ability to
record, process, summarize and report financial data in any material respect,
(B) any material weaknesses in the Nexus Companies’ internal controls, (C) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Nexus Companies’ internal controls and (D) any
material change in the internal controls or disclosure controls and procedures
of any Nexus Company effected since January 1, 2007.
(vii) Member
has no assets except as set forth in Section 4.1(m) of the Disclosure
Schedule.
(n) Pipeline
Matters. Section 4.1(n) of the Disclosure
Schedule sets forth summary throughput and other operating data reflected
therein with respect to the Pipeline Assets for the periods indicated therein
(the “Pipeline
Data”), which Pipeline Data is true and correct in all material
respects. Subsequent to the periods covered by the Pipeline Data and
through the date of this Agreement, there have been no material adverse changes
in the volumes of Hydrocarbons transported through the Systems and no Person has
provided written or, to Member’s Knowledge, oral notice to Member or any Nexus
Company of its intent to reduce materially the volume of Hydrocarbons
transported through the Systems. To Member’s Knowledge, as of the
date hereof, no fact or circumstance exists that would result in a material
decrease in such volumes excluding, however, changes that may result from (a)
market conditions, (b) matters that affect the energy industry in general or in
the area in which the Systems are located, or (c) non-performance by a party
under the Hydrocarbon Contracts other than a Nexus Company.
(o) Affiliate
Transactions. Section 4.1(o) of the Disclosure
Schedule describes all material services provided to any Nexus Company by
an Affiliate of any Nexus Company (other than another Nexus Company or any
director, officer or employee of any Nexus Company in such
capacity). Except as disclosed in Section 4.1(o) of the Disclosure
Schedule, there are (i) no services provided by any Affiliate of any
Nexus Company (other than another Nexus Company or any director, officer or
employee of any Nexus Company in such capacity) at an actual cost to any Nexus
Company below the approximate cost at which such services could be obtained from
a third party unaffiliated service provider and all charges charged or allocated
to any Nexus Company by any Affiliate of any Nexus Company as of the date of the
applicable Pipeline Data are reflected in such Pipeline Data and (ii) to
Member’s Knowledge, no Contracts involving a Nexus Company in which any Manager,
Officer, Director or Affiliate of any Nexus
17
Company
has a financial interest (other than compensation arrangements disclosed in
Section 4.1(r) of the Disclosure
Schedule).
(p) Regulatory
Status. The
representations and warranties in this Section 4.1(p) do not cover
environmental matters. Representations and warranties of Nexus and
Member regarding environmental matters are contained solely in Section 4.1(s).
(i) No
portion of the Assets is subject to the jurisdiction of the FERC under the
Natural Gas Act of 1938, as amended (the “NGA”), the Natural
Gas Policy Act of 1978 (the “NGPA”) or the
Interstate Commerce Act. No Nexus Company is subject to regulation as
a public utility company or public service company.
(ii) To
Member’s Knowledge, (i) the representations made by Nexus concerning the
jurisdictional status of the Nexus Companies’ facilities and operations to
natural gas purchasers and interstate or intrastate pipelines in order to effect
sales or to facilitate transportation transactions (whether for the Nexus
Companies or any other Person) are, and were when made, true and correct in all
material respects, and (ii) each Nexus Company has complied in all material
respects with the terms and conditions of such sales, transportation or
interconnect or similar arrangements (including “on behalf of”
certificates).
(iii) The
gathering rates charged by any Nexus Company for services related to the Assets
and the terms and conditions applied by such Nexus Company to such services, are
non-discriminatory and otherwise in compliance with all applicable
Laws.
(iv) No rate
refunds, rebates, offsets or like obligations are accrued or owed by any Nexus
Company with respect to services related to the Assets.
(v) There is
no regulatory Proceeding pending or, to Member’s Knowledge, any material
regulatory proceeding overtly threatened against or involving any Nexus Company
or to which its units would be subject or its Assets.
(q) No Adverse Change or
Event. Since
December 31, 2007, the Assets have been operated in the Ordinary Course of
Business and there has not been (i) any sale or transfer by any Nexus Company of
any Real Property Interest or any material piece of equipment, personal property
or other asset used in connection with the operation or maintenance of the
Pipeline Assets, (ii) as of the date of this Agreement, any fact, circumstance,
event, change, effect or occurrence that, individually or in the aggregate with
all other facts, circumstances, events, changes, effects or occurrences since
December 31, 2007, that has had, has or reasonably would be expected to
have any material adverse changes in the throughput capacity or operational
capability of the System(s) or the Facilities, or (iii) as of the date of this
Agreement, any event or occurrence that constitutes a Material Adverse
Effect.
(i) Except as
set forth in Section
4.1(r) of the Disclosure
Schedule, (A) no Nexus Company has sponsored or contributed to any
Employee Benefit Plan (including any multiemployer plan within the meaning of
Section 3(37) of ERISA), (B) except for benefits to be provided to Employees
pursuant to the terms of the Nexus Related Employee Benefit Plans,
18
no Nexus
Company has any liability (including any contingent liability) to any employee,
independent contractor, leased employee or consultant with respect to any
Employee Benefit Plan, and (C) no obligation exists, other than the obligations
to pay base salaries and bonuses in the normal course and other compensation or
to provide benefits pursuant to the terms of such Nexus Related Employee Benefit
Plan, under any Employee Benefit Plan maintained, sponsored or
contributed to by any ERISA Affiliate for which any Nexus Company would be
jointly, severally or otherwise liable. Each Employee Benefit Plan
set forth in Section
4.1(r) of the Disclosure
Schedule (each such plan referred to as a “Nexus Related Employee
Benefit Plan”) has been maintained in all material respects in compliance
with its terms and with the applicable requirements of ERISA, the Code and all
other applicable Laws. No fact or circumstance exists that would
reasonably be expected to materially affect the qualification or tax-exempt
status of such Nexus Related Employee Benefit Plan and no prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code has
occurred.
(ii) Section 4.1(r) of the Disclosure
Schedule lists all employees of any Nexus Company and all employees of
Member, the primary duties or activities of which are to perform services for
the Nexus Companies (collectively, the “Employees”),
identifies the employer of each such Employee and sets forth, (A) each
Employee’s position of employment, current annual salary or hourly rate, as
applicable, classification as exempt or non-exempt, date of employment, and
facility or other location where such Employee works, (B) whether such Employee
is on inactive status for any reason, such as a leave of absence or disability
and (C) the number of days of accrued but unused vacation and sick time with
respect to each Employee (the “Current
Salary/Benefits”).
(iii) All
obligations of the Nexus Companies for salaries, vacation and holiday pay, sick
pay, bonuses and other forms of compensation payable by the Nexus Companies to
the Officers, Directors or Employees in respect of the services rendered by any
of them have been paid or adequate accruals therefor have been made in the
Audited Financial Statements for obligations accrued through the date
thereof.
(iv) Except as
set forth in Section
4.1(r) of the Disclosure
Schedule, there is no pending or, to Member's Knowledge, overtly
threatened claim in respect of any of the Nexus Related Employee Benefit Plans
other than claims for benefits in the Ordinary Course of
Business. The Nexus Companies have complied in all material respects
with the health care continuation requirements of Part 6 of Title I of
ERISA. The Nexus Companies have no obligation under any Nexus Related
Employee Benefit Plans or otherwise to provide health or other welfare benefits
to any prior employees or any other person, except as required by applicable
Laws.
(v) Except as
set forth in Section 4.1(r) of the Disclosure
Schedule, there exists no Severance Obligations or Change of Control
Amounts.
(s) Environmental
Matters. Except as set out in
Section 4.1(s) of the Disclosure
Schedule,
19
(i) no Nexus Company
has caused or allowed the generation, use, treatment, storage, or disposal of
Hazardous Substances at or on the Assets in material violation of applicable
Health, Safety and Environmental Laws;
(ii) there has
been no release of any Hazardous Substances at, on, or underlying any of the
Assets by any Nexus Company for which any Nexus Company could reasonably be
expected to be held responsible in material violation of or in a manner that
could give rise to a Nexus Company material liability under applicable Health,
Safety and Environmental Laws;
(iii) the Nexus
Companies have secured all Permits required under Health, Safety and
Environmental Laws for the ownership or operation of the Assets and the Nexus
Companies are in compliance in all material respects with such
Permits;
(iv) no Nexus
Company has received any written request for information or written notice, nor
does any Nexus Company have any reason to suspect or believe such Nexus Company
will receive any such request for information or notice, of any actual or, to
Member’s Knowledge, overtly threatened Proceedings, or Third Party Claims (in
each case other than as have been finally resolved (formally or informally) or
satisfied with no further obligation of any Nexus Company) related to or arising
under any Health, Safety and Environmental Laws;
(v) no Nexus
Company has transported or arranged for the transportation or disposal of any
Hazardous Substances except in compliance in all material respects with all
applicable Health, Safety and Environmental Laws;
(vi) without
limiting the specificity of the foregoing clauses (i) through (v), the Nexus Companies have
conducted the operation of the Assets in compliance in all material respects
with Health, Safety and Environmental Laws;
(vii) no Nexus
Company is currently operating or required to be operating under any compliance
order, decree or agreement, any consent, decree, order or agreement, or
corrective action decree, order or agreement issued by or entered into with any
Governmental Authority under any Health, Safety and Environmental Laws;
and
(viii) other
than as may be contained in the documents listed in Section 4.1(s) of the
Disclosure Schedule, no Nexus Company has any Contractual obligations to
indemnify, or assume from, any third party any Environmental Costs or
Liabilities.
(t) Insurance. As
of the date of this Agreement, the Nexus Companies carry policies of insurance
as set forth in Section 4.1(t) of the Disclosure
Schedule, which insurance (i) covers such risks, is in such amounts, has
such deductibles and retentions and is underwritten by such companies as
described in Section
4.1(t) of the Disclosure
Schedule and (ii) is in accordance with all statutory and regulatory
criteria required. As of the date of this Agreement, all such
policies are in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium adjustment that are
not yet, but may be, required to be paid with respect to any period ending prior
to the Closing Date), and no written notice of cancellation or termination has
been received by Member or any Nexus Company with
20
respect
to any such policy which has not been replaced on substantially similar terms
prior to the date of such cancellation. There are no outstanding
claims under any such insurance policies and, to Member’s Knowledge, no event
has occurred, and no circumstance or condition exists, that has given rise to or
serves as the basis for or (with or without notice or lapse of time) reasonably
would be expected to give rise to or serve as the basis for any such claim under
any such policy. No Nexus Company has received any written or, to
Member’s Knowledge, oral notice from any insurer or reinsurer of any reservation
of rights with respect to pending or paid claims. No Nexus Company is
a party to any Contract, and the insurance policies listed on Section 4.1(t) of the Disclosure
Schedules do not contain any provision, that would affect the rights of
any Nexus Company under such insurance policies upon or as a result of the
consummation of the transactions contemplated by this Agreement.
(u) Hydrocarbon Imbalances;
Future Delivery of Hydrocarbons. No Nexus Company has
imbalances of Hydrocarbons pertaining to the operation of the System(s) or the
Facilities. No Nexus Company is obligated by virtue of any
hydrocarbon imbalance, prepayment arrangement under any Contract for the sale of
hydrocarbons, forward sale of production or any other obligation to deliver
hydrocarbons at some future time without receiving full payment therefor, other
than in a manner consistent with the normal cycle of billing.
(v) Guarantees. Except
as set forth in Section 4.1(v) of the Disclosure
Schedule, there are no surety bonds, performance bonds guarantees or
financial assurances of which any Nexus Company is a principal or guarantor (the
“Guarantees”).
(w) Labor
Matters.
(i) Each
Nexus Company has furnished Regency copies of all material claims, complaints,
charges, reports or other documents in their files made by or against any of
them since January 9, 2007 and, to Member’s Knowledge, in the past six (6) years
with respect to any current or former Employee pursuant to workers’ compensation
laws, Title VII of The Civil Rights Act of 1964, The Civil Rights Act of 1865,
The Occupational Safety and Health Act, The National Labor Relations Act, The
Employee Retirement Income Security Act, The Equal Pay Act, The Americans With
Disabilities Act, The Family and Medical Leave Act, The Older Workers Benefit
Protection Act, The Fair Labor Standards Act, The Civil Rights Act of 1991, The
False Claims Act, and any other applicable Laws relating to employment and
labor.
(ii) The Nexus
Companies have complied in all material respects with all applicable Laws
relating to the employment of labor.
(iii) Neither
Member nor any of the Nexus Companies has agreed to recognize any labor union or
other collective bargaining representative and, to Member’s Knowledge, no labor
union or other collective bargaining representative claims to or is seeking to
represent any Employees. To Member’s Knowledge, no union
organizational campaign or representation petition is currently pending with
respect to any employee of any Nexus Company.
(iv) Except as
set forth in Section
4.1(w) of the Disclosure
Schedule, neither Member nor any Nexus Company is a party to or bound by
any collective bargaining
21
agreement,
other labor contract or individual agreement applicable to any of its respective
employees. No collective bargaining agreements, other labor contract
or individual agreements relating to any employees of any Nexus Company are
being negotiated by any Nexus Company.
(v) There is
no labor strike or labor dispute, slow down, lockout or stoppage actually
pending or, to Member’s Knowledge, threatened against or affecting any Nexus
Company, and no Nexus Company has experienced any labor strikes or material
labor disputes, slowdowns, lockouts or stoppages. No Nexus Company is
engaged, nor has engaged, in any unfair labor practices, and no Nexus Company
has had any unfair labor practice charges or complaints before any Governmental
Authority pending or, to Member’s Knowledge, threatened against such Nexus
Company. No Nexus Company has had any material grievances,
arbitrations, or other Proceedings, or, since December 31, 2006, any
grievances, arbitrations or other Proceedings, arising or asserted to arise out
of or under any employment or similar Contract or individual Contract, pending
or, to Member’s Knowledge, threatened, against such Nexus Company.
(vi) To
Member’s Knowledge, all Employees are lawfully authorized to work in the United
States according to applicable immigration Laws. Member and all Nexus
Companies are in compliance in all material respects with all applicable Laws
relating to documentation and recordkeeping of their employees’ work
authorization status.
(vii) As of the
date hereof, and in the past four years, there have not been any plant closing,
mass layoffs or other terminations of employees of Member or any Nexus Company
that would create any obligations upon or liabilities for Member or any Nexus
Company under the Worker Adjustment and Retraining Notification Act or similar
Laws.
(x) Intellectual
Property. To
Member’s Knowledge there are no material trademarks, trade names, patents,
service marks, brand names, computer programs, databases, industrial designs,
copyrights or other intangible property (“Intellectual
Property”) that are used in connection with the operating of the business
of the Nexus Companies in the Ordinary Course of Business for which the Nexus
Companies do not hold valid title or a valid right to use in connection with the
use thereof. In the past two years, and, to Member’s Knowledge, in
the past four years no Nexus Company has received any written notice of
infringement, misappropriation or conflict or, to Member’s Knowledge, oral
notice of any infringement, misappropriation or conflict, in each case with
respect to Intellectual Property from any Person with respect to the operation
of the Assets owned by any Nexus Company.
(y) Sonat
Matters. Except as disclosed in
Section 4.1(y) of the
Disclosure Schedule, there are no material consents of third parties that
are required in order for the Surviving Company to transfer the 14-inch Line and
the 16-inch Line (in the case of Alternative B) or the 14-inch Line (in the case
of Alternative C), together in each case with any required Permits and
environmental permits, to Regency Intrastate Gas LLC (“RIGS”) under any
rights-of-way, Hydrocarbon Contracts or such Permits or environmental
permits.
22
ARTICLE V
5.1 Representations and
Warranties Regarding Regency and Merger Sub. Regency
and Merger Sub, jointly and severally, represent and warrant to Nexus and Member
as follows:
(a) Organization. Merger
Sub is a limited liability company, duly organized and validly existing under
the Laws of the State of Delaware and, as of Closing will be, qualified to do
business and in good standing in the State of Texas. Regency is a
limited partnership, which is duly organized and validly existing under the Laws
of the State of Delaware and is qualified to do business and is in good standing
in the State of Texas. Each of Merger Sub and Regency has full legal
power and right to carry on its business as such is now being
conducted.
(b) Authorization of
Transaction. Each
of Regency and Merger Sub has full power and authority to execute and deliver
this Agreement and the other Transaction Documents to which it is or shall be a
party and to perform its obligations hereunder and thereunder and the execution,
delivery and performance by each of Regency and Merger Sub of this Agreement and
the other Transaction Documents to which it is or shall be a party have been
duly and validly authorized and approved by all necessary limited partnership or
limited liability company actions of each of Regency and Merger
Sub. This Agreement and the other Transaction Documents to which each
of Regency and Merger Sub is or shall be a party constitute (or upon execution
will constitute) the valid and legally binding obligation of Regency or Merger
Sub, as applicable, enforceable in accordance with their respective terms and
conditions, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting creditors’ rights
generally and to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at
law). Except as contemplated by Section 6.6, neither Regency
nor Merger Sub is required give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Governmental Authority or any
Third Party in order to execute this Agreement or the other Transaction
Documents to which Regency or Merger Sub, as applicable, is or shall be a party,
consummate the transactions contemplated by, or otherwise perform the
obligations of Regency or Merger Sub, as applicable, under this Agreement or the
other Transaction Documents to which Regency or Merger Sub, as applicable, is or
shall be a party.
(c) Noncontravention. Neither
the execution and delivery nor performance by Regency or Merger Sub is or of
this Agreement or the other Transaction Documents to which Regency or Merger Sub
shall be a party, nor the consummation of the transactions contemplated hereby
or thereby, will (i) subject to obtaining HSR Approval, violate any Law to which
Regency or Merger Sub is subject, (ii) violate any provision of the
Organizational Documents or Regency or Merger Sub or (iii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice, approval or consent under any Contract, lease, license or
other instrument to which Regency or Merger Sub is a party or by which it is
bound or to which any of its assets is subject, except, in this case of this
clause (iii), for such violations, defaults, breaches, or other occurrences that
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of Regency or Merger Sub, as applicable,
to perform
23
its
obligations under this Agreement or the other Transaction Documents to which it
is or shall be a party or to consummate the Merger or the transactions
contemplated by this Agreement and the other Transaction
Documents. The performance by the Surviving Corporation of its
obligations under the Sonat Purchase Agreement will not (i) violate any
provision or Merger Subs’ Organizational Documents or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice, approval or consent under any Contract, lease, license or
other instrument to which Merger Sub is a party or by which it is bound or to
which any of its assets is subject, except, in the case of this clause (ii), for
such violations, defaults, breaches or other occurrences that would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Surviving Corporation to perform its
obligations under the Sonat Purchase Agreement.
(d) Brokers’
Fees. Neither
Regency nor Merger Sub has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
Merger.
(e) Litigation.
(i) There is
no Proceeding by any Person or Governmental Authority pending or, to Regency’s
Knowledge, overtly threatened against Regency or Merger Sub or to which Regency
or Merger Sub is a party, and no injunction, judgment, order or decree to which
Merger Sub, Regency or their respective properties is subject, that reasonably
may be expected to have a material adverse effect upon the ability of Regency or
Merger Sub to consummate the transactions contemplated in this Agreement the
other Transaction Documents to which it is or shall be a party or the
consummation of the transaction contemplated by the Sonat Purchase
Agreement.
(ii) There are
no bankruptcy, insolvency, reorganization, or arrangement Proceedings pending,
being contemplated by, or, to Regency’s Knowledge, threatened against Regency or
Merger Sub or any Affiliate that controls Regency.
(f) Sufficient
Funds. Regency
has cash available and existing committed borrowing facilities which together
are sufficient to enable it to pay the Merger Consideration upon consummation of
the Merger.
ARTICLE
VI
6.1 Satisfaction of Conditions
Precedent;
Cooperation.
(a) From the
date of this Agreement until the earlier of the Closing Date or the termination
of this Agreement, subject to the other terms of this Agreement and without
limiting the provisions set forth in Section 6.6, each Party will
use all commercially reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective the
Merger as soon as possible, including the satisfaction of the conditions
precedent set forth in Sections 7.1 and 7.2.
24
(b) Prior to
the Closing, Member and Nexus shall reasonably cooperate with Regency and
Regency’s financing sources. Nexus shall use all commercially
reasonable efforts to furnish to Regency, as promptly as practicable upon
Regency’s reasonable request, any updated financial information and operating
data related to the Nexus Companies, including monthly financial and Pipeline
Data, with respect to periods subsequent to periods covered by the financial
information contained in the Audited Financial Statements and Pipeline Data
provided by Member (copies of which may be provided to Regency’s lenders or
financing sources).
6.2 Notices and
Consents.
(a) Member
will, and will cause each Nexus Company to, use all commercially reasonable
efforts to obtain prior to Closing each consent set forth in Sections 4.1(c) and 4.1(f) of the Disclosure
Schedule and all other consents required to be obtained prior to Closing
with respect to the Merger and Regency shall use all commercially reasonable
efforts in cooperating with Member in obtaining such consents. The
costs of obtaining such consents shall be borne by Member.
(b) Subject
to the other terms of this Agreement and without limiting the provisions set
forth in Section
6.6,
each of the Parties will give any notices to, make any filings with, and use all
commercially reasonable efforts to obtain or assist the other party in obtaining
any authorizations, consents, and approvals of Governmental Authorities
necessary for the consummation of the Merger.
6.3 Conduct of
Business.
(a) Member
and Nexus covenant and agree that until the earlier of the Closing or the
termination of this Agreement, except as otherwise set forth in Section 6.3(a) of the Disclosure
Schedule or unless Regency otherwise consents in writing (which consent
shall not unreasonably withheld, conditioned or delayed), Member and Nexus shall
cause the Nexus Companies to:
(i) operate
in the Ordinary Course of Business;
(ii) preserve
substantially intact their business organizations, and use all commercially
reasonable efforts to (A) maintain their rights, privileges and immunities and
to maintain their relationships with their customers and suppliers and (B)
retain the services of the Employees it would otherwise retain in the Ordinary
Course of Business, except for such Employees for whom Regency has requested a
Release in connection with this Agreement or the transactions contemplated
hereby or those Employees designated in writing by Regency to be terminated by
the applicable Nexus Company prior to Closing;
(iii) use all
commercially reasonable efforts consistent with past practice to maintain and to
keep their properties and assets in good working order, repair and condition,
ordinary wear and tear excepted; if there is any casualty loss or material
damage to any properties or assets of any Nexus Company prior to Closing, Member
shall, to the extent practicable, consult with Regency regarding the replacement
or repair of such property or asset;
25
(iv) use all
commercially reasonable efforts to keep in full force and effect insurance
applicable to their assets and operations comparable in amount and scope of
coverage to that currently maintained;
(v) (A) keep
and maintain accurate (in all material respects) books, Records and accounts;
(B) pay or accrue all Taxes, assessments and other governmental charges imposed
upon any of their Assets or with respect to their franchises, business, or
income when due and before any penalty or interest accrues thereon, except for
any Taxes the validity of which is being contested in good faith by appropriate
legal Proceedings and for which adequate reserves have been set aside; (C)
accrue and pay when due and payable all wages and other compensation incurred
with respect to all Employees and independent contractors of and consultants to
the Nexus Companies and (D) comply in all material respects with the
requirements of all applicable Laws and all actions and requirements of any
Governmental Authority necessary in the operation of its business, and comply
and enforce (in all material respects) the provisions of all Material
Contracts;
(vi) subject
to Section 8.6,
comply with its obligations under the Sonat Purchase Agreement and the Sonat
CIOM Agreement; and
(vii) use all
commercially reasonable efforts to obtain authorization to the extent required
by Health, Safety and Environmental Laws from the Louisiana Department of
Environmental Quality for the equipment at the Nexus Companies’ Logansport,
Louisiana facility that have the potential to emit condensate “flash gas,”
including, but not limited to, the installation of a flare or any controls
required to reduce the emissions of such “flash gas.”
(b) Except
pursuant to the terms of this Agreement, as otherwise set forth in Section 6.3(b) of the Disclosure
Schedule or unless Regency otherwise agrees in writing from and after the
execution of this Agreement and until the earlier of the Closing or the
termination of this Agreement, Member shall not sell, transfer or otherwise
dispose of, or grant any Lien with respect to, any Membership Interests or any
other Equity Interests of any Nexus Company and Member and Nexus shall not, and
shall not permit any Nexus Company to, take any of the following actions (and
shall take all action necessary (including exercising their respective rights
with respect to the Membership Interests) to prevent any Nexus Company from
taking any action prohibited by this Section 6.3(b)):
(i) (A)
redeem, purchase or acquire, or offer to purchase or acquire, any of the
outstanding Equity Interests of any Nexus Company, (B) effect any reorganization
or recapitalization, (C) split, combine or reclassify any of the Equity
Interests of any Nexus Company, or (D) declare, set aside or pay any dividend or
other distribution in respect of its Equity Interests, other than wholly in cash
to the extent such dividend or other distribution would not cause Net Working
Capital immediately following such dividend or other distribution to be less
than the Base Working Capital;
(ii) (A)
offer, sell, transfer, issue, dispose of or grant, or authorize the offering,
sale, transfer, issuance, grant or disposition of, any Membership Interests or
any of its Equity Interests or (B) grant, or authorize the grant of, any Lien
with respect to any Membership Interests or any of its Equity
Interests;
26
(iii) acquire,
directly or indirectly, (A) whether by merger or consolidation, by purchasing an
Equity Interest or otherwise, any business or division of any Person or (B) any
material assets or properties other than the acquisition of assets from
suppliers or vendors in the Ordinary Course of Business;
(iv) sell,
lease, exchange or otherwise dispose of any of its assets, except for
dispositions of Hydrocarbon inventories or leases of its properties, in each
case in the Ordinary Course of Business;
(v) grant,
create, or assume, or (except for Permitted Encumbrances) incur, any Lien with
respect to any of its respective assets;
(vi) adopt any
amendments to its Organizational Documents;
(vii) (A) make
any material change in its methods of accounting in effect on the date hereof,
except as may be required to comply with changes in GAAP, (B) make or revoke any
Tax election or materially change (or make a request to change) its Tax
accounting methods, policies, or procedures, (C) settle or compromise any
Proceeding relating to material Taxes, except, in each case, as may be required
by Law; (D) revalue any asset except as required by GAAP consistently applied on
a basis consistent with past practice and the preparation of the Audited
Financial Statements, or (E) consent to any extension or waiver of the
limitation period applicable to any material Tax claim or
assessment;
(viii) incur or
guarantee any additional Indebtedness, except for (A) intercompany loans among
the Nexus Companies, or issue or sell any debt securities or warrants or rights
to acquire any debt securities or guaranty any debt securities of others or (B)
Indebtedness incurred under the Credit Facility in the Ordinary Course of
Business;
(ix) incur, or
commit to incur, any liability or obligation to make capital expenditures in
excess of $25,000 individually or $100,000
in the aggregate, except (A) in the case of emergency or as required by a
Governmental Authority, in which case such Nexus Company may make all reasonable
and necessary capital expenditures without the prior written consent of Regency
but shall provide prompt written notice to Regency of such capital expenditures
and (B) liability or obligations for capital expenditures incurred in the
Ordinary Course of Business which have been fully paid and discharged on or
before the Measurement Date;
(x) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing a liquidation, dissolution, merger, consolidation or other
restructuring;
(xi) (A)
amend, modify, waive or assign any rights or obligations under or otherwise
change in any material respect any Contract, (B) terminate any Contract before
the expiration of the term thereof, other than to the extent any such Contract
terminates pursuant to its terms in the Ordinary Course of Business, or (C)
enter into any Contract with any Affiliate of Member; provided, however, that with
respect to actions under the foregoing clause (B) that would require Regency’s
prior consent pursuant to this Section 6.3 but for such
action being in
27
the
Ordinary Course of Business, Member shall promptly notify Regency in writing of
any such action;
(xii) enter
into or assume (A) any Contract that would constitute a Material Contract or (B)
any other Contract with any Person (including an Affiliate of any Nexus
Company), other than Contracts entered into in the Ordinary Course of Business
with a Person (other than an Affiliate of any Nexus Company);
(xiii) (A)
employ any common law employees, of the Nexus Companies, other than the
Employees employed as of the date of this Agreement and replacements for, and on
substantially similar terms as, any such Employees whose employment is
terminated after the date of this Agreement, (B) engage any independent
contractors, consultants or agents pursuant to any Contract which shall either
constitute a Material Contract or for which any Nexus Company shall have any
continuing obligation after the Closing, (C) enter into or become obligated to
make payments under or with respect to, (1) any Nexus Related Employee Benefit
Plan, (2) any other equity based, incentive or deferred compensation plan or
arrangement or other fringe benefit plan, (3) any consulting, employment,
severance, bonus, termination or similar Contract with any Person or (4) any
amendment or extension of any such plan or Contract, except as required by Law
or as is immaterial in amount and authorized pursuant existing terms of such
plans, arrangements or Contracts, (D) grant, pay, or otherwise become liable for
or obligated to pay, any Severance Obligation, Change of Control Amounts, bonus
or increase in compensation or benefits to, or forgive any Indebtedness of, any
Director, Officer, Manager or Employee or any former independent contractor,
consultant or agent of any Nexus Company; or (E) make any loan to, or enter into
any other transaction with, any of its Directors, Officers, Managers or
Employees;
(xiv) waive any
claims or rights pertaining to the business of the Nexus Companies other than
claims which are immaterial in amount and consequence to the business of the
Nexus Companies; or
(xv) agree in
writing or otherwise to do any of the foregoing.
(c) Notwithstanding
anything to the contrary herein, Member and the Nexus Companies shall be
permitted to take any action they reasonably deem necessary or advisable in
order to comply with applicable Law or the terms of any Material Contract in
effect on the date hereof or, subject to Section 8.6 and except for
actions described on Schedule D, to
consummate the transactions contemplated by the Sonat Purchase Agreement
(including with respect to the Sonat Abandonment Application and obtaining Final
FERC Approval Order).
(d) The
parties agree that if Regency agrees in writing to any of the preceding Sections 6.3(a) and 6.3(b), each
applicable section of Disclosure Schedules shall be automatically updated for
all purposes under this Agreement to include such action to which Regency
agreed.
6.4 Access and
Information. During
the period from the date of this Agreement until the time of Closing, during
Nexus’ normal business hours and in a manner so as not to interfere with the
normal business operations of the Nexus Companies, Member and Nexus will
permit
28
representatives
of Regency to have reasonable access to the Employees and to all the
Records. Any information obtained by Regency or its Representatives
under this Section 6.4 shall be deemed
to be Confidential Information under the Confidentiality Agreement, except that
if the Closing occurs, the obligation of confidentiality shall
terminate. During the period from the date of this Agreement until
the time of Closing, Member and Nexus shall also make available to Regency, upon
reasonable notice during normal business hours, personnel of the Nexus Companies
as Regency may reasonably request. No investigations by Regency will
reduce or otherwise affect the obligation or liability of Member or Nexus with
respect to any express representations, warranties, covenants or agreements made
herein or in any instrument, agreement or document executed and delivered in
connection with this Agreement.
(a) During
the period from the date of this Agreement until the time of Closing, Regency
shall, at reasonable time upon reasonable prior notice to Member have the right
to enter upon the property subject to the Real Property Interests to
conduct non-invasive, non-destructive inspections of the Real Property
Interests, the System(s) and the Facilities. Regency agrees that it
will not perform any other types of inspections of the property subject to the
Real Property Interests (such as, by way of example but not limitation, sampling
or testing of soil, groundwater or surface water) prior to Closing, unless
agreed to in advance by Member.
(b) Member
and Nexus agree to cooperate reasonably with Regency in conducting the
inspections referred to in Section 6.5(a), but any and all
such inspections of the Assets shall be conducted solely by Regency and shall be
performed at Regency’s sole risk and expense. All “due diligence”
activities of Regency shall be conducted in accordance with applicable
Laws. Regency shall, if the Closing does not occur, restore the
property subject to the Real Property Interests, to the extent reasonably
possible, to the same condition as it was in prior to the conducting by Regency
or its representatives of the inspections.
(c) During
the period from the date of this Agreement until the time of Closing, to the
extent that any Nexus Company has any alignment sheets relating to the System(s)
and the Facilities and documents containing data on the size and type of the
various portions of the pipelines included in the Assets in such Nexus Company’s
possession or otherwise reasonably available to such Nexus Company, Member and
Nexus will provide copies thereof or make copies thereof available to Regency
and Regency may review such documents during its inspections
hereunder.
(d) REGENCY
SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD MEMBER AND THE OTHER MEMBER
INDEMNITEES (INCLUDING THE NEXUS COMPANIES PRIOR TO CLOSING) HARMLESS FROM AND
AGAINST ANY AND ALL DAMAGES ARISING OUT OF OR RELATING TO THE DUE DILIGENCE
CONDUCTED BY REGENCY, REGENCY’S AFFILIATES OR ANY PERSON ACTING ON REGENCY’S OR
ITS AFFILIATE’S BEHALF, IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT
TO OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
REGARDLESS OF WHETHER SUCH DAMAGES ARE CAUSED BY (IN WHOLE OR IN PART) THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL FAULT
OF
29
MEMBER OR
ANY OTHER MEMBER INDEMNITEES, EXCEPTING ONLY THOSE DAMAGES ACTUALLY CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MEMBER OR ANY MEMBER INDEMNITEES
(INCLUDING THE NEXUS COMPANIES PRIOR TO CLOSING). All due diligence
conducted by Regency, Regency’s Affiliates or any Person acting on Regency’s or
its Affiliate’s behalf pursuant to or in connection with this Agreement or the
transactions contemplated hereby shall be conducted so as not to unreasonably
disrupt the normal operations of Member or any of its Affiliates and shall be
subject to the terms of the Confidentiality Agreement. Neither Member
nor any of the Nexus Companies shall be obligated to comply with any of the
terms of Sections 6.4 or 6.5 if compliance
with such terms reasonably would be expected to violate any attorney-client
privilege or the terms of any confidentiality agreement or Contract to which
Member or any Nexus Company is a party or by which it is bound or applicable
Law. Notwithstanding anything herein to the contrary, Regency
acknowledges and agrees that the terms of Sections 6.4 and 6.5 do not give
Regency or any of its Affiliates or Representatives the right to contact,
directly or indirectly, any customer, supplier or other third Person with whom
any of the Nexus Companies has any business relationship in connection with this
Agreement or the transactions contemplated hereby without the express prior
written consent of Member (and then only on terms as reasonably specified in
writing by Member); provided that Member hereby gives its consent for Regency
and its Representatives to contact and engage in such discussions with the
Persons listed on Schedule
A.
6.6 HSR Act.
(a) Member
and Nexus shall cause the ultimate parent entity of Nexus to (i) file as soon as
practicable and in any event within one (1) Business Day following the date of
this Agreement, exclusive thereof, with the DOJ and the FTC the notification
report form required by the HSR Act for the transactions contemplated hereunder,
requesting early termination of the waiting period thereunder, (ii) respond
promptly to inquiries from the FTC or the DOJ in connection with such filing and
(iii) comply in all material respects with the requirements of the HSR
Act.
(b) Regency
and Merger Sub shall cause the ultimate parent entity of Regency to (i) file as
soon as practicable and in any event within one (1) Business Day following the
date of this Agreement, exclusive thereof, with the DOJ and the FTC the
notification report form required by the HSR Act for the transactions
contemplated hereunder, requesting early termination of the waiting period
thereunder, (ii) respond promptly to inquiries from the FTC or the DOJ and (iii)
comply in all material respects with the requirements of the HSR
Act.
(c) Subject
to regulatory constraints, each Party shall cooperate with each other and
promptly furnish all information to the other Party that is necessary in
connection with the Parties’ compliance with the HSR Act and to obtain HSR
Approval.
(d) The Nexus
Companies and Regency shall coordinate their initial filing of the notification
and report form so that such filings are made on the same day. The
Parties shall each keep the other Parties fully advised with respect to any
requests from or communications with the DOJ or the FTC and shall consult with
the other Parties with respect to all filings and responses
thereto.
30
(e) The
filing fees with respect to any filing under the HSR Act shall be paid at the
time of filing by Regency.
(f) Subject
to Section
6.6(g),
the Parties shall use all commercially reasonable efforts to cause the
expiration or termination of the applicable waiting period under the HSR Act as
soon as practicable.
(g) Notwithstanding
anything herein to the contrary, nothing in this Agreement shall require Regency
or any of its Affiliates to dispose of any of its assets or to limit its freedom
of action with respect to any of its businesses, or to consent to any
disposition of its assets or limits on its freedom of action with respect to any
of its businesses, whether prior to or after the Effective Time, or to commit or
agree to any of the foregoing, to obtain any consents, approvals, permits or
authorizations or to remove any impediments to the Merger relating to Antitrust
Laws or to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order in any Proceeding relating to the HSR
Act or other antitrust, competition, premerger, notification or trade-regulation
law, regulation or order (“Antitrust
Laws”). In addition, notwithstanding anything to the contrary
herein, nothing in this Section 6.6 shall require any
of the Parties to disclose to the other Parties confidential information about
third parties in connection with seeking approvals from Governmental Authorities
to the extent that such disclosures would constitute violations of Contractual
obligations or legal duties, provided that this sentence shall not permit any
Party to fail to disclose any information required to be filed with a
Governmental Authority by this Agreement.
(h) Subject
to Section
6.6(g), if any action or
Proceeding is instituted (or threatened), challenging the transaction
contemplated by this Agreement as violative of any Antitrust Laws, or if any
decree, judgment, injunction or other order is entered, enforced or attempted to
be entered or enforced, by a court or other Governmental Authority, which
decree, judgment, injunction or other order would make the transactions
contemplated by this Agreement illegal or would otherwise prohibit, prevent,
restrict, impair or delay consummation of the transactions contemplated hereby,
each of Regency, Member and the Nexus Companies shall use all commercially
reasonable efforts to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any such decree, judgment,
injunction or other order, whether temporary, preliminary, or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transaction contemplated by this Agreement and to have such decree, judgment,
injunction or other order repealed, rescinded or made inapplicable so as to
permit consummation of the transactions contemplated by this Agreement; provided
that no Party shall have any obligation under this Section 6.6(h) at any
time that Member shall have the right to terminate this Agreement pursuant to
Section 10.1(g) unless, and
then only during the period for which, Member shall have waived such right to
terminate this Agreement pursuant to Section 10.1(g).
6.7 Employees.
(a) Except
for those Employees designated in writing by Regency to be terminated by the
applicable Nexus Company prior to Closing, each Nexus Company will not terminate
any, and will use all commercially reasonable efforts to continue to employ each
Employee until the Closing.
31
(b) Member
and each Nexus Company shall reasonably cooperate with Regency in arranging
interviews with the Employees prior to Closing for potential continued
employment with the Nexus Companies or an Affiliate of Regency after the
Closing.
(c) Nothing
in this Agreement, whether express or implied, shall constitute an obligation of
Regency, the Nexus Companies or any of Affiliates of Regency to maintain the
employment of any particular Employee after the Closing. No Employee
is intended to be a beneficiary of the provisions of this Section 6.7.
(d) Prior to
Closing, the Nexus Companies will (i) adopt appropriate corporate resolutions
and use all commercially reasonable efforts to terminate the Fidelity Advisor
SIMPLE XXX Plan of Nexus Gas Midstream Services, LLC and the Humana Group
Medical, Dental and Voluntary Life Insurance Plan, with each such termination
being effective at or as soon as possible after Closing, and (ii) otherwise take
all action as necessary such that no contributions, premiums or other
liabilities will accrue to the Surviving Company or any of the other Nexus
Companies with respect to the plans identified in Section 6.7(d)(i)
from and after Closing.
6.8 Financial and Internal
Controls Information. From
the date of this Agreement until the Closing, Nexus shall promptly disclose to
Regency in summary form the existence, to Member’s Knowledge, of any of the
following (i) any significant deficiencies in the design or operation of
internal controls of the Nexus Companies that would reasonably be expected to
adversely affect the Nexus Companies’ ability to record, process, summarize and
report financial data, (ii) any material weaknesses in the Nexus Companies’
internal controls, (iii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Nexus
Companies’ internal controls and (iv) any change in the internal controls or
disclosure controls and procedures of the Nexus Companies effected since January
1, 2007.
(a) At least
two (2), but no more than five (5) Business Days prior to the Closing Date,
Nexus shall cause the Nexus Companies to use all commercially reasonable efforts
to cause each payee of Expenses and Third-Party Debt, as the case may be, to
deliver a Payoff Letter to the Nexus Companies, copies of which shall be
promptly delivered to Regency.
(b) Member
and Nexus shall, and shall cause the other Nexus Companies to, use all
commercially reasonable efforts to (i) obtain and deliver to Regency at the
Closing an executed Release from each Officer, Director and Manager who has not
delivered a Release prior to the Closing and (ii) cause each of Xxxxx Xxxxxxxx,
Xxxx Xxxxxx and Xxxx Xxxxx and any other Officer, Director or Manager who has
delivered a Release prior to the Closing to reaffirm such Release as of the
Closing in accordance with the terms of such Release.
6.10 Tax
Matters.
(a) Filing of Tax Returns;
Payment of Taxes. Regency shall prepare or cause to be
prepared all Tax Returns of each Nexus Company required to be filed after the
Closing Date for all Pre-Closing Periods and all Straddle
Periods. Such Tax Returns shall be prepared on a basis consistent
with past practice except to the extent otherwise required by applicable
Law.
32
Not later
than thirty (30) days prior to the due date for filing any such Tax Return
Regency shall deliver a copy of such Tax Return, together with all supporting
documentation and workpapers, to Member for its review and reasonable
comment. Regency will cause such Tax Return (as revised to
incorporate the Member’s reasonable comments) to be timely filed and will
provide a copy to Member. Not later than five (5) days prior to the
due date for payment of Taxes with respect to any Tax Return for a Pre-Closing
Period or Straddle Period, Member shall pay to Regency the amount of any Regency
Indemnified Taxes with respect to such Tax Return.
(b) Proration of Straddle Period
Taxes. In the case of Taxes that are payable with respect to
any Straddle Period, the portion of any such Taxes that is attributable to the
portion of the period ending on the Measurement Date shall be:
(i) in the
case of Taxes that are either (A) based upon or related to income or receipts,
or (B) imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible), deemed equal to the amount
that would be payable if the Tax period of each Nexus Company ended with (and
included) the Measurement Date; provided that exemptions, allowances or
deductions that are calculated on an annual basis (including depreciation and
amortization deductions) shall be allocated between the period ending on and
including the Measurement Date and the period beginning after the Measurement
Date in proportion to the number of days in each period; and
(ii) in the
case of Taxes that are imposed on a periodic basis with respect to the assets or
capital of a Nexus Company, deemed to be the amount of such Taxes for the entire
Straddle Period (or, in the case of such Taxes determined on an arrears basis,
the amount of such Taxes for the immediately preceding period), multiplied by a
fraction the numerator of which is the number of calendar days in the portion of
the period ending on and including the Measurement Date and the denominator of
which is the number of calendar days in the entire period.
(c) Cooperation on Tax Returns
and Tax Proceedings. Regency, each Nexus Company, and Member
shall cooperate fully as and to the extent reasonably requested by the other
party in connection with the filing of Tax Returns and any audit, litigation or
other Proceeding (each a “Tax Proceeding”) with
respect to Taxes (other than a Proceeding described in Section 9.9, which shall be
governed by Section
9.9)
imposed on or with respect to the assets, operations or activities of any Nexus
Company. Such cooperation shall include the retention and (upon the
other party’s request) the provision of records and information that are
reasonably relevant to any such Tax Return or Tax Proceeding and making
employees reasonably available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. Member and Regency further agree, upon request, to use all
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed on Regency, Member (or any
direct or indirect owners of Member) or on any Nexus Company (including, but not
limited to, any Tax with respect to the transactions contemplated hereby).
33
(d) Transfer
Taxes. Member and Regency will equally share all sales, real
property, use, excise, stock, stamp, documentary, filing, recording, permit,
license, authorization and similar Taxes, filing fees and similar charges
(“Transfer
Taxes”) resulting from the Merger. Regency and/or the relevant
Nexus Company shall prepare and timely file all Tax Returns or other
documentation relating to such Transfer Taxes; provided, however, that to the extent
required by applicable Laws, Member will join in the execution of any such Tax
Returns or other documents relating to such Taxes. Regency and/or the
relevant Nexus Company shall provide Member with copies of each such Tax Return
or other document at least five (5) days prior to the date on which such Tax
Return or other document is required to be filed for review and approval by
Member, such approval not to be unreasonably withheld. Regency and
Member shall reasonably cooperate in procuring any available exemptions from any
Transfer Taxes and shall reasonably cooperate in procuring any documentation
that may be necessary to establish any such exemption.
(i) Member
and Regency agree to use all commercially reasonable efforts to agree within
ninety (90) days following the Closing Date (the “Allocation Period”)
to an allocation of the Merger Consideration and any other consideration paid by
Regency (including any liabilities of the Nexus Companies assumed or paid by
Regency) in connection with the transactions contemplated herein (the “Tax Consideration”)
among the Assets. Except as provided in Section 6.10(e)(ii),
below, (A) if at the end of the Allocation Period, there is a dispute between
Member and Regency with respect to the allocation of the Tax Consideration among
the Assets, such dispute shall be resolved pursuant to the principles of Section 2.8(c), and
(B) Member and Regency agree to report the federal, state and local income and
other tax consequences of the transactions contemplated herein, and in
particular to report the information required by Section 1060(b) of the Code, in
a manner consistent with such agreed or resolved allocation, as the case may be,
and will not take any position inconsistent therewith upon examination of any
Tax Return, in any refund claim, in any litigation, investigation or otherwise
unless required to do so by applicable Law after notice to and discussions with
the other Party, or with such other Party’s prior written
consent. Member and Regency agree that each will furnish the other a
copy of Form 8594 (Asset Acquisition Statement under Section 1060) as filed with
the Internal Revenue Service by such party or any affiliate thereof within
ninety (90) days of the filing of such form with the Internal Revenue
Service. Member and Regency further agree to use all commercially
reasonable efforts to revise such allocation to reflect any adjustments to the
Merger Consideration, by reason of Section 2.8 or any Sonat Cash
Payment or otherwise, in a manner consistent with, and to comply with the tax
reporting and other requirements provided in, the Proceeding sentences of this
Section 6.10(e).
(ii) Notwithstanding
anything provided herein to the contrary, Regency shall not be bound by any
agreement or resolution described in Section 6.10(e)(i),
above, nor shall Regency be required to report on any Tax Return, any allocation
of Tax Consideration among the Assets in a manner that would be inconsistent
with any allocation or valuation required by Regency’s auditors for GAAP
purposes.
(f) Escrow
Agreement.
34
(i) The
Parties agree to report on all applicable Tax Returns any payment made to Member
pursuant to Section
2.7(c) or pursuant to Article XI and the Escrow Agreement as an
installment payment pursuant to Section 453 of the Code.
(ii) The
Parties agree to report on all applicable Tax Returns any distributions of
earnings from the Escrow Fund to Member pursuant to the Escrow Agreement as a
payment of interest in respect of the installment obligation by Regency to
Member pursuant to Section 453 of the Code.
6.11 Support of Sonat Abandonment
Application. If
the application for abandonment to be filed by Sonat pursuant to the terms of
the Sonat Purchase Agreement (the “Sonat Abandonment
Application”) is filed by Sonat prior to Closing, from the time of such
filing until the Closing, subject to Section 8.6, Member shall
provide, and shall cause each Nexus Company to provide, diligent and timely
support of the Sonat Abandonment Application, which support shall include (a)
motion in support of the Sonat Abandonment Application, (b) good faith
cooperation in the prosecution of the Sonat Abandonment Application and (c)
assistance to Regency, as Regency may reasonably request from time to time, in
obtaining the Final FERC Approval Order consistent with the parties’ intentions
under the Sonat Purchase Agreement.
6.12 Notice of Breaches of
Representations and Warranties. Following
the execution of this Agreement and prior to Closing, Regency and Merger Sub
shall promptly (and in any event prior to the earlier of five (5) Business Days
following discovery or the Closing Date) notify Member of any matter of which
any Officers of the Managing General Partner has actual knowledge that, to the
actual knowledge of such officer, constitutes a breach of any representation or
warranty of Member or any Nexus Company contained in Article III or Article IV; provided,
however, any such notification will not affect the rights or obligations of
Member, any Nexus Company, Regency, or Merger Sub, under this Agreement and the
failure to provide such notification will not affect any rights of any Regency
Indemnitee or any obligations of Member or any Nexus Company under this
Agreement or any other Transaction Document except as contemplated by Section
9.1(b).
6.13 Auditor
Matters. Prior
to Closing, Member shall use all commercially reasonable efforts to obtain from
Xxxx & Associates LLP a written acknowledgement that they are engaged
jointly by Member and Nexus for purposes of their audit of the Audited Financial
Statements and deliver to such auditors written instructions directing and
authorizing such auditors to, from and after Closing, cooperate with the
Surviving Company at the Surviving Company’s sole cost in producing such
financial information relating to the Nexus Companies as may be requested by the
Surviving Company.
(a) Member
shall terminate the Management Agreement, including without limitation the
provisions of Section 4 thereof, with respect to each Nexus Company, effective
at or prior to the Closing, without any further liability or obligation of any
Nexus Company thereunder, including without limitation under Section 4 of the
Management Agreement.
35
(b) Member
shall cause Nexus Gas Gathering, LP to terminate the Swap Agreement, effective
at or prior to the Closing, without any further liability or obligation of any
Nexus Company thereunder.
6.15 Transfer of Certain Assets
of Member. Prior
to Closing, Member shall transfer, convey and assign to the Nexus Companies,
pursuant to conveyance documents in form reasonably acceptable to Regency, all
of Member’s rights, title and interest in, to and under all assets which
constitute a part of the Systems, the Facilities or are otherwise used in, or
are necessary for use in connection with, the Pipeline Assets in the Ordinary
Course of Business, including without limitation the assets identified in Schedule F
(collectively, the “Identified Member
Assets”).
ARTICLE
VII
7.1 Conditions to Obligation of
Regency and
Merger Sub. The
obligation of Regency and Merger Sub to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(a) Title
Representations shall be true and correct as of the Closing Date as if made as
of the Closing Date;
(b) the
representations and warranties contained in Article III and in
Article IV, other than the Title Representations, shall be true and correct
in all respects (provided, however, that for purposes of
determining whether such representations and warranties are true and correct,
all qualifications in such representations and warranties as to materiality,
Material Adverse Effect, in all material respects and similar materiality
qualifications contained in such representations and warranties (other than in
Section 4.1(q)(iii) or in any
defined term such as “Material Contract”) shall be disregarded when made and as
of the Closing Date as if made on and as of the Closing Date, except (i) that
such representations and warranties may be untrue or incorrect as a result of
actions or transactions expressly permitted or required by this Agreement or
actions or transactions of Member or Nexus made with the prior written consent
of Regency, (ii) for such representations and warranties made as of a specified
date, which shall be required to be true and correct only on and as of such
specified date, and (iii) for those failures to be true and correct that,
individually or in the aggregate, do not constitute a Material Adverse
Effect;
(c) each of
Member and Nexus shall have performed in all material respects each and every
material covenant, agreement and obligation required by this Agreement to be
performed or complied with by Member or Nexus, as applicable, prior to or
at the
Closing;
(d) there
shall not be any injunction, judgment, order, decree, ruling, or charge of any
Governmental Authority in effect preventing consummation of the
Merger;
(e) all
consents, authorizations and approvals set forth on Schedule B shall have
been obtained and delivered to Regency;
(f) HSR
Approval shall have been obtained;
36
(g) all
documents, instruments, certificates or other items required to be delivered to
the Escrow Agent pursuant to Section 7.4(a)(vi) and to
Regency pursuant to Section 7.4(a)(i) through (vii)
shall have been delivered;
(h) from the
date of this Agreement to the Closing Date no Material Adverse Effect shall have
occurred;
(i) none of
the Non-Competition Agreements, the Releases or the Separation Agreements shall
have been terminated and there shall not be pending in a court of competent
jurisdiction or threatened by any party to a Non-Competition Agreement, Release
or Separation Agreement any Proceeding challenging the effectiveness or
enforceability of any Non-Competition Agreement, any Release or any Separation
Agreement;
(j) the Sonat
Purchase Agreement shall be in full force and effect and shall not have been
terminated and neither Nexus nor Sonat shall be in breach of the Sonat Purchase
Agreement to the extent which gives the other any right to terminate the Sonat
Purchase Agreement;
(k) the
Management Agreement shall have been terminated with respect to the Nexus
Companies in accordance with Section 6.14(a);
(l) the Swap
Agreement shall have been terminated in accordance with Section 6.14(b);
(m) the
Identified Member Assets shall have been transferred to a Nexus Company in
accordance with Section 6.15;
and
(n) none of
the Resignations or the Separation Agreements shall have been
revoked.
Regency,
on behalf of Merger Sub, may waive any condition specified in Section 7.1 (other than Section 7.1(d) or Section 7.1(f) or any other
conditions that may not be waived under applicable Law) if it executes a writing
so stating at or before the Closing.
7.2 Conditions to Obligation of
Member and
Nexus. The
obligation of Member and Nexus to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(a) the
representations and warranties of Regency and Merger Sub contained in
Article V shall be true and correct when made and as of the Closing Date as
if made on and as of the Closing Date, except (i) that such representations and
warranties may be untrue or incorrect as a result of actions or transactions
expressly permitted or required by this Agreement or actions or transactions of
Regency and Merger Sub made with the prior written consent of Member, (ii) for
such representations and warranties made as of a specified date, which shall be
required to be true and correct only on and as of such specified date, and (iii)
for those failures to be true and correct that, individually or in the
aggregate, have not had and would not reasonably be expected to have a material
adverse effect on the ability of Regency or Merger Sub to perform
37
their
respective obligations under this Agreement and the other Transaction Documents
to which it is or shall be a party or consummate the Merger;
(b) each of
Regency and Merger Sub shall have performed in all material respects all of its
covenants, agreements and obligations hereunder through the
Closing;
(c) there
shall not be any injunction, judgment, order, decree, ruling, or charge of any
Governmental Authority in effect preventing consummation of the Merger;
(d) the HSR
Approval shall have been obtained;
(e) Sonat
shall not be in breach of the Sonat Purchase Agreement to the extent which gives
Nexus any right to terminate the Sonat Purchase Agreement (unless
Regency shall have consented to Nexus waiving such right to terminate, in which
case this condition shall not apply); and
(f) all
documents, instruments, certificates or other items required to be delivered to
the Escrow Agent pursuant to Section 7.4(b)(i) and to
Member pursuant to Section 7.4(b)(ii)(A) through (E) shall have been
delivered.
Member,
on behalf of Nexus, may waive any condition specified in Section 7.2 (other than Section 7.2(c) or Section 7.2(d) or any other
conditions that may not be waived under applicable Law) if it executes a writing
so stating at or before the Closing.
7.3 Casualty
Loss. If,
prior to Closing, any of the Assets are damaged or destroyed by fire or other
casualty or are taken or threatened to be taken in condemnation or under the
right of eminent domain (“Casualty Loss”) and
the estimated cost to repair or replace, as applicable, such Asset(s) (with
equipment of similar utility) as reasonably agreed to by Regency and Nexus in
good faith exceeds the aggregate proceeds actually received by the Nexus
Companies as of Closing under any indemnity, bond, insurance policy or similar
recovery right with respect to such Casualty Loss (the amount of such estimated
cost in excess of proceeds received, the “Excess Casualty
Loss”), then the Closing Payment Amount shall be reduced by
the amount of such Excess Casualty Loss; provided, however, (A) if the estimated
cost to repair or replace, as applicable, such Asset(s) (with equipment of
similar utility) as reasonably agreed to by Regency and Nexus in good faith, in
the aggregate with respect to all Assets, exceeds $15,000,000 and/or any
material portions of the System(s) or the Facilities will be reasonably unlikely
to operate within twenty (20) days after the
occurrence of such Casualty Loss at a rate equal to or greater than eighty
percent (80%) of its average volume for the three (3) month period immediately
prior to the occurrence of the Casualty Loss, then in either or both such
events, at Regency’s option, Regency may elect to terminate this Agreement and
(B) if the Closing Payment Amount is reduced by the Excess Casualty Loss with
respect to a Casualty Loss and Regency, the Surviving Company or any of the
Nexus Companies shall receive after the Closing any additional proceeds with
respect to such Casualty Loss under any indemnity, bond, insurance policy or
similar recovery right with respect to such Casualty Loss, such proceeds, up to
the amount by which the Closing Payment Amount was reduced, shall be delivered
by Regency to Member within two (2) Business Days of receipt
thereof. If the Excess Casualty Loss exceeds $1,000,000, Member may
elect to terminate this Agreement without any liability unless Regency agrees to
reduce the
38
Closing
Payment Amount with respect to such Casualty Loss by only $1,000,000 rather than
the full amount of the Excess Casualty Loss and waive any right to receive or
recover from Member any additional amount in respect thereof.
(a) Deliveries of Member and
Nexus. At Closing, Member and Nexus shall deliver or cause to
be delivered to Regency each of the following, together with any additional
items which Regency may reasonably request upon written notice to effect the
transactions contemplated herein (the receipt of all of which items described in
Section 7.4(a)(i) through (vi) are conditions
to the obligation of Regency and Merger Sub to close the transactions
contemplated hereby):
(i) a
certificate of Member, dated as of the Closing Date certifying as to the matters
set forth in Sections
7.1(a),
7.1(b) and
7.1(c);
(ii) certified
copies of the resolutions of the appropriate governing body of Member and Nexus,
authorizing and approving the execution, delivery and performance of this
Agreement, and all other Transaction Documents to which such Person shall be a
party, by such Person;
(iii) a
certificate of existence and, if applicable, good standing in respect of each
Nexus Company, issued by the Secretary of State for the state where such Nexus
Company was organized;
(iv) all
consents, authorizations and approvals obtained by Member or any Nexus Company
as of the Closing Date in satisfaction of the conditions in Section 7.1(e) of
this Agreement;
(v) a
certificate of non-foreign status from Member that meets the requirements of
Treasury Regulation Section 1.1445-2(b)(2). Failure to provide such
certificate shall result in a withholding pursuant to Section 1445 of the
Code;
(vi) a
counterpart of the Escrow Agreement duly executed by Member, with an original
counterpart also delivered to the Escrow Agent;
(vii) the
written resignation of each Director, Officer and Manager in his or her capacity
as such, effective concurrently with the Closing on the Closing Date;
and
(viii) any other
documents or agreements contemplated hereby and/or necessary to consummate the
transactions contemplated hereby.
(b) Regency’s
Deliveries. At Closing, Regency shall deliver each of the
following, together with any additional items which Member may reasonably
request upon written notice to effect the transactions contemplated herein (the
receipt of all of which items described in Section 7.4(b)(i) and Section 7.4(b)(ii)(A) through (E), are conditions
to the obligation of Member and Nexus to close the transactions contemplated
hereby):
39
(i) to the
Escrow Agent,
(A) an amount
equal to the Escrow Amount by wire transfer of immediately available funds in
accordance with Section 2.7(a)(ii);
and
(B) a
counterpart of the Escrow Agreement duly executed by Regency;
(ii) to
Member:
(A) an amount
equal to the Closing Payment Amount by wire transfer of immediately available
funds in accordance with Section 2.7(a)(i);
(B) a
certificate of Regency, dated as of the Closing Date certifying as to the
matters set forth in Sections 7.2(a) and 7.2(b);
(C) a
certified copy of the resolutions of the governing body of Regency and Merger
Sub authorizing and approving the execution, delivery and performance of this
Agreement, and all other Transaction Documents to which any such Person shall be
a party, by such Person;
(D) a
certificate of existence and, if applicable, good standing in respect of each of
Regency and Merger Sub, issued by the Secretary of State for the State of
Delaware;
(E) an
executed counterpart of the Escrow Agreement duly executed by Regency;
and
(F) any other
documents or agreements contemplated hereby and/or necessary or appropriate to
consummate the transactions contemplated hereby.
7.5 Frustration of Closing
Conditions. Neither
Regency or Merger Sub, on the one hand, nor Member, on the other hand, may rely
on the failure of any condition set forth in Section 7.1 or 7.2, respectively, to
be satisfied if such failure was caused by such Party’s or Parties’ failure to
use all commercially reasonable efforts to cause the Closing to occur, to the
extent required by Section 6.1.
ARTICLE
VIII
(a) In case
at any time after the Closing any further action is necessary to carry out the
purposes of this Agreement, each of the Parties will take such further action
(including the execution, acknowledgement and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the
sole cost and expense of the requesting Party.
40
(b) From and
after the Closing until the fifth anniversary of the Closing, Member shall
provide to Regency and its Representatives, during normal business hours and
upon reasonable request, reasonable access to and, upon request by Regency,
copies of all Records of Member to the extent related to the Nexus Companies or
the business or operations conducted with respect to the Pipeline Assets, in
each case prior to Closing, in connection with any purpose contemplated by this
Agreement or any other proper business purpose. If Member desires to
destroy or dispose of such Records, Member will offer first in writing at least
sixty (60) days prior to such destruction or disposition to surrender such
Records to Regency and Member may, at any time after Closing, deliver all such
Records to Regency upon which delivery Member’s obligations under this Section 8.1(b) shall
terminate.
(c) From and
after the Closing, Regency shall provide to Member and its Representatives,
during normal business hours and upon reasonable request, reasonable access to
and, upon request by Member, copies of all Records of the Surviving Company and
the other Nexus Companies existing on the Closing Date in connection with any
purpose contemplated by this Agreement or any other proper business
purpose. Regency will cause all such Records to be maintained and not
disposed of for a period of five (5) years from the Closing Date or such longer
time as may be required by Law, and thereafter, if it desires to destroy or
dispose of such Records, will offer first in writing at least sixty (60) days
prior to such destruction or disposition to surrender them to
Member.
8.2 Permits, Licenses and
Approvals. For
a period of 120 days from and after the Closing, Member shall cooperate
reasonably with and provide reasonable assistance to Regency, as reasonably
requested by Regency and provided Regency shall reimburse Member for any
out-of-pocket expenses incurred by Member in connection with such cooperation
and assistance, in completing and submitting all documents, applications, or
filings necessary to transfer (or, if transfer is prohibited, newly obtain) all
permits, licenses or other approvals of any Governmental Authority that are
necessary for Regency (or any Affiliate of Regency) to own and/or operate the
Assets in compliance with all applicable Laws, including Health, Safety and
Environmental Laws.
8.3 Removal of Logos and
Signs. Within
ninety (90) days after the Closing Date, Regency shall remove from any publicly
visible portion of the physical Assets any logo or sign indicating that such
assets are owned or operated by Member or any Affiliates of Member (including
signs displaying Member’s or its Affiliate’s emergency contact telephone number
or otherwise using or displaying the name “Nexus,” in whole or in part) and
execute such documentation as Member shall reasonably request in order to
transfer to Member all of the Nexus Companies’ rights, title and interest in the
name “Nexus” and all derivatives thereof. As promptly as
practical after the Closing Date, Regency shall post Regency’s emergency contact
telephone numbers in place of any emergency contact telephone numbers of any
Member or any Affiliate.
(a) Regency
shall be responsible for all filings with state and federal agencies for change
of owner or operator, and shall promptly provide Member with copies of all such
filings when made and confirmation thereof when received. All
recording and filing fees shall
41
be paid
by Regency and where paid by Member, reimbursed by Regency to Member promptly
after receipt of an invoice.
(b) Member
hereby agrees for a period of 120 days from and after the Closing, to reasonably
cooperate with, and provide and furnish to, Regency any and all information
reasonably requested by Regency with respect to the applications and other
filings which may be required in connection with the Merger, including without
limitation any information required in connection with filings with any
Governmental Authority, provided Regency shall reimburse Member for any out of
pocket cash or expenses incurred by Member related to the services provided by
Member under this Section 8.4(b).
8.5 Post-Closing
Consents. Member
agrees that, for a period of 120 days from and after the Closing, Member will
cooperate with Regency and will use all commercially reasonable efforts to
obtain each consent required with respect to the Merger which shall not have
been obtained prior to Closing, provided, however, the cost of
obtaining such consents, including any amounts the party providing such consent
shall reasonably require as a condition to providing such consent, shall be
borne by Member, and shall be paid promptly by Member upon such party providing
such consent being prepared to tender such consent.
8.6 Sonat Purchase
Agreement.
(a) Member
and Nexus will use all commercially reasonable efforts to ensure that Sonat does
not file the Sonat Abandonment Application with FERC until after Regency shall
have advised Member and Nexus of Regency’s election regarding the Application
Parameters. Within the period commencing on the day following the
date of this Agreement and ending on March 26, 2008 (the “Election Period”),
Regency will advise Member and Nexus in writing (the “Election Notice”) as
to its election among the three alternative Application Parameters set forth in
Exhibit
G (the alternative so selected being the “Selected Application
Parameter”).
(b) Member
and Nexus hereby authorize Regency to act on behalf of the “Purchaser” (as such
term is defined in the Sonat Purchase Agreement), during the Election Period, to
negotiate with the “Upstream Pipeline” (as such term is defined in the Sonat
Purchase Agreement) to obtain a resolution of the “Upstream Intrastate Pipeline
Issue” (as such term is defined in the Sonat Purchase Agreement) that both
complies with Section 5.02(g) of the Sonat Purchase Agreement and is reasonably
satisfactory to Regency in accordance with Exhibit
G.
(c) Member
and Nexus hereby authorize Regency to act on behalf of the “Purchaser” (as such
term is defined in the Sonat Purchase Agreement), during the Election Period, to
negotiate with Sonat to obtain the agreement of Sonat to file and prosecute
diligently the Sonat Abandonment Application incorporating the Selected
Application Parameter.
(d) Prior to
the Effective Time, Member and Nexus will use all commercially reasonable
efforts:
(i) to cause
Sonat to provide to Member and Nexus and to Regency, at least five (5) Business
Days prior to filing the Sonat Abandonment Application, the draft Sonat
Abandonment Application reflecting the Selected Application Parameter for
Regency’s and Member’s review; and
42
(ii) to cause
Sonat to give effect in the Sonat Abandonment Application to any comments and
requests offered by Regency or Member after their review of thereof that are
reasonably necessary to explain, justify or better support Regency’s Selected
Application Parameter.
(e) Following
the giving and receipt of such Election Notice, Member and Nexus will, until the
Effective Time, use all commercially reasonable efforts, and Regency and the
Surviving Company will, following the Effective Time, use all commercially
reasonable efforts, in each case, (i) to cause Sonat to file the Sonat
Abandonment Application in accordance with the Selected Application Parameter
and (ii) to file a motion in support of the Sonat Abandonment Application as so
filed. From the date of filing of the Sonat Abandonment Application
until the consummation or termination of the Sonat Purchase Agreement, Member
and Nexus will, until the Effective Time, and Regency and the Surviving Company
will, following the Effective Time, use all commercially reasonable efforts to
provide diligent and timely support and prosecution of the Sonat Abandonment
Application. Each of Member, Nexus, Regency and the Surviving Company
shall cooperate diligently with the others in the prosecution of the Sonat
Abandonment Application and shall provide, as reasonably requested from time to
time, assistance to the others in obtaining the Final FERC Approval Order of the
Sonat Abandonment Application as so filed.
(f) Regency
shall keep Member fully informed on a reasonably current basis and in reasonable
detail of the status of its efforts to obtain a Final FERC Approval Order, its
negotiations with the Upstream Pipeline and Sonat pursuant to subsections (b)
and (c) of this Section 8.6 and its
efforts to consummate the transactions contemplated by the Sonat Purchase
Agreement. Neither Regency nor any Affiliate of Regency shall
be authorized to enter into, and shall not enter into, without Member’s prior
written consent, any Contract that would be binding on Member or Nexus (other
than a Contract that would be binding on Nexus only upon the
Closing).
(g) The
Parties acknowledge that: the future course of the Sonat Abandonment Application
is difficult to predict; FERC, the staff of FERC and third parties may take
substantive or procedural positions that are contrary to or inconsistent with
the intentions and objectives of the parties to the Sonat Purchase Agreement;
participants in the FERC abandonment proceedings may wish to seek rehearing,
clarification or appeal of FERC’s rulings on the Sonat Abandonment Application;
and, as a consequence, there may be more than one FERC order concerning the
Sonat Abandonment Application.
(h) If
Regency shall have elected Alternative B or C on Exhibit
G as the Selected Application Parameter, Member, Nexus and Regency and
the Surviving Company shall all use all commercially reasonable effort to obtain
for the benefit of RIGS any consents of third parties required to be set forth
in Section 4.1(y) of
the Disclosure Schedule.
8.7 Non-Solicitation. During
the period of time beginning on the Closing Date and continuing until the date
that is twelve (12) months after the Closing Date, Member will not, directly or
indirectly, (a) hire or attempt to hire or retain any person who is an Employee
on the date hereof or who becomes an employee of any Nexus Company on any date
after the date hereof until the Closing if such employee is employed by Regency
at or at any time after the
43
Closing
Date or (b) enter into or attempt to enter into Contracts with any customer,
vendor or supplier of the Assets that would cause such customer, vendor or
supplier to materially reduce the volume of business done with respect to the
Assets; provided,
however, that the foregoing provision will not prevent Member from hiring
or retaining or attempting to hire or retain any such person who (i) contacts
Member or its Affiliates on his or her own initiative without any direct
solicitation by or knowing encouragement from Member or its Affiliates, (ii)
responds to an advertisement or other general solicitation for employment that
is not specifically targeted to such persons described in clause (a) of this
Section 8.7 or (iii) is no
longer employed by a Nexus Company.
ARTICLE
IX
9.1 Survival.
(a) Representations and
Warranties. Regardless of any investigation at any time made
by or on behalf of any Party hereto or of any information any Party may have in
respect thereof, each of the representations and warranties made in this
Agreement or in the certificates delivered pursuant to Section 7.4(a)(i) or Section 7.4(b)(ii)(B) shall
survive the Closing as follows:
(i) the Title
Representations (and the certificate to be delivered pursuant to Section 7.4(a)(i) to the
extent related to such representations and warranties) shall terminate 30 days
after the expiration of all applicable statutes of limitations with respect to
the matters covered by such representations and warranties; and
(ii) each of
the Regency Fundamental Representations, the Member Fundamental Representations
(other than the Title Representations), and the Nexus Fundamental
Representations (other than the Title Representations) (and in the certificates
delivered pursuant to Section 7.4(a)(i) or Section 7.4(b)(ii)(B) to the
extent related to such representations and warranties) shall terminate upon the
earlier of (1) the fourth anniversary of the Closing Date or (2) thirty (30)
days after the expiration of all applicable statutes of limitations with respect
to the matters covered by such representation and warranty; and
(iii) each of
the other representations and warranties set forth in Article IV and Article V shall
terminate on the later of (A) the first anniversary of the Closing Date or (B)
the earlier of (x) the second anniversary of the Closing Date or (y) the date on
which the Sonat Cash Payment shall become due pursuant to Section 2.7(b) (the “Survival Date”),
provided that the representation and warranty in Section 4.1(y) shall
terminate on, and the Survival Date for such shall be, (A) the Closing unless
Regency shall have selected Alternative B or Alternative C on Exhibit
G as the Selected Application Parameter or (B) if Regency shall have
selected Alternative B or Alternative C on Exhibit
G as the Selected Application Parameter, the first anniversary of the
closing date of the Sonat Acquisition.
(b) Survival of
Covenants. The covenants and agreements of the Parties hereto
contained in this Agreement, to the extent that, by their terms, they are to be
performed prior to or on the Closing Date, shall terminate on the Closing Date,
or, to the extent they are to
44
be
performed after the Closing, shall terminate in accordance with their terms or,
if earlier, sixty (60) days following the expiration of all applicable statutes
of limitations applicable to any Claim with respect to such covenant or
agreement; provided however, that (i) the covenant of Regency set forth in Section 6.12 shall
survive the Closing until the Survival Date solely for the purpose of allowing
any Member Indemnitee to assert a Claim for breach, if any, of such covenant
with respect to a representation or warranty set forth in Article III or Article IV (or in the
certificate delivered pursuant to Section 7.4 to the
extent related thereto) in response to any Claim Notice by a Regency Indemnity
asserting a breach of such representation or warranty, (ii) the amount of
Damages to which any Member Indemnitee shall be entitled with respect to any
such Claim shall not exceed the amount of Damages to which such Regency
Indemnity shall be entitled with respect to such Claim asserted by such Regency
Indemnitee that would have been avoided had Regency complied with its covenant
under Section
6.12 with respect to such representation and warranty and (iii) any such
Damages to which any Member Indemnitee shall be entitled shall be recoverable
solely by offset against the Damages to which the Regency Indemnitee shall be
entitled with respect to such Claim or, if such Damages are being recouped by
offset against the Sonat Cash Payment, recovery of such Damages by reducing the
amount of such offset by the amount of such Damages to which such Member
Indemnitee shall be entitled.
(c) Pending
Claims. Notwithstanding the foregoing, if a Claim Notice is
provided in accordance with this Article IX before the
termination of the applicable representation, warranty, covenant or agreement
pursuant to Section
9.1(a)
or Section
9.1(b),
then (notwithstanding such termination) the representation, warranty, covenant
or agreement giving rise to such Claim will survive until, but only for the
purpose of, the resolution of such Claim by final, nonappealable judgment or
settlement; provided
further that any such Claim which solely involves Regency Indemnitees and
Member Indemnitees shall be deemed to have been withdrawn and waived one year
after being made, unless (1) court proceedings shall have been commenced with
respect to such Claim within such one year period; or (2) such Claim shall have
been waived or satisfied within such one-year period.
(d) Environmental
Claims. No Regency Indemnitee may assert a Claim for
indemnification pursuant to Section 9.2(a)(iv) or
Section 9.2(a)(viii) after
the Survival Date; provided if a Claim Notice is provided in accordance with
this Article IX prior to the Survival Date, such Claim shall survive until, but
only for the purposes of, resolution of such Claim by final, nonappealable
judgment or settlement.
(e) Tax
Claims. No Regency Indemnitee may assert a Claim for
indemnification pursuant to Section 9.2(a)(vii)
after the fourth anniversary of the Closing Date; provided if a Claim Notice is
provided in accordance with this Article IX prior to
the fourth anniversary of the Closing Date, such Claim shall survive until, but
only for the purposes of, resolution of such Claim by final, nonappealable
judgment or settlement.
(a) Subject
to the terms of this Article IX, Member
agrees following the Closing to protect, defend, indemnify, reimburse and hold
harmless Regency Indemnitees from
45
and
against any Damages to the extent they arise as a result of any of the following
and for matters specifically listed in this Section 9.2(a):
(i) the
inaccuracy or breach of the Member Fundamental Representations or the Nexus
Fundamental Representations (or in the certificate delivered pursuant to Section 7.4(a)(i) to the
extent related to such representations and warranties) other than for Taxes
(which are covered exclusively by clause (vii) below);
(ii) the
inaccuracy or breach of any representation or warranty made by Nexus in this
Agreement other than the Member Fundamental Representations and the Nexus
Fundamental Representations (or in the certificate delivered pursuant to Section 7.4(a)(i) to the
extent related to such representations and warranties);
(iii) the
breach or non-performance by Member or Nexus of any covenant, indemnity,
agreement or obligation to be performed by Member or Nexus pursuant to this
Agreement (or in the certificate delivered pursuant to Section 7.4(a)(i) to the
extent related to such covenants, agreements and obligations );
(iv) any
Environmental Costs or Liabilities to the extent arising out of or in connection
with or as a result of any conditions, facts or circumstances existing on or
before the Closing Date relating to the operations or Assets of any Nexus
Company at any time on or before the Closing Date (regardless of whether such
matters are disclosed in the Disclosure Schedule) (collectively, the “Pre-Existing Environmental
Matters”), including any Environmental Costs or Liabilities that any
Regency Indemnitee may sustain in connection with any remediation, clean-up,
modification, monitoring, repairs, work, construction, alterations or
installations required as a result of the Pre-Existing Environmental Matters
(except any increased Environmental Costs or Liabilities to the extent such
increased Environmental Costs or Liabilities are caused by the actions or
negligence of any Regency Indemnitee or its employees, agents, or consultants,
but excluding environmental consultants engaged by any Member to investigate,
monitor, clean up or remediate any matter that includes a Pre-Existing
Environmental Matter), including any Environmental Costs or Liabilities relating
to capital improvements, physical upgrading or maintenance and repairs to the
extent required correct any Regency Company’s noncompliance with Environmental
Laws (using the least-stringent standard permissible under such laws given the
commercial or industrial use of the property that does not impose a financial
detriment on Regency, the Surviving Corporation or any other Nexus Company and
does not adversely affect in any material respect the ability of the Nexus
Companies to own and operate the Pipeline Assets in the Ordinary Course of
Business) with respect to Pre-Existing Environmental Matters;
(v) the
Merger Consideration Deficit, if any;
(vi) any
Third-Party Debt, Expenses, Change of Control Amounts and Severance Obligations
that do not result in a reduction in the Merger Consideration pursuant to Section 2.8;
(vii) Regency
Indemnified Taxes, to the extent not paid under Section 6.10 (Tax
Matters);
46
(viii) any
Environmental Costs or Liabilities to the extent arising out of obtaining
authorization for emissions into the atmosphere of condensate “flash gas” at the
Nexus Companies’ Logansport, Louisiana facility, including, but not limited to,
the installation of a flare or any other controls required to reduce the
emissions of “flash gas;” the cost for any associated permitting pursuant to
Health, Safety and Environmental Laws; and any penalties, fines, and injunctive
relief to the extent arising from related allegations of noncompliance with
Health, Safety and Environmental Laws in connection with such emissions, whether
related to periods before or after Closing; and
(ix) the
failure of any Identified Member Assets to be transferred to a Nexus Company in
accordance with Section 6.15.
(b) Each of
Regency and Merger Sub acknowledges and agrees that, other than with respect to
claims by a Regency Indemnitee for fraud by Member or Nexus, the indemnification
obligations of Member set forth in Section 9.2 shall be the
exclusive rights and remedies of Regency Indemnitees after Closing against
Member arising out of or with respect to this Agreement, the events giving rise
to this Agreement and the transactions provided for herein or contemplated
hereby. WITHOUT LIMITING THE PRIOR SENTENCE, AND AS A MATERIAL
INDUCEMENT TO THE OTHER PARTIES HERETO ENTERING INTO THIS AGREEMENT, AND IN
LIGHT OF, AMONG OTHER FACTORS, THE ACKNOWLEDGEMENTS CONTAINED IN SECTION 12.20, UPON THE
CLOSING, REGENCY (ON BEHALF OF ITSELF AND THE OTHER REGENCY INDEMNITEES) HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, RELEASES, AND DISCHARGES MEMBER AND ITS
AFFILIATES AND THEIR RESPECTIVE MEMBERS, PARTNERS, OFFICERS, DIRECTORS,
EMPLOYEES AND MANAGERS, AND COVENANTS NOT TO XXX MEMBER OR ANY OF ITS AFFILIATES
OR THEIR RESPECTIVE MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES OR
MANAGERS, UPON ANY PAST, PRESENT OR FUTURE CLAIM OR CAUSE OF ACTION, KNOWN OR
UNKNOWN, FORESEEN OR UNFORESEEN, WHETHER PURSUANT TO COMMON OR STATUTORY LAW OR
OTHERWISE, THAT RELATES IN ANY MANNER TO THIS AGREEMENT, THE EVENTS GIVING RISE
TO THIS AGREEMENT OR THE TRANSACTIONS PROVIDED FOR HEREIN OR CONTEMPLATED
HEREBY, EXCEPT FOR REGENCY’S RIGHTS OF INDEMNIFICATION SET FORTH IN SECTION 9.2 (AND SUBJECT TO
THE TERMS AND CONDITIONS OF THIS ARTICLE IX); PROVIDED THAT
THIS SENTENCE AND ANY LIMITATION CONTAINED IN THIS SECTION 9.2(b) SHALL NOT
APPLY WITH RESPECT TO CLAIMS FOR FRAUD.
(c) Damages
for which a Regency Indemnitee shall be entitled to receive pursuant to this
Section 9.2 shall include
amounts paid or incurred by such Regency Indemnitee to a third party pursuant to
any indemnity, assumption or similar obligation such Regency Indemnitee may have
to such third party if the matter giving rise to such liability would entitle
the Regency Indemnitee to indemnification under this Section 9.2 if the liability
or damages with respect to such matter had been incurred directly by such
Regency Indemnitee. A Regency Indemnitee also may assign any rights
under this Section
9.2 with
respect to any transfer or assignment of all or any portion of the Assets; provided that in the event of
any such assignment of rights under this Section 9.2, as between
Member, on the one hand, and the Regency
47
Indemnitee
and such assignee, on the other hand, such assignee shall be treated as a
Regency Indemnitee for all purposes of this Section 9.2.
(a) Subject
to the terms of this Article IX, Regency
agrees following the Closing to protect, defend, indemnify, reimburse and hold
harmless Member and Member Indemnitees from and against any Damages to the
extent they arise as a result of any of the following and for matters
specifically listed in this Section 9.3(a):
(i) the
inaccuracy or the breach of the Regency Fundamental Representations (or in the
certificate delivered pursuant to Section 7.4(b)(ii)(B)
to the extent related to such representations and warranties);
(ii) the
inaccuracy or the breach of any representation or warranty made by Regency or
Merger Sub in this Agreement other than the Regency Fundamental Representations
(or in the certificate delivered pursuant to Section 7.4(b)(ii)(B) to the
extent related to such representations and warranties);
(iii) the
breach or non-performance of any covenant, indemnity, agreement or obligation to
be performed by Regency or Merger Sub pursuant to this Agreement (or in the
certificate delivered pursuant to Section 7.4(b)(ii)(B) to the
extent related to such covenants, agreements and obligations);
(iv) the
ownership, operation, repair, replacement or maintenance of the Pipeline Assets
or the Nexus Companies which accrue or arise from and after the Closing Date to
the extent related to periods on or after the Closing as a result of any act,
event, occurrence or omission with respect to, or the ownership or operation of,
the Pipeline Assets or the Nexus Companies after Closing; and
(v) the
Merger Consideration Surplus, if any.
(b) Member
acknowledges and agrees that, other than with respect to claims by a Member
Indemnitee for fraud by Regency or Merger Sub, the indemnification obligations
of Regency set forth in Section 9.3 shall be the
exclusive rights and remedies of Member Indemnitees after Closing against
Regency arising out of or with respect to this Agreement, the events giving rise
to this Agreement and the transactions provided for herein or contemplated
hereby. WITHOUT LIMITING THE PRIOR SENTENCE, AND AS A MATERIAL
INDUCEMENT TO THE OTHER PARTIES HERETO ENTERING INTO THIS AGREEMENT, AND IN
LIGHT OF, AMONG OTHER FACTORS, THE ACKNOWLEDGEMENTS CONTAINED IN SECTION 12.20, UPON THE
CLOSING, MEMBER (ON BEHALF OF ITSELF AND THE OTHER MEMBER INDEMNITEES) HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, RELEASES, AND DISCHARGES REGENCY AND ITS
AFFILIATES AND THEIR RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES,
PARTNERS AND MANAGERS, AND COVENANTS NOT TO XXX REGENCY OR ANY OF ITS AFFILIATES
OR THEIR RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES OR
MANAGERS, UPON ANY PAST, PRESENT OR FUTURE CLAIM OR CAUSE OF
48
ACTION,
KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, WHETHER PURSUANT TO COMMON OR
STATUTORY LAW OR OTHERWISE, THAT RELATES IN ANY MANNER TO THIS AGREEMENT, THE
EVENTS GIVING RISE TO THIS AGREEMENT OR THE TRANSACTIONS PROVIDED FOR HEREIN OR
CONTEMPLATED HEREBY, EXCEPT FOR MEMBER’S RIGHTS OF INDEMNIFICATION SET FORTH IN
SECTION 9.3 (AND SUBJECT TO
THE TERMS AND CONDITIONS OF THIS ARTICLE IX); PROVIDED THAT
THIS SENTENCE AND ANY LIMITATION CONTAINED IN THIS SECTION 9.3(b) SHALL NOT
APPLY WITH RESPECT TO CLAIMS FOR FRAUD.
(c) Regency
will have no liability for any Damages under Section 9.3(a) to the extent
such Damages result from a breach by Member or Nexus of any representation,
warranty, covenant or agreement of Member or Nexus contained in this Agreement
or to the extent a Regency Indemnitee shall be entitled to indemnification with
respect to such matter giving rise to such Damages pursuant to Section
9.2(a)(iv).
(d) Damages
for which a Member Indemnitee shall be entitled to receive indemnity pursuant to
this Section
9.3
shall include amounts paid or incurred by such Member Indemnitee to a third
party pursuant to any indemnity, assumption or similar obligation that such
Member Indemnitee may have to any such third party if the matter giving rise to
such liability would entitle Member Indemnitee to indemnification under this
Section 9.3 if the liability
or damages with respect to such matter had been incurred directly by such Member
Indemnitee.
9.4 Certain
Limitations. The
Regency Indemnitees’ and the Member Indemnitees’ rights to indemnification under
this Article IX
shall be limited as follows:
(a) No Claim
Notice for indemnification may be provided and no Claim for indemnification may
be made with respect to any Claim for breach of a representation, warranty,
covenant or other agreement in this Agreement beyond the applicable period
specified in Section 9.1.
(b) If the
Regency Indemnitees shall seek indemnification with respect to any Escrow
Indemnity Claim, the Regency Indemnities’ sole recourse and recovery rights with
respect to Damages relating to an Escrow Indemnity Claim shall be (i) recovery
from the Escrow Fund in accordance with this Article IX and Article XI, (ii)
recovery from Member as permitted by the immediately following sentence and
(iii) recovery by offset against the Sonat Cash Payment in accordance with Section 9.5; provided
the aggregate amount of Damages that may be recovered with respect to all Escrow
Indemnity Claims pursuant to clauses (i), (ii) and (iii) above shall not exceed
$8,500,000. If the Escrow Fund shall be insufficient to cover
any Escrow Indemnity Claim, the Regency Indemnitees shall have recourse to
Member with respect to any Escrow Indemnity Claim as to which the balance of the
Escrow Fund is insufficient to cover in full for amounts up to, and only up to,
amounts distributed from the Escrow Fund to cover Damages relating to Non-Escrow
Indemnity Claims and to pay the Merger Consideration Deficit to Regency pursuant
to Section 2.8(d)(i) and Section 11.2(c), if
applicable.
(c) No
Regency Indemnitee or Member Indemnitee shall be entitled to recover Damages
pursuant to Section 9.2(a)(ii) or Section 9.3(a)(ii),
respectively, unless:
49
(i) the
Regency Indemnitees, collectively, or the Member Indemnitees, collectively,
shall have suffered or incurred aggregate Damages otherwise recoverable under
this Article IX
in an amount in excess of the Deductible, and then recovery shall be permitted
only to the extent of such excess; and
(ii) after the
Deductible has been met, the Regency Indemnitees, collectively, or the Member
Indemnitees, collectively, shall have suffered or incurred Damages with respect
to the individual Claim or series of related Claims that arise out of
substantially the same facts and circumstances for which Damages are in excess
of $25,000, in which case the full amount of such Damages shall be recoverable,
subject to the limitations imposed by the other provisions of this Article IX (including
clause (i) of this Section 9.4).
Notwithstanding
the foregoing, with respect to any claim for indemnification (and the Damages
recoverable therefrom) that may be brought under both Section 9.2(a)(ii), on the
one hand, and any other subsection of Section 9.2(a), on the other
hand, shall not be subject to any limitation specified in this Section 9.4(c) and any claim
for indemnification (and the Damages recoverable therefrom) that may be brought
under Section
9.3(a)(ii), on the one hand, and any other subsection of Section 9.3(a), on the other
hand, shall not be subject to any limitation specified in this Section 9.4(c).
(d) If an
indemnification Claim is brought by a Regency Indemnitee with respect to a
Non-Escrow Indemnity Claim, the Regency Indemnitee must first, recover the
Damages incurred with respect to such Claim from the Escrow Fund in accordance
with Article XI
to the extent of amounts available in the Escrow Fund, and only thereafter shall
be entitled to recover any Damages with respect to a Non-Escrow Indemnity Claim
not recovered from the Escrow Fund from Member.
(e) The
aggregate liability of Member pursuant to Section 9.2 shall not exceed
the amount of the Merger Consideration received by Member.
(f) The
provisions of this Article IX shall
apply in such a manner as not to give duplicative effect to any item of
adjustment and if there has been an adjustment to the Merger Consideration for
any Damages, there shall not be any charge against the Deductible or the Escrow
Fund and no Indemnitee may claim a breach of any representation or warranty with
respect to any Damages that gave rise to such adjustment in the Merger
Consideration pursuant to Section 2.8 to the extent of
the amount of such Damages given effect in such adjustment to the Merger
Consideration.
(g) No Person
shall have any right to indemnification under this Article IX to the
extent such Damages are duplicative of Damages that have previously been
recovered hereunder.
(h) The
amount of any Damages for which indemnification is provided under this Article IX shall be
net of any accruals or reserves on the Final Closing Statement that specifically
relate to the matter(s) for which indemnification is claimed, and if the amount
to be netted hereunder from any payment required hereunder is determined after
payment of any amount otherwise required to be paid to an indemnified Person
pursuant to this Article IX,
the
50
indemnified
Person shall repay to Member or to Regency, as applicable, promptly after such
determination, any amount that should not have been paid pursuant to this Article IX had such
determination been made at the time of such payment.
(i) No
Regency Indemnitee shall be entitled to recover Damages pursuant to Section 9.2(a)(iv)
unless the Regency Indemnitees, collectively, shall have suffered or incurred
Damages with respect to the individual Claim or series of related Claims that
arise out of substantially the same facts and circumstances for which Damages
are in excess of $25,000, in which case the full amount of such Damages shall be
recoverable, subject to the limitations imposed by the other provisions of this
Article
IX.
(a) Subject
to Section
9.4(b), if a Claim for indemnification under Section 9.2(a) is first
asserted by a Regency Indemnitee after the Escrow Distribution Date (but within
the limitations of Section 9.1) and prior to, or
if asserted prior to the Escrow Distribution Date shall not have been satisfied
in full out of the Escrow Fund as of, the date on which the Sonat Cash Payment
is to be made to Member pursuant to Section 2.7(b), then Regency
shall be entitled to offset against and reduce the Sonat Cash Payment by the
amount of Damages with respect to such Claim as reasonably determined by Regency
in good faith (such amount, the “Pending Claim
Amount”); provided that if any such Claim shall be a Continuing Claim as
of such date then only Damages with respect to such amount in excess of the then
remaining amount in the Escrow Fund retained with respect to such Claim may be
offset against the Sonat Cash Payment pursuant to this Section 9.5.
(b) Member
shall have thirty (30) days after Regency’s payment of the Sonat Cash Payment
(less the Pending Claim Amount) in accordance with Section 2.7(b) and Section 9.5(a) to give
Regency written notice (an “Objection Notice”) of
any objections Member has in good faith to the Pending Claim Amount as
determined in accordance with Section
9.5(a). If Member timely gives Regency an Objection Notice,
Regency and Member shall attempt in good faith to agree on the amount of Damages
to be offset against the Sonat Cash Payment. If Regency and Member
fail to resolve any objections contained in the Objection Notice within 30 days
after the date Member gives Regency an Objection Notice, either Regency or
Member may initiate litigation in accordance with Section 12.6 to finally
resolve Member’s objections to the Pending Claim Amount. If neither
Regency nor Member has initiated litigation within 90 days after the date Member
gives Regency an Objection Notice, Member may initiate litigation to finally
resolve its objections to the Pending Claim Amount in any state or federal court
located within the Borough of Manhattan, State of New York which has
jurisdiction over the subject matter of such dispute brought as before such
court and, if Member initiates such litigation, each Party irrevocably agrees
that all such Proceedings related to this Section 9.5
shall be litigated in such court and each Party consents to the jurisdiction of
such court with respect to such Proceedings, waives any defense of forum non
conveniens and agrees to be bound by any judgment rendered thereby in connection
with this Section 9.5.
51
(a) The amount of any
Damages for which indemnification is provided under this Article IX shall be
computed net of any insurance or other proceeds actually received by the
indemnified Person in connection with such Damages. Each of the
Regency Indemnitees and each of the Member Indemnitees shall pursue in good
faith claims under any applicable insurance policies and against other third
parties who may reasonably be expected to be responsible for such
Damages. A Party subject to indemnifying another Person under this
Agreement may defer such payment obligation pending resolution of any claims
that are still being pursued by such indemnified party as contemplated in the
immediately preceding sentence; however, if any such claim is still being
pursued as of the later of (i) one year after the date of the Closing or (ii)
twelve months after a Claim Notice is delivered as contemplated by Section 9.6(b),
such indemnifying Party shall nonetheless make, or cause to be made, such
indemnification payment, which payment shall be subject to prompt reimbursement
to the extent of the amount, if any, ultimately collected by such indemnified
person prior to the fourth anniversary of the Closing Date.
(b) If a
Regency Indemnitee or a Member Indemnitee pursues recovery under any insurance
policy or from any other source with respect to any Claim, such Regency
Indemnitee or Member Indemnitee, as applicable, may nonetheless deliver a Claim
Notice with respect to such Claim for purposes of Sections 9.1(c) and Section 9.8 and any costs or
expenses incurred by such Regency Indemnitee or Member Indemnitee, as
applicable, in pursuing any such recovery shall constitute Damages to the extent
not recovered under any such insurance policy or from any such other source and
shall be recoverable by such Regency Indemnitee or Member Indemnitee, as
applicable, as Damages with respect to such Claim if the Regency Indemnitee or
Member Indemnitee, as applicable, otherwise is entitled to be indemnified for
such Claim pursuant to this Article
IX.
9.7 Subrogation. Upon
payment of any Damages with respect to a Claim pursuant to this Article IX, the
indemnifying Person shall be subrogated to the extent of such payment (and to
recover costs or expenses incurred by Member in enforcing such recovery rights
against such Person) to the rights of the indemnified Person against any Person
with respect to the subject matter of such Claim. The indemnified
Person shall assign such rights to and otherwise reasonably cooperate with the
indemnifying Person, at the cost and expense of the indemnifying Person, to
pursue any claims against or otherwise recover amounts from, any Person liable
or responsible for any Damages for which indemnification has been received
pursuant to this Agreement. Notwithstanding anything herein to the
contrary, from and after the Closing, to the extent (a) any of the Nexus
Companies incurs costs or expenses with respect to the matter described in Section 9.2(a)(viii)
prior to Closing and such costs or expenses reduce the Net Working Capital, (b)
Member incurs costs or expenses with respect to the matter described in Section 9.2(a)(viii)
after Closing or (c) Member pays Damages to a Regency Indemnitee pursuant to
Section
9.2(a)(viii), in the case of (a), (b) or (c) Member shall be subrogated
to the rights of the Nexus Companies to indemnification under the Prior
Acquisition Agreements in respect of the matter referred to in Section 9.2(a)(viii)
(i) up to such costs or expenses incurred or the amount of Damages so paid by
Member to a Regency Indemnitee and (ii) with respect to any right to recover
costs or expenses incurred by Member in enforcing such recovery rights against
such Person, and, to the extent Member is so entitled to such subrogation,
Regency shall cause the Nexus Companies to assign such rights to and otherwise
reasonably cooperate with Member,
52
at the
cost and expense of Member, to pursue any claims against or otherwise recover
amounts from the Persons responsible under the applicable Prior Acquisition
Agreement.
9.8 Inter-Party
Claims. If
a Regency Indemnitee or a Member Indemnitee intends to seek indemnification from
Member or Regency, respectively, under this Article IX for a
matter other than a Third Party Claim, the Person seeking indemnification shall
deliver a Claim Notice to the Party from whom such indemnification is sought in
writing within ten (10) Business Days of the indemnified Person’s becoming aware
of the event giving rise to such indemnified Person’s claim for indemnification
and that such event had or would result in Damages for which indemnity is
available under this Agreement, specifying in reasonable detail the basis of
such claim; provided,
however, that failure
to give such notification shall not affect the obligation of any Party to
provide indemnification hereunder except to the extent the indemnifying Person
shall have been actually prejudiced as a result of such failure. The
indemnified Person shall thereupon give the indemnifying Person reasonable
access to the books, records and properties of the indemnified Person which
evidence or support such claim or the act, omission or occurrence giving rise to
such claim, except to the extent such access to any item may cause the loss of
the attorney-client privilege with respect to such item, and the right, upon
prior notice during normal business hours, to interview any Representative of
the indemnified Person related thereto. If the indemnifying Person
disputes its liability with respect to any such Claim, the indemnifying Person
and the indemnified Person shall proceed to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall, subject
to the terms of this Agreement, be resolved by litigation in an appropriate
court of competent jurisdiction.
(a) If any
third party shall notify any Party (the “Indemnitee”) with
respect to any matter (including claims based on indemnity and assumption
obligations) (a “Third
Party Claim”) that may give rise to a right to a claim for
indemnification against any other Party (the “Indemnifying Party”)
under Section 9.2 or 9.3, then the
Indemnitee shall promptly (and in any event within five (5) Business Days after
receiving written notice of the Third Party Claim) notify the Indemnifying Party
thereof in writing; provided, however, that the failure to
give such notice promptly to the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to the Indemnitee with
respect to such Third Party Claim except to the extent that the Indemnifying
Party is prejudiced by the failure or delay in the giving of such
notice. Thereafter, the Indemnitee shall deliver to the Indemnifying
Party, promptly following the Indemnitee’s receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.
(b) If a
Third Party Claim is made, the Indemnifying Party shall be entitled to
participate in the defense thereof at the Indemnifying Party’s sole cost and
expense. The Indemnifying Party will have the right, at its sole cost
and expense to assume and thereafter conduct the defense of the Third Party
Claim with counsel of its choice reasonably satisfactory to the Indemnitee;
provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitee (not to be withheld or delayed unreasonably) unless
(i) the Indemnifying Party unconditionally acknowledges and agrees that the
Indemnitee is entitled to indemnification under (and subject to the express
limitations contained in) this Article IX
with
53
respect
to such Third Party Claim, (i) the judgment or proposed settlement involves the
payment of money damages only and does not impose an injunction or other
equitable relief upon the Indemnitee and (ii) concurrently with such settlement
pays the full amount of the Damages incurred by or attributable to the
Indemnitee with respect to such Third Party Claim for which the Indemnitee is
entitled to indemnification under (and subject to the express limitations
contained in) this Article
IX. Notwithstanding the foregoing, the Indemnitee shall have
the right to employ separate counsel to represent the Indemnitee if the
Indemnitee is advised by outside counsel that a conflict of interest exists that
requires the Indemnitee to be represented by separate counsel under the
applicable rules of professional responsibility or if the court in which such
Third Party Claim is pending determines that a conflict of interest exists such
that the Indemnifying Party’s counsel is prohibited by such court or otherwise
unable to represent the Indemnitee with respect to such Third Party Claim or if
there is one or more defenses that could be asserted by the
Indemnitee that could not be asserted by the
Indemnifying Party or the Indemnifying Party’s counsel (on the Indemnitee’s
behalf), and, in the event the Indemnitee has the right to employ separate
counsel for the reasons set forth in this sentence, the reasonable expenses and
fees of such separate counsel shall be paid by the Indemnifying Party, subject
to the limitations in Section
9.4. If the Indemnifying Party chooses to defend or prosecute
a Third Party Claim, all the Indemnitees shall cooperate in the defense or
prosecution thereof, at the sole cost and expense of the Indemnifying
Party. Such cooperation shall include the retention and (upon the
Indemnifying Party’s request) the provision to the Indemnifying Party of records
and information that are reasonably relevant to such Third Party Claim, and
making employees and Representatives available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.
(c) If the
Indemnifying Party elects to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof except as otherwise provided in this Section 9.9. Unless
and until the Indemnifying Party assumes the defense of the Third Party Claim as
provided in this Section 9.9, the Indemnitee
may defend against the Third Party Claim in any manner it reasonably may deem
appropriate and the reasonable fees and expenses of one outside counsel (and not
any fees and expenses allocated to any internal counsel) engaged by the
Indemnitee after the Indemnitee shall have given notice of the Third Party Claim
as provided above (which outside counsel shall be reasonably acceptable to the
Indemnifying Party) in so defending the Third Party Claims shall be paid by
Indemnifying Party, subject to the limitations in Section 9.4, if it is
determined that the Indemnitee is entitled to indemnification from the
Indemnifying Party with respect to such Third Party Claim. The
Indemnitee also shall be entitled to participate in any defense of any Third
Party Claim at its sole cost and expense, it being understood and agreed that
the Indemnifying Party shall control such defense if it elects to do so as
provided in Section
9.9(b).
(d) Whether
or not the Indemnifying Party assumes the defense of a Third Party Claim, in no
event will the Indemnitee admit any liability with respect to, discharge or
consent to the entry of any judgment or enter into any settlement or compromise
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party which consent shall not be withheld or delayed
unreasonably. If the Indemnifying Party assumes the defense of a
Third Party Claim, the Indemnitee shall agree to any settlement, compromise or
discharge of a Third Party Claim that the Indemnifying Party may recommend and
that by its terms obligates
54
the
Indemnifying Party to pay the full amount of Damages in connection with such
Third Party Claim, releases the Indemnifying Party completely in connection with
such Third Party Claim and does not impose any injunction or other equitable
relief upon the Indemnitee.
(e) This
Section 9.9 is subject to
Section 9.14.
9.10 Recourse under Prior
Acquisition Agreements. Notwithstanding
anything to the contrary in this Agreement, if any Regency Indemnitee asserts a
Claim against or seeks to collect any Damages from an Indemnifying Party in
respect of a Claim or Damages pursuant to Section 9.2(a)(i), Section 9.2(a)(ii), Section 9.2(a)(iv) or
Section 9.2(a)(vii) for which
any Nexus Company has a right to indemnification or reimbursement from any third
person under any one or more of the Prior Acquisition Agreements (a “Covered Third Person
Claim”), then, the Regency Indemnitee shall, promptly following the time
at which it submits a Claim Notice to Member, cause such Nexus Company to assert
a Claim for indemnification or reimbursement against such third person pursuant
to and in accordance with the applicable Prior Acquisition Agreements under
which such right(s) arise(s); provided, however, that the
failure to initiate such Claim promptly shall not relieve Member of any
liability that it may have to any Regency Indemnity with respect to such Claim
or Damages except to the extent Member shall have been prejudiced by such
delay. If the third person rejects or denies liability for a Covered
Third Person Claim, or otherwise fails to satisfy in full the Covered Third
Person Claim on or before the date that is ninety (90) days after the initial
Claim Notice is delivered to Member (the “Applicable Time
Period”), then the Regency Indemnitee may thereafter pursue the Claim
against Member pursuant to this Article IX by
submitting a second Claim Notice to Member within sixty (60) days after any such
rejection, denial or failure, notifying Member thereof, in which case time
periods specified in this Article IX with
respect to such Claim shall be deemed to have been tolled during the Applicable
Time Period and through the delivery of the second Claim Notice. If
Member has provided any indemnification to any Regency Indemnitee pursuant to
this Section
9.10 in
respect of any Claim, Regency shall promptly reimburse Member to the extent any
Nexus Company or Regency Indemnitee subsequently receives any indemnification or
reimbursement from a third person pursuant to a Prior Acquisition Agreement in
respect of such Claim.
9.11 Damages. Notwithstanding
anything to the contrary in this Agreement, for purposes of determining the
amount of Damages suffered by any Regency Indemnitee or Member Indemnitee, as
the case may be, upon a breach of any representation or warranty of Member or
any Nexus Company (in the case of a Claim by any Regency Indemnitee) or by
Regency or Merger Sub (in the case of a Claim by any Member Indemnitee), each
representation and warranty set forth in Article III, Article IV and Article V (other than
in Section
4.1(q)(iii) or in any
defined terms such as “Material Contract”), shall be read without regard to and
without giving effect to any “material,” “materiality,” Material Adverse Effect
or similar qualifications that may be contained in any such representation or
warranty.
9.12 Tax Treatment of Indemnity
Payments. To
the extent permitted by Law, all indemnification payments made under this
Agreement, including any payment made under this Article IX, shall be
treated as purchase price adjustments for Tax purposes.
55
9.13 Right to Indemnification. No
investigation or knowledge of Regency or Merger Sub, whenever undertaken or
however obtained, shall limit any Regency Indemnitee’s rights to indemnification
in this Article
IX in any manner. No investigation or knowledge of Member or Nexus,
whenever undertaken or however obtained, shall limit any Member Indemnitee’s
rights to indemnification under this Article IX in any manner.
(a) Notwithstanding
any other provision of this Article IX but
subject to Section
9.1,
Section 9.2 and Section 9.4, Member shall
have control over the defense or settlement, compromise, admission, or
acknowledgment of any Claim asserted by any Regency Indemnitee involving the
contamination of soil or groundwater at or arising from the Assets in accordance
with Section
9.9,
provided, however, that (i) Member shall, by written notice to Regency, first
have acknowledged and accepted responsibility under Section 9.2(a)(iv) or Section 9.2(a)(viii),
as applicable, for the defense of such Claim; (ii) Regency may
participate in the defense or settlement of such matters in accordance with
Section 9.9, and (iii)
without the prior written consent of Regency (which consent shall not be
unreasonably withheld, conditioned or delayed), Member shall make no settlement,
compromise, admission, or acknowledgment that would give rise to liability or
financial detriment on the part of Regency, the Surviving Company or any other
Nexus Company or that would adversely affect in any material respect the ability
of the Nexus Companies to own and operate the Pipeline Assets in the Ordinary
Course of Business.
(b) Notwithstanding
any other provision of this Article IX, but
subject to Section
9.1,
Section 9.2, Section 9.4 and Section 9.14(c),
Regency shall have sole control over the defense or settlement, compromise,
admission, or acknowledgment of any Claim asserted by any Regency Indemnitee
involving Environmental Costs or Liabilities other than Claims involving the
contamination of soil or groundwater at or arising from the Assets; provided,
however, that the Member may participate in the defense or settlement of such
matters in accordance with Section 9.9, and Regency
shall make no settlement, compromise, admission, or acknowledgment that would
give rise to liability on the part of Member without the prior written consent
of Member (which consent shall not be unreasonably withheld, conditioned or
delayed).
(c) Notwithstanding
any other provision of this Article IX but subject to
Section 9.1, Section 9.2 and Section 9.4, from and after
Closing, Regency shall have sole control over the defense or settlement of the
matters described in Section 9.2(a)(viii),
including without limitation the selection, design and installation of the
controls to reduce the emissions of the “flash gas” and obtaining associated
permitting, provided that (i) the Parties agree that authorization shall be
requested for a flare and associated emissions control equipment to address such
matters as required by Health, Safety and Environmental Laws unless directed
otherwise by any Governmental Authority or the Parties otherwise mutually agree
and (ii) if any fines or penalties are imposed or proposed to be imposed upon
any Regency Indemnitee based on or as a result of failure to be in compliance
with Health, Safety and Environmental Laws in connection with such emissions,
then Regency will make no settlement, compromise, admission or acknowledgement
with respect to such fines or penalties without the prior written consent of
Member (which consent shall not be unreasonably withheld, conditioned or
delayed).
56
(d) Member
hereby acknowledges receipt of notice of a Claim related to the matters
described in Section
9.2(a)(viii) and no further Claim Notice shall be required to be given
with respect to such matters.
ARTICLE
X
10.1 Termination of
Agreement. The
Parties may terminate this Agreement prior to Closing, as provided
below:
(a) Regency
and Member may terminate this Agreement by mutual written consent at any time
before Closing;
(b) Either
Regency and Member may terminate this Agreement by written notice to the other
if the Closing shall not have occurred on or before April 14, 2008 or, if HSR
Approval shall not have been obtained on or before April 14, 2008, Member may by
written notice to Regency extend such date to May 14, 2008 (April 14, 2008, or
if Member shall extend such date as provided herein, May 14, 2008, herein is
referred to as the “Termination Date”);
provided that a Party may not terminate this Agreement pursuant to this Section 10.1(b) if
the failure to Close on or before the Termination Date results primarily from
the Party attempting to terminate this Agreement breaching any representation or
warranty or covenant contained in this Agreement;
(c) Regency
or Member may terminate this Agreement by written notice to the other as
provided in Section 7.3 with respect to a
Casualty Loss;
(d) Regency
and Member may terminate this Agreement by written notice to the other if any
Governmental Authority shall have issued a final non-appealable order, decree or
ruling or shall have taken any other action permanently enjoining, restraining
or otherwise prohibiting the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and nonappealable; provided, however, that no Party hereto
may terminate this Agreement pursuant to the terms of this Section 10.1(d) if such Party
has not first complied with its obligations under Section 6.6;
(e) Member by
written notice to Regency may terminate this Agreement at any time prior to the
Termination Date if Regency or Merger Sub shall have breached any
representations, warranties or covenants of Regency or Merger Sub herein
contained in such a manner such that the conditions to Closing contained in
Section 7.2(a) or 7.2(b) would not be
satisfied; provided,
however, if such breach may be cured by Regency or Merger Sub through the
use of all commercially reasonable efforts and for so long as Regency or Merger
Sub continues to use such efforts, Member may not terminate this Agreement under
this Section 10.1(e);
or
(f) Regency
by written notice to Member may terminate this Agreement at any time prior to
the Termination Date if Member or Nexus shall have breached any representations,
warranties or covenants of Member or Nexus herein contained in such a manner
such that the conditions to Closing contained in Section 7.1(a), 7.1(b) or Section 7.1(c) would not be
satisfied; provided,
however, if such breach may be cured by Member or Nexus, as applicable,
through the use of all commercially reasonable efforts and for so long as Member
or
57
Nexus, as
applicable, continues to use such efforts, Regency may not terminate this
Agreement under this Section 10.1(f).
(g) Member by
written notice to Regency may terminate this Agreement if HSR Approval shall not
have been obtained on or before the 30th day (or
if such 30th day is
not a Business Day, on or before the first Business Day after such 30th day)
after the first date on which each of the ultimate parent entity of Regency and
the ultimate parent entity of Nexus shall have filed the notification report
form required by the HSR Act for the transactions contemplated by this Agreement
in accordance with Section 6.6.
(h) Regency
by written notice to Member may terminate this Agreement if the Sonat Purchase
Agreement shall have been terminated or Nexus or Sonat shall have breached the
Sonat Purchase Agreement to the extent which gives the other any right to
terminate the Sonat Purchase Agreement.
(i) Member by
written notice to Regency may terminate this Agreement if Sonat shall have
breached the Sonat Purchase Agreement to the extent which gives Nexus any right
to terminate the Sonat Purchase Agreement and, after written notice to Regency,
Regency shall not have consented to Nexus’ waiving such right to
terminate.
(j) Member by
written notice to Regency may terminate this Agreement on or after March 26,
2008, or such later date as specified in clause (y) of this Section 10.1(j) (the
“Sonat
Deadline”), if by the Sonat Deadline Regency shall not have delivered to
Member the Election Notice; provided, that, (x) Member shall not have the right
to terminate this Agreement pursuant to this Section 10.1(j) if on
or before the Sonat Deadline, Sonat shall have agreed that the condition that a
preliminary agreement on a potential resolution of the Upstream Intrastate
Pipeline Issue (as defined in the Sonat Purchase Agreement) has been reached
such that Sonat shall no longer have the right to terminate the Sonat Purchase
Agreement pursuant to Section 10.01(a)(3) of the Sonat Purchase Agreement and
(y) if Sonat extends the March 31, 2008, date in Section 10.01(a)(3)
of the Sonat Purchase Agreement to a later date, then the Sonat Deadline shall
be the date which is ten days prior to, and exclusive of, the date to which such
March 31, 2008, date is so extended; provided, however, that in no event shall
the Sonat Deadline be prior to March 26, 2008.
10.2 Procedure for and Effect of
Termination. Any
Party terminating this Agreement pursuant to Section 10.1 shall give
written notice thereof to each other Party hereto, whereupon this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any Person. Any termination of the
Agreement pursuant to Section 10.1 (i) by Regency
shall constitute a termination by and on behalf of Regency and Merger Sub and
(ii) by Member shall constitute a termination by and on behalf of Member and
Nexus. If this Agreement and the transactions contemplated hereby are
terminated pursuant to Section 10.1, each Party
hereto shall return all documents and other materials received from the other
Parties hereto relating to this Agreement and the transactions contemplated
hereby, and all confidential information received by each Party hereto with
respect to any other Party hereto shall be treated in accordance with the terms
of Section
12.10. If
any Party terminates this Agreement pursuant to Section 10.1, all rights and
obligations of the Parties hereunder shall terminate except that (a) nothing
herein shall relieve a Party from any liability for any breach of this Agreement
prior to
58
termination
or affect a Party’s right to compel specific performance of the other Parties
hereto of their obligations under this Agreement and (b) this Section 10.2 and Article XII shall all
survive such termination.
ARTICLE
XI
11.1 Escrow
Fund. On
the Closing Date, Regency shall deposit with the Escrow Agent, in accordance
with Section
7.4(b)(i)(A), the
Escrow Amount in immediately available funds (such funds, as held by the Escrow
Agent pursuant to the Escrow Agreement, being the Escrow Amount, as adjusted
from time to time by any disbursements in accordance with this Agreement and the
Escrow Agreement but excluding interest or other income on investments, the
“Escrow Fund”)
pursuant to the Escrow Agreement. The Escrow Agent shall act as
escrow agent and hold, safeguard and disburse the Escrow Fund pursuant to the
terms and conditions of this Agreement and the Escrow Agreement. The
Escrow Fund will not be subject to any Lien or attachment of any creditor of any
Party and will be used solely for the purposes and subject to the conditions set
forth in this Agreement and the Escrow Agreement.
11.2 Release from
Escrow.
(a) At any
time, or from time to time, before the Escrow Distribution Date, Regency may
deliver a Claim Notice to Member and the Escrow Agent (i) specifying in
reasonable detail the nature and dollar amount of Damages with respect to a
Claim it reasonably may have under Article IX and (ii)
requesting a disbursement of the amount of Damages with respect to the Claim
from the Escrow Fund; provided that to the extent the amount of Damages with
respect to any Claim exceeds the amount of the Escrow Fund then held in escrow,
Regency shall not be entitled to recover from the Escrow Agent any amounts in
excess of the Escrow Fund.
(b) If
Regency and Member agree as to the liability of such Claim and the amount of
Damages or any portion thereof with respect to such Claim, Regency and Member
shall provide to the Escrow Agent a written notice jointly executed (“Joint Instructions”)
instructing the Escrow Agent to disburse to Regency from the Escrow Fund an
amount equal to the amount of the Damages for such Claim or the undisputed
portion thereof. If Member and Regency do not deliver Joint
Instructions to the Escrow Agent, then the Escrow Agent shall not disburse the
monies requested pursuant to the Claim Notice but rather hold such amount (the
“Disputed
Amount”) until the earliest of (i) the receipt by the Escrow Agent of
Joint Instructions with respect to such Disputed Amount instructing the Escrow
Agent to release monies, specifying the amount of such monies to be released and
to whom, (ii) subject to Section 11.3, the Escrow
Distribution Date or (iii) a final written non-appealable order issued by a
court of competent jurisdiction with respect to such Disputed
Amount.
(c) In
addition to disbursements from the Escrow Fund pursuant to Sections 11.2(a)
and 11.2(b),
Regency shall be entitled to a disbursement from the Escrow Fund
59
pursuant
to Section 2.8(d)(i) of an
amount equal to the Merger Consideration Deficit as provided in Section 2.8(d)(i).
11.3 Escrow Distribution
Date. On
the Escrow Distribution Date (i) the Escrow Agent shall distribute to Member the
balance of the Escrow Fund minus the amount of any Continuing Claims that are
(A) the subject of litigation between the Parties or (B) unresolved Third Party
Claims that Member has agreed the Regency Indemnitees are entitled to be
indemnified against pursuant to the terms of Article IX
(collectively, the “Retained Escrow
Amount”), (ii) and, if required, Regency and Member shall at least one
Business Day prior to the Escrow Distribution Date provide written notice
jointly executed instructing the Escrow Agent to distribute to Member the
balance of the Escrow Fund minus the Retained Escrow Amount, and (iii) the
escrow shall continue until the resolution of such Continuing Claims, and during
such continuance, the Escrow Agent shall continue to hold the Escrow Fund in an
amount not to exceed the Retained Escrow Amount, subject to Section 11.4.
11.4 Subsequent
Distribution(s). The
Retained Escrow Amount shall only be distributed by the Escrow Agent pursuant to
(b) Joint Instructions or (c) a final written non-appealable order issued by a
court of competent jurisdiction with respect to any Continuing
Claim. Upon the final resolution of any Continuing Claim, or if court
proceedings shall not have been commenced with respect to such Continuing Claim
within ninety (90) days after the date the Claim Notice in respect of such Claim
was delivered to the Escrow Agent, Regency and Member shall promptly execute
Joint Instructions instructing the Escrow Agent to release and disburse the
portion of the Retained Escrow Amount applicable to such Continuing Claim in
accordance with such final resolution or as if such Claim Notice had been
withdrawn (in the case of a failure to commence proceedings). If the
portion of the Retained Escrow Amount in respect of any Continuing Claim exceeds
the Damages relating to such Continuing Claim, Regency and Member shall promptly
execute Joint Instructions instructing the Escrow Agent to release and disburse
the excess portion of the Retained Escrow Amount applicable to such Continuing
Claim. At the end of each calendar quarter, during the pendency of
any Continuing Claims, Regency shall provide Member with a written update in
which Regency shall set forth (i) whether any Continuing Claim has been finally
resolved, (ii) a brief description of the status of each Continuing Claim as of
such date, (iii) the amount of Damages applicable to each Continuing Claim and
(iv) whether the funds known by Regency to be remaining in the Escrow Account in
respect of any Continuing Claim represent any amount in excess of the then
currently anticipated Damages relating to such Continuing Claim. Upon
the final resolution of all Continuing Claims, Regency and Member shall promptly
execute Joint Instructions instructing the Escrow Agent to release and disburse
any remaining Escrow Funds, in excess of the Damages relating to such Continuing
Claim to which a Regency Indemnitee is entitled and which have been distributed
or otherwise paid to such Regency Indemnitee, to Member.
ARTICLE
XII
12.1 Press Releases and Public
Announcements. Except
as may otherwise be required by securities Laws and public announcements or
disclosures that are, in the reasonable opinion of the Party proposing to make
the announcement or disclosure, legally required to be made, there shall be
prior to Closing no press release or public communication concerning the
Merger,
60
this
Agreement or the transactions contemplated hereby by any Party except with the
prior written consent of the Party not originating such press release or
communication, which consent shall not be unreasonably withheld or
delayed. Prior to Closing, Regency and Member will consult in advance
on the necessity for, and the timing and content of, any communications to be
made to the public and, subject to legal constraints, to the form and content of
any application or report to be made to any Governmental Authority that relates
to the Merger.
12.2 No Third Party
Beneficiaries. Except
as expressly provided for otherwise in this Agreement, this Agreement shall not
confer any rights or remedies upon any Person (including, without limitation,
Sonat) other than the Parties and their respective successors and permitted
assigns.
12.3 Succession and
Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No
Party may assign or transfer (including by sale of equity, operation of law,
merger, sale of assets or otherwise) either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other Party, which approval may be denied in such other Party’s sole discretion;
provided, however, that Regency may,
upon prior written notice to Member, assign any or all of its rights and
obligations under this Agreement to any Affiliate of Regency without obtaining
the consent of Member or Nexus, but only if such assignment will not affect
materially and adversely the ability of such assignee to consummate the
transactions contemplated hereby or the Sonat Acquisition (under the HSR Act or
otherwise) and any such assignment shall not relieve Regency of any of its
obligations under this Agreement or otherwise limit or affect such obligations
in any matter. Any attempted assignment in violation of this Section 12.3 shall be
void.
12.4 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original but which together will constitute one and the same
instrument.
12.5 Notices. All
notices, requests, demands, claims, and other communications hereunder must be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given two (2) Business Days after it is sent by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to
Regency
or Merger
Sub:
c/o Regency Energy Partners LP
0000 Xxxxxxx
Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx
00000
Attn: Chief
Legal Officer
Tel: 000-000-0000
Fax: 000-000-0000
61
with a copy
to: Xxxxxx
& Xxxxxx L.L.P.
Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx, Xxxxx
0000
Xxxxxx,
Xxxxx 00000
Attn: Xxxxxx X.
Xxxxx
Tel: 000-000-0000
Fax: 000-000-0000
If to
Member
or
Nexus: c/o
Centre Partners Management LLC
00 Xxxxxxxxxxx Xxxxx, 00xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx
Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
With a copy
to: Dechert
LLP
00
Xxxxxxxxxxx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxxx
X. Xxxxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Any Party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the addresses set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
12.6 Governing
Law. Except
for the provisions of Sections 2.1, 2.3, 2.4 and 2.5 and the last
sentence of Section
2.2 of
this Agreement, which shall be construed and enforced in accordance with the
Laws of the state of Delaware (irrespective of the principal place of business,
residence or domicile of the Parties hereto, and without giving effect to any
choice or conflict of law provision or rule (whether of the state of Delaware or
any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the state of Delaware), 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. Except as set forth in Section 9.5, the
Parties hereby consent to the jurisdiction of any state or federal court located
within the County of Dallas, State of Texas which has jurisdiction over the
subject matter of any dispute brought before such court and irrevocably agree
that all actions or Proceedings related to this Agreement shall be litigated in
such courts and each Party waives any defense of forum non conveniens and agrees
to be
62
bound by
any judgment rendered thereby in connection with this Agreement. Each Party
agrees that service upon it by registered mail shall constitute sufficient
notice; provided that
nothing herein shall affect the right to serve process in any other manner
permitted by law.
12.7 Entire Agreement;
Amendment. This
Agreement (including the Exhibits and Schedules hereto and documents referred to
in this Agreement), the Confidentiality Agreement, the Transaction Documents and
the other certificates, documents and instruments to be executed and delivered
pursuant hereto and the other Transaction Documents constitutes the entire
agreement among the Parties and supersedes any prior understandings,
negotiations, correspondence, undertaking, agreements, or representations by or
among the Parties, written or oral, to the extent they have related in any way
to the subject matter of this Agreement, including the Letter of Intent dated
January 3, 2008, delivered to Nexus by Regency. No amendment or
modification of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Regency, Merger Sub, Member and
Nexus.
12.8 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction so
long as the economic or legal substance of the transactions contemplated herein
is not effected in any manner materially adverse to any Party. Upon
any determination that any term or provision of this Agreement is invalid or
enforceable, the Governmental Authority making such determination is authorized
and instructed to modify this Agreement so as to effect the original intent of
the parties as closely as possible in order that the transactions contemplated
herein are consummated as originally contemplated to the fullest extent
possible.
12.9 Transaction
Expenses. Except
as provided in Section
6.6 each
of Regency and Merger Sub, on the one hand, and Member and Nexus, on the other
hand, will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.
12.10 Confidentiality. All
terms and provisions of this Agreement, any information obtained in due
diligence or in the review of title, or any other information obtained from
Member or the Nexus Companies shall be subject to the terms of the
Confidentiality Agreement, the terms of which are incorporated herein by
reference; provided that, if the Closing occurs, (i) the Confidentiality
Agreement shall terminate as of the Closing and (2) all Records and information
relating to the Nexus Companies, the assets subject to the Sonat Purchase
Agreement, and the business conducted or to be conducted with the Assets and the
assets subject to the Sonat Purchase Agreement shall be maintained as
confidential by Member until the second anniversary of the Closing Date and
shall not be disclosed to any other Person without the prior written consent of
Regency, which consent may be withheld in its sole discretion except that no
consent shall be required for any disclosure (A) to the extent such is required
to comply with the orders, rules or regulations of any Governmental Authority
having jurisdiction hereof, (B) to the extent such information is or becomes
publicly available other than as a result of a disclosure by Member or its
Representatives in violation of this Section 12.10 or the
Confidentiality Agreement or (C) in connection with matters relating to (x)
Member’s direct or indirect
63
ownership
of the Nexus Companies or Assets prior to the Closing (including customary or
required financial and tax reporting), (y) winding down the affairs of Member or
any of its Affiliates or (z) this Agreement, the Transaction Documents or the
transactions contemplated hereby or thereby, including with respect to
post-closing adjustments, escrow releases or claims made with respect to this
Agreement. In the event that any confidential information must be
disclosed by Regency or Member or the Nexus Companies to comply with the orders,
rules or regulations of any Governmental Authority, Regency or Member or the
Nexus Companies shall provide the other Party with prompt prior notice so that
the other Party may seek a protective order or other appropriate
remedy. If such protective order or other remedy is not obtained,
Regency or Member or the Nexus Companies will furnish only that portion of the
information which is legally required, and Regency or Member or the Nexus
Companies will cooperate reasonably with the other Party’s counsel to enable the
other Party to obtain a protective order or other reliable assurance that
confidential treatment will be accorded the same.
12.11 Disclosure
Schedules. The
information in the Disclosure Schedule constitutes (a) exceptions or
qualifications to particular representations, warranties, covenants and
obligations of Member and Nexus as set forth in this Agreement or (b)
descriptions or lists of assets and liabilities and other items referred to in
this Agreement. The Disclosure Schedule shall not be construed as
indicating that any disclosed information is required to be disclosed, and no
disclosure shall be construed as an admission that such information is material
to, outside the ordinary course of business of, or required to be disclosed by,
Member or Nexus or constitutes a Material Adverse Effect. Capitalized
terms used in the Disclosure Schedule that are not defined therein are defined
in this Agreement shall have the meanings given to them in this
Agreement. The captions contained in the Disclosure Schedule are for
the convenience of reference only, and shall not be deemed to modify or
influence the interpretation of the information contained in the Disclosure
Schedules or the Agreement. The statements in the Disclosure Schedule
qualify and relate only to the provisions in the Sections of this Agreement to
which they expressly refer and not to any other provisions in this Agreement,
unless the applicability of a statement in a particular Section of the
Disclosure Schedule to another Section of this Agreement is readily apparent on
its face.
12.12 Incorporation of Exhibits
and Schedules. The
Exhibits and Schedules and Annexes identified in this Agreement are incorporated
herein by reference and made a part hereof.
12.13 Non-Waiver. No
waiver by either Party of any default by the other Party in the performance of
any provision, condition or requirement herein shall be deemed to be a waiver
of, or in any manner release the other Party from, performance of any other
provision, condition or requirement herein, nor shall such waiver be deemed to
be a waiver of, or in any manner a release of, the other Party from future
performance of the same provision, condition or requirement. Any
delay or omission of either Party, in whole or in part, to exercise any right
hereunder shall not impair the exercise of any such right, or any like right,
accruing to it thereafter. The failure of either Party to perform its
obligations hereunder shall not release the other Party from the performance of
such obligations.
64
12.14
Captions. The
captions in this Agreement are for convenience only, and shall not be considered
a part of or affect the meaning or interpretation of any provision of this
Agreement.
12.15 No Affiliate
Liability. Each
of the following is herein referred to as a “Regency Affiliate”: (a)
any direct or indirect holder of the capital stock or other Equity Interests in
Regency (whether limited or general partners, members, stockholders or
otherwise), and (b) any director, officer, manager, employee, representative or
agent of (i) Regency or (ii) any Person who directly or indirectly controls
Regency. Except to the extent that a Regency Affiliate is an express
signatory thereto, an express assignee of Regency or (together with any other
Regency Affiliate) succeeds to all or substantially all of Regency’s assets
prior to the Closing, no Regency Affiliate shall have any liability or
obligation to Member, Nexus or any other Member Indemnitee of any nature
whatsoever in connection with or under this Agreement, any of the Transaction
Documents or the transactions contemplated herein or therein, and each of Member
and Nexus hereby waives and releases all claims of any such liability and
obligation. Each of the following is herein referred to as a “Member
Affiliate”: (a) any direct or indirect holder of the capital stock or
other Equity Interests in Member (whether limited or general partners, members,
stockholders or otherwise), and (b) any director, officer, manager, employee,
representative or agent of (i) Member or (ii) any Person who directly or
indirectly controls Member. Except to the extent that a Member
Affiliate is an express signatory thereto, an express assignee of Member or
(together with any other Member Affiliate) succeeds to all or substantially all
Member’s assets prior to the Closing, no Member Affiliate shall have any
liability or obligation to Regency, Merger Sub or any other Regency Indemnitee
of any nature whatsoever in connection with or under this Agreement, any of the
Transaction Documents or the transactions contemplated herein or therein, and
each of Regency and Merger Sub hereby waives and releases all claims of any such
liability and obligation.
12.16 Time of the
Essence. With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
12.17 Specific
Performance. The
Parties recognize that, if any Party should refuse or fail to perform under the
provisions of this Agreement, monetary damages alone will not be adequate and
the other Parties shall therefore be entitled, in addition to any other remedies
that may be available (but which shall be subject to limitations expressly set
forth in this Agreement), including money damages, and without the necessity of
posting bond or proving actual damages have resulted or would result in the
absence thereof, to obtain specific performance of the terms of this
Agreement. In the event of any action to enforce this Agreement
specifically, each Party hereby waives the defense that there is an adequate
remedy at law.
12.18 Limitations. NOTWITHSTANDING
ANYTHING TO THE CONTRARY ANYWHERE IN THIS AGREEMENT, NO PARTY SHALL BE LIABLE
UNDER THIS AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR
INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE; PROVIDED, HOWEVER, THIS SECTION 12.18 SHALL NOT LIMIT
THE RIGHT OF REGENCY OR MERGER SUB TO RECOVER (A) DAMAGES, TO THE EXTENT
ACTUALLY PAID BY REGENCY OR MERGER SUB TO ANY THIRD PARTY OR (B) FROM AND AFTER
CLOSING, ANY CONSEQUENTIAL DAMAGES, TO
65
THE
EXTENT ACTUALLY SUFFERED, INCURRED OR PAID BY REGENCY, MERGER SUB OR, AFTER THE
EFFECTIVE TIME, THE SURVIVING COMPANY OR ANY OTHER NEXUS COMPANY, ARISING AS A
RESULT OF ANY BREACH OF ANY REPRESENTATION OR WARRANTY CONTAINED IN SECTION 4.1(m)(i), 4.1(m)(ii) or 4.1(m)(iii). IT
IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON THE REMEDIES
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE,
JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE; PROVIDED THAT NOTHING
CONTAINED IN THIS SECTION 12.18 SHALL AFFECT OR
LIMIT ANY RIGHTS OR CLAIMS THAT ANY PARTY MAY HAVE AS A RESULT OF FRAUD OF ANY
OTHER PARTY.
12.19 Waiver of Jury
Trial. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OF THE PARTIES. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS
AGREEMENT.
12.20 Certain
Understandings. Each
of the Parties hereto is sophisticated and was advised by experienced counsel
and, to the extent it deemed necessary, other advisors in connection with this
Agreement. Regency acknowledges that it has performed a due diligence
investigation of the business and operations of the Nexus
Companies. Regency also acknowledges that pursuant to Section 6.4 and Section 6.5 Regency will have
access to the properties, books and records of the Nexus Companies so that
Regency may conduct any additional due diligence it deems necessary, subject to
the limitations contained therein. Each of the Parties hereto hereby
acknowledges that (i) there are no representations or warranties by or on behalf
of any Party hereto or any of its respective Affiliates or representatives other
than those expressly set forth in this Agreement and as set forth in the
certificates to be delivered pursuant to Section 7.4(a)(i) and Section 7.4(b)(ii)(B); (ii)
no Party has relied or will rely in respect of this Agreement or the
transactions contemplated hereby upon any document or written or oral
information previously furnished to or discovered by it or its Representatives,
other than this Agreement (including the Schedules) and as set forth in the
certificates to be delivered pursuant to Section 7.4(a)(i) and Section 7.4(b)(ii)(B); and
(iii) the Parties’ respective rights and obligations with respect to this
Agreement and the events giving rise thereto will be solely as set forth in this
Agreement. Member and its Affiliates, agents, officers, directors and
members will not have or be subject to any liability to Regency or any other
Person resulting from the distribution to Regency, or Regency’s use of, any
information not contained in this Agreement and as set forth in the certificates
to be delivered pursuant to Section 7.4(a)(i) and Section 7.4(b)(ii)(B);
(including, without limitation, any offering memorandum, brochure or other
publication provided to Regency, and any other document or information provided
to Regency in connection with the transactions contemplated
hereby). Notwithstanding anything contained herein to the contrary,
neither Member nor any of the Nexus Companies makes any representation, warranty
or covenant of any kind with respect to any projections, estimates or budgets
heretofore delivered to or made available to Regency of future revenues,
expenses or expenditures, future results of operations (or any component
thereof), future cash flows or future
66
financial
condition (or any component thereof) of the Nexus Companies or the future
business and operations of the Nexus Companies.
12.21 Disclaimer. REGENCY AND MERGER SUB ACKNOWLEDGE
THAT IF THEY CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY THEY WILL DO SO
BASED SOLELY ON THEIR OWN EVALUATION OF THE MERITS AND RISKS OF MAKING AN
INVESTMENT IN THE NEXUS COMPANIES AND THE BUSINESSES THEREOF, AND BASED ON THEIR
OWN DETERMINATION THAT SUCH AN INVESTMENT IS SUITABLE TO
THEM. SUBJECT TO THE REPRESENTATION, WARRANTIES AND COVENANTS OF
MEMBER AND NEXUS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE CERTIFICATES
TO BE DELIVERED PURSUANT TO SECTION
7.4(a)(i), REGENCY AND
MERGER SUB SHALL ACQUIRE THE NEXUS COMPANIES AND THEIR PROPERTIES “AS IS, WHERE
IS,” SUBJECT TO ALL FAULTS AND DEFECTS, WITHOUT ANY OBLIGATION OF MEMBER TO
PERFORM ANY REPAIRS, IMPROVEMENTS, MAINTENANCE OR OTHER WORK TO THE PROPERTIES
OR ANY PART THEREOF, EXCEPT AS EXPRESSLY SET FORTH HEREIN TO THE CONTRARY, AND
WITHOUT, ANY WARRANTIES, EXPRESS OR IMPLIED, OR ANY KIND FROM MEMBER OR THE
NEXUS COMPANIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS
REGARDING THE CONDITION OF THE NEXUS COMPANIES OR THEIR PROPERTIES OR WARRANTIES
OF FITNESS, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, HABITABILITY OR
TENANTABILITY, EXCEPT AS EXPRESSLY SET FORTH HEREIN. MEMBER AND THE
NEXUS COMPANIES EXPRESSLY DISCLAIM ANY REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO THE NEXUS COMPANIES OR THEIR PROPERTIES, EXCEPT AS SPECIFICALLY SET
FORTH IN THIS AGREEMENT AND THE CERTIFICATES TO BE DELIVERED PURSUANT TO
SECTION
7.4(a)(i), REGENCY AND MERGER SUB
DO HEREBY ACKNOWLEDGE THAT, TO THE EXTENT THAT REGENCY OR MERGER SUB ARE RELYING
UPON ANY REPRESENTATIONS OF MEMBER OR THE NEXUS COMPANIES IN PURCHASING THE
NEXUS COMPANIES OR THEIR PROPERTIES, REGENCY AND MERGER SUB ARE RELYING ONLY
UPON THOSE REPRESENTATIONS OF MEMBER AND THE NEXUS COMPANIES CONCERNING THE
NEXUS COMPANIES AND THEIR PROPERTIES EXPRESSLY SET FORTH AS SUCH IN THIS
AGREEMENT AND THE CERTIFICATES TO BE DELIVERED PURSUANT TO SECTION
7.4(a)(i). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MEMBER AND THE NEXUS COMPANIES EXPRESSLY DISCLAIM
ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE EXPECTED FUTURE INCOME OR
PROFITABILITY OF THE BUSINESSES OF THE NEXUS COMPANIES IT BEING UNDERSTOOD THAT
REGENCY AND MERGER SUB ARE EXPERIENCED IN SUCH BUSINESSES AND WERE GIVEN THE
OPPORTUNITY, PRIOR TO CLOSING TO, AMONG OTHER THINGS, INSPECT THE NEXUS
COMPANIES AND THEIR PROPERTIES.
[Signature
page follows]
67
NEXUS
GAS PARTNERS, LLC
By: /s/ Xxxxx
Perekalis
Xxxxx Perekalis
President
NEXUS
GAS HOLDINGS, LLC
By: /s/ Xxxxx
Xxxxxxxx
Xxxxx Xxxxxxxx
President
By: Regency
GP LP, its General Partner
By: Regency
GP LLC, its General Partner
By: /s/ Xxxxxxx X. Xxxxx,
Xx.
Xxxxxxx X. Xxxxx, Xx.
Senior Vice President –
Corporate Development
REGENCY
NX, LLC
By: /s/ Xxxxxxx X. Xxxxx,
Xx.
Xxxxxxx X. Xxxxx, Xx.
Vice President
S-1
Exhibit
A
1.1 Definitions.
(a) Unless
otherwise provided to the contrary in this Agreement, capitalized terms in this
Agreement shall have the following meanings:
“Affiliate” means,
with respect to any specified Person, any other person which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person. For the purposes
of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
“Application
Paramenters” means the essential components of a Final FERC Approval
Order as set forth in the each of the alternative sets of parameters in Exhibit
G.
“Audit Firm” shall
mean Duff & Xxxxxx or if Duff & Xxxxxx
shall not accept the engagement as Audit Firm, a national accounting firm with
no prior material relationship with the Parties or their respective Affiliates
with experience in auditing the financial statements of a natural gas pipeline
company, reasonably acceptable to Regency and Member.
“Base Working Capital”
shall mean Zero Dollars ($0).
“Business Day” or
“business day”
means any day other than a Saturday, Sunday, a federal holiday or a day when
commercial banks in Dallas or Houston, Texas or New York, New York are
authorized or required to be closed.
“Cash” shall mean cash
on deposit with financial institutions net of overdrafts and outstanding
checks.
“Change of Control
Amounts” shall mean any bonus, retention bonus, consent or other fee,
compensation (including the estimated costs of benefits required to be
provided), accelerated payment, vesting or funding (through a grantor trust or
otherwise) of compensation or benefits or other similar payments (including the
employee’s portion of any Medicare, Social Security or unemployment Taxes in
respect of such payments) that any Nexus Company upon Closing, to the extent not
paid as of 11:59 p.m. on the Measurement Date, will become obligated to pay
(other than Expenses and Severance Obligations) to any employee of any Nexus
Company or any Officer, Director or Manager as a result of the consummation of
the transactions contemplated by the Transaction Documents, regardless of
whether such amounts are payable at or after Closing.
Exhibit
A-1
“Claim” shall mean any
demand, claim or notice sent or given by a Person to another Person in which the
former asserts that it has suffered Damages or has become party to a Proceeding
that is the responsibility of the latter.
“Claim Notice” shall
mean a written notice of a claim for indemnification pursuant to this Agreement
specifying in reasonable detail the specific nature of the Claim for which
indemnification is sought, including each of the representations, warranties and
covenants forming the basis of such Claim, each of the facts then known
regarding the matter giving rise to such Claim and the Damages resulting from or
arising out of the matter giving rise to such Claim.
“Closing Payment
Amount” means (A) Eighty Five Million Dollars ($85,000,000) plus (B) the
Estimated Working Capital Surplus, if any, minus (C) (i) the Escrow Amount, (ii)
the Estimated Working Capital Deficit, if any, (iii) the Change of Control
Amounts, if any, (iv) the Severance Obligations, if any, (v) the Estimated
Casualty Loss, if any and (vi) Expenses and the Debt Payoff Amount set forth on
the Estimated Closing Statement.
“Code” means the
Internal Revenue Code of 1986, as amended, or any successor Law.
“Confidentiality
Agreement” means the confidentiality agreement dated January 3, 2008
between Regency and Member.
“Continuing Claim”
means Claims, or any portion thereof, for indemnification properly asserted
pursuant to Article
IX prior to the Escrow Distribution Date that have not been resolved as
of the Escrow Distribution Date, including any Claim with respect to which a
Claim Notice has been delivered pursuant to Section 9.6 or Section
9.10.
“Contract” means any
agreement, contract or other binding commitment, understanding or arrangement,
whether a written or oral (including any amendments and other modifications
thereto).
“Credit Facility”
means the Credit and Guaranty Agreement, dated as of January 9, 2007, by
and among Dominion Midstream Services, LP, predecessor to Nexus Gas Gathering,
L.P., Nexus Gas GP, LLC (“GP”), Nexus Gas
Midstream Services, LLC (“Midstream”), Nexus
Gas Finance, LLC (“Finance”), certain
subsidiaries of Finance party thereto from time to time (together with GP,
Midstream and Finance, the “Credit Parties”), the
Lenders party thereto from time to time (“Lenders”) and Silver
Point Finance, LLC (“Silver Point”), as
Administrative Agent, Collateral Agent and Lead Arranger, as amended by the
First Amendment and Waiver to Credit and Guaranty Agreement, dated as of March
19, 2007, by and among Nexus Gas Gathering, L.P. (f/k/a Dominion Midstream
Services, LP), the Credit Parties, the Lenders and Silver Point and as amended
by the Second Amendment and Waiver to Credit and Guaranty Agreement, dated as of
June 30, 2007, by and among Nexus Gas Gathering, L.P. (f/k/a Dominion Midstream
Services, LP), the Credit Parties, the Lenders and Silver Point.
Exhibit
A-2
“Current Assets” shall
mean the sum of all current assets of the Nexus Companies as of 11:59 p.m. on
the Measurement Date as determined in accordance with GAAP (as applied on a
basis consistent with past practice and the preparation of the Audited Financial
Statements), as adjusted (whether or not in accordance with GAAP) (1) to give
effect to this Agreement, (2) to utilize the methodologies and procedures
otherwise specified in or consistent with the Sample Balance Sheet and (3) to
give effect to the exclusion of the following: (a) Restricted Cash, (b) accounts
receivable evidencing Indebtedness, accounts and obligations owed by Member, any
Nexus Company or any of its or their Affiliates to any of the Nexus Companies,
(c) amounts receivable from Officers, Directors or Managers, Employees or from
any officers, managers or directors of Member, (d) Tax assets, (e) prepaid
expenses and deposits except to the extent usable in or benefiting the business
of the Nexus Companies and (f) assets from risk management activities in
connection with derivatives. The computation of Current Assets as of
the Sample Balance Sheet Date is illustrated in the Sample Balance
Sheet.
“Current Liabilities”
shall mean the sum of all current liabilities of the Nexus Companies as of 11:59
p.m. on the Measurement Date as determined in accordance with GAAP (as applied
on a basis consistent with past practice and the preparation of the Audited
Financial Statements), as adjusted (whether or not in accordance with GAAP) (1)
to give effect to this Agreement, (2) to utilize the methodologies and
procedures otherwise specified in or consistent with the Sample Balance Sheet,
(3) to give effect to the exclusion of the following: (a) accounts payable
evidencing obligations owed by any one or more Nexus Company to any other Nexus
Company, (b) deferred Tax liabilities, (c) escrow payables to the extent
corresponding amounts held in escrow are excluded from Current Assets, (d)
liabilities from risk management activities in connection with derivatives, (e)
Expenses and (f) the Debt Payoff Amount. For purposes of determining
Current Liabilities to be used in the determination of Net Working Capital, (x)
no reserves, allowances or accrued Liability of the Nexus Companies reflected in
the Consolidated Balance Sheet or the Audited Financial Statements shall be
reduced or eliminated, except in the case of a reduction or elimination by
reason of a payment or credit occurring in the Ordinary Course of Business, and
(y) all capital expenditures accrued but not paid as of 11:59 p.m. on the
Closing Date shall be reflected as a Current Liability. The
computation of Current Liabilities as of the Sample Balance Sheet Date is
illustrated by the Sample Balance Sheet.
“Damages” means (i)
all injunctions, judgments, orders, decrees, rulings, awards, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities, obligations,
Taxes, liens, actual losses, expenses, and fees (whether criminal, civil,
commercial or related to claims for personal injury), including court costs and
reasonable attorneys’ fees and expenses, but excluding lost profits, punitive,
exemplary or special damages (except to the extent required to be paid by
Regency or any Nexus Company, as applicable, to any third party, in which case
such lost profits, punitive, exemplary or special damages so paid by Regency or
the Nexus Companies, as applicable, shall constitute Damages), (ii)
Environmental Costs or Liabilities and (iii) solely for purposes of calculating
Damages with respect to a breach of any representation or warranty in
Sections
4.1(m)(i), (ii) or (iii), consequential
damages, but only to the extent reasonably foreseeable as of the date of this
Agreement.
Exhibit
A-3
“Debt Payoff Amount”
shall mean the amount of all unpaid Third-Party Debt of the Nexus Companies as
of the Closing Date, including principal, accrued and unpaid interest, breakage
costs and prepayment fees or penalties or change in control payments that will
be incurred in connection with the payment and discharge of such Third-Party
Debt as contemplated by this Agreement.
“Debt Payoff Letters”
shall mean a payoff letter, in form and substance reasonably satisfactory to
Regency, from each lender of Third-Party Debt setting forth (i) the aggregate
amount, including interest, breakage costs, prepayment penalties, and other
fees, required to be paid to satisfy fully all Third-Party Debt owed to such
lender and (ii) wire transfer instructions for such lender. Each Debt
Payoff Letter shall provide for the release and termination of all Liens,
recourse and other obligations associated with the Third-Party Debt that is the
subject of such Debt Payoff Letter upon receipt of the amount specified in such
Debt Payoff Letter to be paid on the Closing Date.
“Deductible” means
$500,000.
“Director” shall mean
each Person, if any, in his or her capacity as such, who serves as a director of
any of the Nexus Companies, any successor to any of them serving in such
capacity prior to the Closing Date and any other director of any Nexus Company
as of the date hereof or at any time hereafter through the Closing.
“Disclosure Schedule”
means the letter of
even date herewith from Member and Nexus setting forth specific deviations from
their representations and warranties contained in this Agreement and fulfilling
the other functions contemplated hereby.
“DOJ” means the
Department of Justice of the federal government of the United States of
America.
“Employee Benefit
Plans” means (i) each “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), (ii) each employee welfare benefit plan (as
such term is defined in Section 3(1) of ERISA), (iii) each retirement, savings,
profit sharing, deferred compensation, severance, change in control, stock
ownership, stock purchase, stock option, performance, bonus, incentive, vacation
or holiday pay, hospitalization or other medical, disability, life or other
insurance, or other welfare, benefit or fringe benefit plan or policy and (iv)
each Contract, whether written or oral, that provides compensation or benefits
to any present or former officer, employee, agent or consultant.
“Environmental Costs or
Liabilities” means any and all obligations, liabilities, fines,
penalties, investigations, actions, Proceedings, claims, judgments, settlements,
costs, damages (including natural resource damages) expenses and capital
expenditures (including the expenses of any Proceeding and the reasonable fees,
disbursements and expenses of legal counsel, experts, engineers and consultants,
and the costs of investigation or feasibility studies and performance of
Remedial Action) arising from or relating to any failure to comply with, or the
need for any Remedial Action pursuant to,
Exhibit
A-4
any
Health, Safety and Environmental Laws or any damage to natural resources
resulting from the ownership, operation or maintenance of the
Assets.
“Equity Interests”
means (i) the equity ownership rights in a business entity, whether a
corporation, company, joint stock company, limited liability company, general or
limited partnership, joint venture, bank, association, trust, trust company,
land trust, business trust, sole proprietorship or other business entity or
organization, and whether in the form of capital stock, ownership unit, limited
liability company interest, limited or general partnership interest or any other
form of ownership, and (ii) also includes all Equity Interest
Equivalents.
“Equity Interest
Equivalents” means all rights, warrants, options, convertible securities
or indebtedness, exchangeable securities or other instruments, or other rights
that are outstanding and exercisable for or convertible or exchangeable into,
directly or indirectly, any Equity Interest at the time of issuance or upon the
passage of time or occurrence of some future event.
“ERISA Affiliate”
means Member or any trade or business, whether or not incorporated, that
together with any Nexus Company would be considered a single employer under
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of
ERISA.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” shall
mean Xxxxx Fargo, National Association or if Xxxxx Fargo, National Association
shall not accept the engagement pursuant to the Escrow Agreement, a national
banking firm with no prior material relationship with the Parties or their
respective Affiliates with experience in serving in such capacity, reasonably
acceptable to Regency and Member.
“Escrow Agreement”
shall mean an agreement to be entered into by and among Regency, Parent and the
Escrow Agent on or before the Closing Date, in substantially the form attached
hereto as Exhibit
C, or such other form as Nexus and Regency shall reasonably
agree.
“Escrow Amount” shall
mean $8,500,000.
“Escrow Distribution
Date” shall mean the first anniversary of the Closing Date (or if such
date is not a Business Day, the next Business Day).
“Escrow Indemnity
Claims” shall mean any and all claims for indemnification brought by a
Regency Indemnitee other than Non-Escrow Indemnity Claims. If a claim
for indemnification may be brought as both a Non-Escrow Indemnity Claim and as
an Escrow Indemnity Claim, such claim shall be deemed a Non-Escrow Indemnity
Claim.
“Estimated Adjustment
Amount” means the Estimated Working Capital Adjustment Amount less, the
sum of (A) the Expenses as set forth on the Estimated
Exhibit
A-5
Closing
Statement and (B) the Debt Payoff Amount as set forth on the Estimated Closing
Statement.
“Estimated Net Working
Capital” shall mean the amount of Net Working Capital, as estimated by
Nexus and set forth in the Estimated Closing Statement and, if applicable, as
adjusted pursuant to Section 2.8(a).
“Estimated Working Capital
Adjustment Amount” shall mean the Estimated Working Capital Surplus or
Estimated Working Capital Deficit, as applicable.
“Estimated Working Capital
Deficit” shall mean the amount of the Working Capital Deficit, if any, as
estimated by Nexus and set forth in the Estimated Closing Statement and, if
applicable, as adjusted, pursuant to Section 2.8(a).
“Estimated Working Capital
Surplus” shall mean the amount of the Working Capital Surplus, if any, as
estimated by Nexus and set forth in the Estimated Closing Statement and, if
applicable, as adjusted, pursuant to Section 2.8(a).
“Expenses” shall mean,
to the extent existing at 11:59 p.m. on the Closing Date, (A) the aggregate
amount of unpaid third party fees, expenses and other similar amounts that have
been or are expected to be incurred by any Nexus Company on or prior to the
Closing Date arising from the provision of services through the Closing for
Member, any of the Nexus Companies, the Officers, the Directors or the Managers
or any officers, directors or managers of Member in connection with the
preparation, negotiation and execution of this Agreement and the other
Transaction Documents and the consummation of this Agreement and the
transactions contemplated hereby, including the following: (i) the fees and
disbursements of, or other similar amounts charged by, counsel to Member, the
Nexus Companies, the Officers, the Directors or the Managers or any officers,
directors or managers of Member, (ii) the fees and expenses of, or other similar
amounts charged by, any accountants, agents, financial advisors, consultants and
experts employed by Member or the Nexus Companies, or both, (iii) the out of
pocket expenses, if any, of Member, the Nexus Companies, the Officers, the
Directors or the Managers or any officers, directors or managers of Member
incurred in such capacity, in each case to the extent a liability of or to be
incurred by any Nexus Company and (B) all fees, expenses and other amounts
payable by any Nexus Company pursuant to the Management Agreement and the
termination thereof; provided “Expenses” shall not include any fees or expenses
associated with the Sonat Acquisition.
“Facilities” means the
gas and liquid treating and conditioning facilities, dehydration facilities,
storage facilities, measurement facilities and the compressor stations described
on Exhibit
D or otherwise used or held for use in the ownership, operation or
maintenance of the System(s).
“FCC” means the
Federal Communications Commission.
“FCC Licenses” means
any licenses, permits, certificates, approvals, franchises, consents, waivers,
registrations or other authorizations issued by the FCC.
Exhibit
A-6
“FERC” means the
Federal Energy Regulatory Commission.
“Final Adjustment
Amount” means the Working Capital Adjustment Amount less, the sum of (A)
the Expenses and (B) the Debt Payoff Amount.
“Final FERC Approval
Order” means the final order or orders of FERC relating to the Sonat
Abandonment Application filed in accordance with the Selected Application
Parameter that in form and substance are reasonably satisfactory to Regency and
the Surviving Company and which order or orders, taken together, (i) authorize
the abandonment of the Sonat Facilities under the NGA, (ii) authorize the
transfer of the Sonat Assets that are certificated under Section 7(c) of the NGA
to the Surviving Company, (iii) authorize any further inter-affiliate transfer
of those Sonat Assets by the Surviving Company in accordance with any one of the
Application Parameters, (iv) authorize the jurisdictional reclassification of
the Sonat Facilities in accordance with the provisions of the Application
Parameter applicable to such final order or orders, (v) authorize the operation
of the Sonat Facilities by the Purchaser after consummation of the transactions
contemplated by the Sonat Purchase Agreement, (vi) authorize each other
component of the Application Parameter applicable to such final order or orders,
and (vii) establish
the other terms and conditions of the abandonment and reclassification or make
other substantive or procedural determinations regarding the transfer of the
Sonat Assets under the Sonat Purchase Agreement consistent with the Application
Parameter applicable to such final order or orders (including the rate
components in the case of Alternative B or Alternative C of the Application
Parameters), provided, that, such other terms and conditions do not contain
deviations from, terms inconsistent with or terms in addition to the Selected
Application Parameter which deviations, inconsistencies and additions,
collectively, constitute a material deviation from the Application Parameters
that is adverse to the Surviving Company and the other Nexus Companies, taken as
a whole. The date of the Final FERC Approval Order is the date that
the last of such orders has become final (meaning that it is not subject to
further administrative or judicial appeal). The Parties acknowledge
that, from and after the Effective Time, the Surviving Company, as the successor
by law to Nexus under the Sonat Purchase Agreement, may in its sole discretion,
but consistent with the Application Parameters, seek clarification, rehearing or
appeal of any FERC orders or judicial rulings related to the Sonat Acquisition;
and the Parties further acknowledge and agree that the Surviving Company’s
exercise of any contractual, legal or procedural rights related to the Sonat
Acquisition that are consistent with the Application Parameters constitutes a
permissible delay of the date of the Final FERC Approval Order.
“FTC” means the
Federal Trade Commission of the United States of America.
“GAAP” means United
States generally accepted accounting principles.
“Governmental
Authority” means the United States and any state, county, city or other
political subdivision, agency, court or instrumentality having jurisdiction over
a Person.
Exhibit
A-7
“Hazardous Substance”
means any (i) chemical, product, substance, waste, material, pollutant, or
contaminant that is defined or identified as hazardous or toxic or that is
otherwise regulated or may the subject of liability under any Health, Safety and
Environmental Law; (ii) asbestos containing materials, whether in a friable or
non-friable condition, PCBs, NORM or radon; and (iii) any oil or gas exploration
or production waste or any petroleum, petroleum hydrocarbons, petroleum
products, crude oil, natural gas condensate, natural gas liquids and any
components, fractions or derivatives thereof.
“Health, Safety and
Environmental Law” or “Health, Safety and
Environmental Laws” means any and all past or present local, state, and
federal laws, principles of common law, statutes, ordinances, regulations,
rules, orders, permits or enforceable standards (including consent decrees,
judicial decisions, judgments, injunctions and administrative orders issued or
approved thereunder), together with all related amendments and implementing
regulations and all common law, pertaining to or regulating pollution,
environmental protection, health and safety of persons to the extent related to
exposure to Hazardous Substances, natural resource damages, conservation of
resources, wildlife, waste management, the use, storage, generation, production,
treatment, emission, discharge, release, remediation, removal, disposal, or
transport of Hazardous Substances or any other environmental matter,
including: the Comprehensive Environmental Response, Compensation and
Liability Act (“CERLA”), 42 U.S.C.
Section 9601 et seq.;
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Clean Air Act,
as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. Section 3009(f) et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, as amended, 42 U.S.C. Section
11001 et seq.; the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651
et seq.; and the
Hazardous Liquid Pipeline Safety Act, as amended, 49 U.S.C. Section 60101 et seq; the Oil Pollution Act
of 1990, 33 U.S.C. Section 1207 et seq; and the
Pipeline Safety Improvement Act of 2002, 49 U.S.C. Sections 6103-6107 and
60104-60133.
“HSR Act” means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.
“HSR Approval” means
(i) the receipt of authorizations required, or (ii) the expiration of all
applicable waiting periods (and any extensions thereof), under the HSR Act with
respect to the Merger.
“Hydrocarbon
Contracts” means (a) all Hydrocarbon Purchase Contracts, (b) all
Hydrocarbon Sales Contracts, (c) all other Hydrocarbon gathering, treating or
processing agreements, joint operating agreements, water disposal agreements,
and compressor agreements to which any Nexus Company is a party or that is
binding on any Nexus Company and (d) all other Contracts materially affecting
natural gas operations of the Nexus Companies.
Exhibit
A-8
“Hydrocarbon Purchase
Contract” means any sales, purchase, exchange or marketing Contract that
is currently in effect and under which any Nexus Company is a buyer of
Hydrocarbons for resale in whole or in part (other than purchase agreements
entered into in the ordinary course of business with a term of three months or
less, terminable by the Nexus Company which is a party thereto without penalty
on 30 days’ notice or less, which provide for a price not greater than the
market value price that would be paid pursuant to an arm’s-length contract for
the same term with an unaffiliated third-party seller, and which do not obligate
the purchaser to take any specified quantity of Hydrocarbons or to pay for any
deficiencies in quantities of Hydrocarbons not taken).
“Hydrocarbon Sales
Contract” means any sales, purchase, exchange or marketing Contract that
is currently in effect and under which any Nexus Company is a seller of
Hydrocarbons (other than “spot” sales agreements entered into in the ordinary
course of business with a term of three months or less, and which provide for a
price not less than the price that would be received pursuant to an arm’s-length
contract for the same term with an unaffiliated third party
purchaser).
“Hydrocarbons” or
“hydrocarbons”
means crude oil, condensate, natural gas, natural gas liquids, casinghead gas
and other liquid or gaseous hydrocarbons.
“Income Tax” means any
federal, state, local or foreign Tax measured by or imposed on net
income.
“Indebtedness” shall
mean, without duplication, (i) any obligations of any Nexus Company for borrowed
money (including all obligations for principal, interest, premiums, penalties,
fees, expenses and breakage costs), (ii) any obligations of any Nexus Company
evidenced by any note, bond, debenture or other debt security, (iii) any
obligations of any Nexus Company for or on account of capitalized leases, (iv)
any obligations of a Person other than a Nexus Company secured by a Lien against
any Assets, (v) any obligations of any Nexus Company for the reimbursement of
letters of credit, bankers’ acceptance or similar credit transactions, (vi) any
obligations of any Nexus Company under any currency, commodity or interest rate
swap, hedge or similar protection device, (vii) any obligations of the types
described in clauses (i) through (vii) above of any Person other than any Nexus
Company, the payment of which is guaranteed, directly or indirectly, by any
Nexus Company.
“Laws” means any
statute, code, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any applicable Governmental
Authority.
“Lien” means any lien,
pledge, claim, charge, security interest or other encumbrance, option, defect or
other rights of any third Person of any nature whatsoever.
“Management Agreement”
means the Management Agreement dated January 9, 2007, among Member, Nexus, Nexus
Gas Finance, LLC, a Delaware limited liability company, Nexus Gas Midstream
Services, LLC, a Delaware limited liability company, Nexus Gas Gathering, LP, a
Texas limited partnership, and Centre Partners Management LLC, a Delaware
limited liability company.
Exhibit
A-9
“Manager” shall mean
each manager of any Nexus Company, as of the date hereof, that is manager
managed, including any Person serving as a manager of any Nexus Company at any
time hereafter through the Closing Date, in each case in that Person’s capacity
as such.
“Material Adverse
Effect” means any fact, circumstance, event, change, effect or occurrence
(whether or not (A) foreseeable as of the date of this Agreement or (B) covered
by insurance) that, individually or in the aggregate with all other facts,
circumstances, events, changes, effects or occurrences, (i) has had, has or
reasonably would be expected to have a material adverse effect on (x) the
business, results of operation or condition (financial or otherwise) of the
Nexus Companies, taken as a whole, or (y) the Pipeline Assets, taken as a whole
or (ii) reasonably would be expected to prevent or materially delay or
materially impair the ability of Member or Nexus to perform its obligations
hereunder or to consummate the transactions contemplated hereby; provided,
however, that the manifestation of any such fact, circumstance, event, change,
effect or occurrence in the historical financial statements of the Nexus
Companies shall not preclude a determination that the effect thereof is material
and adverse within the meaning of this definition unless that potential effect
is expressly disclosed in the Audited Financial Statements or in Section 4.1(m) of the
Disclosure Schedule; and provided, further, that the following alone or
in combination (or the effects or consequences thereof) shall not be deemed or
construed to constitute a Material Adverse Effect:
(1) changes
in market conditions in the industry in which the Nexus Companies operate
(including changes in commodity prices) that do not materially
disproportionately affect the assets, properties, business, results of operation
or condition (financial or otherwise) of the Nexus Companies, taken as a whole,
as compared to the other Persons in such industry, taken as a
whole,
(2) facts,
circumstances, events, changes, effects or occurrences arising out of, resulting
from or attributable to (a) the negotiation, execution, announcement or
performance of this Agreement or the consummation of the transactions
contemplated hereby including the effect thereof on relationships, contractual
or otherwise, with customers, vendors, distributors, partners, industry
participants, employees or other third parties with whom Member or the Nexus
Companies have a business relationship, (b) the announcement of, or the
performance by the Nexus Companies of their obligations under, the Sonat
Purchase Agreement or the consummation of the transactions contemplated thereby
to the extent consistent with this Agreement, including the effect thereof on
relationships, contractual or otherwise, with customers, vendors, distributors,
partners, industry participants, employees or other third parties with whom
Member or the Nexus Companies have a business relationship, (c) national or
international political or social conditions including the engagement by any
country in hostilities, whether commenced before or after the date hereof, and
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack, acts of war or any
escalation or worsening of any such acts of war underway as of the date of this
Agreement, in each case that do not materially disproportionately affect the
assets, properties, business, results of operation or condition
Exhibit
A-10
(financial
or otherwise) of the Nexus Companies, taken as a whole, as compared to the other
Persons in such industry, taken as a whole, (d) any action taken by the Nexus
Companies as expressly permitted by this Agreement (including under Section 6.3) or, subject to
Section 8.6, as required by
the Sonat Purchase Agreement or with Regency’s consent, or any failure by Member
or the Nexus Companies to take any action prohibited by Article VI of this
Agreement, or (e) changes in Law or GAAP (or any interpretation
thereof),
(3) any
changes or fluctuations, in the Ordinary Course of Business, in the day-to-day
or month-to-month volumes of gas gathered by Nexus, or
(4) any
failure by any of the Nexus Companies to meet any projections or forecasts for
any period.
“Material Contracts”
means each Contract of the following type, but excluding Contracts, the primary
purpose and effect of which is to create or transfer to any Nexus Company a Real
Property Interest (provided this exclusion shall not apply to any such Contract
which has the effect described in clauses (c) or (e)):
(a) all
Hydrocarbon Contracts;
(b) all
other material gas sales, purchase, exchange, treating, compression, gathering,
transportation, dehydrating, marketing and processing Contracts to which any
Nexus Company is a Party and which relate to the Assets, or any part thereof or
the operations conducted therewith (provided that any such Contract with a term
of longer than three months and which may not be terminated by Nexus Company
upon less than three months notice without penalty or payment shall be deemed a
Material Contract);
(c) all
Contracts that restrict the ability of any Nexus Company to engage in any line
of business or which limit or restrict the right or ability to operate the
Assets;
(d) all
other Contracts materially affecting the ownership or operation of the Assets or
that impose any material monetary liability or obligation or other material
liability or obligation with respect to the Nexus Companies’ ownership in, or
operation of, the Assets;
(e) all
material Contracts that would prohibit or restrict the Merger or under which the
Merger would constitute a breach;
(f) joint
venture, limited liability company and partnership (including limited
partnership) Contracts;
(g) each
Contract between any Nexus Company, on the one hand, and
either Member, any of the Directors, Officers, Managers or Employees
or any of the directors, officers, managers or other employees of Member or any
of its Affiliates, on the other hand, including any compensatory
Contracts;
Exhibit
A-11
(h) each
Contract between any Nexus Company, on the one hand, and any financial advisor
or consultant to Member or any Nexus Company, on the other hand, under which
there are remaining indemnity or other obligations of any party thereto after
the Closing, including any financial advisory, oversight or similar agreement
with Member or any of its Affiliates;
(i) agreements
for the acquisition or disposition of a material amount of assets or Assets
(other than Hydrocarbon Contracts);
(j) each
lease for capital equipment that provides for ongoing payments by any Nexus
Company in excess of $200,000 annually;
(k) any
indenture, mortgage, promissory note, loan or other similar Contract for
Indebtedness; and
(l) each
other existing Contract not otherwise covered by clauses (a) through (j) that
(i) otherwise is material to the Nexus Companies, (ii) requires or reasonably
could be expected to require payments to or by the Nexus Companies of an amount
of $200,000 during the remaining term of the Contract or (iii) the loss of which
constitute a Material Adverse Effect.
“Measurement Date”
shall mean the date immediately preceding the Closing Date or such other date to
which the Parties agree in writing.
“Member Indemnitees”
means, collectively, Member and any Affiliates of Member and its and their
officers, directors, managers, members, partners, employees, agents, and
representatives.
“Member’s Knowledge”
or “to Member’s
Knowledge” means actual knowledge after due inquiry of Xxxxx Xxxxxxxx,
Xxxx Xxxxx or Xxxx Xxxxxx.
“Member Fundamental
Representations” means the representations and warranties contained in
Section 3.1.
“Membership Interests”
means the authorized limited liability company interests of Nexus.
“Net Working Capital”
shall mean the amount by which Current Assets exceed Current Liabilities,
expressed as a positive number, or the amount by which Current Liabilities
exceed Current Assets, expressed as a negative number, as of 11:59 p.m. Dallas,
Texas time, on the Measurement Date (or, with respect to accrued but unpaid
capital expenditures, on the Closing Date as provided in clause (y) of the
definition of Current Liabilities). For purposes of greater clarity,
the parties to the Agreement acknowledge that it is their mutual intent that the
Member receive the benefit (or detriment) of the working capital created (or
decreased) and all cash or cash equivalents generated by operations of the Nexus
Companies through 11:59 p.m. on the Measurement Date.
Exhibit
A-12
“Nexus Companies”
shall mean Nexus, Nexus Gas Finance, LLC, a Delaware limited liability company,
Nexus Gas Midstream Services, LLC, a Delaware limited liability company, Nexus
Gas GP, LLC, a Delaware limited liability company, and Nexus Gas Gathering, LP,
a Texas limited partnership.
“Nexus Fundamental
Representations” means the representations and warranties contained in
Sections 4.1(a), 4.1(b), 4.1(c), 4.1(d), 4.1(e), 4.1(k) and 4.1(r).
“Non-Escrow Indemnity
Claim” means (i) any and all Claims for indemnification brought by a
Regency Indemnitee pursuant to (a) Section 9.2(a)(i), (b) Section 9.2(a)(ii) with
respect to the inaccuracy or breach of the representations and warranties
contained in Section
4.1(k)
(Taxes) or Section
4.1(r)
(Employee Benefit Liabilities and Employees), (c) Section 9.2(a)(iii), (d)
Section 9.2(a)(v), (e) Section 9.2(a)(vi), (f) Section 9.2(a)(vii),
(g) Section 9.2(a)(viii) and (h)
Section 9.2(a)(ix) and (ii) a
disbursement from the Escrow Fund to Regency of an amount equal to the Merger
Consideration Deficit pursuant to Section 2.8(d)(i) and Section 11.2(c).
“NORM” means naturally
occurring radioactive materials.
“Officer” shall mean
each Person, in his or her capacity as such, who serves as an officer of any of
the Nexus Companies, any successor to any of them serving in such capacity prior
to the Closing Date and any other officer of any Nexus Company as of the date
hereof or at any time from the date hereof through the Closing.
“Officers of the Managing
General Partner” shall mean each of Xxxxx X. Xxxx, Xxxxxxx X. Xxxxx,
Xxxxxxx X. Xxxx III, and Xxxxxxx X. Xxxxx, Xx.
“Ordinary Course of
Business” means the ordinary course of business in all material respects
consistent with past custom and practice (including with respect to quantity and
frequency) of the Nexus Companies.
“Organizational
Documents” means the articles of incorporation, certificate of
incorporation, charter, bylaws, articles or certificate of formation,
regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any amendments
thereto.
“Payoff Letters” shall
mean the Payoff letters, in form and substance reasonably satisfactory to Member
and Regency, from each Person to whom Expenses are owed, setting forth the
aggregate amount required to be paid to fully satisfy such obligation(s) and
wire transfer instructions for such payee.
“PCBs” means
polychlorinated biphenyls.
“Permitted
Encumbrances” means (i) Liens for Taxes or assessments not yet due and
payable or that are being contested in good faith by appropriate proceedings
with adequate reserves therefor established on the financial books and records
of the Nexus Companies; (ii) terms and conditions of any Material Contracts that
have been fully
Exhibit
A-13
properly
disclosed to Regency on an appropriate schedule to this Agreement (iii)
mechanics’, carriers’, workers’, repairers’ and other similar Liens arising by
operation of Law in the Ordinary Course of Business relating to obligations
which are not past due or which are being contested in good faith by appropriate
proceedings with adequate reserves therefore established on the financial books
and records of the Nexus Companies, or pledges, deposits or other Liens securing
the performance of bids, trade Contracts, leases or statutory obligations
(including workers’ compensation, unemployment insurance or other social
security legislation); (iv) all covenants, conditions, restrictions, easements,
charges, rights-of-way, other encumbrances on title and similar matters filed of
record in the real property records in the jurisdictions in which the Assets to
which they relate or affect are located and which do not materially interfere
with the operation of the Pipeline Assets in the Ordinary Course of Business;
(v) encumbrances on title arising by operation of any applicable United States
federal, state or foreign securities Laws; (vi) such Liens, imperfections in
title, charges, easements, restrictions, encumbrances or other matters that are
due to zoning or subdivision laws or regulations (A) that do not materially and
adversely affect the specific Transferred Asset to which they relate for the use
to which they are put or the ability to transfer or assign any such Assets and
(B) which are of a nature that would be reasonably acceptable to a prudent
operator of natural gas assets and facilities of a type similar to the Assets;
(vii) such other Liens, imperfections in title, charges, easements,
restrictions, encumbrances or other matters (A) that do not constitute a
Material Adverse Effect and (B) to the extent relating to Pipeline Assets, which
are of a nature that would be reasonably acceptable to a prudent operator of
natural gas assets and facilities of a type similar to the Assets; and (viii)
Liens disclosed in Schedule
E.
“Person” means an
individual or entity, including any Nexus Company, corporation, association,
joint stock company, trust, joint venture, limited liability company,
unincorporated organization, or Governmental Authority.
“Pipeline Assets”
shall mean the pipelines, equipment, other tangible personal property,
easements, Contracts securing rights of access and other similar assets and
rights used by any Nexus Company in connection with its natural gas pipeline,
gathering, compression, dehydration and treating operations as presently
conducted, including the Systems and the Facilities.
“Pre-Closing Period”
means any Tax period ending on or before the Measurement
Date. Notwithstanding anything to the contrary herein, any franchise
Tax shall be allocated to the period during which the income, operations, assets
or capital comprising the base of such Tax is measured, regardless of whether
the right to do business for another period is obtained by payment of such
franchise Tax.
“Prior Acquisition
Agreements” means (a) the Purchase and Sale Agreement dated September 1,
2003 by and between Sonat and Dominion Gas Ventures, Inc. and (b) the
Transaction Agreement dated January 9, 2007, by Dominion Midstream Services, LP,
Dominion Gas, LLC, Xxxxxx X. Xxxxxxx, Xx., Nexus Gas Midstream Services, LLC,
Nexus Gas GP, LLC and Nexus Gas Finance, LLC.
Exhibit
A-14
“Pro Rata Portion”
means, with respect to each Person who holds any Membership Interests
immediately prior to the Effective Time, a fraction, the numerator of which is
the Membership Interests so held by such Person immediately prior to the
Effective Time and the denominator of which is all Membership Interests
outstanding immediately prior to the Effective Time.
“Proceeding” means any
action, demand, arbitration, audit, hearing, complaint, inquiry, claim,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority or
arbitrator.
“Real Property
Interests” shall mean all interests in real property used or held for use
by any Nexus Company, including fee properties, rights of way, easements,
surface use agreements, licenses and leases that are used or held for use in
connection with the ownership, operation or maintenance of the assets owned by
or leased by any Nexus Company, and all fixtures, pipelines, gathering
facilities, buildings and improvements located thereon or appertaining thereto
that are owned or held by leasehold interest by any Nexus Company.
“Records” means files,
documents, instruments, notes, papers, ledgers, journals, reports, abstracts,
surveys, maps, books, records, studies and similar data and information, whether
in written or electronic form.
“Regency Fundamental
Representations” means the representations and warranties contained in
Sections
5.1(a), 5.1(b), 5.1(c), 5.1(d) and 5.1(f).
“Regency Indemnified
Taxes” means any and all Taxes, together with any costs, expenses or
damages (including court and administrative costs and reasonable legal fees and
expenses incurred in investigating and preparing for any audit, examination,
litigation or other judicial or administrative Proceeding) arising out of, in
connection with or incident to the determination, assessment or collection of
such Taxes, imposed on any Nexus Company or for which any Nexus Company may
otherwise be liable (i) for any Pre-Closing Period and for the portion of any
Straddle Period ending on the Measurement Date (determined in accordance with
Section 6.10(b)) including
Taxes for such periods of any other Person for which any Nexus Company is or has
been liable as a transferee or successor, (ii) arising out of, in connection
with or related to a breach of any representations and warranties set forth in
Section 4.1(k) (without
giving effect to any materiality or knowledge qualifiers that may be contained
therein and without regard to any scheduled items) or covenants set forth in
Section 6.10, (iii) of any
member of an affiliated, consolidated, combined or unitary group of which any
Nexus Company (or any predecessor) is or was a member on or prior to the
Measurement Date by reason of Treasury Regulation §1.1502-6(a) or any analogous
or similar state or local law, or (vi) that are Member’s share of the Transfer
Taxes pursuant to Section 6.10(d);
provided, however, that no such Tax
will constitute a Regency Indemnified Tax to the extent such Tax was included as
a Current Liability (or resulted in a reduction of a Current Asset) in the
determination of Net Working Capital on the Final Closing
Statement.
Exhibit
A-15
“Regency Indemnitees”
means, collectively, Regency and its Affiliates, including, from and after the
Closing, the Surviving Company and the other Nexus Companies, and its and their
officers, directors, managers, partners, employees, agents and
representatives.
“Regency’s Knowledge”
means the actual knowledge after due inquiry of Xxxx Xxxxxxxx or the Officers of
the Managing General Partner.
“Release” shall mean a
written release of claims either (i) executed concurrently with the execution
and delivery of this Agreement, but to be effective as of the Closing, by
Messrs. Xxxxxxxx, Xxxxx and Xxxxxx and each Employee designated by Regency, and
each Officer, Director or Manager of Member on the one hand, and Regency and the
Nexus Companies, on the other hand, or (ii) a Release in the form attached
hereto as Exhibit
E to be delivered at the Closing pursuant to Section
6.9(b).
“Remedial Action”
means all investigative, site monitoring, restoration, abatement,
detoxification, containment, handling, treatment, removal, storage,
decontamination, clean-up, transport, disposal or other ameliorative work,
corrective action or response action required by (i) any Health, Safety and
Environmental Law, (ii) any order or request of any Governmental Authority, or
(iii) any final judgment, consent decree, settlement or compromise with respect
to any Health, Safety and Environmental Laws.
“Representatives”
means, with respect to any Person, its and its Affiliates’ respective managers,
directors, officers, employees, investment bankers, attorneys, accountants and
other advisors and representatives.
“Restricted Cash”
shall mean as of 11:59 p.m. on the Measurement Date, the amount of Cash of the
Nexus Companies that would be deemed to be “restricted” in accordance with GAAP
as consistently applied by Nexus in the preparation of the Audited Financial
Statements; provided, however, that the
amount so determined shall (whether or not in compliance with GAAP) include the
following: (i) amounts held in escrow, (ii) restricted balances, (iii) the
proceeds of any casualty loss with respect to any asset (to the extent any such
asset has not been repaired or replaced or the liability for the repair or
replacement of such asset has not been paid or accrued as a current liability)
and (iv) proceeds of indemnification settlements to the extent that the
indemnified losses have not been paid or accrued as current
liabilities.
“Sample Balance Sheet”
shall mean the sample calculation of Current Assets and Current Liabilities and
sample calculation of Net Working Capital as of 11:59 p.m. on the Sample Balance
Sheet Date as set forth on Schedule C attached
hereto including the notes thereto.
“Sample Balance Sheet
Date” shall mean December 31, 2007.
“Severance
Obligations” shall mean any severance payment or similar obligation of
any Nexus Company to any Director, Officer, Manager, Employee, or any other
consultant, independent contractor or other service provider employed or engaged
by any
Exhibit
A-16
Nexus
Company pursuant to any Contract with such Person existing as of or prior to the
Closing that would arise from the termination (including termination with or
without cause and voluntary termination) of the position, office, employment or
engagement of such Person upon or at any time after Closing, or that exists as
of the Closing as a result of any such termination prior to Closing, including
any severance, bonus, or tax indemnification obligations or other similar
payments and the Nexus Companies’ portion of any Medicaid, Social Security or
unemployment Taxes in respect of such payments, but excluding salary, accrued
bonus, accrued vacation and other compensation and benefits through the date of
any such termination, and further excluding any payment or other obligation
pursuant to Law.
“Sonat” means Southern
Natural Gas Company, a Delaware general partnership.
“Sonat Acquisition”
means the purchase and sale of the Sonat Assets pursuant to the Sonat Purchase
Agreement.
“Sonat Assets” means
the “Assets” as that term is defined in the Sonat Purchase
Agreement.
“Sonat CIOM Agreement”
means the Construction, Installation, Operation, and Maintenance Agreement dated
December 10, 2007 by and between Sonat and Nexus.
“Sonat Facilities”
means the “Facilities” as that term is defined in the Sonat Purchase
Agreement.
“Sonat Purchase
Agreement” means that certain Purchase and Sale Agreement dated December
10, 2007 by and among Holdings and Sonat, including all exhibits and schedules
thereto, as amended prior to the closing thereunder.
“Straddle Period”
means any Tax period beginning on or before and ending after the Measurement
Date. Notwithstanding anything to the contrary herein, any franchise
Tax shall be allocated to the period during which the income, operations, assets
or capital comprising the base of such Tax is measured, regardless of whether
the right to do business for another period is obtained by the payment of such
franchise Tax.
“Swap Agreement” means
the Letter Agreement dated February 26, 2007 between Bank of Montreal and Nexus
Gas Gathering, LP.
“System(s)” means the
gathering and other pipeline system(s) described on Exhibit
F, together with all gathering lines, pipelines, compression facilities,
pipe, scrubbers, dehydration units, tanks, traps, cathodic protection equipment,
meters, recorders, valves, fittings, and other equipment, personal property,
fixtures and improvements used or held for use in the ownership, operation or
maintenance of such gathering and other pipeline system(s).
“Tax” or “Taxes” means
(a) any taxes, assessments and other governmental charges imposed by any
Governmental Authority, including income, profits, gross receipts, net proceeds,
alternative or add on minimum, ad valorem, value added, turnover,
Exhibit
A-17
sales,
use, property, personal property (tangible and intangible), environmental,
stamp, leasing, lease, user, excise, duty, franchise, capital stock, transfer,
registration, license, withholding, social security (or similar), unemployment,
disability, payroll, employment, social contributions, fuel, excess profits,
occupational, premium, windfall profit, severance, estimated, or other like tax,
including any interest, penalty, or addition thereto, whether disputed or not;
(b) any liability for the payment of any amounts of the type described in
clause (a) as a result of being a member of an affiliated, consolidated,
combined or unitary group for any period; and (c) any liability for the
payment of any amounts of the type described in clause (a) or (b) as a
result of the operation of law or any express obligation to indemnify any other
Person pursuant to a tax sharing or tax indemnity agreement.
“Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“Taxing Authority”
means, with respect to any Tax, the Governmental Authority or political
subdivision thereof that imposes such Tax, and the agency (if any) charged with
the collection of such Tax for such entity or subdivision, including any
Governmental Authority or agency that imposes, or is charged with collecting,
social security or similar charges or premiums.
“Third-Party Debt”
shall mean all (i) outstanding Indebtedness for borrowed money of any Nexus
Company from any Person other than another Nexus Company and (ii) outstanding
Indebtedness of any Person other than a Nexus Company that is secured by a Lien
on any assets or Equity Interests of any Nexus Company or guaranteed by any
Nexus Company.
“Title Defect” shall
mean any Lien or defect in title associated with a Nexus Company’s title to the
Assets, other than a Permitted Encumbrance, that (a) causes a Nexus Company’s
title in any Asset not to constitute good, valid and insurable title or (b)
adversely affects in any material respect the ability of a Nexus Company to own,
operate or maintain the Pipeline Assets in the Ordinary Course of
Business.
“Title Representation”
shall mean the representations and warranties in Section 3.1(e), Section 4.1(b)(i), Section 4.1(b)(iii), and
Section 4.1(b)(v).
“Transaction
Documents” means this Agreement, the Non-Competition Agreements, the
Releases and the other documents executed and delivered by the Parties at the
Closing or thereafter in consummation of the transactions between them
contemplated by this Agreement, including those documents to be delivered by a
Party pursuant to Section 7.4(a) or Section 7.4(b) and any other
Contract among the Parties that is expressly agreed by the Parties to constitute
a Transaction Document for purposes of this Agreement.
Exhibit
A-18
“Working Capital Adjustment
Amount” shall mean the Working Capital Surplus, expressed as a positive,
or Working Capital Deficit, expressed as a negative, as reflected in the Final
Closing Statement.
“Working Capital
Deficit” shall mean the amount, if any, by which the Net Working Capital
as reflected on the Final Closing Statement is less than the Base Working
Capital.
“Working Capital
Surplus” shall mean the amount, if any, by which Net Working Capital as
reflected on the Final Closing Statement exceeds the Base Working
Capital.
(b) The
following additional terms shall have the meanings defined in the Section
indicated:
Agreement
|
Preamble
|
Allocation
Period
|
6.10(e)(i)
|
Alternative
Satisfaction
Date
|
2.2(a)
|
Antitrust
Laws
|
6.6(g)
|
Applicable
Time
Period
|
9.10
|
Assets
|
4.1(h)(i)
|
Audit
Fees
|
2.8(f)
|
Audited
Financial
Statements
|
4.1(m)(i)
|
Casualty
Loss
|
7.3
|
Certificate
of
Merger
|
2.2
|
Closing
|
2.2
|
Closing
Date
|
2.2
|
Consolidated
Balance
Sheet
|
4.1(m)(i)
|
Covered
Third Person
Claim
|
9.10
|
Current
Salary
Benefits
|
4.1(r)(ii)
|
Disputed
Amount
|
11.2(b)
|
DLLCA
|
Recitals
|
Effective
Time
|
2.2
|
Election
Notice
|
8.6(a)
|
Election
Period
|
8.6(a)
|
Employees
|
4.1(r)(ii)
|
Escrow
Fund
|
11.1
|
Estimated
Closing
Statement
|
2.8(a)
|
Excess
Casualty
Loss
|
7.3
|
Final
Closing
Statement
|
2.8(c)
|
Guarantees
|
4.1(v)
|
Indemnifying
Party
|
9.9(a)
|
Indemnitee
|
9.9(a)
|
Identified
Member
Assets
|
6.15
|
Intellectual
Property
|
4.1(x)
|
Joint
Instructions
|
11.2(b)
|
Exhibit
A-19
Member
|
Preamble
|
Merger
|
Recitals
|
Merger
Consideration
|
2.5(b)
|
Merger
Consideration
Deficit
|
2.8(d)(i)
|
Merger
Consideration
Surplus
|
2.8(d)(ii)
|
Merger
Sub
|
Preamble
|
Nexus
|
Preamble
|
Nexus
Related Employee Benefit
Plan
|
4.1(r)(i)
|
NGA
|
4.1(p)(i)
|
NGPA
|
4.1(p)(i)
|
Non-Competition
Agreements
|
Recitals
|
Objection
Notice
|
9.5(b)
|
Party
|
Preamble
|
Pending
Claim
Amount
|
9.5(a)
|
Permits
|
4.1(g)(iii)
|
Pipeline
Data
|
4.1(n)
|
Pre-Existing
Environmental
Matters
|
9.2(a)(iv)
|
Proposed
Closing
Statement
|
2.8(b)
|
Regency
|
Preamble
|
Resignations
|
Recitals
|
Retained
Escrow
Amount
|
11.3
|
Review
Period
|
2.8(c)
|
RIGS
|
4.1(y)
|
Selected
Application
Parameter
|
8.6(a)
|
Separation
Agreements
|
Recitals
|
Sonat
Abandonment
Application
|
6.11
|
Sonat
Cash
Payment
|
2.7(b)
|
Survival
Date
|
9.1(a)(iii)
|
Sonat
Deadline
|
10.1(j)
|
Surviving
Company
|
2.1
|
Tax
Consideration
|
6.10(e)(i)
|
Tax
Proceeding
|
6.10(c)
|
Termination
Date
|
10.1(b)
|
Third
Party
Claim
|
9.9(a)
|
Transfer
Taxes
|
6.10(d)
|
1.2 Interpretations. Unless
expressly provided for elsewhere in this Agreement, this Agreement shall be
interpreted in accordance with the following provisions:
(a) Whenever
the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine, or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa.
Exhibit
A-20
(b) If
a word or phrase is defined, its other grammatical forms have a corresponding
meaning.
(c) A
reference to a person, corporation, trust, estate, partnership, or other entity
includes a reference to all of the foregoing to the extent
applicable.
(d) The
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(e) All
references in this Agreement to articles, sections or subdivisions thereof shall
refer to the corresponding article, section or subdivision thereof of this
Agreement unless specific reference is made to such articles, sections, or
subdivisions of another document or instrument.
(f) A
reference to any agreement or document (including a reference to this Agreement)
is to the agreement or document as amended, varied, supplemented, novated or
replaced, except to the extent prohibited by this Agreement or that other
agreement or document.
(g) A
reference to any party to this Agreement or another agreement or document
includes the party’s successors and permitted assigns.
(h) A
reference to legislation or to a provision of legislation includes a
modification or reenactment of it, a legislative provision substituted for it
and a regulation or statutory instrument issued under it.
(i) A
reference to a writing includes a facsimile transmission of it and any means of
reproducing of its words in a tangible and permanently visible
form.
(j) The
words “hereof,” “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(k) The
word “including” shall mean including without limitation.
(l) The
word “or” will have the inclusive meaning represented by the phrase
“and/or”.
(m) The
phrase “and/or” when used in a conjunctive phrase, shall mean any one or more of
the Persons specified in or the existence or occurrence of any one or more of
the events, conditions or circumstances set forth in that phrase; provided, however, that when used to
describe the obligation of one or more Persons to do any act, it shall mean that
the obligation is the obligation of each of the Persons but that it may be
satisfied by performance by any one or more of them.
(n) “Shall”
and “will” have equal force and effect.
Exhibit
A-21
(p) The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part of this Agreement.
(q) The
Parties and their counsel have reviewed the provisions of this Agreement and
have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
(r) All
references to immediately available funds or dollar amounts contained in this
Agreement shall mean United States dollars.
Exhibit
A-22
EXHIBIT
B
CERTIFICATE
OF MERGER
MERGING
REGENCY NX, LLC,
a
Delaware limited liability company
WITH AND
INTO
NEXUS GAS HOLDINGS,
LLC,
a
Delaware limited liability company
Pursuant
to Title 6, Section 18-209 of the Delaware Limited Liability Company Act, Nexus
Gas Holdings, LLC, a Delaware limited liability company (the “Surviving
Company”), does hereby certify the following for the purpose of merging
Regency NX, LLC, a Delaware limited liability company (the “Merger
Sub”), with and into the Surviving Company:
FIRST: The
name and state of formation of each of the constituent companies of the merger
are as follows:
Name
|
State of
Formation
|
Nexus
Gas Holdings, LLC
|
Delaware
|
Regency
NX, LLC
|
Delaware
|
SECOND: The
name of the surviving limited liability company in the merger is Nexus Gas
Holdings, LLC, which shall hereinwith be changed to Regency NX,
LLC.
THIRD:
The Agreement and Plan of Merger has been
approved, adopted, certified, executed and acknowledged by the constituent
companies.
FOURTH: The
certificate of formation of the Surviving Company shall be amended as
follows: Article FIRST thereof shall be amended in its entirety to
read as follows:
“The name
of the Limited Liability Company is Regency NX, LLC.”
FIFTH: The
merger shall be effective at the time and date of the filing of this certificate
with the office of the Secretary of State of the State of Delaware (the “Effective
Time”).
SIXTH: The
Agreement and Plan of Merger is on file at 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, XX 00000, the place of business of the Surviving Company.
SEVENTH: A
copy of the Agreement and Plan of Merger will be furnished by the Surviving
Company on request, without cost, to any member of the Surviving Company or any
member of Merger Sub.
Exhibit
B-1
IN WITNESS WHEREOF, Nexus Gas
Holdings, LLC has caused this certificate to be signed by [_________], its authorized
officer, this ___ day of __________, 2008.
Exhibit
B-2
EXHIBIT
C
ESCROW
AGREEMENT
This
ESCROW AGREEMENT is made as of this [___] day of [______], 2008 (this “Agreement”) by and
among Regency Energy Partners LP, a Delaware limited partnership (“Regency”), Nexus Gas
Partners, LLC, a Delaware limited liability company (“Nexus”), and Xxxxx
Fargo Bank, National Association, as escrow agent (the “Escrow
Agent”). Regency, Nexus and the Escrow Agent are each referred
to herein as a “Party” and
collectively as the “Parties.”
WHEREAS, Regency, Nexus, Nexus
Gas Holdings, LLC, a Delaware limited liability company (“Holdings”) and
Regency NX, a Delaware limited liability company (“Merger Sub”) have
entered into an Agreement and Plan of Merger, dated as of [________], 2008 (the “Merger Agreement”),
pursuant to which, among other things, Merger Sub has agreed to merge with and
into Holdings upon the terms and subject to the conditions set forth in the
Merger Agreement;
WHEREAS, to secure the payment
of amounts that may become due to Regency pursuant to Article IX of the
Merger Agreement, the Merger Agreement provides in Section 2.7 and Section 7.4(b)(i) for
the delivery by Regency to the Escrow Agent at the closing of the transactions
contemplated by the Merger Agreement of an amount equal to $8,500,000 (such
amount, excluding any income, interest or other amounts received thereon in
accordance with the terms of this Agreement, the “Escrow Funds”), which
shall be deposited into an account with the Escrow Agent (the “Escrow Account”);
and
WHEREAS, Regency and Nexus
desire that the Escrow Agent act as escrow agent in accordance with the terms
hereof, and the Escrow Agent is willing to act in such capacity.
NOW THEREFORE, in
consideration of the premises and covenants and agreements stated herein the
Parties intending to be legally bound, hereby agree as follows:
1. Escrow Agent
Appointment. Regency and Nexus hereby appoint and designate
the Escrow Agent as escrow agent to receive the Escrow Funds and to hold and
distribute the Escrow Funds in accordance with the terms of this Agreement and
the Escrow Agent hereby accepts such appointment.
2. Establishment of
Escrow. Concurrently with the execution of this Agreement,
Regency will deliver to the Escrow Agent an amount equal to $8,500,000 by wire
transfer of immediately available funds. The Escrow Agent hereby
agrees to hold, safeguard and disburse the Escrow Funds pursuant to the terms
and conditions hereof.
3. Investment of Funds; Tax
Treatment.
(a) The
Escrow Agent shall invest the Escrow Funds as set forth in Exhibit A hereto, or
as set forth in any subsequent written instruction signed by both
Exhibit C-1
Regency
and Nexus. The Escrow Agent shall not be liable for failure to invest
or reinvest funds absent such authorization and written direction. It
is expressly agreed and understood by the Parties hereto that the Escrow Agent
is not providing investment advice or recommendations and that the Escrow Agent
shall not in any way whatsoever be liable for losses on any investments,
including, but not limited to, losses from market risks due to premature
liquidation or resulting from other actions taken pursuant to this
Agreement. The Escrow Agent shall be entitled to sell or redeem any
such investments as necessary to make any payments or distributions required
under this Agreement.
(b) Regency
and Nexus shall provide the Escrow Agent with their respective taxpayer
identification numbers documented by an appropriate Form W-8 or Form W-9 upon
execution of this Agreement. Failure to so provide such forms may
prevent or delay disbursements from the Escrow Account and may also result in
the assessment of a penalty and the Escrow Agent’s being required to withhold
tax on any interest or other income earned on the Escrow Account. Any
payments of income shall be subject to applicable withholding regulations then
in force in the United States or any other jurisdiction, as
applicable.
(c) The
Escrow Agent shall deliver to Regency and Nexus promptly following the
conclusion of each month a written statement of account with respect to the
investment of the Escrow Funds and any dividends or other distributions received
on the Escrow Funds. Receipt, investment and reinvestment of the
Escrow Funds shall be confirmed by the Escrow Agent as soon as practicable by
account statement.
(d) Notwithstanding
anything in this Agreement to the contrary, the Escrow Agent shall distribute to
Nexus on a quarterly basis all interest, distributions, dividends and other
income earned on the Escrow Funds. All disbursements to Nexus
pursuant to this Section 3 shall be
made by the Escrow Agent by wire transfer of immediately available funds
pursuant to the wiring instructions provided by Nexus as contained in Exhibit
B.
(e) Proceeds
of the sale of investments will be delivered on the Business Day on which the
appropriate instructions are received by the Escrow Agent if received prior to
the deadline for same day sale of such investments. If such
instructions are received after the applicable deadline, proceeds will be
delivered on the next succeeding Business Day.
(f) Regency
and Nexus agree that, for tax reporting purposes, all interest or other income
from investment of the Escrow Funds shall, as of the end of each calendar year
and to the extent required by the Internal Revenue Service, be reported,
ultimately, as interest income to Nexus, whether or not income was disbursed
during a particular year, in accordance with installment sale treatment provided
for in Section 453 of the Internal Revenue Code of 1986, as amended, i.e. the
earnings will be reported for tax purposes as Regency’s (it being understood
that Regency is deemed to then pay those earnings over to Nexus as
Exhibit C-2
interest
on the installment obligation). Regency and Nexus agree, jointly and
severally, to indemnify, defend and hold the Escrow Agent harmless from and
against any tax, late payment, interest, penalty or other cost or expense that
may be assessed against the Escrow Agent on or with respect to the Escrow Funds
and the investment thereof unless any such tax, late payment, interest, penalty
or other expense was caused by the gross negligence or willful misconduct of the
Escrow Agent. The indemnification provided by this Section 3 is in
addition to the indemnification provided in Section 6 and
shall survive the resignation or removal of the Escrow Agent and the termination
of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in no event will Regency be distributed any interest or other income
from the Escrow Funds or be deemed to have earned any income or interest from
the investment of the Escrow Funds.
4. Disbursements of Escrow
Funds and Accretions Thereto.
(a) The
Escrow Agent shall hold the Escrow Funds deposited in the Escrow Account in
safekeeping and disburse the same or any part or parcel thereof only in
accordance with and upon: (i) jointly executed written instructions
of Regency and Nexus (a “Joint Direction”), or
(ii) a final written decision, order, judgment or decree of a court having
jurisdiction which is not subject to appeal and as to which notice of appeal has
not been timely filed or served (a “Final
Decision”). The Escrow Agent shall be entitled to receive and
may conclusively rely upon an opinion of counsel to the presenting party to the
effect that a decision, order, judgment or decree is final and nonappealable and
from a court having competent jurisdiction. Within one Business Day
after the end of each calendar quarter after the date of this Agreement, the
Escrow Agent shall disburse to Nexus any income, interest or other amounts
received on the Escrow Funds.
(b) Upon
receipt of a Joint Direction or Final Decision directing the Escrow Agent to pay
the remainder of the Escrow Funds contained in the Escrow Account in accordance
with the terms and provisions of such Joint Direction or Final Decision and to
close the Escrow Account, the Escrow Agent shall disburse such Escrow Funds in
accordance therewith, disburse to Nexus any income, interest or other amounts
received on the Escrow Funds and not theretofore distributed to Nexus and close
the Escrow Account.
(c) Any
Joint Direction may instruct the Escrow Agent to release all or any portion of
the remainder of the Escrow Funds contained in the Escrow Account.
(d) When
a Joint Direction is required, such instructions may be given by separate
instruments of a similar tenor. Either Regency or Nexus may hereafter
act through an agent or attorney in fact only if written evidence of authority
in form and substance satisfactory to the Escrow Agent is furnished to the
Escrow Agent.
(e) All
disbursements to Regency or Nexus of all or any portion of the Escrow Funds (or
disbursements to Nexus of any income, interest or other amounts
Exhibit C-3
received
on the Escrow Funds) deposited into the Escrow Account pursuant to the terms of
this Section 4
shall be made in accordance with the wiring instructions provided to the Escrow
Agent by Regency and Nexus as set forth in Exhibit B attached
hereto for all purposes. The wiring instructions set forth in Exhibit B may be
revised by delivering written notice to the Escrow Agent in accordance with the
terms and conditions of Section 10
hereof. The Escrow Agent agrees that upon receipt of a Joint
Direction instructing the Escrow Agent to disburse all or a portion of the
Escrow Funds, the Escrow Agent shall comply therewith and wire such funds
pursuant to the wiring instructions provided by Regency or Nexus, as applicable,
as contained in Exhibit B upon
receipt of such Joint Direction or Final Decision, as the case may
be. If the party to whom such funds are to be paid has not provided
the Escrow Agent with wiring instructions, then the Escrow Agent shall disburse
the funds in compliance with the terms of such Joint Direction along with
detailed payment instructions or Final Decision along with detailed payment
instructions from the party to whom Escrow Funds will be released.
5. Duties of the Escrow
Agent.
(a) Accounts and
Records. The Escrow Agent shall keep accurate books and
records of all transactions hereunder.
(b) Standard of
Care. The Escrow Agent shall be obligated only to perform the
duties specifically set forth in this Agreement, which shall be deemed purely
ministerial in nature, and shall under no circumstances be deemed to be a
fiduciary to any Party or any other person. Regency and Nexus agree
that the Escrow Agent shall not assume any responsibility for the failure of
Regency and Nexus to perform in accordance with this Agreement. This
Agreement sets forth all matters pertinent to the escrow contemplated hereunder,
and no additional obligations of the Escrow Agent shall be inferred from the
terms of this Agreement or any other agreement. IN NO
EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY
(i) damages or expenses arising out of the services provided hereunder, other
than damages which directly result from the Escrow Agent’s gross negligence or
willful misconduct, or (ii) SPECIAL
OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE FORM OF
ACTION. The Escrow Agent shall not be liable for any action
taken or omitted under this Agreement so long as it shall have acted without
gross negligence or willful misconduct.
(c) Reliance. The
Escrow Agent shall be entitled to rely upon and shall be protected in acting
upon any request, instructions, statement or other instrument from Nexus or
Regency, not only as to its due execution, validity and effectiveness, but also
as to the truth and accuracy of any information contained therein, which the
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person purporting to sign the same and to
Exhibit C-4
conform
to the provisions of this Agreement. Concurrent with the execution of
this Agreement, Regency and Nexus, respectively, shall deliver to the Escrow
Agent an authorized signers form in the form of Exhibit C-1 and Exhibit C-2 attached
hereto.
(d) Attorneys and
Agents. The Escrow Agent shall have the right, but not the
obligation, to consult with counsel or other such professionals of
choice. The Escrow Agent may perform its duties through its agents,
attorneys, custodians or nominees. The Escrow Agent shall not be
obligated to take any legal action or to commence any proceeding in connection
with the Escrow Funds, any account in which the Escrow Funds are deposited or
this Agreement, or to prosecute or defend any such legal action or
proceedings.
(e) No Financial
Obligation. No provision of this Agreement shall require the
Escrow Agent to risk or advance its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of its rights under
this Agreement.
6. Indemnification.
(a) From
and at all times after the date of this Agreement, Regency and Nexus, jointly
and severally, shall, to the fullest extent permitted by law and to the extent
provided herein, indemnify, defend and hold harmless the Escrow Agent and each
director, officer, employee, attorney, agent and affiliate of the Escrow Agent
(collectively, the “Indemnified Parties”)
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs, penalties, fines, judgments and expenses of any kind or
nature whatsoever (including without limitation, reasonable attorneys’ fees,
costs and expenses) incurred by or asserted against any of the Indemnified
Parties from and after the date hereof, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
claim, demand, suit, action or proceeding (including any inquiry or
investigation) by any person, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation, including without limitation, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transactions contemplated herein,
whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability finally determined by a court of competent jurisdiction, subject to no
further appeal, to have directly resulted from the gross negligence or willful
misconduct of such Indemnified Party. The obligations of Regency and
Nexus under this Section 6 shall
survive the termination of this Agreement and the resignation or removal of the
Escrow Agent.
Exhibit C-5
(b) The
Parties agree that neither the payment by Regency or Nexus of any claim by the
Escrow Agent for indemnification hereunder shall impair, limit, modify or
affect, as between Regency and Nexus, the respective rights and obligations of
Regency and Nexus under this Agreement or the Merger
Agreement. Regency and Nexus agree among themselves that any
obligation for indemnification under this Section 6 shall
be borne by Regency and Nexus in proportion to Regency’s, on the one hand, and
Nexus, on the other hand, respective responsibility, if any, of such loss,
damage, liability, cost or expense for which the Escrow Agent is entitled to
indemnification, the causation to be determined by mutual agreement, arbitration
(if both Regency and Nexus agree in writing to submit the dispute to
arbitration) or litigation; provided, however, that if no
such party is determined to be responsible for such loss, damage, liability,
cost or expense, any obligation for indemnification under this Section 6 shall
be borne equally between Regency, on the one hand, and Nexus on the
other.
7. Disputes. If,
at any time, there shall exist any unresolvable dispute between Regency or Nexus
with respect to the holding or disposition of any portion of the Escrow Funds or
any other obligations of the Escrow Agent hereunder, or if at any time the
Escrow Agent is unable to determine, to the Escrow Agent’s sole satisfaction,
the proper disposition of any portion of the Escrow Funds or the Escrow Agent’s
proper actions with respect to its obligations hereunder, or if Regency and
Nexus have not, within 30 calendar days of the furnishing by the Escrow Agent of
a notice of resignation pursuant to Section 8 below,
appointed a successor escrow agent to act hereunder, then the Escrow Agent may,
in its sole discretion, take either or both of the following
actions:
(a) suspend
the performance of any of its obligations under this Agreement (other than the
safekeeping and investment of the Escrow Funds and any income, interest or other
amounts received thereon) until such dispute or uncertainty shall be resolved to
the sole satisfaction of the Escrow Agent or until a successor escrow agent
shall have been appointed (as the case may be) as evidenced by written
instructions executed by Regency and Nexus; or
(b) petition
(by means of an interpleader action or any other appropriate method) any court
of competent jurisdiction in the State of Texas, for instructions with respect
to such dispute or uncertainty, and pay into or deposit with such court all
disputed escrow amounts held by it pursuant to this Agreement for holding and
disposition in accordance with the instructions of such court.
Subject
to Section 5(b), the Escrow Agent shall have no liability to Regency or Nexus or
any other person with respect to any action taken pursuant to this Section 7,
specifically including any liability that may arise, or be alleged to have
arisen, out of or as a result of any delay in the disbursement of funds held in
the Escrow Account or any delay in or with respect to any other action required
or requested of the Escrow Agent.
8. Resignation or Removal of
the Escrow Agent. The Escrow Agent may resign from the
performance of its duties hereunder at any time by giving 30 Business Days’
prior written notice to Regency and Nexus or may be removed, with or without
cause, by Regency and
Exhibit C-6
Nexus,
acting jointly, at any time by the giving of 30 Business Days’ prior written
notice to the Escrow Agent. Upon any such notice of resignation or
removal, Regency and Nexus, acting jointly, shall appoint a successor escrow
agent hereunder, which shall be a commercial bank, trust company or other
financial institution with a combined capital and surplus in excess of
$500,000,000, unless otherwise agreed by Regency and Nexus. Upon the
acceptance in writing of any appointment as the Escrow Agent hereunder by a
successor escrow agent, such successor escrow agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations under this Agreement, but shall not be discharged
from any liability for actions taken as the Escrow Agent hereunder prior to such
succession.
9. Fees. Regency
and Nexus shall compensate the Escrow Agent for its services hereunder in
accordance with Exhibit D attached
hereto and, in addition (but without duplication), shall reimburse the Escrow
Agent for all of its reasonable out-of-pocket expenses, including attorneys’
fees, travel expenses, telephone and facsimile transmission costs, postage,
copying charges and the like (collectively, the “Fees”). All
of the compensation and reimbursement obligations set forth in this Section 9 shall
be paid upon demand by the Escrow Agent. The obligations of Regency
and Nexus under this Section 9 shall
survive any termination of this Agreement and the resignation or removal of the
Escrow Agent. Each of Regency, on the one hand, and Nexus, on the
other hand, shall be responsible for one-half of the fees and expenses described
in this Section 9.
10. Notices. All
notices, requests, demands, claims, and other communications hereunder will be
in writing and shall be deemed effectively given (i) upon personal delivery to
the party notified, (ii) five days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid, return receipt
requested, (iii) one day after deposit with a nationally recognized air courier
service such as DHL or Federal Express for next day delivery, or (iv) on the day
of facsimile transmission if such facsimile is received by 5:00 p.m., local time
at the location of receipt, on a Business Day (otherwise on the next Business
Day), with written confirmation of receipt, to the facsimile number shown below
(or to such other facsimile number as the party to be notified may indicate by
ten days advance written notice to the other party in the manner herein
provided), provided that notice is also given under clauses (i), (ii) or (iii)
above; in any such case addressed to the party to be notified at the address
indicated below for that party, or at such other address as that party may
indicate by ten days advance written notice to the other party in the manner
herein provided:
If to the Escrow
Agent:
Xxxxx
Fargo Bank, National Association
Corporate
Trust and Escrow Services-MAC T5303-022
0000 Xxxx
Xxxxxx, 0xx Xxxxx
Xxxxxx,
Xxxxx 00000
Attention: Xxx
X. Xxxxxxx
Telecopy
Number: (000) 000-0000
Exhibit C-7
If to
Nexus:
Nexus Gas
Partners, LLC
0000 Xxxx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attn: Xxxxx
Xxxxxxxx
Tel: _____________
Fax: _____________
with a copy
to:
Dechert
LLP
00
Xxxxxxxxxxx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Xxxx
X. Xxxxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
If to
Regency:
0000
Xxxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attention: Chief
Legal Officer
Telecopy
Number: 000-000-0000
with a copy
to:
Xxxxxx
& Xxxxxx L.L.P.
Attn: Xxxxxx
X. Xxxxx, Esq.
0000 Xxxx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000-0000
Fax:
(000) 000-0000
Any Party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex or ordinary mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
11. Incorporation of
Exhibits. The Exhibits identified in this Agreement are
incorporated herein by reference and made a part hereof.
12. Amendments and
Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by Regency and
Nexus. In addition,
Exhibit C-8
any
failure of any Party to comply with any obligation, covenant, agreement or
condition contained herein may be waived only if set forth in an instrument in
writing signed by the party or parties to be bound by such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
13. Interpretation.
(a) All
references in this Agreement to Exhibits, Articles, Sections, subsections and
other subdivisions refer to the corresponding Exhibits, Articles, Sections,
subsections and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles,
Sections, subsections or other subdivisions of this Agreement are for
convenience only, do not constitute any part of such Articles, Sections,
subsections or other subdivisions, and shall be disregarded in construing the
language contained therein. The words “this Agreement,” “herein,”
“hereby,” “hereunder” and “hereof” and words of similar import, refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. The words “this Section,” “this subsection” and words of
similar import, refer only to the Sections or subsections hereof in which such
words occur. The word “including” (in its various forms) means
“including, without limitation.” Pronouns in masculine, feminine or
neuter genders shall be construed to state and include any other gender and
words, terms and titles (including terms defined herein) in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise expressly requires. Unless the context otherwise requires,
all defined terms contained herein shall include the singular and plural and the
conjunctive and disjunctive forms of such defined terms. Unless the
context otherwise requires, all references to a specific time shall refer to
Central time.
(b) Unless
otherwise specified, in computing any period of time described herein, the day
of the act or event after which the designated period of time begins to run is
not to be included and the last day of the period so computed is to be included,
unless such last day is not a Business Day, in which event the period shall run
until the end of the next day which is a Business Day. The last day
of any period of time described herein shall be deemed to end at 5:00 p.m.,
Central time. As used in this Agreement, “Business Day” shall
mean any day that is not a Saturday, Sunday or other day on which banks are
required or authorized by law to be closed in New York, New York.
14. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
15. Entire
Agreement. This Agreement (together with the Merger Agreement
in the case of Nexus and Regency) constitutes the entire agreement among the
Parties with respect to the subject matters hereof and thereof and supersede any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to
Exhibit C-9
the
subject matter hereof or thereof. This Agreement shall not affect any
rights or obligations of Nexus or Regency under the Merger
Agreement.
16. No Third Party
Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
17. Governing
Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
18. Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision so long as the economic or legal substance of
the transactions contemplated herein are not affected in any manner materially
adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the Parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent
possible.
19. Succession and
Assignment.
(a) This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of Regency and Nexus;
provided, however, that both
Regency and Nexus may (i) assign any or all of their respective rights and
interests hereunder to one or more of their respective Affiliates and (ii)
designate one or more of their respective Affiliates to perform their respective
obligations hereunder (in any or all of which cases Regency or Nexus, as the
case may be, nonetheless shall remain responsible for the performance of all of
its obligations hereunder).
(b) Notwithstanding
the provisions in Section 19(a), any
corporation or association into which the Escrow Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer all or substantially all of its corporate trust business and assets as
a whole or substantially as a whole, or any corporation or association resulting
from any such conversion, sale, merger, consolidation or transfer to which the
Escrow Agent is a party, shall be and become the successor escrow agent under
this Agreement and shall have and succeed to the rights, powers, duties,
immunities and privileges as its predecessor, without the execution or filing of
any instrument or paper or the performance of any further act.
* * * *
*
Exhibit C-10
[The
remainder of this page intentionally left blank.]
Exhibit C-11
IN WITNESS WHEREOF, the
Parties have executed and delivered this Agreement as of the date first written
above.
ESCROW
AGENT
XXXXX
FARGO BANK, NATIONAL ASSOCIATION,
as Escrow
Agent
By:
Name:
Title:
REGENCY
By:
Name:
Title:
NEXUS
NEXUS
GAS PARTNERS, LLC
By:
Name:
Title:
Exhibit C-12
EXHIBIT
A
ACCOUNT
DIRECTION FOR CASH BALANCES
Xxxxx
Fargo Money Market Deposit Account (MMDA)
We
understand that amounts on deposit in the MMDA are insured, subject to the
applicable rules and regulations of the Federal Deposit Insurance Corporation
(FDIC), in the basic FDIC insurance amount of $100,000 per depositor, per
insured bank. This includes principal and accrued interest up to a total of
$100,000. We understand that deposits in the MMDA are not
secured.
Each of
the undersigned acknowledges that it has full power to direct investments of the
Account(s).
We
understand that we may jointly change this direction at any time and that it
shall continue in effect until revoked or modified by us by joint written notice
to you.
Signature:____________________ Signature:_______________________
Date:
________________________ Date:___________________________
Exhibit C-13
EXHIBIT
B
WIRING
INSTRUCTIONS
Entity Wiring
Instructions
Regency Bank
Name:
Account
Name:
Account
No:
ABA No:
Nexus Bank
Name:
Account
Name:
Account
No:
ABA No:
Exhibit C-14
EXHIBIT
C-1
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of Regency Energy
Partners LP (“Regency”), and are
authorized to initiate and approve transactions of all types for the
above-mentioned account on behalf of Regency.
Name
/ Title
|
Specimen
Signature
|
____________________
Name
_____________________
Title
|
________________________________
Signature
|
____________________
Name
_____________________
Title
|
________________________________
Signature
|
Exhibit C-15
EXHIBIT
C-2
CERTIFICATE
AS TO AUTHORIZED SIGNATURES
The
specimen signatures shown below are the specimen signatures of the individuals
who have been designated as authorized representatives of Nexus Gas Partners,
LLC (“Nexus”),
and are authorized to initiate and approve transactions of all types for the
above-mentioned account on behalf of Nexus.
Name
/ Title
|
Specimen
Signature
|
____________________
Name
_____________________
Title
|
________________________________
Signature
|
____________________
Name
_____________________
Title
|
________________________________
Signature
|
Exhibit
C-16
EXHIBIT
D
FEES OF
ESCROW AGENT
[Fee
schedule omitted. Registrant will furnish supplemental copies to the
Securities and Exchange Commission upon request.]
Exhibit
C-17
Exhibit
D
Logansport
Compressors
2 – G3516
LE Caterpillar w/ Ariel Compressors 1340 hp
1 – Ajax
DPC280 540 hp
Dehydration
1 –
Molecular Sieve Dehydration Unit 37.5 MMcf/d
1 –
Triethylene Glycol (TEG) Dehydration Unit 40 MMcf/d
With 750,000 Reboiler and BTEX
Unit
1 –
Triethylene Glycol (TEG) Dehydration Unit 50 MMcf/d
With 1,000,000 Reboiler and BTEX
Unit
1 – 400
gallon gun barrel distillate tank
4 – 210
gallon gun barrel distillate tanks
Spider
1 - G3516
LE Caterpillar w/ Ariel Compressors 1340 hp
2 –
Scrubbers
1 – 400
gallon gun barrel distillate tank
2 – 210
gallon gun barrel distillate tanks
[Map
omitted. Registrant will furnish supplemental copies to the Securities and
Exchange Commission upon request.]
Exhibit D
EXHIBIT
E
|
MUTUAL
RELEASE
(INDIVIDUAL)
This
Mutual Release (the “Release”) is entered
into as of the 22nd day of
February, 2008, by and among (i) [__________] (the “Releasing Party”) in
all capacities, including without limitation, in his capacity as a direct or
indirect owner of an Equity Interest in and/or director, officer or manager of
Nexus Gas Holdings, LLC, a Delaware limited liability company (“Nexus”), Nexus Gas
Finance, LLC, a Delaware limited liability company (“Nexus Gas”), Nexus
Gas Midstream Services, LLC, a Delaware limited liability company (“Nexus Midstream”),
Nexus Gas GP, LLC, a Delaware limited liability company (“Nexus GP”), and Nexus
Gas Gathering, LP, a Texas limited partnership (“Nexus Gathering” and,
together with Nexus, Nexus Gas, Nexus Midstream, Nexus GP and, from and after
the Effective Time, the Surviving Company, the “Nexus Companies”),
(ii) the Nexus Companies, (iii) Regency Energy Partners LP, a Delaware limited
partnership (“Regency”), and (iv)
Regency NX, LLC, a Delaware limited liability company (“Merger Sub” and,
together with Regency, the “Regency
Companies”).
WHEREAS,
the Regency Companies, Nexus and Nexus Gas Partners, LLC, a Delaware limited
liability company are parties to that certain Agreement and Plan of Merger,
dated as of February 22, 2008 (the “Merger Agreement”);
and
WHEREAS,
to induce the Regency Companies to enter into and perform their respective
obligations under the Merger Agreement, the Releasing Party has agreed to
execute, deliver and perform its obligations under this Release and it is a
condition to the execution of the Merger Agreement by the Regency Companies that
the Regency Companies, the Releasing Party and the Nexus Companies enter into
this Release at or prior to execution of the Merger Agreement.
1. Release of the Company
Group. Effective as of the
Closing under the Merger Agreement and without any further action by any party
hereto:
(a) Subject to Section 1(d), the
Releasing Party, for himself and on behalf of any other Person claiming by or
through the Releasing Party, hereby finally, unconditionally, irrevocably and
absolutely forever releases, acquits, remises and discharges:
(1) The Regency
Companies, each of their respective Affiliates controlled by Regency, each Nexus
Company and each of their respective individual, joint or mutual, past, present
and future officers, directors, shareholders, members, managers, partners
(limited and/or general) and employees, and all of the foregoing Persons’
predecessors, successors, assigns, agents and representatives (collectively, the
“Company
Group”), from any and all Claims that
Exhibit
E-1
the
Releasing Party (or any other Person claiming by or through the Releasing Party)
may now have, has ever had, or that might subsequently accrue to the Releasing
Party (or any other Person claiming by or through the Releasing Party),
including without limitation any Claims (i) that may be asserted derivatively,
whether on behalf of any Nexus Company or otherwise, against any current or
former officer, director, partner, member, manager or employee of any member of
the Company Group, including without limitation with respect to the negotiation,
execution and delivery of the Merger Agreement or any other Transaction Document
or otherwise related to the transactions contemplated thereby,
(ii) relating to breach of fiduciary duty, (iii) relating to breach of or
arising pursuant to rights, including without limitation any rights of
indemnification, under the Organizational Documents of any Nexus Company, (iv)
relating to requests for information or any failure to provide required reports
or complete or correct information to the Releasing Party, or any officers
and/or, directors of any Nexus Company, (v) relating to the operation or
management of any Nexus Company by the officers, directors and Affiliates of
such Nexus Company, or (vi) relating to any failure of any Nexus Company to
offer the Releasing Party the right to acquire any additional Equity Interests
of any member of the Company Group or any violation of any preemptive rights of
the Releasing Party; and
(2) each agent,
consultant, advisor, fiduciary and other representative (including legal
counsel, accountants and financial advisors) of each Nexus Company (the “Extended Company
Parties”) from and against any and all Claims that the Releasing Party
(or any other Person claiming by or through the Releasing Party) may now have,
has ever had, or that might subsequently accrue to the Releasing Party (or any
other Person claiming by or through the Releasing Party) that may be asserted
derivatively, whether on behalf of any Nexus Company or otherwise, against any
agent, consultant, advisor, fiduciary and other representative (including legal
counsel, accountants and financial advisors) of the Company Group to the extent
arising as a result of or in connection with or related to the negotiation,
execution and delivery of the Merger Agreement or any other Transaction Document
or otherwise related to the transactions contemplated thereby ((1) and (2),
collectively, the “Releasing Party Released
Claims”).
(b)
SUBJECT
TO SECTION 1(d), THE RELEASE IN SECTION 1(a) IS SPECIFICALLY INTENDED TO OPERATE
AND BE APPLICABLE EVEN IF IT IS ALLEGED, CHARGED OR PROVEN THAT ALL OR SOME OF
THE CLAIMS OR DAMAGES RELEASED WERE SOLELY AND COMPLETELY CAUSED BY ANY ACTS OR
OMISSIONS, WHETHER NEGLIGENT, GROSSLY NEGLIGENT, INTENTIONAL OR OTHERWISE, OF OR
BY THE COMPANY GROUP OR ANY EXTENDED COMPANY PARTIES.
(c) The Releasing Party
represents and warrants that it has not transferred, pledged, assigned or
otherwise hypothecated to any other Person all or any portion of any Releasing
Party Released Claims (or any Claims that would constitute Releasing Party
Released Claims but for any such transfer, pledge or assignment) or any rights
or entitlements with respect thereto and the execution and delivery of this
Release does not violate or conflict with the terms of any contract, agreement
or other instrument to which the Releasing Party is a party or by which the
Releasing Party otherwise is bound.
Exhibit
E-2
(d) (i) Nothing
contained in this Release is intended to, nor does it, limit, impair or
otherwise modify or affect any rights of the Releasing Party (or any other
Person claiming by or through the Releasing Party) or the obligations of the
Regency Companies or any Nexus Company expressly set forth in or arising under
the Merger Agreement or any other Transaction Document and any facts,
circumstances or Claims to the extent entitling the Releasing Party (or any
other Person claiming by or through the Releasing Party) to any recovery under
the Merger Agreement or any other Transaction Document.
(ii)Nothing contained in this Release is intended to, nor does it, limit, impair
or otherwise modify or affect any rights of the Releasing Party (or any other
Person claiming by or through the Releasing Party) or the obligations of any
member of the Company Group, other than the Regency Companies and their
respective Affiliates controlled by Regency and the Nexus Companies, with
respect to any Claim the Releasing Party may have against such Person to the
extent (a) such Claim is independent of such Person’s actions in its capacity as
a direct or indirect equityholder of the Regency Companies or their respective
Affiliates controlled by Regency or any Nexus Company or as an officer,
director, member, manager, partner or employee of any such equityholder or the
Regency Companies or their respective Affiliates controlled by Regency or the
Nexus Companies and (b) neither Regency, Merger Sub or any of their respective
Affiliates controlled by Regency or any Nexus Company has any direct or indirect
liability with respect to such Claim.
(iii)Furthermore, none of the provisions set forth in this Release shall be
deemed a waiver by the Releasing Party (or any other Person claiming by or
through the Releasing Party) of any right or remedy which the Releasing Party
may have, at law or in equity, based on fraudulent acts or omissions of any
member of the Company Group or any Extended Company Party in connection with the
transactions contemplated by the Merger Agreement or otherwise, nor shall any
such provisions limit, or be deemed to limit, (c) the amounts of recovery sought
or awarded in any such claim for fraud, (d) the time period during which a claim
for fraud may be brought, or (e) the recourse which the Releasing Party may seek
against any member of the Company Group or any Extended Company Party with
respect to a claim for fraud.
(e)
The Releasing Party
acknowledges and agrees that the provisions of Section 1(a) are
valid, fair, adequate and reasonable and were agreed to with his full knowledge
and consent, were not procured through fraud, duress or mistake and have not had
the effect of misleading, misinforming or failing to inform the Releasing
Party.
(f) The Releasing
Party hereby irrevocably covenants to refrain from, directly or indirectly,
asserting any Claim or demand, or commencing, instituting or causing to be
commenced, or assisting any party in the commencement of any action, proceeding,
arbitration, audit, hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, investigative or informal) of any kind against any
member of the Company Group or any Extended Company Party based upon any
Releasing Party Released Claims released hereby. The Releasing Party
understands and agrees that, subject to Section 1(d) he is
expressly waiving all Claims against the Company Group and the Extended Company
Parties described in Section 1(a),
including, but not limited to, those Claims that it may not know of or suspect
to exist, which
Exhibit
E-3
if known,
may have materially affected the decision to provide this Release, and the
Releasing Party expressly waives any rights under applicable law that provide to
the contrary.
2. Release of the
Releasing Party Group. Effective as of the Closing under the
Merger Agreement and without any further action by any party hereto:
(a)
Subject to Section
2(d), each Regency Company and each Nexus Company for itself, and on
behalf of any other Person claiming by or through such Regency Company or Nexus
Company (collectively the “Nexus Releasors”),
hereby finally, unconditionally, irrevocably and absolutely forever releases,
acquits, remises and discharges:
(1)
Releasing Party, his executors, heirs, estate, legal representatives, assigns
and agents (collectively, the “Releasing Party
Group”) from any and all Claims, that any Nexus Releasor may now have,
has ever had, or that might subsequently accrue to any of them, including
without limitation any Claims (i) with respect to the negotiation, execution and
delivery of the Merger Agreement or any other Transaction Document or otherwise
related to the transactions contemplated thereby, (ii) relating to a breach of
fiduciary duty, (iii) relating to the operation or management of any Nexus
Company, (iv) relating to breach of or arising pursuant to rights under the
Organizational Documents of any Nexus Company, or (v) relating to requests for
information or any failure to provide required reports or complete or correct
information to any Nexus Company, or any officers and/or directors of any Nexus
Company; and
(2) each
agent, consultant, advisor, fiduciary and other representative (including legal
counsel, accountants and financial advisors) of the Releasing Party (the “Extended
Released Parties”) from and against any and all Claims that any Nexus
Releasor may now have, has ever had, or that might subsequently accrue to the
Nexus Releasors that may be asserted derivatively, whether on behalf of any
Nexus Releasor or otherwise, against any agent, consultant, advisor, fiduciary
and other representative (including legal counsel, accountants and financial
advisors) of the Releasing Party Group to the extent arising as a result of or
in connection with or related to the negotiation, execution and delivery of the
Merger Agreement or any other Transaction Document or otherwise related to the
transactions contemplated thereby ((1) and (2), collectively, the “Nexus
Released Claims”).
(b) SUBJECT
TO SECTION 2(d), THE RELEASE IN SECTION 2(a) IS SPECIFICALLY INTENDED TO OPERATE
AND BE APPLICABLE EVEN IF IT IS ALLEGED, CHARGED OR PROVEN THAT ALL OR SOME OF
THE CLAIMS OR DAMAGES RELEASED WERE SOLELY AND COMPLETELY CAUSED BY ANY ACTS OR
OMISSIONS, WHETHER NEGLIGENT, GROSSLY NEGLIGENT, INTENTIONAL OR OTHERWISE, OF OR
BY THE RELEASING PARTY GROUP OR ANY EXTENDED RELEASED PARTIES.
(c) The
Nexus Releasors represent and warrant that none of them has transferred,
pledged, assigned or otherwise hypothecated to any other Person all or any
portion of any Nexus Released Claims (or any Claims that would constitute Nexus
Released Claims but for any such transfer, pledge or assignment) or any rights
or entitlements with respect thereto and the execution and delivery of this
Release does not violate or conflict with the terms of any
contract,
Exhibit
E-4
agreement
or other instrument to which any Nexus Releasor is a party or by which it
otherwise is bound.
(d) (i) Nothing
contained in this Release is intended to, nor does it, limit, impair or
otherwise modify or affect any rights of any Nexus Releasor or the obligations
of the Releasing Party expressly set forth in or arising under the Merger
Agreement or any other Transaction Document and any facts, circumstances or
Claims to the extent entitling any Nexus Releasor to any recovery under the
Merger Agreement or any other Transaction Document.
(ii)
Nothing contained in this Release is intended to, nor does it, limit, impair or
otherwise modify or affect any rights of the Nexus Releasors or the obligations
of any member of the Releasing Party Group, other than the Releasing Party, with
respect to any Claim the Nexus Releasors may have against such Person to the
extent (a) such Claim is independent of such Person’s actions in its capacity as
an executor, heir or legal representative of the Releasing Party and (b) the
Releasing Party does not have any direct or indirect liability with respect to
such Claim.
(iii)
Furthermore, none of the provisions set forth in this Release shall be deemed a
waiver by any Nexus Releasor of any right or remedy which such Nexus Releasor
may have, at law or in equity, based on fraudulent acts or omissions of any
member of the Releasing Party Group or any of the Extended Released Parties in
connection with the transactions contemplated by the Merger Agreement or
otherwise, nor shall any such provisions limit, or be deemed to limit, (c) the
amounts of recovery sought or awarded in any such claim for fraud, (d) the time
period during which a claim for fraud may be brought, or (e) the recourse which
any Nexus Releasor may seek against any member of the Releasing Party Group or
any of the Extended Released Parties with respect to a claim for
fraud.
(e) The Nexus Releasors
acknowledge and agree that the provisions of Section
2(a) are valid, fair, adequate and reasonable and were agreed to with
their full knowledge and consent, were not procured through fraud, duress or
mistake and have not had the effect of misleading, misinforming or failing to
inform any Nexus Releasor.
(f) Each Nexus Releasor
hereby irrevocably covenants to refrain from, directly or indirectly, asserting
any Claim or demand, or commencing, instituting or causing to be commenced, or
assisting any party in the commencement of any action, proceeding, arbitration,
audit, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative or informal) of any kind against any member of the
Releasing Party Group or any of the Extended Released Parties based upon any
Nexus Released Claims released or purported to be released
hereby. The Nexus Releasors understand and agree that, subject to
Section
2(d), each of them is expressly waiving all Claims against the Releasing
Party Group and the Extended Released Parties described in Section
2(a), including, but not limited to, those Claims that they may not know
of or suspect to exist, which if known, may have materially affected the
decision to provide this Release, and each Nexus Releasor expressly waives any
rights under applicable law that provide to the contrary.
3. Reaffirmation of
Release. By the execution and delivery of this Release, each
party hereby agrees to execute and deliver to the other parties at the Closing a
confirmatory release as
Exhibit
E-5
of the
date of such Closing in the form attached hereto as Exhibit
A (a “Confirmatory
Release”). Notwithstanding the foregoing, the failure of any
party to deliver a Confirmatory Release pursuant to this Release shall have no
effect on the validity or enforceability of the release by such party pursuant
to this Release as of the Closing under the Merger Agreement.
4. Effect of
Termination. In the event of the termination of the Merger
Agreement prior to the occurrence of the Closing pursuant to the terms of the
Merger Agreement, this Release shall forthwith become void ab initio
and have no effect, without any liability on the part of any party hereto or its
Affiliates, directors, officers, managers, members, partners or
shareholders.
5. Miscellaneous.
(a) Assignment. Neither
this Release nor any rights or obligations of any party hereto may be assigned
by any party hereto, by operation of law or otherwise, without the prior written
consent of the other parties, and any purported assignment without such consent
shall be null and void.
(b) Amendments. This
Release may be amended or modified in whole or in part, only by a duly
authorized agreement in writing executed in the same manner as this Release and
which makes reference to this Release.
(c) No
Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Release or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(d) No Third Party
Beneficiaries. This Release is not intended to be for the
benefit of, and shall not be enforceable by, any Person who or which is not a
party hereto, except that (i) each of the members of the Releasing Party Group
(other than the Releasing Party) and each Extended Released Party shall be
deemed a third party beneficiary entitled to benefit from and enforce all of the
rights and benefits of the Releasing Party Group or Extended Released Party
under this Release and (ii) each of the members of the Company Group (other than
the Regency Companies or the appropriate Nexus Company, as applicable) and the
Extended Company Parties shall be deemed a third party beneficiary entitled to
benefit from and enforce all of the rights and benefits of the Company Group and
the Extended Company Parties under this Release.
(e) Entire
Agreement. This Release embodies the entire agreement and
understanding between the parties hereto relating to the subject matter hereof
and supersedes any prior agreements and understandings, both written and oral,
relating to the subject matter hereof.
(f) Invalid
Provisions. If any provision of this Release is held to be
illegal, invalid or unenforceable under present or future laws effective during
the effective period of this Release, such provision shall be fully severable;
this Release shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Release; and the
remaining provisions of this Release shall remain in full force and effect and
shall not be affected
Exhibit
E-6
by the
illegal, invalid or unenforceable provision or by its severance from this
Release. The parties further agree that if any provision contained
herein is, to any extent, held invalid or unenforceable in any respect under the
laws governing this Release, they shall take any actions necessary to render the
remaining provisions of this Release valid and enforceable to the fullest extent
permitted by law and, to the extent necessary, shall amend or otherwise modify
this Release to replace any provision contained herein that is held invalid or
unenforceable with a valid and enforceable provision giving effect to the intent
of the parties.
(g) Governing
Law. This Release will be interpreted, construed and enforced
in accordance with the laws of the State of Texas (excluding Texas choice-of-law
principles that might call for the application of some other state’s
law).
(h) Binding Effect and
Assignment. This Release shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
(i) Section
Headings. The section headings contained in this Release are
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Release.
(j) Counterparts. This
Release may be executed in multiple counterparts (including by facsimile), each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument. Facsimile signatures shall be given the
same effect as original signatures.
(k) No Admission of
Liability. Nothing in this Release shall be deemed an
admission of liability by any of the parties hereto with respect to any of the
Claims released pursuant to the Releases.
(l) Transaction
Document. This Release constitutes a Transaction Document for
purposes of the Merger Agreement.
6. Defined
Terms. For purposes of this Release, the following terms shall
have the following meanings:
“Affiliate”
means, with respect to any specified Person, any other Person which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person. For the purposes
of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
“Claims”
means all actions, arbitrations, audits, hearings, investigations, litigations,
orders, suits (whether civil, criminal, administrative, investigative or
informal), debts, sums of money, interest owed, accounts, contribution
obligations, reckonings, bonds, bills, covenants, controversies, agreements,
guaranties, promises, undertakings, variances, trespasses, credit memoranda,
charges, damages, judgments, executions, obligations, costs, expenses, fees
(including attorneys’ fees and court costs), counterclaims, claims, demands,
causes of action and liabilities, including without limitation to any rights to
indemnification, reimbursement or
Exhibit
E-7
contribution,
whether pursuant to any instrument or contract or otherwise, any and all offsets
and defenses, in each case related to any action, inaction, event, circumstance
or occurrence occurring or alleged to have occurred on or prior to the Closing
Date, whether known or unknown, absolute or contingent, matured or unmatured,
foreseeable or unforeseeable, previously or presently existing or hereafter
discovered, at law, in equity or otherwise, whether arising by statute, common
law, in contract, in tort or otherwise, of any kind, character or nature
whatsoever.
“Closing” means the
closing of the merger contemplated by the Merger Agreement.
“Closing Date” means
the date on which the Closing shall occur.
“Effective Time” shall
have the meaning given such term in the Merger Agreement.
“Equity Interest”
means (i) the equity ownership rights in a business entity, whether a
corporation, company, joint stock company, limited liability company, general or
limited partnership, joint venture, bank, association, trust, trust company,
land trust, business trust, sole proprietorship or other business entity or
organization, and whether in the form of capital stock, ownership unit, limited
liability company interest, limited or general partnership interest or any other
form of ownership, and (ii) also includes all Equity Interest
Equivalents.
“Equity Interest
Equivalents” means all rights, warrants, options, convertible securities
or indebtedness, exchangeable securities or other instruments, or other rights
that are outstanding and exercisable for or convertible or exchangeable into,
directly or indirectly, any Equity Interest at the time of issuance or upon the
passage of time or occurrence of some future event.
“Organizational
Documents” means with respect to any particular
entity: (a) if a corporation, its articles or certificate of
incorporation and its bylaws; (b) if a limited partnership, its limited
partnership agreement and its articles or certificate of limited partnership;
(c) if a limited liability company, its articles of organization or certificate
of formation and its limited liability company agreement or operating agreement;
(d) all related equityholders’ agreements, voting agreements, voting trust
agreements, joint venture agreements or registration rights agreements; and (e)
any amendment or supplement to any of the foregoing.
“Person” means an
individual or entity, including any Nexus Company, corporation, association,
joint stock company, trust, joint venture, limited liability company,
unincorporated organization, or governmental authority.
“Surviving Company”
shall have the meaning given such term in the Merger Agreement.
“Transaction
Documents” shall have the meaning given such term in the Merger
Agreement.
[Signature
page follows]
Exhibit
E-8
REGENCY:
By:
Regency GP LP, its general partner
By:
Regency GP LLC, its general partner
By:______________________________
Name Xxxxxxx
X. Xxxxxxxx
Title Executive
Vice President and Chief Operating
Officer
|
|
MERGER SUB:
REGENCY
NX, LLC
By: _____________________________
Name: Xxxxxxx
X. Xxxxxxxx
Title: Vice
President
|
|
NEXUS COMPANIES:
|
|
NEXUS
GAS HOLDINGS, LLC
By:
Name:
Title:
|
|
NEXUS
GAS FINANCE, LLC
By:
Name:
Title:
|
|
NEXUS
GAS MIDSTREAM SERVICES, LLC
By:
Name:
Title:
|
|
NEXUS
GAS GP, LLC
By:
Name:
Title:
|
|
NEXUS
GAS GATHERING, LP
By: Nexus
Gas GP, LLC, its general partner
By:
Name:
Title:
|
|
RELEASING PARTY:
[_______________]
By:
|
S-1
EXHIBIT
A
Form of Confirmatory
Release
[Date]
The
undersigned hereby acknowledges and reaffirms all of the terms and other
provisions set forth in the Mutual Release, dated February 22, 2008 (the
“Release
Agreement”), by and among the undersigned (“Confirming Party”),
the Nexus Companies and the Regency Companies. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such
terms in the Release Agreement.
Effective
as of the date hereof, the Confirming Party acknowledges, reaffirms and
restates, mutatis
mutandis, all of the terms and other provisions set forth in the Release
as if the Release had been executed as of the date hereof.
Confirming
Party
A-1
Exhibit
F
The
facilities are located in Shelby County, Texas and DeSoto Parish, Louisiana, and
are comprised of two compressor stations, pipelines, valves, and meter
stations.
The
pipelines consist of the following:
Pipe
|
Louisiana
|
Texas
|
|||||||||||||||||
Size
|
Identification
|
Feet
|
Miles
|
Feet
|
Miles
|
||||||||||||||
14 | 59,933.28 | 11.35 | 12,408.00 | 2.35 | |||||||||||||||
14 | 59,933.28 | 11.35 | 12,408.00 | 2.35 | |||||||||||||||
00 |
XX-000
Xxxxx X 00"
|
3,699.00 | 0.70 | ||||||||||||||||
12 | 3,699.00 | 0.70 | |||||||||||||||||
00 |
XX-000
Xxxxx I&II
|
28,199.00 | 5.34 | ||||||||||||||||
10 |
LF-133
Phase III
|
33,596.00 | 6.36 | ||||||||||||||||
10 | 61,795.00 | 11.70 | |||||||||||||||||
8 |
LF-3
|
4,480.00 | 0.85 | ||||||||||||||||
8 |
LF-8
|
3,578.00 | 0.68 | ||||||||||||||||
8 |
Spider
Supply Line
|
17,627.81 | 3.34 | ||||||||||||||||
8 |
LF-15
|
2,516.00 | 0.48 | ||||||||||||||||
8 |
LF-127
Crosstex
|
4,615.64 | 0.87 | ||||||||||||||||
8 |
LF-128
Classic
|
29,721.28 | 5.63 | ||||||||||||||||
8 |
LF-131
Xxxxxxxx 8" Lateral
|
2,727.36 | 0.52 | ||||||||||||||||
8 |
Spider
Suction Line
|
1,859.21 | 0.35 | ||||||||||||||||
8 |
Classic
Xxxxxxx
|
4,067.34 | 0.77 | ||||||||||||||||
8 | 68,676.64 | 13.01 | 2,516.00 | 0.48 | |||||||||||||||
6 |
LF-31
|
10,750.00 | 2.04 | ||||||||||||||||
6 |
LF-39
|
17,370.00 | 3.29 | ||||||||||||||||
6 |
LF-49
|
4,498.00 | 0.85 | ||||||||||||||||
6 |
LF-50
|
9,240.00 | 1.75 | ||||||||||||||||
6 |
LF-47
|
3,270.00 | 0.62 | ||||||||||||||||
6 |
LF-54
|
3,640.00 | 0.69 | ||||||||||||||||
6 |
LF-132
Xxxxxxxx Valmac
|
3,641.00 | 0.64 | ||||||||||||||||
6 |
LF-135
Xxxxxxxx To Classic
|
264.00 | 0.05 | ||||||||||||||||
6 | 45,763.00 | 8.62 | 6,910.00 | 1.31 |
Exhibit
F-1
0 |
Xxxxx
Xxxx #0000
|
9,445.92 | 1.79 | ||||||||||||||||
0 |
Xxxxx
Xxxx #0000
|
32,340.00 | 6.13 | ||||||||||||||||
4 |
LIG
Tie-In
|
1,473.12 | 0.28 | ||||||||||||||||
4 |
LF-9
|
109.60 | 0.02 | ||||||||||||||||
4 |
LF-13
|
2,481.00 | 0.47 | ||||||||||||||||
4 |
LF-34
|
1,850.00 | 0.35 | ||||||||||||||||
4 |
LF-35
|
7,360.00 | 1.39 | ||||||||||||||||
4 |
LF-40
|
30.00 | 0.01 | ||||||||||||||||
4 |
LF-41
|
3,298.00 | 0.62 | ||||||||||||||||
4 |
LF-43
|
2,293.00 | 0.43 | ||||||||||||||||
4 |
LF-44
|
8,727.00 | 1.65 | ||||||||||||||||
4 |
LF-45
|
2,676.00 | 0.51 | ||||||||||||||||
4 |
LF-51
|
48.00 | 0.01 | ||||||||||||||||
4 |
LF-52
|
2,617.50 | 0.50 | ||||||||||||||||
4 |
LF-65
|
5,171.00 | 0.98 | ||||||||||||||||
4 |
LF-66
|
35.00 | 0.01 | ||||||||||||||||
4 |
LF-67
|
2,002.00 | 0.38 | ||||||||||||||||
4 |
LF-70
|
2,008.00 | 0.38 | ||||||||||||||||
4 |
LF-71
|
2,380.00 | 0.45 | ||||||||||||||||
4 |
LF-78
|
890.00 | 0.17 | ||||||||||||||||
4 |
LF-81
|
3,587.00 | 0.68 | ||||||||||||||||
4 |
LF-82
|
3,030.00 | 0.57 | ||||||||||||||||
4 |
LF-83
|
430.00 | 0.08 | ||||||||||||||||
4 |
LF-89
|
357.00 | 0.07 | ||||||||||||||||
4 |
LF-92
|
164.00 | 0.03 | ||||||||||||||||
4 |
LF-93
|
4,915.00 | 0.93 | ||||||||||||||||
4 |
LF-102
|
1,483.00 | 0.28 | ||||||||||||||||
4 |
LF-103
|
2,380.80 | 0.45 | ||||||||||||||||
4 |
LF-109
|
8,067.00 | 1.53 | ||||||||||||||||
4 |
LF-110
|
2,250.00 | 0.43 | ||||||||||||||||
4 |
LF-111
|
216.00 | 0.04 | ||||||||||||||||
4 |
LF-112
|
1,800.00 | 0.34 | ||||||||||||||||
4 |
LF-114
|
175.60 | 0.03 | ||||||||||||||||
4 |
LF-115
|
411.80 | 0.08 | ||||||||||||||||
4 |
LF-116
|
130.00 | 0.02 | ||||||||||||||||
4 |
LF-117
|
1,555.00 | 0.29 | ||||||||||||||||
4 |
LF-118
|
1,200.00 | 0.23 |
Exhibit
F-2
4 |
LF-12
|
299.20 | 0.06 | ||||||||||||||||
4 |
LF-16
|
294.00 | 0.06 | ||||||||||||||||
4 |
LF-20
|
280.00 | 0.05 | ||||||||||||||||
4 |
LF-29
|
26.10 | - | ||||||||||||||||
4 |
LF-33
|
1,953.60 | 0.37 | ||||||||||||||||
4 |
LF-38
|
6,267.00 | 1.19 | ||||||||||||||||
4 |
LF-46
|
626.50 | 0.12 | ||||||||||||||||
4 |
LF-61
|
2,057.20 | 0.39 | ||||||||||||||||
4 |
LF-63
|
1,900.00 | 0.36 | ||||||||||||||||
4 |
LF-85
|
1,717.00 | 0.33 | ||||||||||||||||
4 |
LF-86
|
1,257.00 | 0.24 | ||||||||||||||||
4 |
LF-91
|
160.00 | 0.03 | ||||||||||||||||
4 |
LF-94
|
2,339.00 | 0.44 | ||||||||||||||||
4 |
LF-96
|
5,373.00 | 1.02 | ||||||||||||||||
4 |
LF-97
|
448.80 | 0.09 | ||||||||||||||||
4 |
LF-98
|
2,346.20 | 0.44 | ||||||||||||||||
4 |
LF-100
|
3,817.30 | 0.72 | ||||||||||||||||
4 |
LF-106
|
2,249.00 | 0.43 | ||||||||||||||||
4 |
LF-108
|
965.70 | 0.18 | ||||||||||||||||
4 |
LF-119
|
1,394.00 | 0.26 | ||||||||||||||||
0 |
XX-000
Xxxxxxxx Xxxxxx
|
634.00 | 0.12 | ||||||||||||||||
0 |
XX-000
Xxxxxxxx Xxxx
|
992.00 | 0.19 | ||||||||||||||||
4 |
LF-137
Xxxxxxxx Xxxxxxxx
|
2,194.00 | 0.42 | ||||||||||||||||
4 |
LF-138
Xxxxxxxx Xxxxxxxx
|
189.00 | 0.04 | ||||||||||||||||
4 |
LF-139
Xxxxxxxx Weyerhauser
|
398.00 | 0.08 | ||||||||||||||||
4 |
Classic
Xxxxx
|
7,530.50 | 1.43 | ||||||||||||||||
4 |
Classic
Marfel
|
4,828.00 | 0.91 | ||||||||||||||||
4 | 136,152.84 | 25.79 | 35,770.60 | 6.78 | |||||||||||||||
3 |
LF-42
|
377.00 | 0.07 | ||||||||||||||||
3 |
LF-93
Extension Will Drill
|
438.00 | 0.08 | ||||||||||||||||
3 | 815.00 | 0.15 | |||||||||||||||||
2 |
LF-77
|
720.00 | 0.14 | ||||||||||||||||
2 |
LF-105
|
247.00 | 0.05 | ||||||||||||||||
2 | - | - | 967.00 | 0.19 | |||||||||||||||
Exhibit
F-3
PERSONAL
PROPERTY
All above
ground appurtenances to include office and compressor buildings, shops, and
sheds.
All
existing hand tools and specialty tools.
Trucks and
Equipment
1997
Ford PU VIN
0XXXX00X0XXX00000
2006
Ford F250 VIN
0XXXX00X0XXX00000
2006
Ford F250 VIN
0XXXX00X00XX00000
2007
Ford F250S VIN
0XXXX00000XX00000
2007
Ford F150
VIN 0XXXX00XX0XX00000
ATV
Mule
16 foot
Dual Axle Trailer
Pneumatic
Hand Grease Gun
Xxxxxx
Bore Scope
Radio
Detection Pipe Locator
Power
Washer
2 ea.
Battery Chargers
Office
Building
All as-is
office desks, chairs, tables, file cabinets, print racks with prints and book
cases.
Nexus
Server 1
Nexus
Server 2
Nexus
Sequel Server
Dell Desk
Top Computer
Telephones
Fire
Extinguishers
Kitchen
Equipment
Stove
Refrigerator
Microwave
Hoshizaki
Ice Maker
Work Shop Tools &
Equipment
Work
Bench
Storage
Shelving
Craftsman
Electric Shop air Compressor
Bench
Vise
Pipe Line
Up Clamps 2” and larger
Exhibit
F-4
Spare
orifice plates and seal rings
2
Deadweight Testers
Gas
Sample Cylinders and Associated Containers
Rigid
Pipe Cutter
Hand Pipe
Threader
[Map
omitted. Registrant will furnish supplemental copies to the Securities
Exchange Commission upon request.]
Exhibit
F-5
Exhibit
G
Alternative
A
The Sonat
Abandonment Application shall request abandonment authorization from FERC under
Section 7(b) of the NGA for all Sonat Assets that are currently certificated
under Section 7(c) of the NGA and that are to be sold to Nexus pursuant to the
Sonat Purchase Agreement. The Sonat Abandonment Application shall
request that all such Sonat Assets be reclassified by FERC as “gathering”
facilities exempt from NGA jurisdiction pursuant to Section 1(b) of the
NGA.
Alternative
B
The Sonat
Abandonment Application shall request abandonment authorization from FERC under
Section 7(b) of the NGA for all Sonat Assets that are currently certificated
under Section 7(c) of the NGA and that that are to be sold to Nexus pursuant to
the Sonat Purchase Agreement. Specifically, the Sonat Abandonment
Application shall request that: (i) the Carthage Line and the
Logansport Compressor Station be reclassified by FERC as “gathering” facilities
exempt from NGA jurisdiction pursuant to Section 1(b) of the NGA and (ii) the
14-inch Line and the 16-inch Line be reclassified by FERC as intrastate pipeline
facilities as defined by Section 2(16) of the Natural Gas Policy Act of 1978
(“NGPA”). The
Sonat Abandonment Application shall further request that FERC authorize the
transfer of the 14-inch Line and the 16-inch Line to the Surviving Company and
the subsequent transfer thereof by the Surviving Company to Regency Intrastate
Gas LLC (“RIGS”). The
Sonat Abandonment Application shall inform FERC that (A) subsequent to the
transfer of the 14-inch Line and the 16-inch Line to RIGS, interstate
transportation service on the 14-inch Line and the 16-inch Line will be subject
to RIGS’ currently applicable system-wide NGPA Section 311 maximum rates,
including RIGS’ currently applicable fuel retention, and RIGS’ Operating
Statement on file with the FERC and (B) RIGS will, upon obtaining the Final FERC
Approval Order in accordance with Alternative B, construct pipeline facilities
that will interconnect the RIGS system with either the 14-inch Line or the
16-inch Line or both.
Alternative
C
The Sonat
Abandonment Application shall request abandonment authorization from FERC under
Section 7(b) of the NGA for all Sonat Assets that are currently certificated
under Section 7(c) of the NGA and that that are to be sold to Nexus pursuant to
the Sonat Purchase Agreement. Specifically, the Sonat Abandonment
Application shall request that: (i) the Carthage Line, the Logansport
Compressor Station and the 16-inch Line be reclassified by FERC as “gathering”
facilities exempt from NGA jurisdiction pursuant to Section 1(b) of the NGA and
(ii) the 14-inch Line be reclassified by FERC as intrastate pipeline facilities
as defined by Section 2(16) of the NGPA. The Sonat Abandonment
Application shall further request that FERC authorize the transfer of the
14-inch Line to the Surviving Company and the subsequent transfer thereof by the
Surviving Company to RIGS. The Sonat Abandonment Application shall
inform FERC that (A) subsequent to the transfer of the 14-inch Line to RIGS,
interstate transportation service on the 14-inch Line will be subject to RIGS’
currently applicable system-wide NGPA Section 311
Exhibit
G-1
maximum
rates, including RIGS’ currently applicable fuel retention, and RIGS’ Operating
Statement on file with the FERC and (B) RIGS will, upon obtaining the
Final FERC Approval Order in accordance with Alternative C, to construct
pipeline facilities that will interconnect the RIGS system with the 14-inch
Line.
Exhibit
G-2