EXECUTION COPY
UNIT TRANSFER AND CONTRIBUTION AGREEMENT
AMONG
E-HOLDINGS III, L.P.
PAAI LLC, as Seller
PLAINS RESOURCES INC.
AND
PLAINS ALL AMERICAN INC.
Dated as of May 8, 2001
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS............................................................. 2
SECTION 1.01 Certain Defined Terms.............................. 2
ARTICLE II. PURCHASE AND SALE OF SUBORDINATED UNITS; CLOSING....................... 12
SECTION 2.01 Sale of Buyer Subordinated Units................... 12
SECTION 2.02 Payment of Purchase Price.......................... 12
SECTION 2.03 Closing............................................ 12
SECTION 2.04 Deliveries at the Closing.......................... 12
SECTION 2.05 Simultaneous Deliveries............................ 14
SECTION 2.06 Sales and Transfer Taxes........................... 14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT,
RODEO, INC. AND SELLER............................................................ 15
SECTION 3.01 Organization, Authority and Qualification.......... 15
SECTION 3.02 Capitalization of the Company; Ownership of the 17
Units............................................. 17
SECTION 3.03 Company Subsidiaries............................... 17
SECTION 3.04 Entity Books and Records........................... 19
SECTION 3.05 No Conflicts....................................... 19
SECTION 3.06 Governmental Consents and Approvals................ 19
SECTION 3.07 SEC Reports, Financial Information, Books and 20
Records........................................... 20
SECTION 3.08 No Undisclosed Liabilities......................... 20
SECTION 3.09 Absence of Certain Changes, Events and Conditions.. 21
SECTION 3.10 Litigation......................................... 21
SECTION 3.11 Compliance with Laws............................... 21
SECTION 3.12 Material Contracts................................. 22
SECTION 3.13 Employee Benefit Matters........................... 22
SECTION 3.14 Environmental Matters.............................. 23
SECTION 3.15 Taxes.............................................. 24
SECTION 3.16 Brokers............................................ 25
SECTION 3.17 No Required Stockholder or Unitholder Vote or 25
Consent........................................... 25
SECTION 3.18 Fairness Opinion................................... 25
SECTION 3.19 Takeover Restrictions.............................. 25
SECTION 3.20 Transactions with Related Parties.................. 25
SECTION 3.21 Title.............................................. 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER................................ 26
SECTION 4.01 Organization and Authority of Buyer................ 26
SECTION 4.02 No Conflict........................................ 26
SECTION 4.03 Governmental Consents and Approvals................ 27
SECTION 4.04 Brokers............................................ 27
SECTION 4.05 Restrictions on Company Business Activities........ 27
SECTION 4.06 Investment Representations......................... 27
SECTION 4.07 Financing.......................................... 28
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SECTION 4.08 Title.............................................. 28
ARTICLE V. ADDITIONAL AGREEMENTS................................................... 28
SECTION 5.01 Conduct of Business Prior to the Closing........... 28
SECTION 5.02 Access to Information.............................. 31
SECTION 5.03 Confidentiality.................................... 32
SECTION 5.04 Regulatory and Other Authorizations; Notices and 32
Consents.......................................... 32
SECTION 5.05 Notice of Certain Matters.......................... 32
SECTION 5.06 Expenses........................................... 33
SECTION 5.07 Cooperation........................................ 33
SECTION 5.08 Publicity.......................................... 33
SECTION 5.09 Credit Agreements.................................. 33
SECTION 5.10 Employee Benefit Matters; Separation............... 33
SECTION 5.11 No Solicitation.................................... 34
SECTION 5.12 Certain Contracts.................................. 35
SECTION 5.13 Transfer Restrictions.............................. 35
SECTION 5.14 Restructuring...................................... 35
SECTION 5.15 Company Partnership Agreement...................... 36
ARTICLE VI. CONTRIBUTIONS.......................................................... 36
SECTION 6.01 Pre-Closing Events................................. 36
SECTION 6.02 Closing Events..................................... 36
ARTICLE VII. CONDITIONS TO CLOSING................................................. 37
SECTION 7.01 Conditions to the Obligations of Each Party........ 37
SECTION 7.02 Conditions to the Obligations of Buyer............. 37
SECTION 7.03 Conditions to the Obligations of Rodeo, Inc. and
Seller............................................ 38
ARTICLE VIII. TERMINATION AND WAIVER............................................... 38
SECTION 8.01 Termination........................................ 38
SECTION 8.02 Effect of Termination.............................. 40
ARTICLE IX. GENERAL PROVISIONS..................................................... 40
SECTION 9.01 Survival of Representations, Warranties and
Covenants......................................... 40
SECTION 9.02 Notices............................................ 40
SECTION 9.03 Entire Agreement................................... 41
SECTION 9.04 Headings........................................... 41
SECTION 9.05 Separability....................................... 41
SECTION 9.06 Assignment......................................... 41
SECTION 9.07 Amendment.......................................... 41
SECTION 9.08 Governing Law; Forum............................... 42
SECTION 9.09 Counterparts....................................... 42
SECTION 9.10 Specific Performance............................... 42
SECTION 9.11 Waiver of Jury Trial............................... 42
SECTION 9.12 Attorney's Fees.................................... 42
SECTION 9.13 Extensions, Waivers, Etc........................... 42
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SECTION 9.14 Word Meanings...................................... 43
Exhibits:
---------
Exhibit A - Newco LP Certificate
Exhibit B - Initial Newco LP Agreement
Exhibit C - Newco GP LLC Certificate
Exhibit D - Initial Newco GP LLC Agreement
Exhibit E - Newco GP LLC Operating Agreement
Exhibit F - Newco LP Partnership Agreement
Exhibit G - Registration Rights Agreement
Exhibit H Value Assurance Agreement
Exhibit I - Form of Parent, Rodeo, Inc. and Seller's
Officer's Certificate
Exhibit J - Form of Parent, Rodeo, Inc. and Seller's
Secretary's Certificate
Exhibit K - Form of Buyer's Officer's Certificate
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EXECUTION COPY
UNIT TRANSFER AND CONTRIBUTION AGREEMENT
UNIT TRANSFER AND CONTRIBUTION AGREEMENT, dated as of May 8, 2001, among E-
Holdings III, L.P., a Texas limited partnership ("BUYER"), Plains Resources
Inc., a Delaware corporation ("PARENT"), Plains All American Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("RODEO, INC.") and PAAI LLC,
a Delaware limited liability company and wholly-owned, direct subsidiary of
Rodeo, Inc. ("SELLER").
RECITALS:
WHEREAS, Seller is the record and beneficial owner of at least 6,686,412
subordinated units (the "SUBORDINATED UNITS") of Plains All American Pipeline,
L.P., a Delaware limited partnership (the "COMPANY");
WHEREAS, Seller desires to sell 1,002,962 Subordinated Units to Buyer (the
"BUYER SUBORDINATED UNITS") and Buyer desires to purchase such Buyer
Subordinated Units, on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, prior to the Closing, Rodeo, Inc. desires to (a) form Plains AAP,
L.P., a Delaware limited partnership ("NEWCO LP"), pursuant to the DLPA (as
hereinafter defined) and pursuant to the certificate of limited partnership
attached hereto as Exhibit A (the "NEWCO LP CERTIFICATE") and the limited
partnership agreement attached hereto as Exhibit B (the "INITIAL NEWCO LP
AGREEMENT"), (b) form Plains All American GP LLC, a Delaware limited liability
company ("NEWCO GP LLC"), pursuant to the Delaware Limited Liability Company Act
and pursuant to the limited liability company certificate attached hereto as
Exhibit C (the "NEWCO GP LLC CERTIFICATE") and the limited liability company
agreement attached hereto as Exhibit D (the "INITIAL NEWCO GP LLC AGREEMENT"),
to act as the general partner of Newco LP, and (c) contribute such percentage
of incentive distribution rights of the Company (the "LLC INCENTIVE
DISTRIBUTIONS RIGHTS") equal to one percent (1%) of the aggregate fair market
value of the GP Interest (as hereinafter defined), the Operating Partnerships GP
Interests (as hereinafter defined) and the incentive distribution rights of the
Company to Newco GP LLC, which will further contribute the LLC Incentive
Distribution Rights to Newco LP and (d) contribute the GP Interest, the
Operating Partnerships GP Interests and such percentage of incentive
distribution rights of the Company (the "LP INCENTIVE DISTRIBUTION RIGHTS")
equal to (i) one hundred percent, less (ii) the LLC Incentive Distribution
Rights, to Newco LP as its capital contribution as Newco LP's limited partner;
WHEREAS, Rodeo, Inc., as the initial member of Newco GP LLC, the general
partner of Newco LP, and as the initial limited partner of Newco LP desires at
the Closing to (a) amend and restate the Initial Newco GP LLC Agreement to be as
set forth in Exhibit E hereto (the "NEWCO GP LLC OPERATING AGREEMENT"), (b) to
amend and restate the Initial Newco LP Agreement to be as set forth in Exhibit F
hereto (the "NEWCO LP PARTNERSHIP AGREEMENT"), (c) to admit Buyer as a member of
Newco GP LLC with a Percentage Interest (as defined in the Newco GP LLC
Operating Agreement) of 10% of Newco GP LLC (the "BUYER NEWCO GP LLC INTEREST")
in exchange for an initial capital contribution of $75,000 that will then be
distributed to Rodeo, Inc. and (d) admit Buyer as a limited partner of Newco LP
with a Partnership Percentage (as defined in the Newco LP Partnership Agreement)
of 9.9% of Newco LP (the
"BUYER NEWCO LP INTEREST") in exchange for an initial capital contribution of
$7,425,000 that will then be distributed to Rodeo, Inc.;
WHEREAS, simultaneously with the execution and delivery hereof, Xxxxx
Xxxxxxxx Capital Advisors L.P. and Sable Holdings, L.P. are entering into a
Stock Purchase Agreement for 1,000,000 shares of Parent Common Stock;
WHEREAS, simultaneously with the execution and delivery hereof, Seller,
Rodeo, Inc. and Parent are entering into Unit Transfer and Contribution
Agreements (the "SABLE AGREEMENT" and the "INVESTOR AGREEMENT," respectively)
with Sable Investments, L.P. ("SABLE INVESTMENTS"), Sable Holdings L.P. ("SABLE
HOLDINGS"), Kafu Holdings, LLC ("KAFU HOLDINGS" and, together with Sable
Holdings and the Management Entity (as defined below), the "OTHER MEMBERS"); and
WHEREAS, simultaneously with the Closing, Seller, Rodeo, Inc. and Parent
will enter into a Management Purchase Agreement whereby the Management Entity
will be entitled to purchase up to 125,000 Subordinated Units at the Buyer Unit
Purchase Price within 90 days of Closing.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, agreements
and covenants herein, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"AGREEMENT" or "THIS AGREEMENT" means this Agreement, dated as of May 8,
2001, among Buyer, Parent, Rodeo, Inc. and Seller (including the Exhibits hereto
and the Disclosure Letter) and all amendments hereto made in accordance with the
provisions of Section 9.07.
"ACQUISITION AGREEMENT" shall have the meaning specified in Section
5.11(b).
"AUDIT" means any audit, assessment of Taxes, other examination by any Tax
Authority, proceeding or appeal of such proceeding relating to Taxes.
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"BENEFIT ARRANGEMENT" shall mean any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including without limitation any "voluntary employees' beneficiary association"
as defined in Section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
restricted stock, phantom stock, stock appreciation rights, stock purchases or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits which (i) is not a Welfare Plan, Pension Plan or Multiemployer Plan
and (ii) covers any current or former employee, director, or consultant of the
Company, Seller or any ERISA Affiliate (with respect to their relationship with
such entities).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in the City of New
York.
"BUYER" has the meaning specified in the introductory paragraph to this
Agreement.
"BUYER NEWCO GP LLC INTEREST" has the meaning specified in the recitals to
this Agreement.
"BUYER NEWCO LP INTEREST" has the meaning specified in the recitals to this
Agreement.
"BUYER SUBORDINATED UNITS" has the meaning specified in the recitals to
this Agreement.
"BUYER UNIT PURCHASE PRICE" means $22.00 per unit, subject to appropriate
adjustment to reflect any split, subdivision, dividend of partnership interest,
combination or other recapitalization.
"CLASS B COMMON UNITS" shall mean the class B common units of the Company.
"CLOSING" has the meaning specified in Section 2.03.
"CLOSING DATE" has the meaning specified in Section 2.03.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"COMMON UNITS" shall mean the common units of the Company.
"COMPANY" has the meaning specified in the recitals to this Agreement.
"COMPANY FINANCIAL STATEMENTS" has the meaning specified in Section
3.07(b).
"COMPANY PARTNERSHIP AGREEMENT" means the Second Amended and Restated
Agreement of Limited Partnership of the Company dated as of November 23, 1998,
as amended to the date of this Agreement.
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"COMPANY SEC REPORTS" has the meaning specified in Section 3.07(a).
"COMPANY SUBSIDIARY" means, with respect to the Company, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by the Company or
one or more of the other Subsidiaries of the Company or a combination thereof,
or (ii) if a partnership, association or other business entity, a majority of
either (x) the partnership or other similar ownership interest thereof, or (y)
the stock or other equity interest of such partnership, association or other
business entity's general partner, managing member or similar controlling
Person, is at the time owned or controlled, directly or indirectly, by the
Company or one or more Subsidiaries of the Company or a combination thereof.
"COMPETING PROPOSAL" shall have the meaning specified in Section 5.11.
"CONFIDENTIALITY AGREEMENT" shall have the meaning specified in Section
5.03.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, or as trustee or executor, of the
power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"COURT" shall mean any court, tribunal, or other judicial or arbitral panel
of the United States, any foreign country, or any domestic or foreign state, and
any political subdivision or agency thereof.
"CREDIT AGREEMENTS" means that certain Amended and Restated Credit
Agreement [Letter of Credit and Hedged Inventory Facility], dated May 4, 2001,
among the Company, the Operating Partnerships, Fleet National Bank, as agent,
and certain lenders named therein, as amended through the date hereof, and that
certain Amended and Restated Credit Agreement [Revolving Credit Facility], dated
May 4, 2001, among the Company, the Operating Partnerships and Fleet National
Bank, as agent, and certain lenders named therein, as amended through the date
hereof, as each may be amended from time to time as provided for in Section 5.01
of the Disclosure Letter.
"DGCL" means the Delaware General Corporation Law.
"DLPA" means the Delaware Revised Uniform Limited Partnership Act.
"DISCLOSURE LETTER" means the disclosure letter delivered by Parent, Rodeo,
Inc. and Seller to Buyer simultaneously with the execution of this Agreement.
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"EMPLOYEE PLANS" shall mean all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, any defect or imperfection in title, preferential
arrangement or restriction, right to purchase, right of first refusal or other
burden or encumbrance of any kind.
"ENVIRONMENTAL LAWS" means any Law in effect on the date of this Agreement
relating to pollution or protection of the environment, health, safety or
natural resources, including, but not limited to, Laws pertaining to the use,
handling, transportation, storage, disposal, release or discharge of Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean any business or entity which is a member of a
"controlled group of corporations" with, under "common control" with, or a
member of an "affiliated service group" with the Company or Rodeo, Inc. under
Section 414(b), (c) or (m) of the Code, or which is required to be aggregated
with the Company or Rodeo, Inc. under Section 414(o) of the Code, or which is
under "common control" with the Company or Rodeo, Inc., within the meaning of
Section 4001(a)(14) of ERISA.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"GP" means the general partner of the Company.
"GP INTEREST" means the ownership interest of the general partner in the
Company (in its capacity as general partner).
"GOVERNMENTAL AUTHORITY" means any United States federal, state, local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or any Court.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HAZARDOUS MATERIALS" means (i) petroleum and petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls, and (ii) other chemicals, materials or
substances defined or regulated as toxic or hazardous or as pollutants,
contaminants or waste under any applicable Environmental Law.
"HEDGING CONTRACT" means (a) any agreement providing for options, swaps,
floors, caps, collars, forward sales or forward purchases involving interest
rates, commodities or commodity prices, equities, currencies, bonds, or indexes
based on any of the foregoing, (b) any option, futures or forward contract
traded on an exchange, and (c) any other derivative agreement or other similar
agreement or arrangement.
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"HYDROCARBONS" means crude oil, natural gas, casinghead gas, condensate,
sulphur, natural gas liquids, plant products and other liquid or gaseous
hydrocarbons produced in association therewith, including, without limitation,
coalbed methane and gas and CO2.
"INCENTIVE DISTRIBUTION RIGHTS" means those certain limited partner
interests in the Company that confer on the holders thereof the right to cash
distributed by the Company pursuant to Sections 6.4(a)(iv), (v) and (vi) and
6.4(b)(ii), (iii) and (iv) of the Company Partnership Agreement.
"INDEBTEDNESS" means, with respect to any Person, its Liabilities (without
duplication) in any of the following categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities (other than reserves for taxes and reserves for contingent
obligations) which (i) would under U.S. GAAP be shown on such Person's balance
sheet as a liability and (ii) are payable more than one year from the date of
creation or incurrence thereof,
(e) Liabilities arising under Hedging Contracts (on a net basis to the
extent netting is provided for in the applicable Hedging Contract),
(f) Liabilities constituting principal under capital leases,
(g) Liabilities arising under conditional sales or other title retention
agreements,
(h) Liabilities owing under direct or indirect guaranties of Liabilities
of any other Person or otherwise constituting obligations to purchase or acquire
or to otherwise protect or insure a creditor against loss in respect of
Liabilities of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to purchase
Liabilities, assets, goods, securities or services), but excluding endorsements
in the ordinary course of business of negotiable instruments in the course of
collection,
(i) Liabilities consisting of an obligation to purchase or redeem
securities or other property, if such Liabilities arise out of or in connection
with the sale or issuance of the same or similar securities or property (for
example, repurchase agreements, manditorily redeemable preferred stock and
sale/leaseback agreements),
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to banker's acceptances, or
6
(l) Liabilities with respect to obligations to deliver goods or services
in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred in the ordinary course of business by such Person
on ordinary trade terms to vendors, suppliers or other Persons providing goods
and services for use by such Person in the ordinary course of its business,
unless and until such Liabilities are outstanding more than 120 days after the
date the respective goods are delivered or the respective services are rendered,
other than Liabilities contested in good faith by appropriate proceedings, if
required, and for which adequate reserves are maintained on the books of such
Person in accordance with U.S. GAAP.
"INITIAL NEWCO GP LLC AGREEMENT" has the meaning specified in the recitals
to this Agreement.
"INITIAL NEWCO LP AGREEMENT" has the meaning specified in the recitals to
this Agreement.
"INTRACOMPANY ARRANGEMENTS" means any transactions, arrangements,
agreements, commitments or understandings solely between the Company and any
wholly owned Company Subsidiaries (or Company Subsidiaries owned entirely by the
Company together with the GP) or among any of them.
"INVESTOR AGREEMENT" has the meaning specified in the recitals to this
Agreement.
"IRS" means the Internal Revenue Service of the United States.
"KAFU HOLDINGS" has the meaning specified in the recitals to this
Agreement.
"KNOWLEDGE" means an individual will be deemed to have knowledge of a
particular fact or matter if such individual is actually aware of such fact or
matter after inquiry reasonable under the circumstances. A Person other than an
individual will be deemed to have "Knowledge" of a particular fact or matter if
any individual who is serving as a director, executive officer, general partner,
managing member, executor, trustee or similar position of such Person or a
Subsidiary of such Person has Knowledge of such fact or matter.
"LAWS" shall mean all laws, statutes, ordinances, rulings and Regulations
of the United States, any foreign country, or any domestic or foreign state, and
any political subdivision or agency thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"LIABILITIES" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured, or determined or
determinable, including, without limitation, those arising under any Law, Action
or Governmental Order, and those arising under any contract or agreement.
"LLC INCENTIVE DISTRIBUTION RIGHTS" has the meaning specified in the
recitals to this Agreement.
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"LP INCENTIVE DISTRIBUTION RIGHTS" has the meaning specified in the
recitals to this Agreement.
"MANAGEMENT ENTITY" means an entity to be formed, whose participants shall
all be employees of Rodeo, Inc. or Affiliates of Parent, Rodeo, Inc. or Newco GP
LLC.
"MARKETING AGREEMENT" means that certain Crude Oil Marketing Agreement,
dated November 23, 1998, among Parent, Plains Illinois Inc., Xxxxxxx Resources,
L.P., Calumet Florida, Inc. and Plains Marketing, L.P., as amended from time to
time.
"MATERIAL ADVERSE EFFECT" means any event, circumstance, condition,
development or occurrence causing, resulting in or having (or with the passage
of time likely to cause, result in or have) a material adverse effect on the
financial condition, business, assets, properties or results of operations of
the Company and the Company Subsidiaries taken as a whole, except to the extent
such effect is attributable to the execution of this Agreement and the
announcement thereof, but shall not include events, circumstances, conditions,
developments or occurrences that are generally applicable to (i) the midstream
segment of the oil and gas industry, (ii) the United States economy or (iii) the
United States security markets.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.12(a).
"MEMBER" has the meaning specified in the Newco GP LLC Operating Agreement.
"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan," as defined in
Sections 3(37) or 4001(a)(3) of ERISA, which (i) is entered into, maintained,
administered, contributed to or required to be contributed to, as the case may
be, by the Company, Rodeo, Inc. or any ERISA Affiliate and (ii) covers any
employee or former employee of the Company, Rodeo, Inc. or any ERISA Affiliate
(with respect to their relationship with such entities).
"NOTICE" has the meaning specified in Section 5.11(a).
"NEWCO GP LLC" has the meaning specified in the recitals to this Agreement.
"NEWCO GP LLC CERTIFICATE" has the meaning specified in the recitals to
this Agreement.
"NEWCO GP LLC OPERATING AGREEMENT" has the meaning specified in the
recitals to this Agreement.
"NEWCO LP" has the meaning specified in the recitals to this Agreement.
"NEWCO LP CERTIFICATE" has the meaning specified in the recitals to this
Agreement.
"NEWCO LP PARTNERSHIP AGREEMENT" has the meaning specified in the recitals
to this Agreement.
"OMNIBUS AGREEMENT" means that certain Omnibus Agreement, dated November
23, 1998, among Parent, Rodeo, Inc., the Company and the Operating Partnerships,
as amended from time to time.
8
"OPERATING PARTNERSHIPS" means Plains Marketing, L.P. and All American
Pipeline, L.P.
"OPERATING PARTNERSHIPS AGREEMENTS" means the Amended and Restated
Agreement of Limited Partnership of Plains Marketing, L.P., dated as of November
23, 1998 and the Amended and Restated Agreement of Limited Partnership of All
American Pipeline, L.P., dated as of November 23, 1998.
"OPERATING PARTNERSHIPS GP" means the general partner of each of the
Operating Partnerships.
"OPERATING PARTNERSHIPS GP INTERESTS" means, collectively, the 1.0101%
ownership interest of the Operating Partnerships GP in Plains Marketing, L.P.
and the .001% ownership interest of the Operating Partnerships GP in All
American Pipeline, L.P.
"OTHER MEMBERS" has the meaning specified in the recitals to this
Agreement.
"PARENT" has the meaning specified in the introductory paragraph to this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" shall mean any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which (i) is entered
into, maintained, administered, contributed to or required to be contributed to,
as the case may be, by the Company, Rodeo, Inc. or any ERISA Affiliate and (ii)
which covers any current or former employee, director, or consultant of the
Company, Rodeo, Inc. or any ERISA Affiliate (with respect to their relationship
with such entities).
"PERCENTAGE INTEREST" has the meaning specified in the Newco GP LLC
Operating Agreement.
"PERMITTED ENCUMBRANCES" means (i) such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by Law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; (c) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (d) minor survey
exceptions, reciprocal easement agreements and other customary Encumbrances on
title to real property that do not, individually or in the aggregate, materially
adversely affect the value or use of property subject thereto for its current
and anticipated purposes; (e) easements, rights-of-way, restrictions, and other
Encumbrances on, over, or in respect of any property of the Company or any
Company Subsidiary which will not materially interfere with the value, operation
or use of any of the affected properties of the Company or any Company
Subsidiary; and (f) rights reserved to or vested in any Governmental Authority
to control or regulate any property of the Company or any Company Subsidiary in
any manner and (ii) any and all Encumbrances imposed, contemplated or permitted
by the Credit Agreements.
"PERMITTED TRANSFERS" shall have the meaning specified in Section 5.13(a).
9
"PERMITTED TRANSFEREE" shall mean any Person who shall have acquired and
who shall hold Subordinated Units, or portion thereof, pursuant to a Permitted
Transfer.
"PERSON" means any individual, partnership, corporation, limited liability
company, trust, incorporated or unincorporated organization or other legal
entity of any kind.
"PURCHASE PRICE" means an amount equal to: the number of Buyer
Subordinated Units to be sold hereunder multiplied by the Buyer Unit Purchase
Price.
"REFERENCE BALANCE SHEET" means the consolidated balance sheet of the
Company, dated as of March 31, 2001, included in the Company Financial
Statements.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, by
and among the Company and Buyer, Sable Investments, Kafu Holdings and the
Management Entity, in the form attached hereto as Exhibit G.
"REGULATION" shall mean any rule or regulation of any Governmental
Authority having the effect of law.
"REPRESENTATIVES" has the meaning specified in Section 5.02.
"RODEO, INC." has the meaning specified in the introductory paragraph to
this Agreement.
"RODEO, INC. MATERIAL ADVERSE EFFECT" means any event, circumstance,
condition, development or occurrence causing, resulting in or having (or with
the passage of time likely to cause, result in or have) a material adverse
effect on the financial condition, business, assets, properties, prospects or
results of operations of Rodeo, Inc. and its Subsidiaries taken as a whole,
except to the extent that such effect is attributable to the execution of this
Agreement and the announcement thereof, but shall not include events,
circumstances, conditions, developments or occurrences that are generally
applicable to (i) the midstream segment of the oil and gas industry, (ii) the
United States economy, or (iii) the United States security markets.
"SABLE AGREEMENT" has the meaning specified in the recitals to this
Agreement.
"SABLE HOLDINGS" has the meaning specified in the recitals to this
Agreement.
"SABLE INVESTMENTS" has the meaning specified in the recitals to this
Agreement.
"SABLE PARTNERS" shall mean Sable Holdings and Sable Investments.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SELLER" has the meaning specified in the introductory paragraph to this
Agreement.
"SERIES F AMOUNT" has the meaning specified in Section 2.02.
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"SERIES F PREFERRED " means the Series F Cumulative Convertible Preferred
Stock of Parent.
"SUBORDINATED UNITS" has the meaning specified in the recitals to this
Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, association or other business entity, a majority of
either (x) the partnership or other similar ownership interest thereof, or (y)
the stock or other equity interest of such partnership, association or other
business entity's general partner, managing member or similar controlling Person
is at the time owned or controlled, directly or indirectly, by such Person or
one or more Subsidiaries of that Person or a combination thereof.
"SUPERIOR PROPOSAL" shall have the meaning specified in Section 5.11.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs duties, tariffs, and similar charges.
"TAX AUTHORITY" means the IRS and any other domestic or foreign
Governmental Authority responsible for the administration of Taxes.
"TERMINATION DATE" has the meaning specified in Section 8.01(b).
"TERMINATION FEE" has the meaning specified in Section 8.02(b).
"TRANSFER" or "TRANSFERRED" means to give, sell, exchange, assign,
transfer, pledge, hypothecate, bequeath, devise or otherwise dispose of or
encumber voluntarily or involuntarily, by operation of law or otherwise. When
referring to Subordinated Units, "Transfer" means the Transfer of such
Subordinated Units whether of record, beneficially, by participation or
otherwise.
"U.S. GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
"UNITS" means the Common Units, the Class B Common Units and the
Subordinated Units.
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"VALUE ASSURANCE AGREEMENT" means the Value Assurance Agreement, by and
between Parent and Buyer, in the form attached hereto as Exhibit H.
"WELFARE PLAN" shall mean any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, which (i) is entered into, maintained, administered,
contributed to or required to be contributed to, as the case may be, by the
Company, Seller or any ERISA Affiliate and (ii) which covers any current or
former employee, director, or consultant of the Company, Seller or any ERISA
Affiliate (with respect to their relationship with such entities).
ARTICLE II.
PURCHASE AND SALE OF SUBORDINATED UNITS; CLOSING
SECTION 2.01 Sale of Buyer Subordinated Units. Subject to the terms and
conditions and in reliance upon the representations and warranties set forth in
this Agreement, at the Closing, Seller shall sell and assign to Buyer, and Buyer
shall purchase and acquire from Seller, the Buyer Subordinated Units for the
Purchase Price free and clear of all Encumbrances and subject to no restrictions
other than those restrictions on the transfer of the Buyer Subordinated Units
contemplated hereby, or arising from applicable federal and state securities
laws and from the terms of the Company Partnership Agreement.
SECTION 2.02 Payment of Purchase Price. At the Closing, Buyer shall pay to
Seller the Purchase Price by (i) delivering 5,108.233 shares of Series F
Preferred to the Seller with an aggregate value of $10,000,000 (the "SERIES F
AMOUNT") and (ii) by wire transfer of the Purchase Price less the Series F
Amount of immediately available funds to the bank account set forth on a notice
given by Seller to Buyer not later than three (3) Business Days prior to the
Closing Date; provided; however, that in the event the Closing has not occurred
by June 9, 2001, the Series F Amount shall be increased by 10%. The Purchase
Price shall be subject to adjustment pursuant to the Value Assurance Agreement.
SECTION 2.03 Closing. The consummation of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Xxxxxx &
Xxxxxx L.L.P., 2300 First City Tower, 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000,
on later of (x) June 8, 2001 and (y) the Business Day after satisfaction or
waiver of the conditions set forth in Article VII. The Closing may be postponed
to such other date as the parties hereto may mutually agree. The date on which
the Closing occurs is referred to in this Agreement as the "CLOSING DATE."
SECTION 2.04 Deliveries at the Closing. At the Closing:
(a) Parent shall deliver, or cause to be delivered, to the Buyer the
following:
(i) an officer's certificate executed by an executive officer of
Parent, in the form of Exhibit I hereto, duly executed on Parent's behalf,
stating that the conditions set forth in Section 7.02(a) have been satisfied
in all respects;
(ii) a Secretary's certificate, in the form of Exhibit J attached
hereto, duly executed on Parent's behalf;
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(iii) executed counterparts of the approvals and consents referred
to in Section 7.02(b);
(iv) executed counterparts of the waiver and consent referred to in
Section 7.01(c);
(v) the Value Assurance Agreement executed by Parent; and
(vi) such other documents, instruments and certificates as Buyer may
reasonably request in connection with the transactions contemplated by this
Agreement.
(b) Seller shall deliver, or cause to be delivered, to Buyer the following:
(i) certificates representing the Buyer Subordinated Units, in each case
endorsed in blank or together with duly executed transfer powers, a Transfer
Application (as defined in the Company Partnership Agreement) for each of the
Buyer Subordinated Units, and an acknowledgement of Newco LP or other written
evidence, in form and substance satisfactory to Buyer, that Buyer has been
admitted as a substitute limited partner of the Company with respect to the
Buyer Subordinated Units in accordance with the terms of the Company Partnership
Agreement and that such admission has been reflected on the books and records of
the Company;
(ii) a receipt for the payment of the Purchase Price received by Seller;
(iii) an officer's certificate executed by Seller's managing member,
in the form of Exhibit I hereto, duly executed on Seller's behalf, stating that
the conditions set forth in Section 7.02(a) have been satisfied in all respects;
and
(iv) a secretary's certificate, in the form of Exhibit J attached
hereto, duly executed on Seller's behalf.
(c) Rodeo, Inc. shall deliver, or cause to be delivered, to Buyer the
following:
(i) an officer's certificate executed by Rodeo, Inc.'s chief executive
officer, in the form of Exhibit I attached hereto, duly executed on Rodeo,
Inc.'s behalf, stating that the conditions set forth in Section 7.02(a) have
been satisfied in all respects;
(ii) a Secretary's certificate, in the form of Exhibit J attached hereto,
duly executed on Rodeo, Inc.'s behalf;
(iii) executed counterparts of the approvals and consents referred to in
Section 7.02(b);
(iv) executed counterparts of the waiver and consent referred to in Section
7.01(c);
(v) the Newco LP Partnership Agreement and the Newco GP LLC Operating
Agreement, executed by Rodeo, Inc. and the Other Members;
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(vi) the Registration Rights Agreement executed by the Company and the Other
Members;
(vii) an executed copy of each of the Newco GP LLC Certificate, the Initial
Newco GP LLC Agreement, the Newco LP Certificate and the Initial Newco LP
Agreement, each as in effect as of the Closing Date;
(viii) documents reasonably acceptable to Buyer evidencing the transfer
of (A) the LLC Incentive Distribution Rights from Rodeo, Inc. to Newco GP LLC,
(B) the LLC Incentive Distribution Rights from Newco GP LLC to Newco LP, and (C)
the GP Interest, the Operating Partnerships GP Interests and the LP Incentive
Distribution Rights from Rodeo, Inc. to Newco LP; and
(ix) such other documents, instruments and certificates as the Buyer may
reasonably request in connection with the transactions contemplated by this
Agreement.
(d) The Buyer, as applicable, shall deliver, or cause to be delivered, the
following:
(i) the Purchase Price to Seller with the cash portion being paid in
federal or other immediately available funds by wire transfer in accordance with
Section 2.02;
(ii) to Parent and Rodeo, Inc., an officer's certificate executed by an
executive officer of Buyer, in the form of Exhibit K attached hereto, duly
executed on Buyer's behalf, stating that the conditions set forth in
Section 7.03(a) have been satisfied in all respects;
(iii) to Rodeo, Inc., the Newco LP Partnership Agreement and the Newco GP
LLC Operating Agreement, executed by Buyer;
(iv) to Parent and Rodeo, Inc., the Registration Rights Agreement executed
by Buyer;
(v) to Parent, the Value Assurance Agreement executed by Buyer; and
(vi) to Newco GP LLC and Newco LP, as the case may be, Buyer's initial
capital contribution under the Newco GP LLC Operating Agreement and the Newco LP
Partnership Agreement for Buyer Newco GP LLC Interest, and Buyer Newco LP
Interest.
SECTION 2.05 Simultaneous Deliveries. The delivery of the documents
required to be delivered at the Closing pursuant to this Agreement shall be
deemed to occur simultaneously. No delivery shall be effective until each party
hereto has received or waived receipt of all the documents that this Agreement
entitles such party to receive.
SECTION 2.06 Sales and Transfer Taxes. Any Taxes and any transfer,
recording or similar fees and charges arising out of or in connection with the
transactions contemplated by this Agreement shall be borne by Parent.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT, RODEO, INC. AND SELLER
Except as disclosed in the Disclosure Letter delivered to Buyer prior to
the execution of this Agreement or in the Company SEC Reports filed prior to the
date hereof, each of Parent, Rodeo, Inc., and Seller, jointly and severally,
hereby represent and warrant to Buyer that:
SECTION 3.01 Organization, Authority and Qualification.
(a) The Company is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its business as it is
currently conducted and as it is now proposed to be conducted. The Company is
duly licensed or qualified as a foreign organization to do business and is in
good standing in each jurisdiction in which the properties owned or leased by it
or the operation of its business makes such licensing or qualification
necessary, except for such failures to be so licensed or qualified and in good
standing that would not have a Material Adverse Effect. Complete and correct
copies of the Certificate of Limited Partnership and the Company Partnership
Agreement, each as in effect on the date hereof, have been made available by the
Company to Buyer. The Company is not in default in any respect in the
performance, observation or fulfillment of any provision of its Certificate of
Limited Partnership or the Company Partnership Agreement. The Company has all
necessary power and authority to enter into the Registration Rights Agreement,
to carry out its obligations thereunder, and to consummate the transactions
contemplated thereby. The execution and delivery of the Registration Rights
Agreement by the Company, the performance by the Company of its obligations
thereunder and the consummation by the Company of the transactions contemplated
thereby have been duly authorized by all requisite action on the part of the
Company and no other proceedings on the part of the Company are necessary to
authorize the Registration Rights Agreement or the consummation of the
transactions contemplated thereby. At the Closing, the Registration Rights
Agreement shall be duly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by Buyer) shall constitute a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.
(b) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary power and
authority to own, operate or lease the properties and assets now owned, operated
or leased by it and to carry on its business as it is currently conducted and as
it is now proposed to be conducted. Parent has all necessary power and authority
to enter into this Agreement and the Value Assurance Agreement, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Value Assurance Agreement by Parent, the performance by Parent of its
obligations hereunder and thereunder and the consummation by Parent of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Parent and no other corporate proceedings on the
part of Parent are necessary to authorize this Agreement or the Value Assurance
Agreement, or the consummation of the transactions contemplated hereby or
thereby. This Agreement has been, and at the Closing the Value Assurance
Agreement will be, duly executed and delivered by
15
Parent, and (assuming due authorization, execution and delivery by Buyer) this
Agreement constitutes, and the Value Assurance Agreement shall constitute, a
legal, valid and binding obligation of Parent enforceable against Parent in
accordance with its terms.
(c) Rodeo, Inc. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by it and to carry on its business as it is currently
conducted and as it is now proposed to be conducted. Rodeo, Inc. has all
necessary power and authority to enter into this Agreement and the Initial Newco
GP LLC Agreement, the Initial Newco LP Agreement, the Newco GP LLC Operating
Agreement and the Newco LP Partnership Agreement, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Initial Newco
GP LLC Agreement, the Initial Newco LP Agreement, the Newco GP LLC Operating
Agreement and the Newco LP Partnership Agreement by Rodeo, Inc., the performance
by Rodeo, Inc. of its obligations hereunder and thereunder and the consummation
by Rodeo, Inc. of the transactions contemplated hereby and thereby have been
duly authorized by all requisite action on the part of Rodeo, Inc. and no other
corporate proceedings on the part of Rodeo, Inc. are necessary to authorize this
Agreement or the Initial Newco GP LLC Agreement, the Initial Newco LP Agreement,
the Newco GP LLC Operating Agreement or the Newco LP Partnership Agreement or
the consummation of the transactions contemplated hereby or thereby. This
Agreement has been, and at the Closing the Initial Newco GP LLC Agreement, the
Initial Newco LP Agreement, the Newco GP LLC Operating Agreement and the Newco
LP Partnership Agreement shall be, duly executed and delivered by Rodeo, Inc.,
and (assuming due authorization, execution and delivery by Buyer) this Agreement
constitutes, and the Initial Newco GP LLC Agreement, the Initial Newco LP
Agreement, the Newco GP LLC Operating Agreement and Newco LP Partnership
Agreement shall constitute, a legal, valid and binding obligation of Rodeo, Inc.
enforceable against Rodeo, Inc. in accordance with its terms.
(d) Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its business as it is
currently conducted and as it is now proposed to be conducted. Seller has all
necessary power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller, the performance by
Seller of its obligations hereunder and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of Seller and no other proceedings on the part of Seller are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller, and (assuming due authorization, execution and delivery by Buyer) this
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.
(e) As of the Closing Date, Newco LP shall be a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and shall have all necessary power and authority to own, operate or
lease its properties and assets owned, operated or leased by it as of the
Closing Date and to carry on its business as it is then proposed to be
16
conducted. As of the Closing Date, Newco GP LLC shall be a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and shall have all necessary power and authority to own,
operate or lease its properties and assets owned, operated or leased by it as of
the Closing Date and to carry on its business as it is then proposed to be
conducted.
SECTION 3.02 Capitalization of the Company; Ownership of the Units. As
of the date of this Agreement, (i) 23,049,239 Common Units, (ii) 1,307,190 Class
B Common Units, (iii) 10,029,619 Subordinated Units, (iv) the GP Interest, and
(v) the Operating Partnerships GP Interests are issued and outstanding, all of
which (a) are duly authorized, validly issued, fully paid and nonassessable, and
(b) were issued in compliance with all applicable state and federal securities
laws and the Company Partnership Agreement or the Operating Partnerships
Agreements (as applicable). None of the issued and outstanding Units, Incentive
Distribution Rights, GP Interest or Operating Partnerships GP Interests were
issued in violation of any preemptive rights. Rodeo, Inc. is the holder of 100%
of the Incentive Distribution Rights. Except as set forth in Section 3.02 of the
Disclosure Letter, or as relates to Intracompany Arrangements, there are no (i)
options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom equity, or other rights, agreements, arrangements or commitments
of any character (including "rights plans" or "poison pills") relating to the
Units, the Incentive Distribution Rights, the GP Interest or Operating
Partnerships GP Interests or obligating the Company to issue, transfer or sell
any Units, Incentive Distribution Rights or any other interest in, the Company,
(ii) outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any Units, the Incentive Distribution Rights, the GP Interest
or any interest in any Company Subsidiary or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person or (iii) outstanding contractual obligations to register the GP
Interest, any Units or instruments convertible or exchangeable into Units or
Operating Partnerships GP Interests. Except as set forth in Section 3.02 of the
Disclosure Letter, or as relates to Intracompany Arrangements, there are no
voting trusts, voting agreements, proxies or other agreements in effect with
respect to the voting or transfer of the GP Interest or Operating Partnerships
GP Interests or any Units binding upon Parent, Rodeo, Inc., Seller or the
Company or to which Parent, Rodeo, Inc., Seller or the Company is a party,
except those contemplated or required by this Agreement.
SECTION 3.03 Company Subsidiaries.
(a) Section 3.03 of the Disclosure Letter sets forth a list of all Company
Subsidiaries, listing for each Company Subsidiary its name, type of entity, the
jurisdiction and date of its incorporation or organization, the jurisdictions in
which it is qualified or holds licenses to do business as a foreign corporation
or other organization as of the date hereof, its authorized capital stock,
partnership capital or equivalent, the number and type of its issued and
outstanding shares of capital stock, partnership interests or similar ownership
interests and the current ownership of such shares, partnership interests or
similar ownership interests.
(b) Other than the Company Subsidiaries, there are no other corporations,
partnerships, joint ventures, limited liability companies, associations or other
entities in which the Company owns, of record or beneficially, any direct or
indirect equity or other interest, or any right (contingent or otherwise) to
acquire the same.
17
(c) Each Company Subsidiary that is a corporation: (i) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Company Subsidiary and to carry on its business as it is currently
conducted and as it is now proposed to be conducted by such Company Subsidiary
and (iii) is duly licensed or qualified as a foreign corporation to do business
and is in good standing in the jurisdictions set forth in Section 3.03 of the
Disclosure Letter, which include each jurisdiction in which the properties owned
or leased by it or the operation of its business makes such licensing or
qualification necessary, except for such failures to be so licensed or qualified
and in good standing that would not have a Material Adverse Effect. Each Company
Subsidiary that is not a corporation: (i) is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, (ii)
has all necessary power and authority to own, operate or lease the properties
and assets owned, operated or leased by such Company Subsidiary and to carry on
its business as it is currently conducted and as it is now proposed to be
conducted by such Company Subsidiary and (iii) is duly licensed or qualified to
do business and is in good standing in the jurisdictions set forth in Section
3.03 of the Disclosure Letter, which include each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except for such failures to be so licensed
or qualified and in good standing that would not have a Material Adverse Effect.
No Company Subsidiary is in default (x) in any respect in the performance,
observation or fulfillment of any provision of its certificate of incorporation
or bylaws (or similar organizational documents), if a corporation, or (y) in any
material respect in the performance, observation, or fulfillment of any
provision of its partnership or limited liability company agreement, if a
partnership or limited liability company.
(d) Except as set forth in Section 3.03 of the Disclosure Letter, all the
outstanding shares of capital stock of, or any other interest in, each Company
Subsidiary are validly issued, fully paid and nonassessable, and are owned by
the Company, whether directly or indirectly, free and clear of all Encumbrances.
(e) Except as set forth in Section 3.03 of the Disclosure Letter and
except for Intracompany Arrangements, there are no (i) options, warrants,
convertible securities, subscriptions, stock appreciation rights, phantom equity
or other rights, agreements, arrangements or commitments of any character,
relating to the capital stock of, or any other interest in, any Company
Subsidiary or obligating the Company or any Company Subsidiary to issue,
transfer or sell any shares of capital stock of, or any other interest in, any
Company Subsidiary nor (ii) outstanding contractual obligations of any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of outstanding
capital stock of, or any other interest in, the Company or any Company
Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person.
(f) Except for Intracompany Arrangements, there are no voting trusts,
stockholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any shares of capital stock of, or any
other interests in, any Company Subsidiary.
(g) True and complete copies of the charter and by-laws (or similar
organizational documents), in each case as in effect on the date hereof, of
each Company Subsidiary have been made available by the Company to Buyer.
18
SECTION 3.04 Entity Books and Records. The minute books and other similar
records of the Company and the Company Subsidiaries that are corporations are
true and complete in all material respects and accurately reflect in all
material respects all meetings and all other actions taken by the stockholders
(or equivalent), Boards of Directors (or other governing bodies) and all
committees of the Boards of Directors (or other governing bodies) of the Company
and the Company Subsidiaries.
SECTION 3.05 No Conflicts. Except as disclosed in Section 3.05 of the
Disclosure Letter, assuming that all consents, approvals, authorizations and
other actions described in Section 3.06 have been obtained and all filings,
approvals and notifications listed in Section 3.06 of the Disclosure Letter have
been made or obtained, the execution, delivery and performance of this Agreement
by Parent, Rodeo, Inc. and Seller, the Registration Rights Agreement by the
Company, the Value Assurance Agreement, and the Initial Newco GP LLC Agreement,
Initial Newco LP Agreement, Newco GP LLC Operating Agreement and Newco LP
Partnership Agreement by Rodeo, Inc., do not and will not (a) violate or
conflict with or result in a breach of any provision of the Certificate of
Incorporation or Bylaws or similar organizational documents (including the
Company Partnership Agreement) of Parent, Rodeo, Inc., Seller, the Company or
any Company Subsidiary, (b) violate or conflict with any Law or Governmental
Order applicable to Parent, Rodeo, Inc., Seller, the Company or any Company
Subsidiary or any of their respective assets and properties, or violate any rule
or regulation of the New York Stock Exchange or the American Stock Exchange, or
(c) conflict with, result in any violation or breach of or constitute a default
(or an event which, with the giving of notice or lapse of time, or both, would
become a default) under, require any notice or consent under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in any loss of any benefit, the triggering of any payment by, or the increase in
any other obligation of, Parent, Rodeo, Inc., Seller, the Company or any Company
Subsidiary or the creation of any Encumbrance on any assets or properties of
Parent, Rodeo, Inc., Seller, the Company or any Company Subsidiary pursuant to
any Material Contract or any other material contract, license, permit, franchise
or other instrument or arrangement to which Parent, Rodeo, Inc., Seller, the
Company or any Company Subsidiary is a party or by which any of them, or any of
such assets or properties is bound or affected, except for, in the case of
clauses (b) and (c), such conflicts, violations, breaches, defaults or other
occurrences which would not (i) have a Material Adverse Effect, (ii) impair, in
any material respect, the ability of Parent, Rodeo, Inc. and Seller to perform
their obligations under this Agreement or (iii) prevent or materially delay the
consummation of any of the transactions contemplated hereby.
SECTION 3.06 Governmental Consents and Approvals. Except as disclosed in
Section 3.06 of the Disclosure Letter, the execution, delivery and performance
of this Agreement by Parent, Rodeo, Inc. and Seller, the Registration Rights
Agreement by the Company, the Value Assurance Agreement, and the Initial Newco
GP LLC Agreement, Initial Newco LP Agreement, Newco GP LLC Operating Agreement
and Newco LP Partnership Agreement by Rodeo, Inc., do not and will not require
any consent, waiver, approval, authorization or other order of, action by,
filing with or notification to, any Governmental Authority, except (a) the
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, the New York Stock Exchange and the American Stock Exchange, and (b)
any other consent, approval, authorization, filing or notice the failure of
which to make or obtain would not (i) have a Material Adverse Effect, (ii)
impair, in any material respect, the ability of Parent, Rodeo, Inc. and Seller
to perform
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its obligations under this Agreement, or (iii) prevent or materially delay the
consummation of any of the transactions contemplated hereby.
SECTION 3.07 SEC Reports, Financial Information, Books and Records.
(a) The Company has filed with the SEC true and complete copies of each
form, registration statement, report, schedule, proxy or information statement
and other information statement and other document (including exhibits and
amendments thereto) required to be filed by it or its predecessors with the SEC
since December 31, 1997 under the Securities Act or the Exchange Act
(collectively, the "COMPANY SEC REPORTS"). As of the respective dates such
Company SEC Reports were filed, each of the Company SEC Reports, including
without limitation any financial statements or schedules included therein, (a)
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and the applicable
rules and regulations promulgated thereunder, and (b) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed in Section 3.07(a) of the Disclosure Letter, no event since the date
of the last Company SEC Report has occurred that would require the Company to
file a Current Report on Form 8-K.
(b) Each of the audited consolidated balance sheets of the Company for each
of the fiscal years ended as of December 31, 1998, December 31, 1999 and
December 31, 2000, and the related audited consolidated and combined statements
of operations and cash flows, and the related audited consolidated statements of
changes in partners' capital of the Company, together with all related notes and
schedules thereto, accompanied by the reports thereon of the Company's
accountants included in the Company SEC Reports and the unaudited consolidated
balance sheet of the Company for the fiscal quarter ended March 31, 2001
(collectively referred to herein as the "COMPANY FINANCIAL STATEMENTS") (i) were
prepared from, and are in accordance with, the books of account and other
financial records of the Company, (ii) present fairly the consolidated financial
position of the Company and the Company Subsidiaries as of the dates thereof and
the consolidated results of operations and cash flows and changes in partners'
capital of the Company and the Company Subsidiaries for the periods covered
thereby, subject, in the case of unaudited financial statements, to normal year-
end adjustments, (iii) have been prepared in accordance with U.S. GAAP applied
on a basis consistent with the past practices of the Company and (iv) comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto.
(c) The books of account and other financial records of the Company and the
Company Subsidiaries (i) are complete and correct in all material respects, and
do not contain or reflect any material inaccuracies or discrepancies and (ii)
have been maintained in all material respects in accordance with good business
and accounting practices and in accordance with U.S. GAAP.
SECTION 3.08 No Undisclosed Liabilities. Except as disclosed in Section
3.08 of the Disclosure Letter and for liabilities and obligations incurred in
the ordinary course of business of the Company and the Company Subsidiaries
since the date of the Reference Balance Sheet or relating to Intracompany
Arrangements, neither the Company nor any Company Subsidiary has incurred any
liabilities or obligations of any nature (contingent or otherwise) that
20
would have a Material Adverse Effect or would be required by U.S. GAAP to be
reflected on a consolidated balance sheet of the Company and the Company
Subsidiaries or the notes thereto which are not so reflected.
SECTION 3.09 Absence of Certain Changes, Events and Conditions. Except as
disclosed in Section 3.09 of the Disclosure Letter, since the date of the
Reference Balance Sheet, the business of the Company and the Company
Subsidiaries has been conducted in all material respects in the ordinary course,
consistent with past practice, and, since such date, there has not been (a)
individually or in the aggregate, any Material Adverse Effect, (b) any material
change by the Company or any Company Subsidiary in its accounting methods,
principles or practices, (c) any declaration, setting aside or payment of any
dividend or distribution in respect of the Units, Incentive Distribution Rights
or any redemption, purchase or other acquisition of any of the Units or
Incentive Distribution Rights, other than distributions pursuant to the terms of
the Company Partnership Agreement and the partnership agreements of the
Operating Partnerships, (d) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, unit option, unit purchase or other employee benefit plan, except in
the ordinary course of business consistent with past practice or (e) the
occurrence of the other events set forth in Section 5.01(b).
SECTION 3.10 Litigation. Except as disclosed in Section 3.10 of the
Disclosure Letter, there is no material Action pending or, to the Knowledge of
Rodeo, Inc. and the Company, threatened against or directly affecting Rodeo,
Inc., Seller, the Company, any Company Subsidiary or any property of Rodeo,
Inc., Seller, the Company or any Company Subsidiary or any of the directors or
officers of Rodeo, Inc., the Company or any Company Subsidiary in their capacity
as such that would reasonably be expected to have a Material Adverse Effect or a
Rodeo, Inc. Material Adverse Effect. There are no outstanding Governmental
Orders against Rodeo, Inc., Seller, the Company or any Company Subsidiary or any
property of Rodeo, Inc., Seller, the Company or any Company Subsidiary, or any
of the directors or officers of Rodeo, Inc., Seller, the Company or any Company
Subsidiary, that would reasonably be expected to (a) have a Material Adverse
Effect or a Rodeo, Inc. Material Adverse Effect, (b) impair, in any material
respect, the ability of Parent, Rodeo, Inc. or Seller to perform its obligations
under this Agreement, or (c) prevent or materially delay the consummation of the
transactions contemplated hereby.
SECTION 3.11 Compliance with Laws. Each of Rodeo, Inc., the Company and the
Company Subsidiaries holds all approvals, licenses, permits, registrations and
similar type authorizations necessary for the lawful conduct of their respective
businesses, as now conducted, except where the failure to hold such approvals,
licenses, permits, registrations and authorizations would not, individually or
in the aggregate, have a Material Adverse Effect, and such businesses are not
being, and none of Seller, Rodeo, Inc., the Company nor any Company Subsidiary
has received any notice from any Governmental Authority or Person that any such
business has been or is being, conducted in violation of any Law other than
violations that would not, individually or in the aggregate, have a Material
Adverse Effect, and has conducted and continues to conduct their businesses in
compliance in all material respects with all Laws and Governmental Orders
applicable to Seller, Rodeo, Inc., the Company or any Company Subsidiary.
21
SECTION 3.12 Material Contracts.
(a) Each contract, lease, indenture, agreement, arrangement or
understanding to which the Company or any of the Company Subsidiaries is subject
that is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the Securities and Exchange Commission) has been
filed or incorporated by reference in the Company SEC Reports (collectively, the
"MATERIAL CONTRACTS").
(b) Except as set forth in Section 3.12(b) of the Disclosure Letter, each
of the Material Contracts (i) is in full force and effect and is the valid and
legally binding obligation of the parties thereto and are enforceable in all
material respects in accordance with their respective terms; (ii) neither the
Company nor any Company Subsidiary nor, to the Knowledge of Rodeo, Inc. and the
Company, any other party to such Material Contract is in violation, breach or
default of any material provision thereof, including with respect to payments or
otherwise; (iii) no party to any Material Contract has given notice of any
action to terminate, cancel, rescind or procure a judicial reformation thereof;
and (iv) no Material Contract contains any provision that prevents in any
material respect the Company or any Company Subsidiary from owning, managing and
operating their properties and business in accordance with historical practices.
(c) Except as set forth in Section 3.12(c) of the Disclosure Letter,
neither the Company nor any Company Subsidiary is a party to or bound by a non-
competition agreement or any other agreement or obligation which purports to
materially limit the manner in which, or the localities in which, the current
business of the Company or any Company Subsidiary is conducted.
(d) Section 3.12(d) of the Disclosure Letter lists each contract or other
agreement purporting to require, preclude, or limit the ability of the Company
or any Company Subsidiary to register the issuance of debt or equity securities
under the Securities Act.
SECTION 3.13 Employee Benefit Matters. Section 3.13 of the Disclosure
Letter contains a true and complete list of all Employee Plans. Neither the
Company, Rodeo, Inc. nor any ERISA Affiliate is required to contribute to any
Employee Plans other than those plans listed in Section 3.13 of the Disclosure
Letter. All ERISA Affiliates are listed in Section 3.13 of the Disclosure
Letter. All Employee Plans and their related trusts that are intended to be
qualified under Sections 401(a) and 501(a) of the Code have received a current
favorable IRS determination letter for each such plan that covers the amendments
required by the Tax Reform Act of 1986, and to the Knowledge of the Company or
Rodeo, Inc., there are no circumstances likely to result in revocation of any
such determination letter. Except as set forth in Section 3.13 of the Disclosure
Letter or as would not have a Material Adverse Effect: all Employee Plans have
been administered and operated in all respects in compliance with their terms,
ERISA (if applicable), the Code (if applicable), and all other applicable laws;
each Pension Plan subject to Section 412 of the Code has been maintained in
compliance with the minimum funding standards of ERISA and the Code; neither the
Company, Rodeo, Inc. nor any ERISA Affiliate has any liability, contingent or
otherwise, under Title IV of ERISA; there are no actions, proceedings,
arbitrations, suits or claims pending, or to the Knowledge of the Company or
Rodeo, Inc., threatened or anticipated (other than routine claims for benefits)
against the Company, Rodeo, Inc., any ERISA Affiliate or any administrator,
trustee or other fiduciary of any Employee Plan with respect to any Employee
Plan, or against any Employee Plan or against the assets of any
22
Employee Plan; no Employee Plan is under audit or investigation by the Internal
Revenue Service, the Department of Labor or the PBGC, and to the Knowledge of
the Company, Rodeo, Inc. and any ERISA Affiliate, no such audit or investigation
is pending or threatened; there are no Multiemployer Plans, and neither the
Company, Rodeo, Inc. nor any ERISA Affiliate has at any time during the one-year
period preceding the date of this Agreement maintained, contributed to, or
participated or agreed to participate in, or incurred any withdrawal liability
(within the meaning of Section 4201 of ERISA) with respect to any Multiemployer
Plan; and the Company, Rodeo, Inc., and each ERISA Affiliate have made all
payments required of them with respect to all periods through the date hereof,
and all payments due with respect to the period beginning on the date hereof and
ending on the Closing Date shall be made or accrued as may be required with
respect to each Employee Plan.
SECTION 3.14 Environmental Matters. Except as disclosed in Section
3.14 of the Disclosure Letter:
(a) The Company and the Company Subsidiaries currently are in compliance in
all material respects with all applicable Environmental Laws. Neither the
Company nor any Company Subsidiary has caused the generation, treatment,
manufacture, processing, distribution, use, storage, discharge, release,
disposal, transport or handling of any Hazardous Materials at any of its
properties or facilities, except in material compliance with all Environmental
Laws.
(b) There are no existing or, to the Company's Knowledge, threatened
actions, suits, investigations, allegations, inquiries, proceedings or clean-up
obligations relating to any Environmental Laws with respect to any of the
properties of the Company or any Company Subsidiary or any other properties
adversely affected by any of their properties or activities thereon other than
such actions, suits, investigations, allegations, inquiries, proceedings or
clean-up obligations that would not result in Liabilities that individually or
in the aggregate would reasonably be expected to have a Material Adverse Effect.
To the Company's Knowledge, there is no fact or condition that would reasonably
be expected to give rise to such action, suit, investigation, allegation,
inquiry, proceeding or clean-up obligation. Neither the Company nor any Company
Subsidiary has received any written notice from any Governmental Authority or
third party or, to the Knowledge of the Company, any other communication
alleging or concerning any material violation by the Company or any Company
Subsidiary of, or responsibility or liability of the Company or any Company
Subsidiary under, any Environmental Law.
(c) To the Company's Knowledge, there are no conditions or circumstances
at the properties of the Company or any Company Subsidiary creating a cleanup
obligation relating to any Environmental Laws or any other action, suit,
investigation, inquiry, or proceeding arising from such conditions or
circumstances, except as would not result in liabilities that would reasonably
be expected to have a Material Adverse Effect.
(d) All material notices, permits, licenses, registrations, approvals or
authorizations required to be obtained or filed by the Company or any Company
Subsidiary in connection with the operation of their properties, including,
without limitation, treatment, storage, disposal or release of hazardous
substances or solid waste into the environment, have been duly obtained or
filed, other than such notices, permits, licenses, registrations, approvals or
authorizations, the
23
failure of which to be obtained or filed would not reasonably be expected to
have a Material Adverse Effect; there are no existing, pending or, to the
Company's Knowledge, threatened actions, proceedings, or investigations seeking
to modify, revoke, or deny renewal of any permits, licenses, registrations,
approvals, or other authorizations; and none of the Company or any Company
Subsidiaries have any Knowledge of any fact or condition that would reasonably
be expected to give rise to any action, proceeding, or investigation to modify,
revoke, or deny renewal of any such permits, licenses, registrations, approvals,
or other authorizations.
(e) No pending claims have been asserted or, to the Knowledge of the Company
and the Company Subsidiaries, threatened to be asserted against the Company or
any Company Subsidiary for any personal injury (including wrongful death) or
property damage (real or personal) arising out of exposure to Hazardous
Materials used, handled, generated, transported, or disposed by the Company or
any Company Subsidiary at property currently or formerly owned or operated by
the Company or any Company Subsidiary, except as would not result in liabilities
that would reasonably be expected to have a Material Adverse Effect.
SECTION 3.15 Taxes. Except as set forth in Section 3.15 of the Disclosure
Letter:
(a) Each of the Company, the Operating Partnerships, Plains Canada LLC and
Plains Canada L.P. are not taxable as corporations or associations for U.S.
federal income tax purposes.
(b) Newco LP shall be as of the Closing Date a partner of the Company for
U.S. federal income tax purposes.
(c) Each of the Company and the Operating Partnerships are not subject to
franchise taxes as imposed by the State of Texas.
(d) Allocations under the Company Partnership Agreement and the partnership
agreements of the Operating Partnerships have been and shall be respected for
U.S. federal income tax purposes.
(e) Each of the Company, the Operating Partnerships, Newco LP and Newco GP
LLC have made or will make valid elections under Section 754 of the Code.
(f) Section 3.15 of the Disclosure Letter lists all other material U. S.
federal income tax elections made by the Company, the Operating Partnerships,
Plains Canada LLC, Plains Canada L.P., Newco LP and Newco GP LLC.
(g) The capital account amounts attributable to the Buyer Subordinated
Units, the GP Interest and the incentive distribution rights of the Company are
as set forth on Section 3.15 of the Disclosure Letter.
(h) Each of the Company, Rodeo, Inc., Seller and the Company Subsidiaries
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party, except to the extent any failures to have so
withheld or paid Taxes would not have a Material Adverse Effect.
24
SECTION 3.16 Brokers. Except as disclosed in Section 3.16 of the Disclosure
Letter, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement, based upon arrangements made by or on behalf of
Parent, Rodeo, Inc., Seller, the Company or the Company Subsidiaries and no such
fees or commissions are payable by Buyer.
SECTION 3.17 No Required Stockholder or Unitholder Vote or Consent. No vote of
the holders of any class or series of Parent's capital stock or the holders of
any Units will be necessary or required under Parent's Certificate of
Incorporation, the Company's Certificate of Limited Partnership, the Company
Partnership Agreement, this Agreement, the DGCL, the DLPA or under applicable
Law to consummate the transactions contemplated by this Agreement.
SECTION 3.18 Fairness Opinion. The Board of Directors of Parent has
received the written opinion of Xxxxxx Xxxxxxx & Co. to the effect that, as of
the date of such opinion, the consideration to be received by Parent in the
transactions contemplated by this Agreement is fair from a financial point of
view to Parent. A true and complete copy of such opinion has been given to
Buyer.
SECTION 3.19 Takeover Restrictions.
(a) The Company, Seller and Parent have each taken all action required to be
taken by it in order to exempt this Agreement and the transactions contemplated
hereby from the requirements of any "moratorium," "control share," "fair price,"
"affiliate transaction," "business combination," or other antitakeover laws and
regulations of any state.
(b) No provision of the Certificate of Limited Partnership of the Company or
the Company Partnership Agreement or comparable organizational documents of any
of the Company Subsidiaries would, directly or indirectly, restrict or impair
the ability of Buyer or any of its Affiliates to vote, or otherwise to exercise
the rights of a unitholder with respect to, Units that may be acquired or
controlled by Buyer or any of its Affiliates pursuant to this Agreement or
permit any unitholder to acquire Units on a basis not available to Buyer or in
the event that Buyer were to acquire Units.
(c) The Company is not a party to any shareholder rights plan or similar
antitakeover agreement or arrangement.
SECTION 3.20 Transactions with Related Parties. Except for the transactions
disclosed in Section 3.20 to the Disclosure Letter, there have been no loans,
agreements or other transactions between the Company and/or any Company
Subsidiary, on the one hand, and any of the officers, directors, unitholders,
owners or Affiliates of Rodeo, Inc., Seller, the Company or any Company
Subsidiary, on the other hand that would be required to be disclosed pursuant to
Item 404(a) or (c) of Regulation S-K promulgated by the Securities and Exchange
Commission. Except as disclosed in Section 3.20 to the Disclosure Letter,
neither any Affiliate of the Company or any Company Subsidiary, nor any officer
or director of Rodeo, Inc., Seller, the Company or any Company Subsidiary nor
any spouse or child of any such person owns or has any material interest in,
directly or indirectly, any real or personal property owned by or leased to
25
the Company or any Company Subsidiary that would be required to be disclosed
pursuant to Item 404(a) of Regulation S-K promulgated by the Securities and
Exchange Commission.
SECTION 3.21 Title.
(a) Seller is the record owner of, and holds directly the Buyer Subordinated
Units. On the Closing Date, the Buyer Subordinated Units will be free and clear
of all Encumbrances except restrictions arising from applicable federal and
state securities laws and the Company Partnership Agreement. Upon payment of the
Purchase Price, Buyer shall be the record and beneficial owner of the Buyer
Subordinated Units, free and clear of all Encumbrances, except restrictions
contemplated hereby or arising from applicable federal and state securities laws
and the Company Partnership Agreement.
(b) As of the date hereof, Rodeo, Inc. is the record owner of the GP Interest,
the Operating Partnerships GP Interests, and the Incentive Distribution Rights.
On the Closing Date, Newco LP shall be the record and beneficial owner of the GP
Interest, the Operating Partnerships GP Interests, and the incentive
distribution rights of the Company, and the GP Interest, the Operating
Partnerships GP Interests, and the incentive distribution rights of the Company
shall be free and clear of all Encumbrances except restrictions arising from
applicable federal and state securities laws, the Company Partnership Agreement
and the limited partnership agreements of the Operating Partnerships. Upon
payment of the capital contributions referenced in Section 6.02(a), Buyer shall
be the record and beneficial owner of the Buyer Newco GP LLC Interest and the
Buyer Newco LP Interest.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants jointly and severally, to Parent,
Rodeo, Inc. and Seller as follows:
SECTION 4.01 Organization and Authority of Buyer. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of Texas, and has all necessary power and authority to carry on its business as
it is currently conducted. Buyer has all necessary power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer, the performance by Buyer of its obligations hereunder and
the consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all requisite action on the part of Buyer and no other proceedings
on the part of Buyer are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer, and (assuming due authorization, execution
and delivery by Parent, Rodeo, Inc. and Seller) this Agreement constitutes a
legal, valid and binding obligation of Buyer enforceable against it in
accordance with its terms.
SECTION 4.02 No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to
in Section 4.03,
26
except as may result from any facts or circumstances relating solely to Parent,
Rodeo, Inc. or Seller, the execution, delivery and performance of this Agreement
by Buyer does not and will not (a) violate, conflict with or result in the
breach of any provision of the organizational documents of Buyer, (b) conflict
with or violate any Law or Governmental Order applicable to Buyer or by which
any property or asset of it is bound or (c) conflict with, result in any breach
of or constitute a default (or an event which, with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment or cancellation
of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or obligation to which Buyer is a
party or by which any of such assets or properties are bound or affected, except
for, in the case of clauses (b) and (c), conflicts, violations, breaches or
defaults which would not prevent or materially delay the consummation of the
transactions contemplated hereby.
SECTION 4.03 Governmental Consents and Approvals. Except for (a) applicable
requirements, if any, of the Exchange Act, and (b) as would not prevent or
materially delay the consummation of the transactions contemplated hereby, Buyer
is not required to submit any notice, report or other filing with any
Governmental Authority, in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. No waiver, consent, approval or authorization of any
Governmental Authority is required to be obtained or made by Buyer in connection
with their execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except where the failure
to obtain such waivers, consents, approvals or authorizations would not prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 4.04 Brokers. Except as disclosed in Section 4.04 of the Disclosure
Letter, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer and no such fees or commission are payable by Parent or its Affiliates.
SECTION 4.05 Restrictions on Company Business Activities. There are no
judgments, injunctions, orders or decrees or material agreements (including,
without limitation, agreements containing provisions restricting Buyer or any of
its Affiliates from entering or engaging in any line of business, agreements
containing rights of first refusal, rights of first offer, exclusivity or
similar provisions) binding upon Buyer or any of its Affiliates which will or
would reasonably be expected to have the effect of prohibiting or impairing the
conduct of the business of the Company or any Company Subsidiary, as conducted
on the date hereof, in any material respect after the Closing.
SECTION 4.06 Investment Representations.
(a) Buyer understands that the Incentive Distribution Rights, the Subordinated
Units, the Buyer Newco GP LLC Interest and the Buyer Newco LP Interest have not
been registered under the Securities Act or the securities laws of any state and
that the Subordinated Units, the Buyer Newco GP LLC Interest and the Buyer Newco
LP Interest cannot be resold unless they
27
are subsequently registered under the Securities Act or applicable securities
laws of any state, or an exemption from registration is available.
(b) Buyer is an "accredited investor" as such term is defined in Rule 501(a)
of Regulation D under the Securities Act.
(c) (i) Buyer has had an opportunity to ask questions and receive answers
from Seller and the Company, as applicable, regarding the terms and conditions
of the acquisition of the Buyer Subordinated Units, and (ii) Buyer has had an
opportunity to ask questions and receive answers from Rodeo, Inc. and the
Company regarding the terms and conditions of the acquisition of the Buyer Newco
GP LLC Interest, the Buyer Newco LP Interest and the business, properties,
prospects and financial condition of the Company.
(d) Buyer is acquiring the Subordinated Units to be purchased by it under
this Agreement for its own account, for its own investment and not with a view
to the distribution thereof within the meaning of the Securities Act.
(e) Buyer is acquiring the Buyer Newco GP LLC Interest, and the Buyer Newco LP
Interest to be purchased by it under this Agreement for its own account, for its
own investment and not with a view to the distribution thereof within the
meaning of the Securities Act.
SECTION 4.07 Financing. At the Closing Date, Buyer will have funds
available to it sufficient to consummate the transactions contemplated hereby.
SECTION 4.08 Title. Affiliates of Buyer are the record owners of, and hold
directly the Series F Preferred. On the Closing Date, the Series F Preferred
will be free and clear of all Encumbrances except restrictions arising from
applicable federal and state securities laws. Upon delivery of the Series F
Preferred, Seller shall be the record and beneficial owner of the Series F
Preferred, free and clear of all Encumbrances, except restrictions arising from
applicable federal and state securities laws.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing.
(a) Parent and Rodeo, Inc. covenant and agree that, between the date of this
Agreement and the time of the Closing, except as set forth in Section 5.01 of
the Disclosure Letter or as contemplated by any other provision of this
Agreement, unless the Buyer shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed:
(i) the businesses of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not
take any action except in, the ordinary course of business;
(ii) the Company and the Company Subsidiaries shall use reasonable best
efforts to preserve substantially intact their business organization, to keep
available the services of the current employees of Rodeo, Inc. and to preserve
the current relationships of the Company and the Company Subsidiaries with
customers, contractholders and other
28
Persons with whom the Company or any Company Subsidiary has significant
business relations;
(iii) the Company and the Company Subsidiaries shall comply in all
material respects with their respective obligations under all material
contracts binding upon them as such obligations become due and with their
respective obligations under applicable Law; and
(iv) the Company and the Company Subsidiaries shall use their
reasonable best efforts to continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and in
such amounts as are consistent with past practice.
(b) By way of amplification and not limitation, except as contemplated by
this Agreement, or as reflected in the Company SEC Reports filed prior to the
date hereof or Section 5.01 of the Disclosure Letter, Parent and Rodeo, Inc.
covenant and agree that neither the Company nor any Company Subsidiary shall,
between the date of this Agreement and the Closing, directly or indirectly do,
or propose to do, any of the following, without the prior written consent of
Buyer, which consent shall not be unreasonably withheld or delayed:
(i) amend, propose to amend, or otherwise change its Certificate of
Limited Partnership or the Company Partnership Agreement or similar
organizational documents;
(ii) issue, sell, transfer, pledge, dispose of, grant, encumber, amend
the terms of, or authorize the issuance, sale, pledge, disposition, grant or
Encumbrance of any Units, the Incentive Distribution Rights, the GP Interest
or any other ownership interests (including without limitation general and
limited partnership interests) of the Company or any Company Subsidiary of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any Units, the Incentive Distribution Rights, the GP Interest
or any other ownership interests (including, without limitation, any phantom
interest, general partnership interest or limited partnership interest) of the
Company or any Company Subsidiary, other than as permitted under clause (ix)
of Section 5.01(b);
(iii) declare, set aside, make or pay any dividend or other distribution
payable in cash, stock, property or otherwise, with respect to any of the
Units, the Incentive Distribution Rights, the GP Interest or any other
ownership interests, except for (A) dividends and other distributions by
direct or indirect wholly-owned Company Subsidiaries and (B) distributions
pursuant to the terms of the Company Partnership Agreement;
(iv) other than in the case of any direct or indirect wholly-owned
Company Subsidiary, combine, split or subdivide, directly or indirectly, any
of the Units, the Incentive Distribution Rights, the GP Interest or any other
ownership interests or reclassify any of the Units, the Incentive Distribution
Rights, the GP Interest or any other ownership interests or issue or authorize
the issuance of any other Units or any other ownership interests of the
Company or any Company Subsidiary in respect of, in lieu of,
29
or in substitution of the Units, the Incentive Distribution Rights, the GP
Interest or other ownership interests;
(v) redeem, purchase or otherwise acquire, directly or indirectly, any
Units, Incentive Distribution Rights or any other ownership interests of the
Company or any Company Subsidiary or rights, warrants or options to acquire
any Units, Incentive Distribution Rights or other ownership interests;
(vi) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or any division thereof
or any assets, except for transactions not exceeding $15,000,000 individually
or $30,000,000 in the aggregate for all transactions pursuant to this
subsection (vi);
(vii) except for Permitted Encumbrances or as required by any Material
Contract, lease, license, mortgage or otherwise encumber or subject to any
Encumbrance, or agree to encumber or subject to any Encumbrance, any of its
assets or properties, other than transactions that are in the ordinary course
of business and not material to the Company and the Company Subsidiaries taken
as a whole;
(viii) except as required by any Material Contract or in the ordinary
course of business, sell, transfer or otherwise dispose of, or agree to sell,
transfer or otherwise dispose of, any of its assets or properties, other than
transactions not exceeding $25,000,000 individually or $50,000,000 in the
aggregate for all transactions pursuant to this subsection (viii);
(ix) incur any Indebtedness, other than as permitted by the terms of
the Credit Agreements;
(x) enter, to a material extent, any line of business that is not (i)
currently conducted, (ii) currently contemplated to be conducted by the
Company or (iii) ancillary to the Company's current business, or commence
business operations in any country outside the United States or Canada;
(xi) increase the compensation payable or to become payable to the
Company's, any Company Subsidiary's, or Seller's officers or employees, except
in the ordinary course of business, or grant any severance or termination pay
to, or modify or enter into any employment or severance agreement with, any
director, officer, employee or former employee of the Company, Seller or any
Company Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, unit option,
restricted unit, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee except as
required by law;
(xii) change any method of accounting or accounting practice by the
Company or any Company Subsidiary, except for any such change required by U.S.
GAAP;
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(xiii) pay, discharge or satisfy any material claim, litigation,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business, of liabilities reflected or reserved against in
the Reference Balance Sheet or subsequently incurred in the ordinary course of
business or in accordance with the provisions of this Section 5.01;
(xiv) settle or compromise any material Audit, make or change any
material Tax election or file any material amended Tax return;
(xv) take any action that would give rise to a claim under the WARN Act
or any similar state law or regulation because of a "plant closing" or "mass
layoff" (each as defined in the WARN Act);
(xvi) enter into, amend, modify or supplement any Material Contracts in
any material respect;
(xvii) enter into any contract, agreement or other arrangement that
involves annual payments to or from the Company or its Subsidiaries in excess
of $25,000,000 singly or $50,000,000 in the aggregate, other than in the
ordinary course of business or in connection with the transactions described
in clause (vi) above;
(xviii) except as provided in this Agreement, enter into, amend,
terminate or waive any provision of, any agreement or arrangement, or enter
into any transaction, between the Company and/or any Company Subsidiary, on
the one hand, and any of their respective officers, directors, unitholders,
owners or Affiliates, on the other hand, which if entered into prior to the
date hereof would be required to be disclosed pursuant to Section 3.20;
(xix) materially alter (through merger, liquidation, reorganization,
restructuring, conversion or in any other fashion) the corporate structure or
ownership of the Company or any Company Subsidiary other than as contemplated
by this Agreement; or
(xx) enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
SECTION 5.02 Access to Information. Except as (i) required pursuant to any
confidentiality agreement or similar agreement or arrangement to which Parent,
Rodeo, Inc., Seller, the Company or any Company Subsidiary is a party, (ii)
would jeopardize the attorney-client privilege of Parent, Rodeo, Inc., Seller,
the Company or any Company Subsidiary, or (iii) would contravene applicable Law,
from the date hereof until the Closing, upon reasonable notice, Parent shall
cause Rodeo, Inc., Seller, the Company and each of the Company Subsidiaries and
each of Rodeo, Inc., Seller's, the Company's and the Company Subsidiaries'
officers, directors, employees, agents, representatives, accountants and counsel
to: (a) afford the officers, employees and authorized agents, accountants,
financial advisors, counsel and other representatives of Buyer (collectively,
"REPRESENTATIVES") reasonable access, during normal business hours, to the
offices, premises, properties, other facilities, books and records of the
Company and of each Company Subsidiary, (b) furnish to the Representatives such
additional financial and operating data and other information regarding the
assets, properties and goodwill
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of the Company and the Company Subsidiaries as Buyer may from time to time
reasonably request; (c) provide Buyer reasonable assistance in searches of
government records related to the assets of the Company and the Company
Subsidiaries; and (d) furnish copies of all such books and records, documents,
and all financial, operating, and other data and other information as Buyer may
reasonably request. No investigation will affect any of the representations or
warranties made herein or the conditions to the obligations of the parties
hereto to consummate the transactions contemplated hereby.
SECTION 5.03 Confidentiality. Each party shall hold in confidence all
nonpublic information until such time as such information is otherwise publicly
available and, if this Agreement is terminated, each party will deliver, subject
to the terms of the Confidentiality Agreement, to the other all documents, work
papers and other materials (including copies) obtained by such party or on its
behalf from the other party as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof.
Notwithstanding the foregoing, the Confidentiality Agreement dated May 2, 2001
between Parent and EnCap Investments L.L.C. (the "CONFIDENTIALITY AGREEMENT")
shall survive the execution and delivery of this Agreement.
SECTION 5.04 Regulatory and Other Authorizations; Notices and Consents. Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
(a) use its reasonable best efforts to take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary, proper or
advisable under applicable Law and applicable rules and regulations of the New
York Stock Exchange and American Stock Exchange, or to remove any injunctions or
other impediments or delays, or otherwise to consummate and make effective the
transactions contemplated by this Agreement and (b) use its reasonable best
efforts to (i) take all reasonable actions necessary to cause the conditions to
closing set forth in Article VII to be satisfied, and (ii) obtain any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by Parent, Rodeo, Inc., Seller, Buyer, the Company, any Company
Subsidiary, or any of their respective Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement and (c) make all necessary
filings, and thereafter make any other required submissions with respect to this
Agreement and the transactions contemplated by this Agreement required under
applicable Laws and applicable rules and regulations of the New York Stock
Exchange and American Stock Exchange and shall promptly provide the other party
or its counsel with copies of all such filings. The parties hereto shall
cooperate with each other in connection with the making of all such filings.
SECTION 5.05 Notice of Certain Matters. Buyer shall give prompt notice to
Parent, Rodeo, Inc. and Seller, and Parent, Rodeo, Inc. and Seller shall give
prompt notice to Buyer, of (a) the occurrence, or nonoccurrence, of any event
the occurrence or nonoccurrence of which would be likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied, and (b) any failure of Buyer,
Seller, Rodeo, Inc. or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. Each of Buyer, Rodeo, Inc., Seller and Parent shall promptly notify
each other of any written notice or other communication from any Person alleging
that the consent of such Person (or other Person) is or may be required in
connection
32
with the transactions contemplated by this Agreement that causes such party to
believe that there is a reasonable likelihood that such approval or consent will
not be obtained or will be materially delayed.
SECTION 5.06 Expenses. All expenses incurred by the parties hereto shall be
borne solely and entirely by the party that has incurred such expenses.
SECTION 5.07 Cooperation. Subject to compliance with applicable Law, from the
date hereof until the Closing, each of the parties hereto shall confer on a
regular and frequent basis with one or more representatives of the other parties
to report operational matters of materiality and the general status of ongoing
operations.
SECTION 5.08 Publicity. Neither Parent, Rodeo, Inc., Buyer nor any of their
respective Affiliates shall issue or cause the publication of any press release
or other announcement with respect to this Agreement or the transactions
contemplated hereby without a prior consultation of the other parties, except as
may be required by Law or by any listing agreement with a national securities
exchange, and will use reasonable efforts to provide copies of such release or
other announcement to the other parties hereto, and give due consideration to
such comments as the other parties may have, prior to such release.
SECTION 5.09 Credit Agreements. On or before the Closing Date, Parent, Rodeo,
Inc. and Buyer will each use its reasonable best efforts to obtain a waiver and
consent of the Administrative Agent and the Majority Lenders (each as defined in
the Credit Agreements) that would permit the transactions contemplated hereby to
be effected without resulting in a breach or default under the Credit
Agreements.
SECTION 5.10 Employee Benefit Matters; Separation.
(a) As of the Closing Date, the parties shall identify the employees
of Parent who will transfer employment to Newco GP LLC and make such other
arrangements that are appropriate and necessary with respect to compensation and
employee benefits plans and programs for such transferring employees. In the
event such arrangements are not in place as of the Closing Date, the parties
shall enter into any transition services arrangements deemed reasonably
necessary by Parent, Rodeo, Inc. and Newco GP LLC for a period of no more than
three months following the Closing Date. With respect to the benefit plans and
arrangements listed in Schedule 3.13 of the Disclosure Letters in which
transferring employees participate, the Parent, Rodeo, Inc. and Newco GP LLC
shall, as of the Closing Date, determine the treatment of obligations and
liabilities under such plans affecting the transferring employees under the
employee benefit plans and arrangements of Newco GP LLC (i.e., assumption of
liabilities and transfers of assets with respect to any such plans and
arrangements).
(b) Prior to Closing Parent, Rodeo, Inc. and Newco GP LLC shall enter
into a separation agreement, in form reasonably satisfactory to the parties
hereto, with respect to employee benefits and other matters (e.g. insurance,
tax).
(c) Buyer and each of the Other Members shall cooperate in good faith to
develop a management incentive plan for the management of Newco GP LLC within 90
days of Closing in such form and containing such terms as they shall reasonably
agree.
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SECTION 5.11 No Solicitation. (a) None of Rodeo, Inc., Seller, Parent nor any
of their respective officers, directors, employees, agents, affiliates
(including the Company), accountants, counsel, investment bankers, financial
advisors or other representatives shall, (i) directly or indirectly, initiate,
solicit or encourage, or take any action to facilitate the making of, any
Competing Proposal (as defined below), or (ii) directly or indirectly engage in
any discussions or negotiations with, or provide any information or data to, or
afford any access to the properties, books or records of the Company or any
Company Subsidiary to, or otherwise assist, facilitate or encourage, any person
relating to any Competing Proposal; provided, however, that at any time Parent,
Rodeo, Inc. and Seller may, in response to a Superior Proposal (as defined
below) which was not solicited by them and which did not otherwise result from a
breach of this Section 5.11(a), and subject to providing prior written notice of
their decision to take such action to Buyer (the "NOTICE"), following delivery
of the Notice (x) furnish information with respect to the Company, or the
Company Subsidiaries to any person making a Superior Proposal pursuant to a
customary confidentiality agreement and (y) participate in discussions and
negotiations regarding such Superior Proposal. Parent, Rodeo, Inc. and Seller
shall keep Buyer apprised of any such discussions and negotiations promptly
after they occur.
(b) Except as set forth below, neither Rodeo, Inc. nor Seller shall
enter into any letter of intent, agreement in principle, acquisition agreement
or similar agreement (other than a confidentiality agreement in connection with
a Superior Proposal which is entered into by Rodeo, Inc. and Seller in
accordance with Section 5.11(a)) relating to any Competing Proposal (each, an
"ACQUISITION AGREEMENT"). Notwithstanding the foregoing, in response to a
Superior Proposal which was not solicited by any of Rodeo, Inc., Seller or
Parent nor any of their Representatives, and which did not otherwise result from
a breach of Section 5.11(a), Parent, Rodeo, Inc. and Seller may, subject to the
immediately following sentence, terminate this Agreement pursuant to and subject
to the terms of Section 8.01(f) and, concurrently with such termination, enter
into an Acquisition Agreement with respect to a Superior Proposal. The
foregoing actions set forth in this Section 5.01(b) (including terminating this
Agreement pursuant to Section 8.01(f)) may be taken by Parent, Rodeo, Inc. and
Seller only if they have delivered to Buyer prior to the 30th day following the
date hereof written notice of the intent of Parent, Rodeo, Inc. and Seller to
take such action, together with a copy of the related Acquisition Agreement and
a description of any terms of the Superior Proposal not contained therein. None
of Parent, Rodeo, Inc. or Seller shall terminate this Agreement pursuant to
Section 8.01(f) prior to the fifth business day following such notice. If
during such five business day period Buyer informs Parent that it may make an
alternative proposal, Parent shall establish a reasonable and customary bidding
procedure pursuant to which Buyer and the person making the Superior Proposal
shall have the opportunity to make their respective bids to Parent, Rodeo, Inc.
and Seller. Parent, Rodeo, Inc. and Seller shall accept Buyer's offer unless
Parent shall have determined that the competing bid is more favorable from a
financial point of view as compared to Buyer's bid, taking into account the
factors discussed in the definition of a Superior Proposal.
For purposes of this Agreement, a "COMPETING PROPOSAL" means any
inquiry, proposal or offer from any person (other than the Sable Parties, Kafu
Holdings or their respective Affiliates) relating to the Buyer Subordinated
Units, the Buyer Newco LP Interest and the Buyer Newco GP LLC Interest.
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For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any written
proposal made by a third party (other than the Sable Parties, Kafu Holdings or
their respective Affiliates) to acquire the Buyer Subordinated Units, the Buyer
Newco LP Interest and the Buyer Newco GP LLC Interest for cash, with respect to
which Parent determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation and such other matters as
Rodeo Inc. and Seller deem relevant) is reasonably likely to lead to a
transaction that is more favorable from a financial point of view than the terms
contained herein; provided, however, that such transaction shall be on terms,
other than pricing and form of consideration, identical to those contained
herein and in the forms of Newco GP LLC Operating Agreement and Newco LP
Partnership Agreement attached as Exhibits E and F hereto.
SECTION 5.12 Certain Contracts. Parent and the Company shall use their
reasonable best efforts to cause the Marketing Agreement and the Omnibus
Agreement, as each may be amended, to remain in full force and effect following
the Closing.
SECTION 5.13 Transfer Restrictions.
(a) For a period of eighteen months from the date hereof, or upon the earlier
conversion of the Subordinated Units into Common Units, Buyer shall not transfer
any of the Subordinated Units held by it and thereafter Buyer shall not transfer
any of the Subordinated Units held by it other than (i) a transfer to
Affiliates; provided, however, that such Transfer will be permitted under the
terms of this Section 5.13 only so long as such Subordinated Units are held by
such Affiliate or otherwise transferred to another Affiliate or (ii) transfers
of Buyer Subordinated Units in amounts greater than 500,000 units, or such
lesser number of Units so long as such transfer is for an aggregate
consideration of at least $11,000,000 in each instance (together with the
transfer contemplated by (i), "PERMITTED TRANSFERS").
(b) Notwithstanding any other provision in this Agreement, Buyer agrees that
it will not transfer any Buyer Subordinated Units if, in the Company's
reasonable determination, after review of the terms of such transfer and
consultation with tax counsel for the Company and Buyer, such transfer would be
likely to result in a tax termination of the Company for federal income tax
purposes. The Company shall furnish to Buyer such information as forms the basis
for the Company's determination.
(c) From and after the date on which a Permitted Transfer becomes effective,
the Permitted Transferee of the Subordinated Units so transferred shall have the
same rights, and shall be bound by the same obligations, under this Agreement as
the transferor of such Subordinated Units and such Permitted Transferee shall,
as a condition to such Transfer, agree in writing to be bound by the terms of
this Agreement. No Permitted Transfer shall conflict with or result in any
violation of a judgment, order, decree, statute, law, ordinance, rule or
regulation or require the Company, if not currently subject, to become subject
or, if currently subject, to become subject to a greater extent, any statute,
law, ordinance, rule or regulation, excluding matters of a ministerial nature
that are not materially burdensome to the Company.
SECTION 5.14 Restructuring. If the Restructuring, as more fully described in
Section 5.01 of the Disclosure Letter, is effected prior to Closing, this
Agreement shall be
35
deemed to be amended to delete any inconsistent references to the Operating
Partnerships, the Operating Partnerships GP and the Operating Partnerships GP
Interests.
SECTION 5.15 Company Partnership Agreement. Rodeo, Inc. shall use its
reasonable best efforts to cause the Company Partnership Agreement to be amended
to reflect the transactions contemplated by this Agreement, as provided for in
Section 5.01 of the Disclosure Letter.
ARTICLE VI.
CONTRIBUTIONS
SECTION 6.01 Pre-Closing Events. Prior to the Closing, Rodeo, Inc. shall (i)
form Newco LP pursuant to the DLPA, the Newco LP Certificate, and the Initial
Newco LP Agreement, (ii) form Newco GP LLC pursuant to the Delaware Limited
Liability Company Act, the Newco GP LLC Certificate and the Initial Newco GP LLC
Agreement, to act as the general partner of Newco LP, (iii) contribute the LLC
Incentive Distribution Rights to Newco GP LLC, which shall promptly contribute
the LLC Incentive Distribution Rights to Newco LP, and (iv) contribute the GP
Interest, the Operating Partnerships GP Interests, and the LP Incentive
Distribution Rights to Newco LP as its capital contribution as Newco LP's
limited partner.
SECTION 6.02 Closing Events.
(a) At the Closing, Rodeo, Inc. shall (i) amend and restate the Initial Newco
GP LLC Agreement to be as set forth in the Newco GP LLC Operating Agreement,
(ii) amend and restate the Initial Newco LP Agreement to be as set forth in the
Newco LP Partnership Agreement, (iii) cause the admission of Buyer as a member
of Newco GP LLC with the Buyer Newco GP LLC Interest in exchange for an initial
capital contribution of $75,000 by Buyer that shall then be distributed to
Rodeo, Inc., and (iv) cause the admission of Buyer as a limited partner of Newco
LP with the Buyer Newco LP Interest in exchange for an initial capital
contribution of $7,425,000 by Buyer that shall then be distributed to Rodeo,
Inc.
(b) At the Closing, each of Rodeo, Inc. and Buyer shall execute and deliver
the Newco LP Partnership Agreement and the Newco GP LLC Operating Agreement.
(c) At the Closing, Buyer shall deliver the Purchase Price to Seller in
accordance with Section 2.02.
(d) The transaction contemplated by the Sable Agreement and, to the extent
such agreement has not been terminated in accordance with the terms thereof, the
Investor Agreement shall have been consummated.
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ARTICLE VII.
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to the Obligations of Each Party. The obligations of
Parent, Rodeo, Inc., Seller, and Buyer to consummate the transactions
contemplated hereby are subject to the satisfaction or waiver, in whole or in
part (where permissible by applicable law), at or prior to the Closing, of each
of the following conditions:
(a) no Governmental Authority or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law or Governmental Order
which is then in effect making the consummation of the transactions contemplated
hereby illegal or otherwise prohibiting the consummation of the transactions
contemplated hereby;
(b) the Pre-Closing Events specified in Section 6.01 and the Closing Events
specified in Section 6.02 shall have occurred;
(c) Parent, Rodeo, Inc. and Seller shall have obtained a waiver and consent of
the agent under the Credit Agreements and the Majority Lenders (as defined in
the Credit Agreements) that would permit the transactions contemplated hereby to
be effected without resulting in a breach or default under the Credit
Agreements; and
(d) the Company shall have amended the Company Partnership Agreement as
provided for in Section 5.01 of the Disclosure Letter.
SECTION 7.02 Conditions to the Obligations of Buyer. The obligations of the
Buyer to consummate the transactions contemplated hereby are subject to the
satisfaction of the following additional conditions, unless waived by the Buyer
in writing:
(a) (i) The representations and warranties of Parent, Rodeo, Inc. and Seller
set forth in this Agreement, when read without any exception or qualification as
to materiality or reference to Material Adverse Effect, shall be true and
correct as of the date of this Agreement and as of the Closing (except as to any
such representation and warranty which speaks as of a specific date, which shall
be true and correct as of such date) except where the failure to be so true and
correct would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect; (ii) Rodeo, Inc. shall own 100% of the GP
Interest and 100% of the Incentive Distribution Rights; (iii) Seller shall own
all of the issued and outstanding Subordinated Units; (iv) Parent, Rodeo, Inc.
and Seller shall have performed all obligations and complied with all agreements
and covenants of Parent, Rodeo, Inc. and Seller to be performed or complied with
by them under Article VI of this Agreement prior to the Closing; and (v) Parent,
Rodeo, Inc. and Seller shall have performed all other obligations and complied
with all other agreements and covenants of Parent, Rodeo, Inc. and Seller to be
performed or complied with by them under this Agreement prior to the Closing in
each case in all material respects .
(b) Parent, Rodeo, Inc. and Seller shall have obtained all approvals and
consents necessary or required for the consummation of the transactions
contemplated by this Agreement, except for those approvals and consents the
failure of which to obtain would not have a Material Adverse Effect.
37
(c) Since the date of this Agreement there shall not have occurred any event,
change, effect or development that, individually or when considered together
with any other event, change, effect or development, has had or would have a
Material Adverse Effect.
(d) At the Closing, each of Parent, Rodeo, Inc. and Seller shall have
delivered to Buyer an officer's certificate, duly executed by their respective
chief financial officers, or, in the case of Seller, its managing member, in the
form attached hereto as Exhibit I, stating that the conditions to Closing set
forth in Section 7.02(a) have been satisfied.
(e) At the Closing, each of Parent, Rodeo, Inc. and Seller shall have
delivered to Buyer a Secretary's Certificate, in the form attached hereto as
Exhibit J.
(f) Buyer shall have received the agreements referred to in Sections 2.04(a),
(b) and (c) executed by all parties thereto (except the Buyer).
SECTION 7.03 Conditions to the Obligations of Rodeo, Inc. and Seller. The
obligations of Rodeo, Inc. and Seller to consummate the transactions
contemplated hereby are subject to the satisfaction of the following additional
conditions, unless waived by Parent, Rodeo, Inc. and Seller in writing:
(a) The representations and warranties of Buyer set forth in this Agreement,
when read without any exception or qualification as to materiality, shall be
true and correct as of the date of this Agreement and as of the Closing (except
as to any such representation and warranty which speaks as of a specific date,
which shall be true and correct as of such date) except where the failure to be
so true and correct would (x) not prevent or materially delay the consummation
of the transactions contemplated hereby or (y) have a material adverse effect on
the Company's ability to conduct its business after the Closing; and (ii) Buyer
shall have performed all obligations and complied with all agreements and
covenants of Buyer to be performed or complied with by it under this Agreement
prior to the Closing in each case in all material respects.
(b) At the Closing, Buyer shall have delivered to Parent and Rodeo, Inc. an
officer's certificate, duly executed by an executive officer of Buyer, in
the form of Exhibit K attached hereto, stating that the conditions to
Closing set forth in Section 7.03(a) have been satisfied.
(c) Parent, Rodeo, Inc. and Seller shall have received the agreements referred
to in Section 2.04(d) executed by all parties thereto (except Parent, Rodeo,
Inc., Seller and the Company).
ARTICLE VIII.
TERMINATION AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Parent, Rodeo, Inc., Seller and Buyer;
38
(b) by either Parent, Rodeo, Inc., Seller or Buyer if the Closing shall not
have occurred on or before the date that is sixty (60) days from the date hereof
(the "TERMINATION DATE"), provided that the party seeking to terminate this
Agreement pursuant to this Section 8.01(b) shall not have breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the failure to consummate the transactions
contemplated hereby on or before the Termination Date;
(c) by Parent, if (i) there has been a breach by Buyer of any representation
or warranty of Buyer contained in this Agreement which would reasonably be
expected to have a Material Adverse Effect on the Company's ability to conduct
its business after the Closing and which by its nature or timing cannot be cured
prior to the Termination Date, or prevent or delay the consummation of the
transactions contemplated hereby beyond the date specified in Section 8.01(b),
or (ii) there has been a breach of any of the covenants or agreements set forth
in this Agreement on the part of Buyer, which would reasonably be expected to
have a Material Adverse Effect on the Company's ability to conduct its business
after the Closing and which by its nature or timing cannot be cured prior to the
Termination Date, or prevent or delay the consummation of the transactions
contemplated hereby beyond the date specified in Section 8.01(b), provided, that
Parent may not terminate this Agreement pursuant to this Section 8.01(c) if
Parent, Rodeo, Inc. or Seller shall be in material breach of any of their
representations, warranties, covenants or agreements hereunder;
(d) by either Parent, Rodeo, Inc., Seller, or Buyer if any Governmental
Authority or court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order making the
consummation of the transactions contemplated hereby illegal or otherwise
prohibiting the transactions contemplated thereby and such Governmental Order
shall have become final and nonappealable, provided that the party seeking to
terminate this Agreement shall have used its reasonable best efforts to remove
or lift such Governmental Order;
(e) by Buyer, if (i) there has been a breach by Parent, Rodeo, Inc. or Seller
of any representation or warranty of Parent, Rodeo, Inc. and Seller contained in
this Agreement which would reasonably be expected to have a Material Adverse
Effect and which by its nature or timing cannot be cured prior to the
Termination Date, or prevent or delay the consummation of the transactions
contemplated hereby beyond the date specified in Section 8.01(b), or (ii) there
has been a breach of any of the covenants or agreements set forth in this
Agreement on the part of Parent, Rodeo, Inc. or Seller, which could reasonably
be expected to have a Material Adverse Effect and which by its nature or timing
cannot be cured prior to the Termination Date or prevent or delay the
consummation of the transactions contemplated hereby beyond the date specified
in Section 8.01(b), provided, that Buyer may not terminate this Agreement
pursuant to this Section 8.01(e) if Buyer shall be in material breach of any of
their representations, warranties, covenants or agreements hereunder; or
(f) by Parent, prior to the 30th day following the date of this Agreement and
in accordance with Section 5.11, provided, however, in order for the termination
of this Agreement pursuant to this Section 8.01(f) to be deemed effective,
Rodeo, Inc. and Seller shall have complied with all provisions therein, and with
the applicable requirements of Section 8.02, including the payment of the
Termination Fee.
39
The party desiring to terminate this Agreement pursuant to Section 8.01(a)
through (f) shall give written notice of such termination to the other party in
accordance with Section 9.02.
SECTION 8.02 Effect of Termination.
(a) In the event of termination of the Agreement pursuant to this Article
VIII, all obligations of the parties shall terminate, except the obligations of
the parties pursuant to this Section 8.02 and except for the provisions of
Sections 5.03, 5.06, 9.01, 9.02, 9.03, 9.05, 9.08, 9.10, 9.11 and 9.12, provided
that nothing herein shall relieve any party from liability for any breaches
hereof.
(b) In the event of the termination of this Agreement pursuant to Section
8.01(f), Parent shall pay to Buyer an aggregate amount of $890,000 (the
"TERMINATION FEE"), by wire transfer or immediately available funds, no later
than the earlier of (i) 10 business days after this Agreement is terminated
pursuant to Section 8.01(f), or (ii) the date Rodeo, Inc. Seller or Parent
enters into a definitive agreement with respect to a Superior Proposal.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Survival of Representations, Warranties and Covenants.
(a) The representations and warranties of the parties contained in this
Agreement shall not survive the Closing Date.
(b) The covenants and agreements of the parties to be performed after the
Closing Date contained in this Agreement shall survive the Closing Date.
SECTION 9.02 Notices. All notices or communications hereunder shall be in
writing (including facsimile or similar writing) addressed as follows:
(a) To Parent, Rodeo, Inc. or Seller:
Plains Resources Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
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(b) To Buyer:
E-Holdings III, L.P.
C/o EnCap Investments L.L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx and Xxxxx XxXxxxxxx
with a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxx Xxxxxx Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
Business Day after being deposited with a next day courier, postage prepaid, or
(iii) three Business Days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
SECTION 9.03 Entire Agreement. This Agreement, the Value Assurance Agreement
and the confidentiality obligations under the Confidentiality Agreement
represent the entire agreement of the parties with respect to the subject matter
hereof and shall supersede any and all previous contracts, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof.
SECTION 9.04 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.05 Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
SECTION 9.06 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by operation of law or
otherwise without the prior written consent of the parties hereto, which consent
may be granted or withheld in the sole discretion of the parties. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 9.07 Amendment. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by each of, or on behalf of each of, the
parties or
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(b) by a waiver in accordance with Section 9.13. This Agreement may be amended
or supplemented in writing by the parties hereto with respect to any of the
terms contained in this Agreement.
SECTION 9.08 Governing Law; Forum. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas applicable to
contracts executed in and to be performed in that state and without regard to
any applicable conflicts of law. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any Texas state or
federal Court located in Houston, Texas. In connection with the foregoing, each
of the parties to this Agreement irrevocably (a) consents to submit itself to
the personal jurisdiction of the state and federal Courts of competent
jurisdiction located in Houston, Texas, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such Court, and (c) hereby consents to service of process pursuant to
the notice provisions set forth in Section 9.02.
SECTION 9.09 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
SECTION 9.10 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.11 Waiver of Jury Trial. Each of the parties hereto irrevocably and
unconditionally waives all right to trial by jury in any action, proceeding or
counterclaim (whether based in contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the parties hereto in the
negotiation, administration, performance and enforcement thereof.
SECTION 9.12 Attorney's Fees. If any action at law or equity, including an
action for declaratory relief, is brought to enforce or interpret any provision
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees and expenses from the other party, which fees and expenses shall
be in addition to any other relief which may be awarded.
SECTION 9.13 Extensions, Waivers, Etc. At any time prior to the Closing,
either party may:
(a) extend the time for the performance of any of the obligations or act of
the other party;
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto; or
(c) waive compliance with any of the agreements or conditions of the other
party contained herein.
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Notwithstanding the foregoing, no failure or delay by Parent, Rodeo, Inc.,
Seller or Buyer in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right hereunder. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
SECTION 9.14 Word Meanings. The words such as "herein", "hereinafter",
"hereof" and "hereunder" refer to this Agreement as a whole and not merely a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice-versa, unless the context
otherwise requires. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." When verbs are used as nouns, the nouns correspond to such
verbs and vice-versa. The worlds "material" and "materiality" shall have a
correlative meaning to Material Adverse Effect.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
PLAINS RESOURCES INC.
By: ____________________________________
Name: _______________________________
Title: ______________________________
PLAINS ALL AMERICAN, INC.
By: ____________________________________
Name: _______________________________
Title: ______________________________
PAAI LLC
By: ____________________________________
Name: _______________________________
Title: ______________________________
E-HOLDINGS III, L.P.
By: E-Holdings III GP, LLC
By: ____________________________________
Name: _______________________________
Title: ______________________________
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