EX-10.1
2
v054535_ex1.htm
CONTRIBUTION
AGREEMENT
between
DCP
LP Holdings, LP
and
DCP
Midstream Partners, LP
October
9, 2006
TABLE
OF CONTENTS
|
ARTICLE
I CERTAIN DEFINITIONS
|
1
|
|
|
|
|
|
1.1
|
CERTAIN
DEFINED TERMS
|
1
|
|
1.2
|
OTHER
DEFINITIONAL PROVISIONS
|
13
|
|
1.3
|
HEADINGS.
|
13
|
|
1.4
|
OTHER
TERMS
|
13
|
|
|
|
|
ARTICLE
II CONTRIBUTION OF THE SUBJECT INTEREST, ISSUANCE OF THE UNITS
AND
CONSIDERATION
|
13
|
|
|
|
|
2.1
|
THE
TRANSACTION.
|
13
|
|
2.2
|
CONSIDERATION
|
14
|
|
|
|
|
ARTICLE
III ADJUSTMENTS, PRORATIONS AND SETTLEMENT
|
14
|
|
|
|
|
3.1
|
ADJUSTMENTS.
|
14
|
|
3.2
|
PRORATIONS
AND ADJUSTMENTS.
|
14
|
|
3.3
|
PRELIMINARY
SETTLEMENT STATEMENT
|
15
|
|
3.4
|
FINAL
SETTLEMENT STATEMENT
|
15
|
|
3.5
|
DISPUTE
PROCEDURES
|
15
|
|
3.6
|
PAYMENTS
|
15
|
|
3.7
|
ACCESS
TO BOOKS AND RECORDS
|
16
|
|
3.8
|
EXCLUDED
ASSETS
|
16
|
|
|
|
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF HOLDINGS
|
16
|
|
|
|
|
4.1
|
ORGANIZATION,
GOOD STANDING, AND AUTHORITY.
|
16
|
|
4.2
|
ENFORCEABILITY.
|
17
|
|
4.3
|
NO
CONFLICTS.
|
17
|
|
4.4
|
CONSENTS,
APPROVALS, AUTHORIZATIONS AND GOVERNMENTAL
REGULATIONS.
|
17
|
|
4.5
|
TAXES
|
18
|
|
4.6
|
LITIGATION;
COMPLIANCE WITH LAWS
|
19
|
|
4.7
|
CONTRACTS
|
19
|
|
4.8
|
TITLE
TO ASSETS; INTELLECTUAL PROPERTY
|
20
|
|
4.9
|
PREFERENTIAL
RIGHTS TO PURCHASE.
|
21
|
|
4.10
|
BROKER'S
OR FINDER'S FEES
|
21
|
|
4.11
|
COMPLIANCE
WITH PROPERTY INSTRUMENTS
|
21
|
|
4.12
|
ENVIRONMENTAL
MATTERS
|
21
|
|
4.13
|
EMPLOYEE
MATTERS
|
22
|
|
4.14
|
BENEFIT
PLAN LIABILITIES
|
22
|
|
4.15
|
NO
FOREIGN PERSON
|
22
|
|
4.16
|
CAPITALIZATION
OF GSRLLC.
|
22
|
|
4.17
|
SUBSIDIARIES
AND OTHER EQUITY INTERESTS
|
22
|
|
4.18
|
BANK
ACCOUNTS
|
22
|
|
4.19
|
NO
PREPAYMENTS MADE OR REFUNDS OWED.
|
22
|
|
4.20
|
INVESTMENT
INTENT
|
23
|
|
4.21
|
NO
OTHER REPRESENTATIONS OR WARRANTIES; SCHEDULES
|
23
|
|
|
|
|
ARTICLE
V REPRESENTATIONS AND WARRANTIES OF DCP
|
23
|
|
|
|
|
5.1
|
ORGANIZATION,
GOOD STANDING, AND AUTHORIZATION
|
23
|
|
5.2
|
ENFORCEABILITY
|
23
|
|
5.3
|
NO
CONFLICTS
|
24
|
|
5.4
|
CONSENTS,
APPROVALS, AUTHORIZATIONS AND GOVERNMENTAL
REGULATIONS
|
24
|
|
5.5
|
LITIGATION
|
24
|
|
5.6
|
INDEPENDENT
INVESTIGATION
|
24
|
|
5.7
|
BROKER'S
OR FINDER'S FEES
|
25
|
|
5.8
|
INVESTMENT
INTENT
|
25
|
|
5.9
|
AVAILABLE
FUNDS
|
26
|
|
|
|
|
ARTICLE
VI COVENANTS AND ACCESS
|
26
|
|
|
|
|
6.1
|
CONDUCT
OF BUSINESS.
|
26
|
|
6.2
|
CASUALTY
LOSS.
|
27
|
|
6.3
|
ACCESS,
INFORMATION AND ACCESS INDEMNITY.
|
28
|
|
6.4
|
REGULATORY
FILINGS; XXXX-XXXXX-XXXXXX FILING.
|
29
|
|
6.5
|
LIMITATION
ON CASUALTY LOSSES AND OTHER MATTERS
|
29
|
|
6.6
|
SUPPLEMENTS
TO EXHIBITS AND SCHEDULES
|
30
|
|
6.7
|
PRESERVATION
OF RECORDS
|
30
|
|
6.8
|
MEASUREMENT
AND VALUATION OF EXCESS INVENTORY
|
30
|
|
6.9
|
CAPITAL
PROJECTS
|
31
|
|
6.10
|
NEW
DEBT
|
31
|
|
6.11
|
CREDITS
AND RECEIPTS.
|
31
|
|
6.12
|
TAX
COVENANTS.
|
31
|
|
6.13
|
FINANCIAL
STATEMENTS AND FINANCIAL RECORDS
|
34
|
|
6.14
|
INSURANCE
|
35
|
|
|
|
|
ARTICLE
VII CONDITIONS TO CLOSING
|
35
|
|
|
|
|
7.1
|
HOLDINGS'
AND DEFS' CONDITIONS
|
35
|
|
7.2
|
DCP'S
CONDITIONS
|
36
|
|
|
|
|
ARTICLE
VIII CLOSING
|
37
|
|
|
|
|
8.1
|
TIME
AND PLACE OF CLOSING
|
37
|
|
8.2
|
DELIVERIES
AT CLOSING
|
37
|
|
|
|
|
ARTICLE
IX TERMINATION
|
38
|
|
|
|
|
9.1
|
TERMINATION
AT OR PRIOR TO CLOSING.
|
38
|
|
9.2
|
EFFECT
OF TERMINATION
|
38
|
ii
|
ARTICLE
X INDEMNIFICATION
|
38
|
|
|
|
|
10.1
|
INDEMNIFICATION
BY DCP
|
38
|
|
10.2
|
INDEMNIFICATION
BY HOLDINGS.
|
39
|
|
10.3
|
DEDUCTIBLES,
CAPS, SURVIVAL AND CERTAIN LIMITATIONS.
|
39
|
|
10.4
|
NOTICE
OF ASSERTED LIABILITY; OPPORTUNITY TO DEFEND.
|
41
|
|
10.5
|
MATERIALITY
CONDITIONS
|
43
|
|
10.6
|
EXCLUSIVE
REMEDY.
|
43
|
|
10.7
|
NEGLIGENCE
AND STRICT LIABILITY WAIVER
|
43
|
|
10.8
|
LIMITATION
ON DAMAGES
|
43
|
|
10.9
|
BOLD
AND/OR CAPITALIZED LETTERS
|
44
|
|
|
|
|
ARTICLE
XI MISCELLANEOUS PROVISIONS
|
44
|
|
|
|
|
11.1
|
EXPENSES
|
44
|
|
11.2
|
FURTHER
ASSURANCES
|
44
|
|
11.3
|
APPORTIONMENT
OF PROPERTY TAXES; TRANSFER TAXES; AND RECORDING
FEES.
|
44
|
|
11.4
|
ASSIGNMENT
|
44
|
|
11.5
|
ENTIRE
AGREEMENT, AMENDMENTS AND WAIVER
|
45
|
|
11.6
|
SEVERABILITY
|
45
|
|
11.7
|
COUNTERPARTS
|
45
|
|
11.8
|
GOVERNING
LAW, DISPUTE RESOLUTION AND ARBITRATION.
|
45
|
|
11.9
|
NOTICES
AND ADDRESSES
|
48
|
|
11.10
|
PRESS
RELEASES
|
49
|
|
11.11
|
OFFSET.
|
49
|
|
11.12
|
NO
PARTNERSHIP; THIRD PARTY BENEFICIARIES
|
49
|
|
11.13
|
NEGOTIATED
TRANSACTION
|
49
|
iii
EXHIBITS
|
A
|
Map
of Terminals
|
|
B
|
Form
of Amended Limited Partnership Agreement
|
|
C
|
Form
of ISDA Master Agreement
|
|
D
|
Form
of Omnibus Agreement Amendment
|
|
E
|
Form
of Subject Interests Assignment Agreement
|
|
F
|
Form
of Certificate for Class C Units
|
|
G
|
Form
of Canada Business Agreement
|
SCHEDULES
|
1.1(a)
|
Personal
Property
|
|
1.1(b)
|
Real
Property Interests
|
|
1.1(c)
|
Permits
|
|
1.1(d)
|
Contracts
|
|
1.1(e)
|
Post
Closing Consents
|
|
1.1(f)
|
Retained
Liabilities
|
|
1.1(g)
|
Excluded
Assets
|
|
1.1(h)
|
HOLDINGS'
Knowledge
|
|
1.1(i)
|
List
of Terminals and Field Offices
|
|
4.4
|
HOLDINGS
Consents, Approvals and Authorizations
|
|
4.5
|
Taxes
|
|
4.6
|
Litigation
|
|
4.9
|
Preferential
Rights
|
|
4.11
|
Real
Property Matters
|
|
4.12
|
Environmental
Matters
|
|
4.18
|
Bank
Accounts
|
|
4.19
|
Prepayments,
Refunds
|
|
5.4
|
DCP
Consents, Approvals and Authorizations
|
|
6.8
|
Measurement
and Valuation of Excess Inventory
|
|
6.9
|
Capital
Projects
|
|
6.10
|
New
Debt
|
|
10.2(d)
|
Certain
Indemnified Matters
|
iv
CONTRIBUTION
AGREEMENT
This
Contribution Agreement ("Agreement")
is
dated as of October 9, 2006 and is between DCP LP Holdings, LP, a Delaware
limited partnership ("HOLDINGS")
and
DCP Midstream Partners, LP, a Delaware limited partnership ("DCP").
HOLDINGS and DCP are sometimes referred to collectively herein as the
"Parties"
and
individually as a "Party".
RECITALS
A. HOLDINGS
owns all of the outstanding limited liability company member interests of Duke
Energy Xxxxxxxxx Pipeline, LLC, a Delaware limited liability company
("DEGP").
B. DEGP
owns
all of the outstanding limited liability company member interests of Gas Supply
Resources LLC, a Texas limited liability company ("GSRLLC").
C. GSRLLC
owns
(a) all of the limited
liability company
member
interests of GSRI Transportation LLC, a Texas limited
liability company ("GSRI")
and
(b) 50% of the limited liability company member interests of Pine
Tree
Propane limited
liability company, a Maine limited liability company ("Pine
Tree").
D. X
X
Xxxxxx LLC,
a Maine
limited liability company operates and owns the remaining 50% of the limited
liability company member interests of Pine
Tree.
E. Prior
to
Closing, DEGP will distribute, convey and assign all of the outstanding limited
liability company member interests of GSRLLC to HOLDINGS.
F. HOLDINGS
and DCP desire that HOLDINGS contribute to DCP all of the limited
liability company member
interest
of GSRLLC (the "Subject
Interests")
in
accordance with this Agreement.
FOR
GOOD AND VALUABLE CONSIDERATION,
the
receipt and sufficiency of which are hereby acknowledged, DCP and HOLDINGS
agree
as follows:
ARTICLE
I
CERTAIN
DEFINITIONS
1.1 Certain
Defined Terms.
Capitalized terms used herein and not defined elsewhere in this Agreement shall
have the meanings given such terms as is set forth below.
"Affiliate"
means,
when used with respect to a specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the specified Person as of the time or for the time periods during
which such determination is made. By way of example, the LLCs shall be deemed
Affiliates of HOLDINGS during the time period prior to the Effective Time and
shall be deemed Affiliates of DCP for time periods subsequent to the Effective
Time. For purposes of this definition "control", when used with respect to
any
specified Person, means the power to direct the management and policies of
the
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing. Notwithstanding
the
foregoing, the term "Affiliate" when applied to (a) DCP shall not include Duke
Energy Corporation, a Delaware corporation, or ConocoPhillips, a Delaware
corporation, or any entities owned, directly or indirectly, by Duke Energy
Corporation or ConocoPhillips, other than entities owned, directly or
indirectly, by DCP and DCP Midstream GP and (b) HOLDINGS shall not include
DCP
or any entities owned, directly or indirectly, by DCP.
"Allocation
Statement"
shall
have the meaning given such term in Section
6.12(f).
"Amended
Limited Partnership Agreement"
shall
mean DCP's Second Amended and Restated Agreement of Limited Partnership to
be
dated on or before the Effective Time in substantially the form of Exhibit
B.
"Annual
Financial Statements"
shall
have the meaning given such term in Section
6.13.
"Arbitral
Dispute"
means
any dispute, claim, counterclaim, demand, cause of action, controversy and
other
matters in question arising out of or relating to this Agreement or the alleged
breach hereof, or in any way relating to the subject matter of this Agreement
or
the relationship between the Parties created by this Agreement, regardless
of
whether (a) allegedly extra-contractual in nature, (b) sounding in contract,
tort, or otherwise, (c) provided for by applicable Law or otherwise, or (d)
seeking damages or any other relief, whether at Law, in equity, or
otherwise.
"Arbitration
Rules"
shall
have the meaning given such term in Section
11.8(d).
"Assets"
shall
mean all of the assets and properties of the respective LLC, including the
respective LLC's interests in the following, except for the Excluded Assets.
Each Schedule referenced in this definition includes a separate subpart for
each
of the three LLCs.
(a) Personal
Property.
All
tangible personal property of every kind and nature that relate to the
ownership, operation, use or maintenance of the Assets, including field
equipment, office equipment, fixtures, trailers, railcars, tools, instruments,
spare parts, machinery, computer equipment, telecommunications equipment,
furniture, supplies and materials that are located at the Terminals or Field
Offices, including those items of personal property more particularly described
in Schedule
1.1(a)
and all
hydrocarbon inventory at the Terminals or in transit to or from the Terminals
(collectively the "Personal
Property");
(b) Real
Property.
All fee
property, rights-of-way, easements, surface use agreements, licenses and leases
that relate to the ownership, operation, use or maintenance of the other Assets,
including those described in Schedule
1.1(b)
(collectively, the "Real
Property Interests"),
and
all fixtures, buildings and improvements located on or under such Real Property
Interests;
2
(c) Permits.
All
assignable permits, licenses, certificates, orders, approvals, authorizations,
grants, consents, concessions, warrants, franchises and similar rights and
privileges which are necessary for, or are used or held for use primarily for
or
in connection with, the ownership, use, operation or maintenance of the Assets
(collectively, the "Permits"),
including those Permits more particularly described in Schedule
1.1(c);
(d) Contract
Rights.
All
contracts that relate to the ownership, operation, use or maintenance of the
Assets, including all propane purchase and sales agreements, storage agreements,
and transportation agreements, equipment leases, rental contracts, and service
agreements, including those contracts or agreements described in Schedule
1.1(d)
(collectively, the "Contracts");
(e) Intellectual
Property.
All
technical information, shop rights, designs, plans, manuals, specifications
and
other proprietary and nonproprietary technology and data used in connection
with
the ownership, operation, use or maintenance of the Assets (collectively, the
"Intellectual
Property");
(f) Terminals
and Field Offices.
The
Terminals and Field Offices;
(g) Books
and Records.
All
contract, land, title, engineering, environmental, operating, accounting,
business, marketing, and other data, files, documents, instruments, notes,
correspondence, papers, ledgers, journals, reports, abstracts, surveys, maps,
books, records and studies which relate primarily to the Assets or which are
used or held for use primarily in connection with, the ownership, operation,
use
or maintenance of the Assets; provided,
however,
such
material shall not include (i) any proprietary data that is not primarily used
in connection with the continued ownership, use or operation of the Assets,
(ii)
any information subject to Third Person confidentiality agreements for which
a
consent or waiver cannot be secured by HOLDINGS after reasonable efforts, (iii)
any information which, if disclosed, would violate an attorney-client privilege
or would constitute a waiver of rights as to attorney work product or
attorney-client privileged communications, or (iv) any information relating
primarily to the Retained Liabilities or any obligations for which HOLDINGS
is
required to indemnify the DCP Indemnitees pursuant to Section
10.2
(collectively, the "Records");
provided,
however,
that
DCP shall have the right to copy any of the information specified in
clause
(iv);
and
(h) Incidental
Rights.
All of
the following insofar as the same are attributable or relate primarily to any
of
the Assets described in clauses
(a)
through
(g):
(i) all purchase orders, invoices, storage or warehouse receipts, bills of
lading, certificates of title and documents, (ii) all keys, lock
combinations, computer access codes and other devices or information necessary
to gain entry to and/or take possession of such Assets, (iii) all rights in
any confidentiality or nonuse agreements relating to the Assets, and
(iv) the benefit of and right to enforce all covenants, warranties,
guarantees and suretyship agreements running in favor of the LLCs relating
primarily to the Assets and all security provided primarily for payment or
performance thereof.
3
"Assumed
Obligations"
shall
mean, except for the Retained Liabilities, all rights, liabilities, duties,
obligations, risk of loss, Claims, Losses and any related responsibility for
the
ownership, operation or use of the LLCs, the Assets and the business related
thereto and any condition of or on the Assets attributable to any period of
time, whether before, on or after the Effective Time.
"Benefit
Plan"
shall
mean any of the following: (a) any employee welfare benefit plan or
employee pension benefit plan as defined in sections 3(1) and 3(2) of ERISA,
and
(b) any other material employee benefit agreement or arrangement, including
a deferred compensation plan, incentive plan, bonus plan or arrangement, stock
option plan, stock purchase plan, stock award plan, golden parachute agreement,
severance plan, dependent care plan, cafeteria plan, employee assistance
program, scholarship program, employment contract, retention incentive
agreement, non-competition agreement, consulting agreement, vacation policy,
and
other similar plan, agreement and arrangement.
"Business
Day"
shall
mean any day, other than Saturday and Sunday, on which federally-insured
commercial banks in Denver,
Colorado are generally open for business and capable
of sending and receiving wire transfers.
"Canada
Business Agreement"
shall
mean a Canada Business Agreement between HOLDINGS and GSRLLC in the form of
the
attached Exhibit
G.
"Capital
Projects"
shall
have the meaning given such term in Section
6.9.
"Cash
Consideration"
shall
have the meaning given such term in Section
2.2.
"Casualty
Loss"
shall
mean, with respect to all or any portion of the Assets, any destruction by
fire,
storm or other casualty, or any condemnation or taking or threatened
condemnation or taking, of all or any portion of the Assets.
"Cash
Consideration"
shall
have the meaning given such term in Section
2.2.
"Certificate
of Class C Units"
shall
mean the certificate(s) representing HOLDINGS’ additional interest in DCP in the
form of the attached Exhibit
E.
"Claim"
shall
mean any demand, demand letter, claim or notice by a Third Person of
noncompliance or violation or Proceeding.
"Claim
Notice"
shall
have the meaning given such term in Section
10.3(c).
"Closing"
shall
have the meaning given such term in Section
8.1.
"Closing
Date"
shall
have the meaning given such term in Section
8.1.
4
"Code"
shall
mean the U.S. Internal Revenue Code of 1986, as amended.
"Commercially
Reasonable Efforts"
shall
mean efforts which are reasonably within the contemplation of the Parties on
the
date hereof, which are designed to enable a Party, directly or indirectly,
to
satisfy a condition to, or otherwise assist in the consummation of, the
transactions contemplated by this Agreement and which do not require the
performing Party to expend any funds or assume liabilities other than
expenditures and liabilities which are reasonable in nature and amount in the
context of the transactions contemplated by this Agreement.
"Contracts"
shall
have the meaning given such term in the definition of Assets.
"Consideration"
shall
mean the Unit Consideration and Cash Consideration.
"DCP"
shall
mean DCP Midstream Partners, LP, a Delaware limited partnership and its
permitted successors and assigns.
"DCP
Indemnitees"
shall
have the meaning given such term in Section
10.2.
"DCP's
Knowledge"
or the
"Knowledge
of DCP"
or any
similar term, shall mean the actual knowledge of any officer of DCP having
a
title of vice president or higher.
"DCP
Midstream GP"
shall
mean DCP Midstream GP, LP, a Delaware limited partnership.
"DCP
Required Consents"
shall
have the meaning given such term in Section
5.4.
"Defensible
Title"
shall
mean, as to the Assets, such title to the Assets that vests the applicable
LLC
with indefeasible title in and to the Assets free and clear of Liens
other
than Permitted Encumbrances.
"DEFS"
shall
mean Duke Energy Field Services, LLC, a Delaware limited liability
company.
"DENGL"
shall
mean Duke Energy NGL Services, LP, a Delaware limited partnership.
"DOJ"
shall
mean the Department of Justice of the United States.
"Effective
Time"
shall
mean 7:00 A.M. on the calendar day following the Closing Date; provided,
however, that if Closing occurs after November 1, 2006, but on or before
November 14, 2006, "Effective
Time"
shall
mean 7:00 A.M. on November 1, 2006.
"Environmental
Law"
shall
mean any and all Laws, statutes, ordinances, rules, regulations, or orders
of
any Governmental Authority in existence at the Effective Time pertaining to
the
protection of the environment or natural resources or to Hazardous Materials
in
any and all jurisdictions in which the party in question owns property or
conducts business or in which the Assets are located, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation, and Liability
Act
of 1980 ("CERCLA"),
the
Federal Water Pollution Control Act, the Occupational Safety and Health Act
of
1970 (to the extent relating to environmental matters), the Resource
Conservation and Recovery Act of 1976 ("RCRA"),
the
Safe Drinking Water Act, the Toxic Substances Control Act, the Hazardous &
Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization
Act of 1986, the Hazardous Materials Transportation Act, the Oil Pollution
Act
of 1990, any state or local Laws implementing or substantially equivalent to
the
foregoing federal Laws, and any state or local Laws pertaining to the handling
of oil and gas exploration, production, gathering, and processing wastes or
the
use, maintenance, and closure of pits and impoundments.
5
"Environmental
Matter"
shall
have the meaning given such term in Section
4.4(b).
"ERISA"
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
"Excess
Inventory"
shall
mean all propane included in the Assets above the necessary minimum operating
inventory, which shall be measured in accordance with Section
6.8.
"Excluded
Assets"
shall
mean all of the following:
(a) All
deposits, cash, checks, funds, claims for refund and accounts receivable to
the
extent related to the business of the LLCs prior to the Effective
Time;
(b) any
deposits or pre-paid items attributable to the operation of the
Assets;
(c) the
Excess Inventory;
(d) Claims
for refund of or loss carry forwards with respect to (i) Taxes attributable
to
the business of the LLCs for any period prior to the Effective Time or (ii)
any
Taxes attributable to any of the Excluded Assets;
(e) All
work
product of HOLDINGS' or its Affiliates' attorneys, records relating to the
negotiation and consummation of the transactions contemplated hereby and
documents that are subject to a valid attorney-client privilege;
(f) All
real
property, personal property, contracts, intellectual property, Permits, office
computers or other equipment (or any leases or licenses of the foregoing ),
if
any, that are listed on Schedule
1.1(g);
(g) All
vehicles, and all leases for vehicles that relate to the ownership, operation,
use or maintenance of the Assets, except the leasehold interest in tractors
and
trailers under the lease agreements described in Schedule
1.1(d);
(h) All
computer software that relates to the ownership, operation, use or maintenance
of the Assets that requires a consent to transfer;
6
(i) All
rights and obligations under swaps, futures or other similar derivative-based
transactions that relate to the ownership, operation, use or maintenance of
the
Assets, except those that are specifically described in Schedule
1.1(d);
(j) all
Canadian propane supply and inventory/storage contracts (i.e., the only Canadian
assets that will be included within the Assets are rail car
leases);
(k) All
office equipment and accessories (including computers) that relate to the
ownership, operation, use or maintenance of the Assets, other than that located
at the Terminals and the Field Offices; and
(l) Subject
to Sections
6.2
and
6.14,
all
rights to claim coverage or benefits under HOLDINGS' or its Affiliates'
insurance policies or coverage,
including self-insurance and insurance which HOLDINGS has obtained through
a
captive insurance carrier.
"Exhibits"
shall
mean any and/or all of the exhibits attached to and made a part of this
Agreement.
"Field
Offices"
shall
mean GSRLLC’s offices (or leasehold interest in offices) described in
Schedule
1.1(i).
"Final
Settlement Statement"
shall
have the meaning given such term in Section
3.4.
"FTC"
shall
mean the Federal Trade Commission of the United States of America.
"GAAP"
means
generally accepted accounting principles in the United States as of the date
hereof, consistently applied.
"Governmental
Authorities"
shall
mean (a) the United States of America or any state or political subdivision
thereof within the United States of America and (b) any court or any
governmental or administrative department, commission, board, bureau or agency
of the United States of America or of any state or political subdivision thereof
within the United States of America.
"Hazardous
Materials"
shall
mean: (a) any chemicals, materials or substances defined or included in the
definition of "hazardous substances," "hazardous materials," "toxic substances,"
"solid wastes," "pollutants," "contaminants," or words of similar import, under
any Environmental Law, (b) any petroleum, petroleum products (including,
without limitation, crude oil or any faction thereof), natural gas liquids,
natural gas condensate, or oil and gas exploration or production waste,
radioactive materials (other than naturally occurring radioactive materials),
friable asbestos, mercury, lead based paints and polychlorinated biphenyls,
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority; or (d) any
regulated constituents or substances in concentrations or levels that exceed
numeric or risk-based standards established pursuant to Environmental Laws.
7
"HOLDINGS"
shall
mean DCP LP Holdings, LP, a Delaware limited partnership.
"HOLDINGS'
Indemnitees"
shall
have the meaning given such term in Section
10.1.
"HOLDINGS'
Knowledge"
or the
"Knowledge
of HOLDINGS"
or any
similar term, shall mean the actual knowledge of (i) any officer of HOLDINGS
having a title of Vice President or higher, and (ii) the individuals listed
on
Schedule
1.1(h).
"HOLDINGS'
Property Tax"
shall
have the meaning given such term in Section 11.3(a).
"HOLDINGS'
Required Consents"
shall
have meaning given such term in Section 4.4(a).
"HSR
Act"
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
"Imbalance"
shall
mean all hydrocarbon imbalances between an LLC and a Third Person relating
to or
arising out of the operation of the Assets that exist at the Effective
Time.
"Imbalance
Payable"
shall
mean an account payable for an Imbalance owed by an LLC to a Third
Person.
"Imbalance
Receivable"
shall
mean an account receivable for an Imbalance owed by a Third Person to an
LLC.
"Indemnified
Party"
or
"Indemnitee"
shall
have the meaning given such term in Section 10.4(a).
"Indemnifying
Party"
or
"Indemnitor"
shall
have the meaning given such term in Section
10.4(a).
"Independent
Accountants"
shall
mean PriceWaterhouseCoopers.
"Insurance"
shall
have the meaning give such term in Section
6.14.
"Interest
Rate"
shall
mean a per annum rate of interest equal to the lesser of (a) the prime rate
of interest by Bank of America plus one percent (1%), which rate shall change
when and as such prime rate changes, or (b) the maximum non-usurious rate
of interest permitted to be charged under applicable Law.
"ISDA
Agreement"
shall
mean an ISDA Master Agreement between DENGL and GSRLLC in the form of the
attached Exhibit
C.
"Laws"
shall
mean all applicable statutes, laws (including common law), regulations, rules,
rulings, ordinances, orders, restrictions, requirements, writs, judgments,
injunctions, decrees and other official acts of or by any Governmental
Authority.
"Lien"
shall
mean any lien, mortgage, pledge, claim, charge, security interest or other
encumbrance, option or defect on title.
8
"Limited
Partnership Agreement"
shall
mean the First Amended and Restated Agreement of Limited Partnership of DCP
dated as of December 7, 2005.
"LLCs"
shall
mean GSRLLC, GSRI and Pine Tree.
"Loss"
or
"Losses"
shall
mean any and all damages, demands, payments, obligations, penalties,
assessments, disbursements, claims, costs, liabilities, losses, causes of
action, and expenses, including interest, awards, judgments, settlements, fines,
fees, costs of defense and reasonable attorneys' fees, costs of accountants,
expert witnesses and other professional advisors and costs of investigation
and
preparation of any kind or nature whatsoever.
"Material
Adverse Effect"
shall
mean a single event, occurrence or fact, or series of events, occurrences or
facts, that, alone or together with all other events, occurrences or facts
(a)
would have an adverse change in or effect on the LLCs or the Assets (including
the cost to remedy, replace or obtain same) taken as a whole, in excess of
$3,400,000 or (b) would result in the prohibition or material delay in the
consummation of the transactions contemplated by this Agreement, excluding
(in
each case) matters that are generally industry-wide developments or changes
or
effects resulting from changes in Law or general economic, regulatory or
political conditions.
"Materiality
Condition"
shall
have the meaning given such term in Section
10.5.
"Notice
Period"
shall
have the meaning given such term in Section
10.4(c).
"Omnibus
Agreement Amendment"
shall
mean the Second Amendment to Omnibus Agreement among DEFS, DCP, DCP Midstream
GP, DCP Midstream GP, LLC and DCP Midstream Operating, LP, in the form of the
attached Exhibit
D.
"Ordinary
Course of Business"
shall
mean the ordinary course of business consistent with past
practices.
"Permits"
shall
have the meaning given such term in the definition of Assets.
"Permitted
Encumbrances"
shall
mean the following:
(a) the
terms, conditions, restrictions, exceptions, reservations, limitations, and
other matters contained in any document creating the Real Property Interests,
or
in any Permit or Contract;
(b) Liens
for
property Taxes and assessments that are not yet due and payable (or that are
being contested in good faith by appropriate Proceedings for which HOLDINGS
will
retain liability);
9
(c) mechanic's,
materialmen's, repairmen's and other statutory Liens arising in the ordinary
course and securing obligations incurred prior to the Effective Time and (i)
for
which HOLDINGS or a Third Person is, and will after the Effective Time be,
responsible for payment, or (ii) that are not delinquent and that will be paid
and discharged in the ordinary course of business by HOLDINGS or a Third Person
or, if delinquent, that are being contested in good faith with any action to
foreclose on or attach any Assets on account thereof properly stayed and for
which HOLDINGS, its Affiliates or a Third Person will retain
liability;
(d) utility
easements, restrictive covenants, defects and irregularities in title,
encumbrances, exceptions and other matters that are of record that, singularly
or in the aggregate, will not materially interfere with the ownership, use
or
operation of the Assets to which they pertain;
(e) required
Third Person consents to assignment, preferential purchase rights and other
similar agreements with respect to which consents or waivers are obtained from
the appropriate Person for the transaction contemplated hereby prior to Closing
or, as to which the appropriate time for asserting such rights has expired
as of
the Closing without an exercise of such rights;
(f) any
Post-Closing Consent;
(g) Liens
created by DCP or its successors or assigns; and
(h) The
Liens
listed on Schedule
1.1(a).
"Person"
shall
mean any natural person, corporation, company, partnership (general or limited),
limited liability company, trust, joint venture, joint stock company,
unincorporated organization, or other entity or association.
"Personal
Property"
shall
have the meaning given such term in the definition of Assets.
"Post-Closing
Consents"
shall
mean consents or approvals from, or filings with Governmental Authorities or
consents from railroads customarily obtained following the closing of a
transaction similar to the transaction contemplated hereby, including those
listed on Schedule 1.1(e).
"Pre-Closing
Tax Period"
shall
mean, with respect to the LLCs, any taxable period (including the portion of
any
Straddle Period) ending on or prior to the Closing Date.
"Preliminary
Settlement Statement"
shall
have the meaning given such term in Section 3.3.
"Proceeding"
shall
mean any action, suit, claim, investigation, review or other judicial or
administrative proceeding, at Law or in equity, before or by any Governmental
Authority or arbitration or other dispute resolution proceeding.
10
"Qualified
Claims"
shall
have the meaning given such term in Section
10.3(b)(iv).
"Real
Property Interests"
shall
have the meaning given such term in the definition of Assets.
"Records"
shall
have the meaning given such term in the definition of Assets.
"Recoupments"
shall
have meaning given such term in Section
6.9.
"Retained
Liabilities"
shall
mean Losses with respect to:
(i) except
for sales, transfer, use or similar Taxes that are due or should hereafter
become due (including penalty and interest thereon) by reason of the transaction
contemplated by this Agreement and property Taxes, all Taxes with respect to
the
LLCs or the Assets to the extent related to periods prior to and including
the
Closing Date;
(ii) property
Taxes on the Assets related to periods prior to January 1, 2006;
(iii) disposal
of Hazardous Substances generated at the Terminals at offsite locations between
April 30, 2001 and the Closing Date;
(iv) the
Excluded Assets and Taxes related thereto; and
(v) those
matters, if any, described on Schedule
1.1(f).
"Schedules"
shall
mean any and/or all of the schedules attached to and made a part of this
Agreement.
"SEC"
shall
mean the U.S. Securities and Exchange Commission.
"SEC
Financial Statements"
shall
have the meaning specified in Section
6.13.
"Securities
Act"
shall
mean the Securities Act of 1933, as amended.
"Settlement
Notice"
shall
have the meaning given such term in Section
3.5.
"Straddle
Period"
shall
mean any taxable period that begins before and ends after the Closing
Date.
"Straddle
Tax Return"
shall
mean any Tax Return that covers a taxable period that begins before and ends
after the Closing Date.
"Stub
Period Financial Statements"
shall
have the meaning given such term in Section 6.13.
"Subject
Interests"
shall
mean 100% of the limited liability company membership interests of
GSRLLC.
11
"Subject
Interests Assignment Agreement"
shall
mean the Assignment Agreement in substantially the form of Exhibit
E
covering
the conveyance of the Subject Interests by HOLDINGS to DCP.
"Subject
Time"
shall
mean the current local time then in effect (a) with respect to the Closing,
in
Denver,
Colorado and (b) with respect to Personal Property or Real Property
Interests, where such property is located.
"Tank
Damage"
shall
have the meaning given such term in Section
6.9.
"Tax"
or
"Taxes"
shall
mean any Governmental Authority income tax, ad valorem tax, excise tax, sales
tax, use tax, franchise tax, real or personal property tax, transfer tax, gross
receipts tax or other tax, assessment, duty, fee, levy or other governmental
charge, together with and including, any and all interest, fines, penalties,
assessments, and additions to Tax resulting from, relating to, or incurred
in
connection with any of those or any contest or dispute thereof.
"Tax
Authority"
shall
mean any Authority having jurisdiction over the payment or reporting of any
Tax.
"Tax
Benefits"
means
the amount by which the Tax liability of the Indemnified Party or any of its
Affiliates for a taxable period is actually reduced (including, without
limitation, by deduction, reduction in income upon a sale, disposition or other
similar transaction as a result of increased tax basis, receipt of a refund
of
Taxes or use of a credit of Taxes) plus any related interest (net of Taxes
payable thereon) received from the relevant Tax Authority, as a result of the
incurrence, accrual or payment of any Loss or Tax with respect to which the
indemnification payment is being made.
"Tax
Claim"
shall
mean the written notice of the assertion or commencement of any claim,
assessment, deficiency, audit, review, examination or other proposed change
or
adjustment by any Tax Authority or any judicial or administrative proceeding
relating to a Pre-Closing Tax Period of the Company.
"Tax
Proceeding"
shall
have the meaning given such term in Section
6.12(g).
"Tax
Return"
shall
mean any report, statement, form, return or other document or information
required to be supplied to a taxing authority in connection with
Taxes.
"Terminals"
shall
mean those propane terminal facilities described in Schedule
1.1(i)
and
identified on the Terminal Map.
"Terminal
Map"
shall
mean the map describing the Terminals attached to this Agreement as Exhibit
A.
"Third
Person"
shall
mean (i) any Person other than a Party or its Affiliates, and (ii) any
Governmental Authority.
12
"Third
Person Awards"
shall
mean any actual recoveries from Third Persons by the Indemnified Party
(including, without limitation, from insurance and third-party indemnification)
in connection with the claim for which such party is also potentially
liable.
"Third
Person Claim"
shall
have the meaning given such term in Section
10.4(c).
"Transaction
Documents"
shall
mean the ISDA Agreement, the Amended Limited Partnership Agreement, the Canada
Business Agreement, the Omnibus Agreement Amendment, the Subject Interests
Assignment Agreement, a Certificate representing the Unit Consideration, and
any
other document related to the sale, transfer, assignment or conveyance of the
Subject Interests to be delivered at Closing.
"Treasury
Regulations"
shall
mean regulations promulgated under the Code.
"Unit
Consideration"
shall
have the meaning given such term in Section
2.2.
"Units"
shall
mean one of that certain class of limited partnership interests of DCP with
those special rights and obligations specified in the Amended Limited
Partnership Agreement as being appurtenant to a "Class C
Unit".
1.2 Other
Definitional Provisions.
As used
in this Agreement, unless expressly stated otherwise or the context requires
otherwise, (a) all references to an "Article," "Section," or "subsection" shall
be to an Article, Section, or subsection of this Agreement, (b) the words "this
Agreement," "hereof," "hereunder," "herein," "hereby," or words of similar
import shall refer to this Agreement as a whole and not to a particular Article,
Section, subsection, clause or other subdivision hereof, (c) the words used
herein shall include the masculine, feminine and neuter gender, and the singular
and the plural, (d) the word "including" means "including, without
limitation"
and (e)
the word "day" or "days" means a calendar day or days, unless otherwise denoted
as a Business Day.
1.3 Headings.
The
headings of the Articles and Sections of this Agreement and of the Schedules
and
Exhibits are included for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction or interpretation hereof
or
thereof.
1.4 Other
Terms.
Other
terms may be defined elsewhere in the text of this Agreement and shall have
the
meaning indicated throughout this Agreement.
ARTICLE
II
CONTRIBUTION
OF THE SUBJECT INTEREST, ISSUANCE OF THE UNITS AND
CONSIDERATION
2.1 The
Transaction.
At the
Closing, but effective for all purposes as of the Effective Time, HOLDINGS
shall
contribute to DCP the Subject Interests in exchange for the issuance of the
Consideration to HOLDINGS by DCP.
13
2.2 Consideration.
In
consideration for the contribution of the Subject Interests, DCP shall
(i) issue and deliver to HOLDINGS at the Closing one or more certificates
duly registered in the name of HOLDINGS and representing 200,312 Units (the
"Unit
Consideration")
and
(ii) distribute $57,057,000.00 in cash to HOLDINGS (the "Cash
Consideration").
ARTICLE
III
ADJUSTMENTS,
PRORATIONS AND SETTLEMENT
3.1 Adjustments.
(a) The
value
of the Cash Consideration shall be subject to cash adjustments pursuant to
this
Article
III.
(b) For
the
avoidance of doubt, cash adjustments pursuant to this Article
III
shall
not result in any adjustment to the Unit Consideration. Each payment of an
adjustment to the Cash Consideration shall be made at Closing if the adjustment
is determined by such date, or otherwise, in the Final Settlement
Statement.
(c) The
Parties shall use all Commercially Reasonable Efforts to agree upon the
adjustments set forth in this Article
III,
and to
resolve any differences with respect thereto. Except as provided herein, no
adjustments shall be made after delivery of the Final Settlement
Statement.
3.2 Prorations
and Adjustments.
(a) The
amount payable to HOLDINGS will be reduced by the amount of any unpaid general
property Tax assessed against or pertaining to the Assets for periods before
the
Effective Time with respect to any taxable period that includes the Effective
Time, prorated in accordance with Section
11.3(a).
(b) The
amount payable to HOLDINGS will be increased by the value of Excess Inventory
under Section 6.8,
prepaid
items and any other Excluded Assets that DCP agrees to acquire at Closing (in
which event, such Excluded Assets shall be transferred to the respective LLC).
(c) The
amount payable to HOLDINGS will be reduced by the amount of any utility charges
or other items of expense attributable to the operation of the Assets prior
to
the Effective Time paid by GSRLLC. Such amounts shall be prorated as of the
Effective Time.
(d) Subject
to Sections
3.2(e)
and
6.9,
the
amount payable to HOLDINGS will be reduced by the amount of any trade accounts
payable (including Imbalance Payables) of the LLCs that exist as of the
Effective Time.
14
(e) Notwithstanding
anything to the contrary, including Sections
3.2(d)
and
10.2(b),
the
amount payable to HOLDINGS will be increased by the amount of DCP's
reimbursement obligation in respect of the Capital Projects in accordance with
Section
6.9.
(f) If
Closing occurs after November 1, 2006 but on or before November 14, 2006, the
amount payable to HOLDINGS will be increased by an amount equal to the Interest
Rate times X divided by 365 times the number of days from and including November
1, 2006 through but excluding the Closing Date; where X equals what the value
of
the Cash Consideration plus the Unit Consideration, as adjusted by Section
3.2(a)
through
(e),
would
have been if Closing had occurred on November 1, 2006.
3.3 Preliminary
Settlement Statement.
Not
later
than five (5) business days before the Closing Date, and after consultation
with
DCP, HOLDINGS shall deliver to DCP a written statement (the "Preliminary
Settlement Statement")
setting forth the Cash Consideration and the description and amount of each
item
determined in good faith by HOLDINGS that are described in Section 3.2,
with
HOLDINGS' calculation of such items in reasonable detail, based on information
then available to HOLDINGS. The
Preliminary Settlement Statement shall also set forth wire transfer instructions
for the Closing payments.
Payment
of the Cash Consideration at the Closing shall be based on the Preliminary
Settlement Statement.
3.4 Final
Settlement Statement.
No later
than ninety (90) days after the Closing Date and after consultation with DCP,
HOLDINGS shall deliver to DCP a revised settlement statement showing in
reasonable detail its calculation of the items described in Section
3.2
along
with other adjustments or payments contemplated in this Agreement (said revised
statement and the calculation thereof shall be referred to as the "Final
Settlement Statement").
3.5 Dispute
Procedures.
The
Final Settlement Statement shall become final and binding on the Parties on
the
45th
day
following the date the Final Settlement Statement is received by DCP, unless
prior to such date DCP delivers written notice to HOLDINGS of its disagreement
with the Final Settlement Statement (a "Settlement
Notice").
Any
Settlement Notice shall set forth DCP's proposed changes to the Final Settlement
Statement, including an explanation in reasonable detail of the basis on which
DCP proposes such changes. If DCP has timely delivered a Settlement Notice,
DCP
and HOLDINGS shall use good faith efforts to reach written agreement on the
disputed items. If the disputed items have not been resolved by DCP and HOLDINGS
by the 30th
day
following HOLDINGS' receipt of a Settlement Notice, any remaining disputed
items
shall be submitted to the Independent Accountants for resolution within ten
(10)
Business Days after the end of the foregoing 30-day period. The fees and
expenses of the Independent Accountants shall be borne fifty percent (50%)
by
HOLDINGS and fifty percent (50%) by DCP. The Independent Accountants'
determination of the disputed items shall be final and binding upon the Parties,
and the Parties hereby waive any and all rights to dispute such resolution
in
any manner, including in court, before an arbiter or appeal.
3.6 Payments.
If the
final amount as set forth in the Final Settlement Statement exceeds the
estimated amount as set forth in the Preliminary Settlement Statement, then
DCP
shall pay to HOLDINGS the amount of such excess, with interest at the Interest
Rate (calculated from the Closing Date). If the final calculated amount as
set
forth in the Final Settlement Statement is less than the estimated calculated
amount as set forth in the Preliminary Settlement Statement, then HOLDINGS
shall
pay to DCP the amount of such excess, with interest at the Interest Rate. Any
payment shall be made within three (3) Business Days of the date the Final
Settlement Statement becomes final pursuant to Section
3.5.
15
3.7 Access
to Books and Records.
The
Parties shall grant to each other full access to the Books and Records and
its
relevant personnel to allow each of them to make evaluations under this
Article
III.
3.8 Excluded
Assets.
Prior
to the Closing, the Excluded Assets will be distributed by the LLCs to
DEGP.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF HOLDINGS
HOLDINGS
represents and warrants to DCP as follows:
4.1 Organization,
Good Standing, and Authority.
(a) HOLDINGS
is a limited partnership duly formed, validly existing and in good standing
under the Laws of the State of Delaware. The execution and delivery of this
Agreement and the other Transaction Documents to which HOLDINGS is a party
and
the consummation by HOLDINGS of the transactions contemplated herein and therein
have been duly and validly authorized by all necessary limited partnership
action by HOLDINGS. This Agreement has been duly executed and delivered by
HOLDINGS. HOLDINGS
has all requisite limited partnership power and authority to enter into and
perform this Agreement and the other Transaction Documents to which it is a
party, to perform its obligations hereunder and thereunder and to carry out
the
transactions contemplated herein and therein.
(b) DEGP
is a
limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Delaware. The execution and delivery of this
Agreement and the other Transaction Documents to which DEGP is a party and
the
consummation by DEGP of the transactions contemplated herein and therein have
been duly and validly authorized by all necessary limited partnership action
by
DEGP. HOLDINGS has all requisite limited liability company power and authority
to enter into and perform the Transaction Documents to which it is a party,
to
perform its obligations thereunder and to carry out the transactions
contemplated herein and therein.
(c) GSRLLC
is
a limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Texas and has all requisite limited liability
company power and authority to own or otherwise hold and operate its Assets.
GSRLLC is duly licensed or qualified and in good standing as a foreign limited
liability company authorized to do business in each additional State in which
it
owns assets.
16
(d) GSRI
is a
limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Texas and has all requisite limited liability
company power and authority to own or otherwise hold and operate its Assets.
GSRI is duly licensed or qualified and in good standing as a foreign limited
liability company authorized to do business in each additional State in which
it
owns assets.
(e) To
HOLDINGS' Knowledge, Pine Tree is a limited liability company duly formed,
validly existing and in good standing under the Laws of the State of Maine
and
has all requisite limited liability company power and authority to own or
otherwise hold and operate its Assets. To HOLDINGS' Knowledge, Pine Tree is
duly
licensed or qualified and in good standing as a foreign limited liability
company authorized to do business in each additional State in which it owns
assets.
4.2 Enforceability.
This
Agreement constitutes and, upon execution of and delivery by HOLDINGS, DENGL
and
DEFS of the other Transaction Documents to which they are a party, such
Transaction Documents will constitute, valid and binding obligations of
HOLDINGS, DENGL and DEFS, as applicable, enforceable against such Parties in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar Laws affecting creditor's rights
generally and general principles of equity.
4.3 No
Conflicts.
The
execution, delivery and performance by HOLDINGS of this Agreement, and the
execution, delivery and performance by HOLDINGS, DEGP, DENGL and DEFS of the
other Transaction Documents to which they are party and the consummation of
the
transactions contemplated hereby or thereby, will not:
(a) Provided
all of HOLDINGS' Required Consents and Post Closing Consents have been obtained,
conflict with, constitute a breach, violation or termination of, give rise
to
any right of termination, cancellation or acceleration of or result in the
loss
of any right or benefit under, any agreements to which HOLDINGS, DENGL, DEFS,
DEGP, GSRI or GSRLLC (and to HOLDINGS' Knowledge, Pine Tree) is a party or
by
which any of them, the Subject Interests or the Assets are bound;
(b) Conflict
with or violate the limited liability company agreements of DEGP or the LLCs,
or
the limited partnership agreement of HOLDINGS; and
(c) Provided
that all of HOLDINGS' Required Consents and Post Closing Consents have been
obtained, violate any Law applicable to HOLDINGS, DENGL, DEFS, GSRLLC, GSRI
or
the Assets (and to HOLDINGS' Knowledge, Pine Tree).
4.4 Consents,
Approvals, Authorizations and Governmental Regulations.
(a) Except
(i) for Post-Closing Consents, (ii) as set forth in Schedule
4.4
and
(iii) as may be required under the HSR Act (the items described in clauses
(ii)
and
(iii)
being
collectively referred to as the "HOLDINGS'
Required Consents";
no
order, consent, waiver, permission, authorization or approval of, or exemption
by, or the giving of notice to or the registration or filing with any
Governmental Authority or Third Person, is necessary for HOLDINGS to execute,
deliver and perform this Agreement or for HOLDINGS, DEGP, DEFS or DENGL to
execute, deliver and perform the other Transaction Documents to which it is
a
party.
17
(b) Except
as
set forth in Schedule
4.4,
(i),
all material permits, licenses, certificates, orders, approvals, authorizations,
grants, consents, concessions, warrants, franchises and similar rights and
privileges, of all Governmental Authorities required or necessary for GSRLLC
and
GSRI (and to HOLDINGS' Knowledge, Pine Tree) to own and operate its Assets
in
the places and in the manner currently owned or operated, have been obtained,
and are in full force and effect, (ii) HOLDINGS and its Affiliates have received
no written notification concerning, and there are no violations that are in
existence with respect to the Permits and (iii) no Proceeding is pending or
threatened with respect to the revocation or limitation of any of the Permits.
Notwithstanding anything herein to the contrary, the provisions of this
Section
4.4(b)
shall
not relate to or cover any matter relating to or arising out of any
Environmental Laws (an "Environmental
Matter"),
which
shall be governed by Section
4.12.
4.5 Taxes.
Except
as set forth in Schedule
4.5:
(a) GSRLLC
and GSRI have not and will not (and, with respect to Pine Tree, GSRLLC has
not
and will not consent to Pine Tree to) on or prior to the Closing Date, file
an
election under Treasury Regulation §301.7701-3 to be classified as a corporation
for U.S. federal income tax purposes. Since December 7, 2005 until Closing,
GSRLLC and GSRI have been and will be business entities that will be disregarded
for federal Tax purposes under Treasury Regulation §§301.7701-2 and - 3. To
HOLDINGS' Knowledge, during the entirety of the period from the date of its
formation until Closing, Pine Tree has been and will be a partnership for
federal tax purposes;
(b) Except
with respect to ad valorem Taxes for the year in which Closing occurs, all
Taxes
due and owing or claimed to be due and owing (whether such claim is asserted
before or after the Effective Time) from or against HOLDINGS, DEGP, GSRLLC,
GSRI
or Pine Tree relating to the Assets, or the operation thereof, prior to the
Effective Time have been or will be timely paid in full by HOLDINGS or its
Affiliates;
(c) All
withholding Tax and Tax deposit requirements imposed on HOLDINGS, DEGP, GSRLLC,
GSRI or Pine Tree and applicable to the Assets, or the operation thereof, for
any and all periods or portions thereof ending prior to the Effective Time
have
been or will be timely satisfied in full by HOLDINGS or its
Affiliates;
(d) All
Tax
Returns that are required to be timely filed for, by, on behalf of or with
respect to GSRLLC or GSRI (and to HOLDINGS' Knowledge, Pine Tree), before the
Effective Time have been or will be filed with the appropriate Governmental
Authority; all Taxes shown to be due and payable on such Tax Returns have been
or will be paid in full by HOLDINGS or its Affiliates;
18
(e) None
of
DEGP or the LLCs are under audit or examination by any Governmental Authority.
There are no Claims now pending or, to the Knowledge of HOLDINGS, threatened
against DEGP or the LLCs with respect to any Tax or any matters under discussion
with any Governmental Authority relating to any Tax. There are no claims for
any
additional Tax asserted by any Governmental Authority against DEGP or the LLCs,
in each case, relating to its Assets or the operation thereof;
(f) None
of
DEGP, GSRLLC or GSRI (and to HOLDINGS' Knowledge, Pine Tree) (i) have agreed
to
make, nor is required to make, any adjustment under Section 481 of the Code
or
any comparable provision of state, local or foreign Law by reason of a change
in
accounting method or otherwise, and (ii) is a party to or bound by (or will
become a party to or bound by) any Tax sharing, Tax indemnity, or Tax allocation
agreement; and
(g) Pine
Tree
has made, or will make, an election under Section 754 of the Code.
4.6 Litigation;
Compliance with Laws.
(a) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS, DENGL,
DEFS, DEGP or the LLCs that restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(b) Except
for the litigation and Claims identified on Schedule
4.6,
there
is no written Claim, investigation or examination pending, or to the Knowledge
of HOLDINGS, threatened, against or affecting the Assets or the Subject
Interests before or by any Governmental Authority or any Third
Person.
(c) To
HOLDINGS' Knowledge, the Assets have been owned and operated in compliance
with
applicable Laws, except for any non-compliance which has been timely brought
into compliance therewith. Notwithstanding anything herein to the contrary,
the
provisions of this Section
4.6(c)
shall
not relate to or cover any Environmental Matters, which shall be governed by
Section
4.12.
4.7 Contracts.
All of
the Contracts that are material are listed on Schedule
1.1(d).
GSRLLC,
GSRI and, to HOLDINGS' Knowledge, Pine Tree are not in default and there is
no
event or circumstance that with notice, or lapse of time or both, would
constitute an event of default by the applicable LLC under the terms of the
Contracts. All of the Contracts are in full force and effect and to HOLDINGS'
Knowledge, no counter-party to any of the Contracts is in default under the
terms of such Contracts. Schedule
1.1(d)
lists
each Contract that:
(a) expressly
obligates an LLC to pay an amount of $500,000 or more and has not been fully
performed as of the date hereof;
19
(b) expressly
restricts the ability of an LLC to compete or otherwise to conduct its business
in any manner or place;
(c) provides
for the sale of products or the provision of services for amounts in excess
of
$500,000 (including outstanding offers or quotes which by acceptance would
create such a Contract) and which have not been fully performed as of the date
hereof;
(d) is
a
sales, agency, marketing or distribution agreement which is material to an
LLC,
taken as a whole; provides a right of first refusal or other restrictive right
that limits the ability to transfer, sell or assign an interest in an asset
or
an equity interest in a Person;
(e) is
a
master agreement, swap, derivative, option, future or similar type Contract
or
any open agreement or position thereunder;
(f) is
with
any current or former employee, officer, director or consultant of any
LLC;
(g) is
with
HOLDINGS' or any Affiliate (other than an LLC);
(h) is
with
any labor union or association;
(i) is
a
partnership or joint venture agreement with a Third Person in which one of
the
LLCs is a party or by which any of them are bound;
(j) is
an
agreement with a consideration in excess of $500,000 by one of the LLCs to
purchase or sell any assets (other than inventory in the Ordinary Course of
Business), businesses, capital stock or other debt or equity securities of
any
Person;
(k) any
agreements with a consideration in excess of $500,000 involving the merger,
consolidation, purchase, sale, transfer or other disposition of interests in
real property, capital stock or other debt or equity securities of any Person
prior to Closing; or
(l) is
any
other lease agreements with respect to any parcel of real property in which
the
Company or any of its Subsidiaries has a leasehold or similar
interest.
4.8 Title
to Assets; Intellectual Property.
Except
for the Permitted Encumbrances, to HOLDINGS' Knowledge, each LLC has Defensible
Title to the Assets that it operates, free and clear of all Liens.
(a) None
of
HOLDINGS, DEGP or the LLCs have received any written notice of infringement,
misappropriation or conflict with respect to Intellectual Property from any
Person with respect to the ownership, use or operation of the
Assets.
(b) To
HOLDINGS' Knowledge, the ownership, use and operation of the Assets have not
infringed, misappropriated or otherwise conflicted with any patents, patent
applications, patent rights, trademarks, trademark applications, service marks,
service xxxx applications, copyrights, trade names, unregistered copyrights,
trade secrets of any other Person.
20
4.9 Preferential
Rights to Purchase.
Except
for Pine Tree and as listed in Schedule 4.9,
there
are no preferential or similar rights to purchase any portion of the LLCs or
Assets that will be triggered by this Agreement or the transactions contemplated
herein.
4.10 Broker's
or Finder's Fees.
No
investment banker, broker, finder or other Person is entitled to any brokerage
or finder's fee or similar commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of HOLDINGS,
or
any of its Affiliates
4.11 Compliance
with Property Instruments.
To
HOLDINGS' Knowledge and except as set forth in Schedule
4.11,
(a) all
of the instruments creating the Real Property Interests are presently valid,
subsisting and in full force and effect; (b) there are no violations, defaults
or breaches thereunder, or existing facts or circumstances which upon notice
or
the passage of time or both will constitute a violation, default or breach
thereunder; and
(c)
the Assets are currently being operated and maintained in compliance with all
terms and provisions of the instruments creating the Real Property Interests.
None of HOLDINGS or its Affiliates have received or given any written notice
of
default or claimed default under any such instruments and is not participating
in any negotiations regarding any material modifications thereof.
4.12 Environmental
Matters.
Except
as set forth in Schedule
4.12:
(a) To
HOLDINGS' Knowledge, HOLDINGS and its Affiliates have not caused or allowed
the
generation, use, treatment, manufacture, storage, or disposal of Hazardous
Materials at, on or from the Assets, except in accordance with all applicable
Environmental Laws;
(b) To
HOLDINGS' Knowledge, there has been no Release of any Hazardous Materials at,
on, from, or underlying any of the Assets except in accordance with all
applicable Environmental Laws;
(c) To
HOLDINGS' Knowledge, the LLCs have secured all Permits required under
Environmental Laws for the ownership, use and operation of the Assets and the
LLCs are in compliance with such Permits;
(d) HOLDINGS
and its Affiliates have not received written inquiry or notice of any actual
or
threatened Claim related to or arising under any Environmental Law relating
to
the Assets;
(e) GSRLLC,
GSRI and to HOLDINGS' Knowledge, Pine Tree, are not currently operating or
required to be operating any of the Assets under any compliance order, a decree
or agreement, any consent decree or order, or corrective action decree or order
issued by or entered into with any Governmental Authority under any
Environmental Law or any Law regarding health or safety in the work
place;
21
(f) To
HOLDINGS' Knowledge, the LLCs have owned, used and operated the Assets in
compliance with Environmental Laws, except for any non-compliance which has
been
remediated and brought into compliance with Environmental Laws;
(g) To
HOLDINGS' Knowledge, none of the off-site locations where Hazardous Materials
from any of the Assets have been stored, treated, recycled, disposed of or
released has been designated as a facility that is subject to a claim under
any
Environmental Laws.
4.13 Employee
Matters.
At no
time prior to the Effective Time will GSRLLC or GSRI have had any
employees.
4.14 Benefit
Plan Liabilities.
At no
time prior to the Effective Time will GSRLLC or GSRI have maintained any Benefit
Plans. At the Effective Time, GSRLLC and GSRI shall have no liability with
respect to any Benefit Plans.
4.15 No
Foreign Person.
HOLDINGS is not a "foreign person" as defined in Section 1445 of the Code and
in
any regulations promulgated thereunder.
4.16 Capitalization
of GSRLLC.
(a) The
Subject Interests constitute all of the outstanding ownership interests in
GSRLLC and are duly authorized, validly issued, fully paid and non-assessable,
and were not issued in violation of any pre-emptive rights. DEGP has good and
marketable title to the Subject Interests.
(b) There
are
no existing rights, agreements or commitments of any character obligating
GSRLLC, GSRI or to HOLDINGS' Knowledge, Pine Tree, to issue, transfer or sell
any additional ownership rights or interests or any other securities (debt,
equity or otherwise) convertible into or exchangeable for such ownership rights
or interests.
4.17 Subsidiaries
and Other Equity Interests.
GSRLLC
does not have any subsidiaries or own, directly or indirectly, any equity
interest in any other Person except as follows (a) 100% of the membership
interests of GSRI and (b) 50% of the membership interests of Pine
Tree.
4.18 Bank
Accounts.
Except
as set forth on Schedule
4.18,
neither
GSRLLC nor GSRI have any accounts or safe-deposit boxes with banks, trust
companies, savings and loan associations, or other financial
institutions.
4.19 No
Prepayments Made or Refunds Owed.
Except
as set forth in Schedule
4.19
and
except for any Imbalance Payables included in the Final Settlement Statement
pursuant to Section
3.2(f),
none of
the LLCs have received any prepayment, advance payment, deposits or similar
payments, and has no refund obligation, with respect to any products purchased,
sold, treated or
processed through the Terminals, and neither HOLDINGS nor any of its Affiliates
has received any compensation for services relating to the Terminals which
would
be subject to any refund or create any repayment obligation either by or to
GSRLLC.
22
4.20 Investment
Intent.
HOLDINGS is acquiring the Units for its own account, and not with a view to,
or
for sale in connection with, the distribution thereof in violation of state
or
federal Law. HOLDINGS acknowledges that the Units have not been registered
under
the Securities Act or the securities Laws of any state and neither HOLDINGS
nor
any of its Affiliates has any obligation or right to register the Units except
as set forth in the Amended and Restated Partnership Agreement. Without such
registration, the Units may not be sold, pledged, hypothecated or otherwise
transferred unless it is determined that registration is not required. HOLDINGS,
itself or through its officers, employees or agents, has sufficient knowledge
and experience in financial and business matters to be capable of evaluating
the
merits and risks of an investment such as an investment in the Units, and
HOLDINGS, either alone or through its officers, employees or agents, has
evaluated the merits and risks of the investment in the Units.
4.21 No
Other Representations or Warranties; Schedules.
HOLDINGS makes no other express or implied representation or warranty with
respect to the LLCs or any of their respective Affiliates, the Assets or the
transactions contemplated by this Agreement, and disclaims any other
representations or warranties. The disclosure of any matter or item in any
schedule to this Agreement shall not be deemed to constitute an acknowledgment
that any such matter is required to be disclosed.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF DCP
DCP
hereby represents and warrants to HOLDINGS:
5.1 Organization,
Good Standing, and Authorization.
DCP is
a limited partnership duly formed, validly existing and in good standing under
the Laws of the State of Delaware. DCP has all requisite limited partnership
power and authority to enter into and perform this Agreement and the Transaction
Documents to which it is a party, to perform its obligations hereunder and
thereunder and to carry out the transactions contemplated herein and therein.
The execution and delivery of this Agreement and the Transaction Documents
to
which it is a party and the consummation by DCP of the transactions contemplated
herein have been duly and validly authorized by all necessary limited
partnership action by DCP. This Agreement has been duly executed and delivered
by DCP.
5.2 Enforceability.
This
Agreement constitutes, and upon execution and delivery of the Transaction
Documents to which DCP is a party, such Transaction Documents will
constitute, valid
and
binding obligations of DCP, enforceable against DCP in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar Laws affecting creditor's rights generally and general
principles of equity.
23
5.3 No
Conflicts.
The
execution, delivery and performance by DCP of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby or
thereby, will not:
(a) Provided
that any DCP Required Consents and Post Closing Consents have been obtained,
conflict with, constitute a breach, violation or termination of, give rise
to
any right of termination, cancellation or acceleration of or result in the
loss
of any right or benefit under, any agreement to which DCP is a
party;
(b) Conflict
with or violate the Limited Partnership Agreement (with respect to time periods
prior to Closing), the Amended Limited Partnership Agreement (with respect
to
time periods at and after Closing) or result in the creation of a Lien on the
Units; or
(c) Provided
that all of the DCP Required Consents and Post Closing Consents have been
obtained, violate any Law applicable to DCP.
5.4 Consents,
Approvals, Authorizations and Governmental Regulations.
Except
(i) for Post-Closing Consents, (ii) as set forth in Schedule
5.4
and
(iii) as may be required under the HSR Act (the items described in clauses
(ii)
and (iii) being collectively referred to as the "DCP Required
Consents"),
no
order, consent, waiver, permission, authorization or approval of, or exemption
by, or the giving of notice to or registration or filing with, any Governmental
Authority or Third Person, is necessary for DCP to execute, deliver and perform
this Agreement or the Transaction Documents to which it will be a
party.
5.5 Litigation.
There
is no injunction, restraining order or Proceeding pending against DCP that
restrains or prohibits the consummation of the transactions contemplated by
this
Agreement.
5.6 Independent
Investigation.
DCP is
knowledgeable in the business of owning and operating propane facilities and
has
had access to the Assets, the representatives of HOLDINGS and its Affiliates,
and to the records of HOLDINGS and its Affiliates with respect to the Assets.
DCP
ACKNOWLEDGES THAT THE ASSETS ARE IN THEIR "AS IS, WHERE IS" CONDITION AND STATE
OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, AND THAT, EXCEPT AS EXPRESSLY SET
OUT IN THIS AGREEMENT, HOLDINGS HAS MADE NO REPRESENTATION OR WARRANTY OF ANY
KIND OR NATURE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, CONFORMITY TO SAMPLES,
MERCHANTABILITY, AND/OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE
EXPRESSLY DISCLAIMED BY HOLDINGS AND EXCEPT AS SET FORTH IN THIS AGREEMENT,
WAIVED BY DCP. DCP FURTHER ACKNOWLEDGES THAT: (I) THE ASSETS HAVE BEEN USED
FOR PROPANE OPERATIONS AND PHYSICAL CHANGES IN THE ASSETS AND IN THE LANDS
BURDENED THEREBY MAY HAVE OCCURRED AS A RESULT OF SUCH USES; (II) THE ASSETS
MAY
INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT
BE
KNOWN BY HOLDINGS OR READILY APPARENT BY A PHYSICAL INSPECTION OF THE ASSETS
OR
THE LANDS BURDENED THEREBY; (III) DCP SHALL HAVE INSPECTED PRIOR TO CLOSING,
OR
SHALL BE DEEMED TO HAVE WAIVED ITS RIGHTS TO INSPECT, THE ASSETS AND THE
ASSOCIATED PREMISES, AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, AND THAT DCP SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS
AGREEMENT, ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION AND
STATE
OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT LIMITED TO,
THE
PRESENCE OF MAN-MADE MATERIAL FIBERS AND THE PRESENCE, RELEASE OR DISPOSAL
OF
HAZARDOUS MATERIALS. EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, HOLDINGS
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO
(A) THE ACCURACY OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO DCP
WITH RESPECT TO THE INTERESTS, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION
OF
THE INTERESTS, PRICING ASSUMPTIONS, QUALITY OR QUANTITY OF THE INTERESTS,
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR (B) FUTURE VOLUMES OF
HYDROCARBONS OR OTHER PRODUCTS TRANSPORTED, TREATED, STORED OR PROCESSED THROUGH
OR AT THE ASSETS. With respect to any projection or forecast delivered by or
on
behalf of HOLDINGS or its Affiliates to DCP, DCP acknowledges that (i) there
are
uncertainties inherent in attempting to make such projections and forecasts,
(ii) DCP is familiar with such uncertainties, (iii) DCP is taking full
responsibility for making its own evaluation of the adequacy and accuracy of
all
such projections and forecasts furnished to DCP and (iv) DCP will not have
a
claim against HOLDINGS or any of its advisors or Affiliates with respect to
such
projections or forecasts.
24
5.7 Broker's
or Finder's Fees.
No
investment banker, broker, finder or other Person is entitled to any brokerage
or finder's fee or similar commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of DCP or any
of
its Affiliates which is, or following the Closing would be, an obligation of
HOLDINGS or any of its Affiliates.
5.8 Investment
Intent.
DCP is
acquiring the Subject Interests for its own account, and not with a view to,
or
for sale in connection with, the distribution thereof in violation of state
or
federal Law. DCP acknowledges that the Subject Interests have not been
registered under the Securities Act or the securities Laws of any state and
neither HOLDINGS nor any of its Affiliates has any obligation to register the
Subject Interests. Without such registration, the Subject Interests may not
be
sold, pledged, hypothecated or otherwise transferred unless it is determined
that registration is not required. DCP, itself or through its officers,
employees or agents, has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an
investment such as an investment in the Subject Interests, and DCP, either
alone
or through its officers, employees or agents, has evaluated the merits and
risks
of the investment in the Subject Interests.
25
5.9 Available
Funds.
DCP
will have at Closing, sufficient cash to enable it to make payment in
immediately available funds of the cash portion of the Consideration when due
and any other amounts to be paid by it hereunder.
ARTICLE
VI
COVENANTS
AND ACCESS
6.1 Conduct
of Business. HOLDINGS
covenants and agrees that from and after the execution of this Agreement and
until the Closing:
(a) Without
the prior written consent of DCP, (i) HOLDINGS will not, and will not permit
GSRLLC or GSRI (or with respect to Pine Tree, will not consent to Pine Tree)
to,
sell, transfer, assign, convey or otherwise dispose of any Assets other than
(A) the transfer of the Excluded Assets; (B) the sale of inventory in the
ordinary course of business or (C) the sale or other disposition of equipment
or
other Personal Property which is replaced with equipment or other Personal
Property of comparable or better value and utility; (ii) except for the Capital
Projects, modify in any respect the Terminals that will require a capital
expenditure in excess of $25,000; (iii) make any adverse change in its sales,
credit or collection terms and conditions relating to the Assets; (iv) do any
act or omit to do any act which will cause a material breach in any Contract;
or
(v) unless disputed in good faith, fail to pay when due all amount owed under
the Contracts; notwithstanding the foregoing, the Parties acknowledge that
the
Excess Inventory is an Excluded Asset and HOLDINGS may minimize the amount
of
Excess Inventory held by the LLCs prior to Closing; and that DCP will purchase
the remaining Excess Inventory at Closing;
(b) HOLDINGS
will not allow GSRLLC or GSRI (or with respect to Pine Tree, will not consent
to
Pine Tree to) create or permit the creation of any Lien on any Asset other
than
Permitted Encumbrances;
(c) If
HOLDINGS becomes aware of any event or development that it reasonably believes
is likely to cause a material breach or default hereunder or to have a Material
Adverse Effect, it will give prompt written notice to DCP; and
(d) HOLDINGS
agrees to cause GSRLLC and GSRI to (and with respect to Pine Tree, will not
consent to Pine Tree to not):
(i) maintain
and operate the Assets in the ordinary course of business in accordance with
the
past operating and maintenance practices of the LLCs, including regular
scheduled maintenance plans and capital expenditures, and pay or cause to be
paid all costs and expenses in connection therewith when due;
(ii) carry
on
its business in respect of the Assets in substantially the same manner as it
has
heretofore;
26
(iii) use
reasonable efforts to preserve its business in respect of the Assets intact,
to
keep available the services of the employees involved in the conduct of such
business and to preserve the goodwill of customers having business relations
with HOLDINGS in respect of the Assets, in each case, in all material
respects;
(iv) not
abandon any of the Assets or liquidate, dissolve, recapitalize or otherwise
wind
up its business;
(v) comply
in
all material respects with all of the rules, regulations and orders of any
Governmental Authority applicable to the Assets;
(vi) timely
file, properly and accurately make in all material respects all reports and
filings required to be filed with the appropriate Governmental Authority;
and
(vii) pay
all
Taxes with respect to the Assets which come due and payable prior to the Closing
Date;
(viii) not
make,
amend or revoke any material election with respect to Taxes;
(ix) not
amend
its organizational documents;
(x) not
make
any material change in any method of accounting or accounting principles,
practices or policies, other than those required by GAAP;
(xi) not
issue
or sell any equity interests, notes, bonds or other securities or incur, assume
or guarantee any indebtedness for borrowed money, or any option, warrant or
right to acquire same;
(xii) not
(A)
merge or consolidate with any Person; or (B) make any loan to any Person (other
than extensions of credit to customers in the ordinary course of business and
intercompany loans under DEFS' cash management system); and
(xiii) maintain
in full force and effect insurance policies covering the Assets.
6.2 Casualty
Loss.
(a) HOLDINGS
shall promptly notify DCP of any Casualty Loss of which HOLDINGS becomes aware
prior to the Closing. If a Casualty Loss occurs that would reasonably be
expected to have a Material Adverse Effect on the LLCs or the Assets, HOLDINGS
shall have the right to extend the Closing Date for up to forty-five (45) days
for the purpose of repairing or replacing the Assets destroyed or damaged by
the
Casualty Loss to the reasonable satisfaction of DCP. If HOLDINGS does not repair
or replace the Assets destroyed or damaged by the Casualty Loss prior to the
Closing to the reasonable satisfaction of DCP and the Parties are unable to
agree on a value to compensate DCP for the Casualty Loss, DCP may terminate
this
Agreement upon fifteen (15) days written notice to HOLDINGS.
27
(b) If
this
Agreement is not terminated by DCP as provided in subsection (a), DCP's sole
remedy with respect to any Casualty Loss in respect of Assets which are not
repaired or replaced prior to the Closing to the reasonable satisfaction of
DCP
is at DCP's option to (i) accept a value estimated by HOLDINGS and agreed to
by
DCP to be equal to the cost to repair or replace the Assets affected by the
Casualty Loss; provided
that, if
the Parties cannot agree, then the Closing shall occur and either Party may
submit the determination of the costs of the Casualty Loss for resolution
pursuant to Section
11.8,
in
which case any insurance, condemnation or taking proceeds with respect to such
Casualty Loss shall be the sole property of HOLDINGS, or (ii) accept the Assets
with no value being paid by HOLDINGS, but with DCP being entitled to receive
as
DCP's sole property an assignment of all claims with respect to, and all rights
in such Casualty Loss, including in and to all insurance, condemnation or
taking, on account of such Casualty Loss.
6.3 Access,
Information and Access Indemnity.
(a) Prior
to
Closing, HOLDINGS will make available at HOLDINGS' offices to DCP and DCP's
authorized representatives for examination as DCP may reasonably request, all
Records; provided,
however,
such
material shall not include (i) any proprietary data which relates to another
business of HOLDINGS or its Affiliates and is not primarily used in connection
with the continued ownership, use or operation of the Assets, (ii) any
information subject to Third Person confidentiality agreements for which a
consent or waiver cannot be secured by HOLDINGS or its Affiliates after
reasonable efforts, or (iii) any information which, if disclosed, would violate
an attorney-client privilege or would constitute a waiver of rights as to
attorney work product or attorney-client privileged communications.
(b) Subject
to subsection (a) above, HOLDINGS shall permit DCP and DCP's authorized
representatives to consult with employees of HOLDINGS and its Affiliates during
the business hours of 8:00 a.m. to 5:00 p.m. (local time), Monday through Friday
and to conduct, at DCP's sole risk and expense, inspections and inventories
of
the Assets and to examine all Records over which HOLDINGS and its Affiliates
have control. HOLDINGS shall also coordinate, in advance, with DCP to allow
site
visits and inspections at the field sites on Saturdays unless operational
conditions would reasonably prohibit such access.
(c) DCP
SHALL
PROTECT, DEFEND, INDEMNIFY AND HOLD THE HOLDINGS' INDEMNITEES HARMLESS FROM
AND
AGAINST ANY AND ALL CLAIMS AND LOSSES OCCURRING ON OR TO THE ASSETS CAUSED
BY
THE ACTS OR OMISSIONS OF DCP, DCP'S AFFILIATES OR ANY PERSON ACTING ON DCP'S
OR
ITS AFFILIATES' BEHALF IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT
TO OR IN CONNECTION WITH THIS AGREEMENT PRIOR TO CLOSING, INCLUDING ANY SITE
VISITS AND ENVIRONMENTAL SAMPLING; PROVIDED,
HOWEVER,
THE
FOREGOING OBLIGATION OF DCP SHALL NOT APPLY WITH RESPECT TO ANY ENVIRONMENTAL
DEFECTS EXISTING PRIOR TO THE CONDUCT OF SUCH DUE DILIGENCE WHICH ARE DISCOVERED
DURING SUCH DUE DILIGENCE. DCP shall comply in all material respects with all
rules, regulations, policies and instructions issued by HOLDINGS or any Third
Person operator regarding DCP's actions prior to Closing while upon, entering
or
leaving any property included in the Assets, including any insurance
requirements that HOLDINGS may impose on contractors authorized to perform
work
on any property owned or operated by HOLDINGS.
28
6.4 Regulatory
Filings; Xxxx-Xxxxx-Xxxxxx Filing.
(a) DCP
and
HOLDINGS will take all commercially reasonable actions necessary or desirable,
and proceed diligently and in good faith and use all commercially reasonable
efforts, as promptly as practicable to obtain all consents, approvals or actions
of, to make all filings with, and to give all notices to, Governmental
Authorities required to accomplish the transactions contemplated by this
Agreement;
provided, however, that the cost to obtain Post-Closing Consents shall be borne
by DCP.
(b) The
Parties shall make any filings required under the HSR Act on or prior to ten
(10) days after the date of this Agreement and provide such information to
the
FTC as is required in connection with the HSR Act as soon as practicable after
a
request therefore.
(c) Notwithstanding
any provision herein to the contrary, each of the Parties will (i) use
reasonable efforts to comply as expeditiously as possible with all lawful
requests of Governmental Authorities for additional information and documents
pursuant to the HSR Act, (ii) not (A) extend any waiting period under the HSR
Act or (B) enter into any voluntary agreement with any Governmental Authority
not to consummate the transactions contemplated by this Agreement, except with
the prior consent of the other Party, and (iii) cooperate with each other and
use reasonable efforts to obtain the requisite approval of the FTC and DOJ;
provided, however, that the Parties are not obligated to accept any conditional
approval or divest any of the Assets or any of theirs properties.
(d) DCP
will
be responsible for paying the filing fees required with respect to any filing
under the HSR Act.
6.5 Limitation
on Casualty Losses and Other Matters.
Notwithstanding any provision herein to the contrary, in the event that either
HOLDINGS or DCP reasonably determines that the anticipated aggregate value
of
any Casualty Losses and a good faith estimate of HOLDINGS' liability with
respect to breaches of representations and warranties of which either HOLDINGS
or DCP has provided notice to the other prior to Closing, exceeds $4,000,000,
then such Party shall provide written notice to the other of such determination
together with the notifying Party's calculations of the estimated costs,
payments, reductions and liabilities supporting such determination.
Notwithstanding Section
9.1(c),
upon
the other Party's receipt of such notice, the Party receiving the notice shall
have the right to terminate this Agreement at any time prior to Closing upon
ten
(10) days written notice to the other Party.
29
6.6 Supplements
to Exhibits and Schedules.
HOLDINGS may, from time to time, by written notice to DCP at any time prior
to
the Closing Date, supplement or amend the Exhibits and Schedules to correct
any
matter that would constitute a breach of any representation or warranty of
HOLDINGS herein contained. DCP shall have a minimum of five (5) Business Days
to
review such supplement or amendment and the Closing shall be extended as
required to allow DCP to do so; provided,
however,
that in
the event that DCP reasonably determines that any individual new disclosure
item
set forth in any such supplement or amendment would increase the amount of
the
Assumed Obligations by more than $50,000, then DCP shall notify HOLDINGS of
such
determination together with DCP's calculations of such increase in the amount
of
the Assumed Obligations. Promptly upon HOLDINGS' receipt of such written notice,
the Parties shall endeavor in good faith to agree to a value to be paid by
HOLDINGS to DCP therefore or other mutually agreeable remedy to address the
matters which are the subject of such supplement(s) and amendment(s) to the
Exhibits and Schedules. If within fifteen (15) days of HOLDINGS' receipt of
such
written notice, the Parties have not agreed to a value to be paid by HOLDINGS
to
DCP therefore or another mutually agreeable remedy, DCP shall have the right
to
terminate this Agreement at any time during the five (5) Business Days following
the expiration of such fifteen (15) day period by provision of written notice
to
HOLDINGS. Notwithstanding any other provision hereof, if the Closing occurs,
any
such supplement or amendment will be effective to cure and correct for all
purposes any breach of any representation or warranty that would have existed
if
such supplement or amendment had not been made.
6.7 Preservation
of Records.
For a
period of seven (7) years after the Closing Date, the Party in possession of
the
originals of the Records will retain such Records at its sole cost and expense
and will make such Records available to the other Party to the extent pertaining
to such other Parties' obligations hereunder upon reasonable notice for
inspection and/or copying, at the expense of the requesting Party, at the
headquarters of the Party in possession (or at such other location in the United
States as the Party in possession may designate in writing to the other Party)
at reasonable times and during regular office hours. DCP
agrees that HOLDINGS may retain a copy of the Records to the extent such Records
pertain to their obligations hereunder.
6.8 Measurement
and Valuation of Excess Inventory.
As of
the Effective Time, representatives of HOLDINGS and DCP shall jointly calculate
the quantity and value of Excess Inventory in accordance with Schedule
6.8.
With
respect to Excess Inventory: (a) that is located in the Company’s storage,
trailers and railcars, the Parties shall jointly measure inventory immediately
prior to Closing, and (b) that is held in storage by a Third Person, the volume
of Excess Inventory shall be determined based upon a statement of account from
the Third Person as of the time immediately prior to Closing.
30
6.9 Capital
Projects.
The
LLCs are currently constructing or participating in the construction of those
capital projects described on Schedule
6.9
(the
"Capital
Projects").
HOLDINGS shall continue such construction of the Capital Projects until the
Effective Time; provided however that at Closing, DCP shall reimburse HOLDINGS
for the total amount expended on the Capital Projects prior to the Effective
Time. Notwithstanding
anything to the contrary, (a) unless accounted for under Section
3.2(e),
any
other capital expenditures for new projects or maintenance capital (but
excluding capital expenditures related to Casualty Losses) incurred between
the
date of this Agreement and Closing shall be at the sole cost and expense of
DCP
and (b) to the extent that DCP or GSRLLC incurs any out of pocket repair costs,
increased supply costs, replacement costs, or other costs associated with the
tank at the Midland terminal due to damage (the "Tank
Damage")
thereto in or about September 2006 (regardless of whether DCP or GSRLLC incurs
same either directly or via reimbursement of Capital Projects), and if HOLDINGS
(or its Affiliates) recoups any costs, expenses or damages ("Recoupments")
with
respect to the Tank Damage from a Third Person (including an insurer), then
HOLDINGS shall reimburse DCP or GSRLLC their out of pocket costs related to
the
Tank Damage, but only to the extent that the Recoupments exceed the damages
and
costs incurred by HOLDINGS (and/or its Affiliates) in connection with the Tank
Damage and any assertion and/or collection of claims related
thereto.
6.10 New
Debt.
DCP or
its Affiliates will incur new indebtedness that will be used and subject to
the
restrictions and other matters as set forth in Schedule
6.10.
6.11 Credits
and Receipts.
Subject
to the terms hereof (including the indemnification provisions hereof), all
monies, proceeds, receipts, credits and income attributable to the Assets (as
determined in accordance with GAAP) (i) for all periods of time at and after
the
Effective Time, shall be the sole property and entitlement of the LLCs and
DCP,
and, to the extent received by HOLDINGS or one of its Affiliates, shall be
promptly accounted for and transmitted to DCP and (ii) for all periods of time
prior to the Effective Time, shall be the sole property and entitlement of
HOLDINGS and, to the extent received by LLCs or DCP, shall be promptly accounted
for and transmitted to HOLDINGS. Subject to the terms hereof (including the
indemnification provisions hereof), after the Effective Time, regardless of
when
and by whom the actual invoice or demand for payment is received, DCP shall
cause the LLCs to pay and be responsible for all accounts payable or overhead
or
administrative costs incurred in the ordinary course of business with respect
to
the Assets and attributable to any period of time whether before or after the
Effective Time.
Notwithstanding the foregoing, the LLCs and DCP shall be entitled to all monies,
proceeds, receipts, credits and income attributable to that certain Propane
Supply Agreement dated May 1, 2004 between Aux Sable Liquid Products LP and
Gas
Supply Resources, Inc. for the period of time between December 1, 2005 and
March
1, 2006 to the extent attributable to the Aux Sable volume disruption during
said period of time regardless of when and by whom same is received; and, to
the
extent received by HOLDINGS or one of its Affiliates, shall be promptly
accounted for and transmitted to DCP.
31
6.12 Tax
Covenants.
(a) Preparation
of Tax Returns.
HOLDINGS shall prepare and file or cause to be prepared and filed all Tax
Returns with the appropriate federal, state, local and foreign Tax Authorities
relating to the LLCs for periods ending on or prior to the Closing Date, and
shall pay all Taxes due with respect to such Tax Returns, to the extent not
accrued in the Final Settlement Statement. DCP shall prepare and file, or cause
to be prepared and filed, all other Straddle Tax Returns required to be filed
by
the LLCs and DCP shall cause the LLCs to pay the Taxes shown to be due thereon;
provided,
however,
that
HOLDINGS shall promptly reimburse DCP for the portion of such Tax that relates
to a Pre-Closing Tax Period, to the extent not accrued in the Final Settlement
Statement.
HOLDINGS
shall furnish to DCP all information and records reasonably requested by DCP
for
use in preparation of any Straddle Tax Returns. DCP shall allow HOLDINGS to
review, comment upon and reasonably approve without undue delay any Straddle
Tax
Return at any time during the twenty (20) day period immediately preceding
the
filing of such Tax Return.
(b) Close
of Prior Periods.
Except
as otherwise provided in Section
11.3,
HOLDINGS
and DCP shall, unless prohibited by Law, cause the LLCs to close all Tax periods
on the Closing Date, with HOLDINGS bearing the sole obligation for filing the
Tax Returns and paying all Taxes for such Tax periods. If applicable Law does
not permit any of the LLCs to close a Tax period on the Closing Date, except
as
otherwise provided in this Section
6.12(b),
the
amount of Taxes allocable to the portion of such period ending on the Closing
Date shall be deemed equal to the amount that would be payable if the relevant
taxable period ended on the Closing Date. Any allocation of income or deductions
required to determine any income Taxes relating to such period shall be taken
into account as though the relevant taxable period ended on the Closing Date
and
by means of a closing of the books and records of the LLCs on the Closing Date;
provided
that
exemptions, allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and the period after
the Closing Date in proportion to the number of days in each such period. All
Tax Returns filed by DCP, HOLDINGS, and the LLCs shall be prepared consistently
with such allocation. Notwithstanding anything to the contrary herein, any
franchise Tax paid or payable with respect to the LLCs shall be allocated to
the
taxable period during which the income, operations, assets or capital comprising
the base of such Tax is measured, regardless of whether the right to do business
for another taxable period is obtained by the payment of such franchise
Tax.
(c) Refund
or Credit.
Any
refund or credit (including any interest with respect thereto) of Taxes of
the
LLCs attributable to any taxable period (or portion thereof) ending on or before
the Closing Date shall be the property of HOLDINGS to the extent not previously
accrued in the Final Settlement Statement, and if Tax refund or credits in
excess of that accrued in the Final Settlement Statement is received by DCP
or
the LLCs after the Closing Date, DCP shall promptly notify HOLDINGS of such
refund or credit and pay over to HOLDINGS the amount of such refund or credit
(net of any Tax liability imposed on DCP or the LLCs in connection with the
receipt of such refund).
32
(d) Post-Closing
Assistance.
HOLDINGS and DCP will each provide the other, and subsequent to the Closing,
DCP
will cause the LLCs to provide HOLDINGS with such assistance as may reasonably
be requested in connection with the preparation of any Tax Return, any audit
or
other examination by any Tax Authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or determination.
The
party requesting assistance will reimburse the other party for reasonable
out-of-pocket expenses (other than salaries or wages of any employees of the
parties) incurred in providing such assistance. Any information obtained
pursuant to this Section 6.12(d)
or
pursuant to any other Section hereof providing for the sharing of information
or
the review of any Tax Return or other schedule relating to Taxes will be kept
confidential by the Parties.
(e) Maintaining
Records.
DCP and
HOLDINGS will maintain all Tax records, working papers and other supporting
financial records and documents relating to the Tax Returns filed by the LLCs
for all open years. Such Tax Returns will be delivered to and maintained by
DCP
for a period of seven years after the Closing, and DCP will make the same
available to HOLDINGS or their agents at reasonable times for inspection and
copying.
(f) Allocation
Statement.
As
promptly as practicable, but in no event later than sixty (60) days after the
delivery of Final Settlement Statement, DCP shall prepare and deliver to
HOLDINGS a statement (the "Allocation
Statement")
allocating the Consideration among the assets of the LLCs in accordance with
Section 1060 of the Code and the Treasury Regulations promulgated thereunder.
HOLDINGS shall have fifteen (15) days to review the Allocation Statement and
shall notify DCP of any disputes with the allocation as set forth in the
Allocation Statement. HOLDINGS and DCP shall negotiate in good faith to resolve
any such dispute prior to the date that is sixty (60) days prior to the due
date
of the Tax Returns that reflect the allocation. If HOLDINGS and DCP cannot
resolve the disputed allocation prior to such date, then HOLDINGS and DCP shall
refer the dispute to the Independent Accountant to review and to determine
the
proper allocation (it being understood that in making such determination, the
Independent Accountant shall be functioning as an expert and not as an
arbitrator). The Independent Accountant shall deliver to HOLDINGS and DCP,
as
promptly as practicable (but in any case no later than thirty (30) days from
the
date of engagement of the Independent Accountant), a determination of the
allocation, which determination will be binding on the parties hereto. The
cost
of such review and report shall be borne one-half by HOLDINGS and one-half
by
DCP. All Tax Returns filed by DCP, HOLDINGS, the LLCs and each of their
Affiliates concerning the LLCs or the Assets shall be prepared consistently
with
the allocation determined under this Section
6.12.
(g) Notice
of Audit.
If
notice of any claim, audit, examination, or other proposed change or adjustment
by any Taxing Authority, as well as any notice of assessment and any notice
and
demand for payment, concerning any Taxes for any taxable period (or portion
thereof) ending on or before the Closing Date (a "Tax
Proceeding")
shall
be received by DCP, DCP shall promptly inform HOLDINGS in writing of such Tax
Proceeding. HOLDINGS shall have the right, at its expense to represent the
interests of GSRLLC and GSRI (and, with respect to Pine Tree, DCP shall not
object to HOLDINGS representing its interests) and control the prosecution,
defense and settlement of any Tax Proceeding relating exclusively to taxable
periods ending on or before the Closing Date. DCP shall represent, at its
expense, the interests of the LLCs in any Tax Proceeding relating to any taxable
period that begins on or before the Closing Date and ends after the Closing
Date; provided,
however,
that
(i) DCP shall allow HOLDINGS and its counsel to participate in any such Tax
Proceeding at HOLDINGS' sole expense; (ii) DCP shall keep HOLDINGS fully and
timely informed with respect to the commencement, status and nature of such
Tax
Proceeding; and (iii) if the results of any such Tax Proceeding involve an
issue
that is otherwise the subject of indemnification by HOLDINGS under this
Agreement or for which a refund may be available to HOLDINGS, then DCP and
HOLDINGS shall, subject to the indemnification procedures set forth in
Article
X,
jointly
control the prosecution, defense and settlement of any such Tax Proceeding,
each
party shall cooperate with the other party at its own expense and there shall
be
no settlement or closing or other agreement with respect thereto without the
consent of the other party, which consent shall not be unreasonably
withheld.
33
(h) Carry
Back of Losses.
DCP
agrees that, unless required by applicable Law, it shall not, and shall not
cause or permit any of GSRLLC or GSRI (and, with respect to Pine Tree, shall
not
consent to Pine Tree) to, carry back to any taxable period ending on or prior
to
the Closing Date any net operating loss or other Tax attribute and further
agrees that HOLDINGS have no obligation under this Agreement or otherwise to
return or remit any refund or other Tax benefit attributable to a breach by
DCP
of the foregoing undertaking.
(i) Certain
Elections.
DCP
shall not make any Tax elections that would affect HOLDINGS or any of its
Affiliates (including the LLCs) for any taxable period (or portion thereof,
determined under Section
6.12(f))
ending
on or prior to the Closing Date.
6.13 Financial
Statements and Financial Records.
From
the date hereof through the Closing:
(a) HOLDINGS
shall use Commercially Reasonable Efforts to cooperate with DCP to prepare
(i)
balance sheets as of December 31, 2003, December 31, 2004 and December 31,
2005
with respect to the LLCs and related combined income statements and cash flow
statements with respect to the LLCs for each such year (such statements,
including the related notes and schedules thereto, are referred to herein as
the
"Annual
Financial Statements")
and
(ii) a balance sheet as of the date of the last day of the calendar quarter
immediately preceding the date of the Closing and the related combined income
statements and cash flow statements for the interim period from January 1,
2006
through the date of such balance sheet and comparative income statements and
cash flow statements for the comparable period in 2005 (the "Stub
Period Financial Statements"),
in
each case in accordance with the requirements of Regulation S-X adopted by
the
SEC and, in the case of the Stub Period Financial Statements, on a basis
consistent with the basis of presentation of the Annual Financial Statements
(except to the extent of differences permitted by Regulation S-X with respect
to
financial statements for interim periods). The Annual Financial Statements
and
the Stub Period Financial Statements are collectively the "SEC
Financial Statements."
34
(b) HOLDINGS
shall consent to the inclusion or incorporation by reference of the SEC
Financial Statements in any registration statement, report or other document
of
DCP or any of its Affiliates to be filed with the SEC in which DCP or such
Affiliate reasonably determines that the SEC Financial Statements are required
to be included or incorporated by reference to satisfy any rule or regulation
of
the SEC or to satisfy relevant disclosure obligations under the Securities
Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
HOLDINGS shall use Commercially Reasonable Efforts to cause its auditors to
consent to the inclusion or incorporation by reference of its audit opinion
with
respect to the Annual Financial Statements in any such registration statement,
report or other document and, in connection therewith, HOLDINGS shall execute
and deliver to its auditors such representation letters, in form and substance
customary for representation letters provided to external audit firms by
management of the company whose financial statements are the subject of an
audit, as may be reasonably requested by its auditors.
6.14 Insurance.
HOLDINGS shall continue to provide certain existing property and liability
insurance coverage related to the Assets (the "Insurance")
and
administer any insured claims asserted by DCP. The Insurance is part of Duke
Energy Field Services, LLC’s corporate insurance program. It is anticipated that
the Insurance will be provided for up to one (1) year. However, either Party
may
terminate any or all of the Insurance upon 30 Days notice. HOLDINGS will invoice
DCP for premiums related to the Insurance. DCP shall pay such invoices within
30
days after receipt. With respect to the Insurance, DCP shall be solely
responsible for (a) deductibles, (b) self insured retentions, (c) out of pocket
costs, (d) claims that are not insured or excluded from coverage, and (e)
amounts in excess of policy limits. The foregoing costs shall be paid directly
by DCP.
ARTICLE
VII
CONDITIONS
TO CLOSING
7.1 HOLDINGS'
and DEFS' Conditions.
The
obligation of HOLDINGS to close is subject to the satisfaction of the following
conditions, any of which may be waived in HOLDINGS sole discretion:
(a) The
representations of DCP contained in Article
V
shall be
true, in all material respects (or, in the case of representations or warranties
that are already qualified by a materiality standard, shall be true in all
respects) on and as of Closing.
(b) DCP
shall
have performed in all material respects the obligations, covenants and
agreements of DCP contained herein.
35
(c) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS, DENGL,
DEFS, DEGP or the LLCs that restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(d) All
of
HOLDINGS' Required Consents, DCP's Required Consents, consents or approvals
under the HSR Act (or expiration of the waiting period) and consents under
the
Real Property Interests, Contracts and Permits shall have been
obtained.
(e) The
Amended Limited Partnership Agreement shall have been executed and delivered
by
DCP Midstream GP, in its capacity as the general partner of DCP, and by
HOLDINGS, in its capacity as the attorney-in-fact of the limited partners of
DCP.
(f) DCP
shall
have made all deliveries in accordance with Section
8.2.
7.2 DCP's
Conditions.
The
obligation of DCP to close is subject to the satisfaction of the following
conditions, any of which may be waived in its sole discretion:
(a) The
representations of HOLDINGS contained in Article
IV
shall be
true, in all material respects (or in the case of representations or warranties
that are already qualified by a materiality standard, shall be true in all
respects) on and as of the Closing.
(b) HOLDINGS
shall have performed, in all material respects, the obligations, covenants
and
agreements of HOLDINGS contained herein.
(c) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS, DENGL,
DEFS, DEGP or the LLCs that restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(d) All
of
HOLDINGS' Required Consents, DCP's Required Consents, consents or approvals
under the HSR Act (or expiration of the waiting period) and consents under
the
Real Property Interests, Contracts and Permits shall have been obtained.
(e) There
shall have been no events or occurrences that could reasonably be expected
to
have a Material Adverse Effect.
(f) HOLDINGS
shall have delivered all documents in accordance with Section
8.2.
(g) HOLDINGS
shall have delivered to DCP resignations of all officers and managers of GSRLLC
and GSRI, unless otherwise requested by DCP.
(h) The
SEC
Financial Statements and the content thereof shall be satisfactory to DCP in
its
sole discretion.
36
7.3 Exceptions.
Notwithstanding the provisions of Sections
7.1(a)
and
(b)
and
7.2(a)
and
(b),
no
Party shall have the right to refuse to close the transaction contemplated
hereby by reason of this Article
VII unless
(a) in the case of HOLDINGS, the sum of all representations of DCP contained
in
Article
V
which
are not true and all obligations, covenants and agreements which DCP has failed
to perform, would reasonably be expected to have a Material Adverse Effect,
and
(b) in the case of DCP, the sum of all representations of HOLDINGS contained
in
Article
IV
which
are not true and all obligations, covenants and agreements which HOLDINGS has
failed to perform, would reasonably be expected to have a Material Adverse
Effect.
ARTICLE
VIII
CLOSING
8.1 Time
and Place of Closing.
The
consummation of the transactions contemplated by this Agreement (the
"Closing")
shall
take place at 4:00 p.m. Subject Time in the offices of DEFS in Denver,
Colorado,
on October 31,
2006
(unless such date is otherwise extended by either HOLDINGS or DCP as permitted
hereunder), or on the last day of the month following the receipt of the
consents required by Sections
7.1(d)
and
7.2(d)
(if
later than the foregoing specified date of Closing), or such other time and
place as the Parties agree to in writing (the "Closing
Date"),
and
shall be effective as of the Effective Time.
8.2 Deliveries
at Closing.
At the
Closing,
(a) HOLDINGS,
as applicable, will execute and deliver or cause to be executed and delivered
to
DCP:
(i) Each
of
the Transaction Documents to which HOLDINGS or Affiliates are a party;
(ii) Certificates
of a corporate officer or other authorized person dated the Closing Date,
certifying on behalf of HOLDINGS that the conditions in Sections 7.2(a)
and
(b)
have
been fulfilled.
(b) DCP
will
execute and deliver or cause to be executed and delivered to
HOLDINGS:
(i) Each
of
the Transaction Documents to which DCP or DCP's Affiliates are a party;
(ii) A
certificate of a corporate officer or other authorized person dated the Closing
Date certifying on behalf of DCP that the conditions in Sections 7.1(a)
and
(b)
have
been fulfilled;
(iii) A
certificate, in the form of Certificate for Class C Units attached as
Exhibit
F,
for the
number of Units determined in accordance with Section
2.1;
37
(iv) A
wire
transfer to HOLDINGS of the amount due with respect to the Cash Consideration
(as set forth in the Preliminary Settlement Statement).
ARTICLE
IX
TERMINATION
9.1 Termination
at or Prior to Closing.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
as follows:
(a) HOLDINGS
and DCP may elect to terminate this Agreement at any time prior to the Closing
by mutual written consent thereof;
(b) Either
HOLDINGS or DCP by written notice to the other may terminate this Agreement
if
the Closing shall not have occurred on or before December 31, 2006; provided,
however,
that
neither Party may terminate this Agreement if such Party is at such time in
material breach of any provision of this Agreement;
(c) HOLDINGS
and DCP may each terminate this Agreement at any time on or prior to the Closing
if either DCP, on the one hand, or HOLDINGS, on the other hand, shall have
materially breached any representations, warranties or covenants thereof herein
contained and the same is not cured within thirty (30) days after receipt of
written notice thereof from the applicable non-breaching Party; provided,
however,
that
neither Party may terminate this Agreement if such Party is at such time in
material breach of any representations, warranties or covenants of such Party;
and
(d) In
addition to the foregoing, any Party may terminate this Agreement to the extent
such termination is expressly authorized by another provision of this
Agreement.
9.2 Effect
of Termination.
In the
event that Closing does not occur as a result of any Party exercising its right
to terminate pursuant to Section
9.1,
then no
Party shall have any further rights or obligations under this Agreement, except
that (i) nothing herein shall relieve any Party from any liability for any
willful breach of this Agreement, and (ii) the provisions of Section
6.3(c)
and
Article
XI
shall
survive any termination of this Agreement.
ARTICLE
X
INDEMNIFICATION
10.1 Indemnification
by DCP.
Effective upon Closing, DCP shall defend, indemnify and hold harmless HOLDINGS
and its Affiliates, and all of its and their directors, officers, employees,
partners, members, contractors, agents, and representatives (collectively,
the
"HOLDINGS
Indemnitees")
from
and against any and all Losses asserted against, resulting from, imposed upon
or
incurred by any of the HOLDINGS Indemnitees as a result of or arising out
of:
(a) the
breach of any of the representations or warranties under Article
V;
38
(b) the
breach of any covenants or agreements of DCP contained in this
Agreement;
(c) to
the
extent that HOLDINGS is not required to indemnify any of the DCP Indemnitees
pursuant to Section
10.2,
the
Assumed Obligations; and
(d) to
the
extent that HOLDINGS is not required to indemnify any of the DCP Indemnitees
pursuant to Section
10.2(d),
all
liabilities or obligations of any kind or nature resulting from or arising
out
of the ownership, use or operation of the Assets by the LLCs or the ownership
of
the Subject Interests by DCP, arising out of or relating to periods on and
after
the Effective Time.
10.2 Indemnification
by HOLDINGS.
Effective upon Closing, HOLDINGS shall defend, indemnify and hold harmless
DCP
and its Affiliates (including GSRLLC), and all of its and their directors,
officers, employees, partners, members, contractors, agents, and representatives
(collectively, the "DCP
Indemnitees")
from
and against any and all Losses asserted against, resulting from, imposed upon
or
incurred by any of the DCP Indemnitees as a result of or arising out
of:
(a) the
breach of any of the representations or warranties under Article
IV
(other
than Sections
4.1,
4.2,
4.16
and
4.17);
(b) subject
to Sections
3.2(e)
and
6.9,
to the
extent not accounted for in the Final Settlement Statement, Third Person Claims
asserted within one (1) year after Closing to the extent related to underpayment
of trade payables for periods prior to the Effective Time;
(c) claims
by
Governmental Authorities asserted within two (2) years after Closing to the
extent related to fines and penalties for periods between April 30, 2001 and
Closing;
(d) any
matters set forth on Schedule 10.2(d);
(e) the
breach of any of the representations or warranties under Sections
4.1,
4.2,
4.16
and
4.17
or the
covenants or agreements of HOLDINGS contained in this Agreement;
and
(f) any
Retained Liabilities.
10.3 Deductibles,
Caps, Survival and Certain Limitations.
(a) Subject
to this Section
10.3,
all
representations, warranties, covenants and indemnities made by the Parties in
this Agreement or pursuant hereto shall survive the Closing as hereinafter
provided, and shall not be merged into any instruments or agreements delivered
at Closing.
39
(b) With
respect to the obligations of HOLDINGS:
(i) under
Sections
10.2(a)
or
(b),
none of
the DCP Indemnitees shall be entitled to assert any right to indemnification
after one (1) year from the Closing;
(ii) under
Section
10.2(c),
none of
the DCP Indemnitees shall be entitled to assert any right to indemnification
after two (2) years from the Closing;
(iii) under
Section
10.2(d),
none of
the DCP Indemnitees shall be entitled to assert any right to indemnification
after three (3) years from the Closing;
(iv) none
of
the DCP Indemnitees shall be entitled to assert any right to indemnification
unless the individual claim or series of related claims which arise out of
substantially the same facts and circumstances exceeds $50,000 ("Qualified
Claims");
(v) under
Section
10.2(a),
none of
the DCP Indemnitees shall be entitled to assert any right to indemnification
unless Qualified Claims for which indemnity in only provided under Section
10.2(a) in the aggregate exceed $680,000, and then only to the extent that
all
such claims exceed said amount; and
(vi) under
Section
10.2(a),
none of
the DCP Indemnitees shall be entitled to indemnification for any amount in
excess of $6,800,000.
(c) The
claim
for indemnity under this Agreement made by a Party Indemnitee shall be in
writing, be delivered in good faith prior to the respective survival period
under Sections
10.3(b)
(to the
extent applicable), and specify in reasonable detail the specific nature of
the
claim for indemnification hereunder ("Claim
Notice").
Any
such claim that is described in a timely (if applicable) delivered Claim Notice
shall survive with respect to the specific matter described therein.
(d) Notwithstanding
anything contained herein to the contrary, in no event shall HOLDINGS be
obligated under this Agreement to indemnify (or be otherwise liable hereunder
in
any way whatsoever to) any of the DCP Indemnitees with respect to a breach
of
any representation or warranty, if DCP had Knowledge thereof at Closing and
failed to notify HOLDINGS of such breach prior to Closing. Unless HOLDINGS
or a
Third Person shall have made a claim or demand or it appears reasonably likely
that such a claim or demand appears reasonably likely, DCP shall not take any
voluntary action that is intended by DCP to cause a Third Person Claim to be
initiated that would be subject to indemnification by HOLDINGS.
(e)
All
Losses indemnified hereunder shall be determined net of any (i) Third
Person Awards, (ii) Tax Benefits; and (iii) amount which specifically
pertains to such Loss and is reflected in the calculations of the amounts set
forth on the Final Settlement Statement.
40
10.4 Notice
of Asserted Liability; Opportunity to Defend.
(a) All
claims for indemnification hereunder pertaining to Third Person Claims shall
be
asserted and handled pursuant to this Section
10.4.
Any
person claiming indemnification hereunder is referred to herein as the
"Indemnified
Party"
or
"Indemnitee"
and any
person against whom such claims are asserted hereunder is referred to herein
as
the "Indemnifying
Party"
or
"Indemnitor."
(b) In
the
event that any Third Person Claim is asserted against or any Loss is sought
to
be collected by a Third Person from an Indemnified Party, the Indemnified Party
shall with reasonable promptness provide to the Indemnifying Party a Claim
Notice. The failure to give any such Claim Notice, shall not otherwise affect
the rights of the Indemnified Party to indemnification hereunder unless the
Indemnified Party has proceeded to contest, defend or settle such Claim or
remedy such a Loss with respect to which it has failed to give a Claim Notice
to
the Indemnifying Party, but only to the extent the Indemnifying Party is
prejudiced thereby. Additionally, to the extent the Indemnifying Party is
prejudiced thereby, the failure to provide a Claim Notice to the Indemnifying
Party shall relieve the Indemnifying Party from liability for such Claims and
Losses that it may have to the Indemnified Party, but only to the extent the
liability for such Claims or Losses is directly attributable to such failure
to
provide the Claim Notice.
(c) The
Indemnifying Party shall have thirty (30) days from the personal delivery or
receipt of the Claim Notice (the "Notice
Period")
to
notify the Indemnified Party (i) whether or not it disputes the liability to
the
Indemnified Party hereunder with respect to the Claim or Loss, and in the event
of a dispute, such dispute shall be resolved in the manner set forth in
Section
11.8
hereof,
(ii) in the case where Losses are asserted against or sought to be collected
from an Indemnifying Party by the Indemnified Party, whether or not the
Indemnifying Party shall at its own sole cost and expense remedy such Losses
or
(iii) in the case where Claims are asserted against or sought to be collected
from an Indemnified Party by a Third Person ("Third
Person Claim"),
whether or not the Indemnifying Party shall at its own sole cost and expense
defend the Indemnified Party against such Third Person Claim; provided however,
that any Indemnified Party is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading that it shall deem necessary
or appropriate to protect its interests or those of the Indemnifying Party
(and
of which it shall have given notice and opportunity to comment to the
Indemnifying Party) and not prejudicial to the Indemnifying Party.
(d) If
the
Indemnifying Party does not give notice to the Indemnified Party of its election
to contest and defend any such Third Person Claim within the Notice Period,
then
the Indemnifying Party shall be bound by the result obtained with respect
thereto by the Indemnified Party and shall be responsible for all costs incurred
in connection therewith.
41
(e) If
the
Indemnifying Party is obligated to defend and indemnify the Indemnified Party,
and the Parties have a conflict of interest with respect to any such Third
Person Claim, then the Indemnified Party may, in its sole discretion, separately
and independently contest and defend such Third Person Claim, and the
Indemnifying Party shall be bound by the result obtained with respect thereto
by
the Indemnified Party and shall be responsible for all costs incurred in
connection therewith.
(f) In
the
event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it shall defend the Indemnified Party against a Third Person
Claim, the Indemnifying Party shall have the right to defend all appropriate
Proceedings, and with counsel of its own choosing (but reasonably satisfactory
to the Indemnified Party) and such Proceedings shall be promptly settled
(subject to obtaining a full and complete release of all Indemnified Parties)
or
prosecuted by it to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so
at
its sole cost and expense. If the Indemnified Party joins in any such Third
Person Claim, the Indemnifying Party shall have full authority to determine
all
action to be taken with respect thereto, as long as such action could not create
a liability to any of the Indemnified Parties, in which case, such action would
require the prior written consent of any Indemnified Party so
affected.
(g) If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Third Person
Claim
and in making any counterclaim against the Third Person asserting the Third
Person Claim, or any cross-complaint against any person as long as such
cooperation, counterclaim or cross-complaint could not create a liability to
any
of the Indemnified Parties.
(h) At
any
time after the commencement of defense by Indemnifying Party under Section
10.4(f)
above of
any Third Person Claim, the Indemnifying Party may request the Indemnified
Party
to agree in writing to the abandonment of such contest or to the payment or
compromise by the Indemnifying Party of the asserted Third Person Claim, but
only if the Indemnifying Party agrees in writing to be solely liable for such
Third Person Claim; whereupon such action shall be taken unless the Indemnified
Party determines that the contest should be continued and notifies the
Indemnifying Party in writing within fifteen (15) days of such request from
the
Indemnifying Party. In the event that the Indemnified Party determines that
the
contest should be continued, the amount for which the Indemnifying Party would
otherwise be liable hereunder shall not exceed the amount which the Indemnifying
Party had agreed to pay to compromise such Third Person Claim; provided
that,
the other Person to the contested Third Person Claim had agreed in writing
to
accept such amount in payment or compromise of the Third Person Claim as of
the
time the Indemnifying Party made its request therefor to the Indemnified Party,
and further provided
that,
under such proposed compromise, the Indemnified Party would be fully and
completely released from any further liability or obligation with respect to
the
matters which are the subject of such contested Third Person Claim.
42
10.5 Materiality
Conditions.
For
purposes of determining whether an event described in this Article
X
has
occurred for which indemnification under this Article
X
can be
sought, any requirement in any representation, warranty, covenant or agreement
by HOLDINGS or DCP, as applicable, contained in this Agreement that an event
or
fact be "material," "Material," meet a certain minimum dollar threshold or
have
a "Material Adverse Effect" or a material adverse effect (each a "Materiality
Condition")
in
order for such event or fact to constitute a misrepresentation or breach of
such
representation, warranty, covenant or agreement under this Agreement, such
Materiality Condition shall be disregarded and such representations, warranties,
covenants or agreements shall be construed solely for purposes of this
Article
X
as if
they did not contain such Materiality Conditions. Notwithstanding anything
in
this Section
10.5,
any
claim for indemnification under this Article
X
will be
subject to Section
10.3.
10.6 Exclusive
Remedy.
AS
BETWEEN THE DCP INDEMNITEES AND THE HOLDINGS INDEMNITEES, AFTER CLOSING (A)
THE
EXPRESS INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT, WILL BE THE
SOLE
AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT
TO
SAID AGREEMENT AND THE EVENTS GIVING RISE THERETO, AND THE TRANSACTIONS PROVIDED
FOR THEREIN OR CONTEMPLATED THEREBY (OTHER THAN THE OTHER TRANSACTION DOCUMENTS)
AND (B) NEITHER PARTY NOR ANY OF ITS RESPECTIVE SUCCESSORS OR ASSIGNS SHALL
HAVE
ANY RIGHTS AGAINST THE OTHER PARTY OR ITS AFFILIATES WITH RESPECT TO THE
TRANSACTIONS PROVIDED FOR HEREIN OTHER THAN AS IS EXPRESSLY PROVIDED IN THIS
AGREEMENT
AND THE
OTHER TRANSACTION DOCUMENTS.
10.7 Negligence
and Strict Liability Waiver.
WITHOUT
LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH
IN
THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION UNDER
THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE
LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT
OF
THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OR VIOLATION
OF ANY LAW OF OR BY SUCH INDEMNIFIED PARTY.
10.8 Limitation
on Damages.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL
ANY OF HOLDINGS OR DCP BE LIABLE TO THE OTHER, OR TO THE OTHERS' INDEMNITEES,
UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE,
CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS; PROVIDED
THAT,
IF ANY
OF THE HOLDINGS INDEMNITEES OR DCP INDEMNITEES IS HELD LIABLE TO A THIRD PERSON
FOR ANY SUCH DAMAGES AND THE INDEMNITOR IS OBLIGATED TO INDEMNIFY SUCH HOLDINGS
INDEMNITEES OR DCP INDEMNITEES FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES,
THE INDEMNITOR SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH INDEMNITEES
FOR SUCH DAMAGES.
43
10.9 Bold
and/or Capitalized Letters.
THE
PARTIES AGREE THAT THE BOLD AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT
CONSTITUTE CONSPICUOUS
LEGENDS.
ARTICLE
XI
MISCELLANEOUS
PROVISIONS
11.1 Expenses.
Unless
otherwise specifically provided for herein, each Party will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
the
negotiation of this Agreement and the transactions contemplated hereby;
provided
that
HOLDINGS will bear the cost of all Post-Closing Consents which must be obtained
from any railroad.
11.2 Further
Assurances.
From
time to time, and without further consideration, each Party will execute and
deliver to the other Party such documents and take such actions as the other
Party may reasonably request in order to more effectively implement and carry
into effect the transactions contemplated by this Agreement.
11.3 Apportionment
of Property Taxes; Transfer Taxes; and Recording Fees.
(a) Prior
to
the Closing, HOLDINGS shall determine, in accordance with this Section
11.3,
the
portion of general property Tax attributable to the period from January 1 (of
the year in which Closing occurs) to the Effective Time (the "HOLDINGS'
Property Tax").
The
HOLDINGS Property Tax shall be an amount equal to the product of (i) the amount
of such general property Tax assessed or pertaining to the Assets for the entire
taxable period that includes the Effective Time (or the amount of such general
property Tax for the immediately preceding taxable period in the case of those
Assets, if any, for which such general property Tax for the current period
cannot be determined, subject to future adjustment as set forth herein), times
(ii) a fraction, the numerator of which is the number of days from January
1 (of
the year in which Closing occurs) to the Effective Time and the denominator
of
which is the total number of days in the entire taxable period.
(b) The
Parties believe that the contribution of the Subject Interests as provided
for
herein is exempt from or is otherwise not subject to any and all sales, use,
transfer, or similar Taxes. If any such sales, transfer, use or similar Taxes
are due or should hereafter become due (including penalty and interest thereon)
by reason of this transaction, DCP shall timely pay and solely bear all such
type of Taxes.
11.4 Assignment.
Neither
Party may assign this Agreement or any of its rights or obligations arising
hereunder without the prior written consent of the other Party;
provided,
however,
DCP
shall be permitted to assign this Agreement to an Affiliate prior to Closing,
provided,
that,
notwithstanding such assignment, DCP shall continue to remain responsible for
all obligations of DCP hereunder following such assignment.
44
11.5 Entire
Agreement, Amendments and Waiver.
This
Agreement, together with the Transaction Documents and all certificates,
documents, instruments and writings that are delivered pursuant hereto and
thereto contain the entire understanding of the Parties with respect to the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. This
Agreement may be amended, superseded or canceled only by a written instrument
duly executed by the Parties specifically stating that it amends, supersedes
or
cancels this Agreement. Any of the terms of this Agreement and any condition
to
a Party's obligations hereunder may be waived only in writing by that Party
specifically stating that it waives a term or condition hereof. No waiver by
either Party of any one or more conditions or defaults by the other in
performance of any of the provisions of this Agreement shall operate or be
construed as a waiver of any future conditions or defaults, whether of a like
or
different character, nor shall the waiver constitute a continuing waiver unless
otherwise expressly provided.
11.6 Severability.
Each
portion of this Agreement is intended to be severable. If any term or provision
hereof is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity of the remainder of this
Agreement.
11.7 Counterparts.
This
Agreement may be executed simultaneously in any number of counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.8 Governing
Law, Dispute Resolution and Arbitration.
(a) Governing
Law.
This
Agreement shall be governed by, enforced in accordance with, and interpreted
under, the Laws of the State of
Colorado, without reference to conflicts of
Laws
principles.
(b) Negotiation.
In the
event of any Arbitral Dispute, the Parties shall promptly seek to resolve any
such Arbitral Dispute by negotiations between senior executives of the Parties
who have authority to settle the Arbitral Dispute. When a Party believes there
is an Arbitral Dispute under this Agreement that Party will give the other
Party
written notice of the Arbitral Dispute. Within thirty (30) days after receipt
of
such notice, the receiving Party shall submit to the other a written response.
Both the notice and response shall include (i) a statement of each Party's
position and a summary of the evidence and arguments supporting such position,
and (ii) the name, title, fax number, and telephone number of the executive
or
executives who will represent that Party. In the event the Arbitral Dispute
involves a claim arising out of the actions of any Person not a signatory to
this Agreement, the receiving Party shall have such additional time as
necessary, not to exceed an additional thirty (30) days, to investigate the
Arbitral Dispute before submitting a written response. The executives shall
meet
at a mutually acceptable time and place within fifteen (15) days after the
date
of the response and thereafter as often as they reasonably deem necessary to
exchange relevant information and to attempt to resolve the Arbitral Dispute.
If
one of the executives intends to be accompanied at a meeting by an attorney,
the
other executive shall be given at least five (5) Business Days' notice of such
intention and may also be accompanied by an attorney.
45
(c) Failure
to Resolve.
If the
Arbitral Dispute has not been resolved within sixty (60) days after the date
of
the response given pursuant to Section
11.8(b)
above,
or such additional time, if any, that the Parties mutually agree to in writing,
or if the Party receiving such notice denies the applicability of the provisions
of Section
11.8(b)
or
otherwise refuses to participate under the provisions of Section
11.8(b),
either
Party may initiate binding arbitration pursuant to the provisions of
Section
11.8(d)
below.
(d) Arbitration.
Any
Arbitral Disputes not settled pursuant to the foregoing provisions shall be
resolved through the use of binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
("Arbitration
Rules"),
as
supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code)
and
in accordance with the following provisions:
(i) If
there
is any inconsistency between this Section
12.8(d)
and the
Arbitration Rules or the Federal Arbitration Act, the terms of this Section
12.8(d)
will
control the rights and obligations of the Parties.
(ii) Arbitration
shall be initiated by a Party serving written notice, via certified mail, on
the
other Party that the first Party elects to refer the Arbitral Dispute to binding
arbitration, along with the name of the arbitrator appointed by the Party
demanding arbitration and a statement of the matter in controversy. Within
thirty (30) days after receipt of such demand for arbitration, the receiving
Party shall name its arbitrator. If the receiving Party fails or refuses to
name
its arbitrator within such thirty (30) day period, the second arbitrator shall
be appointed, upon request of the Party demanding arbitration, by the Chief
U.S.
District Court Judge for the District of
Colorado, or such other person
designated by such judge. The two arbitrators so selected shall within thirty
(30) days after their designation select a third arbitrator; provided, however,
that if the two arbitrators are not able to agree on a third arbitrator within
such thirty (30) day period, either Party may request the Chief U.S. District
Court Judge for the District of
Colorado, or such other person designated by
such judge to select the third arbitrator as soon as possible. In the event
the
Judge declines to appoint an arbitrator, appointment shall be made, upon
application of either Party, pursuant to the Commercial Arbitration Rules of
the
American Arbitration Association. If any arbitrator refuses or fails to fulfill
his or her duties hereunder, such arbitrator shall be replaced by the Party
which selected such arbitrator (or if such arbitrator was selected by another
Person, through the procedure which such arbitrator was selected) pursuant
to
the foregoing provisions.
46
(iii) The
hearing will be conducted in Denver,
Colorado, no later than sixty (60) days
following the selection of the arbitrators or thirty (30) days after all
prehearing discovery has been completed, whichever is later, at which the
Parties shall present such evidence and witnesses as they may choose, with
or
without counsel. The Parties and the arbitrators should proceed diligently
and
in good faith in order that the award may be made as promptly as
possible.
(iv) Except
as
provided in the Federal Arbitration Act, the decision of the arbitrators will
be
binding on and non-appealable by the Parties. Any such decision may be filed
in
any court of competent jurisdiction and may be enforced by any Party as a final
judgment in such court.
(v) The
arbitrators shall have no right or authority to grant or award exemplary,
punitive, remote, speculative, consequential, special or incidental
damages.
(vi) The
Federal Rules of Civil Procedure, as modified or supplemented by the local
rules
of civil procedure for the U.S. District Court of
Colorado, shall apply in
the
arbitration. The Parties shall make their witnesses available in a timely manner
for discovery pursuant to such rules. If a Party fails to comply with this
discovery agreement within the time established by the arbitrators, after
resolving any discovery disputes, the arbitrators may take such failure to
comply into consideration in reaching their decision. All discovery disputes
shall be resolved by the arbitrators pursuant to the procedures set forth in
the
Federal Rules of Civil Procedure.
(vii) Adherence
to formal rules of evidence shall not be required. The arbitrators shall
consider any evidence and testimony that they determine to be
relevant.
(viii) The
Parties hereby request that the arbitrators render their decision within thirty
(30) days following conclusion of the hearing.
(ix) The
defenses of statute of limitations and laches shall be tolled from and after
the
date a Party gives the other Party written notice of an Arbitral Dispute as
provided in Section
11.8(b)
above
until such time as the Arbitral Dispute has been resolved pursuant to
Section
11.8(b),
or an
arbitration award has been entered pursuant to this Section
11.8(d).
(e) Recovery
of Costs and Attorneys' Fees.
In the
event arbitration arising out of this Agreement is initiated by either Party,
the decision of the arbitrators may include the award of court costs, fees
and
expenses of such arbitration (including reasonable attorneys' fees).
(f) Choice
of Forum.
If,
despite the Parties' agreement to submit any Arbitral Disputes to binding
arbitration, there are any court proceedings arising out of or relating to
this
Agreement or the transactions contemplated hereby, such proceedings shall be
brought and tried in, and the Parties hereby consent to the jurisdiction of,
the
federal or state courts situated in the City and County of Denver, State of
Colorado.
47
(g) Jury
Waivers.
THE
PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO DEMAND A TRIAL BY
JURY.
(h) Settlement
Proceedings.
All
aspects of any settlement proceedings, including discovery, testimony and other
evidence, negotiations and communications pursuant to this Section
11.8,
briefs
and the award shall be held confidential by each Party and the arbitrators,
and
shall be treated as compromise and settlement negotiations for the purposes
of
the Federal and State Rules of Evidence.
11.9 Notices
and Addresses.
Any
notice, request, instruction, waiver or other communication to be given
hereunder by either Party shall be in writing and shall be considered duly
delivered if personally delivered, mailed by certified mail with the postage
prepaid (return receipt requested), sent by messenger or overnight delivery
service, or sent by facsimile to the addresses of the Parties as
follows:
DCP:
DCP
Midstream Partners, LP
000
-
00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
President
with
a
copy to:
DCP
Midstream Partners, LP
000
-
00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
General Counsel
HOLDINGS:
Duke
Energy Field Services, LP
000
-
00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
President
with
a
copy to:
Duke
Energy Field Services, LP
000
-
00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
General Counsel
48
or
at
such other address as either Party may designate by written notice to the other
Party in the manner provided in this Section
11.9.
Notice
by mail shall be deemed to have been given and received on the third
(3rd)
day
after posting. Notice by messenger, overnight delivery service, facsimile
transmission (with answer-back confirmation) or personal delivery shall be
deemed given on the date of actual delivery.
11.10 Press
Releases.
Except
as may otherwise be required by securities Laws and public announcements or
disclosures that are, in the reasonable opinion of the Party proposing to make
the announcement or disclosure, legally required to be made, there shall be
no
press release or public communication concerning the transactions contemplated
by this Agreement by either Party except with the prior written consent of
the
Party not originating such press release or communication, which consent shall
not be unreasonably withheld or delayed. DCP and HOLDINGS will consult in
advance on the necessity for, and the timing and content of, any communications
to be made to the public and, subject to legal constraints, to the form and
content of any application or report to be made to any Governmental Authority
that relates to the transactions contemplated by this Agreement.
11.11 Offset.
Nothing
contained herein or in any Transaction Document shall create a right of offset
or setoff for any Party under this Agreement and each Party hereby waives and
disclaims any such right of offset or setoff under all applicable Law (including
common Law).
11.12 No
Partnership; Third Party Beneficiaries.
Nothing
in this Agreement shall be deemed to create a joint venture, partnership, tax
partnership, or agency relationship between the Parties. Nothing in this
Agreement shall provide any benefit to any Third Person or entitle any Third
Person to any claim, cause of action, remedy or right of any kind, it being
the
intent of the Parties that this Agreement shall not be construed as a
third-party beneficiary contract; provided, however, that the indemnification
provisions of Article
X
shall
inure to the benefit of the DCP Indemnitees and the HOLDINGS Indemnitees as
provided therein.
11.13 Negotiated
Transaction.
The
provisions of this Agreement were negotiated by the Parties, and this Agreement
shall be deemed to have been drafted by both Parties.
49
THE
PARTIES HAVE
signed
this Agreement by their duly authorized officials as of the date first set
forth
above.
| | | |
| | DCP LP HOLDINGS,
LP |
|
|
|
|
|
| By: | /s/ Xxxx
X.
Xxxxx |
| |
Name:
Xxxx X. Xxxxx |
| | Title: Vice President |
| | | |
| |
DCP
MIDSTREAM PARTNERS, LP
By:
DCP MIDSTREAM GP, LP,
Its
General Partner
By:
DCP MIDSTREAM GP, LLC,
Its
General Partner
|
|
|
|
|
|
| By: | /s/ Xxxx
X.
Xxxxx |
| |
Name:
Xxxx X. Xxxxx |
| | Title:
Vice President |
50
