EXHIBIT 10.24
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of the 21st day of September, 2000 by and between Enron North
America Corp., a Delaware corporation ("Seller"), and NBP Energy Pipelines,
L.L.C., a Delaware limited liability company ("Purchaser").
RECITALS
A. Seller holds, directly or beneficially, all issued and outstanding
membership interests in and to Enron Midstream Services, L.L.C., a Delaware
limited liability company ("EMS"), ECT Wind River, L.L.C., a Delaware limited
liability company ("EWR"), and ECT Powder River, L.L.C., a Delaware limited
liability company ("EPR"). EMS, EWR, and EPR are referred to herein individually
as a "Transferred Company" and collectively as the "Transferred Companies."
B. Subject to the remaining terms and conditions of this Agreement,
Seller desires to sell and transfer (or cause to be transferred) to Purchaser,
and Purchaser desires to purchase and acquire from Seller, all of the issued and
outstanding membership interests in the Transferred Companies. The Membership
Interests, defined below, acquired by Purchaser hereunder are collectively
referred to as the "Acquired Membership Interests."
NOW, THEREFORE, in consideration of the recitals and the
representations, warranties and covenants set forth in this Agreement, the
Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, each of the following
terms has the meaning given in this Section 1.1 or in the Section referred to
below:
"AAA" has the meaning specified in Section 9.9(a).
"Acquired Membership Interests" has the meaning set forth in the
Recitals to this Agreement.
"Adjusted Purchase Price" has the meaning specified in Section 2.2.
"Administrative Services Agreement" means the agreement entered into
between Purchaser and Management Company at the Closing in the form attached
hereto as Exhibit B.
"Affiliate" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by or is under common control with such Person, but
Seller and its Affiliates (other than Northern Border Partners, L.P. and its
subsidiaries, including Purchaser) shall not be considered Affiliates of
Purchaser, and Northern Border Partners, L.P. and its subsidiaries (including
Purchaser) shall not be considered Affiliates of Seller. The term "control"
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the actual power
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to direct the management or policies of a Person, whether through the ownership
of stock, by contract or otherwise.
"Agreement" means this Purchase and Sale Agreement, as amended,
supplemented or modified from time to time.
"Assumed Obligations" means all of Seller's obligations and
liabilities under the Fort Union Consent to Assignment, the Firm Gas Gathering
Agreements and the NCO Agreements relating to periods of time from and after the
Closing Date.
"Audit Committee Approval" means the special approval of the audit
committee of Northern Border Partners, L.P., the parent company of Purchaser, to
the effect that, as of the date of such approval, the transactions contemplated
by this Agreement are fair and reasonable to Purchaser.
"Bighorn" means Bighorn Gas Gathering, L.L.C., a Delaware limited
liability company.
"Cash Disbursements" means all cash payments by Seller that are
attributable to the Transferred Companies that are incurred in the ordinary
course of business consistent with past practices, including expenses and
capital expenditures on the EMS Gathering System, capital contributions made by
EMS to Bighorn, demand payments made to Fort Union and Lost Creek, employee
expenses, general and administrative expenses (excluding Enron Corp internal
allocations, capital contributions made by EWR to Lost Creek from the Reserve
Account, and cash paid by Seller for activities related to the role of Lost
Creek construction manager).
"Cash Receipts" means all cash received by Seller that are
attributable to the Transferred Companies including revenues received on the EMS
Gathering System, distributions made to EMS, EPR, and EWR from Bighorn, Fort
Union, and Lost Creek respectively, and interest income and principal payments
received from Sapphire Bay, L.L.C. and Quantum Energy, L.L.C., but excluding any
cash received by Seller from Lost Creek for activities related to the role of
Lost Creek construction manager.
"Claimant" has the meaning specified in Section 9.9(b).
"Closing" means consummation of the purchase and sale of Acquired
Membership Interests in accordance with the terms of this Agreement.
"Closing Date" means September 15, 2000, or such other date as may be
agreed to by Seller and Purchaser.
"Closing Statement" has the meaning specified in Section 2.4.
"Completed Systems" means the gathering system described in Part 4 of
Schedule 3.1(n).
"Covered Systems" means all computer software, computer hardware,
firmware, telecommunications and other information technology systems, and
equipment containing
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microchips, including any third-party manufactured hardware, software or
devices, owned, licensed or used by each Transferred Company, if any, in the
performance and operation of its business or in connection with the provision of
gathering services by a Transferred Company.
"Credit Support Obligations" means the credit support and guarantee
obligations described in Schedule 1.1(a).
"Disclosure Schedule" means the Schedules included in the Disclosure
Schedule attached hereto.
"Dispute" has the meaning specified in Section 9.9(a).
"Effective Date" means 7:00 a.m., prevailing local time in the
Central time zone, on July 1, 2000.
"EMS" is defined in the Recitals to this Agreement.
"EMS Gathering System" means the gas gathering system of EMS as
existing on the date of this Agreement located in Xxxxxxxx County, Wyoming, as
generally depicted on Exhibit A, including the equipment and inventory described
on Exhibit A, as well as all related real property, rights of way, surface
leases, contracts, contract rights and other tangible and intangible real and
personal property and rights held by EMS for use in connection with such system.
"Environmental Laws" means any and all laws, regulations, rules,
orders, ordinances, requirements or determinations of any Governmental Authority
(all as existing on or before the date of this Agreement) pertaining to health
or the environment in effect in any and all jurisdictions in the State of
Wyoming, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liabilities Act ("CERCLA"), the Resource Conservation
and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act,
the Toxic Substances Control Act, the Safe Drinking Water Act, the Occupational
Safety and Health Act of 1970, the Hazardous Materials Transportation Act, all
as they have been amended, and other federal, state and local laws whose purpose
is to observe or protect the environment, health, wildlife or natural resources.
"EPR" is defined in the Recitals to this Agreement.
"Estimated Adjusted Purchase Price" has the meaning specified in
Section 2.4.
"EWR" is defined in the Recitals to this Agreement.
"EWR Pledge Agreement" has the meaning specified in Schedule 3.1(d).
"Existing EMS Gas Gathering Contracts" means the contracts and
agreements listed in Schedule 1.1(b).
"Final Settlement Date" has the meaning specified in Section 2.5.
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"Financial Statements" means the unaudited financial statements of
each Transferred Company as of, and for the eight (8) month period ending on,
August 31, 2000, as set forth in Schedule 3.1(i).
"Firm Gas Gathering Agreements" means the Firm Gas Gathering
Agreements described in Schedule 1.1(c).
"Fort Union" means Fort Union Gas Gathering, L.L.C., a Delaware
limited liability company.
"Fort Union Consent to Assignment" means the Consent to Assignment,
dated as of April 16, 0000, xxxxxxx Xxxxx Xxxxx Xxxxxxx Corp. and BankBoston,
N.A. as Administrative Agent under the Fort Union Credit Agreement.
"Fort Union Credit Agreement" has the meaning specified in Schedule
1.1(a).
"Fort Union Operating Agreement" means the Limited Liability Company
Operating Agreement of Fort Union, as amended.
"GAAP" means generally accepted accounting principles, as recognized
by the U.S. Financial Accounting Standards Board (as in effect during the period
covered by the Financial Statements), consistently applied.
"Gathering Company" means Fort Union and Lost Creek individually and
"Gathering Companies" means Fort Union and Lost Creek collectively.
"Governmental Action" means any authorization, application, approval,
consent, exemption, filing, license, notice, registration, permit or other
requirement of, to or with any Governmental Authority.
"Governmental Authority" means any national, state, county or
municipal government, domestic or foreign, any agency, board, bureau,
commission, court, department or other instrumentality of any such government,
or any arbitrator in any case that has jurisdiction over a Transferred Company
or any of its properties or assets.
"Hazardous Material" means (a) any "hazardous substance," as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, amended; (b) any "hazardous waste" or "solid waste," in either case as
defined by the Resource Conservation and Recovery Act, as amended; (c) any
solid, hazardous, dangerous or toxic chemical, material, waste or substance,
within the meaning of and regulated by any other Environmental Law; (d) any
radioactive material, including any naturally occurring radioactive material,
and any source, special or byproduct material as defined in 42 U.S.C. 2011 et
seq. and any amendments or authorizations thereof; (e) any asbestos-containing
materials in any form or condition; (f) any polychlorinated biphenyls in any
form or condition; or (g) petroleum, petroleum hydrocarbons, or any fraction or
byproducts thereof.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
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"I-80 Corridor" means the area in the Specified Geographical Area
within 3 miles of each side of Interstate 80.
"Indemnified Person" has the meaning specified in Section 6.5(a).
"Indemnifying Person" has the meaning specified in Section 6.5(a).
"Jurisdictional Laws" has the meaning specified in Section
3.1(m)(iii).
"Knowledge," "Know" or "Known" (whether or not capitalized), with
respect to a Person, means the actual knowledge of that Person and, where such
Person is a business entity, means the actual knowledge of each of the officers,
directors and managers of such entity.
"Legal Requirement" means each of the following (as in existence on
or before the date of this Agreement), any law, statute, ordinance, decree,
requirement, order, treaty, proclamation, convention, rule or regulation (or
interpretation of any of the foregoing) of, and the terms of any Governmental
Action issued by, any Governmental Authority, including, without limitation, any
applicable law, statute, ordinance, decree, requirement, order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) relating to the environment.
"Liability" means any debt, obligation, duty or liability of any
nature (including any undisclosed, unfixed, unliquidated, unsecured, unmatured,
unaccrued, unasserted, contingent, conditional, inchoate, implied, vicarious,
joint, several or secondary liability), regardless of whether such debt,
obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with GAAP.
"Lien" means any lien, mortgage, security interest, pledge, deposit,
production payment, restriction, burden, encumbrance, claim, right of first
refusal, rights of a vendor under any title retention or conditional sale
agreement, or lease or other arrangement substantially equivalent thereto.
"Loss" means any loss, damage, injury, harm, detriment, Liability,
diminution in value, exposure, claim, demand, proceeding, settlement, judgment,
award, punitive damage award, fine, penalty, fee, charge, cost or expense
(including, without limitation, costs of attempting to avoid or in opposing the
imposition thereof, interest, penalties, costs of preparation and investigation,
and the fees, disbursements and expenses of attorneys, accountants and other
professional advisors), as well as with respect to compliance with Legal
Requirements relating to the environment, expenses of remediation and any other
remedial, removal, response, abatement, cleanup, investigative, monitoring or
record keeping costs and expenses.
"Lost Creek" means Lost Creek Gas Gathering Company, L.L.C., a
Delaware limited liability company.
"Lost Creek Credit Agreement" has the meaning specified in Schedule
1.1(a).
"Lost Creek Operating Agreement" means the Limited Liability Company
Operating Agreement of Lost Creek.
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"Management Company" means NBP Services Corporation.
"Master Services Agreement" means the agreement, together with the
attached Service Schedules 1 through 9, to be entered into between Seller and
Purchaser at the Closing in the form attached hereto as Exhibit C.
"Material" or "Materially" (whether or not capitalized) means
circumstances or results having an economic effect in excess of $250,000, except
as otherwise specified.
"Material Adverse Effect" means: (a) when used with respect to a
Transferred Company, a result or consequence that would materially adversely
affect the condition (financial or otherwise), business prospects, results of
operations or business of the Transferred Company, or the value of its assets or
would materially impair the ability of the Transferred Company to own, hold,
develop and operate its assets; (b) when used with respect to Seller, a result
or consequence that would materially impair Seller's ability to perform its
obligations hereunder or consummate the transactions contemplated hereby; and
(c) when used with respect to Purchaser, a result or consequence that would
materially adversely affect the condition (financial or otherwise), results of
operations or business of Purchaser or the aggregate value of its assets, would
materially impair the ability of Purchaser to own, hold, develop and operate its
assets, or would impair Purchaser's ability to perform its obligations hereunder
or consummate the transactions contemplated hereby.
"Material Agreements" means: (a) each Firm Gas Gathering Agreement
and NCO Agreement; (b) each contract or agreement (oral or written) that
involves performance of services or delivery of goods or materials by a
Transferred Company of an amount or value in excess of $100,000; and (c) each
contract or agreement (oral or written) that involves performance of services or
delivery of goods or materials to a Transferred Company of an amount or value in
excess of $100,000.
"Membership Interests" has the meaning (for each Transferred Company)
specified in the Operating Agreement (defined below) for that Transferred
Company, which includes, but is not limited to, the right to receive allocations
of profits and losses, distributions of cash flow, a capital account balance and
all amounts a member of that Transferred Company is entitled to receive upon
liquidation of that Transferred Company, all voting and approval rights and any
such other rights, all as provided for in each such Operating Agreement.
"NCO Agreements" means the agreements described in Schedule 1.1(d).
"Notice of Disagreement" has the meaning specified in Section 2.5.
"Operating Agreements" means the Amended and Restated Limited
Liability Company Agreement for each of the Transferred Companies.
"Other Contracts" has the meaning specified in Section 3.1(l)(ii).
"Parties" means Seller and Purchaser, collectively.
"Party" means Seller or Purchaser, individually.
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"Permits" shall have the meaning specified in Section 3.1(m)(ii).
"Permitted Liens" means (a) Liens for Taxes, assessments or other
governmental charges or levies if the same shall not at the particular time in
question be due and delinquent or are being contested in good faith by
appropriate proceedings; (b) Liens of carriers, warehousemen, mechanics,
laborers, materialmen, landlords, vendors, workmen and operators arising by
operation of law in the ordinary course of business or by a written agreement
existing as of the date hereof for sums not yet due or which are being contested
in good faith by appropriate proceedings; (c) Liens incurred in the ordinary
course of business in connection with worker's compensation, unemployment
insurance and other social security legislation; (d) Liens incurred in the
ordinary course of business to secure the performance of bids, tenders, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
and repayment bonds and other obligations of a like nature; (e) easements,
rights-of-way, restrictions, servitudes, permits, conditions, covenants,
exceptions, reservations and other similar encumbrances and defects,
irregularities or deficiencies in title to real or personal property, easements,
rights of way, surface use agreements or other agreements granting rights in and
to real property that do not adversely affect the value of the assets of a
Transferred Company by an amount in excess of $100,000, in the aggregate; (f)
Liens created or arising by operation of law to secure a party's obligations as
a purchaser of oil and gas; and (g) all required notices to and filings with any
Governmental Authority to the extent customarily made subsequent to closing.
"Person" means any natural person, corporation, company, limited or
general partnership, joint stock company, joint venture, association, limited
liability company, trust, bank, trust company, land trust, business trust or
other entity or organization, whether or not a Governmental Authority.
"Purchase Price" has the meaning specified in Section 2.2.
"Purchaser" has the meaning specified in the introductory paragraph
of this Agreement.
"Purchaser Indemnitees" has the meaning specified in Section 6.3.
"Request" has the meaning specified in Section 9.9(b).
"Reserve Account" means the account held by EWR in the amount of
$3,465,000 to fund anticipated capital expenditures to Lost Creek in connection
with the term conversion of the financing of the Lost Creek Credit Agreement
described in Schedule 1.1(a).
"Respondent" has the meaning specified in Section 9.9(b).
"Seller" has the meaning set forth in the introductory paragraph of
this Agreement.
"Seller Indemnitees" has the meaning specified in Section 6.4.
"Specified Geographical Area" means the geographical area described
in Exhibit D hereto.
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"Specified Project" has the meaning specified in Section 8.1.
"Tax Returns" has the meaning specified in Section 3.1(r)(i).
"Taxes" means taxes of any kind, levies or other like assessments,
customs, duties, imposts, charges or fees, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
federal royalty, license, payroll, transaction, capital, net worth and franchise
taxes, estimated taxes, withholding, employment, social security, workers
compensation, utility, severance, production, unemployment compensation,
occupation, premium, windfall profits, transfer and gains taxes or other
governmental taxes imposed or payable to the United States or any state, local
or foreign governmental subdivision or agency thereof, and in each instance such
term shall include any interest, penalties or additions attributable to any such
tax, including penalties for the failure to file any Tax Return or report.
"Term Conversion Date" has the meaning given that term in the Lost
Creek Credit Agreement.
"Transferred Company" or "Transferred Companies" shall have the
meaning specified in the Recitals to this Agreement.
"Year 2000 Ready" means capable at all times, without additional
expense, human intervention or additional programming, of correctly processing
(and, if applicable, calculating, comparing, sequencing, storing, retrieving,
displaying, printing, inputting and outputting) calendar, date and time data
before, on and after January 1, 2000 (and correctly handling each leap year).
1.2 Other Definitional Provisions.
(a) All references in this Agreement to Exhibits, Schedules,
Articles, Sections, subsections and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections and
other subdivisions of or to this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections or other subdivisions of this Agreement are for convenience
only, do not constitute any part of this Agreement and shall be disregarded
in construing the language hereof.
(b) The words "this Agreement," "herein," "hereby," "hereunder" and
"hereof," and words of similar import, refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The
words "this Article," "this Section" and "this subsection," and words of
similar import, refer only to the Article, Section or subsection hereof in
which such words occur. The word "or" is not exclusive, and the word
"including" (in its various forms) means "including without limitation."
(c) Pronouns in masculine, feminine or neuter genders shall be
construed to state and include any other gender, and words, terms and
titles (including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the context
otherwise requires.
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ARTICLE II
PURCHASE AND SALE OF MEMBERSHIP INTERESTS
2.1 Purchase and Sale. At the Closing, Purchaser shall purchase from
Seller, and Seller shall sell to Purchaser and transfer (or cause to be
transferred), the Acquired Membership Interests, on the terms and subject to the
conditions set forth in this Agreement.
2.2 Purchase Price. The purchase price for the sale and transfer of
the Acquired Membership Interests to Purchaser is $204,000,000 (the "Purchase
Price"), subject to adjustment as provided below. The "Adjusted Purchase Price"
shall be the Purchase Price adjusted as follows:
(i) adjusted downward by the amount of Cash Receipts after the
Effective Date and prior to the Closing Date;
(ii) adjusted upward by (A) the amount of Cash Disbursements
after the Effective Date and prior to the Closing Date, (B) the
amount of regular salaries and related employee benefits paid to the
Transferred Employees from the Closing Date through September 30,
2000, and (C) Cash Disbursements after the Closing Date and before
October 31, 2000 that relate to periods prior to the Closing Date;
and
(iii) adjusted by any other amount specifically provided for in
this Agreement or agreed upon by the Parties in writing.
2.3 Closing. The Closing with respect to purchase and sale of the
Acquired Membership Interests will take place on the Closing Date at 10:00 a.m.,
Houston time, at the offices of Xxxxxxx & Xxxxx L.L.P. at 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx, 00000, or at such other place as Seller and Purchaser may
otherwise agree.
2.4 Closing Statement. Not later than three (3) Business Days prior
to the Closing Date, Seller shall prepare and deliver to Purchaser a statement
(the "Closing Statement") of the estimated Purchase Price adjustments and its
best estimate of the Adjusted Purchase Price (the "Estimated Adjusted Purchase
Price"). As set forth in Section 2.6, the closing payment payable by Purchaser
at Closing shall be the Estimated Adjusted Purchase Price.
2.5 Post-Closing Adjustment to the Purchase Price.
(a) On or before the date that is sixty (60) days after the Closing
Date, Seller shall prepare and deliver to Purchaser a revised Closing
Statement setting forth the Purchase Price adjustments and the Adjusted
Purchase Price. To the extent reasonably required by Seller, Purchaser
shall assist in the preparation of the revised Closing Statement. Seller
shall provide to Purchaser such data and information as Purchaser may
reasonably request supporting the amounts reflected on the revised Closing
Statement in order to permit Purchaser to perform or cause to be performed
an audit of the revised Closing Statement at Purchaser's expense. The
revised Closing Statement shall become final and binding upon the parties
on the date (the "Final Settlement Date") that is thirty (30) days
following receipt thereof by Purchaser unless Purchaser gives written
notice of
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its disagreement ("Notice of Disagreement") to Seller prior to such date.
Any Notice of Disagreement shall specify in detail the dollar amount,
nature, and basis of any disagreement so asserted. If a Notice of
Disagreement is received by Seller in a timely manner, then Seller and
Purchaser shall diligently work in good faith to reach agreement on a
final Closing Statement. If the Parties fail to agree on the final Closing
Statement within thirty (30) days after the date of the Notice of
Disagreement, the matter may be submitted by either party to arbitration
under Section 9.9. The Closing Statement shall become final and binding on
the Parties on, and the Final Settlement Date shall be, the earlier of (i)
the date upon which Seller and Purchaser agree in writing with respect to
all matters specified in the Notice of Disagreement or (ii) the date on
which the arbitrators' final decision is issued under Section 9.9.
(b) If the Adjusted Purchase Price, as finally determined pursuant to
this Section 2.5, is less than the Estimated Adjusted Purchase Price
delivered pursuant to Section 2.4, then Seller will pay to Purchaser,
within two business days, by wire transfer of immediately available funds,
the amount of such shortfall. If the Adjusted Purchase Price, as finally
determined pursuant to this Section 2.5, is greater than the Estimated
Adjusted Purchase Price delivered pursuant to Section 2.4, then Purchaser
will pay to Seller, within two business days, by wire transfer of
immediately available funds, the amount of such excess. Such payment shall
be deemed an adjustment of the Purchase Price in Section 2.2.
2.6 Closing Obligations. At the Closing:
(a) Seller shall deliver to Purchaser:
(i) A duly executed Assignment and Assumption Agreement, in the
form attached hereto as Exhibit E-1, by which (A) the membership
interests in EMS are assigned to Purchaser free and clear of all
Liens except restrictions created by the Operating Agreement for EMS,
(B) the Fort Union Consent to Assignment, the Firm Gas Gathering
Agreements, and the NCO Agreements are assigned to Purchaser, and (C)
Purchaser assumes the Assumed Obligations and Seller retains
liability for gas imbalances under the Firm Gas Gathering Agreements
that relate to periods prior to the Closing Date;
(ii) A duly executed Assignment and Assumption Agreement, in the
form attached hereto as Exhibit E-2, by which the membership
interests in EWR and EPR are assigned to Purchaser free and clear of
all Liens except restrictions created by the Operating Agreements for
EPR and EWR.
(iii) A certificate in the form attached hereto as Exhibit F,
dated the Closing Date and executed by an officer of Seller, to the
effect that each of Seller's representations and warranties contained
herein is true and correct as of the Closing Date, as if made on and
as of the Closing Date, unless by their terms any such
representations or warranties relate to an earlier date;
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(iv) A letter duly executed by the assignors of the membership
interests in EWR and EPR waiving the restrictions on dispositions of
such membership interests contained in Section 3.03 of the Operating
Agreements for EWR and EPR to the extent such restrictions apply to
the transactions contemplated hereunder.
(v) The Master Services Agreement duly executed by Seller;
(vi) A copy of the executed Operating Agreements; and
(vii) Such other certificates and documents as may be called for
under this Agreement or as Purchaser shall reasonably request.
(b) Purchaser shall deliver (or cause to be delivered) to Seller:
(i) The Estimated Adjusted Purchase Price, by wire transfer to
the account or accounts designated in writing by Seller in
immediately available funds;
(ii) Assignment and Assumption Agreements executed by Purchaser
in the forms attached hereto as Exhibit E-1 and Exhibit E-2;
(iii) The Administrative Services Agreement duly executed by
Purchaser and Management Company;
(iv) A Guaranty executed by Northern Border Intermediate Limited
Partnership in the form attached hereto as Exhibit G;
(v) The Master Services Agreement duly executed by Purchaser;
(vi) A certificate from Purchaser in the form attached hereto as
Exhibit H, dated the Closing Date and executed by an officer of
Purchaser, to the effect that the representations and warranties of
Purchaser contained herein are true and correct as of the Closing
Date, as if made on and as of the Closing Date, unless by their terms
any such representations or warranties relate to an earlier date;
(vii) Such other certificates and documents as may be called for
under this Agreement or as Seller shall reasonably request; and
(viii) Satisfactory proof of substitute credit support necessary
or required to release Seller and its Affiliates from liability under
the Credit Support Obligations.
2.7 Allocation of Adjusted Purchase Price. The Parties shall agree
upon an allocation of the Adjusted Purchase Price consistent with Section 1060
of the Code and the Treasury regulations thereunder by the Final Settlement
Date. The Parties shall report this transaction for federal income tax purposes
in accordance with the allocation so agreed upon.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Purchaser as of the Closing Date, as follows:
(a) Authority for Transaction. Seller has full power and authority to
execute and deliver this Agreement and to perform Seller's obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles, regardless of whether enforceability is considered in a
proceeding at law or in equity. Except for filings under the HSR Act and
as shown in Schedule 3.1(a), Seller is not required to give any notice to,
make any filing with or obtain any authorization, consent or approval of
any Governmental Authority in order to consummate the transactions
contemplated by this Agreement.
(b) Noncontravention. Except as shown in Schedule 3.1(b), the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not (i) violate any statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any Governmental Authority or court to which Seller
or any Transferred Company is subject, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel,
or require any notice or consent under any agreement, contract, lease,
license, instrument or other arrangement to which Seller or any
Transferred Company is a party or by which Seller or any Transferred
Company is bound, or (iii) conflict with or violate any provision of the
Operating Agreement or any other charter document of any Transferred
Company, except, in each case, as would not have, individually or in the
aggregate, a Material Adverse Effect on any Transferred Company.
(c) Consents and Approvals. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit
from, any Governmental Authority or other Person is required by or with
respect to Seller or any Transferred Company in connection with the
execution and delivery of this Agreement by Seller or the consummation by
Seller of the transactions contemplated hereby, except (i) for filings to
be made under the HSR Act, (ii) as shown in Schedule 3.1(c), and (iii)
where the failure to obtain such consent, approval, order, authorization,
registration, filing or permit would not have, individually or in the
aggregate, a Material Adverse Effect on any Transferred Company.
(d) Title to Membership Interests.
(i) The Acquired Membership Interests being conveyed by Seller
to Purchaser pursuant to Section 2.1 were, immediately prior to such
conveyance, held directly or beneficially by Seller and are being
conveyed to Purchaser free
Purchase and Sale Agreement
Page 12
and clear of any Lien, claim, pledge, encumbrance, restriction on
transfer (other than any restrictions on Purchaser's ability to
transfer the Acquired Membership Interests under the Operating
Agreements and federal and state securities laws), security interest,
option, warrant, purchase right or other contract or commitment
(other than the Operating Agreements). Seller is not a party to any
voting trust, proxy or other agreement or understanding with respect
to the voting of the Acquired Membership Interests, except for the
Operating Agreements.
(ii) Except as shown in Schedule 3.1(d), EWR holds, beneficially
and of record, a 35% membership interest in Lost Creek, and EPR
holds, beneficially and of record, a 33.33% membership interest in
Fort Union, in each case, free and clear of any Lien, claim, pledge,
encumbrance, security interest, option, warrant, purchase right or
other contract or commitment (other than as provided in the Fort
Union Operating Agreement or the Lost Creek Operating Agreement).
(iii) Except as shown in Schedule 3.1(d), EMS holds,
beneficially and of record, ten percent (10%) of the common
membership interests, and twenty percent (20%) of the Preferred A
Units, in Bighorn, free and clear of any Lien, claim, pledge,
encumbrance, security interest, option, warrant, purchase right or
other contract or commitment (other than as provided in the Amended
and Restated Limited Liability Company Operating Agreement of
Bighorn).
(e) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Each Transferred Company (i) is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware, (ii) has the requisite power and authority to own,
lease and operate its properties and to conduct its business as it is
presently being conducted, and (iii) is duly qualified to do business as a
foreign limited liability company in each jurisdiction where the character
of the properties owned or leased by it or the nature of its activities
makes such qualification necessary (except where any failure to be so
qualified as a foreign limited liability company or to be in good standing
would not, individually or in the aggregate, have a Material Adverse
Effect on any Transferred Company). Copies of the Certificate of Formation
and Operating Agreement (as currently in effect) of each Transferred
Company have heretofore been delivered to Purchaser, and such copies are
accurate and complete as of the date hereof.
(f) No Violations. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby and
compliance by Seller with the provisions hereof will not, conflict with,
result in any violation of or default (with or without notice or lapse of
time or both) under, give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under,
or result in the creation of any Lien on any of the properties or assets
of any Transferred Company or Seller under, any provision of: (i) any loan
or credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or other agreement or instrument applicable
to any Transferred Company or Seller, or (ii) subject to compliance with
the HSR Act, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to any Transferred Company or Seller or any of their
respective properties or
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Page 13
assets, other than, in the case of either clause (i) or (ii) above, any
such conflict, violation, default, right, loss or Lien that would not
have, individually or in the aggregate, a Material Adverse Effect on any
Transferred Company or Seller.
(g) Capital Structure.
(i) At the Closing, the issued and outstanding equity interests
of each Transferred Company will be comprised of Membership Interests
totaling one hundred percent (100%). The capital account balance, as
of August 31, 2000, of each Transferred Company in respect of the
Acquired Membership Interests, is set forth on Schedule 3.1(g)
attached hereto.
(ii) There are outstanding (A) no securities of any Transferred
Company or any other Person convertible into or exchangeable or
exercisable for equity interests in any Transferred Company, and (B)
no subscriptions, options, warrants, calls, rights (including
preemptive rights), commitments, understandings or agreements to
which any Transferred Company is a party or by which it is bound
obligating such Transferred Company to issue, deliver, sell,
purchase, redeem or acquire equity interests in such Transferred
Company (or securities convertible into or exchangeable or
exercisable for equity interests in such Transferred Company) or
obligating such Transferred Company to grant, extend or enter into
any such subscription, option, warrant, call, right, commitment,
understanding or agreement.
(h) Business Activities of Transferred Company. Except as disclosed
in Schedule 3.1(h), no Transferred Company has engaged in any business
activities other than those undertaken in connection with or incidental to
the development, construction, ownership and operation of its assets.
(i) Financial Statements. The Financial Statements (which are
attached hereto as Schedule 3.1(i)) are true and accurate (except to
the extent any such untruths or inaccuracies do not result in Losses
which exceed $50,000, in the aggregate, for each Transferred Company)
and fairly present, in all material respects, the financial position
of each Transferred Company as of the date thereof and the results of
operations of each Transferred Company for the period then ended, and
are in conformity with GAAP (subject to normal year-end adjustments,
the effect of which, individually or in the aggregate, will not be
materially adverse, and except for footnote disclosures required by
GAAP), except as otherwise noted therein, and the accounting records
underlying the Financial Statements accurately and fairly reflect in
all material respects the transactions of each Transferred Company.
Except as set forth on Schedule 3.1(i) hereto, no Transferred Company
has any material Liabilities or obligations of a type which are
required to be included in or reflected on the Financial Statements
if prepared in accordance with GAAP, whether related to Tax or
non-Tax matters, accrued or contingent, due or not yet due,
liquidated or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in the Financial Statements or otherwise set
forth on Schedule 3.1(i).
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Page 14
(j) Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.1(j) and to the extent fully reflected or reserved against on
the Financial Statements, as of the date of the Financial Statements, no
Transferred Company had any Liabilities or any Tax Liabilities due or to
become due and whether incurred in respect of or measured by the income
or sales of that Transferred Company for any period, or arising out of
any transaction entered into or any state of facts existing, on or before
the date of the Financial Statements, that would have, individually or in
the aggregate, a Material Adverse Effect on any Transferred Company.
Since the date of the Financial Statements, no Transferred Company had
incurred any Liabilities except in the ordinary course of business.
(k) Absence of Certain Changes or Events. Except as otherwise set
forth on Schedule 3.1(k) or as contemplated by this Agreement, since the
date of the Financial Statements, no Transferred Company has done any of
the following:
(i) Discharged or satisfied any Lien or paid any obligation or
Liability, absolute or contingent, other than current Liabilities
paid in the ordinary course of business;
(ii) Made any loans or advances or guaranteed any loans or
advances to any Person (other than loans, advances or guaranties made
in the ordinary course of business);
(iii) Except for Permitted Liens, suffered or permitted any Lien
to arise or be granted or created against or upon any of its assets;
(iv) Canceled, waived or released any rights or claims against,
or indebtedness owed by, third parties;
(v) Made or permitted any amendment, supplement, modification or
termination of any Material Agreement;
(vi) Expended or committed to expend capital in excess of
$100,000;
(vii) Entered into any swap, hedging or similar arrangements;
(viii) Made any change in the accounting methods followed by it;
(ix) Received notice or otherwise acquired knowledge of any
dispute or any other occurrence, event or condition of any character
which could be anticipated to give rise to a legal or administrative
action or a Material Adverse Effect on any Transferred Company;
(x) Suffered any material adverse change in its working capital,
financial condition, assets, Liabilities, reserves, business
operations or prospects; or
Purchase and Sale Agreement
Page 15
(xi) Agreed, whether in writing or otherwise, to do any of the
foregoing.
(l) Contracts and Agreements.
(i) Schedule 3.1(l) contains a listing of (A) the Existing EMS
Gas Gathering Contracts, which constitute all of the contracts
(whether oral or written) relating to the gathering of natural gas on
the EMS Gathering System, and (B) all other Material Agreements of
any Transferred Company (provided, however, that inclusion of any
agreement or contract on Schedule 3.1(l) does not constitute an
admission that such agreement or contract is a Material Agreement).
(ii) No Transferred Company is in violation of, or in default in
any respect under, and no event has occurred that (with notice or the
lapse of time or both) would constitute a violation by such
Transferred Company of, or default by such Transferred Company under,
(A) its Operating Agreement or its other charter documents, (B) any
Material Agreement, (C) any Existing EMS Gas Gathering Contracts, or
(D) any other contract, agreement, lease or commitment, whether oral
or written to which a Transferred Company is a party ("Other
Contracts"), except for any such violation or default that would not
have, individually or in the aggregate, a Material Adverse Effect on
any Transferred Company.
(iii) (A) all of the Existing EMS Gas Gathering Contracts, the
Material Agreements and the Other Contracts are in full force and
effect and are valid and enforceable in accordance with their terms,
except where the failure to be in full force and effect and
enforceable would not have, individually or in the aggregate, a
Material Adverse Effect on any Transferred Company; (B) there is no
material default or material breach under any of the Existing EMS Gas
Gathering Contracts, Material Agreement or Other Contract by any
Transferred Company; or (C) to Seller's knowledge, there are no
material defaults or material breaches on the part of the other party
to any of the Existing EMS Gas Gathering Contracts, Material
Agreement or Other Contract, and Seller has no knowledge of any
condition that exists or event that has occurred which, with notice
or lapse of time or both, would constitute a default or a basis for
force majeure or other claim of excusable delay or non-performance
thereunder.
(m) Compliance with Laws; Permits.
(i) Except for Jurisdictional Laws (as to which Seller does not
make any representation), each Transferred Company is, and at all
times since its formation, has been, and, to Seller's knowledge, each
Gathering Company is and at all times since its formation has been,
in compliance with all Legal Requirements applicable to it or to the
ownership of its assets or the operation of its business, where any
failure to so be in compliance, or during such period prior to the
date hereof to have so been in compliance, would be expected to have,
individually or in the aggregate, a Material Adverse Effect on any
Transferred
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Company. Neither Seller nor any Transferred Company has received, and
to the knowledge of Seller, there is not threatened, any order,
notice or other communication from any Governmental Authority of any
alleged, actual or potential violation and/or failure to comply with
any such Legal Requirements. To Seller's knowledge, no Gathering
Company has received any order, notice or other communication from
any Governmental Authority of any alleged, actual or potential
violation and/or failure to comply with any such Legal Requirements.
(ii) Schedule 3.1(m) sets forth a true and accurate list of all
material permits, licenses and Governmental Actions that each
Transferred Company has heretofore obtained for the conduct of its
business (collectively, herein the "Permits"). The Permits have been
duly obtained and are in full force and effect, except where the
failure to be in full force and effect would not have, individually
or in the aggregate, a Material Adverse Effect on any Transferred
Company. There are no proceedings pending or, to Seller's knowledge,
threatened, which seek to revoke, cancel, suspend or modify any of
the Permits. Except as set forth in Schedule 3.1(m), the Permits
constitute all of the permits, licenses or Governmental Actions
necessary for the conduct of each Transferred Company's business as
it is conducted as of the Closing, except where the failure to posses
any such permit, license or Governmental Action would not have,
individually or in the aggregate, a Material Adverse Effect on any
Transferred Company.
(iii) NOTWITHSTANDING ANY OTHER PROVISION SET FORTH IN THIS
AGREEMENT, SELLER MAKES NO REPRESENTATION REGARDING EXEMPTION FROM OR
COMPLIANCE OF THE EMS GATHERING SYSTEM OR THE OTHER ASSETS OF THE
TRANSFERRED COMPANIES OR THE GATHERING COMPANIES WITH THE NATURAL GAS
ACT OF 1938 (15 U.S.C. ss. 717, et seq.), THE NATURAL GAS POLICY ACT
OF 1978 (15 U.S.C. ss.3301 et seq.), THE LAWS OF WYOMING OR OTHER
LEGAL REQUIREMENTS (COLLECTIVELY HEREIN, THE "JURISDICTIONAL LAWS")
WHICH MAY: (A) REQUIRE SUCH PARTIES TO FILE FOR AND/OR OBTAIN A
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY (OR SIMILAR LICENSES
OR QUALIFICATIONS, HOWEVER DENOMINATED) WITH RESPECT TO OWNERSHIP OR
OPERATION OF THEIR RESPECTIVE ASSETS; (B) REQUIRE SUCH PARTIES TO
FILE FOR AND/OR OBTAIN A TARIFF (OR OTHERWISE REGULATE THE RATES
WHICH SUCH PARTIES MAY CHARGE FOR GATHERING OR OTHER SERVICES) ON
THEIR ASSETS; (C) REQUIRE SUCH PARTIES TO PROVIDE GATHERING OR OTHER
SERVICES ON A NON-DISCRIMINATORY BASIS OR OPEN ACCESS BASIS; OR (D)
OTHERWISE REQUIRE APPROVAL FROM THE FEDERAL ENERGY REGULATORY
COMMISSION, WYOMING PUBIC SERVICE COMMISSION OR MONTANA PUBLIC
SERVICE COMMISSION IN ORDER TO PROVIDE GATHERING OR OTHER SERVICES.
(n) Title. Except for Permitted Liens and defects or imperfections in
title that would not have, individually or in the aggregate, a Material
Adverse Effect on any
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Page 17
Transferred Company and except as set forth on Schedule 3.1(n), each
Transferred Company owns, free and clear of all Liens, all of the
properties and assets (real, personal and mixed, tangible and intangible)
reflected as owned by such Transferred Company in the books and records of
such Transferred Company or otherwise used or employed in any manner by
such Transferred Company in the conduct of its business including, without
limitation, all of the properties and assets reflected in the Financial
Statements (except for personal property sold since the date of the
Financial Statements in the ordinary course of business), and all the
properties and assets acquired by such Transferred Company since the date
of the Financial Statements (except for personal property acquired and
sold since the date of the Financial Statements in the ordinary course of
business).
(o) Condition of Property. Except as set forth on Schedule 3.1(o),
the buildings, plants, structures and equipment owned or leased by EMS
(including the EMS Gathering System), and, to the knowledge of Seller,
owned or leased by each Gathering Company, are structurally sound, are in
good operating condition and repair, are reasonably fit for the purposes
for which they are intended to be used, and none of such buildings,
plants, structures or equipment is in need of maintenance or repairs,
except for ordinary, routine maintenance and repairs that in the aggregate
are not material in nature or cost. WITH RESPECT TO ANY PERSONAL PROPERTY
(INCLUDING EQUIPMENT OR INVENTORY) INCORPORATED IN, ASSOCIATED WITH OR
HELD FOR USE IN CONNECTION WITH OPERATION OF SUCH ASSETS, SELLER DISCLAIMS
ANY OTHER EXPRESS OR IMPLIED REPRESENTATION, COVENANT OR WARRANTY AS TO
MERCHANTABILITY, PERFORMANCE, FITNESS (BOTH GENERALLY AND FOR ANY
PARTICULAR PURPOSE) OR OTHERWISE (WHICH WARRANTIES SELLER HEREBY EXPRESSLY
DISCLAIMS).
(p) Litigation. Except as otherwise set forth on Schedule 3.1(p), (i)
no litigation, arbitration, investigation or other proceeding of any
Governmental Authority or any third party is pending or, to the knowledge
of Seller, threatened against any Transferred Company or Seller, or any of
their respective assets, and (ii) to Seller's knowledge, no litigation,
arbitration, investigation or other proceeding is pending or threatened
against either Gathering Company or their respective assets, which, in
each case, if adversely determined, will have or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on any Transferred Company. There is no litigation, proceeding or
investigation pending or, to the knowledge of Seller, threatened against
or affecting Seller or any Transferred Company that questions the validity
or enforceability of this Agreement or any other document, instrument or
agreement to be executed and delivered by Seller or any Transferred
Company in connection with the transactions contemplated hereby.
(q) No Restrictions. Except for the applicable Operating Agreement or
as otherwise set forth on Schedule 3.1(q), no Transferred Company is a
party to (i) any agreement, indenture or other instrument that contains
restrictions with respect to the payment of distributions with respect to
its capital; (ii) any financial arrangement with respect to or creating
any indebtedness to any Person (other than indebtedness reflected
Purchase and Sale Agreement
Page 18
in the Financial Statements or indebtedness incurred after the date of the
Financial Statements in the ordinary course of business); (iii) any
agreement, contract or commitment relating to the making of any advance
to, or investment in, any Person (other than advances in the ordinary
course of business); (iv) any guaranty or other contingent liability with
respect to any indebtedness or obligation of any Person (other than
guaranties undertaken in the ordinary course of business and other than
the endorsement of negotiable instruments for collection in the ordinary
course of business); or (v) any agreement, contract or commitment limiting
in any respect its ability to compete with any Person or otherwise conduct
business of any line or nature.
(r) Taxes.
(i) Except as shown in Schedule 3.1(r), each Transferred
Company, and to Seller's knowledge, each Gathering Company, has: (A)
timely filed all federal, state and local returns, declarations,
reports, estimates, information returns and statements required to be
filed by it with respect to any Taxes and in any instance where the
Transferred Company is not required to file a separate return, Seller
has included such Transferred Company in its own timely filed return
("Tax Returns"); and (B) timely paid all Taxes that are reflected on
such Tax Returns. Except as shown in Schedule 3.1(r), to Seller's
knowledge, all such Tax Returns were correct and complete in all
material respects and properly reflect any Tax Liabilities of each
Transferred Company or Gathering Company.
(ii) Except as provided in Section 4.16, with respect to any Tax
Return covering a taxable period beginning on or before the Closing
Date and ending after the Closing Date that is required to be filed
after the Closing Date with respect to the Transferred Companies,
Seller shall cause the Tax Return to be prepared, shall cause to be
included in such Tax Return all items of income, gain, loss,
deduction and credit and other tax items of the Transferred Companies
which are required to be included therein, shall file timely such Tax
Return with the appropriate taxing authority, and shall be
responsible for the timely payments (and entitled to any refund) of
all Taxes due with respect to the period covered by such Tax Return;
provided, however, that Seller shall be entitled to reimbursement
from Purchaser with respect to any liability for Taxes that relates
to any taxable period, or portion thereof, after the Closing Date.
(iii) To Seller's knowledge, no audits or other administrative
or court proceedings are presently pending with regard to any
federal, state or local Taxes for which a Transferred Company or
Gathering Company would be liable. To Seller's knowledge, there are
no pending requests for rulings from any taxing authority, no
outstanding subpoenas or requests for information by any taxing
authority with respect to any Taxes, no proposed reassessments by any
taxing authority of any property owned or leased, and no agreements
in effect to extend the time to file any Tax Return or the period of
limitations for the assessment or collection of any material Taxes
for which a Transferred Company or Gathering Company would be liable.
There are no Liens (other than Permitted Liens) on any assets of any
Transferred Company resulting from the failure of that
Purchase and Sale Agreement
Page 19
Transferred Company to pay any Taxes. Each Transferred Company has,
and to Seller's knowledge, each Gathering Company has, withheld and
paid all Taxes required to have been paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
member or any third party.
(s) Brokers. No broker, finder, investment banker or other Person is
or will be, in connection with the transactions contemplated by this
Agreement, entitled to any other brokerage, finder's or other fee or
compensation based on any arrangement or agreement made by or on behalf of
Seller
(t) Related Transactions. Except as set forth on Schedule 3.1(t),
there are no agreements, instruments, commitments, extensions of credit,
indebtedness, Tax sharing or allocation agreements or other contractual
agreements of any kind between or among a Transferred Company and Seller,
or any Affiliate of Seller or a Transferred Company, which require any
payment by a Transferred Company to an Affiliate or any payment by an
Affiliate of a Transferred Company to a Transferred Company.
(u) Year 2000 Readiness. The Covered Systems are Year 2000 Ready.
(v) Environmental Compliance. Except as set forth in Schedule 3.1(v):
(i) Each Transferred Company is on the date of this Agreement
and has been and will be on the Closing Date in compliance with
Environmental, Laws in all material respects, and to the knowledge of
Seller, each Gathering Company is and has been and will be on the
Closing Date in compliance with all Environmental Laws in all
material respects;
(ii) Each Transferred Company, and, to Seller's knowledge, each
Gathering Company, has made all notices and obtained all material
permits, licenses and registration required by Environmental Laws, or
has submitted applications for them, and is in material compliance
with their terms and conditions;
(iii) No Governmental Authority or any third person has made any
environmental claim against a Transferred Company or, to Seller's
knowledge, a Gathering Company, including the filing of any lawsuit,
the commencement of any administrative action or proceeding, or the
issuance of any order, decree, consent agreement or notice of
violation, and, to Seller's knowledge, no such claim is threatened;
(iv) No Hazardous Materials that have been generated or
transported by a Transferred Company, or to Seller's knowledge, a
Gathering Company, have been disposed of at a site which at the time
of the Closing is on the National Priorities List, the CERCLIS or any
analogous list of State Superfund sites, nor has a Transferred
Company or, to Seller's knowledge, a Gathering Company, received
notice that any Governmental Authority claims or, to Seller's
knowledge, threatens to claim, that a Transferred Company or a
Gathering
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Page 20
Company is a potentially responsible party in connection with a
cleanup authorized by CERCLA; and
(v) To the Seller's knowledge, there have been no material
releases of Hazardous Materials to surface waters or groundwater by a
Transferred Company or a Gathering Company in violation of
Environmental Laws.
THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE SELLER CONTAINED IN THIS
SECTION 3.1 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND THE SELLER EXPRESSLY
DISCLAIMS ANY AND ALL SUCH OTHER WARRANTIES. EXCEPT AS SET FORTH IN THIS
AGREEMENT OR ANY DOCUMENT, AGREEMENT OR CERTIFICATE TO BE DELIVERED AT THE
CLOSING. (A) THE SELLER SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, OR
RELATING TO THE TITLE, CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE OR FITNESS FOR ANY PURPOSE OR AS TO MERCHANTABILITY WITH RESPECT TO ANY
TRANSFERRED COMPANY OR GATHERING COMPANY OR ITS ASSETS; AND (B) THE SELLER MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO
THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS,
INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE
AVAILABLE TO PURCHASER IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OR
HYDROCARBON RESERVES (IF ANY) IN THE AREA OF ANY OF THE ASSETS OF ANY
TRANSFERRED COMPANY OR THE ABILITY OR POTENTIAL OF ANY OF THE ASSETS OF ANY
TRANSFERRED COMPANY TO GATHER SUCH HYDROCARBONS OR ANY OTHER MATTERS CONTAINED
IN THE DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO PURCHASER BY
THE SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES OR BY ANY OTHER PARTY.
3.2 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
(a) Organization of Purchaser. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Authority for Transaction. Purchaser has full power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable
principles, regardless of whether enforceability is considered in a
proceeding at law or in equity. Except for filings under the HSR Act,
Purchaser is not required to give any notice to, make any
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Page 21
filing with or obtain any authorization, consent or approval of any
Governmental Authority in order to consummate the transactions
contemplated by this Agreement.
(c) Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) subject to compliance with the HSR Act, violate any statute,
regulation, rule, injunction, judgment, order, decree, any ruling, charge
or other restriction of any Governmental Authority or court to which
Purchaser is subject or any provision of Purchaser's charter document; or
(ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to
which Purchaser is a party or by which Purchaser is bound.
(d) Consents and Approvals. No consent, approval, order or
authorization of, registration, declaration or filing with, or permit
from, any Governmental Authority or any other Person is required by or
with respect to Purchaser in connection with the execution and delivery of
this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated hereby except for filings to be made under the
HSR Act.
(e) Litigation. There is no litigation, proceeding or investigation
pending or, to the knowledge of Purchaser, threatened against or affecting
Purchaser that questions the validity or enforceability of this Agreement
or any other document, instrument or agreement to be executed and
delivered by Purchaser in connection with the transactions contemplated
hereby.
(f) Brokers' Fees. Purchaser has no Liability or obligation to pay
any brokerage or finder's fee or commission to any broker, finder,
investment banker or other Person with respect to the transactions
contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Public Announcements. Each Party will consult with the other
Party before issuing any press release with respect to the transactions
contemplated by this Agreement and shall not issue any press release prior to
obtaining the approval of the other Party; provided, however, that such approval
shall not be required where such release or announcement is required by
applicable law, securities regulations or rules of an applicable stock exchange;
and provided further, that the Parties will consult each other and give
reasonable cooperation to the other Party with respect to the content of any
such press releases.
4.2 Payment of Expenses. The Parties to this Agreement shall each
bear their own expenses incurred in connection with the transactions
contemplated herein, except that Purchaser shall pay all fees related to filings
required under the HSR Act.
4.3 Further Assurances. Seller and Purchaser agree that from time to
time, whether at or after the Closing Date, they will execute and deliver such
further instruments of
Purchase and Sale Agreement
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conveyance and transfer and take such other action as the other Parties may
reasonably request in order more effectively to consummate the transactions
contemplated by this Agreement.
4.4 Employee Matters.
(a) Administrative Services Agreement. Purchaser shall cause the
Management Company to enter into the Administrative Services Agreement
with Purchaser at the Closing.
(b) Employment. Purchaser shall cause the Management Company to make
offers of employment to certain employees of Seller. The offer of
employment by the Management Company will be effective on the first day of
the month following the Closing Date, at no less than 100% of the
employee's current base salary on the Closing Date (including the
incentive structure described in Section 4.4(d) below), with substantially
equivalent responsibilities, headquartered in the Denver, Colorado office
or such other location as specified in the offer of employment, and with
an aggregate value of fringe benefits that are substantially equivalent to
benefits maintained by Seller for such employees immediately prior to the
Closing Date.
(c) Employee Benefit Plans. Purchaser shall cause the Management
Company to procure or maintain for Seller's employees who accept offers of
employment with the Management Company (the "Transferred Employees") the
existing Enron Corp. employee benefit plans for such Transferred Employees
that have no less than a substantially equivalent aggregate value of
benefits and coverage as the benefit plans that are maintained by Seller
immediately prior to the Closing Date for the Transferred Employees.
(d) Incentive Structure. The Management Company will implement an
incentive compensation program, as described in the Administrative
Services Agreement, to encourage the Transferred Employees to develop new
business opportunities, develop Purchaser's existing assets, and
contribute to the financial performance of Purchaser.
4.5 Conduct of Business Pending Closing. Subject to Section 4.6 and
the constraints of the Operating Agreements and other existing agreements, from
the date hereof through the Closing Date, except as disclosed in Schedule 4.5 or
as otherwise consented to or approved by Purchaser (which consent or approval
shall not be unreasonably withheld or delayed), Seller covenants and agrees
that:
(a) Changes in Business. Seller shall cause each Transferred Company
to comply with the following:
(i) each Transferred Company shall not make any material change
in the conduct of its business or operations;
(ii) except in the ordinary course of business and consistent
with past practices, each Transferred Company shall not enter into,
assign, terminate, or amend, in any material respect, any Material
Agreement;
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(iii) each Transferred Company shall not:
(a) declare or pay any dividends or make any distributions
in respect of, or issue any of, its equity securities or
securities convertible into its equity securities, or
repurchase, redeem, or otherwise acquire any such securities or
make or propose to make any other change in its capitalization;
except that on or before the Closing Date, Seller shall have the
right to cause each Transferred Company to dividend to Seller
any or all of the cash, except the Reserve Account, held by such
Transferred Company which dividends shall be reflected in the
Closing Statement and the revised Closing Statement prepared
pursuant to Section 2.5;
(b) merge into or with or consolidate with any other
corporation or acquire all or substantially all of the business
or assets of any corporation or other Person;
(c) make any change in its Certificate of Formation or
Operating Agreement; and
(d) purchase any securities of any corporation or other
Person, except for investments made in the ordinary course of
business and consistent with prior practices;
(iv) other than pursuant to the requirements of existing
contracts or commitments, each Transferred Company shall not sell,
lease, or otherwise dispose of any of its assets, except for (a)
assets sold, leased, or otherwise disposed of in the ordinary course
of business, (b) the sale or disposition of any item of personal
property or equipment having a value of less than $100,000, and (c)
the pledge by EWR of its membership interests in Lost Creek under the
EWR Pledge Agreement; and
(v) each Transferred Company shall not take any action or enter
into any commitment with respect to or in contemplation of any
liquidation, dissolution, recapitalization, reorganization, or other
winding up of its business or operations.
(b) Liens. Seller shall not, and will cause each Transferred Company
not to, grant any express lien or security interest on any assets of each
Transferred Company, except to the extent (i) required or permitted
incident to the operation of the assets of each Transferred Company and
the business of each Transferred Company, (ii) required or evidenced by
any Material Agreements, and (iii) required under the EWR Pledge
Agreement.
(c) Operations. Seller shall:
(i) cause each Transferred Company's assets to be maintained and
operated in the ordinary course of business in accordance with each
Transferred Company's past practices (including the repair or
replacement of damaged,
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destroyed, obsolete, depreciated, non-working, or non-economical
items of equipment or other personal property), maintain insurance
now in force with respect to such Transferred Company's assets, and
pay or cause to be paid all costs and expenses in connection
therewith promptly when due;
(ii) cause each Transferred Company to use its reasonable
efforts to maintain its relationships with suppliers, customers, and
others having material business relations with each Transferred
Company with respect to its assets so that they will be preserved for
Purchaser on and after the Closing Date; and
(iii) cause EPR to vote in favor of the expansion of the
existing gathering system of Fort Union if a vote is taken by the
members of Fort Union on such matter prior to the Closing Date.
4.6 Qualifications on Conduct. Seller and each Transferred Company
may take (or not take, as the case may be) any of the actions described in
Section 4.5 above if reasonably necessary under emergency circumstances (or if
required or prohibited pursuant to Law) and provided Purchaser is notified as
soon thereafter as practicable.
4.7 Actions by Parties. Each Party agrees to use commercially
reasonable efforts to satisfy the conditions to Closing set forth in Article 5.
4.8 Supplement to Schedules. Seller may, from time to time prior to
the Closing, by written notice to Purchaser, supplement or amend the Disclosure
Schedule to this Agreement to correct any matter that would constitute a breach
of any representation or warranty of Seller contained in this Agreement. No such
supplement or amendment will affect the rights and obligations of the Parties
under Section 5.1 or Section 5.2 until after the Closing Date. Notwithstanding
anything in this Agreement to the contrary, if the Closing occurs, any such
supplement or amendment of any such schedule will be effective to cure and
correct for indemnification purposes any breach of any representation, warranty,
or covenant that would have existed by reason of Seller not having made such
supplement or amendment.
4.9 Access. Between the date hereof and the Closing Date, Seller
shall permit Purchaser and its representatives, during regular business hours
and upon reasonable advance notice, access to review the books and records of
Seller regarding the Transferred Companies. To the extent the books and records
of Seller with respect to the Transferred Companies do not contain information
regarding a Gathering Company that Purchaser desires to review, Seller shall use
its reasonable efforts to cause each Gathering Company to make such information
available to Purchaser.
4.10 Credit Obligation Replacement. Purchaser shall cooperate with
Seller and use all commercially reasonable efforts to provide or cause an
Affiliate of Purchaser to provide substitute credit support for the Credit
Support Obligations and to cause the release of Seller and each Affiliate of
Seller from the Credit Support Obligations on or before the Closing Date.
4.11 Name Change. Within 30 days after the Closing Date, Purchaser
shall and shall cause the Transferred Companies to cease using the trademarks,
service marks, logos, and
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trade names of Seller, including causing each Transferred Company to remove
"Enron" and "ECT" from its name.
4.12 Title Defects. On or before 90 days after the Closing Date,
Seller shall cure the title defects affecting or burdening the Completed Systems
in a manner that would generally be considered prudent by an experienced owner
of similar properties.
4.13 Lost Creek. If the Term Conversion Date under the Lost Creek
Credit Agreement does not occur on or before the Closing, Purchaser shall
execute and deliver, and cause its Affiliates to execute and deliver, all such
instruments and documents that may be required to complete the conversion from a
Construction Loan to a Term Loan under the Lost Creek Credit Agreement.
4.14 Release of Assumed Obligations. If Seller has not obtained
releases of the obligations of Seller under the Firm Gas Gathering Agreements
and the NCO Agreements on or before the Closing Date, Purchaser shall, when
reasonably requested by Seller, execute and deliver all such instruments and
documents, and take such actions, as may be reasonably required to obtain such
releases of such obligations of Seller.
4.15 Gas Imbalances -- Further Assistance. From and after the Closing
Date, Purchaser shall take all actions reasonably requested by Seller to permit
Seller to resolve the gas imbalances existing under the Firm Gas Gathering
Agreements as of the Closing Date.
4.16 Certain Tax Matters. Seller shall be responsible for and shall
pay all sales and use taxes related to the ownership and operation of the EMS
Gathering System and to periods of time prior to the Effective Date and
Purchaser shall be responsible for, and shall cause EMS to pay, all sales and
use taxes related to the ownership and operation of the EMS Gathering System and
to periods of time from and after the Effective Date.
ARTICLE V
CLOSING CONDITIONS
5.1 Seller's Closing Conditions. The obligation of Seller to proceed
with the Closing contemplated hereby is subject, at the option of Seller, to the
satisfaction on or prior to the Closing Date of all of the following conditions.
(a) Representations, Warranties and Covenants. The representations
and warranties of Purchaser contained in Section 3.2 of this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, and the covenants and agreements of Purchaser to be
performed on or before the Closing Date shall have been duly performed in
all material respects in accordance with this Agreement.
(b) Closing Documents. On or prior to the Closing Date, Purchaser
shall have delivered all agreements, instruments, and documents required
to be delivered by Purchaser under Section 2.6(b).
(c) No Action. On the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Seller or any of its
Affiliates) shall be pending or
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threatened before any court or governmental agency or body of competent
jurisdiction seeking to enjoin or restrain the consummation of the Closing
or recover damages from Seller or any Affiliate of Seller resulting
therefrom.
(d) Waiting Period. The waiting period under the HSR Act applicable
to the consummation of the transactions contemplated hereby shall have
expired or been terminated with no adverse action taken or threatened by
applicable Governmental Authorities.
(e) Purchase Price. Purchaser shall have delivered the Estimated
Adjusted Purchase Price to Seller by wire transfer in immediately
available funds.
(f) Credit Support. Purchaser shall have provided satisfactory
substitute credit support, and Seller and its Affiliates shall have been
released from, the Credit Support Obligations.
(g) Board of Directors Approval. Seller shall have received the
approval of its board of directors to the transactions contemplated by
this Agreement.
5.2 Purchaser's Closing Conditions. The obligation of Purchaser to
proceed with the Closing contemplated hereby is subject, at the option of
Purchaser, to the satisfaction on or prior to the Closing Date of all of the
following conditions.
(a) Representations, Warranties and Covenants. The representations
and warranties of Seller in Section 3.1 of this Agreement shall be true
and correct in all material respects on and as of the Closing Date, and
the covenants and agreements of Seller to be performed on or before the
Closing Date shall have been duly performed in all material respects in
accordance with this Agreement.
(b) Closing Documents. On or prior to the Closing Date, Seller shall
have delivered all agreements, instruments, and documents required to be
delivered by Seller under Section 2.6(a).
(c) No Action. On the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Purchaser or any of its
Affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to enjoin or
restrain the consummation of the Closing or recover damages from Purchaser
or any Affiliate of Purchaser resulting therefrom.
(d) Waiting Period. The waiting period under the HSR Act applicable
to the consummation of the transactions contemplated hereby shall have
expired or been terminated with no adverse action taken or threatened by
applicable Governmental Authorities.
(e) Consents. Seller shall have obtained all consents or waivers
required to sell and transfer (or cause to be transferred) the Acquired
Membership Interests to Purchaser and the terms of such consents or
waivers shall be reasonably acceptable to Purchaser.
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(f) Due Diligence Review. Purchaser shall have completed its due
diligence review of the Transferred Companies and the Gathering Companies
and the results of that review shall be reasonably satisfactory to
Purchaser.
(g) Approvals. Purchaser shall have received the Audit Committee
Approval and the approval of the Partnership Policy Committee of Northern
Border Partners, L.P.
(h) Lender Consent. Purchaser shall have received from its existing
lenders all waivers and consents necessary to consummate the transactions
contemplated by this Agreement.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND AGREEMENTS
INDEMNIFICATION AND THIRD PARTY CLAIMS
6.1 Survival. The representations, warranties, covenants, agreements,
indemnities, and other obligations of each Party in this Agreement and in any
certificate delivered in connection herewith shall survive the Closing and shall
continue in full force and effect until the second anniversary of the Closing
Date; provided, however, (i) if a bona fide claim has been asserted by written
notice of such claim delivered to the Indemnifying Person prior to the
expiration of the second anniversary of the Closing Date, the applicable
representation, warranty, covenant, indemnity or agreement with respect to which
such bona fide claim is asserted, insofar as it relates to such bona fide claim,
shall not terminate, but shall continue in full force and effect until final
resolution of such claim and any indemnification obligations with respect
thereto and (ii) if Seller has not been fully released from its obligations
under the Firm Gas Gathering Agreements and the NCO Agreements by the second
anniversary of the Closing Date, then Purchaser's indemnity obligations in
Section 6.4(ii) shall not terminate and continue in full force and effect until
the earlier of the date on which Seller obtains such release or the expiration
of the applicable statute of limitations.
6.2 Right to Indemnification Not Affected by Knowledge. The right to
indemnification in accordance with the provisions of this Article VI will not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification in accordance with the provisions of this Article
VI.
6.3 Indemnification by Seller. Except as otherwise provided in this
Article VI, Seller unconditionally, absolutely and irrevocably agrees to and
shall defend, indemnify and hold harmless Purchaser and each of its
subsidiaries, members, partners, Affiliates, officers, directors, managers,
employees, counsel, agents, contractors, successors, assigns, heirs and legal
and personal representatives (collectively referred to as the "Purchaser
Indemnitees") from and against, and shall reimburse the Purchaser Indemnitees
for, each and every Loss, including without limitation those Losses arising out
of the strict liability (including, without limitation, strict liability arising
pursuant to environmental laws) of any Person, paid, imposed on or
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incurred by the Purchaser Indemnitees, directly or indirectly, relating to,
resulting from or arising out of, or any allegation by any third party with
respect to, any inaccuracy in any representation or warranty of Seller under
this Agreement or any certificate or other agreement or document delivered or to
be delivered by Seller under this Agreement, whether or not the Purchaser
Indemnitees relied thereon or had Knowledge thereof, or any breach or
nonfulfillment of any covenant, agreement or other obligation of Seller under
this Agreement or any other agreement or document delivered or to be delivered
by Seller under this Agreement.
With respect to matters not involving proceedings brought or asserted
by third parties, within 10 days after notification from the Purchaser
Indemnitees supported by reasonable documentation setting forth the nature of
the circumstances entitling the Purchaser Indemnitees to indemnity hereunder,
Seller, at no cost or expense to the Purchaser Indemnitees, shall diligently
commence resolution of such matters and shall diligently and timely prosecute
such resolution to completion. If Seller, within 10 days after notice, fails to
diligently commence resolution of such matters, the Purchaser Indemnitees shall
have the right to undertake the resolution of such matters at the sole expense
of Seller. With respect to those claims that may be satisfied by payment of a
liquidated sum of money, including, without limitation, claims for reimbursement
of expenses incurred in connection with any circumstances entitling the
Purchaser Indemnitees to indemnity hereunder, Seller shall pay the full amount
so claimed to the extent supported by reasonable documentation within 15 days of
such resolution. If Seller disputes its liability in connection with such claim,
it shall pay any undisputed part of such liability, and the Purchaser and Seller
shall have 30 days to resolve any remaining dispute. If any proceeding is
commenced between Seller and any Purchaser Indemnitee, the prevailing party in
such proceeding shall be entitled to recover all reasonable costs and expenses
incurred in connection with proceeding, including, without limitation,
attorneys' fees. If any proceeding is commenced or threatened by any third party
for which the Purchaser Indemnitees are entitled to indemnification under this
Section 6.3, the provisions of Section 6.5 shall control.
6.4 Indemnification by Purchaser. Except as otherwise provided in
this Article VI, Purchaser unconditionally, absolutely and irrevocably agrees to
and shall defend, indemnify and hold harmless Seller and each of Seller's
Affiliates, employees, counsel, agents, contractors, successors, assigns, heirs
and legal and personal representatives (collectively referred to as the "Seller
Indemnitees") from and against, and shall reimburse the Seller Indemnitees for,
each and every Loss paid, imposed on or incurred by the Seller Indemnitees,
directly or indirectly, relating to, resulting from or arising out of (i) any
inaccuracy in any representation or warranty of Purchaser under this Agreement
or any agreement, certificate or other document delivered or to be delivered by
Purchaser under this Agreement, whether or not the Seller Indemnitees relied
thereon or had Knowledge thereof, or any breach or nonfulfillment of any
covenant, agreement or other obligation of Purchaser under this Agreement or any
agreement or document delivered by Purchaser under this Agreement, (ii) the
Assumed Obligations, and (iii) the Acquired Membership Interests, the
Transferred Companies or the Gathering Companies (whether relating to periods of
time before or after the Closing Date) to the extent such Loss was not properly
asserted by Purchaser under Section 6.3 by the dated specified in Section 6.1.
With respect to matters not involving proceedings brought or asserted by third
parties, within 10 days after notification from the Seller Indemnitees supported
by reasonable documentation setting forth the nature of the circumstances
entitling the Seller Indemnitees to indemnity hereunder, the Purchaser, at no
cost or expense to the Seller Indemnitees, shall
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diligently commence resolution of such matters and shall diligently and timely
prosecute such resolution to completion. If Purchaser, within 10 days after
notice, fails to diligently commence resolution of such matters, the Seller
Indemnitees shall have the right to undertake the resolution of such matters at
the expense of the Purchaser. With respect to those claims that may be satisfied
by payment of a liquidated sum of money, Purchaser shall pay the amount so
claimed to the extent supported by reasonable documentation within 15 days of
such resolution. If Purchaser disputes its liability in connection with such
claim, it shall pay any undisputed part of such liability, and Purchaser and
Seller shall have 30 days to resolve any remaining dispute. If any proceeding is
commenced between Purchaser and any Seller Indemnitee, the prevailing party in
such proceeding shall be entitled to recover all reasonable costs and expenses
incurred in connection with such proceeding, including, without limitation,
attorneys' fees. If any proceeding is commenced or threatened by any third party
for which the Seller Indemnitees are entitled to indemnification under this
Section 6.4, the provisions of Section 6.5 shall control.
6.5 Notice and Defense of Third-Party Claims.
(a) If any proceeding (other than a proceeding described in Section
6.5(b)) shall be brought or asserted under this Article against an
indemnified party or any successor thereto (the "Indemnified Person") in
respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "Indemnifying Person")
pursuant to any civil or regulatory proceeding, the Indemnified Person
shall give prompt written notice of such proceeding to the Indemnifying
Person who shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Person and the payment
of all expenses; provided, that any delay or failure so to notify the
Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. In no event shall any
Indemnified Person be required to make any expenditure or bring any cause
of action to enforce the Indemnifying Person's obligations and liability
under and pursuant to the indemnifications set forth in this Article. In
addition, actual or threatened action by a Governmental Authority or other
Person is not a condition or prerequisite to the Indemnifying Person's
obligations under this Article. The Indemnified Person shall have the
right to employ separate counsel in any of the foregoing proceedings and
to participate in the defense thereof, but the reasonable fees and
expenses of such counsel shall be at the expense of the Indemnified Person
unless the Indemnified Person shall in good faith determine that there
exist actual or potential conflicts of interest which make representation
by the same counsel inappropriate. The Indemnified Person's right to
participate in the defense or response to any proceeding should not be
deemed to limit or otherwise modify its obligations under this Article. In
the event that the Indemnifying Person, within 20 days after notice of any
such proceeding, fails to assume the defense thereof, the Indemnified
Person shall have the right to undertake the defense, compromise or
settlement of such proceeding for the account of and at the expense of the
Indemnifying Person, subject to the right of the Indemnifying Person to
assume the defense of such proceeding with counsel reasonably satisfactory
to the Indemnified Person at any time prior to the settlement, compromise
or final determination thereof. Anything in this Article to the contrary
notwithstanding, the Indemnifying Person shall
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not, without the Indemnified Person's prior written consent, settle or
compromise any proceeding or consent to the entry of any judgment with
respect to any proceeding.
(b) Notwithstanding the foregoing, if any proceeding shall be brought
or asserted under this Article against an Indemnified Person in respect of
which indemnity may be sought under this Article from an Indemnifying
Person pursuant to a regulatory proceeding or any criminal proceeding, the
Indemnified Person shall assume the defense thereof, including the
employment of counsel, all at the expense of the Indemnified Person. The
Indemnifying Person, at its expense, shall have the right to employ
separate counsel and participate in the defense thereof, subject to the
Indemnified Person's right to control such proceeding. The Indemnified
Person shall not, without the Indemnifying Person's prior written consent,
which will not be unreasonably withheld, settle or compromise any
proceeding or consent to the entry of any judgment with respect to any
proceeding that requires the payment of money damages.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
proceeding or claim may adversely affect it or its Affiliates other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by
notice to the Indemnifying Person, assume the exclusive right to defend,
compromise, or settle such proceeding or claim, but the Indemnifying
Person will not be bound by any determination of a proceeding or claim so
defended or any compromise or settlement effected without its consent.
6.6 Limits on Indemnity Obligations.
(a) No Indemnified Person shall be entitled to indemnification from
an Indemnifying Person pursuant to this Article VI with respect to any
Loss unless any Indemnified Person notifies such Indemnifying Party of
such Loss prior to the expiration of the survival period applicable
thereto. In the event an Indemnified Party delivers notice of any Loss
which is subject to indemnification under this Article VI prior to
expiration of the survival period, the survival period shall continue with
respect to any Loss specified in such notice, without the Indemnified
Party being required to specify the amount of such Loss.
(b) If the total amount of all Losses covered by this Article VI
which the Purchaser Indemnitees have the right to assert against Seller
does not exceed an amount equal to one percent (1%) of the Adjusted
Purchase Price (the "Deductible Amount"), then Seller shall have no
obligation under this Article VI with respect to any such Losses. If the
total amount of all of the Purchaser Indemnitees Losses exceeds the
Deductible Amount, then Seller's obligations under this Article VI shall
be limited to the amount by which the aggregate amount of all such Losses
exceeds the Deductible Amount.
(c) Seller's liability to the Purchaser Indemnitees under this
Article VI for Losses arising out of or attributable to a Transferred
Company shall not exceed the amount of the Adjusted Purchase Price
allocated to that Transferred Company under Section 2.7. Seller's total
aggregate liability to Purchaser under this Article VI or
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otherwise in connection with the Acquired Membership Interests, the
Transferred Companies or the transactions contemplated by this Agreement
shall not exceed the Adjusted Purchase Price.
(d) Notwithstanding anything contained to the contrary in any other
provision of this Agreement, Seller and Purchaser agree that the recovery
by either Party hereto of any damages suffered or incurred by it as a
result of any breach by the other Party of any of its representations,
warranties, covenants or obligations or any other matter or claim under
this Agreement shall be limited to the actual damages suffered or incurred
by the Indemnified Party as a result of the breach by the breaching Party
of its representations, warranties, covenants or obligations hereunder,
and in no event shall either Party ever be liable to the other Party for
any indirect, consequential, special, exemplary or punitive damages,
except to the extent constituting part of a third party claim suffered or
incurred by an Indemnified Party as a result of the breach or other action
or matter by the Indemnifying Party of any of its representations,
warranties, covenants or obligations hereunder.
(e) The Parties agree that the sole and exclusive remedy for any
Losses incurred in connection with or as a result of the transactions
contemplated in this Agreement shall be their rights to indemnity under
this Article VI (subject to the procedures and limitations set forth
herein).
(f) ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND
INDEMNITIES IN THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE VI, SHALL
APPLY EVEN IN THE EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY, OR OTHER FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED,
DISCLAIMED, LIMITED, OR INDEMNIFIED.
6.7 Right to Subrogation of Indemnified Party. If an Indemnifying
Party is obligated to pay any Losses arising out of its indemnification
obligations under and pursuant to the terms of this Article VI, the Indemnifying
Party shall be entitled to be subrogated to the rights of any Indemnified Party
and/or a Transferred Company (to the extent of the Indemnifying Party's
indemnity obligations that have been satisfied under this Agreement) and may
pursue (and collect on its own behalf) any and all claims with respect to such
indemnified Losses against third parties but not against a Transferred Company.
In such event, the Indemnified Party shall give, and shall cause such
Transferred Company to give, all necessary cooperation to the Indemnifying Party
in order to: (i) file (or cause to be filed) claims under all insurance policies
held by such Transferred Company in respect to any indemnified Losses, (ii)
pursue all claims for indemnification, contribution or other recoveries (whether
for breach of contract or otherwise) under agreements with third parties other
than a Transferred Company, and (iii) pursue all rights or contribution or other
recoveries afforded under applicable law (including, but not limited to,
remedies awarded under Environmental Laws) against third parties but not against
a Transferred Company. Pursuit of any and all such claims or rights of recovery
shall be at the sole cost and expense, and for the sole benefit, of the
Indemnifying Party.
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6.8 General Provisions. Purchase and Sale Agreement Page 32
(a) The amount of any Loss for which indemnification is sought
pursuant to this Article VI shall be calculated on an after tax basis,
taking into account any tax consequences (including the tax consequences
to an Indemnified Person of payments made by an Indemnifying Person under
this Article VI) which may be realized by the Indemnified Person under any
applicable law on account of the Loss.
(b) The term "proceeding" as used in this Article VI means any
action, arbitration, audit, hearing, investigation, litigation or suit
(whether civil, criminal, administrative, investigative or informal) which
is commenced, conducted or heard by or before or otherwise involving any
governmental body or arbitrator.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing:
(a) by the written mutual consent of Seller and Purchaser; or
(b) if the Closing has not occurred by the close of business on the
Closing Date, then (a) by Seller if any condition specified in Section 5.1
has not been satisfied on or before such close of business, and shall not
theretofore have been waived by Seller, or (b) by Purchaser if any
condition specified in Section 5.2 has not been satisfied on or before
such close of business, and shall not theretofore have been waived by
Purchaser; provided, in each case, that the failure to consummate the
transactions contemplated hereby on or before such date did not result
from the failure by the Party seeking termination of this Agreement to
fulfill any undertaking or commitment provided for herein on the part of
such Party that is required to be fulfilled on or prior to Closing.
7.2 Effect of Termination. In the event of termination of this
Agreement by Seller or Purchaser pursuant to Section 7.1, written notice thereof
shall promptly be given by the terminating Party to the other Party, and this
Agreement shall terminate upon receipt of such notice. If this Agreement is
terminated as provided herein, all filings, applications and other submissions
made to any Governmental Authority shall, to the extent practicable, be
withdrawn from the Governmental Authority to which they were made.
ARTICLE VIII
PARTICIPATION RIGHTS
8.1 Purchaser's Rights. If Seller or any of its wholly-owned
subsidiaries proposes to develop or acquire an interest in, directly or
indirectly, a natural gas processing plant, natural gas gathering system,
natural gas transportation pipeline, or natural gas transmission system all or
part of which is located in the Specified Geographical Area, other than (i)
natural gas sales or distribution pipelines connecting to end users or local
distribution companies or (ii) any natural gas transportation pipeline or
transmission system in the I-80 Corridor (each a "Specified Project"), then
Seller shall promptly give written notice to Purchaser describing in
Purchase and Sale Agreement
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reasonable detail the Specified Project. If Purchaser notifies Seller in writing
within ten (10) business days after receipt of Seller's notice that Purchaser
desires to participate in such Specified Project, Seller and Purchaser shall
work together in good faith for a commercially reasonable period (given the
nature of the Specified Project) to permit Purchaser the right to participate in
the asset based equity portion of the Specified Project on terms that are
acceptable to Seller and Purchaser. If after the end of such period, Seller and
Purchaser have failed to reach agreement on Purchaser's participation in such
Specified Project, Seller shall have no further obligations to Purchaser under
this Section 8.1 with respect to such Specified Project. Any Specified Project
developed by Seller as part of a transaction that is primarily a producer
finance transaction shall not be considered a Specified Project.
8.2 Seller's Rights. If Purchaser or Northern Border Partners, L.P.
or any of its wholly-owned subsidiaries proposes to develop or participate in,
directly or indirectly, a Specified Project, then Purchaser shall promptly give
written notice to Seller describing in reasonable detail the Specified Project.
If Seller notifies Purchaser in writing within ten (10) business days after
receipt of Purchaser's notice that it desires to participate in such Specified
Project, Seller and Purchaser shall work together in good faith for a
commercially reasonable period (given the nature of the Specified Project) to
permit Seller the right to participate in all gas or other energy linked
commodity transactions and producer outsourcing opportunities related to the
Specified Project, including access to gathering or transportation services, on
terms that are acceptable to Seller and Purchaser. If after the end of such
period, Seller and Purchaser have failed to reach agreement on Seller's
participation in such Specified Project, Purchaser shall have no further
obligations to Seller under this Section 8.2 with respect to such Specified
Project.
8.3 Term of Participation Rights. The participation rights created in
this Article VII shall terminate on the last day of the sixtieth (60th) month
following the Closing Date.
8.4 Certain Proprietary Rights. Except for the Conoco, Inc. Pioneer
Pipeline Company project and the Petro Source CO2 project which are either
pending or under development by Seller or Seller and Purchaser, the proprietary
rights to any Specified Project under development by Seller in the Specified
Geographical Area will be assigned to Purchaser. All proprietary rights and
information concerning any transactions outside the Specified Geographical Area
which are under development by Seller or the Transferred Employees shall remain
with Seller.
8.5 No Limitation. The provisions of this Article VIII and the
participation rights granted herein shall not limit or restrict the Seller or
Purchaser from pursuing or developing transactions outside of the Specified
Geographical Area.
ARTICLE IX
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Texas without giving
effect to the principles of conflicts of law thereof.
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9.2 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
9.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any Party
(whether by operation of law or otherwise) without the prior written consent of
the other Party; provided, however, that Purchaser may assign its rights,
interests or obligations hereunder to its Affiliates without the prior written
consent of the other Party hereto, but no such assignment shall relieve such
Purchaser from its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
9.4 Entire Agreement. This Agreement (including the Exhibits and the
Disclosure Schedule attached hereto) constitutes the entire agreement between
the Parties, and supersedes any prior understandings, agreements, arrangements
and representations between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
9.5 Notices. All notices, requests, demands, claims and other
communications required or permitted hereunder shall be in writing and shall be
sent by (a) personal delivery (effective upon delivery), or (b) registered or
certified mail, return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below (effective on the third day after being so
mailed):
If to Seller:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Ms. Xxxxxxx Xxxx
Telephone: 000-000-0000
If to Purchaser:
NBP Energy Pipelines, L.L.C.
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Mr. Xxxxxx Xxxx
Telephone: 000-000-0000
Any Party may change its address for receiving notices by giving written notice
of such change to the other Parties in accordance with this Section 9.5.
9.6 Amendment. This Agreement may be amended by the Parties at any
time only by a written instrument signed on behalf of each of the Parties.
9.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
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invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
9.8 Waivers. Subject to the remaining terms of this Agreement, the
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Any failure of a Party to comply with any obligation, covenant,
agreement or condition herein may be waived by each Party affected thereby only
by a written instrument signed by the Party granting such waiver. Except as
provided in this Agreement, no action taken pursuant to this Agreement,
including any investigation by or on behalf of either Party, shall be deemed to
constitute a waiver by the Party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by either Party hereto of a breach of any provision hereof
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provisions hereof.
9.9 Arbitration. Notwithstanding anything in this Agreement to the
contrary, all Disputes (defined below) between the Parties relating to this
Agreement shall be resolved as follows:
(a) Any claim, action, dispute or controversy of any kind arising out
of or relating to this Agreement ("Dispute") shall be resolved by
mandatory and binding arbitration administered by the American Arbitration
Association (the "AAA") pursuant to the Federal Arbitration Act (Title 9
of the United States Code) in accordance with this Agreement and the
then-applicable Commercial Arbitration Rules of the AAA. The Parties
acknowledge and agree that the transactions evidenced and contemplated
hereby involve "commerce" as contemplated in Section 2 of the Federal
Arbitration Act. If Title 9 of the United States Code is inapplicable to
any such Dispute for any reason, such arbitration shall be conducted
pursuant to the Delaware Voluntary Alternative Dispute Resolution Act
(Del. Code Xxx. Tit. 6, ss.ss.7701-21), this Agreement and the
then-applicable Commercial Arbitration Rules of the AAA. To the extent
that any inconsistency exists between this Agreement and the foregoing
statute or rules, this Agreement shall control. Judgment upon the award
rendered by the arbitrator acting pursuant to this Agreement may be
entered in, and enforced by, any court having jurisdiction, absent
manifest disregard by such arbitrator of applicable law; provided,
however, that the arbitrator shall not amend, supplement or reform in any
manner any of the rights or obligations of either Party hereunder or the
enforceability of any of the terms or provisions of this Agreement. Any
arbitration proceedings under this Agreement shall be conducted before
three (3) arbitrators (selected as set forth in Section 9.9(b) below), who
have no direct or indirect relationship with either Party or either
Party's Affiliates.
(b) The arbitration shall be conducted by three (3) arbitrators. The
Party initiating arbitration (the "Claimant") shall appoint its arbitrator
in its request for arbitration (the "Request"). The other Party or Parties
(the "Respondent") shall appoint its or their arbitrator within thirty
(30) days after receipt of the Request and shall notify the Claimant of
such appointment in writing. If the Respondent fails to appoint an
arbitrator within such thirty (30) day period, the AAA shall appoint an
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Page 36
arbitrator on behalf of the Respondent, which arbitrator shall be deemed
to have been appointed by the Respondent. The two (2) Party-appointed
arbitrators shall not be required to be neutral. The two (2)
Party-appointed arbitrators shall appoint a third arbitrator within thirty
(30) days after the appointment of the Respondent's arbitrator. When the
third arbitrator has accepted the appointment, the two (2) Party-appointed
arbitrators shall promptly notify the Parties to the Dispute of the
appointment. If the two (2) Party-appointed arbitrators fail to appoint a
third arbitrator or to notify the Parties to the Dispute within the time
period prescribed above, then the appointment of the third arbitrator
shall be made by the AAA, which shall promptly notify the Parties of the
appointment. The third arbitrator shall act as chair of the panel.
(c) Each Party shall bear its own expenses of the arbitration,
including, without limitation, fees and expenses of counsel incident to
any arbitration. The fees and expenses of the arbitrator and the AAA shall
be borne equally by the Parties to the Dispute. The arbitrator shall have
the power and authority to award expenses to the prevailing Party to the
Dispute if the arbitrator elects to do so.
(d) The ruling of the arbitrators shall be in writing and signed and
shall be final and binding upon the Parties. The fees and expenses of
counsel, witnesses and employees of the Parties and all other costs and
expenses incurred in connection with arbitration shall be allocated as
determined by the arbitrators. Judgment on the arbitration award or
decision may be entered in any court having jurisdiction.
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IN WITNESS WHEREOF, the Parties have executed this Agreement or
caused this Agreement to be executed by their duly authorized representatives as
of the date first above written.
Seller:
ENRON NORTH AMERICA CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Managing Director
--------------------------------
Purchaser:
NBP ENERGY PIPELINES, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Vice President
--------------------------------
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