Exhibit 10.8
FIRST AMENDMENT
TO
CONTRIBUTION AGREEMENT
This First Amendment to Contribution Agreement (this "AMENDMENT") is dated
as of September 23, 2002, by Enbridge Energy Company, Inc. ("EECI"), Enbridge
Energy Partners, L.P. ("MLP") and Enbridge Midcoast Energy, Inc. (the "COMPANY")
WHEREAS, EECI, MLP and the Company entered into that certain Contribution
Agreement dated as of May 16, 2002 (the "CONTRIBUTION AGREEMENT"); and
WHEREAS, EECI, MLP and the Company desire to amend the Contribution
Agreement as provided herein.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the parties hereto do hereby agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the
meanings given thereto in the Contribution Agreement.
2. Section 3.1 of the Contribution Agreement is hereby amended by deleting
the number "$929,100,000" in the first sentence of such Section and substituting
the number "$820,000,000" in lieu thereof.
3. Section 3.3(f) of the Contribution Agreement is hereby amended by (a)
deleting the period at the end of subsection (7) of such Section and
substituting the word "and" in lieu thereof, and (b) adding the following new
subsection (8):
"(8) elimination of any impairment adjustments necessitated by the
reduction in the Total Consideration pursuant to Section 2 of the
First Amendment to Contribution Agreement dated as of September __,
2002 among EECI, MLP and the Company."
4. Section 3.4 of the Contribution Agreement is hereby amended by deleting
such Section and substituting the following in lieu thereof:
"3.4 GOODWILL CLOSING ADJUSTMENT. Prior to the Closing, EECI shall
cause an independent third party to allocate, as of the Closing
Date, the Total Consideration among the Assets using the residual
method as specified under Section 1060 of the Code (the
"Appraisal"). If the value of the Midcoast Goodwill is determined by
the Appraisal to be greater than $227,500,000, then on or before the
30th day following the Closing, EECI shall pay to MLP an amount
equal to the product of (x) 0.182 multiplied by (y) the difference
between (A) $207,500,000 and (B) the actual value of the Midcoast
Goodwill determined by the Appraisal. If the value of the Midcoast
Goodwill is determined by the Appraisal to be less than
$187,500,000, then, on or before the 30th day following the Closing,
MLP shall pay EECI an amount equal to the product of (x) 0.182
multiplied by (y) the difference between (A) the actual value of the
Midcoast Goodwill determined by the Appraisal and (B) $207,500,000.
Any payment under this Section 3.4 shall be deemed an adjustment to
the Total Consideration."
5. Section 4.1(u) of the Contribution Agreement is hereby amended by
deleting such Section and substituting the following in lieu thereof:
"(u) PIPELINE SYSTEMS TITLE. To the knowledge of EECI, the Company
and/or the Company Subsidiaries have Defensible Title in and to the
Pipeline System Interests and the Pipeline System Interests on which
the Pipeline Systems are located (other than pump stations, storage
sites or work sites adjacent to or near such Pipeline Systems) are
contiguous, except (i) for such failures to have Defensible Title or
to be contiguous that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect and (ii) as
may be affected by the defects in title set forth in SCHEDULE 4.1(u)
(the "DISCLOSED TITLE DEFECTS"). To the knowledge of EECI, the
entirety of the Pipeline Systems is located on or beneath land
covered by such Pipeline System Interests, except (x) where the
failure to be so located, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, and
(y) as may be affected by the Disclosed Title Defects."
6. Section 4.1(w) of the Contribution Agreement is hereby amended by
deleting the second sentence of such Section and substituting the following in
lieu thereof:
"To the knowledge of EECI, the Company and/or the Company
Subsidiaries have Defensible Title with respect to the real property
interests described in SCHEDULE 4.1(w) and in Section 4.1(w)(iii)
above, except (x) for such failures to have Defensible Title that,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect, and (y) as may be affected by the
Disclosed Title Defects."
7. Section 4.1(x) of the Contribution Agreement is hereby amended by
deleting such Section and substituting the following in lieu thereof:
"(x) LICENSES; PERMITS. Each member of the Company Group has all
licenses, permits and authorizations (other than licenses or permits
for the use of land) issued or granted by any Governmental Authority
that are necessary for the conduct of its business in accordance
with Law, except (i) where the failures to have any such licenses,
permits and authorizations, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect and
(ii) as may be set forth in SCHEDULE 4.1(x) (the "DISCLOSED
REGULATORY DEFECTS"). All such licenses, permits and authorizations
are validly held by the appropriate member of the Company Group
except (x) for such failures that, individually or in the
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aggregate, could not reasonably be expected to have a Material
Adverse Effect, (y) as may be affected by the Disclosed Regulatory
Defects, and (z) for any exceptions set forth in Section 4.1(i) or
on SCHEDULE 4.1(x)."
8. Section 6.1(b) of the Contribution Agreement is hereby amended by
deleting the first sentence of such Section and substituting the following in
lieu thereof:
"As of the date hereof, the current organizational structure of the
Company and the Company Subsidiaries without the Excluded
Subsidiaries is set forth in SCHEDULE 6.1A."
9. Article 9 of the Contribution Agreement is hereby amended as follows:
(a) Section 9.11 of the Contribution Agreement is hereby amended by
deleting the text of such Section and substituting the following in lieu
thereof:
"The service agreement listed in SCHEDULE 9.11 between the member of
the Company Group and EECI or an Affiliate of EECI (other than a
member of the Company Group) shall be terminated on or before
Closing, and the services covered by such agreement shall be
provided to MLP pursuant to agreements entered among EECI,
Affiliates of EECI (other than members of the Company Group) and MLP
or its designee (collectively, "NEW SERVICES AGREEMENTS") on the
same economic terms as the agreement listed in SCHEDULE 9.11."
(b) Section 9.22 of the Contribution Agreement is hereby amended by
deleting the number "$900,000,000" therefrom and substituting the number
"$805,000,000" in lieu thereof.
(c) The following new Sections 9.23 and 9.24 are added to Article 9:
"9.23 TITLE REVIEW AND CURE OF CERTAIN TITLE AND REGULATORY MATTERS.
Promptly following the Closing, EECI shall (or shall cause its
Affiliates to) perform a review of the members of the Company
Group's title to the Pipeline Systems. Upon completion of such title
review (or during such title review, at EECI's election), EECI shall
use reasonable efforts to cure or cause to be cured those types of
title defects that are included in the Title Defect Categories,
which title defects are identified (i) as the Disclosed Title
Defects, or (ii) in connection with such title review, in each case
to the extent that a reasonably prudent operator of pipeline systems
would cure such types of title defects taking into consideration the
same facts and circumstances as are existing as of the Effective
Time. EECI further covenants to cure or cause to be cured (to the
extent such matters are curable), the Disclosed Regulatory Defects.
9.24 REPORTS TO AUDIT, FINANCE AND RISK COMMITTEE. Bi-annually,
commencing as of the first scheduled meeting of the Audit, Finance
and Risk Committee of the MLP held following the Closing and
continuing
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until December 31, 2005, EECI shall provide to the Audit, Finance
and Risk Committee of MLP, a written report describing the status of
EECI's title review and title and other curative work conducted
pursuant to Section 9.23."
10. Section 13.1 of the Contribution Agreement is hereby amended as
follows:
(a) Section 13.1(a)(2)(A) is hereby amended by deleting such Section
and substituting the following in lieu thereof:
"(A) under Sections 9.6, 9.7, 9.13, 9.15 and 9.24 and Xxxxxxxx 00,
00, 00, 00 (xxxxx than Sections 15.2(c), 15.2(d) and Section
15.2(e)) and 17 shall survive indefinitely or for such shorter
period as may be stipulated in such provisions;"
(b) Section 13.1(a)(2)(B) is hereby amended by deleting the word
"and" at the end of such Section.
(c) The following language is hereby added after the end of Section
13.1(a)(2)(C):
"(D) under Section 9.23 shall survive until the day that is three
years from the Effective Time; and
(E) under Section 15.2(e) shall survive until the day that is eight
years from the Effective Time."
11. Section 15.2 of the Contribution Agreement is hereby amended by (a)
deleting the word "and" at the end of Section 15.2(c) and substituting a comma
in lieu thereof, and (b) deleting the period at the end of Section 15.2(d) and
adding the following in lieu thereof:
", and (e) all claims, actions, suits or proceedings asserted or
instituted against any MLP Indemnified Person by a third Person
(other than any MLP Indemnified Person or EECI Indemnified Person)
that arise out of any of (i) the Title Defect Categories with
respect the Pipeline Systems or other Assets, or (ii) Disclosed
Regulatory Defects."
12. Section 15.4(a) of the Contribution Agreement is hereby amended by
deleting such Section and substituting the following in lieu thereof:
"(a) Notwithstanding anything herein provided to the contrary, EECI
shall have no Liability to MLP or any other MLP Indemnified Person
pursuant to Sections 15.2(a) or for any breach by EECI of this
Agreement, except with respect to Liabilities arising by virtue of
any breach by EECI of its representations and warranties under
Section 4.1(e) and 4.1(r) and Liabilities arising under any of
Sections 9.5, 9.6, 9.15, 9.23, 9.24, 15.2(b), 15.2(c), 15.2(d),
15.2(e) or Article 10, unless and until the aggregate amount of all
Liabilities covered by Section 15.2, exceeds the sum of
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$20,000,000. EECI shall be liable in accordance with the other terms
of this Agreement for those Liabilities in excess of $20,000,000
subject to the further provisions of this Section 15.4. EECI shall
be liable for all Liabilities arising by virtue of any breach by
EECI of its representations and warranties under Sections 4.1(e) and
4.1(r) and for all Liabilities arising under Sections 9.5, 9.6,
9.15, 9.23, 9.24, 15.2(b), 15.2(c), 15.2(d), 15.2(e) and Article
10."
13. Appendix A to the Contribution Agreement is hereby amended as follows:
(a) The defined term "Excluded Subsidiaries" is hereby amended by
deleting such term and substituting the following in lieu thereof:
""EXCLUDED SUBSIDIARIES" shall mean Arcadia/Midcoast Pipeline of New
York, LLC, Midcoast del Bajio S. de X.X. de C.V., Midcoast Anadarko
Gas Services, LLC, Midcoast Anadarko Energy Services, LLC, Midcoast
Gas Pipeline, Inc., Midcoast Energy Marketing, Inc., Midcoast Canada
Energy Services, Inc., Midcoast Canada Operating Corporation,
Midcoast Nova Scotia, G.P. Corporation, Midcoast Nova Scotia, L.P.
Corporation and The Midcoast Alberta Limited Partnership."
(b) The defined term "Excluded Liabilities" is hereby amended by
deleting such term and substituting the following in lieu thereof:
"EXCLUDED LIABILITIES" means: (i) all Liabilities of the Excluded
Subsidiaries; (ii) all Taxes for the payment of which EECI is
obligated under Article 10; (iii) all Liabilities for the payment of
which any one or more members of MLP would be liable solely by
reason of being an ERISA Affiliate of Parent or any of its other
Affiliates; (iv) all Liabilities to the extent arising out of or
attributable to any of the Company Group's use or dealing with prior
to the Closing of any logo, service xxxx, copyright, trade name or
trademark of or associated with EECI or any Affiliate of EECI or any
business of EECI or of any Affiliate of EECI, except as provided in
the license agreement entered into pursuant to Section 9.9; (v) all
indebtedness for borrowed money of EECI that is not EECI Midcoast
Debt, Midcoast Related Debt or indebtedness incurred by EECI on
behalf of MLP in EECI's capacity as general partner of MLP; (vi) all
liabilities of EECI relating to assets other than the Company
Subsidiaries and Assets (other than Liabilities arising on account
of EECI's status as general partner of MLP); (vii) all Liabilities
arising out of or relating to the Arcadia Guaranty, and (viii) all
Liabilities arising out of the failure to obtain the Required
Consents.
(c) The defined term "KPC Payment Termination Date" is hereby
amended by deleting subsection (x) therefrom and substituting the
following in lieu thereof:
"(x) the second anniversary of the Closing Date"
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(d) The following terms are hereby added (in alphabetical order) to
Appendix A:
"ARCADIA GUARANTY" shall mean that certain guaranty given by the
Company pursuant to that certain Natural Gas Pipeline Construction,
Operation and Maintenance Agreement, dated December 30, 1996, by and
between Xxxxx Metal Corporation, Arcadia/Midcoast Pipeline of New
York, LLC, the Company and Arcadia Energy Corporation.
"DISCLOSED REGULATORY DEFECTS" shall be as defined in Section
4.1(x).
"DISCLOSED TITLE DEFECTS" shall be as defined in Section 4.1(u).
"REQUIRED CONSENTS" shall mean the (a) consents required for the
transactions contemplated by this Agreement, including the
Restructuring Actions, pursuant to the following agreements: (i)
Amended and Restated Office Space Lease Agreement between the
Company and 1100 Louisiana Limited Partnership dated as of
__________, 2001 (not dated); (ii) Storage Space Lease Agreement
between the Company and 1100 Louisiana Limited Partnership dated as
of April 15, 2002; (iii) Operating Agreement of Arcadia/Midcoast
Pipeline of New York, LLC, effective as of December 30, 1996,
between the Company and Arcadia Energy Corporation; and (iv) Natural
Gas Pipeline Construction, Operation and Maintenance Agreement,
dated December 30, 1996, by and between Xxxxx Metal Corporation,
Arcadia/Midcoast Pipeline of New York, LLC, the Company and Arcadia
Energy Corporation, and (b) the consent and waiver from Calpine
under the Bamagas Contracts in connection with the conversion of
Bamagas into a limited liability company.
"TITLE DEFECT CATEGORIES" shall mean (i) the failure to obtain
consents to assign an easement/right-of-way/permit, (ii) the failure
to record a condemnation order or judgment, (iii) the expiration of
the term of an easement/right-of-way/permit, (iv) an insufficient
legal description of property covered by an
easement/right-of-way/permit, (v) the lack of authority under an
easement/right-of-way/permit to lay additional pipelines and
additional pipelines have been laid under such
easement/right-of-way/permit as of the Effective Time, (vi) the
failure to make required annual or other periodic payments pursuant
to the terms of an easement/right-of-way/permit, (vii) the failure
to have Defensible Title to an easement/right-of-way/permit
(including the failure to have an easement/right-of-way/permit), and
(viii) the failure to record in the relevant property records an
easement/right-of-way/permit.
14. Exhibit 3.3 to the Contribution Agreement is hereby amended by
deleting such Exhibit and substituting Exhibit 3.3 attached to this Amendment in
lieu thereof.
15. The Schedules to the Contribution Agreement are hereby amended as
follows:
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(a) Schedules 1.1A, 4.1(i), 4.1(k), 4.1(r)(B), 4.1(s), 4.1(x),
6.1(B) and 10.1 are hereby amended by deleting such Schedules and
substituting Schedules 1.1A, 4.1(i), 4.1(k), 4.1(r)(B), 4.1(s), 4.1(x),
6.1(B) and 10.1 attached to this Amendment in lieu thereof.
(b) Schedule 4.1(n) is hereby amended by adding the Arcadia Guaranty
to such Schedule.
(c) Schedule 4.1(u) in the form of Schedule 4.1(u) attached to this
Amendment is hereby added to the Contribution Agreement.
16. All references to the "Agreement" in the Contribution Agreement or any
other document, instrument, agreement or writing shall hereafter be deemed to
refer to the Contribution Agreement as amended hereby.
17. Except as expressly amended hereby, the Contribution Agreement shall
remain in full force and effect. The parties hereto hereby ratify and confirm
the Contribution Agreement, as hereby amended.
18. This Amendment may be executed in counterparts, and each counterpart,
when executed and delivered, shall constitute an original agreement enforceable
against all who signed it, and all separate counterparts shall constitute the
same agreement.
19. The Amendment shall be governed by and construed in accordance with
the laws of the State of Texas and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws (in each
case, without regard to principles of conflicts of laws).
IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of each
of the parties as of the day first above written.
[Remainder of page intentionally left blank.]
ENBRIDGE ENERGY COMPANY, INC.
By: /s/ XXX X. XXXXXXX
---------------------------------
Xxx X. Xxxxxxx, President
ENBRIDGE ENERGY PARTNERS, L.P.
By: Enbridge Energy Company, Inc., its
General Partner
By: /s/ XXXXX XXXXXXX
-----------------------------------
Xxxxx Xxxxxxx, Corporate Secretary
ENBRIDGE MIDCOAST ENERGY, INC.
By: /s/ XXX X. XXXXXXX
---------------------------------
Xxx X. Xxxxxxx, President
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