Exhibit 99.1
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CONTRIBUTION AGREEMENT
by and among
XXXXXXXX PETROLEUM COMPANY,
DUKE ENERGY CORPORATION
and
DUKE ENERGY FIELD SERVICES L.L.C.
Dated as of December 16, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
CONTRIBUTION TO THE COMPANY
Section 2.1 The Company.....................................................10
Section 2.2 Contribution of DEFS to the Company.............................12
Section 2.3 Contribution of the PGC Subsidiaries to the Company.............12
ARTICLE III
THE CLOSING
Section 3.1 Closing Place and Date..........................................12
Section 3.2 Closing Date Deliveries.........................................12
Section 3.3 Post-Closing Adjustment.........................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
Section 4.1 Corporate Organization..........................................14
Section 4.2 Authority; No Violation.........................................15
Section 4.3 Consents and Approvals..........................................16
Section 4.4 Permits; Compliance with Applicable Law.........................16
Section 4.5 Financial Statements; Undisclosed Liabilities...................17
Section 4.6 Broker's Fees...................................................17
Section 4.7 Absence of Certain Changes or Events............................17
Section 4.8 Legal Proceedings...............................................18
Section 4.9 [Intentionally omitted].........................................18
Section 4.10 Contracts.......................................................19
Section 4.11 Real Property...................................................20
Section 4.12 Environmental Matters...........................................21
Section 4.13 Intellectual Property...........................................22
Section 4.14 Employee Benefit Plans..........................................22
Section 4.15 Labor Relations.................................................23
Section 4.16 Transactions with Affiliates....................................23
Section 4.17 Personal Property...............................................24
Section 4.18 Year 2000.......................................................24
Section 4.19 Insurance.......................................................24
Section 4.20 Public Utility Holding Company Act..............................24
Section 4.21 Sufficiency of Contribution.....................................24
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DUKE
Section 5.1 Corporate Organization..........................................25
Section 5.2 Authority; No Violation.........................................26
Section 5.3 Consents and Approvals..........................................27
Section 5.4 Permits; Compliance with Applicable Law.........................27
Section 5.5 Financial Statements; Undisclosed Liabilities...................27
Section 5.6 Broker's Fees...................................................28
Section 5.7 Absence of Certain Changes or Events............................28
Section 5.8 Legal Proceedings...............................................29
Section 5.9 [Intentionally omitted].........................................29
Section 5.10 Contracts.......................................................29
Section 5.11 Real Property...................................................31
Section 5.12 Environmental Matters...........................................32
Section 5.13 Intellectual Property...........................................33
Section 5.14 Employee Benefit Plans..........................................33
Section 5.15 Labor Relations.................................................34
Section 5.16 Transactions with Affiliates....................................34
Section 5.17 Personal Property...............................................34
Section 5.18 Year 2000.......................................................35
Section 5.19 Insurance.......................................................35
Section 5.20 Public Utility Holding Company Act..............................35
Section 5.21 The Company.....................................................35
Section 5.22 Sufficiency of Contribution.....................................35
ARTICLE VI
COVENANTS
Section 6.1 Investigation of Business; Access to Properties and Records......36
Section 6.2 Consents and Approvals...........................................37
Section 6.3 Further Assurances...............................................38
Section 6.4 Conduct of the Xxxxxxxx Gas Business.............................38
Section 6.5 Conduct of the Duke Gas Business.................................40
Section 6.6 Preservation of Business.........................................41
Section 6.7 Public Announcements.............................................42
Section 6.8 PGC Easements....................................................42
Section 6.9 Assignment of Contracts, Leases, Permits, etc....................48
Section 6.10 Corporate Names..................................................49
Section 6.11 D&O Indemnification..............................................50
Section 6.12 Additional Agreements............................................50
Section 6.13 Expenses.........................................................50
Section 6.14 Insurance........................................................51
Section 6.15 Guaranties.......................................................51
Section 6.16 Actions by Affiliates of Xxxxxxxx and Xxxx.......................52
Section 6.17 Financing........................................................52
Section 6.18 PGC Real Property................................................52
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Section 6.19 DEFS Real Property...............................................56
Section 6.20 FCC Licenses; Radio Towers.......................................56
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Duke's Obligation to Close.........................57
Section 7.2 Conditions to Xxxxxxxx' Obligation to Close......................58
ARTICLE VIII
TERMINATION
Section 8.1 Termination......................................................59
Section 8.2 Procedure and Effect of Termination..............................60
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Indemnification by Company.......................................60
Section 9.2 Indemnification by Duke and Xxxxxxxx.............................60
Section 9.3 Indemnification Procedure........................................61
Section 9.4 Survival.........................................................63
Section 9.5 Indemnification Limitation.......................................63
Section 9.6 Materiality Qualifiers...........................................64
ARTICLE X
EMPLOYEE MATTERS
ARTICLE XI
TAX MATTERS
ARTICLE XII
MISCELLANEOUS
Section 12.1 Counterparts....................................................64
Section 12.2 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.....65
Section 12.3 Entire Agreement................................................65
Section 12.4 Expenses........................................................65
Section 12.5 Notices.........................................................66
Section 12.6 Successors and Assigns..........................................67
Section 12.7 Headings; Definitions...........................................67
Section 12.8 Amendments and Waivers..........................................67
Section 12.9 Schedules.......................................................67
Section 12.10 Severability....................................................68
Section 12.11 Interpretation..................................................68
Section 12.12 Specific Performance............................................68
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ANNEXES
Annex A Employee Matters Annex
Annex B Tax Matters Annex
CONTRIBUTION AGREEMENT (this "AGREEMENT"), dated as of December 16,
1999, by and among XXXXXXXX PETROLEUM COMPANY, a Delaware corporation
("XXXXXXXX"), XXXX ENERGY CORPORATION, a North Carolina corporation ("DUKE") and
DUKE ENERGY FIELD SERVICES L.L.C., a Delaware limited liability company (the
"COMPANY").
RECITALS:
WHEREAS, Xxxxxxxx and Xxxx (each, a "PARTY") desire to combine
certain of their continental United States and Canadian midstream natural gas
gathering, processing and marketing operations in the Company in order to
realize synergies and increase the efficiency and profitability of such
operations;
WHEREAS, each of Xxxxxxxx and Duke intend that the Company shall be
the primary vehicle by which each Party conducts midstream natural gas gathering
and processing operations in the continental United States and Canada;
WHEREAS, Xxxxxxxx and Xxxx desire to create a structure pursuant to
which Xxxxxxxx and Duke shall, directly or through direct or indirect
wholly-owned subsidiaries, initially own 30.3% and 69.7%, respectively, of the
voting and economic interests of the Company, into which each of Xxxxxxxx and
Xxxx shall contribute certain subsidiaries engaged in midstream gas gathering,
processing and marketing operations in the continental United States and Canada,
all as more fully provided for herein;
WHEREAS, the parties hereto, simultaneously with the execution of
this Agreement, shall enter into the Governance Agreement, dated as of the date
hereof (the "GOVERNANCE AGREEMENT");
WHEREAS, Xxxxxxxx and Duke contemplate that if market conditions
permit, an Affiliate of the Company will conduct an initial public offering of
certain of its equity securities as soon as practicable after consummation of
the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"ACTUAL NET WORKING CAPITAL" shall have the meaning set forth in
Section 3.3(c).
"ADDITIONAL LINE PARTY" shall have the meaning set forth in
Section 6.8(i).
"AFFILIATE" shall mean, with respect to any Person, a Person
directly or indirectly Controlling, Controlled by, or under common Control with
such Person.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"AMENDED LLC AGREEMENT" shall have the meaning set forth in
Section 2.1(a).
"ASSIGNABLE PGC LEASES" shall have the meaning set forth in
Section 6.18(b)(i).
"BASKET" shall mean (a) with respect to Duke's obligation under
Article IX, $75,000,000, and (b) with respect to Xxxxxxxx' obligation under
Article IX, $50,000,000.
"BENEFICIALLY OWN" shall mean, with respect to any security, having
or sharing the power to direct or control the voting or disposition of such
security.
"BENEFICIAL OWNER" shall mean, with respect to any security, a
Person who Beneficially Owns such security, and "BENEFICIAL OWNERSHIP" has a
corresponding meaning.
"BUSINESS DAY" shall mean any day on which banks are generally open
to conduct business in the State of New York.
"CANROCK" shall mean the Canrock division of Duke Energy Services
Canada, Ltd., an Alberta corporation.
"CAP" shall mean (a) with respect to Duke's obligation under Article
IX, $600,000,000, and (b) with respect to Xxxxxxxx' obligation under Article IX,
$400,000,000.
"CLAIM NOTICE" shall have the meaning set forth in Section 9.3(a).
"CLAIMS" shall mean any rights, demands, claims, actions and causes
of action (whether for personal injuries or property, consequential or other
damages of any kind).
"CLOSING" shall have the meaning set forth in Section 3.1.
"CLOSING DATE" shall have the meaning set forth in Section 3.1.
"CODE" shall mean the United States Internal Revenue Code of 1986,
as amended.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPANY INTERESTS" shall mean limited liability company
interests in the Company.
"CONTROL" shall mean the possession, directly or indirectly, through
one or more intermediaries, by any Person or group (within the meaning of
Section 13(d)(3) under the Exchange Act) of both of the following:
(a) (i) in the case of a corporation, Beneficial Ownership of more
than 25% of the outstanding equity securities thereof, (ii) in the case of a
limited liability company,
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partnership, limited partnership or venture, the right to more than 25% of the
distributions therefrom (including liquidating distributions); (iii) in the case
of a trust or estate, including a business trust, more than 25% of the
beneficial interest therein; and (iv) in the case of any other entity, more than
25% of the economic or beneficial interest therein; and
(b) in the case of any entity, the power or authority, through
ownership of voting securities, by contract or otherwise, to control or direct
the management and policies of the entity.
"CONTROLLED GROUP LIABILITY" shall have the meaning set forth in
Section 4.14(d).
"CORPORATION" shall have the meaning set forth in Section 3.2 of
the Governance Agreement.
"DAMAGES" means claims, liabilities, damages, penalties, judgments,
assessments, losses, costs and expenses, including reasonable attorneys' fees
and expenses, incurred by the party seeking indemnification under this
Agreement, net of (a) any insurance proceeds which such party receives in
respect of such matter net of any costs incurred by such party in the nature of
increased insurance premiums or similar costs related to such recovery
(determined on a reasonable present value basis) and (b) any indemnity payments
(less costs of collection thereof) which such party receives from parties other
than the party against whom such claim is asserted under this Agreement.
"DEFS" shall mean Duke Energy Field Services, Inc., a Delaware
corporation and a direct wholly-owned Subsidiary of DEFS Holding.
"DEFS CORPORATE SUBSIDIARIES" shall have the meaning set forth in
Section 2.1(b).
"DEFS EASEMENTS" shall have the meaning set forth in Section
5.11(c).
"DEFS EMPLOYEE" shall have the meaning set forth in Annex A.
"DEFS HOLDING" shall mean DEFS Holding Corp., a Delaware
corporation.
"DEFS INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 5.13(a).
"DEFS LEASES" shall have the meaning set forth in Section 5.11(b).
"DEFS LLC SUBSIDIARIES" shall have the meaning set forth in
Section 2.1(b).
"DEFS MATERIAL CONTRACTS" shall have the meaning set forth in
Section 5.10(a).
"DEFS MULTIPLE-USER EASEMENTS" shall mean those multiple-line rights
easements on which one or more lines are currently being used by Duke (or a Duke
Retained Affiliate) and one or more lines are currently being used by DEFS or a
DEFS Subsidiary.
"DEFS-OWNED FEE PROPERTIES" shall have the meaning set forth in
Section 5.11(a).
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"DEFS SEPTEMBER 30 BALANCE SHEET" shall have the meaning set forth
in Section 5.5.
"DEFS SEPTEMBER 30 FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 5.5.
"DEFS SUBSIDIARY" or "DEFS SUBSIDIARIES" shall have the meaning set
forth in Section 5.1(b).
"DESIGNATED REPRESENTATIVES" shall have the meaning set forth in
Section 6.1(a).
"DETTCO" shall have the meaning set forth in Section 2.1(b).
"DIRECT CLAIM" shall have the meaning set forth in Section 9.3(a).
"DUKE" shall have the meaning set forth in the Preamble.
"DUKE EXCLUDED ASSETS AND LIABILITIES" shall have the meaning set
forth in Section 2.1(d).
"DUKE INDEMNIFIED PERSON" shall have the meaning set forth in
Section 9.1.
"DUKE PLANS" shall mean all material employee benefit plans
providing benefits to any DEFS Employees that are sponsored or maintained by
Duke or any of its Affiliates or to which Duke or any of its Affiliates
contributes or is obligated to contribute on behalf of DEFS Employees, including
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
any employee pension benefit plan within the meaning of Section 3(2) of ERISA
and any bonus, incentive, deferred compensation, stock purchase, stock option,
severance, change of control or fringe benefit plan.
"DUKE RETAINED AFFILIATES" shall mean, collectively, all Affiliates
of Duke other than DEFS and the DEFS Subsidiaries.
"DUKE SAVINGS PLAN" shall have the meaning set forth in Annex A.
"EASEMENT ASSIGNMENT DEADLINE" shall have the meaning set forth
in Section 6.8(d).
"EASEMENT CURATIVE ACTIONS" shall have the meaning set forth in
Section 6.8(f).
"ENVIRONMENTAL LAW" shall mean any and all principles of common law
and any and all laws, statutes, ordinances, rules, regulations, or orders of any
Governmental Entity pertaining to the protection of the environment or to
Hazardous Materials in any and all jurisdictions in which the party in question
and its Subsidiaries own property or conduct business, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, the Federal Water Pollution Control Act, the Occupational Safety and
Health Act of 1970, the Resource Conservation and Recovery Act of 1976, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Hazardous & Solid
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Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act
of 1986, the Hazardous Materials Transportation Act, the Oil Pollution Act of
1990, any state or local laws implementing or substantially equivalent to the
foregoing federal laws, and any state or local laws pertaining to the handling
of oil and gas exploration, production, gathering, and processing wastes or the
use, maintenance, and closure of pits and impoundments, and all other
environmental conservation or protection laws all as amended from time to time
from enactment or adoption through the date of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FCC LICENSES" shall mean licenses for radio and/or wireless
equipment and/or radio stations issued by the United States Federal
Communications Commission.
"FERC" shall mean the Federal Energy Regulatory Commission.
"FINANCING" shall have the meaning set forth in Section 6.17.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"GOVERNANCE AGREEMENT" shall have the meaning set forth in the
Recitals.
"GOVERNMENTAL ENTITY" shall mean any federal, state, political
subdivision or other governmental agency or instrumentality, foreign or
domestic.
"HAZARDOUS MATERIALS" shall mean: (a) any chemicals, materials or
substances defined or as included in the definition of "hazardous substances,"
"hazardous materials," "toxic substances," or words of similar import, under any
Environmental Law; (b) radioactive materials (other than naturally occurring
radioactive materials), asbestos in any form that is or could be friable,
polychlorinated biphenyls, radon, mercury, lead-based paint; (c) any petroleum
or petroleum products, natural gas or natural gas liquids; and (d) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any Governmental Entity; and (e) regulated constituents or
substances in concentrations or levels that exceed numeric or risk-based
standards established pursuant to Environmental Laws.
"HSR ACT" shall mean the United States Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
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"INDEMNIFIED PARTY" shall mean the party seeking indemnification
under Article VI or IX.
"INDEMNIFYING PARTY" shall mean the party against whom an
indemnification claim is asserted under Article VI or IX.
"IPO" shall have the meaning set forth in the Governance
Agreement.
"KNOWLEDGE" shall have the meaning set forth in Section 12.11.
"LEASE CURATIVE ACTIONS" shall have the meaning set forth in
Section 6.18(b)(v).
"LIABILITIES" shall mean liabilities and obligations of any nature,
whether known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due.
"LIEN" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, lien, charge or deposit arrangement or other arrangement
having the practical effect of the foregoing.
"MATERIAL ADVERSE EFFECT" shall mean, (a) with respect to the PGC
Subsidiaries, a material adverse effect on the business, operations, financial
condition or results of operations of the PGC Subsidiaries, taken as a whole,
and (b) with respect to any other Person, a material adverse effect on the
business, operations, financial condition or results of operations of such
Person and its Subsidiaries, taken as a whole, in each case excluding effects
reasonably attributable to the general state of the industries in which the PGC
Subsidiaries or such Person and its Subsidiaries, as applicable, operate
(including natural gas and petroleum price levels), to general economic
conditions in the United States (including prevailing interest rate and stock
market levels) or to the transactions contemplated by this Agreement or the
Governance Agreement.
"MATERIALITY REQUIREMENT" shall have the meaning set forth in
Section 9.6.
"MULTIEMPLOYER PLANS" shall have the meaning as set forth in
Section 4.14(c).
"NET WORKING CAPITAL" shall mean, with respect to the DEFS
Subsidiaries or the PGC Subsidiaries, current assets less current liabilities
(with the DEFS Subsidiaries' inventory of natural gas liquids and gas being
valued at market value, and excluding consolidated, combined, unitary and other
income tax accounts but including other tax accounts); PROVIDED, HOWEVER, that
the DEFS Subsidiaries' current assets shall be reduced by the Normal NGL and Gas
Inventory. For purposes of this calculation, (a) all items shall be determined
in accordance with GAAP, applied on a basis consistent with the DEFS September
30 Balance Sheet or the PGC September 30 Balance Sheet, as applicable, (b) both
acquisitions (i) set forth in Schedule 6.4(e) of the Xxxxxxxx' Disclosure
Schedule or Schedule 6.5(e) of the Duke Disclosure Schedule or (ii) which are
approved by Duke or Xxxxxxxx, as applicable, pursuant to Section 6.4 or 6.5
prior to the Closing Date, in each case with respect to which acquisition
documents have been executed and the closing has been consummated, shall be
excluded, and (c) the proceeds of sales of non-current assets approved by Duke
or Xxxxxxxx, as applicable, pursuant to Section 6.4 or 6.5 (with
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respect to which sales documents have been executed and the closing has been
consummated) shall be excluded.
"NET WORKING CAPITAL STATEMENT" shall have the meaning set forth in
Section 3.3(a).
"NEUTRAL FIRM" shall have the meaning set forth in Section 3.3(c).
"NON-GOVERNMENT PGC LEASE" shall mean any PGC Lease the lessor under
which is not a Governmental Entity (which term shall include, for purposes of
this definition, the U.S. Bureau of Land Management and the University of
Texas).
"NORMAL NGL AND GAS INVENTORY" shall mean $17,000,000, which
represents Duke's good faith judgment as to the normal level of NGL and gas
inventory held in the line item called "NGL and Gas Inventory" on DEFS's
inventory detail schedules.
"PARTY" shall have the meaning set forth in the Recitals.
"PERMIT" shall have the meaning set forth in Section 4.4.
"PERMITTED ENCUMBRANCES" shall mean, with respect to or upon any of
the property or assets of the PGC Subsidiaries, or the DEFS Subsidiaries, as the
case may be, whether owned as of the date hereof or thereafter, any Liens,
claims, rights (including rights of Governmental Entities), reservations,
exceptions, easements, rights-of-way, conditions, restrictions (including
restrictive covenants and zoning and land use restrictions imposed by applicable
laws, regulations and ordinances), leases, and other similar title exceptions or
encumbrances affecting such property or assets that either (a) affect such
property or assets as of the date of this Agreement and are identified with
reasonable particularity in the appropriate Disclosure Schedule, or (b) were not
incurred in the borrowing of money and, individually and in the aggregate, do
not and will not materially detract from the value of such property or assets or
materially interfere with the use in the ordinary conduct of such Person's
business or present or impose any material financial obligations not reflected
in the financial statements described in Section 4.5 or Section 5.5, as
applicable. Without limiting the generality of the foregoing definition, the
following shall constitute "Permitted Encumbrances": (x) all rights to consent
by, required notices to, filings with, or other actions by governmental entities
or authorities in connection with the sale or conveyance of such properties or
assets, if the same are customarily obtained subsequent to the transfer of
title; and (y) the terms and conditions of all easements, rights of way, and
leases included within such properties and assets, but only to the extent such
terms and conditions would be acceptable to a reasonably prudent person
acquiring those easements, rights of way and leases for the purposes for which
they have been used.
"PERSON" shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Entity.
"PGC" shall mean Xxxxxxxx Gas Company, a Delaware corporation.
"PGC DIRECT LLC SUBSIDIARIES" shall mean the PGC LLC Subsidiaries
whose limited liability company interests are directly held by PGC.
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"PGC EASEMENTS" shall have the meaning set forth in Section
4.11(c).
"PGC EMPLOYEE" shall have the meaning set forth in Annex A.
"PGC GATHERING EASEMENTS" shall have the meaning set forth in
Section 6.8(e).
"PGC INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 4.13(a).
"PGC LEASED PROPERTY" shall mean any real property demised pursuant
to a PGC Lease.
"PGC LEASES" shall have the meaning set forth in Section 4.11(b).
"PGC LLC SUBSIDIARIES" shall have the meaning set forth in
Section 2.1(c).
"PGC MATERIAL CONTRACTS" shall have the meaning set forth in
Section 4.10(a).
"PGC MEMBER PARENT" shall mean Xxxxxxxx Gas Company Shareholder,
Inc., a Delaware corporation and a wholly-owned subsidiary of Xxxxxxxx.
"PGC MULTIPLE-USER EASEMENTS" shall mean those multiple-line rights
easements on which one or more lines are currently being used by Xxxxxxxx (or a
Xxxxxxxx Retained Affiliate) and one or more lines are currently being used by a
PGC Subsidiary.
"PGC-OWNED FEE PROPERTIES" shall have the meaning set forth in
Section 4.11(a).
"PGC PARTIAL EASEMENT RIGHTS" shall have the meaning set forth in
Section 6.8(a).
"PGC PIPELINE LEASE" shall have the meaning set forth in Section
6.18(b)(viii).
"PGC SEPTEMBER 30 BALANCE SHEET" shall have the meaning set forth in
Section 4.5.
"PGC SEPTEMBER 30 FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.5.
"PGC SINGLE-USER EASEMENTS" shall mean all PGC Easements that are
(i) single-line rights easements or (ii) multiple-line rights easements on which
each and every line currently being used is being used by a PGC Subsidiary.
"PGC SUBSIDIARY" or "PGC SUBSIDIARIES" shall have the meaning set
forth in Section 4.1(b).
"PGC TRUNKLINE EASEMENTS" shall have the meaning set forth in
Section 6.8(e).
"XXXXXXXX" shall have the meaning set forth in the Preamble.
"XXXXXXXX EXCLUDED ASSETS AND LIABILITIES" shall have the meaning
set forth in Section 2.1(e).
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"XXXXXXXX INDEMNIFIED PERSON" shall have the meaning set forth in
Section 9.1.
"XXXXXXXX PARTIAL EASEMENT RIGHTS" shall have the meaning set forth
in Section 6.8(a).
"XXXXXXXX PLANS" shall mean all material employee benefit plans
providing benefits to any PGC Employees that are sponsored or maintained by
Xxxxxxxx or any of its Affiliates or to which Xxxxxxxx or any of its Affiliates
contributes or is obligated to contribute on behalf of PGC Employees, including
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
any employee pension benefit plan within the meaning of Section 3(2) of ERISA
and any bonus, incentive, deferred compensation, stock purchase, stock option,
severance, change of control or fringe benefit plan.
"XXXXXXXX RETAINED AFFILIATES" shall mean, collectively, all
Affiliates of Xxxxxxxx other than the PGC Subsidiaries.
"XXXXXXXX RETAINED EASEMENT" shall have the meaning set forth in
Section 6.8(c).
"XXXXXXXX SAVINGS PLANS" shall have the meaning set forth in
Annex A.
"REFERENCE RATE" shall have the meaning set forth in Section
3.3(e).
"RETAINED PGC LEASE" shall have the meaning set forth in Section
6.18(b)(iii).
"RETURNS" or "TAX RETURNS" shall mean returns, declarations,
statements, reports, forms, property tax renditions or other documents or
information required to be filed with or supplied to any Taxing Authority.
"SECOND REQUEST " shall have the meaning set forth in Section
6.2(c).
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARED FCC LICENSES" shall have the meaning set forth in Section
6.20(b).
"SUBJECT EASEMENT LIABILITIES" shall have the meaning set forth
in Section 6.8(c).
"SUBJECT LEASE LIABILITIES" shall have the meaning set forth in
Section 6.18(b)(iv).
"SUBSIDIARY" shall mean, when used with respect to any Person, any
corporation, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, of which such Person owns or controls,
directly or indirectly, 50% or more of the outstanding voting securities or
equivalent equity interests.
"TAX" or "TAXES" shall mean all taxes (whether federal, state, local
or foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, windfall profits, sales, use, occupation,
value added, AD VALOREM, transfer, franchise, withholding, payroll, employment,
excise, stamp, premium, capital stock, production, business and occupation,
disability, severance, or real or personal property taxes, fees, or assessments
of
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any kind whatsoever imposed by any Governmental Entity, together with any
interest or penalties imposed with respect thereto.
"TAXING AUTHORITY" shall mean any Governmental Entity having
jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section
9.3(a).
"TRADEMARKS AND LOGOS" shall have the meaning set forth in
Section 6.10.
"TRANSITION SERVICES AGREEMENT" shall have the meaning set forth
in Section 6.12.
"YEAR 2000 PROBLEM" shall mean the inability of any hardware,
software or process to recognize and correctly calculate dates or the failure of
computer systems, products or services to perform any of their intended
functions in a proper manner in connection with data containing any date.
ARTICLE II
CONTRIBUTION TO THE COMPANY
Section 2.1 THE COMPANY. (a) On or prior to the Closing Date, Duke
shall cause the limited liability company agreement of the Company to be amended
and restated in accordance with the principles set forth in the Governance
Agreement (the "AMENDED LLC AGREEMENT").
(b) On or prior to the Closing Date, Duke shall cause (i) the Class B
Subordinated Units of TE Products Pipeline, L.P. held by the Duke Energy
Transport and Trading Co., a Colorado corporation ("DETTCO") to be transferred
to a Subsidiary of Duke that is not a DEFS Subsidiary; (ii) all of the
outstanding stock or limited liability company interests of DETTCO to be
transferred to a DEFS Subsidiary; (iii) the assets and associated liabilities of
Canrock (other than intercompany indebtedness for borrowed money that Duke
elects not to transfer) to be transferred to a DEFS Subsidiary; and (iv) each
corporate Subsidiary of DEFS Holding, other than the Subsidiaries set forth in
Schedule 2.1(b)(iv) of the Duke Disclosure Schedule (such Subsidiaries listed on
the Duke Disclosure Schedule, the "DEFS CORPORATE SUBSIDIARIES"), to be merged
with and into, or converted into, a separate limited liability company organized
under the laws of the State of Delaware or such state under the laws of which
the DEFS corporate Subsidiary was organized (collectively, as merged or
converted, with any Subsidiary of DEFS Holding already in the form of a limited
liability company, the "DEFS LLC SUBSIDIARIES").
(c) On or prior to the Closing Date, Xxxxxxxx shall cause each
corporate Subsidiary of PGC to be merged with and into, or converted into, a
separate limited liability company organized under the laws of the State of
Delaware (collectively, as merged or converted, with any Subsidiary of PGC
already in the form of a limited liability company, the "PGC LLC SUBSIDIARIES").
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(d) In addition to the provisions of Section 6.10, prior to the
Closing, Duke shall, or shall cause, the assets listed in Schedule 2.1(d) of the
Duke Disclosure Schedule and associated liabilities (the "DUKE EXCLUDED ASSETS
AND LIABILITIES") to be transferred out of the DEFS Subsidiaries.
(e) In addition to the provisions of Section 6.10, prior to the
Closing, Xxxxxxxx shall, or shall cause, the assets listed in Schedule 2.1(e) of
the Xxxxxxxx Disclosure Schedule and associated liabilities (the "XXXXXXXX
EXCLUDED ASSETS AND LIABILITIES") to be transferred out of the PGC Subsidiaries.
(f) Unless otherwise agreed by the Parties prior to the Closing, at
the Closing, (i) all indebtedness for borrowed money between any DEFS
Subsidiary, on the one hand, and Duke or any of its Affiliates (excluding the
DEFS Subsidiaries), on the other hand, shall be distributed, capitalized,
discharged or otherwise canceled in a manner consistent with the pro forma
adjustments reflected in the DEFS September 30 Balance Sheet, and (ii) all
indebtedness for borrowed money between any PGC Subsidiary, on the one hand, and
Xxxxxxxx or any of its Affiliates (excluding the PGC Subsidiaries), on the other
hand, shall be distributed, capitalized, discharged or otherwise canceled in a
manner consistent with the pro forma adjustments reflected in the PGC September
30 Balance Sheet.
(g) Immediately prior to the Closing, Duke either shall make
or cause to be made a capital contribution of cash to (or the release of
accounts payable of) the DEFS Subsidiaries or shall cause the DEFS Subsidiaries
to declare and effect a dividend or distribution of cash and/or accounts
receivable such that, as of the Closing, the Net Working Capital of the DEFS
Subsidiaries (as estimated in good faith at such time by Duke) shall equal zero.
(h) Immediately prior to the Closing, Xxxxxxxx either shall make or
cause to be made a capital contribution of cash to (or the release of accounts
payable of) the PGC Subsidiaries or shall cause the PGC Subsidiaries to declare
and effect a dividend or distribution of cash and/or accounts receivable such
that, as of the Closing, the Net Working Capital of the PGC Subsidiaries (as
estimated in good faith at such time by Xxxxxxxx) shall equal zero.
(i) [Intentionally omitted]
(j) At the Closing, the Company shall accept the contributions from
Duke referred to in Section 2.2 and in consideration therefor (i) DEFS Holding
shall become a member of the Company owning 69.7% of the Company Interests and
(ii) the Company shall make the distribution to DEFS Holding contemplated in
Section 3.2(c).
(k) At the Closing, the Company shall accept the contributions from
PGC referred to in Section 2.3 and in consideration therefor (i) PGC shall
become a member of the Company owning 30.3% of the Company Interests and (ii)
the Company shall make the distribution to PGC contemplated in Section 3.2(c).
Section 2.2 CONTRIBUTION OF DEFS TO THE COMPANY. Duke shall at the
Closing cause DEFS Holding to: (i) contribute, transfer, assign and deliver to
the Company all of the outstanding limited liability company interests in DEFS
and (ii) execute and deliver the Amended LLC Agreement.
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Section 2.3 CONTRIBUTION OF THE PGC SUBSIDIARIES TO THE COMPANY.
Xxxxxxxx shall at the Closing cause PGC to (i) contribute, transfer, assign and
deliver to the Company all of the outstanding limited liability company
interests in each of the PGC Direct LLC Subsidiaries and (ii) execute and
deliver the Amended LLC Agreement.
ARTICLE III
THE CLOSING
Section 3.1 CLOSING PLACE AND DATE. The closing of the transactions
contemplated hereby (the "CLOSING") shall take place at the offices of the
Company, 000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, at 10:00 A.M.,
local time, on the fourth Business Day after the date on which all conditions to
each party's obligations hereunder have been satisfied or waived or such other
time and place upon which the parties may agree. The day on which the Closing
occurs is referred to as the "CLOSING DATE."
Section 3.2 CLOSING DATE DELIVERIES.
(a) XXXXXXXX DELIVERIES. At the Closing, Xxxxxxxx shall, or shall
cause PGC, as the case may be, to deliver the following:
(1) to Duke, the certificate required to be delivered by Xxxxxxxx
pursuant to Section 7.1(a)(3); and
(2) to the Company, an assignment of the limited liability
company interests in each PGC Direct LLC Subsidiary, in a form reasonably
satisfactory to the Parties.
(b) DUKE DELIVERIES. At the Closing, Duke shall, or shall cause DEFS
Holding, as the case may be, to deliver the following:
(1) to Xxxxxxxx, the certificate required to be delivered by Duke
pursuant to Section 7.2(a)(3); and
(2) to the Company, an assignment of the limited liability
company interests in DEFS in a form reasonably satisfactory to the Parties.
(c) COMPANY DELIVERIES. At the Closing, the Company shall deliver the
following:
(1) to PGC, (i) $1,200,000,000 in immediately available funds,
(ii) an amount equal to, and as reimbursement for, the purchase price of the
acquisition set forth in Schedule 6.4(e) of the Xxxxxxxx Disclosure Schedule if
the closing thereof has occurred prior to the Closing, and (iii) an amount equal
to, and as reimbursement for, the aggregate purchase prices of any acquisitions
by the PGC Subsidiaries approved by Duke pursuant to Section 6.4 with respect to
which the closing has occurred prior to the Closing.
(2) to DEFS Holding, (i) $1,200,000,000 in immediately available
funds, (ii) an amount equal to, and as reimbursement for, the aggregate purchase
prices of any of
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the acquisitions set forth in Schedule 6.5(e) of the Duke Disclosure Schedule
with respect to which the closing has occurred prior to the Closing, and (iii)
an amount equal to, and as reimbursement for, the aggregate purchase prices of
any acquisitions by the DEFS Subsidiaries approved by Xxxxxxxx pursuant to
Section 6.5 with respect to which the closing has occurred prior to the Closing.
Section 3.3 POST-CLOSING ADJUSTMENT. (a) Within 30 days after the
Closing, (i) Xxxxxxxx will deliver to Duke and the Company an unaudited
statement of Net Working Capital of the PGC Subsidiaries as of the Closing Date
prepared on a basis consistent with the PGC September 30 Balance Sheet
(Xxxxxxxx' "NET WORKING CAPITAL STATEMENT"), and (ii) Duke will deliver to
Xxxxxxxx an unaudited statement of Net Working Capital of the DEFS Subsidiaries
as of the Closing Date, prepared on a basis consistent with the DEFS September
30 Balance Sheet (Duke's "NET WORKING CAPITAL STATEMENT").
(b) Each Party shall provide the other Party (and, if applicable, the
Neutral Firm), upon request, prompt and reasonable access to its books and
records and other supporting information reasonably necessary for the other
Party (and, if applicable, the Neutral Firm) to verify the determination of such
Party's Net Working Capital Statement.
(c) Unless, within 45 days after receipt by a Party of the other
Party's Net Working Capital Statement, the receiving Party notifies the
delivering Party that the receiving Party does not agree with the determination
of Net Working Capital as of the Closing Date set forth in such delivering
Party's Net Working Capital Statement, such delivering Party's Net Working
Capital determination shall be final and binding on the Parties and shall be
deemed such Party's "ACTUAL NET WORKING CAPITAL." If the receiving Party
notifies the delivering Party in writing during such period that the receiving
Party does not agree with the delivering Party's Net Working Capital
determination, then the Parties shall discuss such disagreement for 15 days from
the date of such written notice and, if such disagreement is not resolved at the
end of such 15-day period, the disagreement will be submitted to Xxxxxx Xxxxxxxx
L.L.P. (the "NEUTRAL FIRM"). The Neutral Firm will review the disagreement and,
as soon as possible but in any event not later than 60 days after the
disagreement was submitted to it, the Neutral Firm shall deliver to Xxxxxxxx and
Duke its determination of the Actual Net Working Capital, which determination
shall be final and binding on the Parties and shall then be deemed such Party's
Actual Net Working Capital. The fees and expenses of the Neutral Firm will be
allocated between Xxxxxxxx and Xxxx by the Neutral Firm.
(d) After a determination of either Party's Actual Net Working Capital
shall have become final and binding on Xxxxxxxx and Duke as described in Section
3.3(b) above, (i) if such Party's Actual Net Working Capital exceeds zero, the
Company shall pay to such Party such difference, or (ii) if such Party's Actual
Net Working Capital is less than zero, such Party shall pay to the Company the
difference.
(e) The payments, together with interest thereon from and including
the Closing Date to but excluding such payment date at a rate equal to the rate
of interest from time to time announced publicly by Chase Manhattan Bank as its
prime rate (the "REFERENCE RATE"), will be made within seven days after the
determination of Actual Net Working Capital for both
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Parties has become final and binding as described above and will be made in
immediately available funds by wire transfer to an account designated by the
Person to receive the payment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
Xxxxxxxx hereby represents and warrants to each of Duke and the
Company that, except as disclosed in the Xxxxxxxx Disclosure Schedule:
Section 4.1 CORPORATE ORGANIZATION. (a) Xxxxxxxx and PGC are duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation or organization. Each of Xxxxxxxx and PGC has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction (whether federal,
state, local or foreign) in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to be
so licensed or qualified, individually or in the aggregate, would not have a
Material Adverse Effect on either Xxxxxxxx or PGC, as applicable. True and
complete copies of the certificate of incorporation and by-laws of PGC, in
effect as of the date of this Agreement, have previously been made available by
Xxxxxxxx to Xxxx.
(b) Schedule 4.1(b) of the Xxxxxxxx Disclosure Schedule sets forth a
complete list of all of the Subsidiaries of PGC (each a "PGC SUBSIDIARY" and
collectively, the "PGC SUBSIDIARIES") and their respective jurisdictions of
organization and capitalization and the organizational structure of PGC and its
Subsidiaries (without designating the names or ownership percentages of any
third party owners). All of the outstanding shares of capital stock or limited
liability company interests, as the case may be, of the PGC Subsidiaries are
validly issued, fully paid and non-assessable and are not subject to, nor were
they issued in violation of, any preemptive rights, and, except as set forth in
Schedule 4.1(b) of the Xxxxxxxx Disclosure Schedule, such shares or limited
liability company interests, as the case may be, are owned by PGC or its
wholly-owned Subsidiaries free and clear of any Lien with respect thereto. Each
PGC Subsidiary (i) is duly organized and validly existing as a corporation or
limited liability company, as the case may be, under the laws of its
jurisdiction of organization, (ii) is duly licensed or qualified to do business
and in good standing in each jurisdiction (whether federal, state, local or
foreign) in which the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified, individually or in the aggregate would not have a Material Adverse
Effect on the PGC Subsidiaries, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its business
as now conducted. Except as described above, as of the date of this Agreement
there are not, and at the Closing there will not be, any capital stock, limited
liability company interests or other equity interests in the PGC Subsidiaries
issued or outstanding or any subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character
obligating any PGC Subsidiary to issue, transfer or sell any of its capital
stock or other equity interests, or any agreements, arrangements, or
understandings granting any Person any rights in any PGC Subsidiary similar to
capital stock, limited liability company interests or other
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equity interests. Except as set forth in Schedule 4.1(b) or 4.10(a)(3) of the
Xxxxxxxx Disclosure Schedule, neither PGC nor any PGC Subsidiary holds any
interest in any corporation, partnership, joint venture or other entity.
Section 4.2 AUTHORITY; NO VIOLATION. (a) Xxxxxxxx has full corporate
power and authority to execute and deliver this Agreement and the Governance
Agreement and to consummate the transactions contemplated by this Agreement and
the Governance Agreement. The execution and delivery of this Agreement and the
Governance Agreement and the consummation of the transactions contemplated by
this Agreement and the Governance Agreement have been duly and validly approved
by all corporate action on the part of Xxxxxxxx. No other corporate proceedings
on the part of Xxxxxxxx, GPM Holding or any of the PGC Subsidiaries are
necessary to approve this Agreement or the Governance Agreement and to
consummate the transactions contemplated by this Agreement and the Governance
Agreement. This Agreement has been duly and validly executed and delivered by
Xxxxxxxx and, assuming due authorization, execution and delivery by Duke and the
Company, constitutes a valid and binding obligation of Xxxxxxxx, enforceable
against Xxxxxxxx in accordance with its terms. The Governance Agreement has been
duly and validly executed and delivered by Xxxxxxxx and, assuming due
authorization, execution and delivery by Duke and the Company, constitutes the
valid and binding obligations of Xxxxxxxx, enforceable against Xxxxxxxx in
accordance with its terms.
(b) At the Closing, (i) PGC shall have good and marketable title to
all of the issued and outstanding limited liability company interests in each
PGC Direct LLC Subsidiary and (ii) PGC or a PGC Subsidiary shall have good and
marketable title to all of the issued and outstanding limited liability company
interests in each PGC Subsidiary, in each case free and clear of any Liens,
restrictions on transfer or voting or preemptive rights. Xxxxxxxx and PGC have
the full corporate power, right and authority to transfer and convey, or cause
to be transferred and conveyed, to the Company at the Closing the limited
liability company interests in each PGC Direct LLC Subsidiary.
(c) The execution, delivery and performance of this Agreement and the
Governance Agreement by Xxxxxxxx do not, and the consummation by Xxxxxxxx of the
transactions contemplated by this Agreement and the Governance Agreement will
not, (i) constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws or other organizational documents of
Xxxxxxxx or PGC, (ii) constitute a breach or violation of, or a default under,
or trigger any "change of control" rights or remedies under, or give rise to any
Lien, any acceleration of remedies, any buy-out right or any right of first
offer or refusal or of termination under, any indenture, license, contract,
agreement or other instrument to which PGC or of any of its Subsidiaries is a
party or by which any of them or their respective properties or assets may be
bound, or (iii) assuming compliance with the applicable requirements of the HSR
Act, violate any law, rule, regulation, judgment, decree or order applicable to
Xxxxxxxx, PGC or any of the PGC Subsidiaries or any of their respective
properties or assets, except in the case of (ii) and (iii) above for such
breaches, violations, defaults, liens, accelerations or rights as would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the PGC Subsidiaries or to adversely affect the
ability of Xxxxxxxx to consummate the transactions contemplated by this
Agreement or the Governance Agreement.
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Section 4.3 CONSENTS AND APPROVALS. Except for applicable requirements
of the HSR Act, no notice to, filing with, authorization of, exemption by, or
consent or approval of, or the taking of any other action in respect of any
Governmental Entity or any other Person on the part of Xxxxxxxx, PGC or the PGC
Subsidiaries is necessary for the consummation by Xxxxxxxx, PGC or any of the
PGC Subsidiaries of the transactions contemplated by this Agreement, except
where the failure to provide such notice, make such filing, or obtain such
authorization, exemption, consent or approval would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
PGC Subsidiaries or to adversely affect the ability of Xxxxxxxx to consummate
the transactions contemplated by this Agreement or the Governance Agreement.
Section 4.4 PERMITS; COMPLIANCE WITH APPLICABLE LAW. As of the Closing
Date, each of the PGC Subsidiaries shall hold all licenses, franchises,
registrations, permits and authorizations (each, a "PERMIT") necessary for the
lawful conduct of their respective businesses under and pursuant to all, and
have complied with and are not in default under and/or in violation of any,
applicable law, statute, order, rule or regulation of any Governmental Entity
relating to any of the PGC Subsidiaries, except in each case where the failure
to hold such Permit or such noncompliance or default would not, individually or
in the aggregate, have a Material Adverse Effect on the PGC Subsidiaries. To
Xxxxxxxx' knowledge, the business of the PGC Subsidiaries is not being and has
not been conducted in violation of any applicable law or any order, writ,
injunction or decree of any Governmental Entity, except for any such violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on the PGC Subsidiaries. None of the PGC Subsidiaries has received any
notice or other communication from any Governmental Entity asserting (i) any
violation of law, statute, ordinance, order, rule or regulation, (ii) any
violation of or failure to comply with any term or requirement of any Permit, or
(iii) any revocation, withdrawal, suspension, cancellation, termination or
modification of any Permit, except for violations, failures to comply,
revocations, withdrawals, suspensions, cancellations, terminations or
modifications which would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the PGC Subsidiaries. No notice of any pending
investigation or violation of, noncompliance with or alleged liability under,
any law, statute, ordinance, order, rule, regulation or Permit has been received
by any of the PGC Subsidiaries which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the PGC
Subsidiaries.
Section 4.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Xxxxxxxx
has previously made available to Duke true, correct and complete copies of (i)
the audited consolidated balance sheets of PGC and its Subsidiaries as of
December 31, 1998 and 1997 and the related audited consolidated statements of
income and cash flows for the periods then ended and (ii) the unaudited proforma
combined balance sheet of the PGC Subsidiaries (exclusive of income taxes and
with proforma adjustments to eliminate intercompany borrowings) as of September
30, 1999 (the "PGC SEPTEMBER 30 BALANCE SHEET"), a copy of which is attached as
Schedule 4.5 of the Xxxxxxxx Disclosure Schedule, and the related unaudited
combined statement of income for the nine-month period then ended (together with
the PGC September 30 Balance Sheet, the "PGC SEPTEMBER 30 FINANCIAL
STATEMENTS").
The financial statements referred to in this Section 4.5 fairly
present (except that, in the case of the PGC September 30 Financial Statements,
such financial statements are
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incomplete in that they do not include footnotes and do include proforma
adjustments as described above, and subject, in the case of the PGC September 30
Financial Statements, to recurring audit adjustments, none of which either
individually or in the aggregate is material) the results of the consolidated
(or combined) operations and consolidated (or combined) financial positions of
PGC and its Subsidiaries or the PGC Subsidiaries (as adjusted in the manner
described above relating to the PGC September 30 Financial Statements), as the
case may be, for the respective fiscal periods or as of the respective dates
therein set forth. Each of such statements described in this Section 4.5
complies with applicable accounting requirements with respect thereto; and each
of such statements has been prepared in accordance with GAAP (except that, in
the case of the PGC September 30 Financial Statements, such statements are
incomplete in that they do not include footnotes and do include proforma
adjustments as described above) consistently applied during the periods
involved. The PGC Subsidiaries do not have any liabilities required by GAAP to
be set forth on a consolidated balance sheet of the PGC Subsidiaries, except (i)
as set forth on the PGC September 30 Balance Sheet, and (ii) for liabilities
incurred in the ordinary course of business since September 30, 1999 and which
would not have a Material Adverse Effect on the PGC Subsidiaries.
Section 4.6 BROKER'S FEES. Neither Xxxxxxxx nor any of its
Subsidiaries (including the PGC Subsidiaries) nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
the transactions contemplated by this Agreement or the Governance Agreement
which would be payable by the Company, Duke, any Duke Subsidiary or any PGC
Subsidiary.
Section 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for changes
or events consented to or approved by Duke in writing pursuant to Section 6.4,
from September 30, 1999 through the date of this Agreement, the business of the
PGC Subsidiaries has been operated in the ordinary and normal course in all
material respects and there has not been:
(a) any event (whether covered by insurance or not) which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the PGC Subsidiaries;
(b) any increase in compensation (including severance or termination
pay) payable to or to become payable to any consultants, officers, directors,
employees or agents working in connection with the business of any PGC
Subsidiary or any change in any insurance, pension or other benefit plan,
payment or arrangement made to, for or with any of such consultants, officers,
directors, employees or agents, in each case other than (i) general increases or
changes reasonably consistent with past practices and applicable to at least 10%
of the employees of Xxxxxxxx and its Subsidiaries, or (ii) other increases that
are in accordance with past practice and are not material in the aggregate;
(c) any change in financial accounting methods, principles or
practices by any PGC Subsidiary materially affecting its assets, Liabilities or
businesses, except insofar as may have been required by a change in GAAP;
(d) any indebtedness for borrowed money incurred by any of the PGC
Subsidiaries other than from Xxxxxxxx or its Affiliates, any issuance of debt
securities by any of
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the PGC Subsidiaries other than to Xxxxxxxx or its Affiliates, any assumption,
guarantee, endorsement or other action which would result in any of the PGC
Subsidiaries having responsibility for the obligations of any other Persons, or
any mortgage or encumbrance on properties or assets of any of the PGC
Subsidiaries other than Liens that do not materially restrict or detract from
the value of such properties or assets; or
(e) any declaration, setting aside or payment of any dividend or any
other similar distribution (other than in cash), directly or indirectly, with
respect to any PGC Subsidiary's securities except as permitted by Section
2.1(e), Section 2.1(f)(ii) or Section 2.1(h).
Section 4.8 LEGAL PROCEEDINGS. (a) As of the date of this Agreement,
neither Xxxxxxxx nor PGC nor any of their respective Subsidiaries is a party to
any, and there are no pending or, to Xxxxxxxx' knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against or otherwise affecting PGC or
any of its Subsidiaries which (i) would reasonably be expected to result in
material injunctive relief or in damages to PGC and its Subsidiaries in excess
of $10,000,000 in the aggregate or (ii) would adversely affect the ability of
Xxxxxxxx to consummate the transactions contemplated by this Agreement or the
Governance Agreement.
(b) As of the date of this Agreement, there are no injunctions,
orders, judgments or decrees imposed upon or otherwise affecting PGC or any of
its Subsidiaries or assets which, individually or in the aggregate, have had, or
would reasonably be expected to have, a Material Adverse Effect on the PGC
Subsidiaries.
Section 4.9 [Intentionally omitted]
Section 4.10 CONTRACTS. (a) Schedule 4.10(a) of the Xxxxxxxx
Disclosure Schedule sets forth a true and complete list as of the date of this
Agreement of all contracts, agreements and commitments of the following
categories, whether oral or written, express or implied, to which any of the PGC
Subsidiaries is party or by which any of their respective properties or assets
are bound (excluding the agreements contemplated by this Agreement or the
Governance Agreement) (collectively, the "PGC MATERIAL CONTRACTS"):
(1) any contract (other than gas purchase agreements) involving
or requiring expenditures or receipts by any PGC Subsidiary of more than
$2,000,000 in any calendar year and not cancelable or terminable within one year
from the Closing Date;
(2) any contract involving or requiring expenditures or receipts
by any PGC Subsidiary of more than $5,000,000 in any calendar year (or other
material contract) that grants a right of first refusal or a right of first
negotiation or other preferential right to a third party;
(3) any partnership or joint venture agreements with regard to
material assets of the PGC Subsidiaries;
(4) any contract containing covenants limiting the freedom of any
of the PGC Subsidiaries to engage in any line of business or compete with any
Person or operate at any location;
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(5) any contract between any of the PGC Subsidiaries, on one
hand, and any Affiliate of Xxxxxxxx (other than the PGC Subsidiaries), on the
other hand;
(6) any collective bargaining agreement;
(7) any employment, personal services, consulting,
noncompetition, severance, golden parachute or similar contract, for officers,
directors or other individuals and requiring payments by the PGC Subsidiary in
excess of $250,000 per year;
(8) any contract pertaining to the purchase, sale, processing,
treating, compression, gathering, storage, exchange, transportation or
transmission of natural gas in all its forms and all other hydrocarbons
(including liquid products, but excluding gas purchase agreements), together
with all deposits (either in products or cash) related to such contracts
involving the delivery or receipt of more than 10,000 mcf per day;
(9) any contract entered into since January 1, 1996 for the
acquisition or disposition, sale or lease of properties or assets of the PGC
Subsidiaries (by merger, purchase or sale of assets or stock or otherwise)
requiring aggregate expenditures or receipts by the PGC Subsidiaries in excess
of $10,000,000; and
(10) any commitment or agreement to enter into any of the
foregoing.
(b) As of the date of this Agreement, each PGC Material Contract is a
valid, binding and enforceable (except as such enforceability may be subject to
any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other laws, now or hereafter in effect, relating to or limiting creditors'
rights generally) obligation of the applicable PGC Subsidiary. As of the date of
this Agreement, there is no default under any PGC Material Contract by any PGC
Subsidiary or, to Xxxxxxxx' knowledge, by any other party thereto, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by any PGC Subsidiary, or to Xxxxxxxx'
knowledge, any other party, which default or event, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
PGC Subsidiaries. As of the date of this Agreement, no party to any PGC Material
Contract has given notice to any PGC Subsidiary or made a claim against any PGC
Subsidiary with respect to any breach or default thereunder which breach or
default, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect on the PGC Subsidiaries. As of the date of this
Agreement, there has been no amendment or modification of any of the PGC
Material Contracts except as specifically listed in Schedule 4.10(a) of the
Xxxxxxxx Disclosure Schedule. The enforceability of any PGC Material Contract
shall not be impaired by the execution and delivery of this Agreement or the
Governance Agreement or the consummation of the transactions contemplated hereby
or thereby, and, as of the date of this Agreement, no PGC Material Contract
requires that a transaction of the kind contemplated by this Agreement or the
Governance Agreement receive the approval of any party to such PGC Material
Contract, except where such impairments or failures to receive approvals,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the PGC Subsidiaries.
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(c) Except for certain indebtedness which shall be canceled without
liability to the PGC Subsidiaries prior to the Closing as provided in Section
2.1(f) and liabilities reflected in the PGC September 30 Balance Sheet, as of
the date of this Agreement, none of the PGC Subsidiaries is a party to any loan
agreement, mortgage, indenture, security agreement or other agreement or
instrument relating to the borrowing of money by, or any extension of credit to,
any of the PGC Subsidiaries.
(d) As of the date of this Agreement, Xxxxxxxx has delivered to Duke
or otherwise made available to Duke at the offices of Xxxxxxxx or its
Subsidiaries true, correct and complete copies of all PGC Material Contracts.
Section 4.11 REAL PROPERTY. (a) FEE PROPERTIES. Except as otherwise
set forth on Schedule 4.11(a) of the Xxxxxxxx Disclosure Schedule, as of the
date of this Agreement, the PGC Subsidiaries own beneficially all real property
listed on Schedule 4.11(a) of the Xxxxxxxx Disclosure Schedule (collectively,
the "PGC-OWNED FEE PROPERTIES") and have (or will on the Closing Date have) good
and marketable record title to each such PGC-Owned Fee Property, free and clear
of all Liens and encumbrances, except for Permitted Encumbrances. Except as
otherwise set forth on Schedule 4.11(a) of the Xxxxxxxx Disclosure Schedule,
record legal title to each PGC-Owned Fee Property is owned by the PGC
Subsidiaries, Xxxxxxxx or a Xxxxxxxx Retained Affiliate as of the date of this
Agreement. Schedule 4.11(a) of the Xxxxxxxx Disclosure Schedule identifies all
real property assets the fee title to which is owned, beneficially and/or of
record, by the PGC Subsidiaries as of the date of this Agreement and which are
material to the business of the PGC Subsidiaries.
(b) REALTY LEASES. As of the date of this Agreement, with respect to
all leases of real property of or used by the PGC Subsidiaries (collectively,
the "PGC LEASES"), (i) beneficial title to or interest in the PGC Leases is held
by the PGC Subsidiaries, and (ii) beneficial and record legal title to or
interest in the PGC Leases is owned or held by the PGC Subsidiaries, Xxxxxxxx or
a Xxxxxxxx Retained Affiliate, free and clear of Liens, encumbrances and claims
of those claiming by, through, or under Xxxxxxxx or the PGC Subsidiaries, but
not otherwise, subject to Permitted Encumbrances. Schedule 4.11(b) of the
Xxxxxxxx Disclosure Schedule identifies all leases of real property, other than
easements and rights of way, a leasehold interest in which is owned,
beneficially and/or of record, by the PGC Subsidiaries as of the date of this
Agreement and which are material to the business of the PGC Subsidiaries. Except
as otherwise set forth in Schedule 4.11(b) of the Xxxxxxxx Disclosure Schedule,
as of the date of this Agreement each of the PGC Leases is a valid, binding and
enforceable (except as such enforceability may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights generally)
obligation of each of the lessee and of the lessor under such PGC Lease. As of
the date of this Agreement, except where, individually or in the aggregate,
there would not reasonably be expected to be a Material Adverse Effect on the
PGC Subsidiaries or as otherwise set forth in Schedule 4.11(b) of the Xxxxxxxx
Disclosure Schedule, (A) the enforceability of any of the PGC Leases will not be
impaired by the execution or delivery of this Agreement or the Governance
Agreement, and (B) no PGC Subsidiary is currently participating in any
discussions or negotiations regarding termination of any PGC Lease of a property
at which such PGC Subsidiary conducts business operations prior to the scheduled
expiration of such PGC Lease by reason of a breach or alleged breach by the
tenant thereunder.
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(c) EASEMENTS. As of the date of this Agreement, with respect to
pipeline easements, rights of way, licenses and land use permits of or used by
the PGC Subsidiaries (collectively, the "PGC EASEMENTS"), beneficial and record
legal title to or interest in the PGC Easements is owned or held by a PGC
Subsidiary, Xxxxxxxx or a Xxxxxxxx Retained Affiliate, free and clear of Liens,
encumbrances and claims of those claiming by, through, or under Xxxxxxxx or the
PGC Subsidiaries, but not otherwise, subject to Permitted Encumbrances.
Section 4.12 ENVIRONMENTAL MATTERS. As of the date of this Agreement,
except for matters that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the PGC Subsidiaries, (i) the
properties, operations and activities of the PGC Subsidiaries have been and are
in compliance with all applicable Environmental Laws; (ii) the PGC Subsidiaries
are not subject to any existing, pending or, to Xxxxxxxx' knowledge, threatened,
action, suit, proceeding or remediation activity under any Environmental Law;
(iii) Hazardous Materials have not at any time been released or disposed of at
the properties currently owned, operated, leased or used by the PGC
Subsidiaries, and Hazardous Materials were not released or disposed of at
properties previously owned, operated, leased or used by the PGC Subsidiaries at
any time prior to the sale or other disposition of such previously owned
properties; (iv) the previous and current methods of releasing or disposing of
Hazardous Materials generated, used, treated, recycled or stored at, upon or
under the properties previously or currently owned, operated, leased or used by
any of the PGC Subsidiaries have been disclosed to Duke, and the PGC
Subsidiaries are not subject to any liability under applicable Environmental
Laws arising in connection with the transportation and off-site disposal of any
such Hazardous Materials; and (v) Xxxxxxxx has not restricted access for the
review of and copying by Duke all of the environmental reports, documents, data
and other information prepared by or for any of the PGC Subsidiaries relating to
the properties previously or currently owned, operated, leased or used by any of
the PGC Subsidiaries; PROVIDED, HOWEVER, that the foregoing representations, as
they apply to any property, operation, activity or PGC Subsidiary prior to the
date such property, operation, activity or PGC Subsidiary became owned or
controlled, directly or indirectly, by Xxxxxxxx, shall be limited to Xxxxxxxx'
knowledge.
Section 4.13 INTELLECTUAL PROPERTY. (a) As of the date of this
Agreement, except for the Xxxxxxxx Trademarks and Logos, PGC and its
Subsidiaries collectively have such ownership of or such rights by license or
other agreement to use all patents and patent applications, trademarks and
service marks, trademark and service xxxx registrations and applications, trade
names, logos, copyrights and copyright registrations and applications
technology, know-how, processes and other intellectual property rights, United
States or foreign (collectively, the "PGC INTELLECTUAL PROPERTY"), as are
necessary to permit the PGC Subsidiaries to conduct their business as currently
conducted, except where the failure to have such ownership, license or right to
use would not, individually or in the aggregate, have a Material Adverse Effect
on the PGC Subsidiaries.
(b) As of the date of this Agreement, (i) to Xxxxxxxx' knowledge,
neither the use of the PGC Intellectual Property nor the conduct of the business
of the PGC Subsidiaries as currently conducted infringes the intellectual
property rights of any third party and there are no present or threatened
infringements of the PGC Intellectual Property by any third party, except, in
either case, for such infringements which would not, individually or in the
aggregate, have a Material Adverse Effect on the PGC Subsidiaries; and
(ii) there are no pending or, to Xxxxxxxx'
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knowledge, threatened proceedings or litigation or other adverse claims by any
person relating to the use by any of the PGC Subsidiaries of any PGC
Intellectual Property or any third party intellectual property.
Section 4.14 EMPLOYEE BENEFIT PLANS. (a) Schedule 4.14(a) of the
Xxxxxxxx Disclosure Schedule includes a complete list of all Xxxxxxxx Plans that
are in effect as of the date of this Agreement. None of the Xxxxxxxx Plans
listed in Schedule 4.14(a) of the Xxxxxxxx Disclosure Schedule is sponsored or
maintained by any PGC Subsidiary.
(b) As of the date of this Agreement, with respect to each Xxxxxxxx
Plan listed in Schedule 4.14(a) of the Xxxxxxxx Disclosure Schedule, Xxxxxxxx
has delivered or made available to Duke a true, correct and complete copy of all
plan documents and the current summary plan description.
(c) As of the date of this Agreement, no Xxxxxxxx Plans listed in
Schedule 4.14(a) of the Xxxxxxxx Disclosure Schedule are "multiemployer plans"
within the meaning of Section 4001(a)(3) of ERISA ("MULTIEMPLOYER PLANS"). None
of the PGC Subsidiaries or any of their respective ERISA Affiliates has, at any
time during the last six years, contributed to or been obligated to contribute
to any Multiemployer Plan, and none of the PGC Subsidiaries or any of their
respective ERISA Affiliates has incurred any withdrawal liability under Part I
of Subtitle E of Title IV of ERISA that has not been satisfied in full.
(d) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of any
of the PGC Subsidiaries following the Closing. "CONTROLLED GROUP LIABILITY"
means any and all liabilities (i) under Title IV of ERISA, (ii) under Section
302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a result of
a failure to comply with the continuation coverage requirements of Section 601
ET SEQ. of ERISA and Section 4980B of the Code and (v) under corresponding or
similar provisions of foreign laws or regulations.
(e) Except as specifically provided in Annex A and except for stock
options granted by Xxxxxxxx to PGC Employees, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any PGC Employee. The consummation of the transactions
contemplated by this Agreement will not constitute a "change in ownership or
control" of Xxxxxxxx within the meaning of Proposed Treasury Regulation Section
1.280G-1.
(f) The Xxxxxxxx Savings Plans are intended to be qualified under
Section 401(a) of the Code.
Section 4.15 LABOR RELATIONS. As of the date of this Agreement, each
of the PGC Subsidiaries is in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages, hours of work, employment discrimination, equal opportunity,
affirmative action, workers' compensation, unemployment insurance, immigration
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, except for
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failures to comply that would not, individually or in the aggregate, reasonably
be expected to cause a Material Adverse Effect on the PGC Subsidiaries. As of
the date of this Agreement, there is no labor strike, slowdown, stoppage or
lockout actually pending, or, to the knowledge of Xxxxxxxx, threatened against
or affecting any of the PGC Subsidiaries. Except as identified on Schedule 4.15
of the Xxxxxxxx Disclosure Schedule, there are no collective bargaining
agreements or other labor union agreement or understandings to which any of the
PGC Subsidiaries is a party by which any of them is bound. As of the date of
this Agreement, none of the PGC Subsidiaries that is not a party to or bound by
any collective bargaining agreements or other labor union agreements or
understandings has any knowledge of any labor union organizing activity within
the last five years. As of the date of this Agreement, there is no labor
dispute, strike, slowdown, stoppage or lockout actually pending, or, to the
knowledge of Xxxxxxxx, threatened against or affecting any of the PGC
Subsidiaries. As of the date of this Agreement, the PGC Subsidiaries are in
material compliance with and has not triggered any requirements under the
Workers Adjustment Restraining Notification Act or similar laws with respect to
PGC Employees.
Section 4.16 TRANSACTIONS WITH AFFILIATES. Except for transactions
contemplated by this Agreement and the Governance Agreement, (i) no director or
officer of Xxxxxxxx or its Affiliates (other than the PGC Subsidiaries) is
currently directly or indirectly a party to any transaction with any PGC
Subsidiary, including any agreement, arrangement or understanding, written or
oral, providing for the employment of, furnishing of services by, rental of real
or personal property from or otherwise requiring payment to any such director or
officer and (ii) none of the PGC Subsidiaries has any outstanding material
contract, agreement or other arrangement with the Xxxxxxxx or any of its
Affiliates (other than the PGC Subsidiaries) or has engaged in any material
transaction with Xxxxxxxx or its Affiliates (other than the PGC Subsidiaries)
since January 1, 1999.
Section 4.17 PERSONAL PROPERTY. As of the date of this Agreement, the
PGC Subsidiaries own, or hold valid leasehold interests in, the personal
property owned or used by them, in each case, free and clear of all Liens,
except for such Liens which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the PGC
Subsidiaries.
Section 4.18 YEAR 2000. The PGC Subsidiaries have initiated a review
and assessment of the Year 2000 Problem, have developed a plan for addressing
the Year 2000 Problem on a timely basis and have to date implemented such plan,
except where their failure to do so would not reasonably be expected to have a
Material Adverse Effect on the PGC Subsidiaries. As of the date of this
Agreement, except as would not reasonably be expected to have a Material Adverse
Effect on the PGC Subsidiaries, to Xxxxxxxx' knowledge, none of the assets or
equipment owned or utilized by the PGC Subsidiaries will fail to perform because
of, or due in any way to, a Year 2000 Problem. As of the date of this Agreement,
to Xxxxxxxx' knowledge, no vendor, supplier or customer of any of the PGC
Subsidiaries is reasonably expected to experience a Year 2000 Problem that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the PGC Subsidiaries.
Section 4.19 INSURANCE. Each PGC Subsidiary is, and has been
continuously since June 18, 1997 (or, if later, the date such PGC Subsidiary
became a Subsidiary of Xxxxxxxx), insured with Xxxxxxxx-affiliated insurance
companies or with third-party insurers in such amounts
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and against such risks and losses as are customary in all material respects for
companies conducting the business as conducted by the PGC Subsidiaries during
such time period. As of the date of this Agreement, none of the PGC Subsidiaries
has received any notice of cancellation or termination with respect to any
insurance policy of any of the PGC Subsidiaries which would reasonably be
expected to have a Material Adverse Effect on the PGC Subsidiaries. Xxxxxxxx has
made available to Duke accurate and complete copies of all insurance policies in
effect as of the date of this Agreement.
Section 4.20 PUBLIC UTILITY HOLDING COMPANY ACT. None of the PGC
Subsidiaries is a "public utility company" or a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 4.21 SUFFICIENCY OF CONTRIBUTION. Except as disclosed
elsewhere in this Agreement or in the Xxxxxxxx Disclosure Schedule, the PGC
Subsidiaries collectively hold all right, title and interest of Xxxxxxxx and its
Affiliates in and to all properties, rights, assets and liabilities (other than
the Xxxxxxxx Excluded Assets and Liabilities) used by Xxxxxxxx and its
Affiliates in conducting their midstream natural gas gathering, processing and
marketing operations in the continental United States and Canada as of the date
of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXX
Xxxx hereby represents and warrants to each of Xxxxxxxx and the
Company that, except as disclosed in the Duke Disclosure Schedule:
Section 5.1 CORPORATE ORGANIZATION. (a) Duke and DEFS Holding are duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation or organization. Each of Duke and DEFS
Holding has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction (whether
federal, state, local or foreign) in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified, individually or in the aggregate, would not have
a Material Adverse Effect on either Duke or DEFS Holding, as applicable. True
and complete copies of the certificate of incorporation and by-laws of DEFS
Holding, in effect as of the date of this Agreement, have previously been made
available by Duke to Xxxxxxxx.
(b) Schedule 5.1(b) of the Duke Disclosure Schedule sets forth a
complete list of all Subsidiaries of DEFS Holding (together with DETTCO and any
Subsidiary of DETTCO, each a "DEFS SUBSIDIARY" and collectively, the "DEFS
SUBSIDIARIES") and their respective jurisdictions of organization and
capitalization and the organizational structure of DEFS Holding and its
Subsidiaries (without designating the names or ownership percentages of any
third party owners). All of the outstanding shares of capital stock or limited
liability company interests, as
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the case may be, of each of the DEFS Subsidiaries are validly issued, fully paid
and non-assessable and are not subject to, nor were they issued in violation of,
any preemptive rights. Except as set forth in Schedule 5.1(b) of the Duke
Disclosure Schedule, and except with respect to DETTCO and its Subsidiaries,
such shares or limited liability company interests, as the case may be, are
owned by DEFS Holding or its wholly-owned Subsidiaries free and clear of any
Lien with respect thereto. At the Closing, all of the outstanding shares of
capital stock or limited liability company interests of DETTCO will be owned by
DEFS free and clear of any Lien with respect thereto and all of the outstanding
shares of capital stock or limited liability company interests of any Subsidiary
of DETTCO will be owned by DETTCO free and clear of any Lien with respect
thereto. Each DEFS Subsidiary (i) is duly organized and validly existing as a
corporation or limited liability company, as the case may be, under the laws of
its jurisdiction of organization, (ii) is duly licensed or qualified to do
business and in good standing in each jurisdiction (whether federal, state,
local or foreign) in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified, individually or in the aggregate, would not have a
Material Adverse Effect on DEFS, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its business
as now conducted. Except as described above, as of the date of this Agreement
there are not, and at the Closing there will not be, any capital stock, limited
liability company interests or other equity interests in the DEFS Subsidiaries
issued or outstanding or any subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character
obligating any DEFS Subsidiary to issue, transfer or sell any of its capital
stock or other equity interests, or any agreements, arrangements, or
understandings granting any Person any rights in any DEFS Subsidiary similar to
capital stock, limited liability company interests or other equity interests.
Except as set forth in Schedule 5.1(b) or 5.10(a)(3) of the Duke Disclosure
Schedule, no DEFS Subsidiary holds any interest in any corporation, partnership,
joint venture or other entity.
Section 5.2 AUTHORITY; NO VIOLATION. (a) Each of Duke and the Company
has full corporate power and authority to execute and deliver this Agreement and
the Governance Agreements and to consummate the transactions contemplated by
this Agreement and the Governance Agreement (except that the board of directors
of the Company has not approved the IPO). The execution and delivery of this
Agreement and the Governance Agreement and the consummation of the transactions
contemplated by this Agreement and the Governance Agreement have been duly and
validly approved by all corporate action on the part of each of Duke and the
Company. No other corporate proceedings on the part of either Duke, DEFS
Holding, the DEFS Subsidiaries or the Company are necessary to approve this
Agreement or the Governance Agreement and to consummate the transactions
contemplated by this Agreement and the Governance Agreement (except that the
board of directors of the Company has not approved the IPO). This Agreement has
been duly and validly executed and delivered by each of Duke and the Company
and, assuming due authorization, execution and delivery by Xxxxxxxx, constitutes
a valid and binding obligation of each of Duke and the Company, enforceable
against each of Duke and the Company in accordance with its terms. The
Governance Agreement has been duly and validly executed and delivered by each of
Duke and the Company and, assuming due authorization, execution and delivery by
Xxxxxxxx, constitutes the valid and binding obligations of each of Duke and the
Company, enforceable against each of Duke and the Company in accordance with its
terms.
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(b) At the Closing (i) DEFS Holding shall have good and marketable
title to all of the issued and outstanding limited liability company interests
in DEFS and (ii) DEFS or a DEFS Subsidiary shall have good and marketable title
to all of the issued and outstanding limited liability company interests in each
DEFS LLC Subsidiary and all of the issued and outstanding capital stock and
other equity interests of each DEFS Corporate Subsidiary, in each case free and
clear of any Liens, restrictions on transfer or voting or preemptive rights.
Duke and DEFS Holding have the full corporate power, right and authority to
transfer and convey, or cause to be transferred and conveyed, to the Company at
the Closing the limited liability company interests in DEFS.
(c) The execution, delivery and performance of this Agreement and the
Governance Agreement by Duke do not, and the consummation by Duke of the
transactions contemplated by this Agreement and the Governance Agreement will
not, constitute (i) a breach or violation of, or a default under, the
certificate of incorporation or by-laws or other organizational documents of
Duke or DEFS Holding, (ii) constitute a breach or violation of, or a default
under, or trigger any "change of control" rights or remedies under, or give rise
to any Lien, any acceleration of remedies, any buy-out right, or any right of
first offer or refusal or of termination under, any indenture, license,
contract, agreement or other instrument to which DEFS Holding or of any of its
Subsidiaries is a party or by which any of them or their respective properties
or assets may be bound, or (iii) assuming compliance with the applicable
requirements of the HSR Act, violate any law, rule, regulation, judgment, decree
or order applicable to Duke, DEFS Holding or any of the DEFS Subsidiaries or any
of their respective properties or assets, except in the case of (ii) and (iii)
above for such breaches, violations, defaults, liens, accelerations or rights as
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect on DEFS or to adversely affect the ability of Duke to
consummate the transactions contemplated by this Agreement or the Governance
Agreements.
Section 5.3 CONSENTS AND APPROVALS. Except for applicable requirements
of the HSR Act, no notice to, filing with, authorization of, exemption by, or
consent or approval of, or the taking of any other action in respect of any
Governmental Entity or any other Person on the part of Duke, DEFS Holding, or
the DEFS Subsidiaries is necessary for the consummation by Duke, DEFS Holding,
or any of the DEFS Subsidiaries of the transactions contemplated by this
Agreement, except where the failure to provide such notice, make such filing, or
obtain such authorization, exemption, consent or approval would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on DEFS or to adversely affect the ability of Duke to consummate
the transactions contemplated by this Agreement or the Governance Agreement.
Section 5.4 PERMITS; COMPLIANCE WITH APPLICABLE LAW. As of the Closing
Date, each of the DEFS Subsidiaries shall hold all Permits necessary for the
lawful conduct of their respective businesses under and pursuant to all, and
have complied with and are not in default under and/or in violation of any,
applicable law, statute, order, rule or regulation of any Governmental Entity
relating to any of the DEFS Subsidiaries, except in each case where the failure
to hold such Permit or such noncompliance or default would not, individually or
in the aggregate, have a Material Adverse Effect on DEFS. To Duke's knowledge,
the business of the DEFS Subsidiaries is not being and has not been conducted in
violation of any applicable law or any order, writ, injunction or decree of any
Governmental Entity, except for any such violations
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which would not, individually or in the aggregate, have a Material Adverse
Effect on DEFS. None of the DEFS Subsidiaries has received any notice or other
communication from any Governmental Entity asserting (i) any violation of law,
statute, ordinance, order, rule or regulation, (ii) any violation of or failure
to comply with any term or requirement of any Permit, or (iii) any revocation,
withdrawal, suspension, cancellation, termination or modification of any Permit,
except for violations, failures to comply, revocations, withdrawals,
suspensions, cancellations, terminations or modifications which would not in the
aggregate reasonably be expected to have a Material Adverse Effect on DEFS. No
notice of any pending investigation or violation of, non-compliance with or
alleged liability under, any law, statute, ordinance, order, rule, regulation or
Permit has been received by any of the DEFS Subsidiaries which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on DEFS.
Section 5.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Duke has
previously made available to Xxxxxxxx true, correct and complete copies of (i)
the audited combined balance sheets of DEFS and its Subsidiaries, DETTCO and
Subsidiaries, Panhandle Field Services, Inc., and Panhandle Gathering Company as
of December 31, 1998 and 1997 and the related audited combined statements of
income and cash flows for the periods then ended (such statements include the
investment in TEPPCO which is an Excluded Asset) and (ii) the unaudited proforma
combined balance sheet of DEFS and its Subsidiaries (with proforma adjustments
to eliminate intercompany advances, notes, income taxes, and the investment in
TEPPCO and to include DETTCO, Canrock and goodwill related to Mega) as of
September 30, 1999 (the "DEFS SEPTEMBER 30 BALANCE SHEET"), a copy of which is
attached as Schedule 5.5 of the Duke Disclosure Schedule, and the related
unaudited combined statement of income for the nine-month period then ended
(together with the DEFS September 30 Balance Sheet, the "DEFS SEPTEMBER 30
FINANCIAL STATEMENTS").
The financial statements referred to in this Section 5.5 fairly
present (except that such financial statements are incomplete in that they do
not include footnotes, and subject, in the case of the DEFS September 30
Financial Statements, to recurring audit adjustments, none of which either
individually or in the aggregate is material) the results of the combined
operations and combined financial positions of DEFS and its Subsidiaries (as
adjusted in the manner described above relating to the DEFS September 30
Financial Statements) for the respective fiscal periods or as of the respective
dates therein set forth. Each of such statements described in this Section 5.5
complies with applicable accounting requirements with respect thereto; and each
of such statements has been prepared in accordance with GAAP (except that such
statements are incomplete in that they do not include footnotes and do include
proforma adjustments as described above) consistently applied during the periods
involved. Neither DEFS nor any of its Subsidiaries (as adjusted in the manner
described above) has any liabilities required by GAAP to be set forth on a
combined balance sheet of DEFS and its Subsidiaries, except (i) as set forth on
the DEFS September 30 Balance Sheet, and (ii) for liabilities incurred in the
ordinary course of business since September 30, 1999 and which would not have a
Material Adverse Effect on DEFS.
Section 5.6 BROKER'S FEES. Neither Duke nor any of its Subsidiaries
(including DEFS Holding and its Subsidiaries) nor any of their respective
officers or directors has employed
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any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement or the Governance Agreement which would be payable by the
Company, Xxxxxxxx, any Xxxxxxxx Subsidiary or any DEFS Subsidiary.
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for changes
or events consented to or approved by Xxxxxxxx in writing pursuant to Section
6.5, from September 30, 1999 through the date of this Agreement, the business of
the DEFS Subsidiaries has been operated in the ordinary and normal course in all
material respects and there has not been:
(a) any event (whether covered by insurance or not) which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on DEFS;
(b) any increase in compensation (including severance or termination
pay) payable to or to become payable to any consultants, officers, directors,
employees or agents working in connection with the business of any DEFS
Subsidiary or any change in any insurance, pension or other benefit plan,
payment or arrangement made to, for or with any of such consultants, officers,
directors, employees or agents, in each case other than (i) general increases or
changes reasonably consistent with past practices and applicable to at least 10%
of the employees of Duke and its Subsidiaries, or (ii) other increases that are
in accordance with past practice and are not material in the aggregate;
(c) any change in financial accounting methods, principles or
practices by any DEFS Subsidiary materially affecting its assets, Liabilities or
businesses, except insofar as may have been required by a change in GAAP;
(d) any indebtedness for borrowed money incurred by any of the DEFS
Subsidiaries other than from Duke or its Affiliates, any issuance of debt
securities by any of the DEFS Subsidiaries other than to Duke or its Affiliates,
any assumption, guarantee, endorsement or other action which would result in any
of the DEFS Subsidiaries having responsibility for the obligations of any other
Persons, or any mortgage or encumbrance on properties or assets other than Liens
that do not materially restrict or detract from the value of such properties or
assets; or
(e) any declaration, setting aside or payment of any dividend or any
other similar distribution (other than in cash), directly or indirectly, with
respect to any DEFS Subsidiary's securities except as permitted by Section
2.1(b)(i), Section 2.1(d), Section 2.1(f) or Section 2.1(g).
Section 5.8 LEGAL PROCEEDINGS. (a) As of the date of this Agreement,
neither Duke nor DEFS Holding nor any of their respective Subsidiaries is a
party to any, and there are no pending or, to Duke's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against or otherwise
affecting DEFS Holding or any of its Subsidiaries which (i) would reasonably be
expected to result in material injunctive relief or in damages to DEFS Holding
and its Subsidiaries in excess of $10,000,000 in the aggregate or (ii) would
adversely affect the ability
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of Duke to consummate the transactions contemplated by this Agreement or the
Governance Agreement.
(b) As of the date of this Agreement, there are no injunctions,
orders, judgments or decrees imposed upon or otherwise affecting the DEFS
Subsidiaries or assets which, individually or in the aggregate, have had, or
would reasonably be expected to have, a Material Adverse Effect on DEFS.
Section 5.9 [Intentionally omitted]
Section 5.10 CONTRACTS. (a) Schedule 5.10(a) of the Duke Disclosure
Schedule sets forth a true and complete list as of the date of this Agreement,
of all contracts, agreements and commitments of the following categories,
whether oral or written, express or implied, to which any of the DEFS
Subsidiaries is a party or by which any of their respective properties or assets
are bound (excluding the agreements contemplated by this Agreement or the
Governance Agreement) (collectively, the "DEFS MATERIAL CONTRACTS"):
(1) any contract (other than gas purchase agreements) involving
or requiring expenditures or receipts by any DEFS Subsidiary more than
$2,000,000 in any calendar year and not cancelable or terminable within one year
from the Closing Date;
(2) any contract involving or requiring expenditures or receipts
by any DEFS Subsidiary of more than $5,000,000 in any calendar year (or other
material contract) that grants a right of first refusal or a right of first
negotiation or other preferential right to a third party;
(3) any partnership or joint venture agreement with regard to
material assets of the DEFS Subsidiaries;
(4) any contract containing covenants limiting the freedom of any
of the DEFS Subsidiaries to engage in any line of business or compete with any
Person or operate at any location;
(5) any contract between any of the DEFS Subsidiaries, on one
hand, and any Affiliate of Duke (other than the DEFS Subsidiaries), on the other
hand;
(6) any collective bargaining agreement;
(7) any employment, personal services, consulting,
noncompetition, severance, golden parachute or similar contract, for officers,
directors or other individuals and requiring payments by the DEFS Subsidiary in
excess of $250,000 per year;
(8) the top ten contracts by volume pertaining to the purchase,
sale, processing, treating, compression, gathering, storage, exchange,
transportation or transmission of natural gas in all its forms and all other
hydrocarbons (excluding liquid products and excluding gas purchase contracts)
together with all deposits (either in products or cash) related to such
contracts in each of the DEFS Subsidiaries' eight operating areas and the NGL
business unit of DEFS;
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(9) any contract entered into since January 1, 1996 for the
acquisition or disposition, sale or lease of properties or assets of the DEFS
Subsidiaries (by merger, purchase or sale of assets or stock or otherwise)
requiring aggregate expenditure or receipts by the DEFS Subsidiaries in excess
of $10,000,000; and
(10) any commitment or agreement to enter into any of the
foregoing.
(b) As of the date of this Agreement, each DEFS Material Contract is
a valid, binding and enforceable (except as such enforceability may be subject
to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other laws, now or hereafter in effect, relating to or limiting creditors'
rights generally) obligation of the applicable DEFS Subsidiary. As of the date
of this Agreement, there is no default under any DEFS Material Contract by any
DEFS Subsidiary or, to Duke's knowledge, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by any DEFS Subsidiary, or to Duke's
knowledge, any other party, which default or event, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
DEFS. As of the date of this Agreement, no party to any DEFS Material Contract
has given notice to any DEFS Subsidiary or made a claim against any DEFS
Subsidiary with respect to any breach or default thereunder which breach or
default, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect on DEFS. As of the date of this Agreement, there has
been no amendment or modification of any of the DEFS Material Contracts except
as specifically listed in Schedule 5.10(a) of the Duke Disclosure Schedule. The
enforceability of any DEFS Material Contract shall not be impaired by the
execution and delivery of this Agreement or the Governance Agreement or the
consummation of the transactions contemplated hereby or thereby, and, as of the
date of this Agreement, no DEFS Material Contract requires that a transaction of
the kind contemplated by this Agreement or the Governance Agreement receive the
approval of any party to such DEFS Material Contract, except where such
impairments or failures to receive approvals, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on DEFS.
(c) Except for certain indebtedness which shall be canceled without
liability to the DEFS Subsidiaries prior to the Closing as provided in Section
2.1(f) and liabilities reflected in the DEFS September 30 Balance Sheet, as of
the date of this Agreement, none of the DEFS Subsidiaries is a party to any loan
agreement, mortgage, indenture, security agreement or other agreement or
instrument relating to the borrowing of money by, or any extension of credit to,
any of the DEFS Subsidiaries.
(d) As of the date of this Agreement, Duke has delivered to Xxxxxxxx
or otherwise made available to Xxxxxxxx true, correct and complete copies of all
DEFS Material Contracts.
(e) DE Fuels, Inc. is party to a Master Natural Gas Liquids Purchase
Agreement, dated November 20, 1998, with Union Pacific Resources Company and
Union Pacific Fuels, Inc. which contains confidentiality provisions which
restrict the disclosure of the terms of such contract. Duke has reviewed this
contract and is satisfied that the terms of this contract reflect customary arms
length contract arrangements.
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Section 5.11 REAL PROPERTY. (a) FEE PROPERTIES. Except as otherwise
set forth in Schedule 5.11(a) of the Duke Disclosure Schedule, as of the date of
this Agreement, the DEFS Subsidiaries own beneficially all real property listed
in Schedule 5.11(a) of the Duke Disclosure Schedule (collectively, the
"DEFS-OWNED FEE PROPERTIES") and have good and marketable record title to each
DEFS-Owned Fee Property, free and clear of all Liens and encumbrances, except
for Permitted Encumbrances. Schedule 5.11(a) of the Duke Disclosure Schedule
identifies all real property assets the fee title to which is owned,
beneficially and/or of record, by the DEFS Subsidiaries as of the date of this
Agreement and which are material to the business of the DEFS Subsidiaries.
(B) REALTY LEASES. As of the date of this Agreement, with respect to
all leases of real property of or used by the DEFS Subsidiaries (collectively,
the "DEFS LEASES"), beneficial and record legal title to or interest in the DEFS
Leases is owned or held by the DEFS Subsidiaries, free and clear of Liens,
encumbrances and claims of those claiming by, through or under Duke or the DEFS
Subsidiaries, but not otherwise, subject to Permitted Encumbrances. Schedule
5.11(b) of the Duke Disclosure Schedule identifies all leases of real property,
other than easements and rights of way, a leasehold interest in which is owned,
beneficially and/or of record, by the DEFS Subsidiaries as of the date of this
Agreement and which are material to the business of the DEFS Subsidiaries.
Except as otherwise set forth in Schedule 5.11(b) of the Duke Disclosure
Schedule, as of the date of this Agreement, each of the DEFS Leases is a valid,
binding and enforceable (except as such enforceability may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally) obligation of such DEFS Subsidiary and of the lessor under such DEFS
Lease. As of the date of this Agreement, except where, individually or in the
aggregate, there would not reasonably be expected to be a Material Adverse
Effect on DEFS or as otherwise set forth in Schedule 5.11(b) of the Duke
Disclosure Schedule, (i) the enforceability of any of the DEFS Leases will not
be impaired by the execution or delivery of this Agreement or the Governance
Agreement, and (ii) no DEFS Subsidiary is currently participating in any
discussions or negotiations regarding termination of any DEFS Lease of a
property at which such DEFS Subsidiary conducts business operations prior to the
scheduled expiration of such DEFS Lease by reason of a breach or alleged breach
by the tenant thereunder.
(C) EASEMENTS. As of the date of this Agreement, with respect to
pipeline easements, rights of way, licenses and land use permits of or used by
the DEFS Subsidiaries (collectively, the "DEFS EASEMENTS"), beneficial and
record legal title to or interest in the DEFS Easements is owned or held by a
DEFS Subsidiary free and clear of Liens, encumbrances and claims of those
claiming by, through, or under such DEFS Subsidiary, but not otherwise, subject
to Permitted Encumbrances.
Section 5.12 ENVIRONMENTAL MATTERS. As of the date of this Agreement,
except for matters that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on DEFS, (i) the properties,
operations and activities of the DEFS Subsidiaries have been and are in
compliance with all applicable Environmental Laws; (ii) the DEFS Subsidiaries
are not subject to any existing, pending or, to Duke's knowledge, threatened,
action, suit, proceeding or remediation activity under any Environmental Law;
(iii) Hazardous Materials have not at any time been released or disposed of at
the properties currently owned,
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operated, leased or used by the DEFS Subsidiaries and Hazardous Materials were
not released or disposed of at properties previously owned, operated, leased or
used by the DEFS Subsidiaries at any time prior to the sale or other disposition
of such previously owned properties; (iv) the previous and current methods of
releasing or disposing of Hazardous Materials generated, used, treated, recycled
or stored at, upon or under the properties previously or currently owned,
operated, leased or used by the DEFS Subsidiaries have been disclosed to
Xxxxxxxx and the DEFS Subsidiaries are not subject to any liability under
applicable Environmental Laws arising in connection with the transportation and
off-site disposal of any such Hazardous Materials; and (v) Duke has not
restricted access for the review of and copying by Xxxxxxxx all of the
environmental reports, documents, data and other information prepared by or for
the DEFS Subsidiaries relating to the properties previously or currently owned,
operated, leased or used by any of the DEFS Subsidiaries; PROVIDED, HOWEVER,
that the foregoing representations, as they apply to any property, operation,
activity or DEFS Subsidiary prior to the date such property, operation, activity
or DEFS Subsidiary became owned or controlled, directly or indirectly, by Duke,
shall be limited to Duke's knowledge.
Section 5.13 INTELLECTUAL PROPERTY. (a) As of the date of this
Agreement, except for the Duke Trademarks and Logos, DEFS and its Subsidiaries
collectively have such ownership of or such rights by license or other agreement
to use all patents and patent applications, trademarks and service marks,
trademark and service xxxx registrations and applications, trade names, logos,
copyrights and copyright registrations and applications, technology, know-how,
processes and other intellectual property rights, United States or foreign
(collectively, the "DEFS INTELLECTUAL PROPERTY"), as are necessary to permit the
DEFS Subsidiaries to conduct their business as currently conducted, except where
the failure to have such ownership, license or right to use would not,
individually or in the aggregate, have a Material Adverse Effect on DEFS.
(b) As of the date of this Agreement, (i) to Duke's knowledge, neither
the use of the DEFS Intellectual Property nor the conduct of the business of the
DEFS Subsidiaries as currently conducted infringes the intellectual property
rights of any third party and there are no present or threatened infringements
of the DEFS Intellectual Property by any third party, except, in either case,
for such infringements which would not, individually or in the aggregate, have a
Material Adverse Effect on DEFS; and (ii) there are no pending or, to Duke's
knowledge, threatened proceedings or litigation or other adverse claims by any
person relating to the use by any of the DEFS Subsidiaries of any DEFS
Intellectual Property or any third party intellectual property.
Section 5.14 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.14(a) of the
Duke Disclosure Schedule includes a complete list of all Duke Plans that are in
effect as of the date of this Agreement.
(b) As of the date of this Agreement, with respect to each Duke Plan
listed in Schedule 5.14(a) of the Duke Disclosure Schedule, Duke has delivered
or made available to Xxxxxxxx a true, correct and complete copy of all plan
documents and the current summary plan description.
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(c) As of the date of this Agreement, no Duke Plans listed in Schedule
5.14(a) of the Duke Disclosure Schedule are Multiemployer Plans. None of the
DEFS Subsidiaries or any of their respective ERISA Affiliates has, at any time
during the last six years, contributed to or been obligated to contribute to any
Multiemployer Plan, and none of the DEFS Subsidiaries or any of their respective
ERISA Affiliates has incurred any withdrawal liability under Part I of Subtitle
E of Title IV of ERISA that has not been satisfied in full.
(d) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of any
of the DEFS Subsidiaries following the Closing.
(e) Except as specifically provided in Annex A and except for stock
options and other equity based incentive awards granted by Duke to DEFS
Employees, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
DEFS Employee. The consummation of the transactions contemplated by this
Agreement will not constitute a "change in ownership or control" of Duke within
the meaning of Proposed Treasury Regulation Section 1.280G-1.
(f) The Duke Savings Plan is intended to be qualified under Section
401(a) of the Code.
Section 5.15 LABOR RELATIONS. As of the date of this Agreement, each
of the DEFS Subsidiaries is in material compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages, hours of work, employment discrimination, equal opportunity,
affirmative action, workers' compensation, unemployment insurance, immigration
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, except for failures to comply that would not, individually or in the
aggregate, reasonably be expected to cause a Material Adverse Effect on DEFS. As
of the date of this Agreement, there is no labor strike, slowdown, stoppage or
lockout actually pending, or, to the knowledge of Duke, threatened against or
affecting any of the DEFS Subsidiaries. Except as identified in Schedule 5.15 of
the Duke Disclosure Schedule, there are no collective bargaining agreements or
other labor union agreement or understandings to which any of the DEFS
Subsidiaries is a party by which any of them is bound. As of the date of this
Agreement, none of the DEFS Subsidiaries that is not a party to or bound by any
collective bargaining agreements or other labor union agreements or
understandings has any knowledge of any labor union organizing activity within
the last five years. As of the date of this Agreement, there is no labor
dispute, strike, slowdown, stoppage or lockout actually pending, or to the
knowledge of Duke, threatened against or affecting any of the DEFS Subsidiaries.
As of the date of this Agreement, the DEFS Subsidiaries are in material
compliance with and has not triggered any requirements under the Workers
Adjustment Restraining Notification Act or similar laws with respect to DEFS
Employees.
Section 5.16 TRANSACTIONS WITH AFFILIATES. Except for transactions
contemplated by this Agreement and the Governance Agreement, (i) no director or
officer of Duke or its Affiliate (other than the DEFS Subsidiaries) is currently
directly or indirectly a party to any
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transaction with any DEFS Subsidiary, including any agreement, arrangement or
understanding, written or oral, providing for the employment of, furnishing of
services by, rental of real or personal property from or otherwise requiring
payment to any such director or officer and (ii) none of the DEFS Subsidiaries
has any outstanding material contract, agreement or other arrangement with Duke
or any of its Affiliates (other than the DEFS Subsidiaries ) or has engaged in
any material transaction with Duke or its Affiliates (other than the DEFS
Subsidiaries) since January 1, 1999.
Section 5.17 PERSONAL PROPERTY. As of the date of this Agreement, the
DEFS Subsidiaries own, or hold valid leasehold interests in, the personal
property owned or used by them, in each case, free and clear of all Liens,
except for such Liens which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on DEFS.
Section 5.18 YEAR 2000. The DEFS Subsidiaries have initiated a review
and assessment of the Year 2000 Problem, have developed a plan for addressing
the Year 2000 Problem on a timely basis and have to date implemented such plan,
except where their failure to do so would not reasonably be expected to have a
Material Adverse Effect on DEFS. As of the date of this Agreement, except as
would not reasonably be expected to have a Material Adverse Effect on DEFS, to
Duke's knowledge, none of the assets or equipment owned or utilized by any of
the DEFS Subsidiaries will fail to perform because of, or due in any way to, a
Year 2000 Problem. As of the date of this Agreement, to Duke's knowledge, no
vendor, supplier or customer of the DEFS Subsidiaries is reasonably expected to
experience a Year 2000 Problem that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on DEFS.
Section 5.19 INSURANCE. Each DEFS Subsidiary is, and has been
continuously since June 18, 1997 (or, if later, the date such DEFS Subsidiary
became a Subsidiary of Duke), insured with Duke-affiliated insurance companies
or with third-party insurers in such amounts and against such risks and losses
as are customary in all material respects for companies conducting the business
as conducted by the DEFS Subsidiaries during such time period. As of the date of
this Agreement, none of the DEFS Subsidiaries has received any notice of
cancellation or termination with respect to any insurance policy of any of the
DEFS Subsidiaries which would reasonably be expected to have a Material Adverse
Effect on DEFS. Duke has made available to Xxxxxxxx accurate and complete copies
of all insurance policies in effect as of the date of this Agreement.
Section 5.20 PUBLIC UTILITY HOLDING COMPANY ACT. None of the DEFS
Subsidiaries is a "public utility company" or a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.21 THE COMPANY. The Company has not and prior to the Closing
Date will not engage in any activities of any nature except as provided in or
contemplated by this Agreement or the Governance Agreement.
Section 5.22 SUFFICIENCY OF CONTRIBUTION. Except as disclosed
elsewhere in this Agreement or in the Duke Disclosure Schedule, the DEFS
Subsidiaries (excluding any Duke
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Excluded Assets and Liabilities but including the contract referred to in
Section 5.10(e)) collectively hold all right, title and interest of Duke and its
Affiliates, in and to all properties, rights, assets and liabilities (other than
the Duke Excluded Assets and Liabilities) used (i) by Duke in conducting its
midstream natural gas gathering and processing operations in the continental
United States and Canada as of the date of this Agreement and (ii) by DEFS
Subsidiaries in conducting its natural gas marketing operations as of the date
of this Agreement.
ARTICLE VI
COVENANTS
Section 6.1 INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND
RECORDS. (a) From the date of this Agreement through the Closing, Duke and
Xxxxxxxx shall cause the DEFS Subsidiaries and the PGC Subsidiaries,
respectively, to afford to representatives of the other Party reasonable access
to their offices, properties, books and records during normal business hours, in
order that the other Party may have a full opportunity to make such
investigations as it desires of their affairs (including Phase I environmental
testing); PROVIDED, HOWEVER, that such investigation shall be at reasonable
times and upon reasonable notice and shall not unreasonably disrupt the
personnel and operations of Duke or any of the DEFS Subsidiaries or Xxxxxxxx or
any of the PGC Subsidiaries, respectively. All requests for access to the
offices, properties, books, and records relating to the DEFS Subsidiaries or the
PGC Subsidiaries shall be made to such representatives designated in writing by
Duke or Xxxxxxxx, as appropriate (the "DESIGNATED REPRESENTATIVES"), which
Designated Representatives shall be solely responsible for coordinating all such
requests and all access permitted hereunder. Neither Duke nor Xxxxxxxx nor their
respective representatives shall contact any of the employees, customers or
suppliers of the other Party and its Subsidiaries, in connection with the
transactions contemplated by this Agreement and the Governance Agreement,
whether in person or by telephone, mail or other means of communication, without
the specific prior written authorization of the other Party's Designated
Representatives, which consent shall not be unreasonably withheld.
(b) Any information provided to a Party or its representatives
pursuant to this Agreement or the Governance Agreement shall be held by such
Party and its representatives in accordance with, and shall be subject to the
terms of, Section 6.4 of the Governance Agreement. From and after the Closing,
each Party shall, and shall cause its Affiliates to, maintain in confidence and
not use nonpublic information of the other Party, except as otherwise
specifically permitted by this Agreement or the Governance Agreement or as
required by law.
(c) Except as contemplated by this Agreement and the Governance
Agreement, each of Xxxxxxxx and Duke agrees, and agrees to cause its
representatives not to, until the earlier of the Closing or termination of this
Agreement in accordance with its terms, not to (i) enter into any agreement with
any third party, or engage in any discussions with attorneys, investment
bankers, other advisors or representatives or any third party, regarding a
transaction involving the sale or a public offering of, or creation of a joint
venture involving, all or any material portion of the operations of the PGC
Subsidiaries or the DEFS Subsidiaries, as applicable, or (ii) solicit, initiate
or encourage offers in respect thereof or otherwise prepare for
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or take any actions intended to prepare for an initial public offering of all or
any material portion of such business.
(d) The Company agrees to (i) hold all of the books and records of
each of the DEFS Subsidiaries and the PGC Subsidiaries existing on the Closing
Date and not to destroy or dispose of any thereof for a period of four years
from the Closing Date or such longer time as may be required by law, and
thereafter, if it desires to destroy or dispose of such books and records, to
offer first in writing at least 60 days prior to such destruction or disposition
to surrender them to Duke or Xxxxxxxx, respectively, and (ii) following the
Closing Date to afford Duke and Xxxxxxxx, their respective accountants and
counsel, during normal business hours, upon reasonable notice, full access to
such books and records to the extent that such access may be requested for any
legitimate purpose at no cost to Duke or Xxxxxxxx (other than for reasonable
out-of-pocket expenses); PROVIDED, HOWEVER, that nothing herein shall limit any
of Duke's or Xxxxxxxx' respective rights of discovery pursuant to any legal
proceeding. The Company shall have the same rights, and Duke and Xxxxxxxx,
respectively, the same obligations, as are set forth above in this Section
6.1(c) with respect to any books, non-privileged records and employees of Duke
or Xxxxxxxx pertaining to the Company and its Subsidiaries, with the exception
of Tax Returns. The Company will provide additional information to the extent
reasonably requested and required by Duke or Xxxxxxxx for a legitimate purpose.
Section 6.2 CONSENTS AND APPROVALS. (a) Subject to the terms and
conditions of this Agreement and the Governance Agreement, each of Duke and
Xxxxxxxx agrees to use its reasonable best efforts to promptly (i) take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Governance Agreement, (ii) obtain and maintain all approvals, consents,
registrations, permits, authorizations and other confirmations required to be
obtained from any third party (including any Governmental Entity), that are
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement and the Governance Agreement from other parties to material loan
agreements, leases and other contracts, (iii) to lift or rescind any injunction
or restraining order or other order adversely affecting its ability to
consummate the transactions contemplated by this Agreement and the Governance
Agreement and (iv) to fulfill all conditions to this Agreement and the
Governance Agreement. Subject to applicable laws relating to the exchange of
information, Duke and Xxxxxxxx shall reasonably cooperate with and inform each
other as to all submissions and communications relating to the DEFS Subsidiaries
or the PGC Subsidiaries, as the case may be, made with any third party and/or
any Governmental Entity in connection with the transactions contemplated by this
Agreement and the Governance Agreement. In no event, however, shall either of
Duke or Xxxxxxxx be obligated to pay any money to any Person or to offer or
grant other financial or other accommodations to any person in connection with
its obligations under this Section 6.2.
(b) Notwithstanding anything to the contrary in this Agreement, in the
event of any sale of non-current assets approved by Duke or Xxxxxxxx, as
applicable, pursuant to Sections 6.2, 6.4, 6.5, or 6.6(c) at the Closing all
after-Tax proceeds from such sale shall be held by the DEFS Subsidiary or the
PGC Subsidiary (or its respective successor entity) that previously held the
sold asset and the representations and warranties in Articles IV and V shall be
deemed to be adjusted appropriately.
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(c) In furtherance and not in limitation of the foregoing, each of
Duke and Xxxxxxxx agrees to (i) make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated by this Agreement as promptly as practicable and in any event
within ten Business Days of the date of this Agreement, (ii) if the Federal
Trade Commission or the Department of Justice, as applicable, issues a request
for additional documentary material and information pursuant to the HSR Act (a
"SECOND REQUEST") in connection with the transaction contemplated by this
Agreement, respond to the Second Request as promptly as possible and, in any
event, certify compliance with the Second Request within 60 days of the date of
issue of the Second Request and (iii) complete the review process under the HSR
Act to permit the consummation of the transactions contemplated by this
Agreement and the Governance Agreement including causing the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
possible.
Section 6.3 FURTHER ASSURANCES. (a) Subject to Section 6.8, Duke and
Xxxxxxxx agree that, from time to time, whether before, at or after the Closing
Date, each of them will execute and deliver, or cause to be executed and
delivered, such further instruments of conveyance and transfer and take such
other action as may be necessary to carry out the purposes and intents of this
Agreement and the Governance Agreement.
(b) To the extent not already in the possession of the Company or its
Subsidiaries on or before the Closing Date, Duke shall deliver to the Company
all original agreements, documents, books, records and files relating to the
ownership or operation of the DEFS Subsidiaries' businesses or their respective
properties or assets, including, all books of account, journals and ledgers,
correspondence, memoranda, maps, plats, customer lists, information and account
histories, supplier lists and information, personnel records relating to DEFS
Employees, engineering plans, property records, title insurance policies,
records relating to all DEFS Easements (regardless of whether a DEFS Subsidiary
is the holder of record title thereof), stock certificates and stock transfer
records, minute books and corporate seals.
(c) To the extent not already in the possession of the Company or its
Subsidiaries on or before the Closing Date, Xxxxxxxx shall deliver to the
Company all original agreements, documents, books, records and files relating to
the ownership or operation of the PGC Subsidiaries' businesses or their
respective properties or assets, including, all books of account, journals and
ledgers, correspondence, memoranda, maps, plats, customer lists, information and
account histories, supplier lists and information, personnel records relating to
PGC Employees, engineering plans, property records, title insurance policies,
records relating to all PGC Easements (regardless of whether a PGC Subsidiary is
the holder of record title thereof), stock certificates and stock transfer
records, minute books and corporate seals.
Section 6.4 CONDUCT OF THE XXXXXXXX GAS BUSINESS. From the date of
this Agreement through the Closing, except as disclosed in Schedule 6.4 of the
Xxxxxxxx Disclosure Schedule or otherwise provided for in, or contemplated by,
this Agreement or the Governance Agreement, and, except as consented to or
approved by Duke in writing, Xxxxxxxx covenants and agrees that:
(a) each of the PGC Subsidiaries shall operate its business in the
ordinary course in substantially the same manner as conducted as of the date
hereof;
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(b) none of the PGC Subsidiaries shall (i) amend its respective
certificate or articles of incorporation or by-laws or comparable organizational
documents or (ii) make any change in its authorized or issued capital stock,
limited liability company interests or other equity interests;
(c) none of the PGC Subsidiaries shall (i) issue, sell or agree to
issue or sell any shares of its capital stock, limited liability company
interests or any other securities (including any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe for, any
shares of its capital stock, limited liability company interests or other
securities) or (ii) redeem, purchase or otherwise acquire, directly or
indirectly, any securities of any of the PGC Subsidiaries;
(d) except in the ordinary course of business or as otherwise provided
for in or contemplated by this Agreement or the Governance Agreement, none of
the PGC Subsidiaries shall enter into any joint venture, partnership or other
similar arrangement;
(e) except (i) in the ordinary course of business (including the
purchase of natural gas and supplies in the ordinary course of business), (ii)
for the acquisition set forth in Schedule 6.4(e) of the Xxxxxxxx Disclosure
Schedule and any other acquisition involving expenditures of less than
$10,000,000, or (iii) as otherwise provided for in or contemplated by this
Agreement or the Governance Agreement, none of the PGC Subsidiaries shall (A)
acquire any material assets or securities of any Person or any interests therein
or (B) except pursuant to Section 6.2, sell, assign, license, transfer, lease
(as lessor) or otherwise dispose of any material assets or securities;
(f) except as contemplated by PGC's 2000 capital expenditure forecasts
set forth in Schedule 6.4(f) of the Xxxxxxxx Disclosure Schedule, and except for
acquisitions permitted under Section 6.4(e), none of the PGC Subsidiaries shall
make or authorize any capital expenditure or expenditures that (i) in the
aggregate are in excess of 5% of PGC's 2000 capital expenditure forecast and
(ii) will be paid for by the Company following the Closing;
(g) none of the PGC Subsidiaries shall make any change in any of its
present financial accounting methods and practices, except as required by
changes in GAAP;
(h) except as contemplated in Section 2.1(e), Section 2.1(f) and
Section 2.1(h), none of the PGC Subsidiaries shall declare or pay any dividend
or make any similar distribution or payment, directly or indirectly, with
respect to securities of any PGC Subsidiary;
(i) except where the applicable PGC Subsidiary is in good faith
contesting the same (with appropriate reserves), none of the PGC Subsidiaries
shall fail to pay when due (i) any trade accounts payable; (ii) any payments
required by any indentures, mortgages, financing arrangements, loan agreements
or similar arrangements; or (iii) any other obligations;
(j) except in the ordinary course of business or as otherwise provided
for in or contemplated by this Agreement or the Governance Agreement, none of
the PGC Subsidiaries shall (i) incur any indebtedness for borrowed money other
than from Xxxxxxxx or its Affiliates, issue any debt securities other than to
Xxxxxxxx and its Affiliates or assume, guarantee, endorse or
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otherwise be responsible for the obligations of any other persons or (ii)
mortgage or encumber any of their respective properties or assets other than
with Liens that do not materially restrict or detract from the value of such
properties or assets; and
(k) none of Xxxxxxxx or its Affiliates (including PGC Subsidiaries)
shall agree to take any action prohibited by this Section 6.4.
Notwithstanding the provisions of this Section 6.4, nothing in this
Agreement or the Governance Agreement shall be construed or interpreted to
prevent the PGC Subsidiaries from (i) paying or making regular or special
dividends or other distributions consisting of cash, (ii) making or accepting
inter or intra company advances to, from or with one another or with Xxxxxxxx or
any of its Affiliates or (iii) engaging in any transaction incident to the
normal cash management procedures of Xxxxxxxx and its Affiliates prior to the
Closing, PROVIDED that as of the Closing, the Net Working Capital of the PGC
Subsidiaries shall equal zero.
Section 6.5 CONDUCT OF THE DUKE GAS BUSINESS. From the date of this
Agreement through the Closing, except as disclosed in Schedule 6.5 of the Duke
Disclosure Schedule or otherwise provided for in, or contemplated by, this
Agreement or the Governance Agreement, and, except as consented to or approved
by Xxxxxxxx in writing, Duke covenants and agrees that:
(a) each of the DEFS Subsidiaries shall operate its business in the
ordinary course in substantially the same manner as conducted as of the date
hereof;
(b) none of the DEFS Subsidiaries shall (i) amend its respective
certificate or articles of incorporation or by-laws or comparable organizational
documents or (ii) make any change in its authorized or issued capital stock,
limited liability company interests or other equity interests;
(c) none of the DEFS Subsidiaries shall (i) issue, sell or agree to
issue or sell any shares of its capital stock, limited liability company
interests or any other securities (including any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe for, any
shares of its capital stock, limited liability company interests or other
securities) or (ii) redeem, purchase or otherwise acquire, directly or
indirectly, any securities of any of the DEFS Subsidiaries;
(d) except in the ordinary course of business or as otherwise provided
for in or contemplated by this Agreement or the Governance Agreement, none of
the DEFS Subsidiaries shall enter into any joint venture, partnership or other
similar arrangement;
(e) except (i) in the ordinary course of business (including the
purchase of natural gas and supplies in the ordinary course of business) (ii)
for the acquisitions set forth in Schedule 6.5(e) of the Duke Disclosure
Schedule and any other acquisition involving expenditures of less than
$10,000,000, or (iii) as otherwise provided for in or contemplated by this
Agreement or the Governance Agreement, none of the DEFS Subsidiaries shall (A)
acquire any material assets or securities of any Person or any interests therein
or (B) except pursuant to Section 6.2, sell, assign, license, transfer, lease
(as lessor) or otherwise dispose of any material assets or securities;
-39-
(f) except as contemplated by DEFS's 2000 capital expenditure
forecasts set forth in Schedule 6.5(f) of the Duke Disclosure Schedule, and
except for acquisitions permitted under Section 6.5(c), none of the DEFS
Subsidiaries shall make or authorize any capital expenditure or expenditures
that (i) in the aggregate are in excess of 5% of DEFS's 2000 capital expenditure
forecast and (ii) will be paid for by the Company following the Closing;
(g) none of the DEFS Subsidiaries shall make any change in any of its
present financial accounting methods and practices, except as required by
changes in GAAP;
(h) except as contemplated in Section 2.1(b)(i), Section 2.1(d),
Section 2.1(f) and Section 2.1(g), none of the DEFS Subsidiaries shall declare
or pay any dividend or make any similar distribution or payment, directly or
indirectly, with respect to securities of any DEFS Subsidiary;
(i) except where the applicable DEFS Subsidiary is in good faith
contesting the same (with appropriate reserves), none of the DEFS Subsidiaries
shall fail to pay when due (i) any trade accounts payable or (ii) any payments
required by any indentures, mortgages, financing arrangements, loan agreements
or similar arrangements;
(j) except in the ordinary course of business or as otherwise provided
for in or contemplated by this Agreement or the Governance Agreement, none of
the DEFS Subsidiaries shall (i) incur any indebtedness for borrowed money other
than from Duke or its Affiliates, issue any debt securities other than to Duke
and its Affiliates or assume, guarantee, endorse or otherwise be responsible for
the obligations of any other persons or (ii) mortgage or encumber any of their
respective properties or assets other than with Liens that do not materially
restrict or detract from the value of such properties or assets; and
(k) none of Duke or its Affiliates (including the DEFS Subsidiaries)
shall agree to take any action prohibited by this Section 6.5.
Notwithstanding the provisions of this Section 6.5, nothing in this
Agreement or the Governance Agreement shall be construed or interpreted to
prevent the DEFS Subsidiaries from (i) paying or making regular or special
dividends or other distributions consisting of cash, (ii) making or accepting
inter or intra company advances to, from or with one another or with Duke or any
of its Affiliates or (iii) engaging in any transaction incident to the normal
cash management procedures of Duke and its Affiliates prior to the Closing,
PROVIDED that as of the Closing, the Net Working Capital of the DEFS
Subsidiaries shall equal zero.
Section 6.6 PRESERVATION OF BUSINESS. (a) Subject to the terms and
conditions of this Agreement and the Governance Agreement, Duke shall, and shall
cause the DEFS Subsidiaries to, use reasonable efforts to preserve the business
of the DEFS Subsidiaries intact, to keep available to the DEFS Subsidiaries and
the Company the services of the DEFS Employees and to preserve the goodwill of
customers and others having business relations with the DEFS Subsidiaries in all
material respects.
(b) Subject to the terms and conditions of this Agreement and the
Governance Agreement, Xxxxxxxx shall, and shall cause the PGC Subsidiaries to,
use reasonable efforts to preserve the business of the PGC Subsidiaries intact,
to keep available to the PGC Subsidiaries
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and the Company the services of the PGC Employees and to preserve the goodwill
of customers and others having business relations with the PGC Subsidiaries in
all material respects.
(c) Prior to the Closing, Duke shall cause the DEFS Subsidiaries to
consummate the sale and disposition of their interest in that certain
partnership identified on the Duke Disclosure Schedule as the General
Partnership for Westana Gathering Company.
Section 6.7 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law,
each of Duke and Xxxxxxxx will consult with the other and obtain the consent of
the other (which consent shall not be unreasonably withheld or delayed) before
issuing, or permitting any agent or Affiliate to issue, any press releases or
otherwise making or permitting any agent or Affiliate to make, any public
statements with respect to this Agreement or the Governance Agreement or the
transactions contemplated hereby and thereby.
Section 6.8 PGC EASEMENTS. (a) For purposes of this Agreement, all of
the PGC Easements shall be classified as either "PGC Single-User Easements" or
"PGC Multiple-User Easements". Xxxxxxxx holds legal title to numerous PGC
Easements for the benefit of the PGC Subsidiaries (or, in the case of certain
PGC Multiple-User Easements, for the joint benefit of one or more PGC
Subsidiaries, with respect to certain existing pipelines used in connection with
such PGC Subsidiaries' business, and Xxxxxxxx, with respect to the remainder of
such PGC Multiple-User Easement). In addition, the PGC Subsidiaries hold legal
title to certain PGC Multiple-User Easements for the joint benefit of Xxxxxxxx,
with respect to certain existing pipelines used in connection with Xxxxxxxx'
business, and a PGC Subsidiary, with respect to the remainder of such PGC
Multiple-User Easement. Duke and the Company acknowledge and agree that it will
not be feasible prior to Closing to effect comprehensive assignments of record
legal title with respect to all of the PGC Single-User Easements, or all of the
partial easement rights ("PGC PARTIAL EASEMENT RIGHTS") in PGC Multiple-User
Easements held by Xxxxxxxx for the benefit of the PGC Subsidiaries, nor will it
be feasible prior to Closing to effect comprehensive assignments of legal title
with respect to all of the partial easement rights ("XXXXXXXX PARTIAL EASEMENT
RIGHTS") in PGC Multiple-User Easements owned by the PGC Subsidiaries for the
benefit of Xxxxxxxx.
(b) Accordingly, (i) at or prior to the Closing, Xxxxxxxx shall assign
to the PGC Subsidiaries all of Xxxxxxxx' beneficial interest in all PGC
Single-User Easements and all PGC Partial Easement Rights in PGC Multiple-User
Easements owned by Xxxxxxxx; (ii) at or prior to the Closing, Xxxxxxxx shall
cause the PGC Subsidiaries to assign to Xxxxxxxx all of the beneficial interest
in all Xxxxxxxx Partial Easement Rights in PGC Multiple-User Easements owned by
the PGC Subsidiaries; (iii) subsequent to the Closing, Xxxxxxxx will continue to
hold record legal title to those PGC Single-User Easements described in the
second sentence of Section 6.8(a) (and all PGC Partial Easement Rights in each
PGC Multiple-User Easement held by Xxxxxxxx) for the use and benefit of the
affected PGC Subsidiary, and otherwise upon and subject to the applicable
provisions of this Section 6.8, until such time as record legal title to such
PGC Single-User Easement or such PGC Partial Easement Rights, as the case may
be, shall have been assigned to a PGC Subsidiary pursuant to Section 6.8(d)
hereof; and (iv) subsequent to the Closing, the applicable PGC Subsidiaries will
continue to hold legal title to all Xxxxxxxx Partial Easement Rights in each PGC
Multiple-User Easement owned by any PGC Subsidiary for the use and benefit of
Xxxxxxxx, and otherwise upon and subject to the applicable provisions of this
-41-
Section 6.8, until such time as record legal title to such Xxxxxxxx Partial
Easement Rights shall have been assigned to Xxxxxxxx pursuant to Section 6.8(h)
hereof.
(c) In connection with any PGC Single-User Easement (or any PGC
Partial Easement Rights in a PGC Multiple-User Easement held by Xxxxxxxx) to
which Xxxxxxxx, pursuant to this Section 6.8, shall retain legal title
subsequent to the Closing for the benefit (in whole or part) of any PGC
Subsidiary (each a "XXXXXXXX RETAINED EASEMENT"), Xxxxxxxx shall hold such
Xxxxxxxx Retained Easement and exercise and enforce its rights thereunder for
the use and benefit of, and in such manner as may be reasonably directed by, the
appropriate PGC Subsidiary. Without limiting the generality of the foregoing,
Xxxxxxxx shall not, without the prior written consent of the Company in each
instance, execute any document or instrument, or take any other affirmative
action, that is intended or could reasonably be expected to have the effect of
terminating, surrendering, canceling, revoking, limiting, rescinding or
otherwise impairing or interfering with any such Xxxxxxxx Retained Easement, or
the rights, privileges and benefits of any PGC Subsidiary with respect thereto,
including any assignment or other disposition of any such Xxxxxxxx Retained
Easement in favor of any Person other than the Company or a PGC Subsidiary. In
connection with Xxxxxxxx Retained Easement, Duke and Xxxxxxxx agree as follows:
(i) Xxxxxxxx shall indemnify, defend and hold harmless the Company
and its Subsidiaries from and against any and all Damages, excluding
consequential and punitive Damages, suffered or incurred by the Company or
such Subsidiaries after Closing as a result of the failure of Xxxxxxxx to
have assigned such Xxxxxxxx Retained Easement to the PGC Subsidiaries by
the Closing Date (all necessary third party consents having been obtained);
PROVIDED, HOWEVER, that such indemnity shall not extend to any Damages
resulting from or attributable to the failure or inability of the Company
to obtain financing for the transactions contemplated by this Agreement.
(ii) The Company shall indemnify, defend and hold harmless Xxxxxxxx
and the Xxxxxxxx Retained Affiliates from and against any and all Damages,
excluding consequential and punitive Damages, suffered or incurred by such
entities after Closing in respect of such Xxxxxxxx Retained Easement to the
extent such Damages consist of Subject Easement Liabilities that the
Company would have been responsible for, had such Xxxxxxxx Retained
Easement been assigned to the PGC Subsidiaries by the Closing Date (all
necessary third party consents having been obtained).
As used in this Section 6.8(c), the term "SUBJECT EASEMENT LIABILITIES" shall
mean, with respect to a Xxxxxxxx Retained Easement, any and all payment
obligations to third parties, including lease rentals, renewal fees, ad valorem
and other taxes, arising and relating to the period from and after Closing in
respect of such Xxxxxxxx Retained Easement.
(d) Prior to the Closing, Xxxxxxxx, in consultation with the Company,
shall develop a timetable and action plan pursuant to which record legal title
to all of the PGC Single-User Easements (and all of the PGC Partial Easement
Rights in PGC Multiple-User Easements) which are to be held by Xxxxxxxx
subsequent to the Closing for the benefit of the PGC Subsidiaries will be
assigned of record to the PGC Subsidiary whose related pipelines or equipment
make use of such PGC Single-User Easements (or such PGC Partial Easement Rights,
as the case may be) as expeditiously as is reasonably practicable, but in any
event not later than
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the applicable date stated in Section 6.8(e) (as extended pursuant to the terms
hereof, the "EASEMENT ASSIGNMENT DEADLINE"). Subsequent to the Closing, all of
such PGC Single-User Easements (and all of such PGC Partial Easement Rights in
PGC Multiple-User Easements) shall, subject to the provisions of the last
sentence of Section 6.8(e) hereof, be assigned to the applicable PGC Subsidiary
in accordance with such timetable and action plan. Each assignment of legal
title to a PGC Single-User Easement (or any PGC Partial Easement Rights in a PGC
Multiple-User Easement, as the case may be) shall be by special warranty
assignment in recordable form customary for the state in which the property
affected by such PGC Single-User Easement or PGC Multiple-User Easement is
located, and shall be without warranty of title or completeness other than a
special warranty of title as against those claiming by, through, or under
Xxxxxxxx and not otherwise, and subject to Permitted Encumbrances. Counsel for
the Company shall have the right to monitor Xxxxxxxx' process of preparing such
assignments and the property descriptions therefor from time to time at
Xxxxxxxx' offices. Such counsel shall also have the right to review selected
samples of such assignments and descriptions to check whether same accurately
reflect the contents of Xxxxxxxx' files. All such assignments and descriptions
shall be reasonably satisfactory to the Company and its counsel. Xxxxxxxx shall
cause each such special warranty assignment to be filed of record in the
appropriate land title recording office, and shall pay all recording fees, deed
stamp taxes and other costs incurred in connection with such recordation.
Xxxxxxxx shall use reasonable efforts to complete such assignments in the order
of the relative value of the applicable PGC Easements, with the most valuable
PGC Easements to be assigned first; PROVIDED, HOWEVER, that nothing contained in
this sentence shall be construed as requiring Xxxxxxxx to assign any PGC
Gathering Easement prior to the Easement Assignment Deadline for the PGC
Trunkline Easements as set forth in Section 6.8(e) (as each such term is
hereinafter defined). If requested to do so by the Company, Xxxxxxxx shall use
reasonable efforts to change the order in which PGC Single-User Easements (and
PGC Partial Easement Rights) are scheduled to be assigned pursuant to this
Section 6.8 to accommodate the business requirements of the Company; PROVIDED,
HOWEVER, that if the Company shall request Xxxxxxxx to defer the assignment of
any PGC Trunkline Easement until after the assignment of any PGC Gathering
Easement (including, without limitation, under the circumstances described in
Section 6.8(f) hereof), then the Easement Assignment Deadline specified in
Section 6.8(e) with respect to the PGC Trunkline Easements shall be extended as
to such PGC Trunkline Easement to the extent reasonably necessary to enable
Xxxxxxxx to comply with such request.
(e) The PGC Easements relating to the pipelines identified in Schedule
6.8(e) annexed to this Agreement are herein called the "PGC TRUNKLINE
EASEMENTS". The PGC Easements, other than the PGC Trunkline Easements, are
herein called the "PGC GATHERING EASEMENTS". With respect to the PGC Trunkline
Easements for which legal title is to be assigned subsequent to the Closing
pursuant to Section 6.8(d), the applicable Easement Assignment Deadline is 120
days following the date of this Agreement, subject to the provisions of the last
sentence of this Section 6.8(e). With respect to the PGC Gathering Easements for
which record legal title is to be assigned subsequent to the Closing pursuant to
Section 6.8(d), the applicable Easement Assignment Deadline is 14 months from
the date of this Agreement subject to the provisions of the last sentence of
this Section 6.8(e). Not later than 30 days after each of the Easement
Assignment Deadlines, Xxxxxxxx shall furnish the Company a certificate of a duly
authorized officer of Xxxxxxxx, certifying that the obligations of Xxxxxxxx
required to have been performed on or prior to such Easement Assignment Deadline
have been complied with in all material respects as of the date of such
officer's certificate, or to the extent that such certification cannot
-43-
accurately be made, specifying the reasons therefor; PROVIDED that no such
certificate shall affect Xxxxxxxx' obligations or the Company's rights under the
other provisions of this Section 6.8. Notwithstanding anything appearing to the
contrary in Section 6.8(d) hereof or in this Section 6.8(e), with respect to any
Xxxxxxxx Retained Easement the assignment of which requires the consent or
approval of any Governmental Entity or other third party, (i) the Easement
Assignment Deadline for such Xxxxxxxx Retained Easement that would otherwise be
applicable to such Xxxxxxxx Retained Easement but for the operation of this
sentence shall be extended by 60 days in the case of a PGC Trunkline Easement
and 90 days in the case of a PGC Gathering Easement, but in each case no later
than that date which is 30 calendar days after such consent or approval shall
have been obtained; and (ii) Xxxxxxxx shall continue subsequent to the Closing
to use commercially reasonable efforts to obtain such consent or approval.
(f) At any time following Closing but prior to the applicable Easement
Assignment Deadline, the Company may notify Xxxxxxxx in writing that the
Company, because of significant business needs or opportunities of the Company
as to which time is of the essence (as determined in good faith by the General
Counsel of the Company), requires Xxxxxxxx to complete promptly the transfer of
record legal title to the PGC Subsidiaries of specified Xxxxxxxx Retained
Easements identified by the Company as being directly involved in such business
needs or opportunities. If Xxxxxxxx fails to complete such transfer within 30
days following such notice, the Company shall have the right, but not the
obligation, to take such of the following actions as it reasonably deems
necessary or appropriate to remedy such failure ("EASEMENT CURATIVE ACTIONS"):
(i) the preparation of an assignment (conforming to the requirements set forth
in Section 6.8(d)hereof) for the applicable Xxxxxxxx Retained Easement, (ii) the
payment of any amounts required to be paid to a third party for the granting of
any consents required for such assignment, (iii) obtaining a new easement for
the existing pipeline, (iv) provided that none of the other Easement Curative
Actions are reasonably likely, in the good faith opinion of the Company, to
remedy such failure, obtaining an easement for a replacement pipeline and laying
a pipeline in such easement; and (v) such other actions as are reasonable under
the circumstances. Xxxxxxxx shall give the Company and its representatives
reasonable access to any records in the possession of Xxxxxxxx or its
Subsidiaries necessary for the Company to prepare such assignments and property
descriptions therefor, PROVIDED such access does not unreasonably interfere with
any significant business need or opportunity as to which time is of the essence.
Within 20 days following request, Xxxxxxxx shall reimburse the Company for all
commercially reasonable costs incurred by the Company for the Easement Curative
Actions (including reimbursement for Company personnel time at their normal
hourly rates). The provisions of this Section 6.8(f) shall not limit the
indemnification obligations of Xxxxxxxx under Section 6.8(c).
(g) With respect to any Xxxxxxxx Retained Easements that (i) have not
been transferred to the applicable PGC Subsidiary as of the applicable Easement
Assignment Deadline due to the failure to obtain a Governmental Entity or other
third party consent and (ii) with respect to which Xxxxxxxx shall have
diligently used commercially reasonable efforts to obtain such consent during
the period beginning on the date hereof and ending on the applicable Easement
Assignment Deadline and Xxxxxxxx agrees to provide the Company a summary of its
efforts in that regard to date, Duke and Xxxxxxxx agree as follows:
(i) Xxxxxxxx shall have the right, for a period of 10 days following
such Easement Assignment Deadline, to approach the Company and propose any
lawful
-44-
arrangements (including an extension of the Easement Assignment Deadline)
that Xxxxxxxx believes will ultimately lead to the receipt of the
applicable unobtained consent within a reasonable period of time or
eliminate (in a lawful way) the need therefor, in either case without
exposing the Company to any undue risks;
(ii) The Company shall consider any such proposals in good faith and
shall act in a commercially reasonable manner (considering the interests of
both parties) in deciding whether to accept or reject any such proposal;
and
(iii) For so long as the Company is considering any such proposal made
by Xxxxxxxx, the Company will refrain from exercising its rights under the
remaining provisions of this Section 6.8(g) with respect to the applicable
PGC Easement.
Subject to the preceding provisions of this Section 6.8(g), at any time
following the applicable Easement Assignment Deadline, the Company may take one
or more Easement Curative Actions with respect to any PGC Easements which shall
not have been transferred by such Easement Assignment Deadline (without regard
to the existence of any significant business need or opportunity as to which
time is of the essence) and, in such event, the Company and Xxxxxxxx shall have
the same rights and obligations as stated in Section 6.8(f) with respect to such
Easement Curative Actions; provided, however, that the Company may take the
Easement Curative Actions described in clauses (i) and (ii) of the third
sentence of Section 6.8(f) upon prior written notice to Xxxxxxxx even in the
absence of commercially reasonable business needs of the Company or a PGC
Subsidiary, and nevertheless Xxxxxxxx shall reimburse the Company for its
reasonable costs incurred in connection with the taking of the Easement Curative
Actions. Each of Duke and the Company acknowledges and agrees that its remedies
against Xxxxxxxx for any failure on the part of Xxxxxxxx to complete the
transfer of legal title to any PGC Easement by the applicable Easement
Assignment Deadline, or any earlier date required under Section 6.8(f) (but not
its other obligations under this Section 6.8), shall be limited exclusively to
(A) seeking indemnification upon and subject to the terms, conditions and
limitations set forth in Section 6.8(c), and (B) taking one or more of the
Easement Curative Actions described in clauses (i) through (v) of Section 6.8(f)
hereof, upon and subject to the terms, conditions and limitations set forth in
Section 6.8(f) or this Section 6.8(g), as applicable.
(h) As expeditiously as is reasonably practicable, but in any event
not later than that date which is nine months after the Closing, record legal
title to all of the Xxxxxxxx Partial Easement Rights which are held by any PGC
Subsidiaries subsequent to the Closing for the benefit of Xxxxxxxx shall be
assigned of record to Xxxxxxxx or the Xxxxxxxx Retained Affiliate designated by
Xxxxxxxx. Each assignment of record legal title to any Xxxxxxxx Partial Easement
Rights in a PGC Multiple-User Easement shall be by special warranty assignment
in recordable form customary for the state in which the property affected by
such PGC Multiple-User Easement is located, and shall be without warranty of
title or completeness other than a special warranty of title as against those
claiming by, through, or under the Company or any PGC Subsidiary and not
otherwise, and subject to Permitted Encumbrances. Xxxxxxxx shall prepare forms
of assignment and the property descriptions therefor and furnish the same for
review and approval by the Company and its counsel, such approval not to be
unreasonably withheld or delayed. Xxxxxxxx shall cause each such special
warranty assignment to be filed of record in the appropriate land title
recording office, and shall pay all recording fees, deed stamp taxes and
-45-
other costs incurred in connection with such recordation. If requested to do so
by Xxxxxxxx, the Company and the PGC Subsidiaries shall use reasonable efforts
to schedule the assignment of Xxxxxxxx Partial Easement Rights pursuant to this
Section 6.8(h) so as to accommodate the business requirements of Xxxxxxxx.
(i) The instrument creating any PGC Multiple-User Easement may give
the easement holder the right to lay one or more additional pipelines on and
across the servient tenement. The partial assignment of such easement to be
completed pursuant to the provisions of this Section 6.8 shall provide that (i)
both assignor and assignee shall have the right to lay a replacement pipeline
and (ii) either assignor or assignee (but not both) shall have the right to lay
additional pipelines (unless expressly permitted by the provisions of the
instrument creating such easement). The party (as between assignor and assignee)
to receive such right to lay additional pipelines (the "ADDITIONAL LINE PARTY")
shall be (i) the party with the greater number of existing pipelines across the
easement or (ii) if each party has the same number of existing pipelines across
the easement, the party who has the greater demonstrated need (present or
projected future over a period of three years) for additional pipeline capacity
at such location. The determination of each party's "demonstrated need" for
additional pipeline capacity shall be on a case-by-case basis. The Company and
Xxxxxxxx shall share information and attempt to reach agreement as promptly as
possible with respect to each such PGC Easement. If, however, such parties fail
to reach agreement within ten (10) days after written notice given by either
party to the other, then the issue of which party shall be the Additional Line
Party for a particular PGC Easement shall be submitted to a mutually agreeable
third party whose determination shall be binding on the Company and Xxxxxxxx. At
any time and from time to time following the execution and delivery of a partial
assignment, the Additional Line Party shall consider and accommodate where
lawful and feasible consistent with the Additional Line Party's needs, a request
by the other party to the partial assignment and to the extent permitted
pursuant to the provisions of the underlying easement instrument and applicable
law, for a grant to such other party of the right to lay an additional pipeline
on and across the servient tenement or the establishment of an agency,
subcontracting, sublicensing or subleasing arrangement satisfactory to both
parties under which such other party would obtain the claims, rights and
benefits and assume the corresponding liabilities and obligations thereunder
with respect to an additional pipeline.
(j) If Duke or any Duke Retained Affiliate holds legal title to any of
the DEFS Easements for the benefit of DEFS or the DEFS Subsidiaries (or, in the
case of certain DEFS Multiple-User Easements, for the joint benefit of one or
more DEFS Subsidiaries, with respect to certain existing pipelines used in
connection with such DEFS Subsidiaries' business, and Duke or such Duke Retained
Affiliate, as the case may be, with respect to the remainder of such DEFS
Multiple-User Easement), or DEFS and the DEFS Subsidiaries hold legal title to
any of the DEFS Multiple-User Easements for the joint benefit of Duke or any
Duke Retained Affiliate, with respect to certain existing pipelines used in
connection with Duke's business, and DEFS or a DEFS Subsidiary, with respect to
the remainder of such DEFS Multiple-User Easement, then reciprocal covenants
corresponding to the covenants of Xxxxxxxx set forth in Sections 6.8(a) through
6.8(h) hereof relating to the PGC Easements shall be deemed incorporated in this
Agreement and shall be applicable to and binding upon the parties hereto with
respect to the affected DEFS Easements.
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Section 6.9 ASSIGNMENT OF CONTRACTS, LEASES, PERMITS, ETC.
(a) Anything in this Agreement or the Governance Agreement to the contrary
notwithstanding, this Agreement and the Governance Agreement shall not
constitute an agreement to assign any contract, lease or Permit or any claim,
right or benefit if an attempted assignment thereof, without the consent of a
third party, would constitute a breach or other contravention thereof, be
ineffective with respect to any party thereto or in any way adversely affect the
rights of the Company, a DEFS Subsidiary or a PGC Subsidiary thereunder.
(b) With respect to any contract, lease or Permit necessary to the
conduct of business of the DEFS Subsidiaries or the PGC Subsidiaries as
presently conducted (and any claim, right or benefit arising thereunder or
resulting therefrom) and not currently held by a DEFS Subsidiary or a PGC
Subsidiary, other than the matters addressed in Sections 6.8, 6.18 and 6.19
(including the PGC Easements) and 6.20, Duke, Xxxxxxxx and the Company will use
their reasonable best efforts to obtain as expeditiously as possible the written
consent of the other parties to such contract, lease or Permit for the
assignment or, if required, novation, thereof to the Company or a DEFS
Subsidiary or a PGC Subsidiary, as applicable, or, alternatively, written
confirmation from such parties reasonably satisfactory in form and substance to
Duke and Xxxxxxxx that such consent is not required. In furtherance of the
foregoing, except with regard to the matters addressed in Sections 6.8, 6.18,
6.19 and 6.20 as soon as practicable following the date hereof, Duke and
Xxxxxxxx shall submit to the other party or parties thereto documentation
seeking the written waiver or approval of such other contracting party or
parties thereto to the transfer and assignment of all of Duke's or Xxxxxxxx', as
applicable, claims, rights, benefits and liabilities thereunder to the Company
or a DEFS Subsidiary or a PGC Subsidiary, as applicable.
(c) The failure by the Parties to obtain any required consent, waiver,
confirmation, novation or approval with respect to any contract, lease, Permit,
PGC Easement, DEFS Easement or FCC License shall not relieve either Party from
its obligation to consummate at the Closing the transactions contemplated by
this Agreement or the Governance Agreement or any other obligations hereunder or
thereunder unless such failures would in the aggregate have a Material Adverse
Effect on DEFS or the PGC Subsidiaries.
(d) Except with regard to the matters addressed in Sections 6.8, 6.18,
6.19 and 6.20, if any consent, waiver, confirmation, novation or approval is not
obtained prior to the Closing with respect to any contract, lease or Permit
necessary to the conduct of the business of the DEFS Subsidiaries or the PGC
Subsidiaries as presently conducted, then Duke or Xxxxxxxx, as applicable, shall
establish an agency type or other arrangement satisfactory to the other Party
and to the Company under which Duke or Xxxxxxxx, as applicable, shall hold such
interest, lease or Permit for the DEFS Subsidiary or PGC Subsidiary, as
applicable, and the affected DEFS Subsidiary or PGC Subsidiary would obtain the
claims, rights and benefits and assume the corresponding liabilities and
obligations thereunder in accordance with this Agreement (including by means of
any subcontracting, sublicensing or subleasing arrangement) or under which Duke
or Xxxxxxxx, as applicable, would enforce at the direction of and for the
benefit of the DEFS Subsidiary or PGC Subsidiary, as applicable, with the DEFS
Subsidiary or PGC Subsidiary, as applicable, assuming and agreeing to pay Duke's
or Xxxxxxxx' obligations and expenses, any and all claims, rights and benefits
of Duke or Xxxxxxxx against a third party thereto; PROVIDED that Duke's or
Xxxxxxxx' obligation to maintain any such arrangement shall terminate upon the
earliest to occur of: (1) the expiration or termination of such contract, lease
or Permit
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in accordance with its terms (without regard to any extensions,
automatic or otherwise); or (2) with regard to a Permit, such time as the
Company, the DEFS Subsidiary or the PGC Subsidiary, as the case may be, shall
obtain a Permit in reasonable substitution therefor, or have its application for
such substitute Permit denied. In any such arrangement, (i) Duke or Xxxxxxxx, as
applicable, shall promptly pay to the DEFS Subsidiary or PGC Subsidiary, as
applicable, when received all moneys relating to the period after the Closing
Date received by it under any contract or any claim, right or benefit arising
thereunder not transferred pursuant to this Section 6.9 and (ii) the applicable
DEFS Subsidiary or PGC Subsidiary shall promptly pay, perform or discharge when
due any obligation or liability arising thereunder after the Closing Date.
Section 6.10 CORPORATE NAMES. (a) The Company and Duke acknowledge
that, from and after the Closing Date, the Company and Duke shall have no rights
with respect to any names, marks, trade names, trademarks and logos
(collectively, "TRADEMARKS AND LOGOS") incorporating "Xxxxxxxx" or "66" by
themselves or in combination with any other Trademark or Logo, including the
corporate design logos associated therewith, and that Xxxxxxxx shall retain
absolute and exclusive proprietary rights thereto or goodwill represented
thereby or pertaining thereto. The Company agrees that promptly after the
Closing Date it shall amend and cause to be amended the certificate of
incorporation or other organizational documents of Xxxxxxxx Natural Gas Company
(or its successor entity) to remove the "Xxxxxxxx" name and that from and after
the Closing Date, the Company and Duke shall not, nor shall they permit any of
their respective Affiliates to, use any name, phrase or logo incorporating
"Xxxxxxxx" or "66" or such corporate design logo or any confusingly similar
name, phrase, logo or corporate design logo in or on any of its literature,
sales materials or products or otherwise in connection with the sale of any
products or services; PROVIDED, HOWEVER, that the Company may continue to use
any signage, printed literature, sales materials, purchase orders and sales or
lease agreements, and sell any products, that are included in the inventories of
PGC on the Closing Date and that bear a name, phrase or logo incorporating
"Xxxxxxxx" or "66" or such corporate design logo, until the supplies thereof
existing on the Closing Date have been exhausted, but in any event for not
longer than 180 days from the Closing Date.
(b) (i) Except as set forth in Section 6.10(b)(ii), the Company and
Xxxxxxxx acknowledge that, from and after the Closing Date, the Company and
Xxxxxxxx shall have no rights with respect to Trademarks and Logos incorporating
"Duke" by itself or in combination with any other Trademark or Logo, including
the corporate design logos associated therewith, and that Duke shall retain
absolute and exclusive proprietary rights thereto or goodwill represented
thereby or pertaining thereto.
(ii) Duke shall grant the Company and the Corporation a royalty-free
license to the word "Duke", which shall be terminable at the option of Duke if
(A) Duke's ownership interest, both direct and indirect, in the Company or the
Corporation, as applicable, at any time, is less than or equal to 35% or (B)
Duke no longer controls, directly or indirectly, the management and policies of
the Company or the Corporation, as applicable. Such license shall include
appropriate restrictions with respect to the nature and quality of goods and
services in connection with which the Duke name or xxxx are used. The Company
agrees that if Duke provides notice to the Company that (1) its ownership
interest, both direct and indirect, in the Company, at any time, is less than or
equal to 35% or (2) it no longer controls, directly or
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indirectly, the management and policies of the Company, and that Duke wishes to
terminate the Company's license to the Duke name, the Company shall amend its
limited liability company agreement or other organizational documents and cause
to be amended the certificates of incorporation or other organizational
documents of the Corporation and its Subsidiaries, as applicable, to remove the
"Duke" name and that thereafter the Company shall not, nor shall it permit the
Corporation or any of its Affiliates to, use any name, phrase or logo
incorporating "Duke" or such corporate design logo or any confusingly similar
name, phrase, logo or corporate design logo in or on any of its literature,
sales materials or products or otherwise in connection with the sale of any
products or services; PROVIDED, HOWEVER, that the Company or the Corporation, as
applicable, may continue to use any signage, printed literature, sales
materials, purchase orders and sales or lease agreements, and sell any products,
that are included in its inventories on such date and that bear a name, phrase
or logo incorporating "Duke" or such corporate design logo, until the supplies
thereof existing on such date have been exhausted, but in any event for not
longer than 180 days from the date of such notice.
Section 6.11 D&O INDEMNIFICATION. The parties hereto agree that the
transactions contemplated by this Agreement and the Governance Agreement shall
not affect or diminish any duties and obligations of indemnification from Duke
or Xxxxxxxx or their respective Affiliates (other than the DEFS Subsidiaries and
the PGC Subsidiaries) existing as of the Closing Date in favor of employees,
agents, directors or officers of the DEFS Subsidiaries or the PGC Subsidiaries,
respectively, arising by virtue of their respective certificates of
incorporation or by-laws or other organizational documents in the form in effect
at the date of this Agreement or arising by operation of law or arising by
virtue of any contract, resolution or other agreement or document existing at
the date of this Agreement, and such duties and obligations shall continue in
full force and effect and shall be honored by the Company for so long as they
would (but for the transactions contemplated by this Agreement and the
Governance Agreement) otherwise survive and continue in full force and effect.
Section 6.12 ADDITIONAL AGREEMENTS. Simultaneously with the execution
of this Agreement, Duke, Xxxxxxxx and the Company are entering into the
Governance Agreement. At or prior to the Closing, Duke, Xxxxxxxx and the Company
shall enter into a transition services agreement (the "TRANSITION SERVICES
AGREEMENT"), providing for the provision of certain transitional services by
Duke and Xxxxxxxx to be reasonably requested by the Company at fully-burdened
cost for a period of not more than one year after the Closing Date.
Section 6.13 EXPENSES. Pre-Closing expenses and accruals of the DEFS
Subsidiaries arising out of the transactions contemplated by this Agreement and
the Governance Agreement and all other pre-Closing expenses of the DEFS
Subsidiaries shall be borne by Duke. Pre-Closing expenses and accruals of the
PGC Subsidiaries arising out of the transactions contemplated by this Agreement
and the Governance Agreement and all other pre-Closing expenses of the PGC
Subsidiaries shall be borne by Xxxxxxxx.
Section 6.14 INSURANCE. (a) Duke and the Company acknowledge that the
programs and policies of insurance maintained by Xxxxxxxx to provide coverage in
favor of the PGC Subsidiaries shall be terminated effective 12:01 A.M. on the
day following the Closing Date. From and after the Closing Date, all risk of
loss with respect to properties and assets of the PGC Subsidiaries shall be
borne by the Company. With respect to events occurring prior to the
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Closing Date, the PGC Subsidiaries shall be entitled to the benefits of
insurance from independent sources (not affiliated with Xxxxxxxx) maintained by
or for the benefit of the PGC Subsidiaries with respect to properties and assets
of the PGC Subsidiaries; PROVIDED, HOWEVER, that notwithstanding anything to the
contrary contained in this Agreement or the Governance Agreement, from and after
the Closing Date, the PGC Subsidiaries shall not be entitled to any insurance
recovery from any Xxxxxxxx-affiliated insurance company. Further, the Company
shall indemnify and hold harmless Xxxxxxxx from any retroactive premiums imposed
by any insurer under programs or policies maintained by Xxxxxxxx prior to
Closing as a result of any claims made after the Closing Date with respect to
the properties and assets of the PGC Subsidiaries regardless of the date of
loss.
(b) Xxxxxxxx and the Company acknowledge that the programs and
policies of insurance maintained by Duke to provide coverage in favor of the
DEFS Subsidiaries shall be terminated effective 12:01 A.M. on the day following
the Closing Date. From and after the Closing Date, except as agreed to by the
Company and Duke, all risk of loss with respect to properties and assets of the
DEFS Subsidiaries shall be borne by the Company. With respect to events
occurring prior to the Closing Date, the DEFS Subsidiaries shall be entitled to
the benefits of insurance from independent sources (not affiliated with Duke)
maintained by or for the benefit of the DEFS Subsidiaries with respect to
properties and assets of the DEFS Subsidiaries; provided, however, that
notwithstanding anything to the contrary contained in this Agreement or the
Governance Agreement, from and after the Closing Date, except as agreed to by
the Company and Duke, the DEFS Subsidiaries shall not be entitled to any
insurance recovery from any Duke-affiliated insurance company. Further, the
Company shall indemnify and hold harmless Duke from any retroactive premiums
imposed by any insurer under programs or policies maintained by Duke prior to
Closing as a result of any claims made after the Closing Date with respect to
the properties and assets of the DEFS Subsidiaries regardless of the date of
loss.
Section 6.15 GUARANTIES. (a) In the event that after the Closing Date
Xxxxxxxx or any Affiliate of Xxxxxxxx (other than the PGC Subsidiaries) remains
liable for any guarantees (whether of payment or performance), letters of credit
or other undertakings it has delivered prior to the Closing Date to others for
the benefit of any PGC Subsidiary, the Company agrees to indemnify and hold
harmless Xxxxxxxx or such Affiliate of Xxxxxxxx from any cost, expense or loss
(including reasonable attorneys' fees) incurred by Xxxxxxxx or such Affiliate of
Xxxxxxxx arising directly or indirectly therefrom with respect to pre-Closing
periods except insofar as such cost, expense or loss constitutes or arises from
a matter with respect to which the Company or any of its Affiliates (including
the PGC Subsidiaries) is entitled to indemnification hereunder. Any such
guarantees, letters of credit or other undertakings (including performance
guarantees) are set forth in Schedule 6.15(a) of the Xxxxxxxx Disclosure
Schedule. Any reasonable out-of-pocket expense incurred by Xxxxxxxx with respect
to maintaining such support for periods after the Closing Date shall be
reimbursed to Xxxxxxxx by the Company. The Company shall use its best efforts
(including an offer of a substitute guarantee, letter of credit or undertaking)
to cause or procure the release, within six months of the Closing Date, of all
liabilities or obligations of Xxxxxxxx or any Affiliate of Xxxxxxxx (other than
the PGC Subsidiaries) with respect to such guaranties, letters of credit or
other undertakings from any of the liabilities or obligations of any PGC
Subsidiary for post-Closing periods.
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(b) In the event that after the Closing Date Duke or any Affiliate of
Duke (other than the Company and the DEFS Subsidiaries) remains liable for any
guarantees (whether of payment or performance), letters of credit or other
undertakings it has delivered prior to the Closing Date to others for the
benefit of any DEFS Subsidiary, the Company agrees to indemnify and hold
harmless Duke or such Affiliate of Duke from any cost, expense or loss
(including reasonable attorneys' fees) incurred by Duke or such Affiliate of
Duke arising directly or indirectly therefrom with respect to pre-Closing
periods except insofar as such cost, expense or loss constitutes or arises from
a matter with respect to which the Company or any of its Affiliates (including
the DEFS Subsidiaries) is entitled to indemnification hereunder. Any such
guarantees, letters of credit or other undertakings (including performance
guarantees) are set forth in Schedule 6.15(b) of the Duke Disclosure Schedule.
Any reasonable out-of-pocket expense incurred by Duke with respect to
maintaining such support for periods after the Closing Date shall be reimbursed
to Duke by the Company. The Company shall use its best efforts (including an
offer of a substitute guarantee, letter of credit or undertaking) to cause or
procure the release, within six months of the Closing Date, of all liabilities
or obligations of Duke or any Affiliate of Duke (other than the Company and the
DEFS Subsidiaries) with respect to such guaranties, letters of credit or other
undertakings from any of the liabilities or obligations of any DEFS Subsidiary
for post-Closing periods.
Section 6.16 ACTIONS BY AFFILIATES OF XXXXXXXX AND XXXX. Each of
Xxxxxxxx and Duke shall ensure that each of their respective Affiliates (other
than, following the Closing, the Company and the Corporation) takes all actions
necessary to be taken by such Affiliate in order to fulfill the obligations of
Xxxxxxxx or Xxxx, as the case may be, under this Agreement and the Governance
Agreement.
Section 6.17 FINANCING. (a) Prior to the Closing, each of Duke and
Xxxxxxxx shall use its reasonable best efforts and cooperate with each other to
cause the Company to secure bank credit facilities of at least the sum of (i)
$2,400,000,000, (ii) an amount equal to the aggregate purchase prices of any of
the acquisitions set forth in Schedule 6.4(e) of the Xxxxxxxx Disclosure
Schedule and in Schedule 6.5(e) of the Duke Disclosure Schedule with respect to
which acquisition documents have been executed or the closing has been
consummated, (iii) an amount equal to the aggregate purchase prices of any
acquisitions approved by Duke or Xxxxxxxx, as applicable, pursuant to Section
6.4 or 6.5 prior to the Closing Date with respect to which acquisition documents
have been executed or the closing has been consummated, and (iv) an amount
reasonably necessary for working capital purposes for the Company, on reasonably
available commercial terms mutually agreeable to the parties hereto
(collectively, the "FINANCING").
Section 6.18 PGC REAL PROPERTY. (a) FEE PROPERTIES. (i) Record title
to any PGC-Owned Fee Property that is not owned of record by any of the PGC
Subsidiaries as of the date hereof shall be conveyed to the appropriate PGC
Subsidiary on or prior to the Closing Date by general warranty deed in form
customary for the state in which such PGC-Owned Fee Property is located.
Xxxxxxxx shall cause each such general warranty deed to be prepared, executed
and filed of record in the appropriate land title recording office, and shall
pay all recording fees, deed stamp taxes and other costs incurred in connection
with such recordation.
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(ii) If any PGC-Owned Fee Property is currently being used
simultaneously by Xxxxxxxx (or a Xxxxxxxx Retained Affiliate) and by a PGC
Subsidiary in their respective business operations, then Xxxxxxxx and Duke, both
acting reasonably and in good faith, shall jointly prepare and agree upon a
mutually acceptable arrangement whereby Xxxxxxxx (or such Xxxxxxxx Retained
Affiliate, as the case may be) will be permitted to continue subsequent to the
Closing to use and occupy such PGC-Owned Fee Property for substantially the same
purpose, in substantially the same manner and to substantially the same extent
as prior to the Closing. Any such shared-use arrangement with respect to a
PGC-Owned Fee Property (A) shall be finalized not later than the date on which
fee title to such PGC-Owned Fee Property is conveyed of record to the applicable
PGC Subsidiary, (B) shall be structured so as to minimize the interference of
any use of such PGC-Owned Fee Property by either party to such arrangement with
any use of such PGC-Owned Fee Property by the other party, and (C) shall provide
for reasonable rights of ingress and egress to and from such PGC-Owned Fee
Property where necessary. It is anticipated that any such shared-use
arrangements with respect to PGC-Owned Fee Properties will in most cases consist
of perpetual easements or licenses granted by a PGC Subsidiary to Xxxxxxxx or a
Xxxxxxxx Retained Affiliate. However, in the case of certain PGC-Owned Fee
Properties (identified in Schedule 4.11(a) of the Xxxxxxxx Disclosure Schedule)
it may be necessary or desirable for a PGC Subsidiary to reconvey to Xxxxxxxx or
a Xxxxxxxx Retained Affiliate fee title to the portion of such PGC-Owned Fee
Property that is being used by Xxxxxxxx or such Xxxxxxxx Retained Affiliate, as
the case may be. In any such case, Xxxxxxxx shall pay, or cause the applicable
Xxxxxxxx Retained Affiliate to pay, all recording fees, deed stamp taxes and
other costs incurred in connection with such reconveyance.
(b) REALTY LEASES. (i) Not later than the Closing Date, Xxxxxxxx shall
prepare and deliver to the Company an updated schedule of PGC Leases, which
updated schedule shall indicate, with respect to each Non-Government PGC Lease
that is not held of record by any of the PGC Subsidiaries as of the date hereof,
whether assignment of such PGC Lease requires the consent of the lessor
thereunder (those Non-Government PGC Leases which do not require lessor consent
being sometimes referred to in this Agreement, collectively, as "ASSIGNABLE PGC
LEASES"). The information set forth on the updated PGC Lease schedule shall be
for the information and benefit of the Company only, and shall not confer upon
any lessor or other third party any consent or approval right that is not
expressly provided for in the applicable PGC Lease.
(ii) Each Assignable PGC Lease shall be assigned to the
appropriate PGC Subsidiary on or prior to the Closing Date by special warranty
assignment in recordable form customary for the state in which the property
demised by such Assignable PGC Lease is located. Xxxxxxxx shall cause each such
special warranty assignment to be prepared, executed and filed of record in the
appropriate land title recording office, and shall pay all recording fees, deed
stamp taxes and other costs incurred in connection with such recordation.
(iii) From and after the Closing, with respect to any PGC Lease
the leasehold estate under which continues to be held of record by Xxxxxxxx or a
Xxxxxxxx Retained Affiliate ("RETAINED PGC LEASE"), Xxxxxxxx shall continue to
use commercially reasonable efforts to obtain the consent of the lessor under
such Retained PGC Lease to the assignment thereof to the appropriate PGC
Subsidiary. Xxxxxxxx shall pay and be responsible for and shall indemnify,
defend and hold harmless the Company from and against any amounts reasonably
required to be
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paid in order to obtain the consent of the lessor under any Retained PGC Lease
to the assignment thereof. If and when the requisite consent to assignment shall
be obtained with respect to any Retained PGC Lease, such Retained PGC Lease
shall be assigned to the appropriate PGC Subsidiary by special warranty
assignment in recordable form customary for the state in which the property
demised by such Retained PGC Lease is located. Xxxxxxxx shall cause each such
special warranty assignment to be prepared, executed and filed of record in the
appropriate land title recording office, and shall pay all recording fees, deed
stamp taxes and other costs incurred in connection with such recordation.
(iv) At all times from and after the Closing while the leasehold
estate under any Retained PGC Lease shall continue to be held of record by
Xxxxxxxx or any Xxxxxxxx Retained Affiliate, Xxxxxxxx or such Xxxxxxxx Retained
Affiliate, as the case may be, shall hold such Retained PGC Lease and exercise
and enforce its rights thereunder for the use and benefit of, and in such manner
as may be reasonably directed by, the appropriate PGC Subsidiary. In connection
with any Retained PGC Lease, Duke and Xxxxxxxx agree as follows:
(A) Xxxxxxxx shall indemnify, defend and hold harmless the
Company and its Subsidiaries from and against any and all Damages,
excluding consequential and punitive Damages, suffered or incurred by
the Company or such Subsidiaries after Closing as a result of the
failure of Xxxxxxxx to have assigned such Retained PGC Lease to the
PGC Subsidiaries by the Closing Date (all necessary third party
consents having been obtained); provided, however, that such indemnity
shall not extend to any Damages resulting from or attributable to the
failure or inability of the Company to obtain financing for the
transactions contemplated by this Agreement.
(B) The Company shall indemnify, defend and hold harmless
Xxxxxxxx and the Xxxxxxxx Retained Affiliates from and against any and
all Damages, excluding consequential and punitive Damages, suffered or
incurred by such entities after Closing in respect of such Retained
PGC Lease to the extent such Damages consist of Subject Lease
Liabilities that the Company or its Subsidiaries would have been
responsible for, had such Retained PGC Lease been assigned to the PGC
Subsidiaries by the Closing Date (all necessary third party consents
having been obtained).
As used in this Section 6.18, the term "SUBJECT LEASE LIABILITIES" shall mean,
with respect to a Xxxxxxxx Retained Easement, any and all payment obligations to
third parties, including lease rentals, renewal fees, ad valorem and other
taxes, arising and relating to the period from and after Closing in respect of
such Retained PGC Lease.
(v) At any time following the Closing Date, the Company may
notify Xxxxxxxx in writing that the Company, because of significant business
needs or opportunities, as to which time is of the essence (as determined in
good faith by the General Counsel of the Company), requires Xxxxxxxx to complete
promptly the transfer of record legal title to the PGC Subsidiaries of specified
Retained PGC Leases identified by the Company. If Xxxxxxxx fails to complete
such transfer within 30 days following such notice, the Company shall have the
right, but not the obligation, to take such reasonable actions as it deems
necessary or appropriate to remedy such failure ("LEASE CURATIVE ACTIONS"). The
Lease Curative Actions may include (i) the preparation of an assignment in the
form required under Section 6.18(b)(ii) for the applicable
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Retained PGC Lease, (ii) the payment of any amounts required to be paid to a
third party for the granting of any consents required for such assignment, (iii)
obtaining a new lease from the landowner to replace the Retained PGC Lease, (iv)
provided that none of the other Lease Curative Actions are reasonably likely, in
the good faith opinion of the Company, to remedy such failure, obtaining a lease
for a new site for the affected facilities and moving them to the new site, and
(v) such other actions as are reasonable under the circumstances. Xxxxxxxx shall
give the Company and its representatives reasonable access to any records in the
possession of Xxxxxxxx or its Subsidiaries necessary for the Company to prepare
such assignments and property descriptions therefor, provided such access does
not unreasonably interfere with any significant business need or opportunity as
to which time is of the essence. Within twenty (20) days following the request,
Xxxxxxxx shall reimburse the Company for all commercially reasonable costs
incurred by the Company for the Lease Curative Actions (including reimbursement
for Company personnel time at their normal hourly rates). The provisions of this
Section 6.18(b)(v) shall not limit the indemnification obligations of Xxxxxxxx
under Section 6.18(b)(iv).
(vi) If any PGC Leased Property is currently being used
simultaneously by Xxxxxxxx (or a Xxxxxxxx Retained Affiliate) and by a PGC
Subsidiary in their respective business operations, then Xxxxxxxx and Duke, both
acting reasonably and in good faith, shall jointly prepare and agree upon a
mutually acceptable arrangement whereby Xxxxxxxx (or such Xxxxxxxx Retained
Affiliate, as the case may be) will be permitted to continue subsequent to the
Closing to use and occupy such PGC Leased Property for substantially the same
purpose, in the substantially the same manner and to substantially the same
extent as prior to the Closing. Any such shared-use arrangement with respect to
a PGC Leased Property (A) shall be finalized not later than the date on which
the related PGC Lease is assigned of record to the applicable PGC Subsidiary,
(B) shall be structured so as to minimize the interference of any use of such
PGC Leased Property by either party to such arrangement with any use of such PGC
Leased Property by the other party, (C) shall provide for reasonable rights of
ingress and egress to and from such PGC Leased Property where necessary, and (D)
shall provide for Xxxxxxxx to retain liability for all pre-Closing environmental
conditions as to the portion of the leased property used by Xxxxxxxx or a
Xxxxxxxx Retained Affiliate.
(vii) If all or part of any pipeline owned or used by the PGS
Subsidiaries is constructed upon any PGC Lease (a "PGC PIPELINE LEASE"), then
(A) all of the provisions of Section 6.8 shall apply (in lieu of the provisions
of this Section 6.18(b)) to such PGC Pipeline Lease to the same extent as a PGC
Easement, (B) if such PGC Pipeline Lease relates to a pipeline identified in
Exhibit 6.8(e) annexed to this Agreement, then Xxxxxxxx shall cause record legal
title to such PGC Pipeline Lease to be transferred to the PGC Subsidiaries not
later than the Easement Assignment Deadline for the PGC Trunkline Easements as
set forth in Section 6.8(e), and (C) Xxxxxxxx shall cause record legal title to
any PGC Pipeline Lease not referenced in the preceding clause (B) to be
transferred to the PGC Subsidiaries not later than the Easement Assignment
Deadline for the PGC Gathering Easements as set forth in Section 6.8(e).
Section 6.19 DEFS REAL PROPERTY. In the event that Duke or any Duke
Retained Affiliate holds legal title to any of the DEFS-Owned Fee Properties or
the leasehold estate under any of the DEFS Leases for the benefit of the DEFS
Subsidiaries, then reciprocal covenants corresponding to the covenants set forth
in Section 6.18 hereof relating to the PGC-Owned Fee Properties or the PGC
Leases, as the case may be, shall be deemed incorporated in this
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Agreement and shall be applicable to and binding upon the parties hereto with
respect to the affected DEFS-Owned Fee Property or the leasehold estate under
the affected DEFS Lease, as the case may be.
Section 6.20 FCC LICENSES; RADIO TOWERS. (a) Prior to the Closing
Date, or as soon thereafter as practicable, Xxxxxxxx shall use commercially
reasonable efforts to assign, or cause to be assigned, to the PGC Subsidiaries
all of the FCC Licenses used solely by them but held of record by Xxxxxxxx or a
Xxxxxxxx Retained Affiliate as of the date hereof, including those identified on
Schedule 6.20(a) of the Xxxxxxxx Disclosure Schedule. Xxxxxxxx shall cause each
such assignment to be filed with the Federal Communications Commission, shall
use commercially reasonable efforts to obtain any approvals and consents from
such Commission necessary for such transfer and shall pay all fees and other
costs incurred in connection with such assignment.
(b) This clause (b) applies to any FCC License identified in Schedule
6.20(a) of the Xxxxxxxx Disclosure Schedule that is currently being used
simultaneously by Xxxxxxxx or a Xxxxxxxx Retained Affiliate and by a PGC
Subsidiary in their respective business operations ("SHARED FCC LICENSE"). Prior
to the Closing, Xxxxxxxx shall use commercially reasonable efforts to obtain two
FCC Licenses in replacement of the Shared FCC License, one in the name of and
for the benefit of Xxxxxxxx or such Xxxxxxxx Retained Affiliate and the second
in the name of and for the benefit of the PGC Subsidiary. Xxxxxxxx shall pay, or
cause the applicable Xxxxxxxx Retained Affiliate to pay, all fees and other
costs incurred in connection with the issuance of such replacement FCC Licenses.
In the event that Xxxxxxxx is unable to obtain two replacement licenses,
Xxxxxxxx will transfer the Shared FCC License to the PGC Subsidiary subject to a
mutually acceptable arrangement whereby Xxxxxxxx or such Xxxxxxxx Retained
Affiliate, as the case may be, shall be permitted to continue to use such FCC
License subsequent to the Closing for substantially the same purpose, in
substantially the same manner and to substantially the same extent as prior to
the Closing. Any such shared-use arrangement with respect to the Shared FCC
License shall be finalized not later than the date on which the Shared FCC
License is transferred. Xxxxxxxx shall pay, or shall cause the applicable
Xxxxxxxx Retained Affiliate to pay, all fees and other costs incurred in
connection with such assignment.
(c) If Xxxxxxxx or a Xxxxxxxx Retained Affiliate, as of the date of
this Agreement, owns the radio tower corresponding to any FCC License identified
in Schedule 6.20(a) of the Xxxxxxxx Disclosure Schedule, then Xxxxxxxx and Xxxx,
both acting reasonably and in good faith, shall jointly prepare and agree upon a
mutually acceptable arrangement whereby Xxxxxxxx or such Xxxxxxxx Retained
Affiliate, as the case may be, shall be permitted to continue to use such radio
tower subsequent to the Closing for substantially the same purpose, in
substantially the same manner and to substantially the same extent as prior to
the Closing. Xxxxxxxx shall use commercially reasonable efforts to obtain, prior
to Closing, consent of third party tower lessors for the assignment to the PGC
Subsidiary of all tower leases corresponding to the FCC Licenses required to be
transferred herein. In those instances where the third party lessor does not
consent to such transfer, Xxxxxxxx and Xxxx shall prepare and agree upon a
shared use agreement with respect to the radio tower as described below. Any
such shared-use arrangement with respect to a radio tower (i) shall be finalized
not later than the date on which title to such radio tower is conveyed of record
to the affected PGC Subsidiary, (ii) shall be structured so as to minimize the
interference of any use of such radio tower by either party to such arrangement
with any use of such radio tower by the other party, and (iii) shall provide for
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reasonable rights of ingress and egress to and from such radio tower where
necessary. It is anticipated that any such shared-use arrangements with respect
to radio towers will in most cases consist of (A) the transfer by Xxxxxxxx or
the Xxxxxxxx Retained Affiliate to the PGC Subsidiaries of record legal title to
such radio tower and the fee property on which such tower is located and (B) the
grant by the affected PGC Subsidiary of a perpetual easement or license to
Xxxxxxxx or a Xxxxxxxx Retained Affiliate. Xxxxxxxx shall cause a general
warranty deed for each such transfer to be prepared, executed and filed of
record in the appropriate land title recording office, and shall pay all
recording fees, deed stamp taxes and other costs incurred in connection with
such recordation.
(d) Prior to the Closing Date, or as soon thereafter as practicable,
Duke shall use commercially reasonable efforts to cause to be assigned to the
DEFS Subsidiaries all of the FCC Licenses used solely by them but held of record
by third parties as of the date hereof, including those identified on Schedule
6.20(d) of the Duke Disclosure Schedule. Duke shall use its commercially
reasonable efforts to (i) cause each such assignment to be filed with the
Federal Communications Commission, and (ii) obtain any approvals and consents
from such Commission necessary for such transfer, and Duke shall pay all fees
and other costs incurred in connection with such assignment (other than such
fees and costs paid by such third parties).
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 CONDITIONS TO DUKE'S OBLIGATION TO CLOSE. Duke's
obligation to consummate the transactions contemplated by this Agreement and the
Governance Agreement on the terms specified herein shall be subject to the
satisfaction or waiver on or prior to the Closing Date of all of the following
conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXXXXX. (1) The
representations and warranties of Xxxxxxxx contained in this Agreement shall be
true and correct both when made and on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date (except for representations and warranties expressly made as of an
earlier date, in which case as of such date), except for such failures to be
true and correct (without giving effect to any Materiality Requirement) which,
individually or in the aggregate, do not have a Material Adverse Effect on the
PGC Subsidiaries.
(2) The covenants and agreements of Xxxxxxxx to be performed on
or before the Closing Date in accordance with this Agreement and the Governance
Agreement shall have been duly performed in all material respects.
(3) Duke shall have received at the Closing a certificate dated
the Closing Date and validly executed on behalf of Xxxxxxxx by an officer of
Xxxxxxxx to the effect that the conditions specified in clauses (1) and (2) of
this Section 7.1(a) have been satisfied.
(b) REGULATORY APPROVALS. Any waiting periods applicable to the
transactions contemplated by this Agreement under applicable United States
antitrust or trade regulation laws and regulations, including under the HSR Act,
shall have expired or been terminated.
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(c) NO INJUNCTION OR PROCEEDINGS. At the Closing Date, (i) there shall
be no statute, rule, regulation, injunction, restraining order or decree of any
nature of any Governmental Entity of competent jurisdiction that is in effect
that restrains or prohibits the consummation of a material portion of the
transactions contemplated by this Agreement and (ii) no action or proceeding
before any Governmental Entity shall have been instituted by a Governmental
Entity to restrain or prohibit the consummation of a material portion of the
transactions contemplated by this Agreement or the Governance Agreement.
(d) MATERIAL ADVERSE EFFECT. From September 30, 1999 through the
Closing, other than actions contemplated by Section 6.2, no Material Adverse
Effect on the PGC Subsidiaries shall have occurred and there shall exist no fact
or circumstances which would reasonably be expected to have a Material Adverse
Effect on the PGC Subsidiaries.
(e) FINANCING. The Company shall have obtained the Financing
contemplated by Section 6.17.
Section 7.2 CONDITIONS TO XXXXXXXX' OBLIGATION TO CLOSE. Xxxxxxxx'
obligation to consummate the transactions contemplated by this Agreement and the
Governance Agreement on the terms specified herein shall be subject to the
satisfaction or waiver on or prior to the Closing Date of all of the following
conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF DUKE. (1) The
representations and warranties of Duke contained in this Agreement shall be true
and correct both when made and on and as of the Closing Date, with the same
effect as though such representations and warranties had been made on and as of
such date (except for representations and warranties expressly made as of an
earlier date, in which case as of such date), except for such failures to be
true and correct (without giving effect to any Materiality Requirement) which,
individually or in the aggregate, do not have a Material Adverse Effect on DEFS.
(2) The covenants and agreements of Duke to be performed on or
before the Closing Date in accordance with this Agreement and the Governance
Agreement shall have been duly performed in all material respects.
(3) Xxxxxxxx shall have received at the Closing a certificate
dated the Closing Date and validly executed on behalf of Duke by an officer of
Duke to the effect that the conditions specified in clauses (1) and (2) of this
Section 7.2(a) have been satisfied.
(b) REGULATORY APPROVALS. Any waiting periods applicable to the
transactions contemplated by this Agreement under applicable United States
antitrust or trade regulation laws and regulations, including under the HSR Act,
shall have expired or been terminated.
(c) NO INJUNCTION OR PROCEEDINGS. At the Closing Date, (i) there shall
be no statute, rule, regulation, injunction, restraining order or decree of any
nature of any Governmental Entity of competent jurisdiction that is in effect
that restrains or prohibits the consummation of a material portion of the
transactions contemplated by this Agreement and (ii) no action or proceeding
before any Governmental Entity shall have been instituted by a Governmental
Entity to restrain or prohibit the consummation of a material portion of the
transactions contemplated by this Agreement or the Governance Agreement.
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(d) MATERIAL ADVERSE EFFECT. From September 30, 1999 through the
Closing, other than actions contemplated by Section 6.2, no Material Adverse
Effect on DEFS shall have occurred and there shall exist no fact or
circumstances which would reasonably be expected to have a Material Adverse
Effect on DEFS.
(e) FINANCING. The Company shall have obtained the Financing
contemplated by Section 6.17.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing by:
(a) The mutual written consent of Duke and Xxxxxxxx;
(b) Either Duke or Xxxxxxxx if the Closing has not occurred by the
close of business on September 30, 2000, PROVIDED that the failure to consummate
the transactions contemplated by this Agreement did not result from the failure
by the party seeking termination of this Agreement to fulfill any material
undertaking or commitment provided for herein that is required to be fulfilled
prior to the Closing;
(c) Either Duke or Xxxxxxxx if the other Party shall have breached or
failed to perform in any material respect any of its respective representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 7.1(a) or 7.2(a), as applicable, and (ii) cannot be or has
not been cured within 30 days after the giving of written notice to Duke or
Xxxxxxxx, as applicable; or
(d) Either Duke or Xxxxxxxx in the event that any order, law, statute,
ordinance, rule, regulation or decree becomes effective (and final and
nonappealable) permanently restraining, enjoining or otherwise prohibiting or
making illegal or otherwise prohibiting the consummation of a material portion
of the transactions contemplated by this Agreement or the Governance Agreement,
upon notification of the non-terminating party by the terminating party.
Section 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by either or both of Duke and Xxxxxxxx pursuant to
Section 8.1, written notice thereof shall forthwith be given by the terminating
party to the other parties hereto, and this Agreement shall thereupon terminate
and become void and have no effect, and the transactions contemplated by this
Agreement shall be abandoned without further action by the parties hereto,
except that the provisions of Section 6.1(b) shall survive the termination of
this Agreement; PROVIDED, HOWEVER, that such termination shall not relieve any
party hereto of any liability for any willful breach of this Agreement. If this
Agreement is terminated as provided herein, the Governance Agreement shall
simultaneously be terminated, and all filings, applications and other
submissions made pursuant hereto shall, to the extent practicable, be withdrawn
from the
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agency or other persons to which they were made by the party making
such filing, application or other submission.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 INDEMNIFICATION BY COMPANY. Subject to the provisions of
this Article IX, the Company shall indemnify and hold harmless each of Xxxxxxxx
and its Affiliates (other than the Company and its Subsidiaries) (each a
"XXXXXXXX INDEMNIFIED PERSON") and Duke and its Affiliates (other than the
Company and its Subsidiaries) (each a "DUKE INDEMNIFIED PERSON") from and
against any and all Damages incurred by such Xxxxxxxx Indemnified Person or Duke
Indemnified Person in connection with (i) any failure by the Company to perform
any covenant or other agreement hereunder, (ii) all Liabilities of a Xxxxxxxx
Indemnified Person or a Duke Indemnified Person arising under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
solely by virtue of its status as an owner of any of the PGC Subsidiaries or the
DEFS Subsidiaries prior to the Closing Date, except in each case for matters
indemnified under Sections 9.2(a) and 9.2(b), and (iii) all Liabilities made the
responsibility of the Company and/or its Subsidiaries pursuant to Annex A.
Section 9.2 INDEMNIFICATION BY DUKE AND XXXXXXXX. (a) Subject to the
provisions of this Article IX, Duke shall indemnify and hold harmless Xxxxxxxx
and its Affiliates and the Company and its Affiliates (excluding Duke and, prior
to the IPO, DEFS Holding, but including the DEFS Subsidiaries following the
Closing) from and against any and all Damages incurred by Xxxxxxxx and its
Affiliates or the Company and its Affiliates (excluding Duke and, prior to the
IPO, DEFS Holding but including the DEFS Subsidiaries following the Closing) in
connection with (i) a breach of any representation or warranty made by Duke
hereunder or in any schedule, exhibit or other document attached to or delivered
pursuant to this Agreement, (ii) any failure by Duke to perform any covenant or
agreement hereunder, (iii) all Liabilities included in Duke Excluded Assets and
Liabilities and (iv) all Liabilities made the responsibility of Duke and/or its
Subsidiaries (other than the Company and its Subsidiaries) pursuant to Annex A.
(b) Subject to the provisions of this Article IX, Xxxxxxxx shall
indemnify and hold harmless Duke and its Affiliates and the Company and its
Affiliates (excluding Xxxxxxxx and, prior to the IPO, PGC and PGC Member Parent
but including the PGC Subsidiaries following the Closing) from and against any
and all Damages incurred by Duke and its Affiliates or the Company or its
Affiliates (excluding Xxxxxxxx, prior to the IPO, and PGC and PGC Member Parent,
but including the PGC Subsidiaries following the Closing) in connection with (i)
a breach of any representation or warranty made by Xxxxxxxx hereunder or in any
schedule, exhibit or other document attached to or delivered pursuant to this
Agreement, (ii) any failure by Xxxxxxxx to perform any covenant or agreement
hereunder, (iii) all Liabilities included in Xxxxxxxx Excluded Assets and
Liabilities and (iv) all Liabilities made the responsibility of Xxxxxxxx and/or
its Subsidiaries pursuant to Annex A.
(c) Matters relating to indemnification for Taxes shall not be
governed by this Article IX (other than this Section 9.2(c)), except to the
extent otherwise provided in Annex B.
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The parties hereto agree that the indemnification provisions in Article XI shall
be the exclusive remedy of the parties with respect to breaches of the
representations and warranties in Sections 6.1 and 6.2 of Annex B, except for
actions grounded in fraud, with respect to which the remedies and limitations
set forth in this Agreement shall not apply or in any manner limit the scope or
availability of any other remedy at law or in equity.
Section 9.3 INDEMNIFICATION PROCEDURE. All claims by any Indemnified
Party under Article VI or this Article IX shall be asserted and resolved as
follows:
(a) In the event that (i) any claim, demand or proceeding is asserted
or instituted in writing by any Person other than the parties to this Agreement
or their Affiliates which could give rise to Damages for which an Indemnifying
Party could be liable to an Indemnified Party under this Agreement (such claim,
demand or proceeding, a "THIRD PARTY CLAIM") or (ii) any Indemnified Party shall
have a claim to be indemnified by any Indemnifying Party under this Agreement
which does not involve a Third Party Claim (such claim, a "DIRECT CLAIM"), the
Indemnified Party shall promptly send to the Indemnifying Party a written notice
specifying the nature of such claim, together with information reasonably
available to the Indemnified Party with respect to such claim (a "CLAIM
NOTICE"), PROVIDED that, subject to the last sentence of Section 9.4, a delay in
notifying the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that such failure shall
have caused actual prejudice to the Indemnifying Party. In the case where the
Company is the Indemnified Party, either Duke or Xxxxxxxx may assert an
indemnity claim on behalf of the Company and each shall be considered an
Indemnified Party for purposes of this Section 9.3 in connection with any Third
Party Claim or Direct Claim for which the other is the Indemnifying Party.
(b) In the event of a Third Party Claim, the Indemnifying Party shall
have 30 days after receipt of the Claim Notice relating to such Third Party
Claim to elect to undertake, conduct and control, through counsel of its own
choosing (PROVIDED that such counsel is reasonably acceptable to the Indemnified
Party) and at its own expense, the settlement or defense of such Third Party
Claim (in which case the Indemnifying Party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by any Indemnified
Party except as set forth below). If the Indemnifying Party elects to undertake
such defense, it shall promptly assume and hold such Indemnified Party harmless
from and against the full amount of any Damages resulting from such Third Party
Claim to the extent provided herein. Notwithstanding an Indemnifying Party's
election to undertake, conduct and control such Third Party Claim, the
Indemnified Party shall have the right to employ separate counsel, and the
Indemnifying Party shall bear the reasonable fees, costs and expenses of such
separate counsel, if the use of the counsel selected by the Indemnifying Party
to represent the Indemnified Party would present such counsel with a conflict of
interest. If the Indemnifying Party elects to undertake such defense, (i) the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting such Third Party Claim, and, if appropriate and related to
such Third Party Claim, the parties will reasonably cooperate with each other in
connection with making any counterclaim against the person asserting the Third
Party Claim, or any cross-complaint against any Person, (ii) such Third Party
Claim may not be settled or compromised by the Indemnified Party without the
prior written consent of the Indemnifying Party; PROVIDED that in the event any
Indemnified Party settles or compromises or consents to the entry of any
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judgment with respect to any Third Party Claim without the prior written consent
of the Indemnifying Party, such Indemnified Party shall be deemed to have waived
all rights against the Indemnifying Party for indemnification under this Article
IX, and (iii) the Indemnifying Party shall not, except with the consent of the
Indemnified Party, enter into any settlement that does not include as an
unconditional term thereof the giving by the third party asserting such claim to
all Indemnified Parties of (A) unconditional release from all liability with
respect to such Third Party Claim or (B) consent to entry of any judgment. If
the Indemnifying Party does not notify the Indemnified Party of its election to
undertake the defense of such Third Party Claim within 30 days after receipt of
the Claim Notice relating to such Third Party Claim, the Indemnified Party shall
have the right to contest, settle, compromise or consent to the entry of any
judgment with respect to such Third Party Claim and in doing so shall not
thereby waive any right to indemnity therefor pursuant to this Article IX,
PROVIDED that at any time thereafter the Indemnifying Party may assume the
defense of such Third Party Claim.
(c) In the event of a Direct Claim, the Indemnifying Party shall
notify the Indemnified Party within 30 days of receipt of a Claim Notice whether
or not the Indemnifying Party disputes such claim.
(d) From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party the Indemnified
Party shall grant the Indemnifying Party and its representatives all reasonable
access to the books, records and properties of such Indemnified Party to the
extent reasonably related to the matters to which the Claim Notice relates. All
such access shall be granted during normal business hours and shall be granted
under conditions which will not unreasonably interfere with the business and
operations of such Indemnified Party. The Indemnifying Party will not, and shall
cause its representatives not to, use (except in connection with such Claim
Notice) or disclose to any third Person other than the Indemnifying Party's
representatives (except as may be required by applicable law) any information
obtained pursuant to this Section 9.3, which is designated as confidential by
the Indemnified Party.
Section 9.4 SURVIVAL. The representations and warranties of the
parties contained in this Agreement shall survive the Closing and remain
enforceable for 18 months from the Closing Date; PROVIDED that (i) the
representations and warranties set forth in Section 4.12 and 5.12
(Environmental) shall survive the Closing and remain enforceable for 36 months
from the Closing Date, (ii) the representations and warranties set forth in
Sections 4.1, 4.2, 4.3, 4.6, 5.1, 5.2, 5.3 and 5.6 shall survive the Closing and
remain enforceable without time limit and (iii) the representations and
warranties set forth in Annex B shall survive to the extent provided in Annex B.
No claim for indemnity under this Article IX for any breach of a representation
or warranty may be brought unless the appropriate Claim Notice shall have been
delivered to the Indemnifying Party prior to expiration of the applicable
survival period. Notwithstanding the foregoing, any covenants or agreements
contained in this Agreement (including any covenants or agreements contained in
any representation or warranty) shall survive the Closing and remain enforceable
without time limit.
Section 9.5 INDEMNIFICATION LIMITATION. (a) Each Indemnified Party
under this Article IX shall use its reasonable efforts to mitigate Damages for
which it seeks indemnification hereunder and shall assign to the Indemnifying
Party all of such Indemnified Party's claims for
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recovery against third parties as to Damages, whether by insurance coverage,
contribution claims, subrogation or otherwise.
(b) Except as otherwise provided herein, each of Duke's and Xxxxxxxx'
obligation to indemnify the other Party and its Affiliates and the Company and
its Affiliates as provided in Section 9.2 shall not become effective until the
aggregate of all Damages sustained by the other Party and its Affiliates and the
Company and its Affiliates as described in Section 9.2 shall have exceeded the
Basket. If the aggregate amount of Damages sustained by the other Party and its
Affiliates and the Company and its Affiliates as described in Section 9.2
exceeds the applicable Basket then the other Party and its Affiliates and the
Company and its Affiliates shall be entitled to assert claims under this Article
IX for indemnification for the amount of such Damages in excess of the
applicable Basket only; PROVIDED that each of Duke's and Xxxxxxxx' obligation
under this Article IX shall not exceed the applicable Cap in the aggregate, and
PROVIDED, FURTHER, that none of Duke, Xxxxxxxx or the Company or their
respective Affiliates shall be entitled to assert claims for indemnification
under this Article IX unless the aggregate amount of Damages claimed in any
individual Claim Notice exceeds $500,000 in the aggregate.
(c) Notwithstanding the foregoing, the indemnification provision set
forth in Section 9.2(a)(ii), Section 9.2(a)(iii), Section 9.2(a)(iv), Section
9.2(b)(ii), Section 9.2(b)(iii) and Section 9.2(b)(iv) shall not be subject
to the Basket or Cap.
(d) The parties hereto agree that the indemnification provisions in
Articles VI and IX shall be the exclusive remedy of the parties with respect to
breaches of the representations and warranties in Articles IV and V, except for
actions grounded in fraud, with respect to which the remedies and limitations
set forth in this Agreement shall not apply or in any manner limit the scope or
availability of any other remedy at law or in equity.
Section 9.6 MATERIALITY QUALIFIERS. For purposes of determining
Damages and rights to indemnification under this Article IX, the representations
and warranties set forth in Articles IV and V shall be read without giving
effect to any Materiality Requirement set forth therein; provided, that
representations and warranties qualified by "Material Adverse Effect" shall be
deemed to be true to the extent the breach thereof is reasonably attributable to
the general state of the industries in which such Party and its Subsidiaries
operate (including natural gas and petroleum price levels), to general economic
conditions in the United States (including prevailing interest rate and stock
market levels) or to the transactions contemplated by this Agreement or the
other Transaction Agreements. As used in this Agreement, a "MATERIALITY
REQUIREMENT" shall mean any requirement in a representation or warranty that a
condition, event or state of fact be "material," correct or true in "all
material respects," have a "Material Adverse Effect," or be or not be
"reasonably expected to have a Material Adverse Effect" (or other words or
phrases of similar effect or impact) in order for such condition, event or state
of facts to cause such representation or warranty to be inaccurate.
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ARTICLE X
EMPLOYEE MATTERS
The provisions of Annex A are hereby incorporated herein.
ARTICLE XI
TAX MATTERS
The provisions of Annex B are hereby incorporated herein.
ARTICLE XII
MISCELLANEOUS
Section 12.1 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered (including by facsimile) to the other
party.
Section 12.2 GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY
TRIAL. (a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without reference to the choice of law
principles thereof.
(b) Each party hereto irrevocably submits to the jurisdiction of any
Delaware state court or any federal court sitting in the State of Delaware in
any action arising out of or relating to this Agreement or the Governance
Agreement, and hereby irrevocably agrees that all claims in respect of such
action may be heard and determined in such Delaware state or federal court. Each
party hereto hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The parties hereto further agree, to the extent permitted by law,
that final and unappealable judgment against any of them in any action or
proceeding contemplated above shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.
(c) To the extent that any party hereto has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
party hereto hereby irrevocably waives such immunity in respect of its
obligations with respect to this Agreement and the Governance Agreement.
(d) Each party hereto waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement or the
Governance Agreement. Each party hereto certifies that it
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has been induced to enter into this Agreement and the Governance Agreement by,
among other things, the mutual waivers and certifications set forth above in
this Section 12.2.
Section 12.3 ENTIRE AGREEMENT. This Agreement and the Governance
Agreement, and the schedules and exhibits hereto and thereto, together with the
Confidentiality Agreements dated August 11, 1999 and August 26, 1999 between
Duke and Xxxxxxxx, contain the entire agreement between the parties with respect
to the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein. Except for Sections 6.8, 6.11, 6.15 and 6.18, Article IX and
Article XI, which are intended to benefit, and to be enforceable by, any of the
indemnified parties thereunder, this Agreement is not intended to confer upon
any Person not a party hereto (and their successors and assigns) any rights or
remedies hereunder.
Section 12.4 EXPENSES. Any sales, use, transfer, gains, excise or
similar Taxes (but not income Taxes) incurred in connection with any transfers
required by this Agreement shall be paid and borne as follows:
(a) with respect to any transfer between the Company, on the one hand,
and Duke or any of its Affiliates (other than the DEFS Subsidiaries and the
Company), on the other hand, 50% by each of the transferor and the transferee;
(b) with respect to any transfer between the Company, on the one hand,
and Xxxxxxxx or any of its Affiliates (other than the PGC Subsidiaries), on the
other hand, 50% by each of the transferor and the transferee;
(c) with respect to any transfers between Duke or any Duke Retained
Affiliate, on the one hand, and any of the DEFS Subsidiaries, on the other hand,
100% by Duke; and
(d) with respect to any transfer between Xxxxxxxx or any Xxxxxxxx
Retained Affiliate, on the one hand, and any of the PGC Subsidiaries, on the
other hand, 100% by Xxxxxxxx.
Section 12.5 NOTICES. All notices and other communications to be given
to any party hereunder shall be sufficiently given for all purposes hereunder if
in writing and delivered by hand, courier or overnight delivery service or three
days after being mailed by certified or registered mail, return receipt
requested, with appropriate postage prepaid, or when received in the form of a
telegram or facsimile and shall be directed to the address or facsimile number
set forth below (or at such other address or facsimile number as such party
shall designate by like notice):
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(a) If to Xxxxxxxx:
Xxxxxxxx Petroleum Company
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxx
Fax No.: (000) 000-0000
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax No.: (000) 000-0000
(b) If to Duke:
Duke Energy Corporation
0000 Xxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. XxXxx
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
(c) If to the Company:
Duke Energy Field Services L.L.C.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
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Section 12.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that no party hereto will
assign its rights or delegate any or all of its obligations under this Agreement
without the express prior written consent of each other party hereto.
Section 12.7 HEADINGS; DEFINITIONS. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated and except in the Annexes hereto, wherein
references to Sections or Articles shall mean Articles or Sections of such Annex
unless otherwise stated. All capitalized terms defined herein are equally
applicable to both the singular and plural forms of such terms.
Section 12.8 AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
all parties hereto. Either party hereto may, only by an instrument in writing,
waive compliance by the other parties hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
Except as otherwise expressly provided herein, no failure to exercise, delay in
exercising or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between the parties, shall constitute a waiver
of any such right, power or remedy.
Section 12.9 SCHEDULES. The disclosure or inclusion of any matter or
item in any Schedule to the Xxxxxxxx Disclosure Schedule or the Duke Disclosure
Schedule shall not be deemed an acknowledgment or admission that any such matter
or item is required to be disclosed or is material for purposes of the
representations and warranties set forth in this Agreement or whether the
subject matter of such disclosure may have a Material Adverse Effect on the PGC
Subsidiaries or DEFS. Xxxxxxxx and Xxxx shall not be prejudiced in any manner
whatsoever by, and no presumptions shall be created by virtue of, any disclosure
of any matter in the Xxxxxxxx Disclosure Schedule or the Duke Disclosure
Schedule, respectively, which is not expressly required to be disclosed under
this Agreement. Information disclosed in any schedule hereto shall only
constitute a disclosure with respect to the specific Section of this Agreement
in which such schedule is referenced.
Section 12.10 SEVERABILITY. If any provision of this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions of this Agreement shall not be affected
thereby, and there shall be deemed substituted for the provision at issue a
valid, legal and enforceable provision as similar as possible to the provision
at issue.
Section 12.11 INTERPRETATION. For the purposes of this Agreement,
"KNOWLEDGE" shall mean, with respect to Xxxxxxxx, except as otherwise specified
in this Agreement, the actual knowledge (after due inquiry) of the persons
identified in Schedule 12.11 of the Xxxxxxxx Disclosure Schedule, and with
respect to Duke, the actual knowledge (after due inquiry) of the persons
identified in Schedule 12.11 of the Duke Disclosure Schedule. The phrase
"including"
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shall be deemed to be followed by "without limitation." The words "hereof,"
"hereby," "herein," "hereunder" and similar terms in this Agreement shall refer
to this Agreement as a whole and not any particular Section or article in which
such words appear. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
Section 12.12 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any party fails to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement and that the parties shall be entitled to specific performance in
such event, in addition to any other remedy at law or in equity.
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IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Agreement to be duly executed and delivered on the date
first set forth above.
XXXXXXXX PETROLEUM COMPANY
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name:
Title:
DUKE ENERGY CORPORATION
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx
Group President, Energy Transmission
DUKE ENERGY FIELD SERVICES L.L.C.
By: /s/ X. X. Xxxx
-----------------------------------
Xxx X. Xxxx
Authorized Person
ANNEX A
EMPLOYEE MATTERS ANNEX
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 DEFINITIONS. (a) Capitalized terms used and not defined in
this Annex shall have the respective meanings ascribed to them in the
Contribution Agreement. Notwithstanding the foregoing, references to
"Subsidiaries" of Duke in this Annex shall not include the Company, DEFS or any
of their respective Subsidiaries, except where specifically so provided.
(b) As used in this Annex, the following terms shall have the
respective meanings set forth below:
"BONUSES" shall have the meaning set forth in Section 3.2.
"CHANGE IN CONTROL SEVERANCE PLAN" shall mean the PanEnergy Corp
Change in Control Severance Benefits Plan, as amended.
"COBRA COVERAGE" shall mean continuation of health coverage required
pursuant to Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA.
"CONTINUED EMPLOYEE" shall mean a Retained DEFS Employee or a
Transferred PGC Employee.
"DEFS EMPLOYEE" shall mean any individual who is, immediately before
the Closing Date, (i) an Employee of DEFS or (ii) an Employee of Duke or a
Subsidiary of Duke (including the Company, DEFS or one of their respective
Subsidiaries) principally employed in connection with the assets held as of the
date of execution of the Contribution Agreement by Canrock.
"DUKE FSP" shall mean the Dependent Care Expense Reimbursement
Plan and the Medical Care Expense Reimbursement Plan components of the Duke
Energy Corporation Cafeteria Plan.
"DUKE SAVINGS PLAN" shall mean the Duke Energy Retirement Savings
Plan.
"ELIGIBLE EXPENSES" shall mean eligible expenses under an Old
Welfare Plan for the plan year in which the Closing Date occurs that are
recorded as such by the applicable plan administrator as of the 45th day after
the Closing Date and reported to the Company on or before the 60th day after the
Closing Date.
"EMPLOYEE" shall mean an employee of the relevant entity who is, on
the relevant day, either (i) actively at work or (ii) not actively at work but
not classified as a terminated employee (including without limitation, on sick
leave or other approved leave of absence with
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the right of reinstatement). Notwithstanding the foregoing, the term "Employee"
shall not include any individual who is on an inactive employee status leave.
"NEW FSP" shall have the meaning set forth in Section 4.5(d).
"NEW WELFARE PLANS" shall have the meaning set forth in Section
4.5(c).
"OLD WELFARE PLANS" shall have the meaning set forth in Section
4.5(c).
"PARENT PLANS" shall mean the Duke Plans and the Xxxxxxxx Plans.
"PGC EMPLOYEE" shall mean any individual who is, immediately before
the Closing Date, an Employee of Xxxxxxxx or a Subsidiary of Xxxxxxxx
principally employed in the businesses conducted by the PGC Subsidiaries,
including each such Employee who is seconded to PGC.
"XXXXXXXX FSP" shall mean the Health Care Account and Child Care
Account components of the Xxxxxxxx Petroleum Company Flexible Spending Plan.
"XXXXXXXX SAVINGS PLANS" shall mean the Thrift Plan of Xxxxxxxx
Petroleum Company and the Long Term Stock Savings Plan of Xxxxxxxx Petroleum
Company.
"RELEASE" means (i) in the case of a Transferred PGC Employee, a
release of claims against the Company and Xxxxxxxx and their respective
Subsidiaries, in form and substance acceptable to Xxxxxxxx and the Company, and
(ii) in the case of a Retained DEFS Employee, a release of claims against the
Company and Duke and their respective Subsidiaries, in form and substance
acceptable to Duke and the Company.
"REQUIRED SEVERANCE AMOUNT" shall mean any severance benefits, pay
in lieu of notice, or other similar benefits payable to a Continued Employee by
the Company or any of its Subsidiaries, which becomes payable on account of such
Continued Employee's termination of employment pursuant to any applicable law,
statute, regulation, court order, or other legal requirement, including without
limitation, the Worker Adjustment and Retraining Notification Act, as amended.
"RETAINED DEFS EMPLOYEE" shall mean (i) a DEFS Employee whose
employment is not terminated or transferred to Duke or a Subsidiary of Duke
before the Closing Date pursuant to Section 2.2 below or (ii) a DEFS Employee
described in clause (ii) of the definition of such term whose employment
actually transfers pursuant to the last sentence of Section 2.2.
"SEVERANCE AMOUNT" with respect to any Continued Employee shall mean
two weeks' base pay for each full year of service completed by such Continued
Employee, plus an additional week's base pay for each such full year of service
in excess of 15 years, but in no event less than 12.5 weeks' base pay nor more
than 60 weeks' base pay, and reduced by (i) the Required Severance Amount and
(ii) such number of weeks not in excess of 8.5 that such Continued Employee is
required to work after receiving notification of termination of employment;
provided, that if such Continued Employee would not have been entitled to cash
severance under the Xxxxxxxx Layoff Plan as in effect on the date of the
execution of the
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Contribution Agreement if he or she had been covered by such plan and terminated
employment from Xxxxxxxx under the same circumstances as his or her termination
from the Company and its Subsidiaries, the Severance Amount shall be zero. For
these purposes, years of service shall include both years of service with
Xxxxxxxx or Xxxx and their respective Subsidiaries (including, in the case of
Duke, the Company, DEFS and their respective Subsidiaries), as applicable, and
years of service with the Company and its Subsidiaries, and shall not be deemed
to have been interrupted by reason of the Continued Employee's becoming an
employee of the Company and its Subsidiaries (including DEFS and its
Subsidiaries).
"SEVERANCE COSTS" shall mean all Liabilities relating to or arising
out of providing severance pay or benefits, redundancy pay or benefits, pay in
lieu of notice, or other similar pay or benefits under applicable laws,
contracts or employee benefit plans or arrangements.
"TERMINATION COSTS" shall mean all Liabilities incurred in
connection with, arising out of or in connection with the termination of
employment of any Employee (whether actual or constructive), including
Liabilities relating to or arising out of any claim of discrimination or other
illegality in connection with such termination, but excluding Severance Costs.
"TRANSFERRED PGC EMPLOYEE" shall mean a PGC Employee whose
employment actually transfers pursuant to Section 2.1 below.
"WELFARE BENEFIT PLANS" shall mean "welfare plans" as defined in
Section 3(1) of ERISA.
ARTICLE II
TRANSFER OF EMPLOYEES TO THE COMPANY
Section 2.1 TRANSFER OF PGC EMPLOYEES. Xxxxxxxx shall make all PGC
Employees available to the Company for employment and, subject to the terms of
any applicable collective bargaining agreements, shall transfer to the Company
on the Closing Date the PGC Employees who are selected for employment by the
Company before the Closing Date.
Section 2.2 SELECTION AND RETENTION OF DEFS EMPLOYEES. Duke shall make
all DEFS Employees available to the Company for employment and, subject to the
terms of any applicable collective bargaining agreements, shall, before the
Closing Date, either terminate the employment of, or transfer to Duke or a
Subsidiary of Duke, (a) all DEFS Employees who are not selected for employment
by the Company before the Closing Date and (b) all employees, if any, of DEFS
and its Subsidiaries who are not Employees. Notwithstanding the foregoing, with
respect to a DEFS Employee described in clause (ii) of the definition of such
term who is selected for employment by the Company, Duke shall cause the
employment of such DEFS Employee to be transferred either (i) to the Company on
the Closing Date or (ii) to a DEFS Subsidiary on or before the Closing Date.
Section 2.3 NO RESTRICTIONS ON CHANGES; SELECTION PROCESS. Nothing in
this Annex shall require or be construed or interpreted as requiring the Company
and its Subsidiaries to continue the employment of any of their employees
(including Continued Employees) or to prevent the Company or any of its
Subsidiaries from changing the terms and conditions of
-3-
employment (including compensation and benefits) of any of their employees
(including Continued Employees) following the Closing Date, except as
specifically provided in Sections 4.1(c), 4.2, 4.4(b), 4.5(c) and 4.5(d). The
selection of Continued Employees shall take place in accordance with Section 6.1
of the Governance Agreement.
Section 2.4 LIABILITIES FOR SELECTION; EMPLOYEE LIABILITIES GENERALLY.
Except as specifically provided in Section 4.2 below, the Company and its
Subsidiaries shall be solely responsible for any and all Termination Costs and
other Liabilities relating to or arising out of the selection process set forth
in Sections 2.1 and 2.2 above, including any Termination Costs or Severance
Costs with respect to Continued Employees arising out of or relating to the
transfer of their employment to the Company and its Subsidiaries or any
subsequent action by the Company and its Subsidiaries, but excluding any
Severance Costs under Xxxxxxxx Plans and Duke Plans. Any and all Liabilities
arising out of or relating to the employment of any Continued Employee by Duke
or any of its Subsidiaries (including the Company, DEFS and their respective
Subsidiaries) or Xxxxxxxx or any of its Subsidiaries before the Closing Date
that are not specifically provided for in this Annex shall remain the
responsibility of Duke and its Subsidiaries, or Xxxxxxxx and its Subsidiaries,
as applicable. Any and all Liabilities arising out of or relating to the
employment of any Continued Employee by the Company or any of its Subsidiaries
on or after the Closing Date that are not specifically provided for in this
Annex shall be the responsibility of the Company and its Subsidiaries.
Section 2.5 INDIVIDUAL AGREEMENTS. (a) With respect to each of the
agreements listed in Schedule 2.5(a)(i) to this Annex to which a Retained DEFS
Employee is a party, Duke and its Subsidiaries shall retain all Liabilities
thereunder, but the Company shall make payments to Duke equal to the amount of
compensation expense arising under such agreement that is charged to the Company
under GAAP, as and when such expense is charged under GAAP; provided, that the
amounts that the Company shall be required to pay Duke shall not include any
amounts attributable to the acceleration or enhancement of compensation or
benefits under such agreements as a result of a change in control of Duke.
Effective as of the Closing Date, the Company shall assume all obligations and
Liabilities of Duke and its Subsidiaries under each agreement listed in Schedule
2.5(a)(ii) to this Annex, but only if the individual party to such agreement is
a Retained DEFS Employee. It is acknowledged and agreed that: (i) the
compensation payable to Retained DEFS Employees after the Closing Date pursuant
to the agreements listed in Schedule 2.5(a)(i) and Schedule 2.5(a)(ii) to this
Annex shall be considered as part of their ongoing compensation from the Company
and its Subsidiaries, for purposes of determining their overall compensation and
benefits from the Company and its Subsidiaries; (ii) the Company shall be
entitled to all tax deductions and other benefits associated with the
compensation payable under such agreements for which it pays Duke under the
first sentence of this Section 2.5(a) and which it pays as a result of its
assumption of obligations and Liabilities under the second sentence of this
Section 2.5(a); and (iii) Duke and the Company shall cooperate to ensure that
all tax withholding and reporting required in connection with the compensation
pursuant to the agreements listed in Schedule 2.5(a)(i) to this Annex is
properly implemented.
(b) Except as specifically provided above in Section 2.5(a), Xxxxxxxx
and its Subsidiaries, or Duke and its Subsidiaries, as applicable, shall assume,
retain and remain solely responsible for all Liabilities under any individual
employment, severance, retention, bonus, equity compensation, or other contracts
or agreements between themselves or any of their
-4-
Subsidiaries (including, in the case of Duke, the Company and its Subsidiaries)
and any Transferred PGC Employee, or Retained DEFS Employee, respectively, in
effect before the Closing Date.
ARTICLE III
COMPENSATION
Section 3.1 COMPENSATION GENERALLY. Without limiting the scope of
Section 2.4, except as provided in the following sentence and in Section 2.5(a)
and Section 3.2, Duke or Xxxxxxxx or their respective Subsidiaries, as
applicable, shall retain all liability and responsibility for wages, salary,
overtime pay, bonuses, incentive pay, and other cash compensation of Continued
Employees attributable to periods before the Closing Date. Effective as of the
Closing Date, the Company and its Subsidiaries shall assume and be solely
responsible for (a) all accrued but unused vacation and sick leave entitlements
of Continued Employees attributable to periods before the Closing Date and (b)
all wages, salary, overtime pay, bonuses, incentive pay, vacation pay, sick pay
and other cash compensation of Continued Employees attributable to the period
beginning on the Closing Date. From and after the Closing Date, the Company
shall provide to Continued Employees all wages, salary, overtime pay, bonuses,
vacation pay, sick pay, other cash compensation and cash and equity-based
incentive compensation on such terms as may be determined from time to time by
the Company in its sole discretion.
Section 3.2 INCENTIVE COMPENSATION. The Company shall determine the
amounts of the annual bonuses (the "BONUSES") earned by Continued Employees for
the year in which the Closing Date occurs under its bonus plans, and Xxxxxxxx
(in the case of Transferred PGC Employees) and Duke (in the case of Retained
DEFS Employees) shall reimburse the Company for a pro-rata portion of the
Bonuses, based upon the number of full calendar months in such year before the
Closing Date. Such reimbursement shall include the employer's share of any
employment taxes relating to such pro-rata Bonuses for the period before the
Closing Date and required to be paid by the Company or any of its Subsidiaries.
ARTICLE IV
EMPLOYEE BENEFITS
Section 4.1 EMPLOYEE BENEFITS GENERALLY. (a) Effective as of the
Closing Date, except as provided in Section 4.2(b), the Continued Employees
shall cease to be active participants in the Parent Plans. Effective as of the
Closing Date, neither the Company nor any of its Subsidiaries shall be a
participating employer in any Parent Plan. Xxxxxxxx and Xxxx shall remain solely
responsible for all liabilities with respect to the Xxxxxxxx Plans and the Duke
Plans, respectively, and the Company and its Subsidiaries shall not assume any
Parent Plan and shall have no obligations and shall assume no liabilities with
respect to the Parent Plans, in each case except as specifically provided in
Section 4.2(b) and Section 4.5(d) below.
(b) From and after the Closing Date, the Company and its Subsidiaries
shall be solely responsible for providing Continued Employees with employee
benefits, including without limitation welfare, savings and pension benefits,
which shall be designed by the
-5-
Company in its sole discretion. Xxxxxxxx and Xxxx shall provide the Company and
its Subsidiaries with all necessary transition assistance to enable them to
develop and implement their compensation and benefit plans and programs.
(c) For purposes of eligibility to participate and vesting under all
compensation and benefit plans applicable to Continued Employees on or after the
Closing Date, the Company and its Subsidiaries shall give Continued Employees
credit for all applicable service with Duke and its Subsidiaries (including the
Company, DEFS and their respective Subsidiaries), or Xxxxxxxx and its
Subsidiaries, as applicable, before the Closing Date. For these purposes, the
applicable service for a Transferred PGC Employee shall be determined by the
elapsed time since his or her Service Award Entry Date as recorded in the
personnel records of Xxxxxxxx.
Section 4.2 SEVERANCE BENEFITS. (a) Xxxxxxxx and its Subsidiaries
shall be solely responsible for all Severance Costs, if any, with respect to any
PGC Employee who does not become a Transferred PGC Employee. Duke and its
Subsidiaries shall be solely responsible for all Severance Costs, if any, with
respect to any DEFS Employee who does not become a Retained DEFS Employee.
(b) Without limiting the generality of the foregoing and except as
provided in this Section 4.2(b), Duke and its Subsidiaries shall remain solely
responsible for all Liabilities under the Change in Control Severance Plan. Each
Retained DEFS Employee who was covered by the Change in Control Severance Plan
immediately before the Closing Date shall continue to be covered by such plan on
and after the Closing Date in accordance with the terms and conditions of such
plan. If any Retained DEFS Employee who is covered by the Change in Control
Severance Plan terminates employment with the Company and its Subsidiaries on or
after the Closing Date under circumstances entitling him or her to severance pay
or benefits under the Change in Control Severance Plan, and if the Retained DEFS
Employee executes a Release, then the Company shall reimburse Duke for the
lesser of (i) the amount of the cash severance paid to such individual under the
Change in Control Severance Plan and (ii) the applicable Severance Amount.
Further, in such event, the Company shall cause such Retained DEFS Employee (and
his or her covered dependents) to be provided with extended coverage under one
or more of the New Welfare Plans to the extent necessary to satisfy the
requirements of Section 6 of the Change in Control Severance Plan, and Duke
shall reimburse the Company for the cost of such extended coverage.
(c) The Company and its Subsidiaries shall provide to each Transferred
PGC Employee whose employment terminates on or before the six-month anniversary
of the Closing Date cash severance benefits at least equal to the sum of the
applicable Severance Amount and the applicable Required Severance Amount,
subject to the execution by such Transferred PGC Employee of a Release.
Section 4.3 PENSION BENEFITS. Effective as of the Closing Date,
Xxxxxxxx shall cause the Transferred PGC Employees to be 100% vested in their
accrued benefit under the Retirement Income Plan of Xxxxxxxx Petroleum Company
as required by the terms thereof, and Duke may, in its sole discretion, cause
the Retained DEFS Employees to be 100% vested in their accrued benefit under the
Duke Energy Retirement Cash Balance Plan.
-6-
Section 4.4 SAVINGS PLANS. (a) Effective as of the Closing Date,
Xxxxxxxx shall cause the Transferred PCG Employees to be 100% vested in their
accrued benefit under the Xxxxxxxx Savings Plans, and Duke shall cause the
Retained DEFS Employees to be 100% vested in their accrued benefits under the
Duke Savings Plan.
(b) The Company, Xxxxxxxx and Xxxx shall take all reasonable steps
necessary and appropriate so that Continued Employees who participated in the
Xxxxxxxx Savings Plans or the Duke Savings Plan, as applicable, and who have
loans outstanding from any such plan as of the Closing Date may continue to
repay such loans using voluntary payroll deductions from their paychecks from
the Company and its Subsidiaries.
Section 4.5 WELFARE BENEFITS. Without limiting the generality of the
above provisions, this Section 4.5 contains certain specific provisions
regarding the provision of benefits under Welfare Benefit Plans, unemployment
compensation benefits and workers compensation benefits.
(a) Effective as of the Closing Date, the Company shall cause the
Continued Employees to be eligible to be covered by such Welfare Benefit Plans
sponsored by the Company and/or one or more of its Subsidiaries as the Company
shall determine to implement.
(b) Except as specifically provided in Section 4.5(d) below:
(i) Xxxxxxxx and its Subsidiaries shall be solely responsible for (A) claims of
Transferred PGC Employees and their eligible beneficiaries and dependents for
workers compensation, unemployment compensation and under Welfare Benefit Plans
that are incurred before the Closing Date, and (B) claims relating to COBRA
Coverage attributable to "qualifying events" occurring on or before the Closing
Date with respect to any Transferred PGC Employees and their eligible
beneficiaries and dependents; (ii) Duke and its Subsidiaries shall be solely
responsible for (I) claims of Retained DEFS Employees and their eligible
beneficiaries and dependents for workers compensation, unemployment compensation
and under Welfare Benefit Plans that are incurred before the Closing Date, and
(II) claims relating to COBRA Coverage attributable to "qualifying events"
occurring on or before the Closing Date with respect to any Retained DEFS
Employees and their eligible beneficiaries and dependents; and (iii) the Company
and its Subsidiaries shall be solely responsible for (x) claims of Continued
Employees and their eligible beneficiaries and dependents for workers
compensation and unemployment compensation benefits and claims under Welfare
Benefit Plans that are incurred on or after the Closing Date, and (y) claims
relating to COBRA Coverage attributable to "qualifying events" occurring after
the Closing Date with respect to Continued Employees and their beneficiaries and
dependents. A medical/dental claim shall be considered incurred on the date when
the medical services are rendered or medical supplies are provided, and not when
the condition arose or when the course of treatment began. An unemployment
compensation or workers compensation claim shall be considered incurred before
the Closing Date if the occurrence leading up to the claim occurs before the
Closing Date.
(c) Each Continued Employee who is employed on a regular basis shall
be immediately eligible to participate, without any waiting time, in any and all
Welfare Benefit Plans sponsored by the Company and its Subsidiaries for the
benefit of Continued Employees (such plans, collectively, the "NEW WELFARE
PLANS") to the extent coverage under such New Welfare Plan replaces coverage
under a comparable Xxxxxxxx Plan or Duke Plan, in which such
-7-
Continued Employee was previously eligible to participate (such plans,
collectively, the "OLD WELFARE PLANS"). For purposes of each New Welfare Plan
providing medical, dental, pharmaceutical and/or vision benefits, the Company
shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Welfare Plan to be waived for Continued Employees and
their eligible beneficiaries and dependents, to the extent such exclusions and
restrictions did not apply under the applicable Old Welfare Plan, and the
Company shall cause any Eligible Expenses incurred by any Continued Employee and
his or her eligible beneficiaries and dependents during the portion of the plan
year of the Old Welfare Plan ending on the Closing Date, to be taken into
account under such New Welfare Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such Continued
Employee and his or her eligible beneficiaries and dependents for the applicable
plan year as if such amounts had been paid in accordance with such New Welfare
Plan.
(d) The Company shall establish one or more flexible spending plans
(collectively, the "NEW FSP") in which Continued Employees shall be eligible to
participate following the Closing Date. Xxxxxxxx, Xxxx and the Company shall
take all reasonable steps necessary or appropriate so that the account balances
under the Xxxxxxxx FSP or the Duke FSP, as applicable, of each Continued
Employee who has elected to participate therein in the year in which the Closing
Date occurs shall be transferred, as soon as practicable after the Closing Date,
from the Xxxxxxxx FSP or the Duke FSP, as applicable, to the New FSP, and so
that the contribution elections of each such Continued Employee as in effect
immediately before the Closing Date remain in effect under the New FSP
immediately after the transfer of such account balance. If the aggregate amount
of the transferred account balances of Transferred PGC Employees or Retained
DEFS Employees is negative, then the Company shall pay Xxxxxxxx or Xxxx, as
applicable, the amount of such aggregate negative balance promptly following
such account balance transfer. Notwithstanding the provisions of Section 4.5(b),
from and after the date a Continued Employee's FSP account is transferred in
accordance with this Section 4.5(d), the Company shall be solely responsible
for, and shall satisfy from the New FSP, all claims, whether incurred before, on
or after the Closing Date, for which such Continued Employee was entitled to
seek reimbursement under the Xxxxxxxx FSP or the Duke FSP for the year in which
the Closing Date occurs.
ARTICLE V
TAX BENEFITS
Section 5.1 TAX BENEFITS GENERALLY. It is the intention of Xxxxxxxx,
Xxxx and the Company that any tax deductions or other tax benefits associated
with any compensation or benefits payable to Continued Employees by any of them
be enjoyed by the party that bears the economic cost thereof, whether through
direct payment or provision of such compensation or benefits or through
reimbursement, and they agree to cooperate to ensure such result to the greatest
extent possible, through allocation of partnership deductions, adjustment of the
amounts of any reimbursement or otherwise.
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ANNEX B
TAX MATTERS ANNEX
ARTICLE I
CERTAIN DEFINITIONS
Any capitalized term used in this Annex but not otherwise defined
herein shall have the meaning ascribed to such term in the Contribution
Agreement or, if not defined in the Contribution Agreement, the Governance
Agreement (including Annex F thereof). Any Section reference in this Annex shall
refer to such section of this Annex, except as otherwise indicated. As used in
this Annex, the following terms shall have the respective meanings set forth
below:
Section 1.1 "CONTRIBUTION AGREEMENT" shall mean the Agreement to which
this Annex is attached and of which it forms a part.
Section 1.2 "DUKE GROUP" shall mean Duke and its Subsidiaries (other
than the Company, any DEFS Subsidiary, any PGC Subsidiary or any other
Subsidiary of the Company).
Section 1.3 "INCOME TAXES" means federal, state, local or foreign
Taxes measured by net income or capital gain.
Section 1.4 "XXXXXXXX GROUP" shall mean Xxxxxxxx and its Subsidiaries
(other than the Company, any DEFS Subsidiary, any PGC Subsidiary or any other
Subsidiary of the Company).
Section 1.5 "POST-CLOSING PERIOD" for any Person means any taxable
period beginning, with respect to such Person, after the Closing Date, and the
portion, beginning after the Closing Date, of any taxable period that includes,
with respect to such Person, but does not end on, the Closing Date.
Section 1.6 "PRE-CLOSING PERIOD" for any Person means any taxable
period ending, with respect to such Person, on or prior to the Closing Date, and
the portion, ending on the Closing Date, of any taxable period that includes,
with respect to such Person, but does not end on, the Closing Date.
Section 1.7 "RETURNS" or "TAX RETURNS" means returns, declarations,
statements, reports, forms, property tax renditions or other documents or
information required to be filed with or supplied to any Taxing Authority.
Section 1.8 "SECTION 3.1(C) TAX PROCEEDING" shall have the meaning set
forth in Section 3.1(c).
Section 1.9 "TAX MATTERS ANNEX" shall mean this Annex B.
Section 1.10 "TAX PROCEEDING" means any Tax audit, contest, litigation
or other proceeding with or against a Governmental Entity.
ARTICLE II
TAX INDEMNIFICATION
Section 2.1 INDEMNIFICATION BY DUKE. Subject to Section 2.4(b), Duke
shall indemnify and hold harmless the Company and each of its Subsidiaries and
each member of the Xxxxxxxx Group against:
(a) Any and all Income Taxes of any DEFS Subsidiary for any
Pre-Closing Period (or of any consolidated, combined, unitary or affiliated
group of which any DEFS Subsidiary is or has ever been a member or of any other
group with whom any DEFS Subsidiary has ever joined (or been required to join)
in filing any combined, consolidated or unitary Tax Return, in each case, for
any Pre-Closing Period);
(b) Any and all Taxes with respect to the operations, assets,
investments and activities of Duke and its Subsidiaries (other than those
operations, assets, investments and activities of the DEFS Subsidiaries),
including any several liability of any of the DEFS Subsidiaries for Taxes of
Duke or any of its Subsidiaries (other than any of the DEFS Subsidiaries) that
would not have arisen but for Treasury Regulation Section 1.1502-6 or any
comparable or similar provisions under state, local or foreign laws or
regulations;
(c) Any and all Taxes imposed on or with respect to any of the
conversions or mergers described in Section 2.1(b) of the Contribution Agreement
and (except as set forth in Section 12.4 of the Contribution Agreement) any and
all Taxes arising from or relating to the Duke Excluded Assets and Liabilities
or their transfer pursuant to Section 2.1(d) of the Contribution Agreement and
(except as set forth in Section 12.4 of the Contribution Agreement) any and all
Taxes arising from the transactions described in Section 2.1(b)(i), (ii) and
(iii) of the Contribution Agreement;
(d) Any and all Taxes of any DEFS Subsidiary (or with respect to any
asset transferred to the Company by any member of the Duke Group pursuant to the
Contribution Agreement) for a Pre-Closing Period; and
(e) Any and all Damages resulting from a breach of the representation
contained in Section 6.1(d) or (e), such Damages to be determined without regard
to the Materiality Requirement set forth in Section 6.1.
Section 2.2 INDEMNIFICATION BY XXXXXXXX. Subject to Section 2.4(b),
Xxxxxxxx shall indemnify and hold harmless the Company and each of its
Subsidiaries and each member of the Duke Group against:
(a) Any and all Income Taxes of any PGC Subsidiary for any Pre-Closing
Period (or of any consolidated, combined, unitary or affiliated group of which
any PGC Subsidiary is or has ever been a member or of any other group with whom
any PGC Subsidiary has ever joined (or been required to join) in filing any
combined, consolidated or unitary Tax Return, in each case, for any Pre-Closing
Period);
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(b) Any and all Taxes with respect to the operations, assets,
investments and activities of Xxxxxxxx and its Subsidiaries (other than those
operations, assets, investments and activities of the PGC Subsidiaries),
including any several liability of any of the PGC Subsidiaries for Taxes of
Xxxxxxxx or any of its Subsidiaries (other than any of the PGC Subsidiaries)
that would not have arisen but for Treasury Regulation Section 1.1502-6 or any
comparable or similar provisions under state, local or foreign laws or
regulations;
(c) Any and all Taxes imposed on or with respect to any of the
conversions or mergers described in Section 2.1(c) of the Contribution Agreement
and (except as set forth in Section 12.4 of the Contribution Agreement) any and
all Taxes arising from or relating to the Xxxxxxxx Excluded Assets and
Liabilities or their transfer pursuant to Section 2.1(e) of the Contribution
Agreement;
(d) Any and all Taxes of any PGC Subsidiary (or with respect to any
asset transferred to the Company by any member of the Xxxxxxxx Group pursuant to
the Contribution Agreement) for a Pre-Closing Period; and
(e) Any and all Damages resulting from a breach of the representation
contained in Section 6.2(d) or (e), such Damages to be determined without regard
to the Materiality Requirement set forth in Section 6.2.
Section 2.3 INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify and hold harmless Duke, Xxxxxxxx and each of their respective
Subsidiaries (other than the Company and each of its Subsidiaries) against any
and all Taxes of the Company, any DEFS Subsidiary, any PGC Subsidiary or any of
their respective Subsidiaries (or with respect to any asset transferred to the
Company by any member of the Duke Group or the Xxxxxxxx Group pursuant to the
Contribution Agreement) for any Post-Closing Period (other than (i) Income Taxes
for such periods or portions thereof of any Person that would not have been
imposed on such Person but for such Person's direct or indirect acquisition or
ownership of membership interests in the Company and (ii) Taxes covered by the
indemnification set forth in Section 2.1(e) or 2.2(e)).
Section 2.4 NO BASKET AND CAP ON TAX INDEMNITIES.
(a) Notwithstanding Section 9.5 of the Contribution Agreement, the
indemnification provided in Sections 2.1, 2.2 and 2.3 shall not be subject to
the limitations set forth in Section 9.5 of the Contribution Agreement.
(b) The amount of any indemnification pursuant to Section 2.1 or 2.2
shall be reduced to the extent of the amount accrued as a liability for the
indemnified Tax to the extent such accrual was taken into account in the
calculation of Xxxxxxxx' Actual Net Working Capital or Duke's Actual Net Working
Capital under Section 3.3 of the Contribution Agreement, as the case may be.
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ARTICLE III
TAX PROCEDURES
Section 3.1 PROCEDURES FOR TAX PROCEEDINGS. Notwithstanding Section
9.3 of the Contribution Agreement:
(a) and notwithstanding any other provision, Duke shall be entitled to
control in all respects, including with respect to settlement, any Tax
Proceeding with respect to any consolidated, combined, affiliated or unitary
group of which Duke or any member of the Duke Group is the common parent or any
other consolidated, combined, affiliated or unitary Tax Returns that include any
member of the Duke Group (whether or not such Tax Returns also include the
Company or any Subsidiary thereof) and neither Xxxxxxxx nor any Subsidiary of
Xxxxxxxx shall be entitled to participate in any such Tax Proceeding.
(b) and notwithstanding any other provision, Xxxxxxxx shall be
entitled to control in all respects, including with respect to settlement, any
Tax Proceeding with respect to any consolidated, combined, affiliated or unitary
group of which Xxxxxxxx, PGC or any member of the Xxxxxxxx Group is the common
parent or any other consolidated, combined, affiliated or unitary Tax Returns
that include any member of the Xxxxxxxx Group (whether or not such Tax Returns
also include the Company or any Subsidiary thereof) and neither Duke nor any
Subsidiary of Duke shall be entitled to participate in any such Tax Proceeding.
(c) in the case of any Tax Proceeding (other than a Tax Proceeding
described in Section 3.1(a) or (b) of this Tax Matters Annex or Section 4.4(d)
of Annex F to the Governance Agreement) (a "Section 3.1(c) Tax Proceeding"), the
provisions of Section 9.3 of the Contribution Agreement shall apply; PROVIDED,
HOWEVER, that: (i) in the case of any Section 3.1(c) Tax Proceeding, for
purposes of Section 9.3 of the Contribution Agreement and this Section 3.1(c),
references to the "Agreement" or "Article IX" in Article IX of the Contribution
Agreement shall also refer to this Tax Matters Annex, "Indemnified Party" shall
include the party seeking indemnification under this Annex B and "Indemnifying
Party" shall include the party against whom an indemnification claim is asserted
under this Annex B, (ii) the Indemnifying Party shall defend any Section 3.1(c)
Tax Proceeding as if it were the only party in interest with respect to the
Taxes covered by such Section 3.1(c) Tax Proceeding, (iii) in the case of a
Section 3.1(c) Tax Proceeding for a taxable period that begins on or before the
Closing Date and ends after the Closing Date, whichever of the Company and its
Subsidiaries, on the one hand, and Duke or Xxxxxxxx, on the other hand, is
reasonably expected to have the greater liability with respect to such Section
3.1(c) Tax Proceeding shall be considered the "Indemnifying Party" for purposes
of Section 9.3 of the Contribution Agreement and this Section 3.1(c) and
whichever of the Company and its Subsidiaries, on the one hand, and Duke or
Xxxxxxxx, on the other hand, is reasonably expected to have the lesser liability
with respect to such Section 3.1(c) Tax Proceeding shall be considered the
"Indemnified Party" for purposes of such Sections, and the costs of such Section
3.1(c) Tax Proceeding shall be borne by the Indemnifying Party and the
Indemnified Party in proportion to such expected liabilities and (iv) in the
case of a Section 3.1(c) Tax Proceeding in which the Company is the Indemnifying
Party and a member of the Duke Group or the Xxxxxxxx Group is the Indemnified
Party or a Section 3.1(c) Tax Proceeding in which Duke or Xxxxxxxx is the
Indemnifying Party and the Company or any of its Subsidiaries is
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the Indemnified Party, the Indemnifying Party shall not, except with the consent
of the Indemnified Party (which consent shall not be unreasonably withheld),
enter into any settlement of any such Section 3.1(c) Tax Proceeding (PROVIDED
FURTHER, HOWEVER, that, in the event that the Indemnified Party withholds
consent under this clause (iv) to a proposed settlement, the Indemnified Party
shall assume the defense of such Section 3.1(c) Tax Proceeding at its sole cost
for expenses incurred thereafter and the liability of the Indemnifying Party
shall not exceed the amount that such liability would have been under the
proposed settlement).
Section 3.2 FILING RESPONSIBILITY.
(a) Duke shall prepare and file, or shall cause the DEFS Subsidiaries,
as the case may be, to prepare and file, with respect to the DEFS Subsidiaries,
all Tax Returns with respect to taxable periods ending on or prior to the
Closing Date. Duke shall prepare and file, or shall cause to be prepared and
filed, any consolidated, combined, affiliated or unitary Tax Return that
includes Duke or any member of the Duke Group (whether or not such Tax Return
also includes the Company or any Subsidiary thereof) and any consolidated,
combined, affiliated or unitary Tax Return that includes any DEFS Subsidiary for
any Pre-Closing Period. All such Tax Returns (other than any consolidated,
combined, affiliated or unitary Tax Returns) shall be filed in a manner that is
consistent with past practice.
(b) Xxxxxxxx shall prepare and file, or shall cause the PGC
Subsidiaries, as the case may be, to prepare and file, with respect to the PGC
Subsidiaries, all Tax Returns with respect to taxable periods ending on or prior
to the Closing Date. Xxxxxxxx shall prepare and file, or shall cause to be
prepared and filed, any consolidated, combined, affiliated or unitary Tax Return
that includes Xxxxxxxx or any member of the Xxxxxxxx Group (whether or not such
Tax Return also includes the Company or any Subsidiary thereof) and any
consolidated, combined, affiliated or unitary Tax Return that includes any PGC
Subsidiary for any Pre-Closing Period. All such Tax Returns (other than any
consolidated, combined, affiliated or unitary Tax Returns) shall be filed in a
manner that is consistent with past practice.
(c) The Company shall file or cause to be filed all Tax Returns with
respect to the Company or any of its Subsidiaries for which neither Duke nor
Xxxxxxxx has filing responsibility pursuant to (a) or (b) above. Any such Tax
Returns that include any Pre-Closing Period shall be filed in a manner that is
consistent with past practice of the applicable Subsidiary included in such Tax
Return. Any Tax Returns for which the Company has filing responsibility under
this clause (c) shall be filed consistent with Annex F of the Governance
Agreement to the extent that such Annex F is applicable to such Tax Returns. The
Company shall not, and shall cause its Subsidiaries not to, file any amended Tax
Return for any Pre-Closing Period, without the prior written consent of Duke, in
the case of any such Tax Return that could affect the indemnification
obligations of Duke under this Annex or any Taxes for which Duke is otherwise
responsible, or Xxxxxxxx, in the case of any such Tax Return that could affect
the indemnification obligations of Xxxxxxxx under this Annex or any Taxes for
which Xxxxxxxx is otherwise responsible.
(d) Upon the filing of any Tax Return with respect to any Pre-Closing
Period, if the amount of Tax shown as due on such Tax Return is less than the
amount accrued therefor as a liability to the extent such accrual was taken into
account in determining Xxxxxxxx' Actual Net Working Capital or Duke's Actual Net
Working Capital pursuant to Section 3.3 of the
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Contribution Agreement, as the case may be, the Company shall distribute to
Xxxxxxxx or Xxxx, as the case may be, an amount of cash equal to the excess of
such accrual over the amount of Tax so shown.
Section 3.3 COOPERATION AND EXCHANGE OF INFORMATION. Duke, Phillips,
the Company and the Corporation shall (and shall cause their respective
Subsidiaries to) cooperate with one another with respect to Tax matters. As soon
as practicable, but in any event within 30 days after the request of Duke or
Xxxxxxxx, from and after the Closing Date, the Company shall deliver to Duke or
Xxxxxxxx, respectively, such information and data concerning the Company and its
Subsidiaries and make available such employees of the Company and its
Subsidiaries as Duke or Xxxxxxxx may reasonably request (including providing the
information and data reasonably required by Duke's and Xxxxxxxx' customary Tax
and accounting questionnaires) in order to enable Duke and Xxxxxxxx to complete
and file all Tax Returns which they each may be required to file with respect to
the Company and its Subsidiaries or to respond to Tax audits or other inquiries
relating to Taxes by any Governmental Entities with respect to such operations
and to otherwise enable Duke and Xxxxxxxx each to satisfy their respective
accounting, Tax and other legitimate business requirements. Such cooperation and
information shall include provision of powers of attorney to Duke or Xxxxxxxx
relating to Tax matters (E.G., for the purpose of signing Returns and defending
audits) and promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any Governmental Entity that relate to
the Company and its Subsidiaries, and providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by any Governmental Entities and
records concerning the ownership and tax basis of property, which the Company,
the Corporation and their Subsidiaries may possess. The Company and the
Corporation shall (and shall cause their respective Subsidiaries to) make their
respective employees and facilities available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder. The
above provisions of this Section 3.3 shall cease to apply with respect to
taxable periods beginning after the consummation of the IPO, except to the
extent that failure of such provisions to apply could reasonably be expected to
affect any member of the Xxxxxxxx Group or the Duke Group (other than in its
capacity as a direct or indirect shareholder, or affiliate of such a
shareholder, of the Corporation). Notwithstanding any other provision, (i) Duke
shall not be required to provide any Person with any consolidated, combined,
affiliated or unitary Income Tax Return or copy thereof that includes Duke or
any other member of the Duke Group and (ii) Xxxxxxxx shall not be required to
provide any Person with any consolidated, combined, affiliated or unitary Income
Tax Return or copy thereof that includes Xxxxxxxx or any other member of the
Xxxxxxxx Group.
ARTICLE IV
REFUNDS
Section 4.1 DUKE REFUNDS. Duke shall be entitled to any refunds or
credits of Taxes of any consolidated, combined, affiliated or unitary group of
which Duke or any member of the Duke Group is the common parent or any other
consolidated, combined, affiliated or unitary Income Tax refund or credit with
respect to any Tax Return that includes any member of the Duke Group. Duke shall
be entitled to any other refunds or credits of Taxes of or with respect to any
DEFS Subsidiary (or with respect to any asset transferred to the Company by any
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member of the Duke Group pursuant to the Contribution Agreement) attributable to
or arising in any Pre-Closing Period (plus any interest received with respect
thereto), but not in duplication of any refund or credit reflected as an asset
to the extent taken into account in determining Duke's Actual Net Working
Capital pursuant to Section 3.3 of the Contribution Agreement. Duke shall be
entitled to any Income Tax refund or credit that would not have arisen but for
the acquisition or ownership by Duke (or any other member of the Duke Group) of
membership interests in the Company.
Section 4.2 XXXXXXXX REFUNDS. Xxxxxxxx shall be entitled to any
refunds or credits of Taxes of any consolidated, combined, affiliated or unitary
group of which Xxxxxxxx or any member of the Xxxxxxxx Group is the common parent
or any other consolidated, combined, affiliated or unitary Income Tax refund or
credit with respect to any Tax Return that includes any member of the Xxxxxxxx
Group. Xxxxxxxx shall be entitled to any other refunds or credits of Taxes of or
with respect to any PGC Subsidiary (or with respect to any asset transferred to
the Company by any member of the Xxxxxxxx Group pursuant to the Contribution
Agreement) attributable to or arising in any Pre-Closing Period (plus any
interest received with respect thereto), but not in duplication of any refund or
credit reflected as an asset to the extent taken into account in determining
Xxxxxxxx' Actual Net Working Capital pursuant to Section 3.3 of the Contribution
Agreement. Xxxxxxxx shall be entitled to any Income Tax refund or credit that
would not have arisen but for the acquisition or ownership by Xxxxxxxx (or any
other member of the Xxxxxxxx Group) of membership interests in the Company.
Section 4.3 COMPANY REFUNDS. The Company shall be entitled to any
refunds or credits of Taxes of the Company or any of its Subsidiaries (or with
respect to any asset transferred to the Company by any member of the Xxxxxxxx
Group or the Duke Group pursuant to the Contribution Agreement) other than such
refunds or credits to which Duke or Xxxxxxxx is entitled under Section 4.1 or
4.2 above. In the event that the amount of any actual Tax refund or credit is
less than the amount of such refund or credit reflected as an asset to the
extent taken into account in determining Duke's Actual Net Working Capital
pursuant to Section 3.3 of the Contribution Agreement, then Duke shall pay the
Company in cash the excess of such amount so reflected over such actual Tax
refund or credit within 10 days of receipt or utilization by the Company or any
of its Subsidiaries of such actual Tax refund or credit (but not in duplication
of any amount otherwise owed by Duke under this Annex). In the event that the
amount of any actual Tax refund or credit is less than the amount of such refund
or credit reflected as an asset to the extent taken into account in determining
Xxxxxxxx' Actual Net Working Capital pursuant to Section 3.3 of the Contribution
Agreement, then Xxxxxxxx shall pay the Company in cash the excess of such amount
so reflected over such actual Tax refund or credit within 10 days of receipt or
utilization by the Company or any of its Subsidiaries of such actual Tax refund
or credit (but not in duplication of any amount otherwise owed by Xxxxxxxx under
this Annex).
Section 4.4 PROMPT PAYMENT. The Company shall promptly (and shall
cause its Subsidiaries promptly to) forward to Duke or Xxxxxxxx or reimburse
Duke or Xxxxxxxx for any refund due Duke or Xxxxxxxx (pursuant to the terms of
this Article IV) after receipt thereof.
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ARTICLE V
MISCELLANEOUS
Section 5.1 SURVIVAL. The provisions of this Tax Matters Annex (other
than Sections 6.1(a), (b) and (c) and Sections 6.2(a), (b) and (c)) shall
survive the Closing until the expiration of each statute of limitations
applicable to any Pre-Closing Period (or, to the extent relating to any
Post-Closing Period, the expiration of the statute of limitations applicable to
such Post-Closing Period). The provisions of Sections 6.1(a), (b) and (c) and
Sections 6.2(a), (b) and (c) shall not survive the Closing.
Section 5.2 TREATMENT OF INDEMNITY PAYMENTS. Duke, Xxxxxxxx and the
Company shall (and shall cause their respective Subsidiaries to) treat any
indemnity payment made pursuant to this Annex or the Contribution Agreement and
any payment made pursuant to Section 3.3 of the Contribution Agreement as an
adjustment to the cash distribution provided in Section 3.2(c)(1) or 3.2(c)(2),
as appropriate, of the Contribution Agreement, unless otherwise required
pursuant to a "determination" within the meaning of Code Section 1313(a).
Section 5.3 TAX SHARING AGREEMENTS. Any Tax sharing agreement or
arrangement between Duke, on the one hand, and any DEFS Subsidiary, on the other
hand, shall be terminated as of the Closing Date and shall thereafter have no
further effect for any taxable year (whether the current year, a future year, or
a past year). Any Tax sharing agreement or arrangement between Xxxxxxxx, on the
one hand, and any PGC Subsidiary, on the other hand, shall be terminated as of
the Closing Date and shall thereafter have no further effect for any taxable
year (whether the current year, a future year, or a past year).
Section 5.4 ALLOCATION OF CERTAIN TAXES.
(a) If any DEFS Subsidiary or PGC Subsidiary is permitted but not
required under applicable state, local or foreign Income Tax laws to treat
either the day before the Closing Date or the Closing Date as the last day of a
taxable period, then, solely for purposes of such state, local or foreign Income
Tax laws, such day shall be treated as the last day of a taxable period.
(b) In the case of any Taxes that are imposed on a periodic basis and
are payable for a period that begins on or before the Closing Date and ends
after the Closing Date, the portion of such Tax that shall be allocable to the
portion of the period ending on the Closing Date shall (i) in the case of any
Taxes, other than Income Taxes and Taxes based upon or related to receipts, be
deemed to be the amount of such Taxes for the entire period, whether actually
paid before, during, or after such period, multiplied by a fraction the
numerator of which is the number of calendar days in the period ending on (and
including) the Closing Date and the denominator of which is the number of
calendar days in the entire period, and (ii) in the case of any Taxes based upon
or related to income or receipts (including but not limited to withholding
Taxes), be deemed equal to the amount which would be payable if the taxable year
ended on the close of business on the Closing Date; PROVIDED, HOWEVER, that any
franchise Tax measured by assets or capital shall be allocable to the taxable
period for which the right to do business obtained by the payment of such
franchise Tax relates, regardless of whether such franchise Tax
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is measured by assets or capital relating to another taxable period. Clause (i)
of the preceding sentence shall be applied with respect to Taxes, if any, for
such period relating to capital (including net worth or long-term debt) or
intangibles by reference to the level of such items on the Closing Date. The
portion of any Taxes (or refunds) that are imposed on a periodic basis, payable
for a period that begins on or before the Closing Date and ends after the
Closing Date and not allocable to the portion of such period ending on the
Closing Date shall be allocable to the portion of the period beginning after the
Closing Date.
(c) If the amount of any Tax described in Section 5.4(b), or any
refund thereof or credit therefor, is voluntarily redetermined or redetermined
by a Taxing Authority, the principles of Section 5.4(b) shall apply to the
amount as so redetermined.
Section 5.5 PREDECESSORS AND SUCCESSORS. For purposes of this Annex,
any reference to a corporation shall include a reference to any limited
liability company into which such corporation is merged or converted and any
reference to a limited liability company shall include a reference to any
corporation which merged into, or was converted into, such limited liability
company; provided, however, that, notwithstanding the Merger, the Corporation
shall not be considered a PGC Subsidiary.
Section 5.6 DUKE SUBSIDIARIES AND PGC SUBSIDIARIES. In the event that
the merger provided in Section 3.2 of the Governance Agreement occurs, then for
purposes of this Annex (other than Sections 6.1(e) and 6.2(e)), the term "DEFS
Subsidiary" shall include DEFS Holding, the term "PGC Subsidiary" shall include
PGC and Xxxxxxxx Member Parent, and the term "Closing Date," when used in
connection with such entities, shall mean the date of such merger. For purposes
of this Annex, the term "DEFS Subsidiary" shall include the Company for the
Pre-Closing Period and shall include any entity that is a Subsidiary of DEFS
Holding immediately prior to the Closing and a Subsidiary of the Company
immediately after the Closing (or is otherwise contributed directly or
indirectly by Duke to the Company). For purposes of this Annex, the term "PGC
Subsidiary" shall include any entity that is a Subsidiary of PGC immediately
prior to the Closing and a Subsidiary of the Company immediately after the
Closing (or is otherwise contributed directly or indirectly by Xxxxxxxx to the
Company).
ARTICLE VI
TAX REPRESENTATIONS
Section 6.1 DUKE TAX REPRESENTATIONS. Duke hereby represents and
warrants to each of Xxxxxxxx and the Company that, except (i) in the case of
clauses (a), (b) and (c), as disclosed in Section B-6.1 of the Duke Disclosure
Schedule and (ii) to the extent that any breach, failure or inaccuracy,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the DEFS Subsidiaries:
(a) as of the date of this Agreement, all Tax Returns that are
required to be filed by or with respect to any of the DEFS Subsidiaries have
been duly filed and all such Tax Returns are complete and accurate;
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(b) as of the date of this Agreement, all Taxes shown to be due on
the Tax Returns referred to in clause (a) have been paid in full;
(c) as of the date of this Agreement, no waivers of statutes of
limitation have been given by or requested with respect to any Tax Returns of
any of the DEFS Subsidiaries;
(d) the aggregate regular federal income tax bases of the depreciable
and amortizable property to be contributed by DEFS Holding to the Company
pursuant to Section 2.2 of the Contribution Agreement and the years in which
such basis is scheduled to be depreciated or amortized for regular federal
income tax purposes, as of December 31, 1999, is not less than the amounts set
forth in Schedule B-6.1(d) of the Duke Disclosure Schedule; and
(e) as of the Closing Date, for United States federal income tax
purposes, each DEFS Subsidiary (organized under the laws of the United States, a
State of the United States or any political subdivision thereof) will constitute
a partnership or will be disregarded as an entity separate from its owner
(within the meaning of Treasury Regulation Section 301.7701-3).
Section 6.2 XXXXXXXX TAX REPRESENTATIONS. Xxxxxxxx hereby represents
and warrants to each of Duke and the Company that, except (i) in the case of
clauses (a), (b) and (c), as disclosed in Section B-6.2 of the Xxxxxxxx
Disclosure Schedule and (ii) to the extent that any breach, failure or
inaccuracy, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the PGC Subsidiaries:
(a) as of the date of this Agreement, all Tax Returns that are
required to be filed by or with respect to any of the PGC Subsidiaries have been
duly filed and all such Tax Returns are complete and accurate;
(b) as of the date of this Agreement, all Taxes shown to be due on
the Tax Returns referred to in clause (a) have been paid in full;
(c) as of the date of this Agreement, no waivers of statutes of
limitation have been given by or requested with respect to any Tax Returns of
any of the PGC Subsidiaries;
(d) the aggregate regular federal income tax bases of the depreciable
and amortizable property to be contributed by PGC to the Company pursuant to
Section 2.3 of the Contribution Agreement and the years in which such basis is
scheduled to be depreciated or amortized for regular federal income tax
purposes, as of December 31, 1999, is not less than the amounts set forth in
Schedule B-6.2(d) of the Xxxxxxxx Disclosure Schedule; and
(e) as of the Closing Date, for United States federal income tax
purposes, each PGC Subsidiary (organized under the laws of the United States, a
State of the United States or any political subdivision thereof) will constitute
a partnership or will be disregarded as an entity separate from its owner
(within the meaning of Treasury Regulation Section 301.7701-3).
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