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STOCK PURCHASE AGREEMENT
DATED DECEMBER 18, 1997
BY AND BETWEEN
OCCIDENTAL PETROLEUM CORPORATION,
AS SELLER
AND
KN ENERGY, INC.
AS BUYER
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES.................................. 2
1.1 Sale and Purchase of Shares.................................. 2
1.2 Purchase Price............................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER................. 2
2.1 Organization and Qualification............................... 2
2.2 Authority.................................................... 3
2.3 Noncontravention............................................. 3
2.4 MidCon's Capitalization...................................... 5
2.5 Utility Status............................................... 5
2.6 Waiver by the MidCon ESOP Trust.............................. 5
2.7 Finders and Brokers.......................................... 6
2.8 Investment Purpose........................................... 6
2.9 MidCon Significant Subsidiaries.............................. 6
2.10 Financial Statements......................................... 7
2.11 Seller's SEC Reports......................................... 8
2.12 Absence of Certain Changes or Events......................... 8
2.13 Litigation................................................... 8
2.14 Compliance with Law.......................................... 9
2.15 Employees and Employee Benefit Matters....................... 9
2.16 Contracts.................................................... 9
2.17 No Undisclosed Liabilities................................... 11
2.18 Tax Matters.................................................. 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER.................. 12
3.1 Organization and Qualification............................... 12
3.2 Authority.................................................... 12
3.3 Noncontravention............................................. 13
3.4 Utility Status............................................... 14
3.5 Finders and Brokers.......................................... 14
3.6 Investment Purpose........................................... 15
ARTICLE IV THE CLOSING.................................................. 15
4.1 Time and Place of the Closing................................ 15
4.2 Conditions Precedent to the Obligations of the Buyer......... 15
4.3 Conditions Precedent to the Obligation of the Seller......... 18
4.4 Conditions of Both Parties................................... 19
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ARTICLE V COVENANTS.................................................... 20
5.1 Covenants by the Seller...................................... 20
5.2 Covenants by the Buyer....................................... 27
5.3 Covenants of Both Parties.................................... 35
ARTICLE VI TAXES........................................................ 43
6.1 Section 338(h)(10) Election.................................. 43
6.2 Tax Sharing Agreement........................................ 43
6.3 Federal Income Tax Returns and Combined State Income Tax
Returns for Periods Through the Closing Date................. 43
6.4 No Adjustment of MidCon Tax Liability for the Taxable Year
Ending December 31, 1997..................................... 44
6.5 Liability of MidCon and its Subsidiaries for Federal and
Combined State Income Tax.................................... 45
6.6 Separate State, Local, Foreign Income Tax Returns............ 45
6.7 Sales and Property Taxes..................................... 46
6.8 State Franchise Taxes........................................ 46
6.9 Adjustment Upon Leaving Consolidation........................ 47
6.10 Sales and Transfer Taxes with Respect to this Transaction.... 47
6.11 Cooperation.................................................. 47
6.12 Tax Proceedings.............................................. 48
6.13 Carrybacks................................................... 48
6.14 Prior Year Tax Returns....................................... 49
6.15 Retention of Carryovers...................................... 49
6.16 Indemnification for Post-Closing Transactions................ 49
ARTICLE VII TERMINATION.................................................. 50
7.1 Termination.................................................. 50
7.2 Effects of Termination....................................... 50
ARTICLE VIII SURVIVAL & INDEMNITY......................................... 51
8.1 Survival of Representations and Warranties; Limitations on
Liability.................................................... 51
8.2 Indemnification by the Buyer................................. 52
8.3 Indemnification by the Seller................................ 53
8.4 Interpretation............................................... 55
8.5 Exclusive Remedy............................................. 58
ARTICLE IX DEFINITIONS.................................................. 58
9.1 Affiliate.................................................... 58
9.2 Affiliated Group............................................. 59
9.3 Agreement.................................................... 59
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9.4 B Facility Loan.............................................. 59
9.5 Business..................................................... 59
9.6 Business Day................................................. 59
9.7 Buyer........................................................ 59
9.8 Buyer Benefit Plans.......................................... 59
9.9 Buyer Indemnitees............................................ 59
9.10 Buyer's Pipeline Lease Guaranty.............................. 59
9.11 C Facility Loan.............................................. 59
9.12 Cash Management Agreement.................................... 60
9.13 Certificate of Designations.................................. 60
9.14 Claim Notice................................................. 60
9.15 Closing...................................................... 60
9.16 Closing Date................................................. 60
9.17 CMIC Preferred Stock......................................... 60
9.18 Code......................................................... 60
9.19 Commitments.................................................. 60
9.20 Common Stock................................................. 60
9.21 Consents..................................................... 60
9.22 Control...................................................... 60
9.23 Current Assets............................................... 61
9.24 Current Liabilities.......................................... 61
9.25 Damages...................................................... 61
9.26 Dividend Note................................................ 61
9.27 Employee Plans and Agreements................................ 61
9.28 Employees.................................................... 62
9.29 Employee Welfare Benefit Plan................................ 62
9.30 Encumbrance.................................................. 62
9.31 ERISA........................................................ 62
9.32 ESOP Note.................................................... 62
9.33 Facilities................................................... 62
9.34 FERC......................................................... 62
9.35 Financial Statements......................................... 62
9.36 Former Salaried Employees.................................... 63
9.37 Former Union Employees....................................... 63
9.38 GAAP......................................................... 63
9.39 Governmental Entity.......................................... 63
9.40 Government Securities........................................ 63
9.41 HSR Act...................................................... 63
9.42 Indemnified Person........................................... 64
9.43 Insurance Novation Agreement................................. 64
9.44 Insurance Release Agreement.................................. 64
9.45 Intercompany Agreements...................................... 64
9.46 Knowledge.................................................... 64
9.47 LIBO Business Day............................................ 64
9.48 LIBO Rate.................................................... 64
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9.49 Material Adverse Effect...................................... 65
9.50 MidCon....................................................... 65
9.51 MidCon ESOP.................................................. 65
9.52 MidCon ESOP Agreements....................................... 65
9.53 MidCon ESOP Trustee.......................................... 66
9.54 MidCon Indemnitees........................................... 66
9.55 MidCon Loans................................................. 66
9.56 MidCon Restructuring Agreements.............................. 66
9.57 1997 Financial Statements.................................... 66
9.58 Notified Party............................................... 66
9.59 Notifying Party.............................................. 66
9.60 OPC Loans.................................................... 66
9.61 Originator Receivables Sale Agreement........................ 66
9.62 Party........................................................ 67
9.63 Person....................................................... 67
9.64 Pipeline Lease............................................... 67
9.65 Pipeline Lease Guaranty...................................... 67
9.66 Pipeline Lessee.............................................. 67
9.67 Pipeline Lessor.............................................. 67
9.68 PUHCA........................................................ 67
9.69 Purchase Price............................................... 67
9.70 Reference Rate............................................... 68
9.71 Related Agreements........................................... 68
9.72 Salaried Employees........................................... 68
9.73 SEC.......................................................... 68
9.74 SEC Reports.................................................. 68
9.75 Securities Act............................................... 68
9.76 Securities Exchange Act...................................... 68
9.77 Seller....................................................... 68
9.78 Seller Indemnitees........................................... 69
9.79 Services Agreement........................................... 69
9.80 Shares....................................................... 69
9.81 Significant Subsidiary....................................... 69
9.82 Subsidiary................................................... 69
9.83 Substitute Note.............................................. 69
9.84 Tax.......................................................... 70
9.85 Tax Return................................................... 70
9.86 Tax Sharing Agreement........................................ 70
9.87 Term Loan Agreement.......................................... 70
9.88 Term Loan Assignment Agreement............................... 71
9.89 Termination Allowance Plan................................... 71
9.90 Termination Date............................................. 71
9.91 Union........................................................ 71
9.92 Union Contract............................................... 71
9.93 Union Employees.............................................. 71
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ARTICLE X MISCELLANEOUS................................................ 72
10.1 Further Assurances........................................... 72
10.2 Preservation of Books and Records............................ 72
10.3 Confidentiality.............................................. 73
10.4 Notices...................................................... 73
10.5 Public Announcements......................................... 74
10.6 Successors and Assigns....................................... 74
10.7 Expenses..................................................... 75
10.8 Severability................................................. 75
10.9 Construction; Interpretation................................. 76
10.10 Entire Agreement; Third Party Beneficiaries.................. 77
10.11 Amendment and Modification................................... 77
10.12 Governing Law................................................ 77
10.13 Waiver of Jury Trial......................................... 77
10.14 Consent to Jurisdiction and Forum Selection.................. 78
10.15 Counterparts................................................. 78
SCHEDULES AND EXHIBITS
NUMBER TITLE
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Schedule 2.3 Non-Contravention of the Seller and MidCon and
Encumbrances on the Shares
Schedule 2.9 MidCon Significant Subsidiaries
(i) Name And Jurisdiction Of Organization
(ii) Number Of Shares Of Authorized Capital Stock
(iii) Number Of Issued And Outstanding Shares
(iv) Name Of Holders Of Shares Of Each Class
(v) Number Of Shares Held In Treasury
Schedule 2.10 Financial Statements of MidCon
Schedule 2.12 Absence of Certain Changes or Events to MidCon
Schedule 2.13 Litigation of MidCon
Schedule 2.14 Compliance with Law by MidCon
Schedule 2.16 Contracts of MidCon
2.16.1 Agreements related to Indebtedness for Borrowed
Money in excess of $10,000,000
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2.16.2 Agreements relating to Future Acquisitions or
Dispositions in Excess of $10,000,000
2.16.3 Affiliate Contracts
2.16.4 Contracts Relating to Ownership of Joint
Ventures, Etc.
2.16.5 Any Contract Involving Payments to or from in
Excess of $50,000,000
Schedule 2.17 Undisclosed Liabilities
Schedule 2.18 Tax Matters
Schedule 3.3 Non-Contravention of the Buyer
Schedule 5.1.1 Exceptions to the Seller's Operations Covenant
Schedule 5.2.3 Seller Employee Obligations
Schedule 5.2.5 Commitments of MidCon
Exhibit 4.2.3 Opinion of Counsel to the Seller
Exhibit 4.3.4 Opinion of Counsel to the Buyer
Exhibit 5.1.5(a) Insurance Release Agreement
Exhibit 5.1.5(b) Insurance Novation Agreement
Exhibit 9.83 Form of Substitute Promissory Note
Exhibit 9.88 Form of Term Loan Assignment Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 18, 1997, by and between
Occidental Petroleum Corporation, a Delaware corporation (the "Seller"), and KN
Energy, Inc., a Kansas corporation (the "Buyer"). Capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed thereto in
Article IX of this Agreement.
WITNESSETH:
WHEREAS, the Seller owns all of the issued and outstanding Common Stock
of MidCon; and
WHEREAS, the Seller desires to sell and the Buyer desires to purchase
the Shares upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Boards of Directors of the Seller and the Buyer have
approved the acquisition of MidCon by the Buyer; and
NOW, THEREFORE, in consideration of, and subject to, the mutual
covenants, agreements, terms and conditions herein contained, the Parties agree
as follows:
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ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of Shares. Subject to and upon the terms and
conditions set forth in this Agreement, including the Buyer's delivery of the
Substitute Note, at the Closing, the Seller shall sell, assign, transfer and
convey to the Buyer, and the Buyer shall purchase and acquire from the Seller,
all of the Shares.
1.2 Purchase Price. The purchase price for the Shares (the "Purchase
Price") shall be $2,103,974,390 to be paid by the Buyer to the Seller at the
Closing by wire transfer of immediately available funds to the bank account of
the Seller which shall be designated by the Seller to the Buyer in writing not
later than three (3) Business Days prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as follows:
2.1 Organization and Qualification.
2.1.1 The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
2.1.2 MidCon is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. MidCon has all
requisite corporate power to own, use or lease its properties and to carry on
its business as it is now being conducted.
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MidCon is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where both (a) the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary and (b) the failure to qualify would have a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole. The Seller has
delivered to the Buyer a complete and correct copy of the Certificate of
Incorporation and By-laws of MidCon, each as in effect on the date hereof.
2.2 Authority. The Seller has full corporate power to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby on the part of the Seller have been duly and
validly authorized by the Seller's Board of Directors, and no other corporate
proceedings on the part of the Seller are necessary, as a matter of law or
otherwise, for the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Seller and is
a valid and binding agreement of the Seller, enforceable against it in
accordance with its terms.
2.3 Noncontravention. Except as provided on Schedule 2.3, the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the performance by the Seller of its obligations
hereunder will not:
(a) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-laws of the Seller, MidCon or any Significant
Subsidiary;
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(b) require any consent, approval, order, authorization or permit of,
or registration, filing with or notification to, any Governmental Entity or any
private third party, except for filings, consents, approvals, orders,
authorizations or permits which (i) are required under the HSR Act; (ii) are
required by the FERC; (iii) are required by the Texas Railroad Commission; (iv)
are required by the Kansas Corporation Commission; (v) will not result in a
Material Adverse Effect on MidCon and its Subsidiaries, taken as a whole; or
(vi) will not prevent the consummation of the transactions contemplated hereby,
if not made or acquired;
(c) result in any violation or breach of, or constitute a default
under (or give rise to any right of termination, cancellation or acceleration or
guaranteed payments under or to a loss of a material benefit or result in the
creation or imposition of a lien under), any of the terms, conditions or
provisions of any note, lease, mortgage, indenture, license, agreement or other
instrument or obligation to which the Seller is a party or by which the
properties or assets of the Seller may be bound, or, to the Seller's Knowledge,
to which MidCon or any of its Significant Subsidiaries is a party or by which
the properties or assets of MidCon or its Significant Subsidiaries may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses which would not result in a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole;
(d) violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to the Seller, or to the Seller's
Knowledge, to MidCon or any of its Significant Subsidiaries, that would result
in a Material Adverse Effect on MidCon and its Subsidiaries, taken as a whole;
or
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(e) result in the creation of any Encumbrance upon the Shares under
any agreement or instrument to which the Seller is a party or by which the
Seller is bound, or, to Seller's Knowledge, upon any of the properties or assets
of MidCon or any of its Significant Subsidiaries under any agreement or
instrument to which MidCon or its Significant Subsidiaries is a party or by
which MidCon or its Significant Subsidiaries is bound.
2.4 MidCon's Capitalization. MidCon has an authorized capitalization
consisting solely of 1,400,000 shares of common stock, par value $.01 per share
("Common Stock"). There are 1,400,000 shares of Common Stock issued and
outstanding, all of which are owned, beneficially and of record, by the Seller
(the "Shares") free and clear of all Encumbrances except as set forth on
Schedule 2.3. The Shares have been validly issued, are fully paid and
nonassessable. No agreement or other document grants or imposes on any Shares
any right, preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any right of first refusal).
2.5 Utility Status. Neither the Seller, MidCon nor any of its
Significant Subsidiaries is a "Holding Company" or a "Public Utility Company" or
a "Gas Utility Company" as those terms are defined in the PUHCA.
2.6 Waiver by the MidCon ESOP Trust. The Seller has obtained a written
waiver by the MidCon ESOP Trust of all its rights to exchange the CMIC Preferred
Stock for, or to cause a third party to acquire, the Shares pursuant to the
MidCon ESOP Agreements.
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2.7 Finders and Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement as a result of
arrangements made by or on behalf of the Seller or MidCon other than (a) Xxxxxxx
Xxxxx & Co. and Credit Suisse First Boston Corporation, the fees of whom will be
paid by the Seller and (b) the agreements with the MidCon ESOP Trustee and its
advisors, which fees and expenses will be paid by MidCon.
2.8 Investment Purpose. The Seller is acquiring the Substitute Note
for its own account and not with a view to any sale or distribution thereof in
violation of any securities laws. The Seller has no present intention of
selling, distributing or otherwise disposing of any portion of the Substitute
Note in violation of any such laws. The Seller acknowledges that the Substitute
Note has not been registered or qualified under the Securities Act or any state
securities laws and may not be sold, assigned, pledged or otherwise disposed of
in the absence of such registration unless an exemption from such registration
is available.
2.9 MidCon Significant Subsidiaries. Schedule 2.9 sets forth for each
Significant Subsidiary (i) its name and jurisdiction of organization, (ii) the
number of shares of authorized capital stock of each class of its capital stock,
(iii) the number of issued and outstanding shares of each class of its capital
stock, (iv) the names of the holders of shares of each class of stock and the
number of shares held by such holder, and (v) the number of shares of its
capital stock held in treasury. Each of the Significant Subsidiaries is a
corporation, validly existing and in good standing under the laws of its
jurisdiction of incorporation, is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of such
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Subsidiary's properties or the nature of its business makes such qualification
necessary, except in jurisdictions, if any, where the failure to be so qualified
would not result in a Material Adverse Effect on MidCon and its Subsidiaries,
taken as a whole. Each of the Significant Subsidiaries has the requisite
corporate power to own, use or lease its properties and to carry on its business
as it is now being conducted. All the issued and outstanding shares of capital
stock of each Significant Subsidiary have been duly authorized and are validly
issued, fully paid and nonassessable; and except as set forth on Schedule 2.9,
there are no outstanding or authorized rights of any Person that could require
any Significant Subsidiary to issue, sell or otherwise cause to become
outstanding any of its capital stock.
2.10 Financial Statements. Schedule 2.10 sets forth the audited
consolidated financial statements of MidCon and its consolidated Subsidiaries
(including any related notes and schedules) for each of the three years ended
December 31, 1994, 1995 and 1996 and for the ten months ended October 31, 1997
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis and present
fairly in all material respects the consolidated financial position of MidCon
and its consolidated Subsidiaries as of the date thereof, and the consolidated
results of operations and cash flows of MidCon and its consolidated Subsidiaries
for the periods presented therein (except as may be indicated in the notes
thereto and subject, in the case of financial statements for the ten-month
period ended October 31, 1997, to normal and recurring year-end adjustments and
the absence of amounts for the comparable period in 1996).
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2.11 Seller's SEC Reports. The Seller files reports, statements and
schedules with the SEC pursuant to the Securities Exchange Act (collectively,
the "SEC Reports"). None of the SEC Reports, to the extent they refer to MidCon
and its Subsidiaries, contain, as of their respective dates, any untrue
statement of a material fact, or omit, as of their respective dates, to state a
fact required to be stated therein or necessary in order to make the statements
made therein, in each case, as it relates to MidCon and its Subsidiaries, in
light of the circumstances under which they were made, not misleading.
2.12 Absence of Certain Changes or Events. Except as contemplated by
this Agreement, or as disclosed in the Financial Statements or Schedule 2.12, to
the Seller's Knowledge, since October 31, 1997, (a) MidCon and its Significant
Subsidiaries have conducted their respective businesses only in the ordinary
course, consistent with past practice during the immediately preceding twelve
month period, and (b) as of the date hereof there has not occurred or arisen any
event that has had or, insofar as reasonably can be foreseen, is likely in the
future to have, a Material Adverse Effect on MidCon and its Subsidiaries, taken
as a whole, other than events or developments generally affecting the industry
in which MidCon and its Subsidiaries operate.
2.13 Litigation. Except as recorded or disclosed in the Financial
Statements or Schedule 2.13, to the Seller's Knowledge, as of the date hereof,
no actions, suits, arbitration proceedings or governmental proceedings are
pending or threatened against MidCon or any of its Significant Subsidiaries
which would have a Material Adverse Effect on MidCon and its Subsidiaries, taken
as a whole.
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2.14 Compliance with Law. Except as recorded or disclosed in the
Financial Statements or Schedule 2.14, to the Seller's Knowledge, neither MidCon
nor any of its Significant Subsidiaries is in violation of any federal, state,
local or foreign law, ordinance, regulation, judgment, order or decree, the
violation of which would have a Material Adverse Effect on MidCon and its
Subsidiaries, taken as a whole.
2.15 Employees and Employee Benefit Matters. To the Seller's Knowledge,
(i) each "employee benefit plan", as defined in Section 3(3) of ERISA,
maintained by MidCon or its Significant Subsidiaries complies in all material
respects with all applicable requirements of ERISA and of the Code, and other
applicable laws; and (ii) neither MidCon nor any of its Significant
Subsidiaries, nor any of their respective directors, officers, employees or
agents has, with respect to any employee benefit plan maintained by MidCon or
its Significant Subsidiaries, engaged in any "prohibited transaction," as such
term is defined in Section 4975 of the Code or Section 406 of ERISA, which would
result in any taxes or penalties on prohibited transactions under Section 4975
of the Code or under Section 502(i) of ERISA, which would have a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole.
2.16 Contracts. Schedule 2.16 sets forth a true and complete list of
each of the following contracts that are currently in effect and to which MidCon
or any of its Significant Subsidiaries is a party, or by which any of their
assets or properties is bound:
2.16.1 each contract which provides for (i) the borrowing of money
by MidCon or any of the Significant Subsidiaries or (ii) the direct or indirect
guarantee by MidCon or any
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of the Significant Subsidiaries of any obligation of any other Person for
borrowed money that, in either case, exceeds $10,000,000.
2.16.2 each contract which provides for the future disposition or
acquisition by MidCon or any of the Significant Subsidiaries of any assets or
properties of any Person or of any interest in any business enterprise (other
than the disposition or acquisition of investments in the ordinary course of
business and consistent with past practice) that involves consideration in
excess of $10,000,000.
2.16.3 each contract to which the Seller or any Affiliate of the
Seller (other than MidCon and its Subsidiaries) is a party (including those
relating to allocations of expenses, personnel, services, or facilities);
2.16.4 each contract to which MidCon or any of the Significant
Subsidiaries is a party relating to its ownership in a joint venture or similar
arrangement involving an investment by MidCon of $5 million or more;
2.16.5 each contract not disclosed pursuant to the foregoing
clauses 2.16.1 through 2.16.4 that involves a contractual commitment for the
payment, pursuant to the terms of such contract, by or to MidCon or any of the
Significant Subsidiaries of more than $50,000,000.
To the Knowledge of the Seller, neither MidCon nor any of the Significant
Subsidiaries nor any other Party to any such contract is currently in violation,
breach or default under any such contract or, with or without notice or lapse of
time or both, would be in violation or breach of
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or default under any such contract, except such as would not have a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole.
2.17 No Undisclosed Liabilities. Except as set forth in Schedule 2.17,
to the Seller's Knowledge, MidCon and its consolidated Subsidiaries have no
liabilities or obligations that would be required to be recorded or disclosed in
a consolidated balance sheet of MidCon and its consolidated Subsidiaries, or
footnotes thereto, prepared as of the date that this representation is made, in
accordance with GAAP, other than liabilities and obligations recorded or
disclosed in the balance sheet included in or in footnotes to the Financial
Statements, or incurred in the ordinary course of business since October 31,
1997.
2.18 Tax Matters. Except as provided on Schedule 2.18: (i) the Seller
has filed, or has caused MidCon and its Subsidiaries to have timely filed, all
Tax Returns the due date of which is on or prior to the Closing Date; (ii)
MidCon and its Subsidiaries, or the Seller on their behalf, have timely paid all
Taxes shown as due and payable on such Tax Returns; (iii) adequate accruals or
provisions including current Tax liabilities, all in accordance with GAAP
applied on a consistent basis for all Taxes due with respect to any period
ending on or prior to December 31, 1997 will have been made in the 1997
Financial Statements; (iv) no assessment of Tax has been proposed in writing
against MidCon or its Subsidiaries or any of their assets or properties; (v)
neither MidCon nor any of its Subsidiaries has an outstanding agreement, waiver
or arrangement extending any statute of limitations in respect of Taxes or has
agreed to any extension of time with respect to a Tax assessment or deficiency
except in all cases which would not have a Material Adverse Effect on MidCon and
its Subsidiaries, taken
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as a whole. The statute of limitations in respect of federal Taxes has expired
through the period set forth on Schedule 2.18. Schedule 2.18 lists all federal
Tax Returns that are currently the subject of audit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
3.1 Organization and Qualification. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Kansas. The Buyer has all requisite corporate power to own, use or lease its
properties and to carry on its business as it is now being conducted. The Buyer
is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where both the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary and the failure to qualify would have a Material Adverse Effect on the
Buyer and its Subsidiaries taken as a whole.
3.2 Authority. The Buyer has full corporate power to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby on the part of the Buyer have been duly and
validly authorized by the Buyer's Board of Directors, and no other corporate
proceedings on the part of the Buyer are necessary, as a matter of law or
otherwise, for the consummation of the transactions contemplated hereby. This
Agreement
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has been duly and validly executed and delivered by the Buyer and is a valid and
binding agreement of the Buyer, enforceable against it in accordance with its
terms.
3.3 Noncontravention. Except as provided on Schedule 3.3, the
execution and delivery of this Agreement, the consummation of the transactions
contemplated by this Agreement and the performance by the Buyer of its
obligations hereunder will not:
(a) conflict with or result in any breach of any provision of the
Buyer's Articles of Incorporation or By-laws;
(b) require any consent, approval, order, authorization or permit of,
or registration, filing with or notification to, any Governmental Entity or any
private third party, except for filings, consents, approvals, orders,
authorizations or permits which (i) are required under the HSR Act; (ii) are
required by the FERC; (iii) are required by the Texas Railroad Commission; (iv)
are required by the Kansas Corporation Commission; (v) will not result in a
Material Adverse Effect on the Buyer and its Subsidiaries, taken as a whole; or
(vi) will not prevent the consummation of the transactions contemplated hereby,
if not made or acquired.
(c) result in any violation of or the breach of or constitute a
default under (or give rise to any right of termination, cancellation or
acceleration or guaranteed payments under or to a loss of a material benefit or
result in the creation or imposition of a lien under) any of the terms,
conditions or provisions of any note, lease, mortgage, indenture, license,
agreement or other instrument or obligation to which the Buyer or one of the
Buyer's Subsidiaries is a party or by which the Buyer, any of the Buyer's
Subsidiaries or any of their respective properties or
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assets may be bound, except for such violations, breaches, defaults, or rights
of termination, cancellation or acceleration, or losses which requisite waivers
or consents have been obtained or which would not result in a Material Adverse
Effect on the Buyer and its Subsidiaries taken as a whole;
(d) violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to the Buyer, that would result
in a Material Adverse Effect on the Buyer and its Subsidiaries taken as a whole;
or
(e) result in the creation of any Encumbrance upon any shares of
capital stock, properties or assets of the Buyer or the Buyer's Subsidiaries
under any agreement or instrument to which the Buyer or the Buyer's Subsidiaries
is a party or by which the Buyer or the Buyer's Subsidiaries is bound.
3.4 Utility Status. Neither the Buyer nor any of its Subsidiaries is a
"Holding Company" or a "Public Utility Company" or a "Gas Utility Company" as
those terms are defined in the PUHCA.
3.5 Finders and Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement as a result of
arrangements made by or on behalf of the Buyer other than Xxxxxx Xxxxxxx & Co.
Incorporated, Xxxxxx Xxxxxxx & Co., Inc. and Salomon Brothers Inc, the fees of
whom will be paid by the Buyer.
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3.6 Investment Purpose. The Buyer is acquiring the Shares and the ESOP
Note for its own account and not with a view to any sale or distribution thereof
in violation of any securities laws. The Buyer has no present intention of
selling, distributing or otherwise disposing of any portion of the Shares or the
ESOP Note in violation of any such laws. The Buyer acknowledges that the Shares
and the ESOP Note have not been registered or qualified under the Securities Act
or any state securities laws and may be sold, assigned, pledged or otherwise
disposed of in the absence of such registration only pursuant to an exemption
from such registration and in accordance with this Agreement.
ARTICLE IV
THE CLOSING
4.1 Time and Place of the Closing. Subject to the satisfaction or
waiver of the conditions precedent set forth herein, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of the Seller, 00000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at
10:00 a.m. Los Angeles time on February 27, 1998, or at such later Business Day,
place and time as the Seller shall specify, but no later than June 30, 1998.
4.2 Conditions Precedent to the Obligations of the Buyer. The
obligation of the Buyer to consummate the transactions contemplated hereby shall
be subject to satisfaction or waiver, at or prior to the Closing, of the
conditions set forth in this Section 4.2.
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4.2.1 Resolutions of the Board of Directors. The Seller shall
have furnished the Buyer at the Closing with certified copies of resolutions
duly adopted by the Board of Directors of the Seller, or a committee thereof,
which resolutions shall authorize the execution, delivery and performance of
this Agreement by the Seller.
4.2.2 Representations and Warranties to be True and Correct.
The representations and warranties of the Seller contained in Article II (as
amended or updated pursuant to Section 5.3.3) shall be true and accurate in all
material respects (if not qualified as to materiality) and true and accurate (if
so qualified) as of the Closing Date with the same force and effect as though
made at and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date or except as contemplated by
this Agreement). The Seller shall have furnished the Buyer at the Closing with
certificates dated as of the Closing Date of two officers of the Seller, to the
effect set forth above, and of two officers of MidCon, to the effect set forth
above but only to the extent that the representations and warranties relate to
MidCon or its Subsidiaries.
4.2.3 Opinion of Counsel to the Seller. The Buyer shall have
received an opinion from counsel employed by the Seller, dated as of the Closing
Date, to the effect set forth on Exhibit 4.2.3, subject only to customary
qualifications and exceptions reasonably acceptable to the Buyer.
4.2.4 Obligations of the Seller to be Fulfilled. The Seller
shall have performed and complied in all material respects with the covenants
required by this Agreement to be performed and complied with by the Seller at or
prior to the Closing. The Seller shall have
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furnished the Buyer at the Closing with a certificate dated as of the Closing
Date of two officers of the Seller to the effect set forth above.
4.2.5 Resignation of the Directors. All directors of MidCon
and its Subsidiaries shall have tendered their written resignations, effective
as of the Closing Date, or their term shall have expired prior thereto.
4.2.6 Transfer of Shares. The Seller shall have delivered to
the Buyer the certificates which represent all the Shares, together with stock
powers or other transfer documents duly endorsed in the name of the Buyer or its
permitted assigns.
4.2.7 Intercompany Agreements. The Seller shall have taken or
shall have caused its Subsidiaries to have taken the following actions with
regard to the Intercompany Agreements:
(a) Contribution of Net Balance. The assignment, immediately
prior to the Closing, of the right to receive all payments of principal of and
interest on the Dividend Note other than the amount of interest accruing from
December 31, 1997 through the Closing Date pursuant to the Dividend Note as a
contribution to the capital of MidCon, which assignment shall occur before any
distribution occurs pursuant to Section 5.1.2(a)(i);
(b) Services Agreement. The Services Agreement shall have been
terminated as provided more fully in Section 5.3.5;
(c) Tax Sharing Agreement. The Tax Sharing Agreement shall
have been terminated as provided more fully in Section 6.2.
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4.3 Conditions Precedent to the Obligation of the Seller. The
obligation of the Seller to consummate the transactions contemplated hereby
shall be subject to satisfaction or waiver, at or prior to the Closing of the
conditions set forth in this Section 4.3.
4.3.1 Resolutions of the Board of Directors. The Buyer shall
have furnished the Seller at the Closing with certified copies of resolutions
duly adopted by the Board of Directors of the Buyer, which resolutions shall
authorize the execution, delivery and performance by the Buyer of this
Agreement, the Substitute Note, and the Term Loan Assignment Agreement, the
Buyer's Pipeline Lease Guaranty and related commitments to be provided pursuant
to Section 5.3.6 and the Insurance Novation Agreement.
4.3.2 Representations and Warranties to be True and Correct.
The representations and warranties of the Buyer contained in Article III (as
amended or updated pursuant to Section 5.3.3) shall be true and accurate in all
material respects (if not qualified as to materiality) and true and accurate (if
so qualified) as of the Closing Date with the same force and effect as though
made at and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date or except as contemplated by
this Agreement). The Buyer shall have furnished the Seller at the Closing with a
certificate of two of its officers to the effect set forth in this Section
4.3.2.
4.3.3 Obligations of the Buyer to be Fulfilled. The Buyer
shall have performed and complied in all material respects with the covenants
required by this Agreement to be performed and complied with by the Buyer at or
prior to the Closing. The Buyer shall
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have furnished the Seller at the Closing with a certificate of two of its
officers to the effect set forth in this Section 4.3.3.
4.3.4 Opinion of Counsel to the Buyer. The Seller shall have
received from counsel employed by the Buyer, an opinion, dated as of the Closing
Date, to the effect set forth on Exhibit 4.3.4, subject only to customary
qualifications and exceptions reasonably acceptable to the Seller.
4.3.5 Delivery of the Purchase Price. The Buyer shall have
delivered the Purchase Price to the Seller at the Closing.
4.4 Conditions of Both Parties. The obligations of both Parties to
consummate the transactions contemplated hereby shall be subject to satisfaction
or waiver, at or prior to the Closing of the conditions set forth in this
Section 4.4.
4.4.1 Consents. All Consents shall have been filed, occurred
or been obtained and shall be in effect immediately prior to and as of the
Closing, except where the failure to obtain such Consents will not result in a
Material Adverse Effect on MidCon and its Subsidiaries, taken as a whole, will
not materially impair the ability of either Party to perform its obligations
under this Agreement and will not prevent the consummation of any of the
transactions contemplated by this Agreement. Any applicable waiting period
imposed by a Governmental Entity, including that imposed under the HSR Act,
shall have expired or been terminated.
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4.4.2 Litigation. No temporary restraining order, preliminary
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Agreement and the
transactions contemplated by this Agreement shall have been issued by any
federal, state or foreign court or other Governmental Entity and remain in
effect.
4.4.3 Statutory Requirements. No federal, state, local or
foreign statute, rule or regulation shall have been enacted which prohibits the
consummation of the transactions contemplated by this Agreement or would make
the consummation of such transactions illegal.
ARTICLE V
COVENANTS
5.1 Covenants by the Seller.
5.1.1 Operation of Business. During the period from the date
of this Agreement to the Closing Date, except as otherwise contemplated by this
Agreement, after consultation with the Buyer if so provided below or consented
to by the Buyer (which consent shall not be unreasonably withheld), the Seller
will cause each of MidCon and its Significant Subsidiaries to:
(a) carry on its business only in the ordinary course
consistent with past practice during the immediately preceding twelve-month
period;
(b) not amend its Certificate of Incorporation or
By-laws;
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(c) not acquire by merging or consolidating with, or
purchasing substantially all the assets of, or otherwise acquiring any business
or any corporation, partnership, association or other business organization or
division thereof which would be material, individually or in the aggregate, to
the business, financial condition or results of operations of MidCon and its
Subsidiaries taken as a whole;
(d) not, except in the ordinary course of business,
sell, lease, or otherwise dispose of, nor voluntarily encumber, any of its
assets (except as listed on Schedule 5.1.1) which are material, individually or
in the aggregate, to the business or financial condition or results of
operations of MidCon and its Subsidiaries taken as a whole;
(e) not declare, set aside, make or pay any dividend or
other distribution (except as listed on Schedule 5.1.1), in respect of its
capital stock (other than dividends and distributions payable to MidCon or its
Subsidiaries) or purchase or redeem, directly or indirectly, any shares of its
capital stock (other than for cash);
(f) not issue or sell any shares of its capital stock of
any class (other than to MidCon or its Subsidiaries);
(g) not incur any indebtedness for borrowed money (other
than from the Seller), or issue or sell any debt securities, other than in the
ordinary course of business consistent with past practice during the immediately
preceding twelve-month period or as described on Schedule 5.1.1;
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(h) not (i) grant to any officer or director any
increase in any compensation in any form, other than as is consistent with prior
practice, or in any severance or termination pay, or (ii) enter into or amend
any employment agreement with an officer, or (iii) amend the terms of any
Employee Benefit Plans and Agreements (other than as may be required by
applicable law or Governmental Entity) or (iv) adopt any new employee benefit
plan or arrangement in each case for which MidCon or its Subsidiaries will be
obligated after the Closing unless listed on Schedule 5.1.1;
(i) not, except for the transactions contemplated by
this Agreement, directly or indirectly solicit proposals or offers from any
person or initiate or participate in any discussions with any person relating to
any acquisition or purchase of all or a material amount of the assets of, or any
securities of, MidCon or any of its Significant Subsidiaries unless listed on
Schedule 5.1.1;
(j) without prior consultation with the Buyer, not enter
into any other contract or commitment having a value in excess of $50 million;
(k) without prior consultation with the Buyer, (i) not
enter into any fixed price purchases or sales of natural gas unless they are
hedged nor (ii) enter into any commodity futures contracts, options or swaps
unless the transactions are a hedge as defined in the Financial Accounting
Standard Board Statement of Financial Accounting Standards No. 80 or unless the
volume in aggregate at any time does not exceed two billion cubic feet.
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(l) without prior consultation with the Buyer, (i) not
enter into any fixed price purchases or sales of electricity unless they are
hedged nor (ii) enter into any commodity futures contract, options or swaps
unless the transactions are a hedge as defined in the Financial Accounting
Standard Board Statement of Financial Accounting Standards No. 80 or unless the
volume in aggregate at any time does not exceed 16,800 MWhs.
Notwithstanding the foregoing or any other provisions of this
Agreement, the Seller and MidCon may amend, modify, terminate or release any of
the MidCon ESOP Agreements or obligations thereunder; provided, however, that
the amount of outstanding principal of, and interest on, the ESOP Note will not
be modified.
5.1.2 The Cash Management Agreement.
(a) Pre-closing Adjustment. The Seller shall, and
shall cause MidCon to, adjust the MidCon Loan and the OPC Loan balances
immediately prior to the Closing as follows:
(i) An amount equal to the net amount, if any, by
which the Current Assets of MidCon exceed the sum of (A) the Current Liabilities
of MidCon plus (B) twenty million dollars ($20 million) each as of December 31,
1997 as shown on the 1997 Financial Statements, shall be added to the balance of
the C Facility Loans under the Cash Management Agreement thereby constituting a
distribution by MidCon to the Seller evidenced as a payable by MidCon.
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(ii) An amount equal to the net amount, if any,
by which the sum of (A) the Current Liabilities of MidCon plus (B) twenty
million dollars ($20 million) exceed the Current Assets of MidCon each as at
December 31, 1997 as shown on the 1997 Financial Statements, shall be added to
the balance of the B Facility Loans under the Cash Management Agreement, thereby
constituting a contribution to MidCon by the Seller evidenced as a receivable of
MidCon.
In connection with determining Current Assets and Current Liabilities
as of December 31, 1997, any and all adjustments in accordance with GAAP to
reflect the consequences of the transactions pursuant to this Agreement shall be
excluded; provided, however, the Current Liabilities at December 31, 1997 shall
include all amounts payable by MidCon to the MidCon ESOP Trustee arising from
the sale of the Shares and shall exclude the principal on the ESOP Note payable
after December 31, 1997.
(b) Loan Balances at Closing. The balance of each of
the OPC Loans and the MidCon Loans as at Closing shall be calculated by
including all amounts accrued but not yet payable for the period elapsed up to
the Closing Date, which amounts will include (i) the accrued interest on the
Dividend Note although due after the Closing, (ii) the payment by, or on behalf
of, MidCon to the MidCon ESOP Trustee and its advisors, and (iii) the amount of
Taxes of all sorts accrued pursuant to Article VI.
(c) Payment for Loan Balances. Within 30 days after
the Closing, the Seller shall pay the amount, if any, by which the OPC Loans
outstanding as of the Closing exceed the MidCon Loans outstanding at such date
(each determined in accordance with
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Section 5.1.2(b)), plus accrued interest in accordance with the provisions of
the Cash Management Agreement (subject to the modifications pursuant to the
following) to the date of payment, as if a "Mandatory Prepayment" existed
pursuant to Section 5.6 of the Cash Management Agreement. The Seller shall, and
shall cause MidCon to, enter into an agreement that, except as provided in the
preceding sentence, (i) shall, at the Closing, terminate each of the respective
Facilities, all management of cash pursuant thereto and the covenants
thereunder, and (ii) shall terminate the Cash Management Agreement fully upon
completion of the foregoing payment so that it no longer governs the payment of
any amounts payable after the Closing pursuant to the contracts, agreements or
arrangements outstanding after the Closing Date by and between MidCon and its
Subsidiaries on the one hand and the Seller and its Subsidiaries (other than
MidCon and its Subsidiary) on the other hand and such amounts shall be payable
as provided in the contract, agreement or arrangement governing such payment.
5.1.3 Intercompany Agreements. The Seller shall, and shall
cause its Subsidiaries to, perform the Intercompany Agreements, as amended,
which continue in effect after the Closing.
5.1.4 Originator Receivables Sales Agreement. Immediately
prior to the Closing, the Seller shall cause its Subsidiaries to terminate the
Originator Receivables Sales Agreement as to MidCon and its Subsidiaries and
shall cause MidCon and its Subsidiaries to repurchase all of the receivables
previously sold by MidCon and its Subsidiaries to Occidental Receivables, Inc.
that have not been collected prior to the date of such repurchase.
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5.1.5 Insurance. The Seller, at the Closing, shall cause
MidCon and its Subsidiaries to enter into a release substantially in the form of
Exhibit 5.1.5(a) (the "Insurance Release Agreement") with the Seller and its
Subsidiary, OPCAL Insurance, Inc. ("OPCAL"), for the release of the Seller and
OPCAL from any and all liability under policies underwritten by OPCAL and its
predecessor, Piper Indemnity, as more fully described in the Insurance Release
Agreement. At the Closing, the Seller, OPCAL and the insurance companies to be
parties thereto shall enter into a novation agreement substantially in the form
of Exhibit 5.1.5(b) (the "Insurance Novation Agreement") substituting the Buyer
for the Seller as indemnitor of the insurance companies with regard to the
specified fronting policies previously issued for MidCon and its Subsidiaries.
Except as provided in the preceding two sentences, the Seller shall cause each
of MidCon and its Subsidiaries to continue to have rights as an insured under
the Seller's insurance policies, subject, however, to the terms and conditions
set forth in each applicable insurance policy. MidCon and its Subsidiaries shall
no longer be an insured under the Seller's insurance for any occurrence after
the Closing.
5.1.6 1997 Financial Statements. The Seller shall cause MidCon
to provide the Buyer with the audited consolidated financial statements of
MidCon and its consolidated Subsidiaries (including any related notes and
schedules) for the year ended December 31, 1997 (the "1997 Financial
Statements") on or before February 15, 1998. The 1997 Financial Statements shall
be prepared in accordance with GAAP applied on a consistent basis and present
fairly in all material respects the consolidated financial position of MidCon
and its consolidated Subsidiaries as at December 31, 1997, and the consolidated
results of operations
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and cash flow of MidCon and its consolidated Subsidiaries for the periods
presented therein (except as may be indicated in the notes thereto).
5.2 Covenants by the Buyer.
5.2.1 Payment of the Loan Balance. Within 30 days after the
Closing, the Buyer shall cause MidCon to pay the amount, if any, by which the
MidCon Loans outstanding as of the Closing exceed the OPC Loans outstanding at
such date (each determined in accordance with Section 5.1.2(b)), plus accrued
interest in accordance with the provisions of the Cash Management Agreement
(subject to the modification described in Section 5.1.2(c)) to the date of
payment to be prepaid as if a "Mandatory Prepayment" existed pursuant to Section
5.6 of the Cash Management Agreement.
5.2.2 ESOP Note and MidCon ESOP Plan.
The Buyer agrees that it shall not demand repayment of,
otherwise discharge, or permit any payment in respect of, the ESOP Note until a
date after the Closing Date and thereafter shall cooperate with the Seller in
the resolution of the MidCon ESOP Plan, including furnishing records necessary
in its administration.
5.2.3 Employees and Employee Benefit Plans.
(a) Effective as of the Closing Date, the Buyer shall cause
MidCon or its Subsidiaries to continue to compensate each Salaried Employee who
remains an employee of the Buyer or its Subsidiaries at salaries or hourly
rates, as the case may be, no lower than the lesser of (i) the salaries or
hourly rates of MidCon or its Subsidiaries in effect immediately
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prior to the Closing Date or (ii) the salaries or hourly rates payable to the
Buyer's employees in either case in similar jobs and locations.
(b) Notwithstanding subpart (a), if the Buyer or any of its
Subsidiaries terminates any Salaried Employee within three months of the
Closing, the Buyer or its Subsidiaries shall pay the terminated Salaried
Employee severance benefits no less than those provided under the Termination
Allowance Plan in effect on the date of this Agreement, provided, however, that
such severance benefits shall only be payable to the extent that such benefits
would have been payable under such Termination Allowance Plan. After a three
month period subsequent to the Closing, a Salaried Employee who is terminated
shall be entitled to severance benefits not less than those provided to
employees of the Buyer or its Subsidiaries with like job status and service.
(c) Except as provided in subsection (b) to this Section
5.2.3, as of the Closing Date, the Buyer shall provide to each Salaried Employee
and each Former Salaried Employee with "Buyer Benefit Plans", which shall mean
the benefit plans and programs under (i) Employee Plans and Agreements effective
immediately prior to the Closing Date, (ii) the Buyer's benefit plans and
programs applicable to employees of the Buyer in similar jobs, or (iii) a
combination of Employee Plans and Agreements and the Buyer's plans and programs,
the determination of which shall be at the sole discretion of the Buyer,
provided however, that such combination of Employee Plans and Agreements and the
Buyer's plans and programs shall be, at a minimum, comparable in type and
aggregate value to those plans and programs provided by the Buyer's benefit
plans and programs applicable to employees of the Buyer in
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similar jobs. In addition, the Buyer shall cause such Buyer Benefit Plans to
comply in form and operation in all material respects with the requirements of
ERISA and the Code.
(d) From and after the Closing, each Salaried Employee and
each Former Salaried Employee shall be eligible to participate in the Buyer
Benefit Plans in accordance with the terms and conditions thereof. Under such
Buyer Benefit Plans, which are Employee Welfare Benefit Plans, Salaried
Employees and Former Salaried Employees and their eligible dependents, if a
participant in any health, long term disability or life insurance plans, as
applicable, of the Seller or its Subsidiaries immediately prior to the Closing
(i) shall participate in such Buyer Benefit Plans as of the Closing Date, and
(ii) shall be deemed to satisfy any pre-existing condition limitations under
group medical, dental, life insurance or disability plans that shall be provided
after the Closing Date. In addition, amounts paid by such Salaried Employees and
Former Salaried Employees towards deductibles and copayment limitations under
the health plans of the Seller or its Subsidiaries shall be counted toward
meeting any similar deductible and copayment limitations under the health plans
that shall be provided under the Buyer Benefit Plans.
(e) The Buyer and its Subsidiaries shall recognize all service
credited for each of the Salaried Employees and Former Salaried Employees on the
records of the Seller or its Subsidiaries for purposes of eligibility for
benefits and vesting under the Buyer Benefit Plans and the level of benefits
under the Buyer Benefit Plans, but specifically excluding any benefit accrual
under any Buyer Benefit Plan that is a defined benefit pension plan.
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(f) From and after the Closing, Salaried Employees shall be
entitled to retain and take any vacation time accrued on MidCon's records as
payable to any Salaried Employee for which vacation time has not been taken
prior to the Closing Date.
(g) From and after the Closing, the Buyer shall, or shall
cause MidCon or its Subsidiaries, as applicable, to, comply with all the terms,
conditions, obligations, and benefits set forth in the Union Contract.
(h) From and after the Closing Date, MidCon and its
Subsidiaries shall cease participation in any and all Employee Plans and
Agreements sponsored or maintained by the Seller or its Subsidiaries. Except as
set forth on Schedule 5.2.3, the Buyer agrees that it shall cause MidCon and its
Subsidiaries, (i) to be solely responsible and to pay for, and (ii) to indemnify
and hold the Seller and its Subsidiaries harmless from, any and all costs,
damages, losses, expenses or other liabilities arising out of or relating to any
and all claims for welfare benefits (including health care continuation coverage
and retiree welfare benefits) under any of the Employee Plans and Agreements or
otherwise by any Employee, Former Salaried Employee, Former Union Employee or
dependent or beneficiary thereof, irrespective of when such claims were
incurred.
(i) Representatives of the Buyer shall be entitled to meet
with the Employees at mutually agreeable times prior to the Closing to explain
and answer questions about the conditions, policies and benefits of employment
by the Buyer or its Subsidiaries after the Closing. The Seller shall cooperate
with the Buyer until Closing in communicating to such Employees any additional
information concerning employment after the Closing which such
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Employees may seek, or which the Buyer may desire to provide, and during normal
business hours shall allow additional meetings by representatives of the Buyer
with such Employees upon the reasonable requests of the Buyer. In addition,
after the Closing, the Seller and the Buyer agree to furnish each other with
appropriate records for each of the Employees as may be necessary to assist in
proper benefit administration.
(j) The Buyer hereby assumes all liability for any alleged
failure to give, or to cause MidCon or any of its Subsidiaries to give, all
notices required by the U.S. Worker Adjustment and Retraining Notification Act
of 1988, as amended (the "WARN Act"), and any similar state law or regulation by
reason of events occurring after the Closing. The Buyer shall indemnify and hold
harmless the Seller and its Affiliates with respect to any and all claims
asserted under the WARN Act or any similar law or regulation because of a "plant
closing" or "mass layoff" with respect to MidCon or any of its Subsidiaries
occurring after the Closing. For purposes of this Agreement, the Closing Date
shall be the "effective date" for purposes of the WARN Act.
5.2.4 Intercompany Agreements. After the Closing, the Buyer
shall cause MidCon and its Subsidiaries to perform their obligations under any
Intercompany Agreements which continue in effect after the Closing.
5.2.5 Substitution of Undertakings. At the Closing, the Buyer
shall execute and deliver the Insurance Novation Agreement as more fully
described in Section 5.1.5.
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The Buyer will use all commercially reasonable efforts to cause to be
terminated, released and discharged, on or prior to the Closing Date, in a
manner reasonably satisfactory to the Seller, any commitments, guarantees and
indemnities (including letters of credit, bonds, promissory notes, commitments,
or obligations of whatsoever nature to any Governmental Entity or any other
Person) of the Seller and each of its Affiliates for the direct and indirect
benefit of MidCon or any of its Subsidiaries as set forth on Schedule 5.2.5 and
all such other commitments, guarantees and indemnities provided by Seller in
accordance with the Cash Management Agreement (collectively "Commitments"). For
any Commitments for which the Buyer does not obtain a termination, discharge or
obtain a release of Seller and its Affiliates at or prior to the Closing, the
Buyer shall after the Closing cause MidCon to pay to the Seller the following
(for purposes of this Section 5.2.5 initial capitalized terms not defined in
this Agreement and "Letter of Credit" shall have the meaning set forth in the
Cash Management Agreement):
(a) A fee in an amount equal to 0.5% per annum on the
Average Balance of each outstanding Letter of Credit;
(b) A fee equal to 0.5% per annum on the Average
Balance of each Guarantee;
(c) All costs and expenses incurred by the Seller
under any Letters of Credit for MidCon Consol; and
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(d) The amount of payments made by the Seller to or
on behalf of MidCon Consol under any Guarantee or Letter of Credit.
Payments pursuant to clauses (a) through (c) shall be made within 10
days after the last day of the month in which such costs and expenses were paid
or fees incurred and payments pursuant to clause (d) shall be made at the time
such payment is made by the Seller.
The Buyer shall continue to use all commercially reasonable efforts to
obtain, in a manner satisfactory to the Seller, all terminations, releases and
discharges of any remaining Commitments as soon as practicable after the
Closing. The Seller shall have no obligation to extend or replace any of the
Commitments.
The Buyer agrees to cause MidCon to indemnify and hold harmless the
Seller after the Closing from and against any and all claims, damages, losses,
liabilities, costs or expenses (including, without limitation, attorneys' fees
and costs) which the Seller may incur (or which may be claimed against the
Seller by any Person whomsoever) by reason of or in connection with the
guarantee, delivery or transfer of or payment under any Commitment, including
any claims, damages, losses, liabilities, costs or expenses which the Seller may
incur by reason of or in connection with the failure of any bank issuing any
such Letter of Credit to fulfill or to comply with its obligations under any
such Letter of Credit.
5.2.6 Indemnification.
(a) The Buyer agrees that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of MidCon and each of
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its Subsidiaries as provided in their respective Certificates or Articles of
Incorporation or By-laws or otherwise, in each case, in effect as of the date
hereof with respect to matters occurring prior to the Closing Date shall survive
the Closing and shall continue in full force and effect. After the Closing Date,
the Buyer shall cause MidCon to indemnify, defend and hold harmless the present
and former officers, directors, employees and agents of MidCon and its
Subsidiaries (each a "MidCon Indemnitee") against all losses, claims, damages,
liabilities, fees and expenses (including reasonable fees and disbursements of
counsel) and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the prior written
consent of the Buyer) arising out of actions or omissions occurring at or prior
to the Closing Date to the full extent permitted by law, or MidCon's and each of
its Subsidiaries Certificate or Articles of Incorporation or By-laws, in each
case as in effect at the date hereof, including provisions therein relating to
the advancement of expenses incurred in the defense of any action or suit;
provided, that nothing herein shall impair any rights or obligations of any
present or former directors or officers of MidCon or any of its Subsidiaries.
(b) The Buyer shall, or shall cause MidCon to, pay
all expenses (including reasonable attorneys' fees), that may reasonably be
incurred by the MidCon Indemnitees in successfully enforcing the rights to which
the MidCon Indemnitees are entitled under this Agreement or MidCon's Certificate
of Incorporation or By-laws or is otherwise entitled.
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(c) In the event MidCon, the Buyer or any of their
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of MidCon or the
Buyer, as the case may be, shall assume the obligations of MidCon and the Buyer
set forth in this Section 5.2.6.
(d) The provisions of this Section 5.2.6 are intended
to be for the benefit of, and shall be enforceable by, each MidCon Indemnitee,
his or her heirs and representatives.
5.3 Covenants of Both Parties.
5.3.1 Access and Information. The Seller shall afford to the
Buyer, and to the Buyer's accountants, counsel and other representatives, full
access, during normal business hours during the period prior to the Closing
Date, to all of MidCon's and its Subsidiaries' properties, books, contracts,
commitments and records and, during such period, Seller shall furnish promptly
to the Buyer (a) a copy of each report, schedule and other document filed or
received by MidCon or its Subsidiaries during such period pursuant to the
requirements of the FERC, and (b) all other information concerning the business,
properties and personnel of MidCon and its Subsidiaries as the Buyer may
reasonably request; provided, however, that such access shall be subject to the
terms of any confidentiality agreements applicable to MidCon and its
Subsidiaries.
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5.3.2 Further Action, Reasonable Efforts; Consents and
Approvals. Upon the terms and subject to the conditions hereof, each of the
Parties hereto shall use its commercially reasonable efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to cause
the conditions set forth in Section 4.2, Section 4.3 and Section 4.4 to be
satisfied and to consummate and make effective the transactions contemplated
hereby, including, without limitation, using commercially reasonable efforts to
obtain all licenses, permits, orders, declarations, consents, approvals,
authorizations, certificates, qualifications and orders of, and make all filings
and required submissions with, all Governmental Entities, and all shareholders,
lenders and partners of, and parties to contracts with, any of the Seller, the
Buyer, MidCon or any other Persons, in each case, as are necessary or desirable
for the consummation of the transactions contemplated hereby (collectively
"Consents"). The Seller shall, as soon as possible after the date hereof, but in
any event prior to the Closing, deliver to the Buyer copies of all Consents
obtained by the Seller. The Buyer shall, as soon as possible prior to the
Closing, deliver to the Seller copies of all Consents obtained by the Buyer. In
case at any time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the Buyer and the Seller
shall use their commercially reasonable efforts to take all such action. Prior
to the Closing, each Party shall use its best efforts not to take any action, or
enter into any transaction, that would cause any of its representations or
warranties contained in this Agreement to be untrue.
5.3.3 Notice of Revisions. A Party (the "Notifying Party") may
elect at any time prior to the Closing to notify the other Party (the "Notified
Party") of any revisions to
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such Party's representations or warranties or a Schedule referred to therein. If
the Notified Party does not terminate this Agreement pursuant to Section 7.1
within five (5) Business Days after receipt of such notice, such written notice
will be deemed to qualify the representations and warranties, or amend the
Schedules, contained in Article II or III, as applicable, and to have cured any
misrepresentation or breach of representation, warranty or covenant that
otherwise might have existed hereunder by reason of the matter covered by such
revision. Notwithstanding the foregoing, if the Notifying Party delivers a
notice of revision pursuant to this Section less than five (5) Business Days
prior to the Closing Date, then the Closing Date automatically shall be extended
to the date which is five (5) Business Days from the date of the notice of
revision or if not a Business Day, then the Business Day immediately following
that date.
5.3.4 Substitute Note. At the Closing, the Seller shall assign
to the Buyer (a) the ESOP Note, and (b) by execution and delivery to the Buyer
of the Term Loan Assignment Agreement, all of the Seller's rights and
obligations under the Term Loan Agreement and, in exchange therefor, at the
Closing the Buyer shall execute and deliver to the Seller the Term Loan
Assignment Agreement and shall issue to the Seller either (i) a Substitute Note,
the prompt and complete payment and performance in full of which shall be
secured by Government Securities maturing as to principal and interest in such
amounts and at such times as are sufficient (without consideration of any
reinvestment of such interest and after payment of all Taxes or other charges or
assessments in respect of such Government Securities payable by the Buyer) to
provide U.S. legal tender to pay the principal of, and each installment of
interest on, such Substitute Note at least one day before the date on which any
such payment is
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due and payable in accordance with the terms of such Substitute Note, (ii) a
Substitute Note, the payment of all interest and principal of which is secured
by one or more letters of credit, in form and substance satisfactory to the
Seller, issued by a bank or group of banks with each such bank either (a) having
an investment grade credit rating by either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc., so long as neither of the above rating agencies
has provided a credit rating below investment grade, (b) having been agreed to
by the Seller or (c) if a bank is not such an investment grade credit, its
portion of the letter of credit can be fronted by a bank having such investment
grade credit or (iii) any combination of the foregoing, as the Buyer may elect,
provided that the aggregate original principal amount of all such Substitute
Notes is equal to the sum of (x) the outstanding unpaid principal balance of the
ESOP Note as of the Closing Date and (y) all accrued and unpaid interest on the
ESOP Note to and including the Closing Date. If the Buyer elects to deliver a
Substitute Note at the Closing that is secured by Government Securities, at the
Closing, the Buyer shall execute and deliver to the Seller a security agreement
and a control agreement, each in form and substance satisfactory to the Seller,
which provide the Seller with a valid, perfected, first priority security
interest in such Government Securities.
5.3.5 Interim Services Agreement. The Seller and MidCon shall
terminate the Services Agreement effective as of the Closing with amounts due
thereunder accrued up to the Closing as provided in Section 5.1.2(b). The Seller
and the Buyer shall negotiate to the extent desired by the Buyer an interim
services agreement by and between the Seller and MidCon for the continuation of
any of the services provided by the Seller to MidCon under the Service
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Agreement upon terms and conditions which must be mutually acceptable to the
Seller and to the Buyer, in their respective sole discretion.
5.3.6 Pipeline Lease and the Buyer's Pipeline Lease Guaranty. At the
Closing, the Buyer shall execute and deliver to the Seller a written guaranty
(the "Buyer's Pipeline Lease Guaranty"), pursuant to which the Buyer shall
irrevocably and unconditionally guarantee to the Pipeline Lessor the full and
timely performance, payment and discharge by the Pipeline Lessee of all
obligations and liabilities of the Pipeline Lessee under the Pipeline Lease. The
Buyer's Pipeline Lease Guaranty shall be substantially in the form of the
Pipeline Lease Guaranty, with the Buyer as guarantor; provided, however that
Section 11 thereof shall be of no force or effect as long as the Pipeline Lease
Guaranty is in full force and effect. At the request of the Buyer, the Seller
shall cause the Pipeline Lessor to agree to a termination of the Pipeline Lease
Guaranty if, concurrently therewith, the Buyer's Pipeline Lease Guaranty is
amended to include the Buyer's Pipeline Covenants for the benefit of the
Pipeline Lessor.
At or prior to the Closing, the Seller shall cause the Pipeline Lessor and
the Pipeline Lessee to amend the Pipeline Lease to:
(a) provide the Pipeline Lessee with an option to purchase the Leased
Property at a price equal to its fair market value upon termination of the
Pipeline Lease, and on other terms and conditions reasonably satisfactory to the
Buyer and the Seller and set forth in such amendment. The fair market value of
the Leased Property shall be determined by agreement between the Pipeline Lessor
and the Pipeline Lessee or if the Pipeline Lessor and the Pipeline Lessee can
not agree within a specific period before the date on which the Pipeline Lease
is to
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terminate, then by a team of three independent appraisers each having
appropriate industry experience to make such a valuation, with one appraiser to
be selected by each of the Pipeline Lessor and the Pipeline Lessee, and the
third to be selected by the first two appraisers. The determination of the fair
market value shall be the value agreed by at least two of the appraisers;
(b) permit assignment of the Pipeline Lease by the Pipeline Lessee if (i)
no event of default under the Pipeline Lease, and no event that, with the giving
of notice or the lapse of time or both, would be such an event of default, shall
have occurred and be continuing, (ii) the Pipeline Lessee pays the costs and
expenses of the Pipeline Lessor in reviewing such proposed assignment, and (iii)
the Person to whom the Pipeline Lessee assigns its rights under the Pipeline
Lease (the "Assignee") satisfies the following criteria: (x) fifty percent (50%)
or more of the Assignee's outstanding equity and voting interests is owned,
directly or indirectly, by the Pipeline Lessee or the Buyer; or (y) (1) the
Assignee is not affiliated with the Pipeline Lessee or the Buyer, (2) the
Assignee, or an entity that absolutely and unconditionally guarantees the
Assignee's obligations under the Pipeline Lease (the "Assignee's Guarantor"),
has a tangible net worth of not less than $100,000,000, and either has an Above
Investment Grade Credit Rating or, in the reasonable opinion of the Pipeline
Lessor, satisfies the minimum financial criteria then in effect for an Above
Investment Grade Credit Rating;
(c) provide that the Pipeline Lessee and the Buyer shall be fully
discharged from their obligations under the Pipeline Lease and the Buyer's
Pipeline Lease Guaranty, respectively, with respect to events and obligations
occurring after the date of an assignment in
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accordance with the foregoing clause (b) upon delivery to the Pipeline Lessor of
an assumption agreement, in form and substance reasonably satisfactory to the
Pipeline Lessor, pursuant to which the Assignee assumes all of the Pipeline
Lessee's liabilities and obligations under the Pipeline Lease including, without
limitation, all liability for the payment of any rent, termination values and
any other amounts owing by the Pipeline Lessee under the Pipeline Lease, which
assumption agreement shall include the Buyer's Pipeline Covenants for the
benefit of the Pipeline Lessor unless the Assignee's Guarantor delivers to the
Pipeline Lessor a written guaranty, in form and substance reasonably
satisfactory to the Pipeline Lessor, that includes the Buyer's Pipeline
Covenants for the benefit of the Pipeline Lessor.
"Buyer's Pipeline Covenants" shall mean financial covenants that are at
least as restrictive as those contained in any indenture, bond, promissory note,
loan or credit agreement or other evidence of indebtedness of the Buyer from
time to time outstanding.
"Leased Property" shall have the meaning set forth in the Pipeline
Lease.
"Investment Grade Credit Rating" means, with respect to any Person, that
the credit rating assigned to such Person's senior unsubordinated long term
indebtedness by at least two Rating Agencies is at least BBB- (or its
equivalent) or better.
"Above Investment Grade Credit Rating" means, with respect to any Person,
that the credit rating assigned to such Person's senior unsubordinated long term
indebtedness by at least two Rating Agencies is at least Baa2 (or its
equivalent) or better.
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"Rating Agencies" shall mean any of Standard & Poor's Ratings Group,
Duff & Xxxxxx Credit Rating Co. and Xxxxx'x Investors Service.
Upon the incorporation by reference of covenants referred to in the
preceding sentence, the Seller shall cause MidCon to be fully discharged from
its obligations under the Pipeline Lease Guaranty.
5.3.7 MidCon Power Services Corp. Unless the Seller and the Buyer
shall enter into mutually satisfactory arrangements with regard to the
operations and contracts of MidCon Power Services Corp. on or before the
Closing, the Seller shall cause (a) MidCon Gas Services Corp. to declare a
dividend of, and transfer immediately prior to the Closing, all of the
outstanding capital stock of MidCon Power Services Corp. to MidCon and (b)
MidCon to declare a dividend of, and transfer immediately prior to the Closing,
all of the outstanding capital stock of MidCon Power Services Corp. to the
Seller after transferring all employees, any tangible assets and any cash of
that corporation to MidCon Management Corp. The Seller and the Buyer hereby
agree to transfer to the Buyer the capital stock so transferred to the Seller
upon receipt of the FERC approval of the transfer of such capital stock
ownership to the Buyer. As a result of any such transfer, MidCon Power Services
Corp. shall be deleted from Schedule 2.9 and the Seller can amend the remaining
Schedules to reflect the transactions between MidCon and its Subsidiaries and
MidCon Power Services Corp. In the event, in the Seller's reasonable judgment
FERC approval of any of the transactions contemplated by this Section 5.3.7 is
necessary, which determination shall be made no later than December 31, 1997,
the Seller shall advise the Buyer of such conclusion together with supporting
basis therefor and the Parties agree to use their best efforts to agree whether
such conclusion is
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correct. If such approval is required the Parties agree to file the documents
which are required to be filed with FERC as quickly as possible.
ARTICLE VI
TAXES
6.1 Section 338(h)(10) Election. There will be no election under Section
338(h)(10) of the Code with respect to the purchase and sale of the Shares.
6.2 Tax Sharing Agreement. The Seller shall cause the Tax Sharing
Agreement between the Seller and MidCon to be terminated as of the Closing Date;
provided, however, that notwithstanding such termination of the Tax Sharing
Agreement, its provisions will remain in effect with respect to any period of
time during the taxable year in which the termination occurs, for which period
the income of MidCon and its Subsidiaries must be included in the federal Tax
Returns or any state Tax Returns of the Seller. With respect to any matters
covered by this Article VI, the provisions and conditions set forth in this
Agreement shall control over any conflicting or contradicting provision or
condition in the Tax Sharing Agreement.
6.3 Federal Income Tax Returns and Combined State Income Tax Returns for
Periods Through the Closing Date. The Seller will include the income of MidCon
and its Subsidiaries (including any deferred income triggered into income by
Reg. Sec. 1.1502-13 and Reg. Sec. 1.1502-14 and any excess loss accounts taken
into income under Reg. Sec. 1.1502-19) on the Seller's consolidated federal
income Tax Return and each combined state income
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Tax Returns for all periods through the Closing Date and pay any federal and
state income Taxes attributable to such income. The allocation of such Tax
liability between the Seller, on one hand, and MidCon and its Subsidiaries, on
the other hand, will be governed by the provisions of the Tax Sharing Agreement.
MidCon and its Subsidiaries will furnish Tax information to the Seller for
inclusion in the Seller's federal consolidated income Tax Return and each
combined state income Tax Return for the period which ends on the Closing Date
in accordance with MidCon's past custom and practice, and the Buyer will bear
the cost of complying with this provision. The income of MidCon and its
Subsidiaries will be allocated between the period up to and including the
Closing Date and the period after the Closing Date by closing the books of
MidCon and its Subsidiaries as of the end of the Closing Date.
6.4 No Adjustment of MidCon Tax Liability for the Taxable Year Ending
December 31, 1997. The liability of MidCon and its Subsidiaries for consolidated
federal and combined state income Taxes with respect to the Taxable Year ending
December 31, 1997, as recorded on the 1997 Financial Statements, shall not be
adjusted to reflect the actual Tax liability reported on the applicable Tax
Returns as filed, and the provisions of Section V of the Tax Sharing Agreement
to the contrary shall not apply. For purposes of calculating the Tax liability
of MidCon and its Subsidiaries under the Tax Sharing Agreement for any Tax year
for which the Tax Sharing Agreement remains in effect under Section 6.2 of this
Agreement, tax attributes which carry forward from the Tax year ending December
31, 1997, shall not be adjusted to reflect amounts reported on the applicable
Tax Returns as filed.
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6.5 Liability of MidCon and its Subsidiaries for Federal and Combined
State Income Tax. Within sixty (60) days after the Closing Date, the Buyer
shall cause MidCon and its Subsidiaries to pay to the Seller a contribution
toward the payment of Tax due on the consolidated or combined Tax Return of
the Seller Affiliated Group for the taxable period ending on the Closing
Date, including any portion of deferred income triggered into income by Reg.
Sec. 1.1502-13 and Reg. Sec. 1.1502-14 and excess loss accounts taken into
income under Reg. Sec. 1.1502-19 to be borne by MidCon and its Subsidiaries,
with such amount to be determined by applying the provisions of the Tax
Sharing Agreement.
6.6 Separate State, Local, Foreign Income Tax Returns. The Seller shall
file, or cause to be filed, all separate state, local and foreign income Tax
Returns for MidCon and its Subsidiaries for which the Tax year ends on the
Closing Date. The Buyer will file, or cause to be filed, all separate state,
local and foreign income Tax Returns for MidCon and its Subsidiaries for which
the Tax year begins before and ends after the Closing Date. The amount of any
liability for taxes on or measured by net income required to be reported on any
state, local or foreign Tax Return required to be filed by any of MidCon and its
Subsidiaries after the Closing Date which includes tax items for a period which
begins before and ends after the Closing shall be allocated between the portion
of such period ending on the Closing Date and the portion of such period
beginning on the date after the Closing Date on the basis of the taxable income
or loss of MidCon and its Subsidiaries as determined from the books and records
of the relevant entity for such partial period.
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6.7 Sales and Property Taxes. The amount of any liability for real and
personal property taxes, business license taxes, ad valorem taxes or any similar
taxes based on the ownership of property payable with respect to assets of the
Business for a period which begins before and ends after the Closing Date shall
be allocated between the portion of such period ending on the Closing Date and
the portion beginning on the day after the Closing Date on a per diem basis. The
amount of any liability for sales taxes, gross receipts taxes, ad valorem taxes,
transfer taxes or other similar taxes based on the proceeds of identifiable
transactions or units of production payable by any of MidCon and its
Subsidiaries after the Closing Date for a period which begins before and ends
after the Closing Date shall be apportioned between the portion of such period
ending on the Closing Date and the portion of such period beginning on the day
after the Closing Date on the basis of the actual activities of MidCon and its
Subsidiaries as determined from the books and records of the relevant entity for
such partial period.
6.8 State Franchise Taxes. The Buyer shall file, or cause to be filed, all
separate state franchise Tax Returns for MidCon and its Subsidiaries for which
the franchise tax measurement period begins before and ends after the Closing
Date. The Seller shall be responsible for any liability attributable to that
portion of such measurement period ending on the Closing Date. The Buyer shall
be responsible for any franchise tax liability attributable to that portion of
such measurement period commencing on the day immediately following the Closing
Date and ending on the last day of such measurement period.
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6.9 Adjustment Upon Leaving Consolidation. Section VII of the Tax Sharing
Agreement is incorporated by reference and any payments thereunder shall be made
within sixty (60) days after the filing of the applicable federal and state Tax
Returns. Adjustments to or additional payments shall be made, as needed, by
reason of amended returns, claims for refund or audits by a taxing authority
with respect to any Tax year for which the Tax Sharing Agreement remains in
effect after the Closing Date.
6.10 Sales and Transfer Taxes with Respect to this Transaction. All sales,
gross receipts, or other similar transfer taxes, if any (including all stock
transfer taxes, if any) incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Buyer. The Buyer shall at
its expense file all necessary tax returns and other documentation in respect to
any such taxes.
6.11 Cooperation. The Seller and the Buyer shall (i) each provide the
other, and the Buyer shall cause MidCon and its Subsidiaries to provide the
Seller, with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return, audit or other examination by
any taxing authority or judicial or administrative proceedings relating to
liability for Taxes, (ii) each retain and provide the other with any material
records or information which may be relevant to such Tax Return, audit or
examination, proceeding or determination, and (iii) each provide the other with
any amount required to be shown on any Tax Return of the other for any period.
The Party requesting assistance hereunder shall reimburse the other for
reasonable out-of-pocket expenses incurred in providing such assistance to the
extent such expenses exceed an aggregate amount of
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$50,000. Without limiting the generality of the foregoing, the Buyer shall
retain, and shall cause MidCon and its Subsidiaries to retain until the
applicable statutes of limitations (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information in its possession which may be relevant to such returns for all
taxable periods from January 1, 1990 to the Closing Date, inclusive, and shall
not destroy or otherwise dispose of any such records without first providing the
Seller with an opportunity to review and copy the same. Following the Closing
Date, the Seller shall forward to the Buyer all Tax statements received by the
Seller with respect to the assets of the Business for any period that begins
before and ends after the Closing Date within thirty (30) days after its receipt
thereof.
6.12 Tax Proceedings. Following the Closing Date, the Seller shall control
the conduct of all stages of any audit or other administrative or judicial
proceeding with respect to Taxes reported on any Tax Return filed by the Seller
or any Affiliate of the Seller or on any Tax Return filed by MidCon and its
Subsidiaries for any taxable period ending on or prior to the Closing Date. The
Buyer shall control the conduct of all other audits or administrative or
judicial proceedings with respect to the Tax liability of any of MidCon and its
Subsidiaries.
6.13 Carrybacks. Except for carrybacks into the Seller's consolidated Tax
Return for the annual tax period ending December 31, 1997, the Seller shall
within 30 days pay to the Buyer any Tax refund resulting from a carryback of a
post-acquisition Tax attribute of any of MidCon and Subsidiaries into the Seller
consolidated Tax Return in all cases where MidCon and Subsidiaries cannot elect
to waive a carryback. Such Tax attributes will be considered to
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produce a refund (or reduce Tax liability) only after all Tax attributes of the
Seller and other members of the Seller Affiliated Group have been used or deemed
used. The Seller shall cooperate with MidCon and its Subsidiaries in obtaining
such refunds, including through the filing of amended Tax Returns or refund
claims. The Buyer agrees to indemnify the Seller for any Taxes resulting from
the disallowance of such post-acquisition Tax attribute on audit or otherwise.
6.14 Prior Year Tax Returns. The Seller shall not amend or restate prior
year tax returns which have been filed prior to the date hereof as they relate
specifically to MidCon without prior consultation with the Buyer.
6.15 Retention of Carryovers. The Seller will not retain any net
operating loss carryovers or capital loss carryovers of MidCon and its
Subsidiaries under Reg. Sec. 1.1502-20(g).
6.16 Indemnification for Post-Closing Transactions. The Buyer agrees to
indemnify the Seller for any additional Tax owed by the Seller (including Tax
owed by the Seller due to this indemnification payment) resulting from any
transaction not in the ordinary course of business occurring on the Closing Date
after the Buyer's purchase of the Shares.
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ARTICLE VII
TERMINATION
7.1 Termination. The Parties may terminate this Agreement before the
Closing as follows:
(a) The Buyer and the Seller may terminate this Agreement by
mutual written consent.
(b) Subject to the provisions of Section 7.2, (i) by the Seller if
one or more of the conditions set forth in Section 4.3 or Section 4.4 shall not
have been satisfied or waived by the Termination Date and (ii) by the Buyer if
one or more of the conditions set forth in Section 4.2 or Section 4.4 shall not
have been satisfied or waived by the Termination Date.
7.2 Effects of Termination. If this Agreement is terminated pursuant to
Section 7.1, all further obligations of the Parties under this Agreement will
terminate, except that the obligations in Section 10.3 and Section 10.7 will
survive. If this Agreement is terminated by a Party because of a breach of the
Agreement by the other Party or because one or more of the conditions to the
terminating Party's obligations under this Agreement is not satisfied as a
result of the other Party's breach of a representation or warranty or failure to
comply with its obligations under this Agreement, the terminating Party's right
to pursue all legal remedies will survive such termination unimpaired; provided,
however, that
(i) if this Agreement is terminated by the Seller because of the
Buyer's failure to perform or comply with any covenant, or satisfy any
condition, which is to be
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performed or complied with or satisfied at or prior to the Closing, (including
the failure to obtain any Consent from a Governmental Entity pursuant to the HSR
Act), the Buyer shall pay the Seller the amount of $100 million which the
Parties agree reflects compensation for the Seller's loss of opportunity to sell
the Shares to another person in a timely manner, and
(ii) if this Agreement is terminated by the Buyer because of the
Seller's failure to perform or comply with any covenant, or satisfy any
condition, which is to be performed or complied with or satisfied at or prior to
the Closing (which shall not include the failure to obtain any necessary Consent
from a Governmental Entity pursuant to the HSR Act or by the FERC), the Seller
shall pay the Buyer the amount of $50 million which the Parties agree reflects
compensation for the Buyer's loss of opportunity to purchase the Shares in a
timely manner.
Each Party's right of termination under Section 7.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies except if the Party
shall receive the compensation provided in the preceding sentence.
ARTICLE VIII
SURVIVAL & INDEMNITY
8.1 Survival of Representations and Warranties; Limitations on
Liability.
(a) The respective representations and warranties of the Parties set
forth in this Agreement (except those in Section 2.18) shall survive up to and
including the first
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anniversary of the Closing; the representations and warranties of the Seller in
Section 2.18 shall survive up to and including the second anniversary of the
Closing; and after which respective survival periods, such representations and
warranties shall terminate and be of no further force or effect.
(b) In the case of any claim arising out of or based upon any breach
of any representation or warranty of a Party set forth in this Agreement, no
claim may be made thereunder unless the other Party delivers a Claim Notice
within the survival period under Section 8.1(a). If a Party delivers a Claim
Notice as provided in Section 8.4.2 prior to the expiration of the survival
period, then the survival period with respect to the matter or matters described
in such Claim Notice shall be tolled until all such matters shall have been
finally resolved and any remedial action required in connection therewith shall
have been effected.
8.2 Indemnification by the Buyer. The Buyer shall indemnify, defend and
hold harmless the Seller Indemnitees against and from, and shall reimburse the
Seller Indemnitees for, any loss, claim, liability, damage, cost or expense
incurred or suffered by any of the Seller Indemnitees, (a) caused by, arising
out of, or based upon, any breach of any representation and warranty by the
Buyer on its own behalf contained in this Agreement or any of the Related
Agreements (to the extent that the Buyer, MidCon or its Subsidiaries are a party
thereto), and (b) caused by, arising out of, based upon or relating to, any
breach of any covenant or agreement by the Buyer on its own behalf or on behalf
of MidCon or its Subsidiaries contained in this Agreement or any of the Related
Agreements (to the extent that the Buyer, MidCon or its Subsidiaries is a party
thereto), in each case, if and to the extent arising from or related to
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occurrences or events that occurred after the Closing and, in each case,
together with interest at a rate per annum equal to the Reference Rate from the
date upon which such loss, claim, liability, damage, cost or expense was
incurred or suffered to the date of payment.
8.3 Indemnification by the Seller.
8.3.1 The Seller shall indemnify, defend and hold harmless the Buyer
Indemnitees against and from, and shall reimburse the Buyer Indemnitees for:
(a) any loss, claim, liability, damage, cost or expense
incurred or suffered by any of the Buyer Indemnitees (i) caused by, arising out
of, or based upon, any breach of any representation or warranty by the Seller
contained in this Agreement or any of the Related Agreements, or (ii) caused by,
arising out of, or based upon, any breach of any covenant or agreement (other
than a representation or warranty) by the Seller contained in this Agreement or
any Related Agreement;
(b) any loss, claim, damage, liability, cost or expense
arising out of the obligations of MidCon or its Subsidiaries in respect of the
MidCon ESOP Agreements (other than any liability or obligation to pay principal
or interest arising under or pursuant to the ESOP Note, the Term Loan Agreement
or the Term Loan Assignment Agreement), in each case, together with interest at
a rate per annum equal to the Reference Rate from the date upon which such loss,
claim, liability, damage, cost or expense was incurred or suffered to the date
of payment;
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(c) any Taxes with respect to any Tax year or portion thereof
ending on or before the Closing Date (or for any Tax year beginning before and
ending after the Closing Date to the extent allocable (determined in a manner
consistent with Sections 6.3, 6.6, 6.7 and 6.8 of this Agreement) to the portion
of such period beginning before and ending on the Closing Date), other than
Taxes with respect to the taxable year in which Closing occurs to which the
provisions of the Tax Sharing Agreement remain in effect after the Closing,
consistent with Section 6.2 of this Agreement; provided, however, that Seller's
obligation pursuant to this sentence shall not include any liability to
indemnify and hold harmless the Buyer Indemnitee for Tax liabilities (i) to the
extent such Taxes are included in or covered by any reserve for Tax liability
recorded on the 1997 Financial Statements and (ii) unless the amount of a
particular Tax liability shall exceed $100,000 and then only to the extent the
aggregate of all such Tax liabilities (exceeding $100,000) shall exceed ten
million dollars ($10,000,000); and
(d) any loss, claim, damage, liability, cost or expense
arising out of or relating to any claims by Persons which own interests in the
assets assigned by MidCon Gas Services Corp. ("MGS") to MC Panhandle Inc.
("MCP") pursuant to the Assignment and Assumption Agreement dated December 31,
1996 by and between MGS and MCP, including those cases referred to on Schedule
2.13 but only to the extent such losses, claims, damages, liabilities, costs and
expenses (i) relate to the liability of MidCon or its Subsidiaries in such
matter and (ii) exceed $10 million; provided, however, the Seller shall be
entitled to defend, as more fully provided in Section 8.4.5, all actions, suits,
proceedings or claims subject to this clause (d).
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8.3.2 The Seller shall indemnify, defend and hold harmless MidCon
and its Subsidiaries (collectively, the "Tax Indemnitees" and individually, a
"Tax Indemnitee") against and from and shall reimburse the Tax Indemnitees from
any liability that any of the Tax Indemnitees may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any increase in Tax
liability arising out of or with respect to the ownership or disposition of, or
investment in, Great Plains Gasifications Associates and MCN Coal Gasification
Company.
8.4 Interpretation. The provisions of each of the foregoing Sections
of this Article VIII shall be interpreted as follows:
8.4.1 The indemnity provided for by each of such Sections shall
extend to, and the amount of any actual loss, liability, damage, cost or expense
incurred or suffered by any Indemnified Person (whether a Seller Indemnitee or a
Buyer Indemnitee) shall include, all losses, liabilities, damages, costs and
expenses of such Indemnified Person, as the case may be, including amounts paid
in settlement, costs of investigation and reasonable fees and expenses of
attorneys, accountants or other agents and experts reasonably incident to
matters indemnified against and the enforcement of such indemnity; provided,
however, that neither Buyer Indemnitees nor Seller Indemnitees shall be entitled
to indemnification hereunder for any loss of profits or other consequential
damages. The losses, liabilities, damages, costs and expenses included in the
indemnity provided for by each of the foregoing Sections of this Article VIII
are herein collectively called "Damages".
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8.4.2 The amount claimed by an Indemnified Person to be owing as
described in each such Section, together with a list identifying to the extent
reasonably possible each separate item of loss, liability, damage, cost or
expense for which payment is so claimed, shall be set forth by such Person in a
statement delivered to the indemnifying Party setting forth the details of and
the basis for such claim ("Claim Notice") and shall be paid by such indemnifying
Party, as and to the extent required herein, within 30 days after receipt of
such Claim Notice or, if the indemnifying Party raises reasonable objection
thereto within such 30 days, then whenever a determination as to whether the
Indemnified Person is entitled to indemnification hereunder shall have occurred
or shall have been mutually agreed to.
8.4.3 No payment on account of any actual loss, liability, damage,
cost or expense pursuant to the provisions of Section 8.3.1(a) or Section
8.3.1(b) shall be required to be made by the Seller unless the Buyer Indemnitees
shall have delivered to the Seller a Claim Notice therefor prior to the first
anniversary of the Closing Date. No payment on account of any actual loss,
liability, damage, cost or expense pursuant to the provisions of Section
8.3.1(c), Section 8.3.1(d) or Section 8.3.2 shall be required to be made by the
Seller unless the Buyer Indemnitees or the Tax Indemnitees, respectively, shall
have delivered to the Seller a Claim Notice therefor prior to the second
anniversary of the Closing Date. No payment on account of any actual loss,
liability, damage, cost or expense pursuant to the provisions of Section 8.2
(except for payments for breach of Buyer's covenants in Section 5.2 and Section
5.3 and Article VI) shall be required to be made by the Buyer unless the
Seller's Indemnitee shall have delivered to the Buyer a Claim Notice therefor
prior to the first anniversary of the Closing Date.
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8.4.4 If any of the Buyer Indemnitees, the Tax Indemnitees, or
Seller Indemnitees shall deliver a Claim Notice as provided in Section 8.4.3
prior to the applicable anniversary of the Closing Date, then the survival
period with respect to each matter described in detail in such Claim Notice
shall be tolled until such matter shall have been finally resolved and any
remedial action required in connection therewith shall have been effected.
8.4.5 In the event that any action, suit or proceeding shall be
brought against any Indemnified Person by any third party, which action, suit or
proceeding, if determined adversely to the interests of such Indemnified Person,
would entitle such Indemnified Person to indemnity pursuant to the provisions of
Section 8.2 or Section 8.3, if the Claim Notice has been timely given pursuant
to Section 8.4.3, such Indemnified Person shall reasonably promptly notify the
indemnifying Party of the same in writing, but any failure to so notify shall
not relieve the applicable indemnifying Party from any liability which it may
have to such Indemnified Person under such Section 8.2 or Section 8.3 unless
such failure would prejudice materially the rights of the Party entitled to
receive such notification. The Person seeking indemnification pursuant to the
provisions of this Article VIII shall have the right, at its sole cost and
expense, to participate in any legal action for which indemnification shall be
sought. However, the Party from whom indemnification shall be sought shall have
the right to assume the defense thereof with counsel reasonably acceptable to
the Person seeking indemnification and shall have the sole right to settle or
otherwise dispose of such legal action in any manner it deems appropriate. The
Person seeking indemnification shall make, at its sole cost and expense,
personnel and records available to the indemnifying Party for the defense of
claims or legal actions, as may be reasonably requested by the indemnifying
Party, and shall take such
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reasonable actions as may be necessary to mitigate its damages, which cost of
mitigation shall be covered by the indemnity in this Article VIII.
8.5 Exclusive Remedy. The sole and exclusive liability of the Seller to
the Buyer Indemnitees or the Tax Indemnitees, and of the Buyer to the Seller
Indemnitees, for Damages under or in connection with this Agreement or the
transactions contemplated hereby (including without limitation, for any breach
or inaccuracy of any representation or warranty or for any breach of any
covenant required to be performed hereunder) and the sole and exclusive remedy
of the Buyer Indemnitees or the Tax Indemnitees and the Seller Indemnitees with
respect to any of the foregoing, shall be as expressly set forth in this Article
VIII and the Seller and the Buyer hereby waive, release and agree not to assert
any other remedy for Damages, including, without limitation, common law and
statutory rights.
ARTICLE IX
DEFINITIONS
9.1 "Affiliate" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person.
9.2 "Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
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9.3 "Agreement" shall mean this Stock Purchase Agreement, including its
Exhibits and Schedules, as the same may be amended in writing from time to time
in accordance with their respective terms.
9.4 "B Facility Loan" shall mean a loan by MidCon to the Seller as more
fully set forth in the Cash Management Agreement.
9.5 "Business" shall mean the business and operations conducted by MidCon
and its Subsidiaries as of the date hereof.
9.6 "Business Day" shall mean any day on which national banks in the City
of New York, State of New York, are open for business.
9.7 "Buyer" shall mean KN Energy, Inc., a Kansas corporation.
9.8 "Buyer Benefit Plans" shall have the meaning set forth in Section
5.2.3(c).
9.9 "Buyer Indemnitees" shall mean the Buyer and each of its Affiliates
and their respective officers, directors, employees and agents.
9.10 "Buyer's Pipeline Lease Guaranty" shall have the meaning set forth in
Section 5.3.6.
9.11 "C Facility Loan" shall mean a loan by the Seller to MidCon as more
fully set forth in the Cash Management Agreement.
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9.12 "Cash Management Agreement" shall mean the Intercompany Cash
Management Agreement, dated as of November 20, 1996, by and between the Seller
and MidCon.
9.13 "Certificate of Designations" shall mean the Certificate of
Designations of the CMIC Preferred Stock, as filed with the Secretary of State
of the State of Delaware on November 20, 1996.
9.14 "Claim Notice" shall have the meaning set forth in Section 8.4.2.
9.15 "Closing" shall have the meaning set forth in Section 4.1.
9.16 "Closing Date" shall mean the Business Day on which the Closing shall
occur.
9.17 "CMIC Preferred Stock" shall mean the Cumulative MidCon-Indexed
Convertible Preferred Stock (Par Value $1.00 Per Share) of the Seller.
9.18 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
9.19 "Commitments" shall have the meaning set forth in Section 5.2.5.
9.20 "Common Stock" shall have the meaning set forth in Section 2.4.
9.21 "Consents" shall have the meaning set forth in Section 5.3.2.
9.22 "Control" (and its derivative terms "Controlled", "Controls" etc.)
shall mean the power and right to direct the management and policies of another
Person, whether by
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ownership of voting securities, the ability to elect a majority of the board of
directors or other managing board or committee, by management contract, or
otherwise.
9.23 "Current Assets" shall mean assets that are reasonably expected to be
realized in cash or sold or consumed within one year or less, determined in
accordance with GAAP on a consistent basis.
9.24 "Current Liabilities" shall mean liabilities, indebtedness and
obligations that are reasonably expected to be payable within one year or less,
determined in accordance with GAAP on a consistent basis.
9.25 "Damages" shall have the meaning set forth in Section 8.4.1.
9.26 "Dividend Note" shall mean that certain Dividend Note, dated November
20, 1996, in the original principal amount of $1,600,000,000, issued by MidCon
to the Seller.
9.27 "Employee Plans and Agreements" shall mean each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, employment,
consulting, severance or termination pay, hospitalization or other medical, life
or other insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program, agreement or arrangement, and each other "employee
benefit plan" (within the meaning of section 3(2) of ERISA), program, agreement
or arrangement, whether formal or informal, written or oral, and whether legally
binding or not, sponsored, maintained or contributed to or required to be
contributed to by the Seller or MidCon or any of their Subsidiaries for the
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benefit of any employee, former employee, consultant, officer, or director of
MidCon or any of its Subsidiaries.
9.28 "Employees" shall mean collectively the Salaried Employees and
the Union Employees.
9.29 "Employee Welfare Benefit Plan" shall have the meaning set forth in
Section 3(1) of ERISA.
9.30 "Encumbrance" shall mean any lien, charge, encumbrance, conditional
sale agreement, option, right of purchase, warrant, title retention agreement,
pledge, restriction on transfer, voting trust, security interest or other
adverse claim, whether arising by contract or law.
9.31 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
9.32 "ESOP Note" shall mean that certain Non-Recourse Promissory Note,
dated November 20, 1996, in the amount of $1,398,600,000, issued by the MidCon
ESOP Trust to the Seller.
9.33 "Facilities" shall have the meaning set forth in the Cash
Management Agreement.
9.34 "FERC" shall mean the Federal Energy Regulatory Commission.
9.35 "Financial Statements" shall have the meaning set forth in
Section 2.10.
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9.36 "Former Salaried Employees" shall mean the former nonunion employees
of MidCon or any of its Subsidiaries (i) who retired, died, became disabled or
otherwise terminated employment prior to the Closing Date and (ii) who are not
immediately after the Closing in the active employment of the Seller or any of
its Subsidiaries.
9.37 "Former Union Employees" shall mean the former employees of MidCon or
any of its Subsidiaries who were represented by a collective bargaining unit
represented by the Union, including such employees who, on the Closing Date and
pursuant to the terms of the union contract in effect as of the date of such
employee terminated from service, retired, died, became disabled or otherwise
terminated employment prior to the Closing Date.
9.38 "GAAP" shall mean United States generally accepted accounting
principles. GAAP relating to the Seller or MidCon shall be that applied on a
basis consistent with the preparation of the Financial Statements.
9.39 "Governmental Entity" shall mean any federal, state, local or foreign
governmental or regulatory authority or agency.
9.40 "Government Securities" means direct non-callable obligations of, or
non-callable obligations timely payments of which are guaranteed by, the United
States of America, for the payment of which guarantee or obligations the full
faith and credit of the United States of America is pledged.
9.41 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
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9.42 "Indemnified Person" shall mean one of the Seller Indemnitees or the
Buyer Indemnitees as the case may be.
9.43 "Insurance Novation Agreement" shall mean the agreement substantially
in the form of Exhibit 5.1.5(b).
9.44 "Insurance Release Agreement" shall mean the agreement substantially
in the form of Exhibit 5.1.5(a).
9.45 "Intercompany Agreements" shall mean (i) the Services Agreement, (ii)
the Cash Management Agreement, (iii) the Tax Sharing Agreement, (iv) the MidCon
Restructuring Agreements, (v) the Dividend Note, (vi) the Pipeline Lease, (vii)
the Pipeline Lease Guaranty and (viii) the Originator Receivable Sales
Agreement.
9.46 "Knowledge" shall mean, with respect to any Party, the actual
conscious awareness of factual information, without independent investigation,
of officers of such Party.
9.47 "LIBO Business Day" shall mean any day not a Saturday, Sunday or
legal holiday in the State of New York and on which banks and the Federal
Reserve Bank of New York are open for business in New York City; provided,
however, that the term "LIBO Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits in the London Interbank
Market.
9.48 "LIBO Rate" shall mean, for any interest period, the interest rate
per annum reflected in the Wall Street Journal under MONEY RATES London
Interbank Offered Rates (LIBOR), or such independent source as shall be agreed
by the Seller and the Buyer, for three
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months, or such shorter period as may be applicable to the interest period, for
the date that is two LIBO Business Days prior to the beginning of such interest
period.
9.49 "Material Adverse Effect," with respect to any Person, shall mean an
adverse effect, circumstance, condition, development or occurrence having (a)
the effect in each individual case of a loss, liability, obligation or damages
of more than twenty-five million dollars or (b) the effect in the aggregate of
all losses, liability, obligation or damages of more than fifty million dollars,
net in each case of any benefit arising from the event, liability, obligation,
claim, litigation or violation giving rise to the adverse effect.
9.50 "MidCon" shall mean MidCon Corp., a Delaware corporation.
9.51 "MidCon ESOP" shall mean the MidCon Corp. Employee Stock Ownership
Plan established by the Seller, effective as of November 20, 1996.
9.52 "MidCon ESOP Agreements" shall mean (i) the MidCon Corp. ESOP Trust
Agreement by and between the Seller and U.S. Trust Company of California, N.A.,
as trustee, effective November 20, 1996, (ii) the MidCon ESOP, (iii) the Funding
Agreement, dated November 20, 1996, by and between the Seller and U.S. Trust
Company of California, N.A., in its capacity as trustee of the MidCon ESOP
Trust; (iv) the Stock Purchase Agreement, dated November 20, 1996, by and
between the Seller and the MidCon ESOP Trust; (v) the Pledge Agreement dated as
of November 20, 1996, by and among the Seller, in its capacity as collateral
agent, the Seller, in its individual capacity, MidCon and the MidCon ESOP Trust;
(vi) the Stockholders' Agreement dated November 20, 1996 by and between the
Seller and the
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MidCon ESOP Trust, (vii) the Certificate of Designations; (viii) the ESOP Note
and (ix) the Term Loan Agreement.
9.53 "MidCon ESOP Trustee" shall have the same meaning as "Trustee" in
the MidCon ESOP. The MidCon ESOP Trustee is the U.S. Trust Company of
California, N.A. as of the date of this Agreement.
9.54 "MidCon Indemnitees" shall have the meaning set forth in Section
5.2.6.
9.55 "MidCon Loans" shall mean loans made by the Seller to MidCon as more
fully set forth in the Cash Management Agreement.
9.56 "MidCon Restructuring Agreements" shall mean all the agreements
referred to in the definition of "MidCon Restructuring" in the Certificate of
Designations.
9.57 "1997 Financial Statements" shall have the meaning set forth in
Section 5.1.6.
9.58 "Notified Party" shall have the meaning set forth in Section
5.3.3.
9.59 "Notifying Party" shall have the meaning set forth in Section
5.3.3.
9.60 "OPC Loans" shall mean loans made by MidCon to the Seller as more
fully set forth in the Cash Management Agreement.
9.61 "Originator Receivables Sale Agreement" shall mean the Originator
Receivables Sale Agreement, dated as of October 29, 1992, by and among
Occidental Receivables, Inc.,
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Occidental Chemical Corporation and the MidCon subsidiaries listed as
originators on the signature pages thereto, as amended.
9.62 "Party" or "Parties" shall mean the Seller or the Buyer, or both,
as the case may be.
9.63 "Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, business,
government or political subdivision thereof, governmental agency or other
entity.
9.64 "Pipeline Lease" shall mean the Intrastate Pipeline System Lease,
dated as of December 31, 1996, by and between the Pipeline Lessor and the
Pipeline Lessee.
9.65 "Pipeline Lease Guaranty" shall mean the Guaranty and Agreement,
dated December 31, 1996, by MidCon in favor of the Pipeline Lessor with regard
to the guaranty of the obligations in favor of the Pipeline Lessee.
9.66 "Pipeline Lessee" shall mean MidCon Texas Pipeline Operator, Inc., a
Delaware corporation, and its successors and assigns.
9.67 "Pipeline Lessor" shall mean MidCon Texas Pipeline, L.P., a Delaware
limited partnership, and its successors and assigns.
9.68 "PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended.
9.69 "Purchase Price" shall have the meaning set forth in Section 1.2.
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9.70 "Reference Rate" shall mean the rate of interest announced from time
to time by The Chase Manhattan Bank, N.A., as its reference rate. This rate of
interest shall be applied to the actual elapsed days over the total days in the
applicable calendar year.
9.71 "Related Agreements" shall mean (a) the Insurance Release Agreement,
(b) the Insurance Novation Agreement, (c) the Term Loan Assignment Agreement,
(d) an interim services agreement, if any, and (e) any security agreement and
control agreement or any letter of credit issued pursuant to Section 5.3.4.
9.72 "Salaried Employees" shall mean all employees, including salaried,
hourly employees of MidCon or any of its Subsidiaries who are not Union
Employees and who are immediately prior to the Closing (i) in the active
employment of MidCon or any of its Subsidiaries, or (ii) on sick leave, short
term disability, long term disability, or other leave of absence approved by the
Seller or any of its Subsidiaries.
9.73 "SEC" shall mean the Securities and Exchange Commission.
9.74 "SEC Reports" shall have the meaning set forth in Section 2.11.
9.75 "Securities Act" shall mean the Securities Act of 1933, as
amended.
9.76 "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
9.77 "Seller" shall mean Occidental Petroleum Corporation, a Delaware
corporation.
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9.78 "Seller Indemnitees" shall mean the Seller and each of its Affiliates
and their respective officers, directors, employees and agents.
9.79 "Services Agreement" shall mean the Services Agreement dated November
20, 1996 by and between the Seller and MidCon.
9.80 "Shares" shall have the meaning set forth in Section 2.4.
9.81 "Significant Subsidiary" shall mean the following Subsidiaries of
MidCon: mc2, Inc., MidCon Gas Products Corp., MidCon Gas Services Corp., MidCon
Power Services Corp., MidCon Texas Pipeline Operator, Inc., Natural Gas Pipeline
Company of America, NGPL Offshore Company, NGPL - Canyon Compression Co., NGPL -
Trailblazer Inc., and Palo Duro Pipeline Company, Inc.
9.82 "Subsidiary" of any Person shall mean another Person, with respect to
which such first Person owns, directly or indirectly, an amount of the voting
securities or other voting ownership or partnership interests sufficient to
elect at least a majority of its board of directors or other governing body (or,
if there are no such voting interests, more than 50% of its equity).
9.83 "Substitute Note" shall mean one or more notes payable to the order
of the Seller, substantially in the form of Exhibit 9.83 hereto, which provides
for interest at a rate equal to 0.3% plus the rate of interest (the "fixed rate
equivalent") applicable to a promissory note with a fixed rate of interest that
has the same present value as a promissory note that bears interest at the LIBO
Rate applicable for each interest period, assuming that both notes have the
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same original principal amount as such Substitute Note and pay interest and
principal at the same times as such Substitute Note, which fixed rate equivalent
shall be determined on the fifth Business Day prior to the Closing Date by
reference to the implied forward LIBO Rates derived from the eurodollar futures
market, which implied forward LIBO Rates are published by an independent source
agreed to by the Buyer and the Seller, in accordance with a methodology
previously agreed to by the Buyer and the Seller.
9.84 "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
9.85 "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
9.86 "Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 20, 1996 by and between the Seller and MidCon.
9.87 "Term Loan Agreement" shall mean the Term Loan Agreement, dated as of
November 20, 1996, by and among the Seller, MidCon Corp. ESOP Trust and MidCon.
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9.88 "Term Loan Assignment Agreement" shall mean an agreement
substantially in the form set forth in Exhibit 9.88.
9.89 "Termination Allowance Plan" shall mean the MidCon Corp. Termination
Allowance Plan adopted by MidCon as amended from time to time.
9.90 "Termination Date" shall mean June 30, 1998 or such other date as the
Parties may mutually agree in writing.
9.91 "Union" shall mean the United Steel Workers (Local 1445--2)
representing certain hourly employees of MidCon.
9.92 "Union Contract" shall mean the collective bargaining agreement
between Natural Gas Pipeline of America and the United Steel Workers Local
1445-2.
9.93 "Union Employees" shall mean all employees of MidCon or its
Subsidiaries immediately prior to the Closing Date who are part of the
collective bargaining unit represented by the Union, including such employees
who, on the Closing Date and pursuant to the terms of the Union Contract, (i)
are in the active employment of MidCon or any of its Subsidiaries, or (ii) are
on layoff, sick leave or other leave of absence.
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ARTICLE X
MISCELLANEOUS
10.1 Further Assurances. Subject to the terms and conditions herein
provided, each of the Parties agrees to use all reasonable commercial efforts to
take, or cause to be taken, all action 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,
including using all reasonable commercial efforts to obtain all necessary
waivers, consents and approvals in connection with any governmental requirements
set forth in Section 2.3 and Section 3.3 of the Agreement, and to effect all
necessary registrations and filings. In case at any time after the Closing Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of the Seller, the Buyer or
MidCon shall take all such necessary action.
10.2 Preservation of Books and Records.
(a) Each Party agrees that for the period specified in subpart (b)
such Party shall take all necessary action to ensure that all corporate books
and records of MidCon and its Subsidiaries with respect to periods ending on or
before the Closing Date in the possession or control of such Party or its
Affiliates shall be open for inspection by representatives of the other Party at
any time during regular business hours and that the other Party may during such
statutory period at its expense make such excerpts therefrom as it may
reasonably request.
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(b) For the period of 10 years following the Closing Date or such
longer period pursuant to Article VI, no Party or its Affiliates shall destroy
or give up possession of any original or any copy of any of the books and
records relating to any matter for which a Party shall have any continuing
responsibility under this Agreement or any agreement contemplated by this
Agreement without first offering to the other Party the opportunity, at its
expense, to obtain such original or a copy thereof. During such period, the
Party shall use reasonable commercial efforts to cooperate with the other Party
and make such books and records available to the employees and representatives
of the other Party to the extent that the other Party may reasonably require for
its corporate and other business purposes.
10.3 Confidentiality. Each Party and its Affiliates shall, and shall cause
their respective employees, agents, accountants, legal counsel and other
representatives to perform and comply with the two Confidentiality Agreements
dated October 9, 1997 and December 16, 1997 respectively between the Parties.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon personal delivery, facsimile transmission
(which is confirmed) or delivery by an overnight express courier service
(delivery, postage or freight charges prepaid), or on the fourth day following
deposit in the United States mail (if sent by registered or certified mail,
return receipt requested, delivery, postage or freight charges prepaid),
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
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(a) if to Seller:
Occidental Petroleum Corporation
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
(b) if to Buyer:
KN Energy, Inc.
X.X. Xxx 000000
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Vice President
Facsimile Number: (000) 000-0000
10.5 Public Announcements. Prior to the Closing, the Parties shall not,
and shall not permit any of their respective Affiliates to, issue any press
release or other public announcement concerning this transaction except (a) with
the prior approval of the other Party, or (b) when, on the advice of legal
counsel, such release or announcement is required by the federal securities laws
or the rules and regulations of any of the national exchanges, in which case the
Parties shall. to the extent practicable, first consult with each other.
10.6 Successors and Assigns. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the express written
consent of the other Party hereto. Any assignment in violation of the foregoing
shall be null and void. Subject to the preceding sentences of this Section 10.6,
the provisions of this Agreement (and, unless
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otherwise expressly provided therein, of any document delivered pursuant to or
in connection with this Agreement) shall be binding upon and inure to the
benefit of the Parties and their respective legal representatives, successors
and assigns.
10.7 Expenses. Whether or not this Agreement is consummated, all costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the Party incurring such expense. Any brokerage, finders or other similar fees
or commissions payable to Xxxxxxx Xxxxx & Co. or to Credit Suisse First Boston
Corporation in connection with the transactions contemplated by this Agreement
shall be paid by the Seller. Any brokerage, finder's or other similar fees
payable to Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxx Xxxxxxx & Co., Inc. or to
Salomon Brothers Inc in connection with the transactions contemplated by this
Agreement shall be paid by the Buyer.
10.8 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against the applicable regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
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10.9 Construction; Interpretation.
(a) When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference shall be to an Article, Section,
Exhibit or Schedule to this Agreement unless otherwise indicated.
(b) The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
(c) The information set forth in any Section or in any Schedule
shall be deemed to qualify and relate to every provision of this Agreement.
(d) The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) The Parties agree that they have been represented by counsel
during the negotiation and execution of this Agreement and, therefore waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
Party drafting such agreement or document.
(f) Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all valid and enforceable rules and
regulations promulgated thereunder, unless the context requires otherwise.
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10.10 Entire Agreement; Third Party Beneficiaries. This Agreement, those
certain Confidentiality Agreements by and between the Seller and the Buyer
(including the documents and the instruments referred to herein and therein) as
more fully described in Section 10.3 and that certain letter agreement from the
Seller to the Buyer dated the date hereof regarding compensation of certain
officers of MidCon (a) constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided under Section
5.2.3, Section 5.2.6, Section 8.2 and Section 8.3, are not intended to confer
upon any person other than the Parties any rights or remedies hereunder.
10.11 Amendment and Modification. This Agreement may not be amended,
modified and supplemented, and no amendment to this Agreement shall be
effective, unless evidenced by an instrument in writing signed by each Party.
10.12 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to
principles of conflicts of law.
10.13 Waiver of Jury Trial. Each of the Buyer and the Seller hereby
irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or actions of the Buyer and the Seller in the
negotiation, administration, performance and enforcement hereof.
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10.14 Consent to Jurisdiction and Forum Selection. Each Party hereby
irrevocably agrees that any legal action or proceeding against it or any of its
Affiliates arising out of this Agreement may be brought in the courts of the
State of Delaware, or of the United States of America District Court for
Delaware and does hereby irrevocably (a) designate, appoint and empower the
Secretary of State of the State of Delaware to receive for and on behalf of it
and its Affiliates service of process in the State of Delaware, and (b) consent
to service of process outside the territorial jurisdiction of such courts in the
manner permitted by law. In addition, each Party, on its own behalf and on
behalf of its Affiliates, irrevocably waives (i) any objection which such Party
or its Affiliates may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of, or relating to, this Agreement brought in
any such court, (ii) any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum, and (iii) the right
to object, with respect to any such claim, suit, action or proceeding brought in
any such court, that such court does not have jurisdiction over such Party or
any other Party.
10.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the Parties and delivered to the other Party, it being understood that all
Parties need not sign the same counterpart.
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IN WITNESS WHEREOF, the Seller and the Buyer have caused this Agreement to
be signed by their respective officers thereunder duly authorized, all as of the
date first written above.
OCCIDENTAL PETROLEUM CORPORATION
("Seller")
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Its: Executive Vice President -
Corporate Development
[Corporate Seal]
Attest
KN ENERGY, INC.
("Buyer")
By: /s/ Xxxxx X. Xxxx
------------------------------------
Its: Chairman of the Board, President
and Chief Executive Officer
[Corporate Seal]
Attest
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