Exhibit 10.14
PURCHASE AND SALE AGREEMENT
BETWEEN
DUKE ENERGY FIELD SERVICES, LP
AND
REGENCY GAS SERVICES WAHA, LP
DATED
JANUARY 29, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I CERTAIN DEFINITIONS 1
1.1 Certain Defined Terms 12
1.2 Other Definitional Provisions 12
1.3 Headings 12
1.4 Other Terms 12
ARTICLE II THE TRANSACTION 12
2.1 The Transaction 12
2.2 Purchase Price 13
2.3 Purchase Price Allocation 13
2.4 Deposit 13
ARTICLE III OTHER TRANSACTIONS, PRORATIONS AND 13
SETTLEMENT
3.1 Other Transactions 13
3.2 Prorations 14
3.3 Preliminary Settlement Statement 14
3.4 Final Settlement Statement 15
3.5 Dispute Procedures 15
3.6 Payments 15
3.7 Special Adjustments 15
ARTICLE IV ASSUMED OBLIGATIONS 16
4.1 Assumption of Assumed Obligations 16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF DEFS 16
5.1 Organization, Good Standing, and Authority 16
5.2 Enforceability 16
5.3 No Conflicts 16
5.4 Consents, Approvals, Authorizations and Governmental Regulations;
Permits 17
5.5 Taxes 17
5.6 Litigation; Compliance with Laws 18
5.7 Contracts 18
5.8 Intellectual Property 18
5.9 Preferential Rights to Purchase 19
5.10 Broker's or Finder's Fees 19
5.11 Condemnation 19
5.12 Benefit Plan Liabilities 19
5.13 No Foreign Person 19
5.14 Bankruptcy 19
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5.15 Advance Receipts/Purchases; Gas Contracts 19
5.16 Rental Payments on Real Property Interests 19
5.17 Eminent Domain 19
5.18 Operating Statements 19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 20
6.1 Organization, Good Standing, and Authorization 20
6.2 Enforceability 20
6.3 No Conflicts 20
6.4 Consents, Approvals, Authorizations and Governmental
Regulations 20
6.5 Litigation 21
6.6 Independent Investigation 21
6.7 Broker's or Finder's Fees 22
6.8 Available Funds 22
ARTICLE VII COVENANTS 22
7.1 Conduct of Business 22
7.2 Casualty Loss 23
7.3 Access, Information and Access Indemnity 24
7.4 Environmental Matters and Post-Closing Access 24
7.5 [Intentionally omitted.] 25
7.6 DEFS' Right to Terminate 25
7.7 Names 25
7.8 Regulatory Filings; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing 25
7.9 Preservation of Records 26
7.10 Accounting for Excess Inventory 26
7.11 Imbalances 26
7.12 Suspense Account Funds 27
7.13 Capital Projects 27
7.14 Employees 27
7.15 Like-kind Exchange 30
7.16 Credits and Receipts 30
7.17 Previously Obtained Consents 30
7.18 Vehicles 30
7.19 Cooperation and Reasonable Efforts 31
ARTICLE VIII CONDITIONS TO CLOSING 31
8.1 DEFS' Conditions 31
8.2 BUYER's Conditions 31
ARTICLE IX CLOSING 32
9.1 Time and Place of Closing 32
9.2 Deliveries at Closing. At the Closing 32
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ARTICLE X TERMINATION 33
10.1 Termination at or Prior to Closing 33
10.2 Effect of Termination 34
ARTICLE XI INDEMNIFICATION 34
11.1 Indemnification by BUYER 34
11.2 Indemnification by DEFS 34
11.3 Deductibles, Caps, Survival and Certain Limitations 35
11.4 Notice of Asserted Liability; Opportunity to Defend 36
11.5 Exclusive Remedy 38
11.6 Negligence and Strict Liability Waiver 38
11.7 DTPA Waiver 39
11.8 Limitation on Damages 39
11.9 Bold and/or Capitalized Letters 39
ARTICLE XII MISCELLANEOUS PROVISIONS 39
12.1 Expenses 39
12.2 Further Assurances 39
12.3 Apportionment of Property Taxes; Transfer Taxes; 40
and Recording Fees
12.4 Assignment 40
12.5 Entire Agreement, Amendments and Waiver 41
12.6 Severability 41
12.7 Counterparts 41
12.8 Governing Law, Dispute Resolution and Arbitration 41
12.9 Notices and Addresses 44
12.10 Press Releases 45
12.11 Offset 45
12.12 No Partnership; Third Party Beneficiaries 45
12.13 Negotiated Transaction 46
EXHIBITS
A-l Form of Coyanosa Processing Contract
A-2 Form of Coyanosa Treating Contract
A-3 Form of Coyanosa Gas Sales Contract
B Form of Transition Services Agreement
C-l Legal Opinion of DEFS
C-2 Legal Opinion of BUYER
D Form of Operating Agreement
E Operating Statements
F Environmental Insurance Commitment Letter
G Form of Assignment, ▇▇▇▇ of Sale and Conveyance Agreement
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SCHEDULES
1.1 Map of Assets
1.1(a) Plant Facilities
1.1(b) Real Property Interests
1.1(c) Permits
1.1(d) Personal Property
1.1(e) Contracts
1.1(f) Intellectual Property
1.1(g) Permitted Encumbrances
1.1(h) Post Closing Consents
1.1(i) BUYER's Knowledge
1.1(j) Excluded Assets
1.1(k) DEFS' Knowledge
1.1(l) Air Issues
2.3 Purchase Price Allocation
3.7 Special Adjustments
5.4(a) DEFS Consents, Approvals and Authorizations
5.4(b) Permit Matters
5.5 Taxes
5.6 Litigation
5.7 Contract Matters
5.8 Intellectual Property Matters
5.9 Preferential Purchase Rights
6.4 BUYER Consents, Approvals and Authorizations
7.3 Confidential and Privileged Information
7.4 Environmental Insurance
7.11 Imbalances
7.12 Suspense Account Funds
7.13 Capital Projects
7.14(e)(i) Severance Formula
11.2(c) Certain Indemnified Matters
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PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (this "Agreement") dated January 29, 2004 is
between Duke Energy Field Services, LP, a Delaware limited partnership ("DEFS")
and Regency Gas Services Waha, LP ("BUYER"). BUYER and DEFS are sometimes
referred to collectively herein as the "Parties" and individually as a "Party".
RECITALS
A. DEFS owns one hundred percent (100%) of the Assets; and
B. DEFS has agreed to sell to BUYER, and BUYER has agreed to
purchase from DEFS, the Assets on the terms and subject to the
conditions set forth in this Agreement.
FOR AND IN CONSIDERATION of the premises and of the mutual covenants
contained herein, the Parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Defined Terms. Capitalized terms used herein and not defined
elsewhere in this Agreement shall have the meanings given such terms as is set
forth below.
"Affiliate" shall mean, when used with respect to a specified Person,
any other Person controlling, directly controlled by or under common control
with the specified Person. For purposes of this definition, "control", when used
with respect to any specified Person, means the power to direct the management
and policies of the Person whether through the ownership of voting securities or
by contract; and the term "controlled" has the meanings correlative to the
foregoing. Notwithstanding the foregoing, the term "Affiliate" when applied to
DEFS shall not include Duke Energy Corporation, a Delaware corporation or
ConocoPhillips, a Delaware corporation, or any entities owned, directly or
indirectly by Duke Energy Corporation or ConocoPhillips, other than Duke Energy
Field Services, LLC, a Delaware limited liability company and its subsidiaries
(but excluding
Texas Eastern Products Pipeline Company, LLC, a Delaware limited
liability company, TEPPCO Partners L.P., a Delaware limited partnership, and any
Person owned, directly or indirectly by
Texas Eastern Products Pipeline Company,
LLC or TEPPCO Partners L.P.).
"Arbitrable Dispute" means any dispute, claim, counterclaim, demand,
cause of action, controversy and other matters in question arising out of or
relating to this Agreement or the alleged breach hereof, or in any way relating
to the subject matter of this Agreement or the relationship between the Parties
created by this Agreement, regardless of whether (a) allegedly
extra-contractual in nature, (b) sounding in contract, tort, or otherwise, (c)
provided for by applicable Law or otherwise, or (d) seeking damages or any other
relief, whether at Law, in equity, or otherwise.
" Arbitration Rules" shall have the meaning given such term in Section
12.8.
"Assets" shall mean all of the following assets and properties, but
excluding the Excluded Assets:
(a) Plants and Stations. All gas processing plants, treaters,
dehydration units, compressor stations, warehouses, field offices,
control buildings and other associated plant facilities that are used
or held for use in connection with the ownership, operation or
maintenance of the System, including those described on Schedule 1.1(a)
(collectively, the "Plant Facilities");
(b) Real Property Interests. All fee properties,
rights-of-way, easements, surface use agreements, licenses and leases
that are used or held for use in connection with the ownership,
operation or maintenance of the Plant Facilities, including those
described on Schedule 1.1(b), and all other real property on or under
the Plant Facilities, pipelines and gathering facilities generally
described on the System Map, and all fixtures, pipelines, gathering
facilities, buildings and improvements located thereon or appertaining
thereto (collectively, the "Real Property Interests");
(c) Permits. All permits, licenses, certificates, orders,
approvals, authorizations, grants, consents, concessions, warrants,
franchises and similar rights and privileges which are necessary for,
used, or held for use exclusively for or in connection with, the
ownership, use, operation or maintenance of the Assets to the extent
assignable to BUYER, including those Permits more particularly
described on Schedule 1.1(c) (collectively, the "Permits");
(d) Personal Property. All tangible personal property of every
kind and nature, which is necessary for, used, or held for use
primarily for or in connection with, the ownership, operation or
maintenance of the Assets, including field equipment, office equipment,
fixtures, tools, motor vehicles, instruments, spare parts, machinery,
computer equipment, telecommunications equipment, supplies and
materials, including those items of personal property more particularly
described on Schedule. 1.1(d) and all hydrocarbon inventory of the
System, including linefill (collectively, the "Personal Property");
(e) Contract Rights. All contracts that relate to the
ownership, operation or maintenance of the Assets, including all gas
and liquids purchase and sales agreements, gas storage agreements, gas
and liquids transportation agreements, equipment and vehicle leases,
rental contracts, gathering, treating and processing agreements,
interconnect agreements, compression service and other service
agreements, including those contracts or agreements described on
Schedule 1.1(e) and the TEPPCO Contract, but not including the Excluded
Assets or the Real Property Interests (collectively, the "Contracts").
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(f) Intellectual Property. All technical information, shop
rights, designs, plans, manuals, specifications and other proprietary
and nonproprietary technology and data used exclusively in connection
with the operation of the Assets, including the computer files and
records described on Schedule 1.1(f) (collectively, the "Intellectual
Property").
(g) Imbalances. All Imbalance Receivables.
(h) Books and Records. All contract, land, title, engineering,
environmental, operating, accounting, business, marketing, and other
data, files, documents, instruments, notes, papers, ledgers, journals,
reports, abstracts, surveys, maps, books, records and studies which
relate to the Assets or which are used, useful, or held for use in
connection with the Assets or the ownership, operation or maintenance
of the Assets (collectively, the "Records").
(i) Incidental Rights. All of the following insofar as the
same are attributable or relate to any of the Assets described in
clauses (a) through (h): (i) all purchase orders, invoices, storage or
warehouse receipts, bills of lading, certificates of title and
documents, (ii) all keys, lock combinations, computer access codes and
other devices or information necessary to gain entry to and/or take
possession of such Assets, and (iii) to the extent arising out of any
period of time in which BUYER is liable to Third Persons in respect of
the Assets, the benefit of and right to enforce all covenants,
warranties, indemnities, guarantees and suretyship agreements relating
exclusively to the Assets running in favor of DEFS, any of its
Affiliates or any previous owner, but only to the extent of any rights
thereunder which are assignable by DEFS to BUYER, and excluding any
such indemnities, guaranties and suretyship agreements provided by any
previous owner of the System.
"Assumed Obligations" shall have the meaning given such term in Section
4.1.
"Benefit Plan" shall mean any of the following that is sponsored,
maintained or adopted by DEFS, or with respect to which DEFS has any liability
with respect to DEFS' ownership or operation of the Assets: (a) any employee
welfare benefit plan or employee pension benefit plan as defined in Sections
3(1) and 3(2) of ERISA, and (b) any other material employee benefit agreement or
arrangement, including a deferred compensation plan, incentive plan, bonus plan
or arrangement, stock option plan, stock purchase plan, stock award plan, golden
parachute agreement, severance plan, dependent care plan, cafeteria plan,
employee assistance program, scholarship program, employment contract, retention
incentive agreement, noncompetition agreement, consulting agreement, vacation
policy, and other similar plan, agreement and arrangement.
"Business Day" shall mean any day, other than Saturday and Sunday, on
which federally-insured commercial banks in Denver, Colorado are generally open
for business and capable of sending and receiving wire transfers.
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"Business Employee" shall have the meaning given such term in Section
7.14.
"BUYER" shall mean Regency Gas Services Waha, LP, a Delaware limited
partnership.
"BUYER Indemnitees" shall have the meaning given such term in Section
11.2.
"BUYER'S Knowledge" or the "Knowledge of BUYER" or any similar term,
shall mean the actual knowledge of (i) any officer of BUYER or any of its
Affiliates having a title of vice president or higher or (ii) any of the
individuals listed on Schedule 1.1 (i)
"BUYER Required Consents" shall have the meaning given in Section 6.4.
"Capital Projects" shall have the meaning given such term in Section
7.13.
"Casualty Loss" shall mean, with respect to all or any portion of the
Assets, destruction by fire, storm or other casualty, or any condemnation or
taking or threatened condemnation or taking occurring after the date hereof, of
all or any portion of the Assets.
"Claim" shall mean any demand, demand letter, claim or notice of
noncompliance or violation or Proceeding.
"Claim Notice" shall have the meaning given such term in Section
11.3(c).
"Closing" shall have the meaning given such term in Section 9.1.
"Closing Date" shall have the meaning given such term in Section 9.1.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between DEFS and Regency Gas Services Company, L.L.C. dated January 6, 2004.
"Continuing Employee" shall have the meaning given such term in Section
7.14(c).
"Contracts" shall have the meaning given such term in the definition of
Assets.
"Coyanosa Contract" shall mean, collectively, the Gas Processing
Contract, Gas Treating Contract and Gas Sales Contract between DEFS and BUYER in
the form of the attached Exhibits ▇-▇, ▇-▇ and A-3, respectively.
"Defensible Title" shall mean, as to the Assets, such title to the
Assets that vests BUYER with indefeasible title in and to the Assets free and
clear of Liens other than Permitted Encumbrances.
"DEFS" shall mean Duke Energy Field Services, LP, a Delaware limited
partnership.
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"DEFS Indemnitees" shall have the meaning given such term in Section
11.1.
"DEFS' Knowledge" or the "Knowledge of DEFS" or any similar term, shall
mean the actual knowledge of (i) any officer of DEFS or any of its Affiliates
having a title of vice president or higher or (ii) any of the individuals listed
on Schedule 1.1(k).
"DEFS Property Tax" shall have the meaning given such term in Section
12.3(a).
"DEFS Required Consents" shall have the meaning given such term in
Section 5,4(a).
"Deposit" shall have the meaning given such term in Section 2.4.
"DOJ" shall mean the Department of Justice of the federal government of
the United States of America.
"Effective Time" shall mean 12:01 A.M. Subject Time on the Closing
Date.
"Environmental Defect" shall mean (a) any pollution, contamination,
degradation, damage or injury caused by, related to, arising from, or in
connection with the presence, generation, handling, use, treatment, storage,
transportation, disposal, discharge, release or emission of any Hazardous
Materials occurring prior to the Effective Time and for which remedial action is
required (or if such defect were known, would be required) under Environmental
Laws in effect at the Effective Time, (b) any Third Person Claim which is
brought against DEFS and is based on the release or migration of Hazardous
Materials in violation of Environmental Law prior to the Effective Time on or
from any of the Assets, or (c) any conditions that could reasonably be expected
to result in a Third Person Claim being brought against DEFS or BUYER and which
is based on the release or migration of Hazardous Materials in violation of
Environmental Law prior to the Effective Time on or from any of the Assets.
"Environmental Law" shall mean any and all Laws, statutes, ordinances,
rules, regulations, or orders of any Governmental Authority in existence and as
amended at the Effective Time pertaining to the protection of the environment,
health or natural resources or to Hazardous Materials in any and all
jurisdictions in which the party in question owns property or conducts business,
including the Clean Air Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Federal Water Pollution
Control Act, the Occupational Safety and Health Act of 1970 (to the extent
relating to environmental matters), the Resource Conservation and Recovery Act
of 1976 ("RCRA"), the Safe Drinking Water Act, the Toxic Substances Control Act,
the Hazardous & Solid Waste Amendments Act of 1984, the Superfund Amendments and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Oil
Pollution Act of 1990, any state or local Laws implementing or substantially
equivalent to the foregoing federal Laws, and any state or local Laws pertaining
to the handling of oil and gas exploration, production, gathering, and
processing wastes or the use, maintenance, and closure of pits and impoundments.
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"Environmental Insurance" shall mean an environmental risk insurance
policy with the terms set forth in Schedule 7.4 from an A + AM Best rated
insurance company, with the terms and company both reasonably acceptable to
DEFS, which covers pre-Closing environmental liabilities on the Assets and names
DEFS and its Affiliates as additional insureds and which is fully paid up and
subject to no contingencies at Closing; it being agreed that the environmental
risk insurance policy described in the commitment letter attached hereto as
Exhibit F and the insurer named therein are irrevocably accepted by DEFS.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any Person, who is, on or before the
Effective Time, under common control with DEFS within the meaning of section 414
of the Code.
"Excess Inventory" shall mean all natural gas liquids included in the
Assets above the minimum operating inventory.
"Excluded Assets" shall mean all of the following:
(a) All deposits, cash, checks, funds and accounts receivable
and other rights to payment arising from or relating to the operation
of the System with respect to any period of time prior to the Effective
Time;
(b) Claims of DEFS for refund of or loss carry forwards with
respect to (i) Taxes attributable to any period prior to the Effective
Time or (ii) any Taxes attributable to the Excluded Assets;
(c) All work product of DEFS' attorneys and records relating
to the negotiation and consummation of the transactions contemplated
hereby that are subject to a valid attorney-client privilege;
(d) All real property, personal property, contracts,
intellectual property, Permits, rolling stock, field vehicles, office
computers or other equipment (or any leases or licenses of the
foregoing) that are described on Schedule 1.1 (j) (including the two
maps attached thereto);
(e) All office equipment and accessories that are located at
offices other than (i) the Plant Facilities or (ii) the field offices
included in the Assets;
(f) All computer software that either cannot be assigned to
BUYER pursuant to the terms of any license therefore or requires a
consent to transfer;
(g) All contracts or agreements that do not relate exclusively
to the ownership, operation or maintenance of the Assets except for (i)
the TEPPCO Contract and (ii) to the extent that they cover or are
dedicated to the Assets or any part thereof, gathering,
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treating and processing agreements and agreements whereby DEFS
purchases gas or natural gas liquids.
(h) All swaps, futures or other similar derivative-based
transactions;
(i) Rights to claim coverage or benefits under DEFS or its
Affiliates' insurance policies or coverage; and
(j) That certain Lubricant Sales Agreement dated November 30,
1998 between DEFS and Lubrication Services, LLC
"Exhibits" shall mean any and/or all of the exhibits attached to and
made a part of this Agreement.
"Final Settlement Statement" shall have the meaning given such term in
Section 3.4.
"FTC" shall mean the Federal Trade Commission of the United States of
America.
"Governmental Authorities" shall mean (a) the United States of America
or any state or political subdivision thereof within the United States of
America and (b) any court or any governmental or administrative department,
commission, board, bureau or agency of the United States of America or of any
state or political subdivision thereof within the United States of America.
"Hazardous Materials" shall mean: (a) any chemicals, materials or
substances defined or included in the definition of "hazardous substances,"
"hazardous materials," "toxic substances," "solid wastes," "pollutants,"
"contaminants," or words of similar import, under any Environmental Law, (b) any
radioactive materials (other than naturally occurring radioactive materials),
friable asbestos, and polychlorinated biphenyls, (c) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Governmental Authority; or (d) any regulated constituents or substances in
concentrations or levels that exceed numeric or risk-based standards established
pursuant to Environmental Laws.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"Imbalance" shall mean all hydrocarbon imbalances between DEFS and a
Third Person relating to or arising out of the operation of the Assets that
exist at the Effective Time.
"Imbalance Payable" shall mean an Imbalance related to a Contract owed
by DEFS to a Third Party.
"Imbalance Receivable" shall mean an Imbalance related to a Contract
owed by a Third Party to DEFS.
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"Indemnified Party" or "Indemnitee" shall have the meaning given such
term in Section 11.4(a).
"Indemnifying Party" or "Indemnitor" shall have the meaning given such
term in Section 11.4(a).
"Independent Accountants" shall mean Ernst & Young.
"Interest Rate" shall mean a per annum rate of interest equal to the
lesser of (a) the prime rate of interest by Citibank, N.A. plus one percent
(1%), which rate shall change when and as such prime rate changes, or (b) the
maximum non-usurious rate of interest permitted to be charged under applicable
Law.
"Laws" shall mean all applicable statutes, laws, regulations, rules,
rulings, ordinances, orders, restrictions, requirements, writs, judgments,
injunctions, decrees and other official acts of or by any Governmental
Authority.
"Lien" shall mean any lien, mortgage, pledge, claim, charge, security
interest or other encumbrance, option or defect on title.
"Loss" or "Losses" shall mean any and all damages, demands, payments,
obligations, penalties, assessments, disbursements, claims, costs, liabilities,
losses, causes of action, and expenses, including interest, awards, judgments,
settlements, fines, costs of Remediation, fees, costs of defense and reasonable
attorneys' fees, costs of accountants, expert witnesses and other professional
advisors and costs of investigation and preparation of any kind or nature
whatsoever.
"Material Adverse Effect" shall mean a single event, occurrence or
fact, or series of events, occurrences or facts, that, alone or together with
all other adverse events, occurrences or facts (a) would have an effect that is
materially adverse to the operation, use or value of the Assets taken as a
whole, or (b) would result in the prohibition of or material delay in the
consummation of, or other material adverse effect on, the transactions
contemplated by this Agreement, excluding (in each case) matters that are
generally industry-wide developments or changes.
"Notice Period" shall have the meaning given such term in Section
11.4(c).
"Operating Agreement" shall mean an Operating Agreement in the form of
the attached Exhibit D.
"Operating Statements" shall mean the FYE ECON/STATS and Operating Cost
Detail for calendar years 2002 and 2003 covering the Assets that are attached to
this Agreement as Exhibit E.
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"Permits" shall have the meaning given such term in the definition of
Assets.
"Permitted Encumbrances" shall mean the following:
(a) As of the date hereof, terms, conditions, restrictions,
exceptions, reservations, limitations, and other matters contained in
any document creating or transferring the Real Property Interests, or
in any Permit or Contract;
(b) Liens for property Taxes and assessments that are not yet
due and payable (or that are being contested in good faith by
appropriate Proceedings);
(c) mechanic's, materialmen's, repairmen's and other statutory
Liens arising in the ordinary course and securing obligations incurred
prior to the Effective Time and (i) for which DEFS or a Third Person is
responsible for payment, and (ii) that are not delinquent and that will
be paid and discharged in the ordinary course of business or, if
delinquent, that are being contested in good faith with any action to
foreclose on or attach any Assets on account thereof properly stayed;
(d) utility easements, restrictive covenants, minor defects
and other minor irregularities in title, that, singularly or in the
aggregate, will not materially interfere with the ownership, use or
operation of the Assets to which such matters relate and which are of a
nature that would be reasonably acceptable to a prudent pipeline
operator;
(e) required Third Person consents to assignment, preferential
purchase rights and other similar agreements with respect to which
consents or waivers are obtained from the appropriate Person for the
sale contemplated hereby or, as to which the appropriate time for
asserting such rights has expired as of the Closing without an exercise
of such rights;
(f) any Post-Closing Consent;
(g) Liens created by BUYER or its successors or assigns;
(h) The Liens listed on Schedule 1.1(g).
"Person" shall mean any natural person, corporation, company,
partnership (general or limited), limited liability company, trust, joint
venture, joint stock company, unincorporated organization, or other entity or
association.
"Personal Property" shall have the meaning given such term in the
definition of Assets.
"Plant Facilities" shall have the meaning given such term in the
definition of Assets.
"Post-Closing Consents" shall mean consents, notices to or approvals
from, or filings with Governmental Authorities or other Persons customarily
obtained following the closing of a transaction similar to the transaction
contemplated hereby, including those listed on Schedule l.l(h).
"Preliminary Settlement Statement" shall have the meaning given such
term in Section 3.3.
"Previously Obtained Consent" shall mean a consent to transfer an Asset
that (a) is a DEFS Required Consent and (b) DEFS had obtained in or after August
2003 in connection with another proposed purchase and sale transaction that did
not close.
"Proceeding" shall mean any action, suit, claim, investigation, review
or other judicial or administrative proceeding, at Law or in equity, before or
by any Governmental Authority or arbitration proceeding.
"Real Property Interests" shall have the meaning given such term in the
definition of Assets.
"Records" shall have the meaning given such term in the definition of
Assets.
"Remediate," "Remediating" or "Remediation" shall mean the removal,
abatement, response, investigative, cleanup, monitoring and related activities
undertaken to address Environmental Defects, including excavation, landfarming,
and installation and operation of remediation systems.
"Retained Liabilities" shall mean:
(a) all wages, benefits and equal opportunity employment
obligations to or in respect of any employees of DEFS or any
of its ERISA Affiliates, including any such obligations
arising under or in respect of any Benefit Plan, in respect of
periods prior to the Effective Time;
(b) all Taxes of DEFS or any of its Affiliates in respect of
periods prior to the Effective Time;
(c) all obligations arising from or relating to the treatment or
disposal by DEFS of any Hazardous Materials at any off-site
location prior to the Effective Time;
(d) all obligations or liabilities with respect to any Excluded
Assets;
(e) all obligations or liabilities with respect to mechanic's,
materialmen's, repairmen's and other statutory Liens arising
in the ordinary course and securing obligations incurred prior
to the Effective Time and for which DEFS or a contractor or
subcontractor for DEFS is responsible for payment;
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(f) all obligations or liabilities with respect to Will Price, et
al. v, DEFS, OTTCO, GPM Gas Corp., et al. 99CV30, ▇▇▇▇▇▇▇
County District Court, Kansas to the extent related to periods
prior to the Effective Time and to the Assets;
(g) all obligations or liabilities with respect to United States
of America, ex rel. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, v. PanEnergy Corp., et
al. (all cases have been transferred and consolidated into MDL
Docket ▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Wyoming) to the
extent related to periods prior to the Effective Time and to
the Assets;
(h) all obligations or liabilities with respect to the OSHA
investigation regarding the January 8, 2003 contractor
fatality at the Plant Facilities; and
(i) the air emission matters described in Schedule 1.1(1), to the
extent of liability accruing prior to the Effective Time
(provided, however, that if DEFS is obligated to correct any
such air matter after Closing, DEFS liability shall extend
until such time that such matter or matters are corrected).
"Schedules" shall mean any and/or all of the schedules attached to and
made a part of this Agreement.
"Settlement Notice" shall have the meaning given such term in Section
3.5.
"Subject Time" shall mean the current local time then in effect where
the System is located.
"Suspense Account Funds" shall have the meaning given such term in
Section 7.12(a).
"System" shall mean the gas processing plant generally described on the
System Map as the "Waha Plant" and all pipeline, gathering, booster and
compression facilities related thereto.
"System Map" shall mean the maps describing the System attached to this
Agreement as Schedule 1.1.
"Tax" or "Taxes" shall mean any tax, assessment, duty, fee, levy or
similar charge assessed by any Governmental Authority, including any income tax,
ad valorem tax, excise tax, sales tax, use tax, franchise tax, real or personal
property tax, transfer tax, gross receipts tax or employment tax, together with
and including, any and all interest, fines, penalties, assessments, and
additions to Tax resulting from, relating to, or incurred in connection with any
of those or any contest or dispute thereof.
"Tax Return" shall mean any report, statement, form, return or other
document or information required to be supplied to a taxing authority in
connection with Taxes.
"TEPPCO Contract" shall mean, to the extent relating to the System,
that certain
11
Condensate Purchase Contract dated March 1, 2003 between DEFS and TEPPCO Crude
Oil, L.P.
"Third Person" shall mean (i) any Person other than a Party or its
Affiliates and (ii) any Governmental Authority.
"Third Person Claim" shall have the meaning given such term in Section
11.4(c).
"Transaction Documents" shall mean this Agreement, the Coyanosa
Contract, the Transition Services Agreement, the Operating Agreement the
assignments and conveyances, and any other document related to the sale,
transfer, assignment or conveyance of the Assets to BUYER and to be delivered at
Closing.
"Transition Services Agreement" shall mean a Transition Services
Agreement in the form of the attached Exhibit B.
1.2 Other Definitional Provisions. As used in this Agreement, unless
expressly stated otherwise or the context requires otherwise, (a) all references
to an "Article," "Section," or "subsection" shall be to an Article, Section, or
subsection of this Agreement, (b) the words "this Agreement," "hereof,"
"hereunder," "herein," "hereby," or words of similar import shall refer to this
Agreement as a whole and not to a particular Article, Section, subsection,
clause or other subdivision hereof, (c) the words used herein shall include the
masculine, feminine and neuter gender, and the singular and the plural, (d) the
word "including" means "including, without limitation" and (e) the word "day" or
"days" means a calendar day or days, unless otherwise denoted as a Business Day.
1.3 Headings. The headings of the Articles and Sections of this
Agreement and of the Schedules and Exhibits are included for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction or interpretation hereof or thereof.
1.4 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. At Closing, but effective for all purposes as of
the Effective Time, DEFS shall sell, transfer and convey (without any express or
implied warranty of title other than as set forth below in this Section 2.1) to
BUYER the Assets, and BUYER shall assume the Assumed Obligations pursuant to
Section 4.1, all on the terms and conditions provided for in this Agreement and
the Assignment and Conveyance delivered hereunder at Closing, the agreed form of
which is attached hereto as Exhibit G. The sale, transfer and conveyance of the
Assets to BUYER shall be free and clear of all Liens other than Permitted
Encumbrances created by, through or under DEFS or any of its Affiliates, and all
bills of sale or
12
other assignment or conveyance documents transferring or conveying the Assets
to BUYER shall contain such a special warranty of title excepting only
Permitted Encumbrances. Notwithstanding any thing to the contrary, DEFS
obtaining certificates of title for vehicles is not a condition to Closing or a
breach of this Agreement at that time; provided that if DEFS has not obtained a
certificate of title for any of the vehicles prior to Closing, DEFS shall
deliver or cause to be delivered a certificate of title for each such vehicle
to BUYER in a diligent manner, but in no event more than sixty (60) days after
Closing.
2.2 Purchase Price. In consideration for the sale, assignment, transfer
and conveyance of the Assets to BUYER, BUYER shall pay to DEFS the amount of
Sixty Two Million Seventy Thousand Eight Hundred Dollars ($62,070,800.00) (the
"Purchase Price"). The Purchase Price shall be paid by wire transfer of
immediately available funds in the amount set forth in the Preliminary
Settlement Statement to the account designated in the Preliminary Settlement
Statement.
2.3 Purchase Price Allocation. For the purpose of making the requisite
filings, if any, under Section 1060 of the Code and the regulations thereunder,
DEFS and BUYER hereby agree that they will report the federal, state, and other
Tax consequences of the transactions contemplated by this Agreement in a manner
consistent with the purchase price allocation set forth on Schedule 2.3, and in
particular to report the information required by Section 1060(b) of the Code,
and will not take any position inconsistent with it upon examination of any tax
return, in any refund claim, in any income tax litigation, investigation, or
other income tax matter. The Parties acknowledge that the purchase price
allocation pursuant to Schedule 2.3 is solely for income tax purposes.
2.4 Deposit. Immediately upon signing of this Agreement, BUYER shall
pay to DEFS by wire transfer a deposit of One Million Dollars ($1,000,000) (the
"Deposit"). Notwithstanding anything to the contrary, in addition to any and all
other remedies that DEFS may have or become entitled to, by written notice to
BUYER, DEFS may terminate this Agreement if DEFS has not received the Deposit
before the end of the first Business Day following signing of this Agreement. If
the Closing fails to occur on the Closing Date, DEFS shall refund the Deposit to
BUYER within two (2) Business Days unless the Closing failed to occur due to a
material breach of this Agreement by BUYER. If Closing failed to occur due to a
material breach of this Agreement by BUYER, the Deposit shall forever be
forfeited and released to DEFS. If Closing occurs, the Deposit shall be applied
to the Purchase Price in accordance with Section 3.2(d).
ARTICLE III
OTHER TRANSACTIONS, PRORATIONS AND SETTLEMENT
3.1 Other Transactions. At Closing, BUYER shall pay to DEFS the
Purchase Price; provided, however, in order that only one wire transfer will be
necessary, the Purchase Price shall be netted against certain other payment
obligations of DEFS and the BUYER, and the
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actual amount paid at Closing will equal the net obligation of BUYER determined
in accordance with Section 3.2.
3.2 Prorations.
(a) The amount payable to DEFS will be reduced by the amount
of any general property Tax assessed against or pertaining to the
Assets for periods before the Effective Time with respect to any
taxable period that includes the Effective Time, prorated in accordance
with Section 12.3(a).
(b) The amount payable to DEFS will be adjusted up or down by
the amount of any utility charges and other items of expense and the
amount of any deposits or pre-paid items attributable to the operation
of the Assets prior to the Effective Time. Such amounts shall be
prorated as of the Effective Time.
(c) The amount payable to DEFS will be adjusted up or down by
the difference between the Suspense Account Funds receivables and
payables in accordance with Section 7.12.
(d) The amount payable to DEFS will be decreased by the
Deposit.
(e) The amount payable to DEFS will be adjusted up or down by
the difference between the Imbalance Receivables and the Imbalance
Payables in accordance with Section 7.11.
(f) The amount payable to DEFS will be increased by the amount
of BUYER's reimbursement obligation in respect of the Capital Projects
in accordance with Section 7.13.
(g) The amount payable to DEFS will be increased by an
estimate of DEFS' net margin under revenue generating Contracts during
that portion of the month of Closing that is prior to the Effective
Time in accordance with Section 7.16.
(h) The amount payable to DEFS will be increased by 50% of the
actual out of pocket costs incurred or estimated to be incurred by DEFS
to obtain substitute consents for Previously Obtained Consents.
3.3 Preliminary Settlement Statement. Not later than five (5) days
before the Closing Date, DEFS shall deliver to BUYER a written statement (the
"Preliminary Settlement Statement") setting forth the Purchase Price, and the
description and amount of each item to be netted against the Purchase Price that
are described in Section 3.2, with DEFS' calculation of such items in reasonable
detail, based on information then available to DEFS. Prior to delivery of the
Preliminary Settlement Statement, DEFS shall consult with BUYER as to the
contents thereof and shall negotiate with BUYER in good faith as to any
modifications thereto proposed by BUYER. The Preliminary Settlement Statement
shall also set forth wire transfer instructions
14
for the Closing payments. The payment at the Closing shall be the amount set
forth in the Preliminary Settlement Statement.
3.4 Final Settlement Statement. No later than ninety (90) days after
the Closing Date, DEFS shall deliver to BUYER a revised settlement statement
showing in reasonable detail its calculation of the items described in Section
3.2 along with any other amounts that are payable or are to be prorated
hereunder as of the Effective Time (said revised statement and the calculation
thereof shall be referred to as the "Final Settlement Statement"). If DEFS does
not deliver the Final Settlement Statement when required, BUYER may prepare and
deliver it to DEFS, and in such case, DEFS shall have BUYER's objection rights
under Section 3.5.
3.5 Dispute Procedures. The Final Settlement Statement shall become
final and binding on DEFS and BUYER on the 20th day following the date the Final
Settlement Statement is received by BUYER, unless prior to such date BUYER
delivers written notice to DEFS of its disagreement with the Final Settlement
Statement (a "Settlement Notice"). Any Settlement Notice shall set forth BUYER's
proposed changes to the Final Settlement Statement, including an explanation in
reasonable detail of the basis on which BUYER proposes such changes. If BUYER
has timely delivered a Settlement Notice, BUYER and DEFS shall use good faith
efforts to reach written agreement on the disputed items. If the disputed items
have not been resolved by BUYER and DEFS by the 30th day following DEFS' receipt
of a Settlement Notice, any remaining disputed items shall be submitted to the
Independent Accountants for resolution within five (5) Business Days after the
end of the foregoing 30-day period. The fees and expenses of the Independent
Accountants shall be borne fifty percent (50%) by DEFS and fifty percent (50%)
by BUYER. The Independent Accountants' determination of the disputed items shall
be final and binding upon BUYER and DEFS and the Parties hereby waive any and
all rights to dispute such resolution in any manner, including in court, before
an arbiter or appeal. The Independent Accountants shall only have the right to
determine the amounts of any items that are to be reflected on the Final
Settlement Statement and not to interpret any other provision of this Agreement.
3.6 Payments. If the final amount as set forth in the Final Settlement
Statement exceeds the estimated amount as set forth in the Preliminary
Settlement Statement, then BUYER shall pay to DEFS the amount of such excess,
with interest at the Interest Rate. If the final calculated amount as set forth
in the Final Settlement Statement is less than the estimated calculated amount
as set forth in the Preliminary Settlement Statement, then DEFS shall pay to
BUYER the amount of such excess, with interest at the Interest Rate. Any payment
shall be made within three (3) Business Days of the date the Final Settlement
Statement becomes final pursuant to Section 3.5. Nothing contained in this
Article III shall relieve any Party from any obligation to make any other
payments required by this Agreement.
3.7 Special Adjustments. The Parties acknowledge that resolution of an
issue concerning certain contracts described in Schedule 3.7 is not a condition
to Closing. Certain agreements of the Parties concerning this issue are set
forth in Schedule 3.7.
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ARTICLE IV
ASSUMED OBLIGATIONS
4.1 Assumption of Assumed Obligations. Effective on the Effective Time,
BUYER assumes all rights, liabilities, duties, obligations, risk of loss,
Claims, Losses and any related responsibility for the ownership, operation or
use of the Assets and the business related exclusively thereto and any condition
of or on the Assets (including, without limitation, environmental matters and
Environmental Defects) attributable to any period of time, whether before, on or
after the Effective Time; excluding, however, the Retained Liabilities
(collectively, the "Assumed Obligations"). Notwithstanding anything contained in
this Agreement to the contrary, the assumption by BUYER of the Assumed
Obligations shall not excuse or otherwise limit DEFS' indemnity obligations
under Article XL
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DEFS
Except as set forth in any of the Schedules delivered to BUYER, as of
the signing of this Agreement and as of the Closing, DEFS represents and
warrants to BUYER as follows:
5.1 Organization, Good Standing, and Authority. DEFS is a limited
partnership duly formed, validly existing and in good standing under the Laws of
the State of Delaware and has all requisite limited partnership power and
authority to operate the Assets operated by it and to own or otherwise hold the
Assets owned or held by it, and is duly qualified as a foreign organization in
good standing in each State in which the Assets are located. The execution and
delivery of this Agreement and the Transaction Documents to which DEFS is a
party and the consummation by DEFS of the transactions contemplated herein and
therein have been duly and validly authorized by all necessary limited
partnership action by DEFS. This Agreement has been duly executed and delivered
by DEFS. DEFS has all requisite limited partnership power and authority to enter
into and perform this Agreement and the Transaction Documents to which it is a
party, to perform its obligations hereunder and thereunder and to carry out the
transactions contemplated herein and therein.
5.2 Enforceability. This Agreement constitutes and, upon execution and
delivery of the Transaction Documents to which DEFS is a party, such Transaction
Documents will constitute, valid and binding obligations of DEFS, enforceable
against DEFS in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar Laws affecting
creditor's rights generally and general principles of equity.
5.3 No Conflicts. The execution, delivery and performance by DEFS of
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby or thereby by DEFS, will not:
16
(a) Provided all of the DEFS Required Consents and Post
Closing Consents have been obtained, conflict with, constitute a
breach, violation or termination of, give rise to any right of
termination, cancellation or acceleration of or result in the loss of
any right or benefit under, any agreement to which DEFS is a party or
by which any of them or the Assets are bound;
(b) Conflict with or violate the organizational documents of
DEFS, including the limited partnership agreement of DEFS; and
(c) Provided that all of the DEFS Required Consents and Post
Closing Consents have been obtained, violate any Law applicable to DEFS
or the Assets.
5.4 Consents, Approvals, Authorizations and Governmental Regulations;
Permits.
(a) Except (i) for Post-Closing Consents, (ii) as may be
required under the HSR Act, and (iii) as set forth in Schedule 5.4(a)
(the items described in clauses (ii) and (iii) being collectively
referred to as the "DEFS Required Consents"); no order, consent,
waiver, permission, authorization or approval of, or exemption by, or
the giving of notice to or the registration or filing with any
Governmental Authority or Third Person, is necessary for DEFS to (A)
execute, deliver and perform this Agreement or the Transaction
Documents to which it is a party or (B) transfer the Permits.
(b) Except as set forth in Schedule 5.4(b), (i) the Permits
described on Schedule 1.1(c) constitute all of the Permits required or
necessary for DEFS or any of its Affiliates to own the Assets and
operate and maintain the System in the places and in the manner
currently owned or operated (other than immaterial Permits, the absence
of which will not adversely affect BUYER's ability to own or operate
the Assets or expose BUYER to more than de minimis obligations) and
each such Permit is in full force and effect, (ii) DEFS has received no
written notification concerning, and there are no, material violations
that are in existence with respect to such Permits and (iii) no
Proceeding is pending, or to DEFS' Knowledge, threatened with respect
to the revocation, limitation or otherwise relating to any of such
Permits. Notwithstanding anything herein to the contrary, the
provisions of this Section 5.4(b) shall not relate to or cover any
matter relating to or arising out of any Environmental Laws.
5.5 Taxes. Except as set forth in Schedule 5.5:
(a) All Taxes payable by or imposed against DEFS relating to
the Assets or the operation thereof have been fully paid on or before
the due date thereof for payment without penalty or is being contested
in good faith (subject, however, to the possibility of audit
adjustments in respect of open years). DEFS has duly complied with all
withholding Tax and Tax deposit requirements imposed on it in respect
of the Assets.
(b) Except for those not yet due or those which are being
contested in good faith, all Tax Returns that are required to have been
filed for, by, on behalf of or with respect to DEFS relating to the
Assets, or the operation of the System have been filed
17
with the appropriate Governmental Authority and all Taxes shown to be
due and payable on such Tax Returns have been paid in full;
(c) To DEFS' Knowledge, (i) neither DEFS is under audit or
examination by any Governmental Authority, (ii) there are no Claims or
Proceedings now pending or threatened against DEFS with respect to any
Tax or any matters under discussion with any Governmental Authority
relating to any Tax, and (iii) there are no Claims for any additional
Tax asserted by any Governmental Authority against DEFS relating to the
Assets or the operation of the System; and
(d) None of the Assets: (i) is "tax-exempt use property"
within the meaning of Section 168(h) of the Code or (ii) directly or
indirectly secures any debt the interest on which is tax-exempt under
the Code.
5.6 Litigation; Compliance with Laws. Except as described in Schedule
5.6:
(a) There is no injunction, restraining order or Proceeding
pending, or to the Knowledge of DEFS, threatened against DEFS that
restrains or prohibits the consummation of the transactions
contemplated by this Agreement.
(b) There is no Proceeding pending, or to DEFS' Knowledge,
Claim threatened, against or affecting the Assets, or DEFS' ownership
of the Assets or the operation of the System by DEFS.
(c) The System is being operated in compliance with applicable
Laws. Notwithstanding anything herein to the contrary, the provisions
of this Section 5.6(c) shall not relate to or cover Environmental Laws.
5.7 Contracts. Schedule 1.1(e) contains a description of all material
contracts and agreements relating to DEFS' ownership, operation or maintenance
of the Assets as of the date of this Agreement. Except as listed on Schedule
5.7, DEFS (a) is not in material default and there is no event or circumstance
that with notice, or lapse of time or both, would constitute a material event of
default by DEFS under the terms of any of the Contracts and (b) has performed
all of its obligations under the Contracts that have become due in the ordinary
course of business. To DEFS' Knowledge and except as listed on Schedule 5.7, (i)
all of the Contracts (other than those to be entered into in the future) are
enforceable and in full force and effect and (ii) no counter party to any of the
Contracts is in material default under the terms of such Contract.
5.8 Intellectual Property. Except as described in Schedule 5.8, DEFS
has not received any written notice of infringement, misappropriation or
conflict with respect to Intellectual Property from any Person with respect to
the operation of the System. To DEFS' Knowledge, the operation of the System has
not infringed, misappropriated or otherwise conflicted with any patents, patent
applications, patent rights, trademarks, trademark applications, service marks,
service ▇▇▇▇ applications, copyrights, trade names, unregistered copyrights, and
trade secrets of any other Person.
18
5.9 Preferential Rights to Purchase. Except as listed in Schedule 5.9,
there are no preferential or similar rights to purchase any portion of the
Assets.
5.10 Broker's or Finder's Fees. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of DEFS or any of DEFS' Affiliates which is,
or following the Closing would be, an obligation of BUYER.
5.11 Condemnation. Except for litigation matters in which DEFS has been
dismissed and the litigation and Claims identified on Schedule 5.6, as of the
date hereof, there has been no taking (whether permanent, temporary, whole or
partial) of any part of the Assets by reason of condemnation against DEFS, and
to DEFS' Knowledge no such taking has been threatened.
5.12 Benefit Plan Liabilities. At the Effective Time, BUYER shall have
no liability with respect to any Benefit Plans except for liabilities, if any,
encumbering the Assets arising from DEFS' status prior to the Closing as an
ERISA Affiliate of Duke Energy Corporation, which liabilities are included as
Retained Liabilities.
5.13 No Foreign Person. DEFS is not a "foreign person" as defined in
Section 1445 of the Code and in any regulations promulgated thereunder.
5.14 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, planned or being contemplated by DEFS with
respect to DEFS, or the Assets, or to the Knowledge of DEFS, being threatened
against DEFS.
5.15 Advance Receipts/Purchases; Gas Contracts. Other than Imbalances,
DEFS has not, other than in a manner consistent with the normal cycle of billing
(a) received any quantity of natural gas or liquids under any Contract for which
payment will be due in the future, or (b) received prepayments, advance payments
or loans that will require BUYER to perform services or provide natural gas or
gas liquids under any Contract after the Effective Time without payment. Except
as listed on Schedule 5.7, DEFS is not in breach (and would not be in breach
upon the receipt of notice) of its obligations under any of the following of the
Contracts: (i) gas or liquids purchase and sales agreements, (ii) gas storage
agreements, (iii) gas or liquids transportation agreements, and/or (iv)
gathering, treating or processing agreements.
5.16 Rental Payments on Real Property Interests. During the period of
DEFS ownership of the Real Property Interests through the Closing Date, DEFS has
paid or will timely pay all amounts owed thereon.
5.17 Eminent Domain. DEFS has not exercised any power of eminent domain
or condemnation with respect to any real property in or on the Assets, including
the Real Property Interests.
5.18 Operating Statements. To DEFS' Knowledge, the Operating Statements
(a) were prepared using accounting practices and procedures ordinarily used by
DEFS in the preparation
19
of its internally prepared operating statements, consistently applied and (b)
fairly present the costs and results of operations of the Assets for the periods
covered thereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the signing of this Agreement and as of the Closing, BUYER hereby
represents and warrants to DEFS as follows:
6.1 Organization, Good Standing, and Authorization. BUYER is a limited
partnership duly formed, validly existing and in good standing under the Laws of
the State of Delaware. BUYER has all requisite power and authority to enter into
and perform this Agreement and the Transaction Documents to which it is a party,
to perform its obligations hereunder and thereunder and to carry out the
transactions contemplated herein and therein. The execution and delivery of this
Agreement and the Transaction Documents to which it is a party and the
consummation by BUYER of the transactions contemplated herein have been duly and
validly authorized by all necessary action by BUYER. This Agreement has been
duly executed and delivered by BUYER.
6.2 Enforceability. This Agreement constitutes, and upon execution and
delivery of the Transaction Documents to which BUYER is a party, such
Transaction Documents will constitute, valid and binding obligations of BUYER,
enforceable against BUYER in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting creditor's rights generally and general principles of equity.
6.3 No Conflicts. The execution, delivery and performance by BUYER of
this Agreement and the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby or thereby, will not:
(a) Provided that any BUYER Required Consents and Post Closing
Consents have been obtained, conflict with, constitute a breach,
violation or termination of, give rise to any right of termination,
cancellation or acceleration of or result in the loss of any right or
benefit under, any agreement to which BUYER is a party;
(b) Conflict with or violate the organizational documents of
BUYER, including its limited partnership agreement and charter
documents, and
(c) Provided that all of BUYER Required Consents and Post
Closing Consents have been obtained, violate any Law applicable to
BUYER or its properties or assets.
6.4 Consents, Approvals, Authorizations and Governmental Regulations.
Except (i) for Post-Closing Consents, (ii) as may be required under the HSR Act
and (iii) as set forth in Schedule 6.4 (the items described in clauses (ii) and
(iii) being collectively referred to as the "BUYER Required Consents"); no
order, consent, waiver, permission, authorization or approval
20
of, or exemption by, or the giving of notice to or registration or filing with,
any Governmental Authority or Third Person, is necessary for BUYER to execute,
deliver and perform this Agreement or the Transaction Documents to which it will
be a party.
6.5 Litigation. There is no injunction, restraining order or Proceeding
threatened or pending against BUYER that restrains or prohibits the consummation
of the transactions contemplated by this Agreement.
6.6 Independent Investigation. BUYER is knowledgeable in the business
of owning and operating natural gas, natural gas liquids, condensate and refined
product facilities. In making the decision to enter into this Agreement and
consummate the transaction contemplated hereby, BUYER has relied solely on its
own independent due diligence investigations and inspection of the Assets, and
the representations, warranties, covenants and undertakings of DEFS in this
Agreement and the Transaction Documents. BUYER ACKNOWLEDGES THAT IT IS ACQUIRING
THE ASSETS IN THEIR "AS IS, WHERE IS" CONDITION AND STATE OF REPAIR, AND WITH
ALL FAULTS AND DEFECTS, AND THAT EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT
OR THE TRANSACTION DOCUMENTS, DEFS HAS MADE NO REPRESENTATION, WARRANTY OR
COVENANT OF ANY KIND OR NATURE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT
NOT LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, CONFORMITY TO
SAMPLES, MERCHANTABILITY, AND/OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH
ARE, EXCEPT AS OTHERWISE SET OUT IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS,
EXPRESSLY DISCLAIMED BY DEFS AND WAIVED BY BUYER. BUYER FURTHER ACKNOWLEDGES
THAT: (I) THE ASSETS HAVE BEEN USED FOR NATURAL GAS, NATURAL GAS LIQUIDS,
CONDENSATE AND/OR REFINED PRODUCT OPERATIONS AND PHYSICAL CHANGES IN THE ASSETS
AND IN THE LANDS BURDENED THEREBY MAY HAVE OCCURRED AS A RESULT OF SUCH USES AND
(II) THE ASSETS MAY INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, THE LOCATIONS
OF WHICH MAY NOT BE READILY APPARENT BY A PHYSICAL INSPECTION OF THE ASSETS OR
THE LANDS BURDENED THEREBY. EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, DEFS
MAKES NO REPRESENTATION, COVENANT OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS
TO (A) THE ACCURACY OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO BUYER
WITH RESPECT TO THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF
THE ASSETS, PRICING ASSUMPTIONS, QUALITY OR QUANTITY OF THE INTERESTS, FREEDOM
FROM PATENT OR TRADEMARK INFRINGEMENT OR (B) FUTURE VOLUMES OF HYDROCARBONS OR
OTHER PRODUCTS GATHERED, TRANSPORTED, TREATED, STORED OR PROCESSED THROUGH OR AT
THE ASSETS. With respect to any projection or forecast delivered by or on behalf
of DEFS or its Affiliates to BUYER, BUYER acknowledges that (i) there are
uncertainties inherent in attempting to make such projections and forecasts,
(ii) BUYER is familiar with such uncertainties, and (iii) BUYER is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
such projections and forecasts furnished to BUYER.
21
6.7 Broker's or Finder's Fees. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of BUYER or any of its Affiliates which is,
or following the Closing would be, an obligation of DEFS or any of its
Affiliates.
6.8 Available Funds, BUYER will have at Closing, sufficient cash to
enable it to make payment in immediately available funds of the Purchase Price
when due and any other amounts to be paid by it hereunder.
ARTICLE VII
COVENANTS
7.1 Conduct of Business.
(a) Without the prior written consent of BUYER, which consent
shall not be unreasonably withheld or delayed, DEFS covenants and
agrees that from and after the execution of this Agreement and until
the Closing:
(i) DEFS will not sell, transfer, assign, convey or
otherwise dispose of any material Assets other than the sale of
Inventory in the ordinary course of business or the sale or other
disposition of material equipment or other material Personal Property
which is replaced with equipment or other Personal Property of
comparable or better value and utility;
(ii) DEFS will not create or allow the creation of
any Lien other than Permitted Encumbrances on any Asset;
(iii) DEFS will not amend any Contract or Real
Property Interest in any material respect, or terminate any Contract or
Real Property Interest, or enter into any new contracts or agreements
in respect of the Assets performable after the Effective Time, other
than in the ordinary course of business, and BUYER agrees that any such
new contracts or agreement entered into in compliance with this Section
7.1(a)(iii) shall be added to Schedule 1.1(b) or Schedule 1.1(e) and
shall be deemed to be a Real Property Interest or Contract, as the case
maybe;
(iv) Other than capital expenditures that have not
been approved by DEFS' management prior to the date hereof which do not
exceed $50,000 in the aggregate for any project, DEFS will not incur,
or commit to incur any liability or obligation to make capital
expenditures that will become the obligations of BUYER pursuant to
Section 7.13 or which will be payable by BUYER after the Effective
Time;
(b) Unless BUYER otherwise agrees in writing, which agreement
shall not be unreasonably withheld or delayed, DEFS shall;
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(i) cause the Assets to be maintained and operated in
the ordinary course of business in accordance with the past operating
and maintenance practices of DEFS, including regular scheduled
maintenance plans and capital expenditures, and pay or cause to be paid
all costs and expenses in connection therewith when due; provided,
however, that if DEFS believes that it is desirable to depart from its
ordinary course of business with respect to the Assets, it will
promptly advise BUYER of the reasons therefore;
(ii) carry on its business in respect of the Assets
in substantially the same manner as it has heretofore; and
(iii) use reasonable efforts (A) to preserve its
business in respect of the Assets intact, (B) to keep available the
services of the employees involved in the conduct of such business and
(C) to preserve the goodwill of customers having business relations
with DEFS in respect of the Assets, in each case, consistent with past
practice.
7.2 Casualty Loss.
(a) DEFS shall promptly notify BUYER of any Casualty Loss of
which DEFS becomes aware prior to the Closing. If a Casualty Loss
occurs that could reasonably be expected to have a Material Adverse
Effect, DEFS or BUYER shall have the right to extend the Closing Date
for up to 45 days for the purpose of repairing or replacing the Assets
destroyed or damaged by the Casualty Loss. If DEFS does not repair or
replace the Assets destroyed or damaged by a Casualty Loss that could
reasonably be expected to have a Material Adverse Effect and the
Parties are unable to agree on a reduction to the Purchase Price to
compensate BUYER for the Casualty Loss, BUYER may terminate this
Agreement upon fifteen (15) days written notice to DEFS. Unless DEFS
exercises its right to terminate the Agreement under Section 7.6, DEFS
shall repair or replace the Assets destroyed or damaged by a Casualty
Loss if the same is not reasonably expected to have a Material Adverse
Effect.
(b) If this Agreement is not terminated by BUYER as provided
in Section 7.2(a), BUYER'S sole remedy with respect to any Casualty
Loss in respect of Assets which are not repaired or replaced prior to
the Closing is, at BUYER'S election, to (i) reduce the Purchase Price
by an amount estimated by DEFS and agreed to by BUYER to be equal to
the repair or replacement cost of the Assets affected by the Casualty
Loss; provided that, if the Parties cannot agree, then the Closing
shall occur and either Party may submit the determination of the costs
of the Casualty Loss for resolution pursuant to Section 12.8, in which
case any insurance, condemnation or taking proceeds with respect to
such Casualty Loss shall be the sole property of DEFS, or (ii) accept
the Assets with no adjustment to the Purchase Price, but with BUYER
being entitled to receive as BUYER'S sole property all insurance,
condemnation or taking proceeds, on account of such Casualty Loss, plus
any insurance deductible (in which case, such insurance deductible
shall be payable by DEFS).
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7.3 Access, Information and Access Indemnity.
(a) Until Closing, during the business hours of 8:00 a.m. to
5:00 p.m. (local time), Monday through Friday DEFS will continue to
make available at DEFS' offices to BUYER and BUYER's authorized
representatives for examination as BUYER may reasonably request, all
files, including land files, regulatory files, abstracts, title
opinions, engineering data, environmental data or information, reports,
maps, drawings, surveys, books, records, and agreements in DEFS' or its
Affiliates' possession or control relating to the Assets; provided,
however, such material shall not include (i) any proprietary data which
relates to another business of DEFS and is not related to the continued
operation of the Assets, (ii) any information described on Schedule 7.3
subject to Third Person confidentiality agreements for which a consent
or waiver cannot be secured by DEFS after reasonable efforts, or (iii)
the information described on Schedule 7.3 which, if disclosed, would
violate an attorney-client privilege or might constitute a waiver of
rights as to attorney work product or attorney-client privileged
communications.
(b) Subject to Section 7.3(a) above, DEFS shall permit BUYER
and BUYER's authorized representatives to consult with DEFS' employees
during the business hours of 8:00 a.m. to 5:00 p.m. (local time),
Monday through Friday and to conduct, at BUYER's sole risk and expense,
inspections and inventories of the Assets and to examine all Records at
the Plant Facilities over which DEFS has control. DEFS shall also
coordinate, in advance, with BUYER to allow site visits and inspections
at the field sites on Saturdays unless operational conditions would
reasonably prohibit such access. Notwithstanding anything to the
contrary, BUYER shall not conduct any physical environmental
assessments of the Assets.
(c) BUYER SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD THE DEFS
INDEMNITEES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS AND LOSSES
OCCURRING ON OR TO THE ASSETS CAUSED BY THE ACTS OR OMISSIONS OF BUYER,
BUYER'S AFFILIATES OR ANY PERSON ACTING ON BUYER'S OR ITS AFFILIATE'S
BEHALF IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT TO OR IN
CONNECTION WITH THIS AGREEMENT, INCLUDING ANY SITE VISITS AND
ENVIRONMENTAL SAMPLING. BUYER shall comply fully with all rules,
regulations, policies and instructions issued by DEFS or any Third
Person operator regarding BUYER's actions while upon, entering or
leaving any property included in the Assets, including any insurance
requirements that DEFS may impose on contractors authorized to perform
work on any property owned or operated by DEFS.
7.4 Environmental Matters and Post-Closing Access.
(a) BUYER shall purchase the Environmental Insurance and have
the same bound and delivered to DEFS at Closing, with no conditions to
it being effective, including, without limitation, payment of premium
or completing applications. BUYER may, at its option and at its sole
cost, risk and expense, obtain an additional insurance
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policy with respect to Environmental Defects for which DEFS is
obligated to indemnify BUYER hereunder (the "DEFS Defects Policy");
provided, however, that obtaining the DEFS Defects Policy shall not be
a condition to Closing. If BUYER elects to obtain the DEFS Defects
Policy, DEFS shall endeavor to assist BUYER in connection with
obtaining the same.
(b) In connection with any Environmental Defect that DEFS is
obligated to indemnify BUYER hereunder, (i) BUYER shall make available,
and DEFS and its designees shall have the right, from time to time, to
review, all environmental materials related to the Assets, and to have
access to the Assets and BUYER'S utility services from time to time to
effect Remediation, (ii) BUYER shall in good faith fully cooperate with
DEFS and its designees with respect thereto and (iii) DEFS and its
designees shall have the sole and exclusive right to conduct any
Remediation and to interface with Governmental Authorities in
connection therewith. DEFS shall PROTECT, DEFEND, INDEMNIFY AND HOLD
THE BUYER INDEMNITIES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS AND
LOSSES OCCURRING ON OR TO THE ASSETS CAUSED BY THE ACTS OR OMISSIONS OF
DEFS, DEFS' AFFILIATES OR ANY PERSON ACTING ON DEFS' OR DEFS'
AFFILIATES BEHALF IN CONNECTION WITH ANY REMEDIATION CONDUCTED BY DEFS
PURSUANT TO THIS AGREEMENT. DEFS shall comply fully with all rules,
regulations, policies and instructions issued by BUYER or any Third
Person operator regarding DEFS' actions while upon, entering or leaving
any property included in the Assets. Notwithstanding the foregoing,
BUYER shall not impose rules, regulations or instructions that
unreasonably impede or delay DEFS' Remediation activities.
7.5 [Intentionally omitted.]
7.6 DEFS' Right to Terminate. Notwithstanding any provision herein to
the contrary, in the event that DEFS' reasonably anticipated reductions in the
Purchase Price as a result of Section 3.7, any Casualty Losses and DEFS' good
faith estimate of its liability with respect to breaches of representations and
warranties of which DEFS has received notice from BUYER, exceeds five percent
(5%) of the Purchase Price, then, DEFS shall have the right to terminate this
Agreement upon ten (10) days written notice to BUYER; provided, however, that
BUYER shall have the right to require DEFS to Close if BUYER assumes the related
liabilities and obligations and accepts a maximum five percent (5%) reduction of
the Purchase Price as full consideration of such assumption.
7.7 Names. As soon as reasonably possible, but in no event later than
sixty (60) days after Closing, BUYER shall remove the names of DEFS and its
Affiliates, including "Duke" or "DEFS" and all variations thereof, from the
Assets. As soon as reasonably possible after the Closing, BUYER shall make the
requisite filings with, and provide the requisite notices to, the appropriate
Governmental Authorities to reflect that BUYER has title to the Assets.
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7.8 Regulatory Filings; ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing.
(a) BUYER and DEFS will take all commercially reasonable
actions necessary or desirable, and proceed diligently and in good
faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make
all filings with, and to give all notices to, Governmental Authorities
required to accomplish the transactions contemplated by this Agreement.
(b) The Parties shall make any filings required under the HSR
Act on or prior to five (5) days after the date hereof and provide such
information to the FTC as is required in connection with the HSR Act as
soon as practicable after a request therefore.
(c) Notwithstanding any provision herein to the contrary, each
of the Parties will (i) use reasonable efforts to comply as
expeditiously as possible with all lawful requests of Governmental
Authorities for additional information and documents pursuant to the
HSR Act, (ii) not (A) extend any waiting period under the HSR Act or
(B) enter into any voluntary agreement with any Governmental Authority
not to consummate the transactions contemplated by this Agreement,
except with the prior consent of the other Party, and (iii) cooperate
with each other and use reasonable efforts to obtain the requisite
approval of the FTC and DOJ; provided, however, that the Parties are
not obligated to accept any conditional approval or divest any of the
Assets or any of theirs properties.
(d) BUYER will be responsible for paying the filing fees
required with respect to any filing under the HSR Act.
7.9 Preservation of Records. For a period of seven (7) years after the
Closing Date, the Party in possession of the originals of the Records will
retain such Records at its sole cost and expense and will make such Records
available to the other Party upon reasonable notice for inspection and/or
copying, at the expense of the requesting Party, at the headquarters of the
Party in possession (or at such other location in the United States as the Party
in possession may designate in writing to the other Party) at reasonable times
and during regular office hours. If BUYER, at any time, transfers the Assets
directly or indirectly, to a Third Person, then BUYER will provide advance
notice of the transfer, obligate the transferee to maintain the Records as
herein required and will retain access to the Records for the benefit of itself
and DEFS. BUYER agrees that DEFS may retain a copy of the Records.
7.10 Accounting for Excess Inventory. Notwithstanding Section 7.1, DEFS
shall have the right to sell and dispose of any or all of the Excess Inventory
prior to the Effective Time. There shall be no price adjustment or obligation
between the Parties with respect to any Excess Inventory sold by DEFS prior to
the Effective Time or remaining thereafter.
7.11 Imbalances. Schedule 7.11 sets out the actual amounts of the
Imbalance Receivables and the Imbalance Payables as of the date set forth in
such schedule. DEFS shall make a good faith estimate of the Imbalance
Receivables and Imbalance Payables as of the date five (5) days prior to the
Closing Date and update Schedule 7.11 to reflect such estimate. The Imbalance
Receivables shall be for the sole benefit of BUYER and it shall be the sole
obligation of BUYER to discharge the Imbalance Payables. Such amounts shall be
cashed out as between
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the Parties based on the simple average of the daily midpoint prices per MMBtu
for the month following the Effective Time as published in Platts Gas Daily for
Permian Area-Waha. BUYER and DEFS agree to cooperate and to make available to
each other all information necessary to calculate and to confirm and verify the
actual volume and value of Imbalances.
7.12 Suspense Account Funds.
(a) Certain funds otherwise payable to or owed by operators
and/or working, royalty or other interest owners in ▇▇▇▇▇ connected, or
other owners delivering natural gas or liquid hydrocarbons to certain
facilities have been or may be placed in suspense pending resolution of
questions of title, execution of division or transfer orders, or for
similar reasons (the "Suspense Account Funds").
(b) Schedule 7.12 sets out the actual net amount in respect of
the Suspense Account Funds receivables and payables as of the date set
forth in Schedule 7.12. DEFS shall make a good faith estimate of the
net amount in respect of the Suspense Account Funds as of the date five
(5) days prior to the Closing Date, shall update Schedule 7.12 to
reflect such estimate, and in exchange for an adjustment of the amount
payable at Closing in an amount equal to such estimated net amount,
BUYER shall assume and agree to be solely responsible for such amounts.
BUYER and DEFS agree to cooperate and to make available to each other
all information necessary to calculate and to confirm and verify the
actual amount of the net amount with respect to the Suspense Account
Funds.
7.13 Capital Projects. Schedule 7.13 as supplemented from time to time
sets out those capital projects ("Capital Projects") for which BUYER shall have
financial responsibility. DEFS shall have the right to supplement Schedule 7.13
to add non-maintenance related capital projects approved by BUYER pursuant to
Section 7.l(a)(iv) or for which BUYER does not have approval rights because they
do not meet the size to require approval pursuant thereto. BUYER shall reimburse
DEFS at the Closing for DEFS' actual costs paid in connection with the Capital
Projects identified in Schedule 7.13, whether or not DEFS has received an
invoice therefore. All costs and expenses in respect of the Capital Projects
incurred after the Effective Time shall be solely for the account of and payable
by BUYER.
7.14 Employees.
(a) DEFS has provided BUYER with a list of certain of the
field employees of DEFS and its Affiliates who are assigned on a full
time or primary basis to any of the Assets (the "Business Employees")
and, with respect to each Business Employee, the Business Employee's
name, title, and compensation.
(b) BUYER shall make offers of employment to not less than 80%
of all Business Employees. BUYER'S offers of employment to each
Business Employee shall be with substantially the same benefits and
compensation as the employee had with DEFS as of the date hereof.
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(c) BUYER may conduct pre-employment interviews with the
Business Employees and DEFS shall provide reasonable access to such
employees to BUYER to conduct such interviews. No later than thirty
(30) days after the date hereof, BUYER will deliver to DEFS a written
list containing the name and proposed offer (including base pay and
benefits) of all of the Business Employees to whom BUYER intends to
offer employment. Buyer shall make the offers to the Business Employees
on the list given to DEFS. The Business Employees who accept and
actually commence employment with BUYER on the Closing Date (unless
DEFS and BUYER mutually agree to a later commencement date) are
hereinafter collectively referred to as the "Continuing Employees."
(d) With respect to any employees of DEFS or its Affiliates
who perform services with respect to any of the Assets and whose
employment relationship with DEFS or any of its Affiliates is
terminated by DEFS, DEFS shall comply with all applicable Laws in
connection therewith, including the Worker Adjustment and Retraining
Notification Act.
(e) With respect to the Continuing Employees:
(i) If BUYER terminates the employment of any
Continuing Employee within one (1) year after the Closing Date
under circumstances that would have entitled such Continuing
Employee to a severance benefit under DEFS' severance formula
in effect for such employee on the Effective Time, as
described on Schedule 7.14(e)(i), BUYER will pay such
Continuing Employee severance based on such severance benefit
plan taking into account years of service recognized by DEFS
and years of service with BUYER. DEFS shall provide BUYER
prior to Closing with a schedule setting out the severance
benefits payable under the DEFS severance benefit plan for
each Continuing Employee.
(ii) The Continuing Employees shall be eligible to
participate in BUYER's benefit plans in accordance with the
terms thereof. To the extent permitted by Law and BUYER's
benefit plans, and without regard to whether such employees
are located outside of the region of any network providing
coverage under any such plans, (A) BUYER shall, to the extent
permitted under the respective plans, programs and policies,
grant all Continuing Employees credit for their service with
DEFS or its Affiliates for purposes of eligibility to
participate in and vesting credits in BUYER's service award,
vacation programs and policies and retirement plans, (B) for
the year during which such coverage begins, BUYER shall credit
under any medical and/or dental benefit plan maintained by
BUYER all Continuing Employees with any deductibles and
co-payments already incurred during such year under DEFS' (or
its Affiliate's) group health plan, and waive any pre-existing
conditions, exclusions or limitations as to coverage, any
evidence-of-insurability provisions, and any waiting-period
requirements under such plans, and (C) BUYER shall apply
towards any
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deductible requirements and out-of-pocket maximum limits under
such BUYER'S welfare benefit plans that are applicable for the
plan year in which the Closing occurs, any similar deductible
requirements and out-of-pocket maximum limits satisfied by any
Continuing employee under DEFS welfare benefit plan. Prior to
the Closing, DEFS shall prepare and deliver to each Continuing
Employee and request such Continuing Employee to deliver to
BUYER a schedule setting forth the amount of the deductible
and out-of-pocket maximum limits satisfied by each Continuing
Employee under DEFS welfare Benefit Plans with the information
available as of the date the schedule is prepared, which
schedule shall be updated through the Closing as soon as
reasonably practical after the Closing.
(iii) As soon as administratively feasible after the
Closing, and subject to reasonable requirements, BUYER shall
cause the trustee of BUYER'S 401(k) plan trust to accept
direct rollovers from DEFS' 401(k) plan trust for each
Continuing Employee electing the same with respect to a
distribution of his or her vested account thereunder. In
addition, participant promissory notes for any outstanding
loans of Continuing Employees under DEFS' 401(k) plan shall be
rolled over to BUYER'S 401(k) plan trust, to the extent
permitted by Law, DEFS' 401(k) plan and BUYER'S 401(k) plan.
If any Continuing Employee does not rollover his or her
account to BUYER'S 401(k) plan, such Continuing Employee may
continue to participate in DEFS' 401(k) plan as a terminated
participant in accordance with the terms thereof, and DEFS
shall retain all responsibility for the management and
administration of such Continuing Employee's account balances
under DEFS' 40l(k) plan.
(iv) The number of vacation days that each Continuing
Employee shall be entitled under BUYER'S vacation policies for
calendar year 2004 shall be no less than the number of
remaining vacation days to which such employee would have been
entitled for calendar year 2004 (determined assuming that such
employee worked for the full calendar year) under DEFS'
vacation policies determined as of the Effective Time, which
such employee has not used and for which such employee has not
been paid by DEFS. Promptly following the Closing, DEFS shall
provide BUYER with a written exhibit showing the number of
remaining vacation days for each Continuing Employee. If, in
DEFS' opinion, it is required to pay employees for unused
vacation accrued under DEFS' vacation policy as determined as
of the Effective Time, DEFS shall pay such amount and BUYER
shall reimburse DEFS for a portion thereof, which portion
shall be calculated by multiplying such amount by a fraction,
the numerator of which is the number of months remaining in
the year in which Closing occurs and the denominator of which
is twelve.
(f) Except as may otherwise be approved by DEFS in writing for
the six (6) month period following the Closing Date, if BUYER or any of
its Affiliates directly or indirectly (including as an employee, a
contractor or an employee of a contractor or subcontractor) retain the
services of any Business Employee to whom DEFS paid severance payments
or
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benefits because the employment of such Business Employee with DEFS was
terminated within sixty (60) days of the Effective Time, BUYER shall
immediately reimburse DEFS the actual amount or value of severance pay
that DEFS paid to such Business Employee. Notwithstanding the
foregoing, this section 7.14(f) shall not apply in respect of employees
of contractors or subcontractors of BUYER who are performing similar
services for customers of such contractor or subcontractor other than
BUYER and its Affiliates in the area of BUYER'S operations.
7.15 Like-kind Exchange. So long as it does not delay the Closing and
DEFS pays the transaction costs for such exchange, DEFS shall have the right at
any time prior to Closing to assign all or a portion of its rights (but not its
obligations) under this Agreement to a qualified intermediary in order to
accomplish the transactions contemplated by this Agreement in a manner that
would comply, either in whole or in part, with the requirements of a like-kind
exchange pursuant to Section 1031 of the Code. If DEFS assigns its rights under
this Agreement for this purpose, DEFS shall provide BUYER with prior written
notice and BUYER agrees that, if so requested by DEFS, it will (a) provide a
written consent to DEFS' assignment of its rights in this Agreement for the sole
purpose herein described and (b) pay the Purchase Price into a qualified escrow
or qualified trust account at Closing as directed in writing by DEFS. Any
assignment of this Agreement to a qualified intermediary shall not release DEFS
from any of its liabilities or obligations to BUYER under this Agreement. DEFS
shall be solely responsible to designate and obtain exchange property and to
otherwise comply with Section 1031 of the Code. The rights of the Parties shall
not be affected by any determination that the transaction does not qualify as a
like-kind exchange.
7.16 Credits and Receipts. With respect to the month in which Closing
occurs, revenues will be prorated between the Parties based upon the number of
days that have elapsed in the month. Subject to the foregoing and the other
provisions hereof (including the indemnification provisions hereof), all monies,
proceeds, receipts, credits and income attributable to the Assets (as determined
in accordance with GAAP) (i) for all periods of time at and after the Effective
Time, shall be the sole property and entitlement of BUYER, and, to the extent
received by DEFS or one of its Affiliates, shall be promptly accounted for and
transmitted to BUYER and (ii) for all periods of time prior to the Effective
Time, shall be the sole property and entitlement of DEFS and, to the extent
received by BUYER, shall be promptly accounted for and transmitted to DEFS.
After Closing, regardless of when and by whom the actual invoice or demand for
payment is received, (a) DEFS shall pay and be responsible for all Retained
Liabilities and (b) BUYER shall pay and be responsible for all Assumed
Obligations.
7.17 Previously Obtained Consents. To the extent that there has not
been an adjustment to the Purchase Price with respect thereto, if DEFS bears out
of pocket costs to obtain any substitute consents for Previously Obtained
Consents, BUYER shall reimburse DEFS 50% of such costs.
7.18 Vehicles. The vehicles that are listed on Schedule 1.1(d) may be
conveyed to BUYER from Automotive Resources International, LLC ("ART") and such
vehicles will also be included within the conveyance documents from DEFS to
BUYER. However, if DEFS has not
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obtained a certificate of title from ARI for any of the vehicles prior to
closing, DEFS will cause ARI to deliver a certificate of title to the vehicles
directly to BUYER.
7.19 Cooperation and Reasonable Efforts. The Parties agree to cooperate
with each other and to use commercially reasonable efforts to cause all of the
conditions precedent to Closing to be satisfied as soon as practicable.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 DEFS' Conditions. The obligation of DEFS to close is subject to the
satisfaction of the following conditions, any of which may be waived in its sole
discretion:
(a) The representations and warranties of BUYER contained in
Article VI hereof are true and correct on and as of the Closing, except
for breaches that individually or in the aggregate are not reasonably
expected to cause a Material Adverse Effect;
(b) BUYER shall have performed in all material respects the
obligations, covenants and agreements of BUYER contained herein and
required before Closing.
(c) No Proceeding shall be pending or threatened which seeks
to restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) All of the DEFS Required Consents, BUYER Required Consents
and consents or approvals under the HSR Act (or expiration of the
waiting period) shall have been obtained;
(e) DEFS shall have received BUYER's wire transfer of the
amount due with respect to the Purchase Price (as set forth in the
Preliminary Settlement Statement).
(f) The Environmental Insurance has been delivered to DEFS.
8.2 BUYER's Conditions. The obligation of BUYER to close is subject to
the satisfaction of the following conditions, any of which may be waived in its
sole discretion:
(a) The representations and warranties of DEFS contained in
Article V shall be true and correct on and as of the Closing (except
for representations and warranties that, in accordance with their terms
speak only as of an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date)
except for breaches that individually or in the aggregate are not
reasonably expected to cause a Material Adverse Effect;
(b) DEFS shall have performed, in all material respects, the
obligations, covenants and agreements of DEFS contained herein and
required before Closing;
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(c) No Proceeding shall be pending or threatened which would
restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement.
(d) All of the DEFS Required Consents, BUYER Required Consents
and consents or approvals under the HSR Act (or expiration of the
waiting period) shall have been obtained; provided, however, that
failure to obtain any DEFS Required Consent shall not be a condition of
BUYER to close if DEFS agrees in writing to amend Schedule 11.2(c) to
include liabilities arising from failure to obtain each such DEFS
Required Consent.
(e) There shall have been no event or occurrence that,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
ARTICLE IX
CLOSING
9.1 Time and Place of Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.
Subject Time on March 1, 2004 in the offices of DEFS in Denver, Colorado or such
other time and place as the Parties agree to in writing (the "Closing Date"),
and shall be effective as of the Effective Time.
9.2 Deliveries at Closing. At the Closing,
(a) DEFS will execute and deliver or caused to be executed and
delivered to BUYER:
(i) Each of the Transaction Documents to which DEFS,
or any of its Affiliates are a party;
(ii) Certificates issued by appropriate Governmental
Authorities evidencing the good standing and existence of DEFS
in Delaware, as of a date not more than thirty (30) days prior
to the Closing Date.
(iii) A certificate of a corporate officer or other
authorized person dated the Closing Date, certifying on behalf
of DEFS that the conditions in Sections 8.2(a) and 8.2(b) have
been fulfilled.
(iv) A legal opinion rendered by DEFS' corporate
counsel in substantially the form attached as Exhibit C-1.
(v) The Transition Services Agreement.
(vi) The Coyanosa Agreement.
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(vii) The Operating Agreement
(b) BUYER will execute and deliver or caused to be executed
and delivered to DEFS:
(i) Each of the Transaction Documents to which BUYER
or BUYER's Affiliates are a party;
(ii) Certificates issued by appropriate Governmental
Authorities evidencing the good standing and existence of
BUYER in Delaware, as of a date not more than thirty (30) days
prior to the Closing Date.
(iii) A certificate of a corporate officer or other
authorized person dated the Closing Date certifying on behalf
of BUYER that the conditions in Sections 8.1 (a) and 8.1(b)
have been fulfilled.
(iv) Legal opinion rendered by BUYER'S corporate
counsel in substantially the form attached as Exhibit C-2.
(v) A wire transfer to DEFS of the amount due with
respect to the Purchase Price (as set forth in the Preliminary
Settlement Statement).
(vi) The Transition Services Agreement.
(vii) The Coyanosa Agreement.
(viii) The Environmental Insurance.
(ix) The Operating Agreement
ARTICLE X
TERMINATION
10.1 Termination at or Prior to Closing. This Agreement may be
terminated and the transactions contemplated hereby abandoned as follows:
(a) DEFS and BUYER may elect to terminate this Agreement at
any time prior to the Closing by mutual written consent of the Parties;
(b) Either Party by written notice to the other Party may
terminate this Agreement if the Closing shall not have occurred on or
before March 1, 2004; provided, however, that a Party may not terminate
this Agreement if such Party is at such time in material breach of any
provision of this Agreement;
33
(c) Either Party may terminate this Agreement at any time on
or prior to the Closing if the other Party shall have materially
breached any representations, warranties or covenants of such other
Party herein contained and the same is not cured within thirty (30)
days after receipt of written notice thereof from the non-breaching
Party; and
(d) By written notice to BUYER, DEFS may terminate this
Agreement if DEFS has not timely received the Deposit as provided in
Section 2.4.
(e) Either Party may terminate this Agreement to the extent
such termination is expressly authorized by another provision of this
Agreement.
10.2 Effect of Termination. In the event that Closing does not occur as
a result of either Party exercising its right to terminate pursuant to Section
10.1, then neither Party shall have any further rights or obligations under this
Agreement, except that (i) nothing herein shall relieve either Party from any
liability for any willful breach of this Agreement, and (ii) the provisions of
Section 2.4, Section 7.3(c) and Article XII shall survive any termination of
this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by BUYER. Effective upon Closing, BUYER shall
defend, indemnify and hold harmless DEFS and its Affiliates, and all of its and
their directors, officers, employees, partners, members, contractors, agents,
and representatives (collectively, the "DEFS Indemnitees") from and against any
and all Losses asserted against, resulting from, imposed upon or incurred by any
of the DEFS Indemnitees as a result of or arising out of:
(a) the breach of any of the representations, warranties,
covenants, or agreements of BUYER contained in this Agreement;
(b) to the extent that DEFS is not required to indemnify BUYER
pursuant to Section 11.2, the Assumed Obligations; and
(c) to the extent that DEFS is not required to indemnify BUYER
pursuant to Section 11.2, all liabilities or obligations of any kind or
nature resulting from or arising out of the ownership, use or operation
of the Assets by BUYER, arising out of or relating to periods on and
after the Effective Time.
(d) All liabilities or obligations of any kind or nature
resulting from or arising out of the failure to obtain any DEFS
Required Consents.
11.2 Indemnification by DEFS. Effective upon Closing, DEFS shall
defend, indemnify and hold harmless BUYER and its Affiliates, and all of its and
their directors, officers, employees, partners, members, contractors, agents,
and representatives (collectively, the
34
"BUYER Indemnitees") from and against any and all Losses asserted against,
resulting from, imposed upon or incurred by any of the BUYER Indemnitees as a
result of or arising out of:
(a) the breach of any of the representations or warranties of
DEFS contained in Article 5 of this Agreement;
(b) any Retained Liabilities and the breach of any of the
covenants or agreements of DEFS contained in this Agreement;
(c) the matters described in Schedule 11.2(c); and
(d) with respect to obligations to make payments that are
incurred during the period from and after December 1, 2003 until the
Effective Time, failure by DEFS to calculate amounts owed and make
payments under the Contracts when due and in a manner consistent with
DEFS practices during the period covered by the Operating Statements.
11.3 Deductibles, Caps, Survival and Certain Limitations.
(a) Subject to this Section 11.3, all representations,
warranties, covenants and indemnities made by the Parties in this
Agreement or pursuant hereto shall survive the Closing as hereinafter
provided, and shall not be merged into any instruments or agreements
delivered at Closing.
(b) With respect to the obligations of DEFS:
(i) Under Section ll.2(a):
(A) none of the BUYER Indemnitees shall
be entitled to assert any right to
indemnification after two (2) years
from the Effective Time;
(B) none of the BUYER Indemnitees shall
be entitled to assert any right to
indemnification unless the
individual claim or series of
related claims which arise out of
substantially the same facts and
circumstances exceed $25,000;
(C) none of the BUYER Indemnitees shall
be entitled to assert any right to
indemnification unless such claims
in the aggregate exceed $250,000,
and then only to the extent that
all such claims exceed said amount;
and
(D) none of the BUYER Indemnitees shall
be entitled to assert any right to
indemnification to the extent such
claims exceed in the aggregate ten
percent (10%) of the Purchase
Price.
35
(ii) Under Section 11.2(d), none of the BUYER
Indemnitees shall be entitled to assert any right to indemnification
after two (2) years from the Effective Time.
(c) The claim for indemnity under this Agreement made by a
Party Indemnitee shall be in writing, be based upon a Claim that is
actually asserted (and, with respect to a BUYER Indemnitee, be
delivered in good faith prior to the respective survival period under
Section 11.3(b)), and specify in reasonable detail the specific nature
of the Claim for indemnification hereunder ("Claim Notice"). Any such
claim that is described in a timely delivered Claim Notice (and
substantially related claims arising out of the same facts or
circumstances) shall survive with respect to the specific matter
described therein; provided, however, that any such claim by any BUYER
Indemnitee involving an Environmental Defect shall terminate at the
earlier of:
(i) The time that DEFS or another Person designee
receives closure from a Governmental Authority of the respective
Environmental Defect; or
(ii) 365 days have lapsed after DEFS or another
Person provided notice of completion of such cleanup activity to the
Governmental Authority that has actually asserted jurisdiction over
such matter; or
(iii) A Governmental Authority having appropriate
jurisdiction has issued a final determination that there was not a
violation of Environmental Law with respect thereto or there is no
longer a violation of Environmental Law with respect thereto.
(d) Notwithstanding anything contained herein to the contrary,
in no event shall DEFS be obligated under this Agreement to indemnify
(or be otherwise liable hereunder in any way whatsoever to) any of the
BUYER Indemnitees with respect to a breach of any representation or
warranty, if BUYER had Knowledge thereof at Closing and failed to
notify DEFS in writing of such breach prior to Closing.
(e) Section 11.2 sets forth BUYER'S sole and exclusive remedy
with respect to Environmental Defects affecting the Assets.
11.4 Notice of Asserted Liability; Opportunity to Defend.
(a) All claims for indemnification hereunder shall be asserted
and handled pursuant to this Section 11.4. Any person claiming
indemnification hereunder is referred to herein as the "Indemnified
Party" or "Indemnitee" and any person against whom such claims are
asserted hereunder is referred to herein as the "Indemnifying Party" or
"Indemnitor."
(b) In the event that any Claim is asserted against or any
Loss is sought to be collected from an Indemnifying Party, the
Indemnified Party shall with reasonable promptness provide to the
Indemnifying Party a Claim Notice. The failure to give any such Claim
Notice shall not otherwise affect the rights of the Indemnified Party
to
36
indemnification hereunder unless the Indemnified Party has proceeded to
contest, defend or settle the Claim or remedy a Loss with respect to
which it has failed to give a Claim Notice to the Indemnifying Party.
Additionally, to the extent the Indemnifying Party is prejudiced
thereby, the failure to provide a Claim Notice to the Indemnifying
Party shall relieve the Indemnifying Party from liability for such
Claims and Losses that it may have to the Indemnified Party, but only
to the extent the liability for such Claims or Losses is directly
attributable to such failure to provide the Claim Notice.
(c) The Indemnifying Party shall have thirty (30) days from
the personal delivery or receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not it disputes
the liability to the Indemnified Party hereunder with respect to the
Claim or Loss, and in the event of a dispute, such dispute shall be
resolved in the manner set forth in Section 12.8 hereof, (ii) in the
case where Losses are asserted against or sought to be collected from
an Indemnified Party by the Indemnified Party, whether or not the
Indemnifying Party desires at its own sole cost and expense to attempt
to remedy such Losses or (iii) in the case where Claims are asserted
against or sought to be collected from an Indemnified Party by a Third
Person ("Third Person Claim"), whether or not the Indemnifying Party
desires at its own sole cost and expense to defend the Indemnified
Party against such Third Person Claim; provided, however, that any
Indemnified Party is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the
Indemnifying Party (and of which it shall have given notice and
opportunity to comment to the Indemnifying Party) and not prejudicial
to the Indemnifying Party.
(d) If the Indemnifying Party does not give notice to the
Indemnified Party of its election to contest and defend any such Third
Person Claim within the Notice Period, then the Indemnifying Party
shall be bound by the result obtained with respect thereto by the
Indemnified Party and shall be responsible for all costs incurred in
connection therewith.
(e) If the Indemnifying Party is obligated to defend and
indemnify the Indemnified Party, and the Parties have a conflict of
interest with respect to any such Third Person Claim, then the
Indemnified Party may, in its sole discretion, separately and
independently contest and defend such Third Person Claim, and the
Indemnifying Party shall be bound by the result obtained with respect
thereto by the Indemnified Party and shall be responsible for all costs
incurred in connection therewith.
(f) In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend
the Indemnified Party against Third Person Claim, the Indemnifying
Party shall have the right to defend all appropriate Proceedings, and
with counsel of its own choosing (but reasonably satisfactory to the
Indemnified Party) and such Proceedings shall be promptly settled or
prosecuted by it to a final conclusion. If the Indemnified Party
desires to participate in, but not control, any such defense or
settlement it may do so at its sole cost and expense. If the
Indemnified
37
Party joins in any such Third Person Claim, the Indemnifying Party
shall have full authority to determine all action to be taken with
respect thereto.
(g) If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel
in contesting any Third Person Claim and in making any counterclaim
against the Third Person asserting the Third Person Claim, or any
cross-complaint against any person. No Third Person Claim may be
settled or otherwise compromised without the prior written consent of
the Indemnifying Party.
(h) At any time after the commencement of defense of any Third
Person Claim, the Indemnifying Party may request the Indemnified Party
to agree in writing to the abandonment of such contest or to the
payment or compromise by the Indemnifying Party of the asserted Third
Person Claim, but only if the Indemnifying Party agrees in writing to
be solely liable for such Third Person Claim; whereupon such action
shall be taken unless the Indemnified Party determines that the contest
should be continued and notifies the Indemnifying Party in writing
within fifteen (15) days of such request from the Indemnifying Party.
In the event that the Indemnified Party determines that the contest
should be continued, the amount for which the Indemnifying Party would
otherwise be liable hereunder shall not exceed the amount which the
Indemnifying Party had agreed to pay to compromise such Third Person
Claim; provided that, the other Person to the contested Third Person
Claim had agreed in writing to accept such amount in payment or
compromise of the Third Person Claim as of the time the Indemnifying
Party made its request therefore to the Indemnified Party, and further
provided that, under such proposed compromise, the Indemnified Party
would be fully and completely released from any further liability or
obligation with respect to the matters which are the subject of such
contested Third Person Claim.
11.5 Exclusive Remedy. AS BETWEEN THE BUYER INDEMNITEES AND THE DEFS
INDEMNITEES, AFTER CLOSING (A) THE EXPRESS INDEMNIFICATION PROVISIONS SET FORTH
IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS WILL BE THE SOLE AND EXCLUSIVE
RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT TO SAID AGREEMENTS,
THE EVENTS GIVING RISE THERETO, AND THE TRANSACTIONS PROVIDED FOR THEREIN OR
CONTEMPLATED THEREBY AND (B) NEITHER PARTY NOR ANY OF ITS RESPECTIVE SUCCESSORS
OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST THE OTHER PARTY OR ITS AFFILIATES OTHER
THAN AS IS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE TRANSACTION DOCUMENTS.
11.6 Negligence and Strict Liability Waiver. WITHOUT LIMITING OR
ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS
AGREEMENT AND THE TRANSACTION DOCUMENTS, AN INDEMNIFIED PARTY SHALL BE ENTITLED
TO INDEMNIFICATION UNDER THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF,
38
REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION
OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE,
STRICT LIABILITY, OR VIOLATION OF ANY LAW OF OR BY SUCH INDEMNIFIED PARTY.
11.7 DTPA Waiver. TO THE EXTENT APPLICABLE TO THE INTERESTS OR ANY
PORTION THEREOF, BUYER HEREBY WAIVES ITS RIGHTS UNDER THE PROVISIONS OF THE
TEXAS DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41
THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), OF
THE
TEXAS BUSINESS & COMMERCIAL CODE (A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS
AND PROTECTIONS). AFTER CONSULTATION WITH AN ATTORNEY OF ITS CHOICE, BUYER
VOLUNTARILY CONSENTS TO THIS WAIVER.
11.8 Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, IN NO EVENT SHALL EITHER DEFS OR BUYER BE LIABLE TO THE OTHER,
OR TO THE OTHER'S INDEMNITEES, UNDER THIS AGREEMENT OR ANY OF THE TRANSACTION
DOCUMENTS FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE, CONSEQUENTIAL
(INCLUDING ANY LOSS OF THROUGHPUT ON THE ASSETS), SPECIAL OR INCIDENTAL DAMAGES
OR LOSS OF PROFITS; PROVIDED THAT, IF ANY OF THE DEFS INDEMNITEES OR BUYER
INDEMNITEES IS HELD LIABLE TO A THIRD PERSON FOR ANY SUCH DAMAGES AND THE
INDEMNITOR IS OBLIGATED TO INDEMNIFY SUCH DEFS INDEMNITEES OR BUYER INDEMNITEES
FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES, THE INDEMNITOR SHALL BE LIABLE
FOR, AND OBLIGATED TO REIMBURSE SUCH INDEMNITEES FOR SUCH DAMAGES.
11.9 Bold and/or Capitalized Letters. THE PARTIES AGREE THAT THE BOLD
AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT CONSTITUTE CONSPICUOUS LEGENDS.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Expenses. Each of DEFS and BUYER WILL bear its own costs and
expenses (including legal fees and expenses) incurred in connection with the
negotiation of this Agreement and the transactions contemplated hereby.
12.2 Further Assurances. From time to time, and without further
consideration, each Party will execute and deliver to the other Party such
documents and take such actions as the other Party may reasonably request in
order to more effectively implement and carry into effect the transactions
contemplated by this Agreement. Without limiting the preceding sentence, DEFS
shall cooperate with BUYER with respect to (a) transitioning the protest and/or
appeal of
39
property Tax assessments and (b) providing reasonable access during normal
business hours to non-privileged documents, records and information (including
access to personnel familiar therewith and the right, at BUYER'S cost, to make
copies thereof) retained by or under the direct or indirect control of DEFS and
that are or may become relevant to BUYER insofar as such documents, records and
information relate to (i) DEFS ownership, operation or maintenance of the Assets
prior to the Closing or (ii) the handling of Claims assumed by BUYER pursuant to
this Agreement; provided, however, that BUYER shall bear all third party costs
reasonably incurred by DEFS in responding to such requests by BUYER.
12.3 Apportionment of Property Taxes; Transfer Taxes; and Recording
Fees.
(a) Prior to the Closing, DEFS shall determine, in accordance
with this Section 12.3, the portion of general property Tax
attributable to the period from January 1 (of the year in which Closing
occurs) to the Effective Time (the "DEFS Property Tax"). DEFS shall pay
the amount of the DEFS Property Tax to BUYER at Closing pursuant to the
adjustment provisions of Section 3.2. The DEFS Property Tax shall be an
amount equal to the product of (i) the amount of such general property
Tax for the entire taxable period that includes the Effective Time (or,
with respect to any property Tax, the amount of such general property
Tax for the immediately preceding taxable period in the case of those
Assets, if any, for which such general property Tax for the current
period cannot be determined), times (ii) a fraction, the numerator of
which is the number of days from January 1 (of the year in which
Closing occurs) to the Effective Time and the denominator of which is
the total number of days in the entire taxable period. Notwithstanding
anything in this Agreement to the contrary, no further adjustment shall
be made for such general property Tax, BUYER hereby agreeing to assume
the payment of all such general property Tax effective upon the
Closing. If either party receives a statement or invoice concerning
property Taxes and such statement relates to properties in addition to
the Assets, the Parties will cooperate in good faith to apportion and
timely pay such statement.
(b) DEFS and BUYER believe that this purchase and sale of the
Assets is exempt from or is otherwise not subject to any and all sales,
use, transfer, or similar Taxes. If any such sales, transfer, use or
similar Taxes are due or should hereafter become due (including penalty
and interest thereon) by reason of this transaction, DEFS shall timely
pay and solely bear all such type of Taxes.
(c) DEFS shall record all assignments and conveyances of Real
Property Interests with the appropriate Governmental Authorities. BUYER
shall reimburse DEFS for all documentary, filing, and recording fees
incurred in connection with the filing and recording of the instruments
of conveyance. As soon as practicable after Closing, DEFS shall provide
BUYER with recorded copies of all documents conveying the Assets to
BUYER.
12.4 Assignment. Except as specifically permitted by Section 7.15,
neither Party may assign this Agreement or any of its rights or obligations
arising hereunder without the prior
40
written consent of the other Party; provided, however, that, without the consent
of DEFS, BUYER may, without relieving BUYER from its liabilities hereunder, (a)
assign this Agreement, and its rights and obligations hereunder, to an Affiliate
of BUYER or to an entity formed, controlled and primarily owned by BUYER, and/or
(b) collaterally assign this Agreement to any entity providing financing to
BUYER.
12.5 Entire Agreement, Amendments and Waiver. This Agreement, together
with the Transaction Documents and all certificates, documents, instruments and
writings that are delivered pursuant hereto and thereto contain the entire
understanding of the Parties with respect to the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof; provided that the Confidentiality
Agreement (which is hereby ratified) shall terminate upon Closing. This
Agreement may be amended, superseded or canceled only by a written instrument
duly executed by the Parties specifically stating that it amends, supersedes or
cancels this Agreement. Any of the terms of this Agreement and any condition to
a Party's obligations hereunder may be waived only in writing by that Party
specifically stating that it waives a term or condition hereof. No waiver by
either Party of any one or more conditions or defaults by the other in
performance of any of the provisions of this Agreement shall operate or be
construed as a waiver of any future conditions or defaults, whether of a like or
different character, nor shall the waiver constitute a continuing waiver unless
otherwise expressly provided.
12.6 Severability. Each portion of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
12.7 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.8 Governing Law, Dispute Resolution and Arbitration.
(a) Governing Law. This Agreement shall be governed by,
enforced in accordance with, and interpreted under, the Laws of the
State of
Texas, without reference to conflicts of Laws principles.
(b) Negotiation. In the event of any Arbitrable Dispute, the
Parties shall promptly seek to resolve any such Arbitrable Dispute by
negotiations between senior executives of the Parties who have
authority to settle the Arbitrable Dispute. When a Party believes there
is an Arbitrable Dispute under this Agreement that Party will promptly
give the other Party written notice of the Arbitrable Dispute. Within
thirty (30) days after receipt of such notice, the receiving Party
shall submit to the other a written response. Both the notice and
response shall include (i) a statement of each Party's position and a
summary of the evidence and arguments supporting such position, and
(ii) the name, title, fax number, and telephone number of the executive
or executives who will represent that Party. In the event the
Arbitrable Dispute involves a claim arising out
41
of the actions of any Person not a signatory to this Agreement, the
receiving Party shall have such additional time as necessary, not to
exceed an additional thirty (30) days, to investigate the Arbitrable
Dispute before submitting a written response. The executives shall meet
at a mutually acceptable time and place within fifteen (15) days after
the date of the response and thereafter as often as they reasonably
deem necessary to exchange relevant information and to attempt to
resolve the Arbitrable Dispute. If one of the executives intends to be
accompanied at a meeting by an attorney, the other executive shall be
given at least five (5) Business Days' notice of such intention and may
also be accompanied by an attorney.
(c) Failure to Resolve. If the Arbitrable Dispute has not been
resolved within sixty (60) days after the date of the response given
pursuant to Section 12.8(b) above, or such additional time, if any,
that the Parties mutually agree to in writing, or if the Party
receiving such notice denies the applicability of the provisions of
Section 12.8(b) or otherwise refuses to participate under the
provisions of Section 12.8(b), either Party may initiate binding
arbitration pursuant to the provisions of Section 12.8(d) below.
(d) Arbitration. Any Arbitrable Disputes not settled pursuant
to the foregoing provisions shall be resolved through the use of
binding arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("Arbitration Rules"), as
supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States
Code) and in accordance with the following provisions:
(i) If there is any inconsistency between this
Section 12.8(d) and the Arbitration Rules or the Federal Arbitration
Act, the terms of this Section 12.8(d) will control the rights and
obligations of the Parties.
(ii) Arbitration shall be initiated by a Party
serving written notice, via certified mail, on the other Party that the
first Party elects to refer the Arbitrable Dispute to binding
arbitration, along with the name of the arbitrator appointed by the
Party demanding arbitration and a statement of the matter in
controversy. Within fifteen (15) days after receipt of such demand for
arbitration, the receiving Party shall name its arbitrator. If the
receiving Party fails or refuses to name its arbitrator within such
fifteen (15) day period, the second arbitrator shall be appointed, upon
request of the Party demanding arbitration, by the Chief U.S. District
Court Judge for the Southern District of
Texas, or such other person
designated by such judge. The two arbitrators so selected shall within
fifteen (15) days after their designation select a third arbitrator;
provided, however, that if the two arbitrators are not able to agree on
a third arbitrator within such fifteen (15) day period, either Party
may request the Chief U.S. District Court Judge for the Southern
District of
Texas, or such other person designated by such judge to
select the third arbitrator as soon as possible. In the event the Judge
declines to appoint an arbitrator, appointment shall be made, upon
application of either Party, pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. If any arbitrator
refuses or fails to fulfill his or her duties hereunder, such
arbitrator shall be replaced by
42
the Party which selected such arbitrator (or if such arbitrator was
selected by another Person, through the procedure which such arbitrator
was selected) pursuant to the foregoing provisions.
(iii) The hearing will be conducted in Houston,
Texas, no later than sixty (60) days following the selection of the
arbitrators or thirty (30) days after all prehearing discovery has been
completed, whichever is later, at which the Parties shall present such
evidence and witnesses as they may choose, with or without counsel. The
Parties and the arbitrators should proceed diligently and in good faith
in order that the award may be made as promptly as possible.
(iv) Except as provided in the Federal Arbitration
Act, the decision of the arbitrators will be binding on and
non-appealable by the Parties. Any such decision may be filed in any
court of competent jurisdiction and may be enforced by any Party as a
final judgment in such court.
(v) The arbitrators shall have no right or authority
to grant or award damages that are precluded by Section 11.8.
(vi) The Federal Rules of Civil Procedure, as
modified or supplemented by the local rules of civil procedure for the
U.S. District Court of the Southern District of
Texas, shall apply in
the arbitration. The Parties shall make their witnesses available in a
timely manner for discovery pursuant to such rules. If a Party fails to
comply with this discovery agreement within the time established by the
arbitrators, after resolving any discovery disputes, the arbitrators
may take such failure to comply into consideration in reaching their
decision. All discovery disputes shall be resolved by the arbitrators
pursuant to the procedures set forth in the Federal Rules of Civil
Procedure.
(vii) Adherence to formal rules of evidence shall not
be required. The arbitrators shall consider any evidence and testimony
that they determine to be relevant.
(viii) The Parties hereby request that the
arbitrators render their decision within thirty (30) days following
conclusion of the hearing.
(ix) The defenses of statute of limitations and
laches shall be tolled from and after the date a Party gives the other
Party written notice of an Arbitrable Dispute as provided in Section
12.8(b) above until such time as the Arbitrable Dispute has been
resolved pursuant to Section 12.8(b), or an arbitration award has been
entered pursuant to this Section 12.8(b).
(e) Recovery of Costs and Attorneys' Fees. In the event
arbitration arising out of this Agreement is initiated by either Party,
after the entry of a final non-appealable order, if one Party has
predominantly prevailed in the dispute, it shall be entitled to recover
from the other Party all court costs, fees and expenses of such
arbitration,
43
including reasonable attorneys' fees that are specifically included in
the arbitration award.
(f) Choice of Forum. If, despite the Parties' agreement to
submit any Arbitrable Disputes to binding arbitration, there are any
court proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby, such proceedings shall be brought and
tried in, and the Parties hereby consent to the jurisdiction of, the
federal or state courts situated in ▇▇▇▇▇▇ County, State of
Texas.
(g) Jury Waivers. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS
TO DEMAND A TRIAL BY JURY.
(h) Settlement Proceedings. All aspects of any settlement
proceedings, including discovery, testimony and other evidence,
negotiations and communications pursuant to this Section 12.8, briefs
and the award shall be held confidential by each Party and the
arbitrators, and shall be treated as compromise and settlement
negotiations for the purposes of the Federal and State Rules of
Evidence.
12.9 Notices and Addresses. Any notice, request, instruction, waiver or
other communication to be given hereunder by either Party shall be in writing
and shall be considered duly delivered if personally delivered, mailed by
certified mail with the postage prepaid (return receipt requested), sent by
messenger or overnight delivery service, or sent by facsimile to the addresses
of the Parties as follows:
BUYER:
Regency Gas Services Waha, LP
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
DEFS:
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Duke Energy Field Services, LP
▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
Duke Energy Field Services, LP
▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
or at such other address as either Party may designate by written notice to the
other Party in the manner provided in this Section 12.9. Notice by mail shall be
deemed to have been given and received on the third (3rd) day after posting.
Notice by messenger, overnight delivery service, facsimile transmission or
personal delivery shall be deemed given on the date of actual delivery.
12.10 Press Releases. Except as may otherwise be required by securities
Laws and public announcements or disclosures that are, in the reasonable opinion
of the Party proposing to make the announcement or disclosure, legally required
to be made, there shall be no press release or public communication concerning
the transactions contemplated by this Agreement by either Party except with the
prior written consent of the Party not originating such press release or
communication, which consent shall not be unreasonably withheld or delayed.
BUYER and DEFS will consult in advance on the necessity for, and the timing and
content of, any communications to be made to the public and, subject to legal
constraints, to the form and content of any application or report to be made to
any Governmental Authority that relates to the transactions contemplated by this
Agreement.
12.11 Offset. Nothing contained herein or in any Transaction Document
shall create a right of offset or setoff for any Party, and each Party hereby
waives and disclaims any right of offset or setoff under all applicable Law or
common Law.
12.12 No Partnership; Third Party Beneficiaries. Nothing in this
Agreement shall be deemed to create a joint venture, partnership, tax
partnership, or agency relationship between the Parties. Nothing in this
Agreement shall provide any benefit to any Third Person or entitle any Third
Person to any claim, cause of action, remedy or right of any kind, it being the
intent of the Parties that this Agreement shall not be construed as a
third-party beneficiary contract; provided, however, that the indemnification
provisions of Article XI shall inure to the benefit of the BUYER Indemnitees and
the DEFS Indemnitees as provided therein.
12.13 Negotiated Transaction. The provisions of this Agreement were
negotiated by the Parties, and this Agreement shall be deemed to have been
drafted by both Parties.
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THE PARTIES HAVE signed this Agreement by their duly authorized
officials as of the date first set forth above.
DUKE ENERGY FIELD SERVICES, LP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
REGENCY GAS SERVICES WAHA, LP
BY REGENCY WAHA GP, LLC, GENERAL
PARTNER
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
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