CONTRIBUTION AGREEMENT among DCP LP Holdings, LP, DCP Midstream, LLC DCP Midstream GP, LP and DCP Midstream Partners, LP May 23, 2007
among
DCP
LP Holdings, LP,
DCP
Midstream, LLC
DCP
Midstream GP, LP
and
May
23, 2007
Table
of Contents
|
ARTICLE
I
CERTAIN DEFINITIONS
|
6
|
|
|
1.1
|
Certain
Defined Terms
|
6
|
|
1.2
|
Other
Definitional Provisions
|
18
|
|
1.3
|
Headings
|
18
|
|
1.4
|
Other
Terms.
|
18
|
|
ARTICLE
II
CONTRIBUTION OF THE SUBJECT INTERESTS, ISSUANCE OF THE UNITS
AND
CONSIDERATION
|
18
|
|
|
2.1
|
The
Transaction
|
18
|
|
2.2
|
Consideration
|
18
|
|
2.3
|
NYSE
Rule Change for Units
|
19
|
|
ARTICLE
III
ADJUSTMENTS AND SETTLEMENT
|
19
|
|
|
3.1
|
Adjustments.
|
19
|
|
3.2
|
Preliminary
Settlement Statement
|
19
|
|
3.3
|
Final
Settlement Statement
|
19
|
|
3.4
|
Dispute
Procedures
|
20
|
|
3.5
|
Payments
|
20
|
|
3.6
|
Access
to Records.
|
20
|
|
3.7
|
Excluded
Assets
|
20
|
|
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
|
20
|
|
|
4.1
|
Organization,
Good Standing, and Authority.
|
20
|
|
4.2
|
Enforceability.
|
21
|
|
4.3
|
No
Conflicts
|
22
|
|
4.4
|
Consents,
Approvals, Authorizations and Governmental Regulations.
|
22
|
|
4.5
|
Taxes
|
22
|
|
4.6
|
Litigation;
Compliance with Laws.
|
24
|
|
4.7
|
Contracts
|
24
|
|
4.8
|
Title
to Assets; Intellectual Property.
|
25
|
|
4.9
|
Preferential
Rights to Purchase.
|
25
|
|
4.10
|
Broker’s
or Finder’s Fees.
|
25
|
|
4.11
|
Compliance
with Property Instruments
|
26
|
|
4.12
|
Environmental
Matters
|
26
|
|
4.13
|
Employee
Matters
|
27
|
|
4.14
|
Benefit
Plan Liabilities
|
27
|
|
4.15
|
No
Foreign Person
|
27
|
|
4.16
|
Capitalization
of the Subject Interests.
|
27
|
|
4.17
|
Subsidiaries
and Other Equity Interests.
|
27
|
|
4.18
|
Bank
Accounts
|
27
|
|
4.19
|
[Reserved].
|
27
|
|
4.20
|
Investment
Intent.
|
28
|
|
4.21
|
Financial
Statements; Internal Controls; Undisclosed Liabilities
|
28
|
|
4.22
|
No
Other Representations or Warranties; Schedules
|
28
|
|
ARTICLE
V
REPRESENTATIONS AND WARRANTIES OF MLP
|
29
|
|
|
5.1
|
Organization,
Good Standing, and Authorization
|
29
|
|
5.2
|
Enforceability
|
29
|
|
5.3
|
No
Conflicts.
|
29
|
|
5.4
|
Consents,
Approvals, Authorizations and Governmental Regulations
|
29
|
|
5.5
|
Litigation.
|
29
|
|
5.6
|
Independent
Investigation..
|
30
|
|
5.7
|
Broker’s
or Finder’s Fees
|
30
|
|
5.8
|
Investment
Intent.
|
31
|
|
5.9
|
Available
Funds
|
31
|
|
ARTICLE
VI
COVENANTS AND ACCESS
|
31
|
|
|
6.1
|
Conduct
of Business
|
31
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|
6.2
|
Casualty
Loss.
|
33
|
|
6.3
|
Access,
Information and Access Indemnity.
|
33
|
|
6.4
|
Regulatory
Filings..
|
34
|
|
6.5
|
Limitation
on Casualty Losses and Other Matters
|
34
|
|
6.6
|
Supplements
to Exhibits and Schedules
|
35
|
|
6.7
|
Preservation
of Records
|
35
|
|
6.8
|
Measurement
and Valuation of Excess Inventory
|
35
|
|
6.9
|
Capital
Projects.
|
35
|
|
6.10
|
New
Debt
|
36
|
|
6.11
|
[Reserved.]
|
36
|
|
6.12
|
Tax
Covenants.
|
36
|
|
6.13
|
Financial
Statements and Financial Records.
|
39
|
|
6.14
|
Insurance.
|
40
|
|
6.15
|
Consent
to Transfer Hedge
|
40
|
|
ARTICLE
VII
CONDITIONS TO CLOSING
|
41
|
|
|
7.1
|
HOLDINGS’
Conditions
|
41
|
|
7.2
|
MLP’s
Conditions
|
41
|
|
7.3
|
Exceptions.
|
42
|
|
ARTICLE
VIII
CLOSING
|
42
|
|
|
8.1
|
Time
and Place of Closing..
|
42
|
|
8.2
|
Deliveries
at Closing
|
42
|
|
ARTICLE
IX
TERMINATION
|
43
|
|
|
9.1
|
Termination
|
43
|
|
9.2
|
Effect
of Termination Prior to Closing
|
43
|
|
ARTICLE
X
INDEMNIFICATION
|
43
|
|
|
10.1
|
Indemnification
by MLP
|
43
|
|
10.2
|
Indemnification
by HOLDINGS
|
44
|
|
10.3
|
Deductibles,
Caps, Survival and Certain Limitations.
|
44
|
|
10.4
|
Notice
of Asserted Liability; Opportunity to Defend.
|
46
|
|
10.5
|
Materiality
Conditions.
|
47
|
|
10.6
|
Exclusive
Remedy
|
48
|
|
10.7
|
Negligence
and Strict Liability Waiver
|
48
|
|
10.8
|
Limitation
on Damages
|
48
|
|
10.9
|
Bold
and/or Capitalized Letters
|
48
|
|
ARTICLE
XI
MISCELLANEOUS PROVISIONS
|
48
|
|
|
11.1
|
Expenses
|
48
|
|
11.2
|
Further
Assurances
|
49
|
|
11.3
|
Transfer
Taxes
|
49
|
|
11.4
|
Assignment
|
49
|
|
11.5
|
Entire
Agreement, Amendments and Waiver
|
49
|
|
11.6
|
Severability
|
49
|
|
11.7
|
Counterparts
|
49
|
|
11.8
|
Governing
Law, Dispute Resolution and Arbitration.
|
49
|
|
11.9
|
Notices
and Addresses
|
52
|
|
11.10
|
Press
Releases
|
53
|
|
11.11
|
Offset
|
53
|
|
11.12
|
No
Partnership; Third Party Beneficiaries.
|
53
|
|
11.13
|
Negotiated
Transaction.
|
53
|
Schedules
|
1.1(a)
|
Personal
Property
|
|
1.1(b)
|
Real
Property Interests
|
|
1.1(c)
|
Permits
|
|
1.1(d)
|
Contracts
|
|
1.1(e)
|
Post
Closing Consents
|
|
1.1(f)
|
List
of Facilities
|
|
1.1(g)
|
Excluded
Assets
|
|
1.1(h)
|
HOLDINGS’
Knowledge
|
|
1.1(i)
|
Permitted
Encumbrances
|
|
1.1(j)
|
Reserved
Liabilities
|
|
1.1(k)
|
System
Maps
|
|
4.4
|
HOLDINGS’
Required Consents
|
|
4.5
|
Taxes
|
|
4.6
|
Litigation
|
|
4.9
|
Preferential
Rights
|
|
4.11
|
Real
Property Matters
|
|
4.12
|
Environmental
Matters
|
|
4.17
|
Subsidiaries
|
|
4.18
|
Bank
Accounts
|
|
4.21(a)
|
Unaudited
Financial Statements of JV
|
|
4.21(b)
|
Financial
Statements of DPS
|
|
5.4
|
MLP
Required Consents
|
|
6.8
|
Measurement
and Valuation of Excess Inventory
|
|
6.9(a)
|
Existing
Capital Projects
|
|
6.9(c)
|
East
Texas Inlet Liquid Handling Facilities
|
|
6.10
|
New
Debt
|
|
10.2(e)
|
Certain
Indemnified Matters
|
Exhibits
|
A
|
Form
of Conveyance, Contribution and Assumption Agreement
|
|
B
|
Form
of JV LLC Agreement
|
|
C
|
Form
of Omnibus Agreement Amendment
|
|
D
|
Form
of Membership Interests Assignment Agreement
|
|
E
|
Form
of Certificate for Common Units
|
|
F
|
Form
of Hedge Assignment Agreement
|
|
G
|
Form
of NGL Purchase
Agreement
|
This
Contribution Agreement (“Agreement”)
is
dated as of May 23, 2007 and is by and among DCP LP Holdings, LP, a Delaware
limited partnership (“HOLDINGS”),
DCP
Midstream, LLC, a Delaware limited liability company (“MIDSTREAM”),
DCP
Midstream GP, LP, a Delaware limited partnership (“GP”)
and
DCP Midstream Partners, LP, a Delaware limited partnership (“MLP”).
HOLDINGS, MIDSTREAM, GP and MLP are sometimes referred to collectively herein
as
the “Parties” and individually as a “Party”.
R
E C I T
A L S
A. Prior
to
the date hereto, MIDSTREAM owned a 40% interest in Discovery Producer Services
LLC, a Delaware limited liability company (“DPS”).
DPS,
together with and through its wholly-owned subsidiary, Discovery Gas
Transmission LLC, a Delaware limited liability company (“DGT”),
owns
and operates the Discovery System.
B. Prior
to
the date hereto, MIDSTREAM owned all of the membership interests in DCP East
Texas GP, LLC, a Delaware limited liability company (“East
Texas GP”),
and
DCP East Texas LP, LLC, a Delaware limited liability company (“East
Texas LP”).
East
Texas GP and East Texas LP own all of the partnership interests in FCV, ELP
and
DETG, which collectively own and operate certain midstream gathering,
compression, dehydrating, processing and fractionating assets located in Panola,
Xxxxxxxx, Xxxxxx, and Xxxx Counties, Texas, and Caddo and DeSoto Parishes,
Louisiana including the Former UP Fuels Properties and the Former Gulf South
Properties, which are generally depicted on the System Map (the “East
Texas System”).
C. On
the
Closing Date and pursuant to the terms of the Conveyance, Contribution and
Assumption Agreement, MIDSTREAM shall convey its interests in East Texas GP
and
East Texas LP to DCP East Texas Holdings, LLC, a newly-formed Delaware limited
liability company (the “JV”).
D. On
the
Closing Date and pursuant to the terms of the Conveyance, Contribution and
Assumption Agreement, MIDSTREAM shall contribute (i) an interest in DPS with
a
value equal to 2% of the additional equity of MLP after all steps described
herein are taken (the “Interest”)
to GP
as a capital contribution (of which 0.001% of the Interest will be made to
GP on
behalf of DCP Midstream GP, LLC); (ii) its remaining interest in DPS after
contribution to GP of the Interest (the “Discovery
Interest”)
to
HOLDINGS as a capital contribution; and (iii) a 25% interest in the JV (the
“JV
Interest”)
to
HOLDINGS as a capital contribution.
E. GP
and
MLP desire that GP contribute the Interest to MLP as a capital contribution
in
exchange for a continuation of its 2% general partner interest.
F. HOLDINGS
and MLP desire that HOLDINGS contribute the Discovery Interest and the JV
Interest to MLP in accordance with this Agreement.
FOR
GOOD
AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, MLP, MIDSTREAM, GP and HOLDINGS 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”
means,
when used with respect to a specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the specified Person as of the time or for the time periods during
which such determination is made. 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, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have the meanings correlative to the foregoing.
Notwithstanding the foregoing, except for the JV, the term “Affiliate” when
applied to (a) MLP shall not include Spectra Energy Corp, a Delaware
corporation, or ConocoPhillips, a Delaware corporation, or any entities owned,
directly or indirectly, by Spectra Energy Corp or ConocoPhillips, other than
entities owned, directly or indirectly, by MLP and GP and (b) HOLDINGS shall
not
include MLP or any entities owned, directly or indirectly, by MLP.
“Allocation
Statement”
shall
have the meaning given such term in Section
6.12(f).
“Alternative
Class”
shall
have the meaning given such term in Section
2.3.
“Annual
Financial Statements”
shall
have the meaning given such term in Section
6.13.
“Arbitral
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
11.8(d).
“Assets”
shall
mean all of the following assets and properties of DPS and JV (and each of
their
respective Subsidiaries), except for the Excluded Assets. Each Schedule
referenced in this definition includes a separate subpart for each of DPS and
the JV (and each of their respective Subsidiaries):
(a) Personal
Property.
All
tangible personal property of every kind and nature that relates to the
ownership, operation, use or maintenance of the Facilities, including meters,
valves, engines, field equipment, office equipment, fixtures, trailers, tools,
instruments, spare parts, machinery, computer equipment, telecommunications
equipment, furniture, supplies and materials that are located at the Facilities,
including those items of personal property more particularly described in
Schedule
1.1(a)
and all
hydrocarbon inventory at the Facilities, including linefill (collectively the
“Personal
Property”);
(b) Real
Property.
All fee
property, rights-of-way, easements, surface use agreements, licenses and leases
that relate to the ownership, operation, use or maintenance of the Facilities,
including those described in Schedule
1.1(b)
(collectively, the “Real
Property Interests”),
and
all fixtures, buildings and improvements located on or under such Real Property
Interests;
(c) Permits.
All
assignable permits, licenses, certificates, orders, approvals, authorizations,
grants, consents, concessions, warrants, franchises and similar rights and
privileges which are necessary for, or are used or held for use primarily for
or
in connection with, the ownership, use, operation or maintenance of the Assets
(collectively, the “Permits”),
including those Permits more particularly described in Schedule
1.1(c);
(d) Contract
Rights.
All
contracts that relate to the ownership, operation, use or maintenance of the
Assets, including all gathering, processing, balancing and other agreements
for
the handling of natural gas or liquids, purchase and sales agreements, storage
agreements, transportation agreements, equipment leases, rental contracts,
and
service agreements, including those contracts or agreements described in
Schedule
1.1(d)
(collectively, the “Contracts”);
(e) Intellectual
Property.
All
technical information, shop rights, designs, plans, manuals, specifications
and
other proprietary and nonproprietary technology and data used in connection
with
the ownership, operation, use or maintenance of the Assets (collectively, the
“Intellectual
Property”);
(f) Facilities.
All
meter stations, gas processing plants, treaters, dehydration units, compressor
stations, fractionators, liquid handling facilities, platforms, warehouses,
field offices, control buildings, pipelines, tanks and other associated
facilities that are used or held for use in connection with the ownership,
operation or maintenance of the East Texas System or the Discovery System,
including those described on Schedule
1.1(f)
(collectively, the “Facilities”);
(g) Books
and Records.
All
contract, land, title, engineering, environmental, operating, accounting,
business, marketing, and other data, files, documents, instruments, notes,
correspondence, papers, ledgers, journals, reports, abstracts, surveys, maps,
books, records and studies which relate primarily to the Assets or which are
used or held for use primarily in connection with, the ownership, operation,
use
or maintenance of the Assets; provided,
however,
such
material shall not include (i) any proprietary data that is not primarily used
in connection with the continued ownership, use or operation of the Assets,
(ii)
any information subject to Third Person confidentiality agreements for which
a
consent or waiver cannot be secured by HOLDINGS after reasonable efforts, (iii)
any information which, if disclosed, would violate an attorney-client privilege
or would constitute a waiver of rights as to attorney work product or
attorney-client privileged communications, or (iv) any information relating
primarily to the Reserved Liabilities or any obligations for which HOLDINGS
is
required to indemnify the MLP Indemnitees pursuant to Section
10.2
(collectively, the “Records”);
provided, however, that MLP shall have the right to copy any of the information
specified in clause (iv); and
(h) Incidental
Rights.
All of
the following insofar as the same are attributable or relate primarily to any
of
the Assets described in clauses (a) through (g): (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, (iii) all rights in any confidentiality or nonuse agreements relating
to
the Assets, and (iv) the benefit of and right to enforce all covenants,
warranties, guarantees and suretyship agreements running in favor of the
Entities relating primarily to the Assets and all security provided primarily
for payment or performance thereof.
“Assumed
Obligations”
shall
mean any and all obligations and liabilities with respect to (i) the DPS
LLC Agreement attributable to the Interest and the Discovery Interest,
(ii) the JV LLC Agreement attributable to the JV Interest, (iii) the
Operated Entities, (iv) the Assets, (v) the ownership of the Subject
Interests, and (vi) the Hedge.
“Benefit
Plan”
shall
mean any of the following: (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,
non-competition 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.
“Cash
Consideration”
shall
have the meaning given such term in Section
2.2.
“Casualty
Loss”
shall
mean, with respect to all or any portion of the Assets, any destruction by
fire,
storm or other casualty, or any condemnation or taking or threatened
condemnation or taking, of all or any portion of the Assets.
“Certificate
of Common Units”
shall
mean the certificate(s) representing HOLDINGS’ additional interest in MLP in the
form of the attached Exhibit
E.
“Claim”
shall
mean any demand, demand letter, claim or notice by a Third Person of
noncompliance or violation or Proceeding.
“Claim
Notice”
shall
have the meaning given such term in Section
10.3(c).
“Closing”
shall
have the meaning given such term in Section
8.1.
“Closing
Date”
shall
have the meaning given such term in Section
8.1.
“Code”
shall
mean the U.S. Internal Revenue Code of 1986, as amended.
“Commercially
Reasonable Efforts”
shall
mean efforts which are reasonably within the contemplation of the Parties on
the
date hereof, which are designed to enable a Party, directly or indirectly,
to
satisfy a condition to, or otherwise assist in the consummation of, the
transactions contemplated by this Agreement and which do not require the
performing Party to expend any funds or assume liabilities other than
expenditures and liabilities which are reasonable in nature and amount in the
context of the transactions contemplated by this Agreement.
“Consideration”
shall
mean the Unit Consideration and Cash Consideration.
“Contracts”
shall
have the meaning given such term in the definition of Assets.
“Conveyance,
Contribution and Assumption Agreement”
means,
that certain Conveyance, Contribution and Assumption Agreement by and among
GP,
MIDSTREAM, and certain other parties, together with the additional conveyance
documents and instruments contemplated or referenced thereunder, all as attached
hereto as Exhibit
A.
“Defensible
Title”
shall
mean, as to the Assets, such title to the Assets that vests the applicable
Entity with indefeasible title in and to the Assets free and clear of Liens
other than Permitted Encumbrances.
“DETG”
shall
mean DCP East Texas Gathering, LP, a Delaware limited partnership.
“DGT”
shall
have the meaning given such term in the Recitals.
“Discovery
Interest”
shall
have the meaning given such term in the Recitals.
“Discovery
System”
shall
mean the offshore and onshore system operated by Xxxxxxxx in which MIDSTREAM
initially acquired an interest in from Texaco Discovery System Inc. in 2002,
as
such system has been added to and otherwise modified, until the Closing
Date.
“DOJ”
shall
mean the Department of Justice of the United States.
“DPS”
shall
have the meaning given such term in the Recitals.
“East
Texas GP”
shall
have the meaning given such term in the Recitals.
“East
Texas LP”
shall
have the meaning given such term in the Recitals.
“East
Texas System”
has
the
meaning given such term in the Recitals.
“Effective
Time”
shall
mean 12:01 A.M. Denver time on July 1, 2007 (or, if the Closing Date occurs
later than July 2, 2007, 12:01 A.M. Denver time on the calendar day following
the Closing Date).
“ELP”
shall
mean EasTrans Limited Partnership, a Texas limited partnership.
“Entities”
shall
mean DPS, DGT, East Texas GP, East Texas LP, FCV, ELP, DETG and the
JV.
“Environmental
Law”
shall
mean any and all Laws, statutes, ordinances, rules, regulations, or orders
of
any Governmental Authority in existence at the Effective Time pertaining to
employee health, public safety, pollution or the protection of the environment
or natural resources or to Hazardous Materials in any and all jurisdictions
in
which the party in question owns property or conducts business or in which
the
Assets are located, 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.
“Environmental
Matter”
shall
have the meaning given such term in Section
4.4(b).
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“Excess
Inventory”
shall
mean all liquid hydrocarbons included in the Assets owned by the Operated
Entities above the necessary minimum operating inventory, which shall be
measured and valued in accordance with Section
6.8.
“Excluded
Assets”
shall
mean, with respect to the Operated Entities, all of the following:
(a) Any
deposits or pre-paid items attributable to the operation of the
Assets;
(b)
[Reserved];
(c) Claims
for refund of or loss carry forwards with respect to (i) Taxes attributable
to the business of the Entities for any period prior to the Closing Date or
(ii) any Taxes attributable to any of the Excluded Assets;
(d) All
work
product of HOLDINGS’ or its Affiliates’ attorneys, records relating to the
negotiation and consummation of the transactions contemplated hereby and
documents that are subject to a valid attorney client privilege;
(e) All
real
property, personal property, contracts, intellectual property, Permits, office
computers or other equipment (or any leases or licenses of the foregoing),
if
any, that are listed on Schedule
1.1(g);
(f) All
vehicles, and all leases for vehicles that relate to the ownership, operation,
use or maintenance of the Assets;
(g) All
computer software that relates to the ownership, operation, use or maintenance
of the Assets that requires a consent to transfer;
(h) All
rights and obligations under swaps, futures or other similar derivative based
transactions that relate to the ownership, operation, use or maintenance of
the
Assets, except those that are specifically described in Schedule
1.1(d);
(i) All
office equipment and accessories (including computers) that relate to the
ownership, operation, use or maintenance of the Assets, other than that located
at the Facilities; and
(j) Without
limiting the obligations under Sections
6.2
and
6.14,
all
rights to claim coverage or benefits under HOLDINGS’ or its Affiliates’ (other
than DPS or DGT) insurance policies or coverage, including self-insurance and
insurance which HOLDINGS has obtained through a captive insurance carrier,
but
excluding any such rights to recover amounts that are included in the
calculation of Net Working Capital.
“Exhibits”
shall
mean any and/or all of the exhibits attached to and made a part of this
Agreement.
“Existing
Capital Projects”
shall
have the meaning given such term in Section
6.9.
“Facilities"
shall
have the meaning given such term within the definition of “Assets.”
“FCV”
means
Fuels Cotton Valley Gathering, LP, a Delaware limited partnership.
“Final
Settlement Statement”
shall
have the meaning given such term in Section
3.3.
“Former
Gulf South Properties”
shall
mean the former Gulf South gathering facilities located in Shelby, Panola and
Xxxxxxxx Counties, Texas and Caddo Parish, Louisiana, which are generally
depicted on the System Map, and which were acquired by DCP Midstream, LP or
its
Affiliates on March 31, 2005.
“Former
UP Fuels Properties”
shall
mean the former UP Fuels gathering and processing facilities located in Panola,
Shelby, Harrison and Rusk Counties, Texas, and Caddo and DeSoto Parishes,
Louisiana, which are generally depicted on the System Map, and which were
acquired by DCP Midstream, LP or its Affiliates on April 1, 1999.
“FTC”
shall
mean the Federal Trade Commission of the United States of America.
“GAAP”
means
generally accepted accounting principles in the United States as of the date
hereof, consistently applied.
“GP”
shall
have the meaning given such term in the introductory paragraph.
“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 wastes, 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 hydrocarbon or petroleum or
component thereof, (including, without limitation, crude oil, natural gas,
natural gas liquids, or condensate that is not reasonably and commercially
recoverable; (c) oil and gas exploration or production wastes including produced
water; (d) radioactive materials (other than naturally occurring radioactive
materials), friable asbestos, mercury, lead based paints and polychlorinated
biphenyls, (e) any other chemical, material or substance, exposure to which
is
prohibited, limited or regulated by any Governmental Authority; or (f) any
regulated constituents or substances in concentrations or levels that exceed
numeric or risk-based standards established pursuant to Environmental Laws.
“Hedge
Assignment Agreement”
shall
mean the Assignment and Assumption of Hedge in substantially the form of
Exhibit
F
covering
the conveyance of the Hedge by HOLDINGS to MLP.
“Hedge”
shall
mean that certain forward $66.72/barrel crude oil sale transaction, transaction
reference number 339269/1 having a trade date of March 8, 2007 between DCP
Midstream Marketing, LP and Citibank N.A. for the period of July 2007 through
December 2012 with a total notational quantity of 1,865,000
barrels.
“HOLDINGS”
shall
have the meaning given such term in the introductory paragraph.
“HOLDINGS’
Indemnitees”
shall
have the meaning given such term in Section
10.1.
“HOLDINGS’
Knowledge”
or
the
“Knowledge
of HOLDINGS”
or
any
similar term, shall mean the actual knowledge of (a) with respect to any matter
other than related to the Non-Operated Entities, (i) any officer of HOLDINGS
having a title of Vice President or higher, and (ii) the individuals listed
on
Schedule
1.1(h)
and (b)
with respect to any matter related to the Non-Operated Entities, Xxxxx Xxxxxxx,
Vice President - South Gas Supply and Xxxxxx Xxxxx, Managing
Director.
“HOLDINGS’
Required Consents”
shall
have meaning given such term in Section
4.4(a).
“Indemnified
Party”
or
“Indemnitee”
shall
have the meaning given such term in Section
10.4(a).
“Indemnifying
Party”
or
“Indemnitor”
shall
have the meaning given such term in Section
10.4(a).
“Independent
Accountants”
shall
mean PricewaterhouseCoopers.
“Insurance”
shall
have the meaning given such term in Section
6.14.
“Interest”
shall
have the meaning given such term in the Recitals.
“Interest
Rate”
shall
mean LIBOR plus one half of one percent (0.5%).
“IRR”
shall
have the meaning given such term in Section
6.9(c).
“JV”
shall
have the meaning given such term in the Recitals.
“JV
Interest”
shall
have the meaning given such term in the Recitals.
“JV
LLC
Agreement”
shall
mean the Amended and Restated Limited Liability Company
Agreement
of DCP
East
Texas Holdings, LLC dated
as
of the Effective Time, in the form of the attached Exhibit
B.
“Laws”
shall
mean all applicable statutes, laws (including common law), 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.
“LIBOR”
shall
mean the British Bankers’ Association interbank offered rates as of
11:00 a.m. London time for deposits in Dollars that appear on the relevant
page of the Reuters service (currently page LIBOR01) or, if not available,
on
the relevant pages of any other service (such as Bloomberg Financial Markets
Service) that displays such British Bankers’ Association rates.
“Limited
Partnership Agreement”
shall
mean the Second Amended and Restated Agreement of Limited Partnership of MLP
dated as of November 1, 2006.
“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,
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 events, occurrences or facts
(a)
would have an adverse change in or effect on the Entities or the Assets
(including the cost to remedy, replace or obtain same) taken as a whole, in
excess of $13,500,000 or (b) would result in the prohibition or material delay
in the consummation of the transactions contemplated by this Agreement,
excluding (in each case) matters that are generally industry-wide developments
or changes or effects resulting from changes in Law or general economic,
regulatory or political conditions.
“Material
Casualty Loss”
shall
have the meaning given such term in Section
6.2.
“Materiality
Condition”
shall
have the meaning given such term in Section
10.5.
“MIDSTREAM”
shall
have the meaning given such term in the introductory paragraph.
“MLP”
shall
have the meaning given such term in the introductory paragraph.
“MLP
Indemnitees”
shall
have the meaning given such term in Section
10.2.
“MLP’s
Knowledge”
or
the
“Knowledge
of MLP”
or
any
similar term, shall mean the actual knowledge of any officer of MLP having
a
title of vice president or higher.
“MLP
Required Consents”
shall
have the meaning given such term in Section
5.4.
“Net
Working Capital”
means,
with respect to any Entity as of any given date, an amount (which may be
positive or negative) equal to the sum of (a) the total current assets of
such Entity and its Subsidiaries as of such date and (b) the value of any
Excess Inventory owned by such Entity that is not owed to producers minus the
total current liabilities of such Entity and its Subsidiaries as of such date,
in each case determined in accordance with GAAP, but excluding accounts payable
(and amounts accrued) associated with Existing Capital Projects and New Capital
Projects.
“New
Capital Projects”
shall
have the meaning given such term in Section
6.9.
“NGL
Purchase Agreement”
shall
mean the NGL Purchase Agreement, substantially in the form of the attached
Exhibit
G.
“Non-Operated
Entities”
shall
mean DPS and DGT.
“Notice
Period”
shall
have the meaning given such term in Section
10.4(c).
“NYSE”
shall mean The New York Stock Exchange.
“NYSE
Amendment”
shall
have the meaning given such term in Section
2.3.
“Omnibus
Agreement Amendment”
shall
mean the Fourth Amendment to Omnibus Agreement dated as of the Closing Date
among MIDSTREAM, MLP, GP and DCP Midstream Operating, LP, in the form of the
attached Exhibit
C.
“Operated
Entities”
shall
mean the JV, East Texas GP, East Texas LP, FCV, ELP and DETG.
“Ordinary
Course of Business”
shall
mean the ordinary course of business consistent with past
practices.
“Permits”
shall
have the meaning given such term in the definition of Assets.
“Permitted
Encumbrances”
shall
mean the following:
(a) the
terms, conditions, restrictions, exceptions, reservations, limitations, and
other matters contained in any document creating 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 for which adequate
reserves in accordance with GAAP have been established on the books of account
of the applicable Entity);
(c) mechanic’s,
materialmen’s, repairmen’s and other statutory Liens arising in the Ordinary
Course of Business and securing obligations incurred prior to the Effective
Time
and (i) for which adequate reserves in accordance with GAAP have been
established on the books of account of the applicable Entity, or (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
and for which adequate reserves in accordance with GAAP have been established
on
the books of account of the applicable Entity;
(d) utility
easements, restrictive covenants, defects and irregularities in title,
encumbrances, exceptions and other matters that are of record that, singularly
or in the aggregate, will not materially interfere with the ownership, use
or
operation of the Assets to which they pertain;
(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 transaction contemplated hereby prior to Closing
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 MLP or its successors or assigns; and
(h) the
Liens
listed on Schedule
1.1(i).
“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.
“Post-Closing
Consents”
shall
mean consents or approvals from, or filings with Governmental Authorities or
consents from railroads customarily obtained following the closing of a
transaction similar to the transaction contemplated hereby, including those
listed on Schedule
1.1(e).
“Pre-Closing
Tax Period”
shall
mean, with respect to the Entities, any taxable period (including the portion
of
any Straddle Period) ending on or prior to the Closing Date.
“Preliminary
Settlement Statement”
shall
have the meaning given such term in Section
3.2.
“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 or other dispute resolution proceeding.
“Qualified
Claims”
shall
have the meaning given such term in Section
10.3(b)(iv).
“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.
“Reserved
Liabilities”
shall
mean Losses (but only to the extent not reflected in Net Working Capital) with
respect to:
(i) except
for sales, transfer, use or similar Taxes that are due or should hereafter
become due (including penalty and interest thereon) by reason of creation of
the
JV and the conveyances and transactions contemplated by this Agreement and
property Taxes, all Taxes with respect to the Entities or the Assets to the
extent related to periods prior to and including the Closing Date;
(ii) property
Taxes on the Assets related to periods prior to January 1, 2007;
(iii) disposal
of Hazardous Materials at offsite locations (a) which were delivered from the
East Texas System (excluding the Former Gulf South Properties) between April
1,
1999 and the Closing Date and (b) which were delivered from the Former Gulf
South Properties between March 31, 2005 and the Closing Date; and
(iv)
the
Excluded Assets and Taxes related thereto; and
(v)
those
matters, if any, described on Schedule
1.1(j).
“Schedules”
shall
mean any and/or all of the schedules attached to and made a part of this
Agreement.
“SEC”
shall
mean the U.S. Securities and Exchange Commission.
“SEC
Financial Statements”
shall
have the meaning specified in Section
6.13.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Settlement
Notice”
shall
have the meaning given such term in Section
3.4.
“Straddle
Period”
shall
mean any taxable period that begins before and ends after the Closing
Date.
“Straddle
Tax Return”
shall
mean any Tax Return that covers a taxable period that begins before and ends
after the Closing Date.
“Stub
Period Financial Statements”
shall
have the meaning given such term in Section
6.13.
“Subject
Interests”
shall
mean the Interest, the Discovery Interest and the JV Interest.
“Subject
Interests Assignment Agreement”
shall
mean the Assignment Agreement in substantially the form of Exhibit
D
covering
the conveyance of the Subject Interests by HOLDINGS and GP to MLP.
“Subsidiary”
means,
with respect to any Person, (a) any corporation, of which a majority of the
total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote generally in the election of directors thereof
is at
the time owned or controlled, directly or indirectly, by that Person or one
or
more of the other Subsidiaries of that Person or a combination thereof or (b)
any limited liability company, partnership, association or other business
entity, of which a majority of the partnership or other similar ownership
interests thereof is at the time owned or controlled, directly or indirectly,
by
that Person or one or more Subsidiaries of that Person or a combination
thereof.
“System
Map”
shall
collectively mean the maps depicting the East Texas System and the Discovery
System, which maps are attached as Schedules
1.1(k)-1
and
1.1(k)-2.
“Tax”
or
“Taxes”
shall
mean any federal, state, local or foreign income tax, ad valorem tax, excise
tax, sales tax, use tax, franchise tax, real or personal property tax, transfer
tax, gross receipts tax or other tax, assessment, duty, fee, levy or other
governmental charge, 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
Authority”
shall
mean any Governmental Authority having jurisdiction over the payment or
reporting of any Tax.
“Tax
Benefits”
means
the amount by which the Tax liability of the Indemnified Party or any of its
Affiliates for a taxable period is actually reduced (including by deduction,
reduction in income upon a sale, disposition or other similar transaction as
a
result of increased tax basis, receipt of a refund of Taxes or use of a credit
of Taxes) plus any related interest (net of Taxes payable thereon) received
from
the relevant Tax Authority, as a result of the incurrence, accrual or payment
of
any Loss or Tax with respect to which the indemnification payment is being
made.
“Tax
Proceeding”
shall
have the meaning given such term in Section
6.12(g).
“Tax
Return”
shall
mean any report, statement, form, return or other document or information
required to be supplied to a Tax Authority in connection with
Taxes.
“Third
Person”
shall
mean (i) any Person other than a Party or its Affiliates, and (ii) any
Governmental Authority.
“Third
Person Awards”
shall
mean any actual recoveries from Third Persons by the Indemnified Party
(including from insurance and third-party indemnification) in connection with
the claim for which such party is also potentially liable.
“Total
Net Working Capital”
means
the amount (which may be positive or negative) equal to the sum of (a) the
product of (i) the Net Working Capital of the JV multiplied by (ii) the JV
Interest and (b) the product of (i) the Net Working Capital of DPS multiplied
by
(ii) the sum of the Interest and the Discovery Interest.
“Transaction
Documents”
shall
mean the JV LLC Agreement, the Omnibus Agreement Amendment, the Subject
Interests Assignment Agreement, the Hedge Assignment Agreement, a Certificate
representing the Unit Consideration, the NGL Purchase Agreement, and any other
document related to the sale, transfer, assignment or conveyance of the Subject
Interests to be delivered at Closing.
“Treasury
Regulations”
shall
mean regulations promulgated under the Code.
“Unaudited
Financial Statements”
shall
have the meaning given such term in Section
4.21(a).
“Unit
Consideration”
shall
have the meaning given such term in Section
2.2.
“Units”
shall
mean one of that certain class of limited partnership interests of MLP with
those special rights and obligations specified in the Limited Partnership
Agreement as being appurtenant to a “Common Unit”.
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
CONTRIBUTION
OF THE SUBJECT INTERESTS,
ISSUANCE
OF THE UNITS AND CONSIDERATION
2.1 The
Transaction.
Upon
the terms and subject to the conditions of this Agreement, at the Closing,
but
effective for all purposes as of the Effective Time (a) GP shall contribute
the
Interest to the MLP in exchange for a continuation of its 2% general partner
interest in MLP and (b) HOLDINGS shall contribute to MLP the Discovery Interest,
the JV Interest and the Hedge in exchange for the issuance of the Consideration
to HOLDINGS by MLP, and MLP shall assume and thereafter to timely perform and
discharge in accordance with their respective terms, all Assumed Obligations
related thereto.
2.2 Consideration.
In
consideration for the contribution of the Discovery Interest, the JV Interest
and the Hedge, and the assumption, performance and discharge of the Assumed
Obligations, MLP shall (i) issue and deliver to HOLDINGS at the Closing one
or
more certificates duly registered in the name of HOLDINGS and representing
620,404 Units (the “Unit
Consideration”)
and
(ii) distribute an amount of cash to HOLDING equal to the sum of (A)
$242,448,979.69, (B) the Total Net Working Capital as of the Effective Time
and
(C) 25% (as attributable to the JV Interest) or 40% (as attributable to the
Interest and the Discovery Interest) of the aggregate payments made by HOLDINGS
and its Subsidiaries after the date of this Agreement for New Capital Projects
(the “Cash
Consideration”).
2.3 NYSE
Rule Change for Units
.
If ten (10) days prior to the expected Closing Date, the NYSE and the SEC have
not yet adopted and approved an amendment to Section 312.03 of the NYSE Listed
Company Manual that would exempt limited partnerships from the provisions of
Subsections 312.03(b), (c) and (d) thereof (the “NYSE
Amendment”),
the
Parties shall negotiate in good faith to amend the terms of this Agreement
so as
to cause the Units to consist of an alternative class of limited partner
interests in the MLP that do not constitute “common stock” or “voting
securities” under Section 312.03 of the NYSE Listed Company Manual and having
customary terms and conditions for offerings of this nature (the “Alternative
Class”).
ARTICLE
III
ADJUSTMENTS
AND SETTLEMENT
3.1 Adjustments.
(a) The
value
of the Cash Consideration shall be subject to cash adjustments pursuant to
this
Article
III.
(b) For
the
avoidance of doubt, cash adjustments pursuant to this Article
III
shall
not result in any adjustment to the Unit Consideration. Each payment of an
adjustment to the Cash Consideration shall be made at Closing if the adjustment
is determined by such date, or otherwise, in the Final Settlement
Statement.
(c) The
Parties shall use all Commercially Reasonable Efforts to agree upon the
adjustments set forth in this Article
III,
and to
resolve any differences with respect thereto. Except as provided herein, no
adjustments shall be made after delivery of the Final Settlement
Statement.
3.2 Preliminary
Settlement Statement.
Not
later than five (5) business days before the Closing Date, and after
consultation with MLP, HOLDINGS shall deliver to MLP a written statement (the
“Preliminary
Settlement Statement”)
setting forth the Cash Consideration and each component therein, as determined
in good faith by HOLDINGS that are described in the definition thereof, with
HOLDINGS’ calculation of such items in reasonable detail, based on information
then available to HOLDINGS. The Preliminary Settlement Statement shall also
set
forth wire transfer instructions for the Closing payments. Payment of the Cash
Consideration at the Closing shall be based on the Preliminary Settlement
Statement.
3.3 Final
Settlement Statement.
No
later than ninety (90) days after the Closing Date and after consultation with
MLP, HOLDINGS shall deliver to MLP a revised settlement statement showing in
reasonable detail its calculation of the items described in the definition
of
Cash Consideration along with other adjustments or payments contemplated in
this
Agreement (said revised statement and the calculation thereof shall be referred
to as the “Final
Settlement Statement”).
3.4 Dispute
Procedures.
The
Final Settlement Statement shall become final and binding on the Parties on
the
45th day following the date the Final Settlement Statement is received by MLP,
unless prior to such date MLP delivers written notice to HOLDINGS of its
disagreement with the Final Settlement Statement (a “Settlement
Notice”).
Any
Settlement Notice shall set forth MLP’s proposed changes to the Final Settlement
Statement, including an explanation in reasonable detail of the basis on which
MLP proposes such changes. If MLP has timely delivered a Settlement Notice,
MLP
and HOLDINGS shall use good faith efforts to reach written agreement on the
disputed items. If the disputed items have not been resolved by MLP and HOLDINGS
by the 30th day following HOLDINGS’ receipt of a Settlement Notice, any
remaining disputed items shall be submitted to the Independent Accountants
for
resolution within ten (10) 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 HOLDINGS and fifty percent (50%) by MLP. The Independent
Accountants’ determination of the disputed items shall be final and binding upon
the Parties, and the Parties hereby waive any and all rights to dispute such
resolution in any manner, including in court, before an arbiter or
appeal.
3.5 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
MLP
shall pay to HOLDINGS the amount of such excess, with interest at the Interest
Rate (calculated from the Closing Date). 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 HOLDINGS
shall
pay to MLP 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
3.4.
3.6 Access
to Records.
The
Parties shall grant to each other full access to the Records and relevant
personnel to allow each of them to make evaluations under this Article
III.
3.7 Excluded
Assets.
Prior
to the Closing, the Excluded Assets will be distributed by and among MIDSTREAM
and its Affiliates.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF HOLDINGS
HOLDINGS
represents and warrants to MLP as follows:
4.1 Organization,
Good Standing, and Authority.
(a) Each
of
HOLDINGS and GP is a limited partnership duly formed, validly existing and
in
good standing under the Laws of the State of Delaware. The execution and
delivery of this Agreement and the other Transaction Documents to which HOLDINGS
or GP is a party and the consummation by HOLDINGS or GP of the transactions
contemplated herein and therein have been duly and validly authorized by all
necessary limited partnership action by HOLDINGS or GP, respectively. This
Agreement has been duly executed and delivered by HOLDINGS and GP. Each of
HOLDINGS and GP has all requisite limited partnership power and authority to
enter into and perform this Agreement and the other 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.
(b) MIDSTREAM
is a limited liability company duly formed, validly existing and in good
standing under the Laws of the State of Delaware. The execution and delivery
of
this Agreement and the other Transaction Documents to which MIDSTREAM is a
party
and the consummation by MIDSTREAM of the transactions contemplated herein and
therein have been duly and validly authorized by all necessary limited liability
company action by MIDSTREAM. This Agreement has been duly executed and delivered
by MIDSTREAM. MIDSTREAM has all requisite limited liability company power and
authority to enter into and perform this Agreement and the other 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.
(c) DPS,
DGT,
East Texas GP and East Texas LP are limited liability companies duly formed,
validly existing and in good standing under the Laws of the State of Delaware
and have all requisite limited liability company power and authority to own
or
otherwise hold and operate its respective assets.
(d) JV
is a
limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Delaware and has all requisite limited liability
company power and authority to own or otherwise hold and operate its assets.
The
execution and delivery of any Transaction Documents to which JV is a party
and
the consummation by JV of the transactions contemplated herein and therein
to
which it is a party have been duly and validly authorized by all necessary
limited liability company action by JV.
(e) ELP
is a
limited partnership duly formed, validly existing and in good standing under
the
Laws of the State of Texas and has all requisite limited partnership power
and
authority to own or otherwise hold and operate its assets.
(f) Each
of
FCV and DETG 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 own or otherwise hold and operate its assets.
4.2 Enforceability.
This
Agreement constitutes and, upon execution of and delivery by HOLDINGS, MIDSTREAM
and GP of the other Transaction Documents to which it is a party, such
Transaction Documents will constitute, valid and binding obligations of
HOLDINGS, MIDSTREAM and GP, enforceable against such Parties 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.
4.3 No
Conflicts.
The
execution, delivery and performance by HOLDINGS, MIDSTREAM and GP of this
Agreement, and the execution, delivery and performance by HOLDINGS, MIDSTREAM
and GP of the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby or thereby, will
not:
(a) Provided
all of HOLDINGS’ 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 agreements to which HOLDINGS, MIDSTREAM,
GP
or the Operated Entities (or to HOLDINGS’ Knowledge, the Non-Operated Entities)
is a party or by which any of them, the Subject Interests or the Assets are
bound;
(b) Conflict
with or violate the limited liability company agreements of MIDSTREAM, JV,
DPS,
DGT, East Texas GP or East Texas LP or the limited partnership agreements of
HOLDINGS, GP, DETG, FCV or ELP; and
(c) Provided
that all of HOLDINGS’ Required Consents and Post Closing Consents have been
obtained, violate any Law applicable to HOLDINGS, MIDSTREAM, GP or the Operated
Entities or the Assets (or to HOLDINGS’ Knowledge, the Non-Operated
Entities).
4.4 Consents,
Approvals, Authorizations and Governmental Regulations.
(a) Except
(i) for Post-Closing Consents and (ii) as set forth in Schedule
4.4
(the
items described in clause (ii) being collectively referred to as the
“HOLDINGS’
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 Third
Person, is necessary for HOLDINGS, MIDSTREAM or GP to execute, deliver and
perform this Agreement or for HOLDINGS, MIDSTREAM or GP to execute, deliver
and
perform the other Transaction Documents to which it is a party.
(b) Except
as
set forth in Schedule
4.4,
(i),
all material permits, licenses, certificates, orders, approvals, authorizations,
grants, consents, concessions, warrants, franchises and similar rights and
privileges, of all Governmental Authorities required or necessary for the
Operated Entities and, to HOLDINGS’ Knowledge, the Non-Operated Entities to own
and operate its Assets in the places and in the manner currently owned or
operated, have been obtained, and are in full force and effect, (ii) HOLDINGS
and its Affiliates have received no written notification concerning, and there
are no violations that are in existence with respect to the permits and (iii)
no
Proceeding is pending or threatened with respect to the revocation or limitation
of any of the permits. Notwithstanding anything herein to the contrary, the
provisions of this Section
4.4(b)
shall
not relate to or cover any matter relating to or arising out of any
Environmental Laws (an “Environmental
Matter”),
which
shall be governed by Section
4.12.
4.5 Taxes.
Except
as set forth in Schedule
4.5:
(a)
JV has
not and will not (and, with respect to DPS and DGT, HOLDINGS and its Affiliates
have not and will not consent to DPS or DGT to) on or prior to the Closing
Date,
file an election under Treasury Regulation §301.7701 3 to be classified as a
corporation for U.S. federal income tax purposes. Since
April 1, 2000 until Closing, FCV and ELP have been and will be business entities
that will be disregarded for federal Tax purposes under Treasury Regulation
§§301.7701-2 and -3. Since the date of their formation until Closing, DETG, East
Texas GP and East Texas LP have been and will be business entities that will
be
disregarded for federal Tax purposes under Treasury Regulation §§301.7701-2 and
-3. To
HOLDINGS’ Knowledge, during the entirety of the period from the date of its
formation until Closing, DPS has been and will be a partnership for federal
tax
purposes;
(b) Except
with respect to ad valorem Taxes for the year in which Closing occurs, all
Taxes
due and owing or claimed to be due and owing (whether such claim is asserted
before or after the Effective Time) from or against any Entity relating to
the
Assets, or the operation thereof, prior to the Effective Time have been or
will
be timely paid in full by HOLDINGS or its Affiliates;
(c) All
withholding Tax and Tax deposit requirements imposed on HOLDINGS, the Operated
Entities, the Non-Operated Entities and applicable to the Assets, or the
operation thereof, for any and all periods or portions thereof ending prior
to
the Effective Time have been or will be timely satisfied in full by HOLDINGS
or
its Affiliates;
(d) All
Tax
Returns that are required to be timely filed for, by, on behalf of or with
respect to the Operated Entities (and to HOLDINGS’ Knowledge, the Non-Operated
Entities), before the Effective Time have been or will be filed with the
appropriate Governmental Authority; all Taxes shown to be due and payable on
such Tax Returns have been or will be paid in full by HOLDINGS or its
Affiliates;
(e) None
of
the Operated Entities or, to HOLDINGS’ Knowledge, the Non-Operated Entities is
under Tax audit or Tax examination by any Governmental Authority. There are
no
Claims now pending or, to the Knowledge of HOLDINGS, threatened against the
Operated Entities with respect to any Tax or any matters under discussion with
any Governmental Authority relating to any Tax. To the Knowledge of HOLDINGS,
there are no Claims now pending or threatened against the Non-Operated Entities
with respect to any Tax or any matters under discussion with any Governmental
Authority relating to any Tax;
(f) None
of
the Operated Entities or, to HOLDINGS’ Knowledge, the Non-Operated Entities) (i)
has agreed to make, nor is required to make, any adjustment under Section 481
of
the Code or any comparable provision of state, local or foreign Law by reason
of
a change in accounting method or otherwise, and (ii) is a party to or bound
by
(or will become a party to or bound by) any Tax sharing, Tax indemnity, or
Tax
allocation agreement; and
(g) To
HOLDINGS knowledge, DPS has made an election under Section 754 of the Code.
The
JV has made, or will make, effective for JV’s initial tax year, an election
under Section 754 of the Code.
4.6 Litigation;
Compliance with Laws.
(a) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS,
MIDSTREAM, GP or the Operated Entities (and to HOLDINGS’ Knowledge, the
Non-Operated Entities) that restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(b) Except
for the litigation and Claims identified on Schedule
4.6,
(i)
there is no written Claim, investigation or examination pending, or to the
Knowledge of HOLDINGS, threatened, against or affecting the Operated Entities
(or their respective assets) before or by any Third Person and (ii) to the
Knowledge of HOLDINGS, there is no written Claim, investigation or examination
pending or threatened, against or affecting the Non-Operated Entities (or their
respective assets) before or by any Third Person.
(c) To
HOLDINGS’ Knowledge, the Assets have been owned and operated in compliance with
applicable Laws, except for any non-compliance which has been timely brought
into compliance therewith. Notwithstanding anything herein to the contrary,
the
provisions of this Section
4.6(c)
shall
not relate to or cover any Environmental Matters, which shall be governed by
Section
4.12.
4.7 Contracts.
All of
the Contracts that are material to the business of the Operated Entities and
the
Non-Operated Entities, taken as a whole, are listed on Schedule
1.1(d).
The
Operated Entities and, to HOLDINGS’ Knowledge, the Non-Operated Entities are not
in default and there is no event or circumstance that with notice, or lapse
of
time or both, would constitute an event of default by the applicable Entity
under the terms of the Contracts. All of the Contracts of the Operated Entities
and, to HOLDINGS’ Knowledge, the Non-Operated Entities, are in full force and
effect and to HOLDINGS’ Knowledge, no counter-party to any of the Contracts is
in default under the terms of such Contracts. Schedule
1.1(d)
lists
each Contract that:
(a) expressly
obligates an Entity to pay an amount of $500,000 (to the 100% interest) or
more
and has not been fully performed as of the date hereof;
(b) expressly
restricts the ability of an Entity to compete or otherwise to conduct its
business in any manner or place;
(c) provides
for the sale of products or the provision of services (for a term greater than
a
year) for amounts in excess of $500,000 (to the 100% interest and including
outstanding offers or quotes which by acceptance would create such a Contract)
and which have not been fully performed as of the date hereof;
(d) provides
a right of first refusal or other restrictive right that limits the ability
to
transfer, sell or assign an interest in an asset or an equity interest in a
Person;
(e) is
a
master agreement, swap, derivative, option, future or similar type Contract
or
any open agreement or position thereunder;
(f) is
with
any current or former employee, officer, director or consultant of HOLDINGS
or
an Entity or their respective Affiliates;
(g) is
an
inter-company agreement;
(h) is
with
any labor union or association;
(i) is
a
partnership or joint venture agreement with a Third Person in which one of
HOLDINGS or an Entity or their respective Affiliates is a party or by which
any
of them are bound;
(j) is
an
agreement with a consideration in excess of $500,000 (to the 100% interest)
by
an Entity to purchase or sell any assets (other than inventory in the Ordinary
Course of Business), businesses, capital stock or other debt or equity
securities of any Person;
(k) is
an
agreement with a consideration in excess of $500,000 (to the 100% interest)
involving the merger, consolidation, purchase, sale, transfer or other
disposition of interests in real property, capital stock or other debt or equity
securities of any Person prior to Closing; or
(l) is
any
other lease agreement with respect to any parcel of real property in which
an
Entity has a leasehold or similar interest.
4.8 Title
to Assets; Intellectual Property.
Except
for the Permitted Encumbrances, each of the Operated Entities and, to HOLDINGS’
Knowledge, each of the Non-Operated Entities, has Defensible Title to those
of
the Assets that it operates, free and clear of all Liens, and:
(a) none
of
HOLDINGS, the Operated Entities or, to HOLDINGS’ Knowledge, the Non-Operated
Entities has received any written notice of infringement, misappropriation
or
conflict with respect to Intellectual Property from any Person with respect
to
the ownership, use or operation of the Assets; and
(b) the
ownership, use and operation of the Assets have not infringed, misappropriated
or otherwise conflicted with any patents, patent applications, patent rights,
trademarks, trademark applications, service marks, service xxxx applications,
copyrights, trade names, unregistered copyrights, trade secrets of any other
Person.
4.9 Preferential
Rights to Purchase.
Except
as listed in Schedule
4.9,
there
are no preferential or similar rights to purchase any portion of the Entities
or
Assets that will be triggered by this Agreement or the transactions contemplated
herein.
4.10 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 HOLDINGS
or
any of its Affiliates.
4.11 Compliance
with Property Instruments.
To
HOLDINGS’ Knowledge and except as set forth in Schedule
4.11,
(a) all
of the instruments creating the Real Property Interests are presently valid,
subsisting and in full force and effect; (b) there are no violations, defaults
or breaches thereunder, or existing facts or circumstances which upon notice
or
the passage of time or both will constitute a violation, default or breach
thereunder; and (c) the Assets are currently being operated and maintained
in
compliance with all terms and provisions of the instruments creating the Real
Property Interests. None of HOLDINGS or its Affiliates has received or given
any
written notice of default or claimed default under any such instruments and
is
not participating in any negotiations regarding any material modifications
thereof.
4.12 Environmental
Matters.
Except
as set forth in Schedule
4.12:
(a) to
HOLDINGS’ Knowledge, HOLDINGS and its Affiliates have not caused or allowed the
generation, use, treatment, manufacture, storage, or disposal of Hazardous
Materials at, on or from the Assets, except in accordance with all applicable
Environmental Laws;
(b) to
HOLDINGS’ Knowledge, there has been no release of any Hazardous Materials at,
on, from, or underlying any of the Assets other than such releases that (i)
are
not required to be reported to a Governmental Authority, (ii) have been reported
to the appropriate Governmental Authority or (iii) were in compliance with
applicable Environmental Laws;
(c) to
HOLDINGS’ Knowledge, the Entities have secured all permits required under
Environmental Laws for the ownership, use and operation of the Assets and the
Entities are in compliance with such permits;
(d) HOLDINGS
and its Affiliates have not received written inquiry or notice of any actual
or
threatened Claim related to or arising under any Environmental Law relating
to
the Assets;
(e) none
of
HOLDINGS or the Operated Entities or to HOLDINGS’ Knowledge, the Non-Operated
Entities, is currently operating or required to be operating any of the Assets
under any compliance order, a decree or agreement, any consent decree or order,
or corrective action decree or order issued by or entered into with any
Governmental Authority under any Environmental Law or any Law regarding health
or safety in the work place;
(f) to
HOLDINGS’ Knowledge, the Entities have owned, used and operated the Assets in
compliance with Environmental Laws, except for any non-compliance which has
been
remediated and brought into compliance with Environmental Laws; and
(g) to
HOLDINGS’ Knowledge, none of the off-site locations where Hazardous Materials
from any of the Assets have been transported, stored, treated, recycled,
disposed of or released has been designated as a facility that is subject to
a
Claim under any Environmental Laws.
4.13 Employee
Matters.
At no
time prior to the Effective Time will the Operated Entities have had any
employees.
4.14 Benefit
Plan Liabilities.
At no
time prior to the Effective Time will the Operated Entities have maintained
any
Benefit Plans. At the Effective Time, the Operated Entities shall have no
liability with respect to any Benefit Plans.
4.15 No
Foreign Person.
HOLDINGS is not a “foreign person” as defined in Section 1445 of the Code and in
any regulations promulgated thereunder.
4.16 Capitalization
of the Subject Interests.
(a) The
JV
Interest (i) constitutes 25% of the outstanding ownership interests in the
JV, (ii) was duly authorized, validly issued, fully paid and
non-assessable, and (iii) was not issued in violation of any pre-emptive
rights.
(b) The
Interest and the Discovery Interest (i) collectively constitute 40% of the
outstanding ownership interests in DPS, (ii) were duly authorized, validly
issued, fully paid and non-assessable and (iii) were not issued in violation
of
any pre-emptive rights.
(c) HOLDINGS
or GP, as applicable, has good and valid title to the Subject Interests and,
except as provided or created by its limited liability company agreement or
other organizational or governance documents, the Securities Act or applicable
securities Laws, the Subject Interests are free and clear of any (i)
restrictions on transfer, Taxes, Liens, Claims, or Proceedings or (ii)
encumbrances, options, warrants, purchase rights, contracts, commitments,
equities or demands to the extent any of the same contain or create any right
to
acquire all or any right in or to the Subject Interests.
(d) There
are
no existing rights, agreements or commitments of any character obligating the
Operated Entities or to HOLDINGS’ Knowledge, the Non-Operated Entities, to
issue, transfer or sell any additional ownership rights or interests or any
other securities (debt, equity or otherwise) convertible into or exchangeable
for such ownership rights or interests or repurchase, redeem or otherwise
acquire any such interest.
4.17 Subsidiaries
and Other Equity Interests.
As of
Closing, the JV will not have any Subsidiaries or own, directly or indirectly,
any equity interest in any other Person except the limited liability company
interests and general and limited partnership interests listed on Schedule
4.17.
DPS
does not have any Subsidiaries or own, directly or indirectly, any equity
interest in any other Person except 100% of the membership interests of
DGT.
4.18 Bank
Accounts.
Except
as set forth on Schedule
4.18,
FCV,
DETG and ELP (and as of Closing, the JV, have no accounts or safe-deposit boxes
with banks, trust companies, savings and loan associations, or other financial
institutions.
4.19 [Reserved].
4.20 Investment
Intent.
HOLDINGS is acquiring the Units for its own account, and not with a view to,
or
for sale in connection with, the distribution thereof in violation of state
or
federal Law. HOLDINGS acknowledges that the Units have not been registered
under
the Securities Act or the securities Laws of any state and neither HOLDINGS
nor
any of its Affiliates has any obligation or right to register the Units except
as set forth in the Amended and Restated Partnership Agreement. Without such
registration, the Units may not be sold, pledged, hypothecated or otherwise
transferred unless it is determined that registration is not required. HOLDINGS,
itself or through its officers, employees or agents, has sufficient knowledge
and experience in financial and business matters to be capable of evaluating
the
merits and risks of an investment such as an investment in the Units, and
HOLDINGS, either alone or through its officers, employees or agents, has
evaluated the merits and risks of the investment in the Units.
4.21 Financial
Statements; Internal Controls; Undisclosed Liabilities.
To
HOLDINGS’ Knowledge:
(a) Schedule
4.21(a)
sets
forth a true and complete copy of the unaudited balance sheets as of March
31,
2007 and December 31, 2006 and 2005, and statements of income (loss),
comprehensive income (loss) and net equity, and statements of cash flow for
the
three months ended March 31, 2007, and for the years ended December 31, 2006,
2005 and 2004 for the business of the JV (the “Unaudited
Financial Statements”).
The
Unaudited Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly, in all material respects, the financial
condition of the business of the JV, as of such dates and the results of
operations of the business of the JV for such periods. There are no undisclosed
off-balance sheet arrangements that have or are reasonably likely to have a
Material Adverse Effect.
(b) Schedule
4.21(b)
sets
forth a true and complete copy of all final unaudited balance sheets, statements
of income, and statements of cash flow that relate to years 2006 or 2007 that
were provided to HOLDINGS or its Affiliates by the managing member of
DPS.
(c) There
are
no liabilities or obligations of the JV (whether known or unknown and whether
accrued, absolute, contingent or otherwise) and there are no facts or
circumstances that would reasonably be expected to result in any such
liabilities or obligations, other than (i) liabilities or obligations disclosed,
reflected or reserved against in the Unaudited Financial Statements, and (ii)
current liabilities incurred in the Ordinary Course of Business since December
31, 2006.
4.22 No
Other Representations or Warranties; Schedules.
HOLDINGS makes no other express or implied representation or warranty with
respect to the Entities or any of their respective Affiliates, the Assets or
the
transactions contemplated by this Agreement, and disclaims any other
representations or warranties. The disclosure of any matter or item in any
schedule to this Agreement shall not be deemed to constitute an acknowledgment
that any such matter is required to be disclosed.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF MLP
MLP
hereby represents and warrants to HOLDINGS:
5.1 Organization,
Good Standing, and Authorization.
MLP is
a limited partnership duly formed, validly existing and in good standing under
the Laws of the State of Delaware. MLP 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.
The execution and delivery of this Agreement and the Transaction Documents
to
which it is a party and the consummation by MLP of the transactions contemplated
herein have been duly and validly authorized by all necessary limited
partnership action by MLP. This Agreement has been duly executed and delivered
by MLP.
5.2 Enforceability.
This
Agreement constitutes, and upon execution and delivery of the Transaction
Documents to which MLP is a party, such Transaction Documents will constitute,
valid and binding obligations of MLP, enforceable against MLP 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 MLP of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby or
thereby, will not:
(a) provided
that any MLP 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 MLP is a
party;
(b) conflict
with or violate the Limited Partnership Agreement or result in the creation
of a
Lien on the Units; or
(c) provided
that all of the MLP Required Consents and Post Closing Consents have been
obtained, violate any Law applicable to MLP.
5.4 Consents,
Approvals, Authorizations and Governmental Regulations.
Except
(i) for Post-Closing Consents, and (ii) as set forth in Schedule
5.4
(the
items described in clauses (ii) being collectively referred to as the
“MLP
Required Consents”),
no
order, consent, waiver, permission, authorization or approval of, or exemption
by, or the giving of notice to or registration or filing with, any Third Person,
is necessary for MLP to execute, deliver and perform this Agreement or the
Transaction Documents to which it will be a party.
5.5 Litigation.
There
is no injunction, restraining order or Proceeding pending against MLP that
restrains or prohibits the consummation of the transactions contemplated by
this
Agreement.
5.6 Independent
Investigation.
MLP is
knowledgeable in the business of owning and operating natural gas and natural
gas liquids facilities and has had access to the Assets, the representatives
of
HOLDINGS and its Affiliates, and to the records of HOLDINGS and its Affiliates
with respect to the Assets. MLP ACKNOWLEDGES THAT THE ASSETS ARE 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, HOLDINGS HAS MADE
NO
REPRESENTATION OR WARRANTY 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 EXPRESSLY DISCLAIMED BY HOLDINGS AND EXCEPT AS SET FORTH IN
THIS AGREEMENT, WAIVED BY MLP. MLP FURTHER ACKNOWLEDGES THAT: (I) THE ASSETS
HAVE BEEN USED FOR NATURAL
GAS AND NATURAL GAS LIQUIDS
OPERATIONS AND PHYSICAL CHANGES IN THE ASSETS AND IN THE LANDS BURDENED THEREBY
MAY HAVE OCCURRED AS A RESULT OF SUCH USES; (II) THE ASSETS MAY INCLUDE BURIED
PIPELINES AND OTHER EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT BE KNOWN BY
HOLDINGS OR READILY APPARENT BY A PHYSICAL INSPECTION OF THE ASSETS OR THE
LANDS
BURDENED THEREBY; (III) MLP SHALL HAVE INSPECTED PRIOR TO CLOSING, OR SHALL
BE
DEEMED TO HAVE WAIVED ITS RIGHTS TO INSPECT, THE ASSETS AND THE ASSOCIATED
PREMISES, AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,
AND THAT MLP SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, ACCEPT
ALL OF THE SAME IN THEIR “AS IS, WHERE IS” CONDITION AND STATE OF REPAIR, AND
WITH ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE OF
MAN-MADE MATERIAL FIBERS AND THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
MATERIALS. EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, HOLDINGS MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO (A) THE
ACCURACY OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO MLP WITH RESPECT
TO
THE INTERESTS, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE INTERESTS,
PRICING ASSUMPTIONS, QUALITY OR QUANTITY OF THE INTERESTS, FREEDOM FROM PATENT
OR TRADEMARK INFRINGEMENT OR (B) FUTURE VOLUMES OF HYDROCARBONS OR OTHER
PRODUCTS TRANSPORTED, TREATED, STORED OR PROCESSED THROUGH OR AT THE ASSETS.
With respect to any projection or forecast delivered by or on behalf of HOLDINGS
or its Affiliates to MLP, MLP acknowledges that (i) there are uncertainties
inherent in attempting to make such projections and forecasts, (ii) MLP is
familiar with such uncertainties, (iii) MLP is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all such projections
and forecasts furnished to MLP and (iv) MLP will not have a claim against
HOLDINGS or any of its advisors or Affiliates with respect to such projections
or forecasts.
5.7 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 MLP or any
of
its Affiliates which is, or following the Closing would be, an obligation of
HOLDINGS or any of its Affiliates.
5.8 Investment
Intent.
MLP is
acquiring the Subject Interests for its own account, and not with a view to,
or
for sale in connection with, the distribution thereof in violation of state
or
federal Law. MLP acknowledges that the Subject Interests have not been
registered under the Securities Act or the securities Laws of any state and
neither HOLDINGS nor any of its Affiliates has any obligation to register the
Subject Interests. Without such registration, the Subject Interests may not
be
sold, pledged, hypothecated or otherwise transferred unless it is determined
that registration is not required. MLP, itself or through its officers,
employees or agents, has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an
investment such as an investment in the Subject Interests, and MLP, either
alone
or through its officers, employees or agents, has evaluated the merits and
risks
of the investment in the Subject Interests.
5.9 Available
Funds.
MLP
will have at Closing, sufficient cash to enable it to make payment in
immediately available funds of the cash portion of the Consideration when due
and any other amounts to be paid by it hereunder.
ARTICLE
VI
COVENANTS
AND ACCESS
6.1 Conduct
of Business.
HOLDINGS and MIDSTREAM each covenants and agrees that from and after the
execution of this Agreement and until the Closing:
(a) Without
the prior written consent of MLP, (i) HOLDINGS will not, and will not permit
the
Operated Entities to (or with respect to the Non-Operated Entities to, will
not
consent to allowing such Non-Operated Entity to) sell, transfer, assign, convey
or otherwise dispose of any Assets other than (A) the transfer of the Excluded
Assets; (B) the sale of inventory in the Ordinary Course of Business or (C)
the
sale or other disposition of equipment or other Personal Property which is
replaced with equipment or other Personal Property of comparable or better
value
and utility; (ii) except for the Existing Capital Projects, modify in any
respect the East Texas System that will require a capital expenditure in excess
of $1,000,000 (as to the 100% interest); (iii) make any adverse change in its
sales, credit or collection terms and conditions relating to the Assets; (iv)
do
any act or omit to do any act which will cause a material breach in any
Contract; (v) unless disputed in good faith, fail to pay when due all amounts
owed under the Contracts; or (vi) amend the Hedge, notwithstanding the
foregoing, the Parties acknowledge HOLDINGS may minimize the amount of Excess
Inventory held by the Entities prior to Closing;
(b) HOLDINGS
will not allow the Operated Entities to (or with respect to the Non-Operated
Entities, will not consent to allowing such Non-Operated Entity to) create
or
permit the creation of any Lien on any Asset other than Permitted Encumbrances;
(c) If
HOLDINGS becomes aware of any event or development that it reasonably believes
is likely to cause a material breach or default hereunder or to have a Material
Adverse Effect, it will give prompt written notice to MLP; and
(d) HOLDINGS
will and will cause the Operated Entities to (and with respect to the
Non-Operated Entities, will not consent to allowing such Non-Operated Entity
not
to):
(i) maintain
and operate the Assets in the Ordinary Course of Business, including regular
scheduled maintenance plans and capital expenditures, and pay or cause to be
paid all costs and expenses in connection therewith when due;
(ii) carry
on
its business in respect of the Assets in substantially the same manner as it
has
heretofore;
(iii) use
reasonable efforts to preserve its business in respect of the Assets intact,
to
keep available the services of the employees involved in the conduct of such
business and to preserve the goodwill of customers having business relations
with the applicable Entities in respect of the Assets, in each case, in all
material respects;
(iv) not
abandon any of the Assets or liquidate, dissolve, recapitalize or otherwise
wind
up its business;
(v) comply
in
all material respects with all of the rules, regulations and orders of any
Governmental Authority applicable to the Assets;
(vi) timely
file, properly and accurately make in all material respects all reports and
filings required to be filed with the appropriate Governmental Authority;
and
(vii) pay
all
Taxes with respect to the Assets which come due and payable prior to the Closing
Date;
(viii) not
make,
amend or revoke any material election with respect to Taxes;
(ix) not
amend
its organizational documents;
(x) not
make
any material change in any method of accounting or accounting principles,
practices or policies, other than those required by GAAP;
(xi) not
issue
or sell any equity interests, notes, bonds or other securities or incur, assume
or guarantee any indebtedness for borrowed money, or any option, warrant or
right to acquire same;
(xii) not
(A)
merge or consolidate with any Person; or (B) make any loan to any Person (other
than extensions of credit to customers in the Ordinary Course of Business and
inter-company loans under DCP Midstream, LLC’s cash management system);
and
(xiii) maintain
in full force and effect insurance policies covering the Assets.
(xiv) with
respect to the Contracts, not enter into any financial derivatives that would
be
Assumed Obligations unless the same are in compliance with MIDSTREAM’s risk
management guidelines.
6.2 Casualty
Loss.
(a) HOLDINGS
shall promptly notify MLP of any Casualty Loss of which HOLDINGS becomes aware
prior to the Closing. If a Casualty Loss occurs that would reasonably be
expected to have a Material Adverse Effect (a “Material
Casualty Loss”),
HOLDINGS shall have the right to extend the Closing Date for up to forty-five
(45) days for the purpose of repairing or replacing the Assets destroyed or
damaged by the Material Casualty Loss to the reasonable satisfaction of MLP.
If
HOLDINGS does not repair or replace the Assets destroyed or damaged by the
Material Casualty Loss prior to the Closing to the reasonable satisfaction
of
MLP and the Parties are unable to agree on a value to compensate MLP for the
Material Casualty Loss, MLP may terminate this Agreement upon fifteen (15)
days
written notice to HOLDINGS.
(b) If
this
Agreement is not terminated by MLP as provided in subsection
(a),
MLP’s
sole remedy with respect to any Casualty Loss in respect of Assets which are
not
repaired or replaced prior to the Closing to the reasonable satisfaction of
MLP
(but only to the extent not reflected in Net Working Capital) is to accept
a
value estimated by HOLDINGS and agreed to by MLP to be equal to (i) 40% of
the
cost to repair or replace the Assets of DPS or DGT affected by the Casualty
Loss
or (ii) 25% of the cost to repair or replace the Assets of any Operated Entity
affected by the Casualty Loss, as applicable; provided
that (A)
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
11.8;
(B)
with respect to any Casualty Loss affecting Assets of an Operated Entity, any
insurance, condemnation or taking proceeds shall be the sole property of (and,
if applicable, shall be assigned to) HOLDINGS; and (C) with respect to any
Casualty Loss affecting Assets of DPS or DGT, if DPS or DGT receives any
insurance, condemnation or takings proceeds on account of such Casualty Loss,
MLP shall promptly pay to HOLDINGS an amount equal to 40% of such
proceeds.
6.3 Access,
Information and Access Indemnity.
(a) Prior
to
Closing, HOLDINGS will make available at HOLDINGS’ offices to MLP and MLP’s
authorized representatives for examination as MLP may reasonably request, all
Records; provided, however, such material shall not include (i) any proprietary
data which relates to another business of HOLDINGS or its Affiliates and is
not
primarily used in connection with the continued ownership, use or operation
of
the Assets, (ii) any information subject to Third Person confidentiality
agreements for which a consent or waiver cannot be secured by HOLDINGS or its
Affiliates after reasonable efforts, or (iii) any information which, if
disclosed, would violate an attorney-client privilege or would constitute a
waiver of rights as to attorney work product or attorney-client privileged
communications.
(b) Subject
to subsection
(a)
above,
HOLDINGS shall permit MLP and MLP’s authorized representatives to consult with
employees of HOLDINGS and its Affiliates during the business hours of 8:00
a.m.
to 5:00 p.m. (local time), Monday through Friday and to conduct, at MLP’s sole
risk and expense, inspections and inventories of the Assets and to examine
all
Records over which HOLDINGS and its Affiliates have control. HOLDINGS shall
also
coordinate, in advance, with MLP to allow site visits and inspections at the
field sites on Saturdays unless operational conditions would reasonably prohibit
such access.
(c) MLP
SHALL
PROTECT, DEFEND, INDEMNIFY AND HOLD THE HOLDINGS’ INDEMNITEES HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS AND LOSSES OCCURRING ON OR TO THE ASSETS CAUSED
BY
THE ACTS OR OMISSIONS OF MLP, MLP’S AFFILIATES OR ANY PERSON ACTING ON MLP’S OR
ITS AFFILIATES’ BEHALF IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT
TO OR IN CONNECTION WITH THIS AGREEMENT PRIOR TO CLOSING, INCLUDING ANY SITE
VISITS AND ENVIRONMENTAL SAMPLING; PROVIDED, HOWEVER, THE FOREGOING OBLIGATION
OF MLP SHALL NOT APPLY WITH RESPECT TO ANY ENVIRONMENTAL CONDITIONS TO THE
EXTENT EXISTING PRIOR TO THE CONDUCT OF SUCH DUE DILIGENCE WHICH ARE DISCOVERED
DURING SUCH DUE DILIGENCE. MLP shall comply in all material respects with all
rules, regulations, policies and instructions issued by HOLDINGS or any Third
Person operator regarding MLP’s actions prior to Closing while upon, entering or
leaving any property included in the Assets, including any insurance
requirements that HOLDINGS may impose on contractors authorized to perform
work
on any property owned or operated by HOLDINGS.
6.4 Regulatory
Filings.
MLP and
HOLDINGS 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; provided, however, that the cost to obtain Post-Closing Consents
shall be borne by MLP.
6.5 Limitation
on Casualty Losses and Other Matters.
Notwithstanding any provision herein to the contrary, if either HOLDINGS or
MLP
reasonably determines that the anticipated aggregate value of any Casualty
Losses and a good faith estimate of HOLDINGS’ liability with respect to breaches
of representations and warranties of which either HOLDINGS or MLP has provided
notice to the other prior to Closing, exceeds $13,500,000, then such Party
shall
provide written notice to the other of such determination together with the
notifying Party’s calculations of the estimated costs, payments, reductions and
liabilities supporting such determination. Notwithstanding Section
9.1(c),
upon
the other Party’s receipt of such notice, the Party receiving the notice shall
have the right to terminate this Agreement at any time prior to Closing upon
ten
(10) days written notice to the other Party.
6.6 Supplements
to Exhibits and Schedules.
HOLDINGS may, from time to time, by written notice to MLP at any time prior
to
the Closing Date, supplement or amend the Exhibits and Schedules to correct
any
matter that would constitute a breach of any representation or warranty of
HOLDINGS herein contained. MLP shall have a minimum of five (5) Business Days
to
review such supplement or amendment and the Closing shall be extended as
required to allow MLP to do so; provided, however, if MLP reasonably determines
that any individual new disclosure item set forth in any such supplement or
amendment would increase the amount of the Assumed Obligations by more than
$50,000, then MLP shall notify HOLDINGS of such determination together with
MLP’s calculations of such increase in the amount of the Assumed Obligations.
Promptly upon HOLDINGS’ receipt of such written notice, the Parties shall
endeavor in good faith to agree to a value to be paid by HOLDINGS to MLP
therefore or other mutually agreeable remedy to address the matters which are
the subject of such supplement(s) and amendment(s) to the Exhibits and
Schedules. If within fifteen (15) days of HOLDINGS’ receipt of such written
notice, the Parties have not agreed to a value to be paid by HOLDINGS to MLP
therefore or another mutually agreeable remedy, MLP shall have the right to
terminate this Agreement at any time during the five (5) Business Days following
the expiration of such fifteen (15) day period by provision of written notice
to
HOLDINGS. Notwithstanding any other provision hereof, (a) if the Closing occurs,
any such supplement or amendment will be effective to cure and correct for
all
purposes any breach of any representation or warranty that would have existed
if
such supplement or amendment had not been made and (b) HOLDINGS may, from time
to time, by written notice to MLP at any time prior to the Closing Date, correct
any representation or warranty with respect to matters that would constitute
a
breach of any representation or warranty of HOLDINGS herein contained if such
representation or warranty relates to any or all of the Non-Operated Entities
and is qualified by Knowledge.
6.7 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 to the extent pertaining
to such other Parties’ obligations hereunder 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. MLP agrees that HOLDINGS
may retain a copy of the Records to the extent such Records pertain to its
obligations hereunder.
6.8 Measurement
and Valuation of Excess Inventory.
Representatives of HOLDINGS and MLP shall jointly calculate the quantity and
value of Excess Inventory in accordance with Schedule
6.8,
which
value
shall be deemed effective as of the Effective Time and will
be
reflected in Net Working Capital
6.9 Capital
Projects.
(a) The
Entities are currently constructing or participating in the construction of
those capital projects described on Schedule
6.9(a)
(the
“Existing
Capital Projects”).
HOLDINGS or its Affiliates shall continue such construction of or participation
in the Existing Capital Projects until the Effective Time, and, from and after
the Effective Time until three years thereafter, HOLDINGS will reimburse
(i) the JV on a monthly basis for any costs and expenses incurred by the JV
to complete the Existing Capital Projects attributable to the JV Interest and
(ii) the MLP on a monthly basis for 40% of any costs and expenses incurred
by the Non-Operated Entities to complete the Existing Capital Projects
attributable to the Interest and the Discovery Interest.
(b) Notwithstanding
anything to the contrary, any other capital expenditures for projects or
maintenance capital (but excluding capital expenditures related to the Existing
Capital Projects, Casualty Losses or the matter described in Schedule
6.9(c))
(collectively, the “New
Capital Projects”)
incurred between March 15, 2007 and Closing and attributable to the Subject
Interests shall be reimbursed by MLP to HOLDINGS as provided in Section
2.2.
(c) With
respect to the East Texas Inlet Liquid Handling Facilities project, which is
described in Schedule
6.9(c),
if all
AFE’s (to the extent primarily related to this project) prepared and
approved by HOLDINGS or the JV between the date hereof and five (5) years
after the date hereof indicate that the JV's reasonable and quantifiable
estimate of the aggregate project pre-tax internal rate of return (“IRR”)
is (a)
less than 10%, HOLDINGS will pay (outside of the JV) to the MLP 25% of the
difference between the reasonable and quantifiable estimate of pre-tax IRR
and
10%, and (b) more than 10%, the MLP will pay (outside of the JV) to HOLDINGS
25%
of the difference between the reasonable and quantifiable estimate of pre-tax
IRR and 10%. MLP and HOLDINGS shall each have the right to review and
provide input regarding the reasonable and quantifiable estimate of the
aggregate project IRR and associated assumptions.
6.10 New
Debt.
MLP or
its Affiliates will incur new indebtedness that will be used and subject to
the
restrictions and other matters as set forth in Schedule
6.10.
6.11 [Reserved.]
6.12 Tax
Covenants.
(a) Preparation
of Tax Returns.
MIDSTREAM shall prepare and file or cause to be prepared and filed all Tax
Returns with the appropriate federal, state, local and foreign Tax Authorities
relating to the Operated Entities for periods ending on or prior to the Closing
Date, and shall pay all Taxes due with respect to such Tax Returns, to the
extent not accrued in the Final Settlement Statement. MIDSTREAM shall pay all
Taxes due with respect to the Tax Returns of the Non-Operated Entities for
periods ending on or prior to the Closing Date to the extent not accrued in
the
Final Settlement Statement. The Parties shall cause the JV to prepare and file,
or cause to be prepared and filed, all other Straddle Tax Returns required
to be
filed by the Operated Entities and also shall cause the JV to cause the Operated
Entities to pay the Taxes shown to be due thereon; provided, however, that
MIDSTREAM shall promptly reimburse the JV for the portion of such Tax that
relates to a Pre-Closing Tax Period, to the extent not accrued in the Final
Settlement Statement. MIDSTREAM shall furnish to the JV all information and
records reasonably requested by the JV for use in preparation of any Straddle
Tax Returns. The Parties shall cause the JV to allow MIDSTREAM to review,
comment upon and reasonably approve without undue delay any Straddle Tax Return
at any time during the twenty (20) day period immediately preceding the filing
of such Tax Return.
(b) Close
of Prior Periods.
Except
as otherwise provided in Section
11.3,
the
Parties shall, unless prohibited by Law, cause the Operated Entities to close
all Tax periods on the Closing Date, with MIDSTREAM bearing the sole obligation
for filing the Tax Returns and paying all Taxes for such Tax periods. If
applicable Law does not permit any of the Operated Entities to close a Tax
period on the Closing Date, except as otherwise provided in this Section
6.12(b),
the
amount of Taxes allocable to the portion of such period ending on the Closing
Date shall be deemed equal to the amount that would be payable if the relevant
taxable period ended on the Closing Date. Any allocation of income or deductions
required to determine any income Taxes relating to such period shall be taken
into account as though the relevant taxable period ended on the Closing Date
and
by means of a closing of the books and records of the Operated Entities on
the
Closing Date; provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation
and
amortization deductions) shall be allocated between the period ending on the
Closing Date and the period after the Closing Date in proportion to the number
of days in each such period. All Tax Returns filed by the JV, MIDSTREAM and
the
Operated Entities shall be prepared consistently with such allocation.
Notwithstanding anything to the contrary herein, any franchise Tax paid or
payable with respect to the Operated Entities shall be allocated to the taxable
period during which the income, operations, assets or capital comprising the
base of such Tax is measured, regardless of whether the right to do business
for
another taxable period is obtained by the payment of such franchise Tax.
(c) Refund
or Credit.
Any
refund or credit (including any interest with respect thereto) of Taxes of
the
Entities attributable to any taxable period (or portion thereof) ending on
or
before the Closing Date shall be the property of MIDSTREAM to the extent not
previously accrued in the Final Settlement Statement, and if Tax refunds or
credits in excess of that accrued in the Final Settlement Statement are received
by the JV or the Entities after the Closing Date, the Parties shall cause the
JV
to promptly notify MIDSTREAM of such refund or credit and pay over to MIDSTREAM
the amount of such refund or credit net of any Tax liability imposed on the
JV
or the Operated Entities in connection with the receipt of such refund and,
with
respect to the Non-Operated Entities, MLP shall promptly notify and pay over
to
MIDSTREAM the amount of such refund or credit net of any Tax liability imposed
on the Non-Operated Entities as to the interest to be transferred hereby).
(d) Post-Closing
Assistance.
The
Parties will each provide as applicable and also cause the JV to provide, and
subsequent to the Closing, will cause the JV to in turn cause the Operated
Entities to provide MIDSTREAM with such assistance as may reasonably be
requested in connection with the preparation of any Tax Return, any audit or
other examination by any Tax Authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or determination.
The
Party requesting assistance will reimburse the other Parties, as applicable,
for
reasonable out-of-pocket expenses (other than salaries or wages of any employees
of the Parties) incurred in providing such assistance. Any information obtained
pursuant to this Section
6.12(d)
or
pursuant to any other Section hereof providing for the sharing of information
or
the review of any Tax Return or other schedule relating to Taxes will be kept
confidential by the Parties.
(e) Maintaining
Records.
MIDSTREAM will maintain, and the Parties will cause the JV to maintain, all
Tax
records, working papers and other supporting financial records and documents
in
their possession relating to the Tax Returns filed by Operated Entities for
all
open years. Such Tax Returns concerning the Operated Entities will be delivered
to and maintained by MIDSTREAM for a period of seven years after the Closing,
and MIDSTREAM will make the same available to the JV or its agents at reasonable
times for inspection and copying.
(f) Allocation
Statement.
As
promptly as practicable, but in no event later than sixty (60) days after the
delivery of Final Settlement Statement, MLP shall prepare and deliver to
MIDSTREAM a statement (the “Allocation
Statement”)
allocating the Consideration among the assets of the Entities in accordance
with
Section 1060 of the Code and the Treasury Regulations promulgated thereunder.
MIDSTREAM shall have fifteen (15) days to review the Allocation Statement and
shall notify MLP of any disputes with the allocation as set forth in the
Allocation Statement. The Parties shall negotiate in good faith to resolve any
such dispute prior to the date that is sixty (60) days prior to the due date
of
the Tax Returns that reflect the allocation. If the Parties cannot resolve
the
disputed allocation prior to such date, then the dispute shall be referred
to
the Independent Accountant to review and to determine the proper allocation
(it
being understood that in making such determination, the Independent Accountant
shall be functioning as an expert and not as an arbitrator). The Independent
Accountant shall deliver to MIDSTREAM and MLP, as promptly as practicable (but
in any case no later than thirty (30) days from the date of engagement of the
Independent Accountant), a determination of the allocation, which determination
will be binding on the parties hereto. The cost of such review and report shall
be borne one-half by MIDSTREAM and one-half by MLP. The Parties agree that
all
Tax Returns filed by the JV, MIDSTREAM, the Operated Entities and each of their
Affiliates concerning the Operated Entities or the Assets shall be prepared
consistently with the allocation concerning such Operated Entities determined
under this Section
6.12.
(g) Notice
of Audit.
If
notice of any claim, audit, examination, or other proposed change or adjustment
by any Tax Authority, as well as any notice of assessment and any notice and
demand for payment, concerning any Taxes for any taxable period (or portion
thereof) ending on or before the Closing Date (a “Tax
Proceeding”)
shall
be received by the JV, the Parties shall cause the JV to promptly inform
MIDSTREAM in writing of such Tax Proceeding. MIDSTREAM shall have the right,
at
its expense to represent the interests of the JV, FCV and ELP (and, with respect
to DPS and DGT, MLP shall similarly inform MIDSTREAM in writing of such Tax
Proceeding and shall not object to MIDSTREAM representing its interests) and
control the prosecution, defense and settlement of any Tax Proceeding relating
exclusively to taxable periods ending on or before the Closing Date. MIDSTREAM
shall represent, at its expense, the interests of the Operated Entities in
any
Tax Proceeding relating to any taxable period that begins on or before the
Closing Date and ends after the Closing Date; provided, however, that (i)
MIDSTREAM shall allow MLP and its counsel to participate in any such Tax
Proceeding at MLP’s sole expense; (ii) MIDSTREAM shall keep MLP fully and timely
informed with respect to the commencement, status and nature of such Tax
Proceeding; and (iii) if the results of any such Tax Proceeding involve an
issue
that is otherwise the subject of indemnification by MIDSTREAM under this
Agreement or for which a refund may be available to MIDSTREAM, then MLP and
MIDSTREAM shall, subject to the indemnification procedures set forth in
Article
X,
jointly
control the prosecution, defense and settlement of any such Tax Proceeding,
each
Party shall cooperate with the other Party at its own expense and there shall
be
no settlement or closing or other agreement with respect thereto without the
consent of the other Party, which consent shall not be unreasonably
withheld.
(h) Carry
Back of Losses.
The
Parties agree that, unless required by applicable Law, the JV shall not, and
shall not cause or permit any of the JV, FCV or ELP (and, with respect to DPS
or
DGT, MLP shall not consent to DPS or DGT) to, carry back to any taxable period
ending on or prior to the Closing Date any net operating loss or other Tax
attribute and further agree that MIDSTREAM has no obligation under this
Agreement or otherwise to return or remit any refund or other Tax benefit
attributable to a breach of the foregoing undertaking.
(i) Certain
Elections.
The
Parties shall cause the JV to not make any Tax elections that would affect
MIDSTREAM or any of its Affiliates (including the Operated Entities) for any
taxable period (or portion thereof, determined under Section
6.12(f))
ending
on or prior to the Closing Date.
6.13 Financial
Statements and Financial Records.
(a) On
or
before September 14, 2007, HOLDINGS shall prepare and deliver, or cause the
preparation and delivery, to the MLP (i) balance sheets as of December 31,
2006
and 2005 with respect to the business of the JV and related combined income
statements and cash flow statements with respect to the business of the JV
for
the years ended December 31, 2006, 2005 and 2004 (such statements, including
the
related notes and schedules thereto, are referred to herein as the “Annual
Financial Statements”)
and
(ii) a balance sheet as of March 31, 2007, and the related combined income
and
cash flow statements for the interim period from January 1, 2007 through the
date of such balance sheet and comparative income statements and cash flow
statements for the comparable period in 2006 (the “Stub
Period Financial Statements”),
in
each case in accordance with the requirements of Regulation S-X adopted by
the
SEC and, in the case of the Stub Period Financial Statements, on a basis
consistent with the basis of presentation of the Annual Financial Statements
(except to the extent of differences permitted by Regulation S-X with respect
to
financial statements for interim periods). The Annual Financial Statements
and
the Stub Period Financial Statements are collectively the “SEC
Financial Statements.”
(b) HOLDINGS
shall consent to the inclusion or incorporation by reference of the SEC
Financial Statements in any registration statement, report or other document
of
MLP or any of its Affiliates to be filed with the SEC in which MLP or such
Affiliate reasonably determines that the SEC Financial Statements are required
to be included or incorporated by reference to satisfy any rule or regulation
of
the SEC or to satisfy relevant disclosure obligations under the Securities
Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
HOLDINGS shall cause its auditors to consent to the inclusion or incorporation
by reference of its audit opinion with respect to the Annual Financial
Statements in any such registration statement, report or other document and,
in
connection therewith, HOLDINGS shall execute and deliver to its auditors such
representation letters, in form and substance customary for representation
letters provided to external audit firms by management of the company whose
financial statements are the subject of an audit, as may be reasonably requested
by its auditors.
(c) HOLDINGS
shall furnish to MLP within five (5) days of receipt copies of all audited
balance sheets, statements of income, and statements of cash flow with respect
to DPS that relate to years 2006 or 2007 that are provided after the date hereof
to HOLDINGS or its Affiliates by the managing member of DPS.
6.14 Insurance.
(a) MIDSTREAM
shall continue to provide certain existing property and liability insurance
coverage related to the Assets (the “Insurance”)
and
administer any insured claims asserted by MLP. The Insurance is part of
MIDSTREAM’s corporate insurance program. It is anticipated that the Insurance
will be provided for up to one (1) year. However, either Party may terminate
any
or all of the Insurance upon 30 days notice. MIDSTREAM will invoice MLP for
premiums related to the Insurance with respect to its interest. MLP shall pay
such invoices within 30 days after receipt. With respect to the Insurance,
MLP
shall be solely responsible for (a) deductibles, (b) self insured retentions,
(c) out of pocket costs, (d) claims that are not insured or excluded from
coverage, and (e) amounts in excess of policy limits. The foregoing costs shall
be paid directly by MLP with respect to its interest.
(b) If
after
the Closing, any Entity receives any insurance recovery of amounts that are
not
reflected in the calculation of Net Working Capital and are attributable to
any
occurrence or loss prior to Closing, MLP shall pay to HOLDINGS within 30 days
after the Entity receives such recovery, in the case of a recovery by the JV
or
its Subsidiaries, 25% of such recovery or in the case of a recovery by a
Non-Operated Entity, 40% of such recovery.
6.15 Consent
to Transfer Hedge.
Notwithstanding anything to the contrary, if prior to the Closing, HOLDINGS
is unable to assign to MLP or its designee the Hedge due to transfer
restrictions set forth therein, then such assignment shall not be made and
it
shall not constitute either a beach of this Agreement or an unsatisfied Closing
condition, and the Parties will enter into arrangements to grant to MLP or
its designee the equivalent benefits and impose on MLP the equivalent
obligations in relation to such Hedge as if such assignment had been
made.
ARTICLE
VII
CONDITIONS
TO CLOSING
7.1 HOLDINGS’
Conditions.
The
obligation of HOLDINGS to close is subject to the satisfaction of the following
conditions, any of which may be waived in HOLDINGS’ sole
discretion:
(a) The
representations of MLP contained in Article
V
shall be
true, in all material respects (or, in the case of representations or warranties
that are already qualified by a materiality standard, shall be true in all
respects) on and as of Closing.
(b) MLP
shall
have performed in all material respects the obligations, covenants and
agreements of MLP contained herein.
(c) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS or
the
Entities that restrains or prohibits the consummation of the transactions
contemplated by this Agreement.
(d) All
of
HOLDINGS’ Required Consents, MLP’s Required Consents, and consents under the
Real Property Interests, Contracts and Permits shall have been
obtained.
(e) MLP
shall
have made all deliveries in accordance with Section
8.2.
7.2 MLP’s
Conditions.
The
obligation of MLP to close is subject to the satisfaction of the following
conditions, any of which may be waived in its sole discretion:
(a) The
representations of HOLDINGS contained in Article
IV
shall be
true, in all material respects (or in the case of representations or warranties
that are already qualified by a materiality standard, shall be true in all
respects) on and as of the Closing.
(b) HOLDINGS
shall have performed, in all material respects, the obligations, covenants
and
agreements of HOLDINGS contained herein.
(c) There
is
no injunction, restraining order or Proceeding pending against HOLDINGS or
the
Entities that restrains or prohibits the consummation of the transactions
contemplated by this Agreement.
(d) All
of
HOLDINGS’ Required Consents, MLP’s Required Consents, and consents under the
Real Property Interests, Contracts and Permits shall have been obtained.
(e) There
shall have been no events or occurrences that could reasonably be expected
to
have a Material Adverse Effect.
(f) HOLDINGS
shall have delivered all documents in accordance with Section
8.2.
(g) HOLDINGS
shall have delivered a signed endorsement to Chubb Environmental Site Liability
Policy #3731-0090 that adds the JV and DETG as named insureds effective 12:01
A.M. July 1, 2007.
(h) MLP
shall
have received financial statements with respect to DPS that are satisfactory
to
MLP in its sole discretion.
7.3 Exceptions.
Notwithstanding the provisions of Sections
7.1(a)
and
(b)
and
7.2(a)
and
(b),
no
Party shall have the right to refuse to close the transaction contemplated
hereby by reason of this Article
VII
unless
(a) in the case of HOLDINGS, the sum of all representations of MLP contained
in
Article
V
which
are not true and all obligations, covenants and agreements which MLP has failed
to perform, would reasonably be expected to have a Material Adverse Effect,
and
(b) in the case of MLP, the sum of all representations of HOLDINGS contained
in
Article
IV
which
are not true and all obligations, covenants and agreements which HOLDINGS has
failed to perform, would reasonably be expected to have a Material Adverse
Effect.
ARTICLE
VIII
CLOSING
8.1 Time
and Place of Closing.
The
consummation of the transactions contemplated by this Agreement (the
“Closing”)
shall
take place in the offices of MIDSTREAM in Denver, Colorado at (a) a
pre-closing at 9:00 a.m. on June 29, 2007 (at which the Transaction Documents
and Officer’s Certificates will be executed) and (b) a final closing at 9:00
a.m. Denver time on July 2, 2007 (unless such date is otherwise extended by
either HOLDINGS or MLP as permitted hereunder); or on the last day of the month
following the receipt of the consents required by Sections
7.1(d)
and
7.2(d)
(if
later than the foregoing specified date of Closing), 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.
8.2 Deliveries
at Closing.
At the
Closing,
(a) HOLDINGS,
as applicable, will execute and deliver or cause to be executed and delivered
to
MLP:
(i) Each
of
the Transaction Documents to which HOLDINGS or Affiliates are a party;
(ii) Certificates
of a corporate officer or other authorized person dated the Closing Date,
certifying on behalf of HOLDINGS that the conditions in Sections
7.2(a)
and
(b)
have
been fulfilled.
(b) MLP
will
execute and deliver or cause to be executed and delivered to
HOLDINGS:
(i) Each
of
the Transaction Documents to which MLP or MLP’s Affiliates are a party;
(ii) A
certificate of a corporate officer or other authorized person dated the Closing
Date certifying on behalf of MLP that the conditions in Sections
7.1(a)
and
(b)
have
been fulfilled;
(iii) A
certificate, in the form of Certificate for Common Units attached as
Exhibit
E,
for the
number of Units determined in accordance with Section
2.1;
(iv) A
wire
transfer to HOLDINGS of the amount due with respect to the Cash Consideration
(as set forth in the Preliminary Settlement Statement).
ARTICLE
IX
TERMINATION
9.1 Termination.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
as follows:
(a) HOLDINGS
and MLP may elect to terminate this Agreement at any time prior to the Closing
by mutual written consent thereof;
(b) Either
HOLDINGS or MLP by written notice to the other may terminate this Agreement
if
the Closing shall not have occurred on or before August 1, 2007; provided,
however, that neither Party may terminate this Agreement if such Party is at
such time in material breach of any provision of this Agreement;
(c) HOLDINGS
and MLP may each terminate this Agreement at any time on or prior to the Closing
if either MLP, on the one hand, or HOLDINGS, on the other hand, shall have
materially breached any representations, warranties or covenants thereof herein
contained with the sum of such breach or breaches reasonably expected to have
a
Material Adverse Effect and the same is not cured within thirty (30) days after
receipt of written notice thereof from the applicable non-breaching Party;
provided, however, that neither Party may terminate this Agreement if such
Party
is at such time in material breach of any representations, warranties or
covenants of such Party; and
(d) In
addition to the foregoing, any Party may terminate this Agreement to the extent
such termination is expressly authorized by another provision of this
Agreement.
9.2 Effect
of Termination Prior to Closing.
If
Closing does not occur as a result of any Party exercising its right to
terminate pursuant to Section
9.1,
then no
Party shall have any further rights or obligations under this Agreement, except
that (i) nothing herein shall relieve any Party from any liability for any
willful breach of this Agreement, and (ii) the provisions of Section
6.3(c)
and
Article
XI
shall
survive any termination of this Agreement.
ARTICLE
X
INDEMNIFICATION
10.1 Indemnification
by MLP.
Effective upon Closing, MLP shall defend, indemnify and hold harmless HOLDINGS
and its Affiliates, and all of its and their directors, officers, employees,
partners, members, contractors, agents, and representatives (collectively,
the
“HOLDINGS
Indemnitees”)
from
and against any and all Losses asserted against, resulting from, imposed upon
or
incurred by any of the HOLDINGS Indemnitees as a result of or arising out
of:
(a) the
breach of any of the representations or warranties under Article
V;
(b) the
breach of any covenants or agreements of MLP contained in this Agreement;
and
(c) to
the
extent that HOLDINGS is not required to indemnify any of the MLP Indemnitees
pursuant to Section
10.2,
the
Assumed Obligations.
10.2 Indemnification
by HOLDINGS.
Effective upon Closing, HOLDINGS shall defend, indemnify and hold harmless
MLP
and its Affiliates, and all of its and their directors, officers, employees,
partners, members, contractors, agents, and representatives (collectively,
the
“MLP
Indemnitees”)
from
and against any and all Losses asserted against, resulting from, imposed upon
or
incurred by any of the MLP Indemnitees as a result of or arising out
of:
(a) the
breach of any of the representations or warranties under Article
IV
(other
than Sections
4.1,
4.2,
4.16
and
4.17),
(b) subject
to Section
6.9,
to the
extent not accounted for in the Final Settlement Statement, Claims asserted
within one (1) year after Closing to the extent related to underpayment of
trade
payables for periods prior to the Effective Time;
(c) with
respect to the Former UP Fuels Properties, Claims by Governmental Authorities
asserted within two (2) years after Closing to the extent related to fines
and
penalties for periods between April 1, 1999 and Closing;
(d) with
respect to the Former Gulf South Properties, Claims by Governmental Authorities
asserted within two (2) years after Closing to the extent related to fines
and
penalties for periods between March 31, 2005 and Closing;
(e) to
the
extent and subject to any limitations provided therein, any matters set forth
on
Schedule
10.2(e);
(f) the
breach of any of the representations or warranties under Sections
4.1,
4.2,
4.16
and
4.17
or the
covenants or agreements of HOLDINGS contained in this Agreement;
and
(g) any
Reserved Liabilities.
10.3 Deductibles,
Caps, Survival and Certain Limitations.
(a) Subject
to this Section
10.3,
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 HOLDINGS:
(i) under
Sections
10.2(a)
or
(b),
none of
the MLP Indemnitees shall be entitled to assert any right to indemnification
after one (1) year from the Closing;
(ii) under
Section
10.2(c)
or
(d),
none of
the MLP Indemnitees shall be entitled to assert any right to indemnification
after two (2) years from the Closing;
(iii) none
of
the MLP 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 exceeds $50,000 (“Qualified
Claims”);
(iv) under
Section
10.2(a),
none of
the MLP Indemnitees shall be entitled to assert any right to indemnification
unless Qualified Claims for which indemnity in only provided under Section
10.2(a)
in the
aggregate exceed $2,700,000, and then only to the extent that all such Qualified
Claims exceed said amount; and
(v) under
Section
10.2(a),
none of
the MLP Indemnitees shall be entitled to indemnification for any amount in
excess of $27,000,000.
(c) Any
claim
for indemnity under this Agreement made by a Party Indemnitee shall be in
writing, be delivered in good faith prior to the respective survival period
under Section
10.3(b)
(to the
extent applicable), 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 (if applicable) delivered Claim Notice
shall survive with respect to the specific matter described therein.
(d) Notwithstanding
anything contained herein to the contrary, in no event shall HOLDINGS be
obligated under this Agreement to indemnify (or be otherwise liable hereunder
in
any way whatsoever to) any of the MLP Indemnitees with respect to a breach
of
any representation or warranty, if MLP had Knowledge thereof at Closing and
failed to notify HOLDINGS of such breach prior to Closing. Unless HOLDINGS
or a
Third Person shall have made a claim or demand or it appears reasonably likely
that such a claim or demand appears reasonably likely, MLP shall not take any
voluntary action that is intended by MLP to cause a Claim to be initiated that
would be subject to indemnification by HOLDINGS.
(e) All
Losses indemnified hereunder shall be determined net of any (i) Third Person
Awards, (ii) Tax Benefits; and (iii) amount which specifically pertains to
such
Loss and is reflected in the calculations of the amounts set forth on the Final
Settlement Statement.
10.4 Notice
of Asserted Liability; Opportunity to Defend.
(a) All
claims for indemnification hereunder shall be subject to the provisions of
this
Section
10.4.
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) If
any
Claim is asserted against or any Loss is sought to be collected from an
Indemnified 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
indemnification hereunder unless the Indemnified Party has proceeded to contest,
defend or settle such Claim or remedy such a Loss with respect to which it
has
failed to give a Claim Notice to the Indemnifying Party, but only to the extent
the Indemnifying Party is prejudiced thereby. 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
11.8
hereof,
(ii) in the case where Losses are asserted against or sought to be collected
from an Indemnifying Party by the Indemnified Party, whether or not the
Indemnifying Party shall at its own sole cost and expense remedy such Losses
or
(iii) in the case where Claims are asserted against or sought to be collected
from an Indemnified Party, whether or not the Indemnifying Party shall at its
own sole cost and expense defend the Indemnified Party against such 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 Claim described in Section
10.4(c)(iii)
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 Claim,
then
the Indemnified Party may, in its sole discretion, separately and independently
contest and defend such 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) If
the
Indemnifying Party notifies the Indemnified Party within the Notice Period
that
it shall defend the Indemnified Party against a 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 (subject to obtaining a full and complete
release of all Indemnified Parties) 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 Party joins in any such Claim, the Indemnifying Party shall have
full authority to determine all action to be taken with respect thereto, as
long
as such action could not create a liability to any of the Indemnified Parties,
in which case, such action would require the prior written consent of any
Indemnified Party so affected.
(g) If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Claim and in
making any counterclaim against the Third Person asserting the Claim, or any
cross-complaint against any person as long as such cooperation, counterclaim
or
cross-complaint could not create a liability to any of the Indemnified Parties.
(h) At
any
time after the commencement of defense by Indemnifying Party under Section
10.4(f)
above of
any 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 Claim, but only if the Indemnifying
Party
agrees in writing to be solely liable for such 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. If 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 Claim;
provided that, the other Person to the contested Claim had agreed in writing
to
accept such amount in payment or compromise of the Claim as of the time the
Indemnifying Party made its request therefor 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 Claim.
10.5 Materiality
Conditions.
For
purposes of determining whether an event described in this Article
X
has
occurred for which indemnification under this Article
X
can be
sought, any requirement in any representation, warranty, covenant or agreement
by HOLDINGS or MLP, as applicable, contained in this Agreement that an event
or
fact be “material,” “Material,” meet a certain minimum dollar threshold or have
a “Material Adverse Effect” or a material adverse effect (each a “Materiality
Condition”)
in
order for such event or fact to constitute a misrepresentation or breach of
such
representation, warranty, covenant or agreement under this Agreement, such
Materiality Condition shall be disregarded and such representations, warranties,
covenants or agreements shall be construed solely for purposes of this
Article
X
as if
they did not contain such Materiality Conditions. Notwithstanding anything
in
this Section
10.5,
any
claim for indemnification under this Article
X
will be
subject to Section
10.3.
10.6 Exclusive
Remedy.
AS
BETWEEN THE MLP INDEMNITEES AND THE HOLDINGS INDEMNITEES, AFTER CLOSING (A)
THE
EXPRESS INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT, WILL BE THE
SOLE
AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT
TO
SAID AGREEMENT AND THE EVENTS GIVING RISE THERETO, AND THE TRANSACTIONS PROVIDED
FOR THEREIN OR CONTEMPLATED THEREBY (OTHER THAN THE OTHER TRANSACTION DOCUMENTS)
AND (B) NEITHER PARTY NOR ANY OF ITS RESPECTIVE SUCCESSORS OR ASSIGNS SHALL
HAVE
ANY RIGHTS AGAINST THE OTHER PARTY OR ITS AFFILIATES WITH RESPECT TO THE
TRANSACTIONS PROVIDED FOR HEREIN OTHER THAN AS IS EXPRESSLY PROVIDED IN THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.
10.7 Negligence
and Strict Liability Waiver.
WITHOUT
LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH
IN
THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION UNDER
THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF, 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.
10.8 Limitation
on Damages.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL
ANY OF HOLDINGS OR MLP BE LIABLE TO THE OTHER, OR TO THE OTHERS’ INDEMNITEES,
UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE,
CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS; PROVIDED THAT,
IF ANY OF THE HOLDINGS INDEMNITEES OR MLP INDEMNITEES IS HELD LIABLE TO A THIRD
PERSON FOR ANY SUCH DAMAGES AND THE INDEMNITOR IS OBLIGATED TO INDEMNIFY SUCH
HOLDINGS INDEMNITEES OR MLP 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.
10.9 Bold
and/or Capitalized Letters.
THE
PARTIES AGREE THAT THE BOLD AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT
CONSTITUTE CONSPICUOUS LEGENDS.
ARTICLE
XI
MISCELLANEOUS
PROVISIONS
11.1 Expenses.
Unless
otherwise specifically provided for herein, each Party 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; provided
that HOLDINGS will bear the cost of all Post-Closing Consents which must be
obtained from any railroad.
11.2 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.
11.3 Transfer
Taxes.
The
Parties believe that the contribution of the Subject Interests as provided
for
herein 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, MLP shall timely pay and solely bear all such
type of Taxes.
11.4 Assignment.
Neither
Party may assign this Agreement or any of its rights or obligations arising
hereunder without the prior written consent of the other Party; provided,
however, MLP shall be permitted to assign this Agreement to an Affiliate prior
to Closing, provided, that, notwithstanding such assignment, MLP shall continue
to remain responsible for all obligations of MLP hereunder following such
assignment.
11.5 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. 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.
11.6 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.
11.7 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.
11.8 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 Colorado, without reference to conflicts of
Laws
principles.
(b) Negotiation.
In the
event of any Arbitral Dispute, the Parties shall promptly seek to resolve any
such Arbitral Dispute by negotiations between senior executives of the Parties
who have authority to settle the Arbitral Dispute. When a Party believes there
is an Arbitral Dispute under this Agreement that Party will give the other
Party
written notice of the Arbitral 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. If the Arbitral Dispute involves
a
claim arising out 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 Arbitral 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 Arbitral 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
Arbitral Dispute has not been resolved within sixty (60) days after the date
of
the response given pursuant to Section
11.8(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
11.8(b)
or
otherwise refuses to participate under the provisions of Section
11.8(b),
either
Party may initiate binding arbitration pursuant to the provisions of
Section
11.8(d)
below.
(d) Arbitration.
Any
Arbitral 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
11.8(d)
and the
Arbitration Rules or the Federal Arbitration Act, the terms of this Section
11.8(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 Arbitral 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
thirty (30) 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 thirty (30) 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 District of Colorado, or such other person
designated by such judge. The two arbitrators so selected shall within thirty
(30) 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 thirty (30) day period, either Party may request the Chief U.S. District
Court Judge for the District of Colorado, or such other person designated by
such judge to select the third arbitrator as soon as possible. If 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 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 Denver, Colorado, 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 exemplary,
punitive, remote, speculative, consequential, special or incidental
damages.
(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 Colorado, 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 Arbitral Dispute as
provided in Section
11.8(b)
above
until such time as the Arbitral Dispute has been resolved pursuant to
Section
11.8(b),
or an
arbitration award has been entered pursuant to this Section
11.8(d).
(e) Recovery
of Costs and Attorneys’ Fees.
If
arbitration arising out of this Agreement is initiated by either Party, the
decision of the arbitrators may include the award of court costs, fees and
expenses of such arbitration (including reasonable attorneys’ fees).
(f) Choice
of Forum.
If,
despite the Parties’ agreement to submit any Arbitral 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 the City and County of Denver, State of
Colorado.
(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
11.8,
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.
11.9 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:
|
MLP:
|
000
- 00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
President
|
|
with
a copy to:
|
000
- 00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
|Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
General Counsel
|
|
HOLDINGS:
|
DCP
Midstream, LP
000
- 00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attn:
President
|
|
with
a copy to:
|
DCP
Midstream, LP
000
- 00xx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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
11.9.
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 (with answer-back confirmation) or personal delivery shall be
deemed given on the date of actual delivery.
11.10 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. MLP and HOLDINGS 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.
11.11 Offset.
Nothing
contained herein or in any Transaction Document shall create a right of offset
or setoff for any Party under this Agreement and each Party hereby waives and
disclaims any such right of offset or setoff under all applicable Law (including
common Law).
11.12 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
X
shall
inure to the benefit of the MLP Indemnitees and the HOLDINGS Indemnitees as
provided therein.
11.13 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.
THE
PARTIES HAVE signed this Agreement by their duly authorized officials as of
the
date first set forth above.
[Signatures
begin on next page]
| DCP LP HOLDINGS, LP | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxxxx | |
|
Name:
Title:
|
Xxxxx X. Xxxxxxxxx Vice
President, Planning and Corporate Development
|
|
| DCP MIDSTREAM, LLC | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxxxx | |
|
Name:
Title:
|
Xxxxx X. Xxxxxxxxx Vice
President, Planning and Corporate Development
|
|
| DCP MIDSTREAM PARTNERS, LP | ||
|
By:
DCP MIDSTREAM GP, LP,
Its
General Partner
|
||
| |
|
|
|
By:
DCP MIDSTREAM GP, LLC,
Its
General Partner
|
||
|
By:
|
/s/ Xxxx
X. Xxxxx
|
|
|
Name:
Title:
|
Xxxx
X. Xxxxx
Vice
President
|
|
| DCP MIDSTREAM GP, LP | ||
| By:
DCP Midstream GP, LLC,
Its
General Partner
|
||
| |
|
|
| By: | /s/ Xxxx X. Xxxxx | |
|
Name:
Title:
|
Xxxx X. Xxxxx
Vice President
|
|
