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EXHIBIT 10.16
CONTRIBUTION AGREEMENT
BETWEEN
DUKE ENERGY TRANSPORT AND TRADING COMPANY
AND
TEPPCO PARTNERS, L.P.
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TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND CONSTRUCTION............................... 1
1.1 DEFINED TERMS................................................................. 1
1.2 OTHER DEFINITIONAL PROVISIONS................................................. 12
1.3 HEADINGS...................................................................... 13
1.4 OTHER TERMS................................................................... 13
ARTICLE II.
CONTRIBUTION OF THE SUBJECT INTEREST AND
ISSUANCE OF THE CLASS B UNITS.............................. 13
2.1 THE TRANSACTION............................................................... 13
2.2 CONSIDERATION AND ASSUMED OBLIGATIONS......................................... 13
2.3 ADJUSTMENTS................................................................... 14
2.4 PRORATIONS OF EXPENSES AND CERTAIN PROPERTY TAXES............................. 14
2.5 CONSENTS...................................................................... 15
ARTICLE III.
RETAINED OBLIGATIONS................................... 16
ARTICLE IV.
CLOSING DATE AND EFFECTIVE TIME............................. 16
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF DETTCO...................................... 16
5.1 CORPORATE MATTERS............................................................. 16
5.2 VALIDITY OF AGREEMENT; NO CONFLICT............................................ 18
5.3 CONSENTS, APPROVALS, AUTHORIZATIONS AND PERMITS............................... 19
5.4 TITLE TO AND CONDITION OF THE ASSETS.......................................... 19
5.5 CONTRACTS AND COMMITMENTS..................................................... 21
5.6 FINANCIAL STATEMENTS; LIABILITIES............................................. 24
5.7 TAXES......................................................................... 24
5.8 NO VIOLATIONS OF LAW.......................................................... 25
5.9 NO ADVERSE CHANGES OR EVENTS.................................................. 25
5.10 ENVIRONMENTAL MATTERS......................................................... 26
5.11 PRODUCT LIABILITY............................................................. 27
5.12 NO UNTRUE STATEMENTS.......................................................... 28
5.13 EMPLOYEE BENEFITS............................................................. 28
5.14 LITIGATION.................................................................... 30
5.15 INVESTMENTS IN OTHER PERSONS.................................................. 30
5.16 INSURANCE..................................................................... 30
5.17 FINDER'S FEES................................................................. 30
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5.18 INVESTMENT INTENT............................................................. 31
5.19 PERSONNEL INFORMATION; LABOR RELATIONS........................................ 31
5.20 YEAR 2000 WARRANTY............................................................ 31
5.21 CAPITAL PROJECTS.............................................................. 32
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP................................. 32
6.1 LIMITED PARTNERSHIP MATTERS................................................... 32
6.2 VALIDITY OF AGREEMENT; NO CONFLICT............................................ 33
6.3 INVESTMENT INTENT............................................................. 33
6.4 FINDER'S FEE.................................................................. 34
6.5 SECTION 704(c) ALLOCATIONS.................................................... 34
6.6 SEC REPORTS................................................................... 34
6.7 FINANCIAL STATEMENTS.......................................................... 34
6.8 ABSENCE OF CERTAIN CHANGES.................................................... 35
6.9 ABSENCE OF UNDISCLOSED LIABILITIES............................................ 35
6.10 CONSENTS, APPROVALS, AUTHORIZATIONS AND PERMITS............................... 35
ARTICLE VII.
CONDITIONS PRECEDENT................................... 35
7.1 CONDITIONS TO OBLIGATIONS OF PARTNERSHIP AT CLOSING........................... 35
7.2 CONDITIONS TO OBLIGATIONS OF DETTCO AT CLOSING................................ 38
ARTICLE VIII.
HSR FILING; ACCESS TO INFORMATION BY
PARTIES; MATTERS PENDING CLOSING............................................ 40
8.1 HSR FILING.................................................................... 40
8.2 DUE DILIGENCE PRIOR TO CLOSING................................................ 41
8.3 PUBLIC ANNOUNCEMENTS.......................................................... 41
8.4 ACTIONS PENDING CLOSING....................................................... 41
8.5 NO-SHOP....................................................................... 43
8.6 NOTICE OF DEFAULT BY DETTCO................................................... 43
8.7 NOTICE OF DEFAULT BY PARTNERSHIP.............................................. 44
8.8 EFFORTS TO SATISFY CONDITIONS................................................. 44
8.9 DISCLAIMERS................................................................... 44
ARTICLE IX.
NONCOMPETITION AGREEMENT; CONFIDENTIALITY..................................... 45
9.1 NONCOMPETITION COVENANT....................................................... 45
9.2 EXCEPTIONS.................................................................... 45
9.3 REASONABLENESS OF COVENANT.................................................... 46
9.4 INJUNCTIVE RELIEF............................................................. 46
9.5 CONFIDENTIALITY............................................................... 46
9.6 RESTRICTIONS REGARDING EMPLOYEES.............................................. 47
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ARTICLE X.
ADDITIONAL AGREEMENTS................................... 48
10.1 DELIVERY OF CORPORATE DOCUMENTS................................................ 48
10.2 FURTHER ASSURANCES............................................................. 48
10.3 COOPERATION AFTER CLOSING...................................................... 48
10.4 PAYMENT FOR OTHER INVENTORY AND IMBALANCES..................................... 49
10.5 EMPLOYEES...................................................................... 50
10.6 REVENUES AND REMITTANCE OF MONIES.............................................. 51
10.7 SUSPENSE ACCOUNT FUNDS AND DIVISION ORDERS..................................... 51
10.8 NON-INSTIGATION OF CLAIMS...................................................... 53
10.9 CAPITAL ACCOUNT ADJUSTMENTS.................................................... 53
10.10 CERTAIN TRANSACTION COSTS...................................................... 53
10.11 CHANGE IN NAME................................................................. 54
ARTICLE XI.
INDEMNIFICATION...................................... 54
11.1 DETTCO'S INDEMNITY............................................................. 54
11.2 ENVIRONMENTAL INDEMNIFICATION.................................................. 55
11.3 EMPLOYEE BENEFITS AND EMPLOYMENT MATTERS....................................... 56
11.4 PARTNERSHIP'S INDEMNITY........................................................ 57
11.5 PROCEDURE...................................................................... 58
11.6 INDEMNIFICATION THRESHOLD...................................................... 60
11.7 EXPRESS NEGLIGENCE............................................................. 60
11.8 EXCLUSIVE REMEDY; LIMITATIONS.................................................. 60
11.9 EXCLUSION OF MATERIALITY....................................................... 61
ARTICLE XII.
TERMINATION........................................ 62
12.1 TERMINATION.................................................................... 62
12.2 LIABILITY UPON TERMINATION..................................................... 62
ARTICLE XIII.
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS..................................... 62
13.1 NO MERGER...................................................................... 62
13.2 INACCURACIES AND DEFECTS....................................................... 63
13.3 SURVIVAL PERIOD................................................................ 63
ARTICLE XIV.
EXPENSES.......................................... 63
ARTICLE XV.
DISPUTES.......................................... 63
15.1 NEGOTIATION.................................................................... 63
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15.2 FAILURE TO RESOLVE............................................................. 64
15.3 ARBITRATION.................................................................... 64
15.4 RECOVERY OF COSTS AND ATTORNEYS' FEES.......................................... 66
15.5 CHOICE OF FORUM................................................................ 66
15.6 JURY WAIVERS................................................................... 66
ARTICLE XVI.
GENERAL PROVISIONS..................................... 66
16.1 NOTICES........................................................................ 66
16.2 GOVERNING LAW.................................................................. 67
16.3 ENTIRE AGREEMENT............................................................... 68
16.4 ASSIGNMENT..................................................................... 68
16.5 SUCCESSORS..................................................................... 68
16.6 AMENDMENTS; WAIVER............................................................. 68
16.7 COUNTERPARTS................................................................... 68
16.8 SEVERABILITY................................................................... 68
16.9 NO THIRD PARTY BENEFICIARIES................................................... 69
16.10 NEGOTIATED TRANSACTION......................................................... 69
Exhibit A -- Assignment of Subject Interest
Exhibit B -- DEPLC Assets
Exhibit C -- DETTCO Assets
Exhibit D -- Excluded Assets
Exhibit E -- Minimum Operating Inventory
Exhibit F -- LSI Assets
Exhibit G -- Determination Methods Pursuant to Section 10.4
Exhibit H -- Assumed Obligations
Exhibit I -- Certain Retained Obligations
Exhibit J -- Phase II Sites
Exhibit K -- Title Defects
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CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement"), dated as of October 15,
1998, is by and between Duke Energy Transport and Trading Company, a Colorado
corporation ("DETTCO"), and TEPPCO Partners, L.P., a Delaware limited
partnership ("Partnership").
W I T N E S S E T H:
WHEREAS, as of the Closing (i) DETTCO will own all of the outstanding
limited liability company membership interests of DETTCO LLC, a Delaware limited
liability company ("DETTCO LLC"), and (ii) DETTCO LLC will own all of the
outstanding limited liability company membership interests of DEPLC LLC ("DEPLC
LLC") and LSI LLC ("LSI LLC"), both Delaware limited liability companies (DETTCO
LLC, DEPLC LLC and LSI LLC are sometimes hereinafter collectively referred to as
the "LLCs") and (iii) the LLCs collectively will own all of the Assets and will
operate the Businesses;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and obligations contained herein, and intending to be legally bound,
Partnership and DETTCO agree as follows:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
1.1 DEFINED TERMS. The capitalized terms used in this Agreement shall
have the meanings ascribed to them as follows:
"Affiliate" shall mean, 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. By way of example, the LLCs shall be deemed
Affiliates of DETTCO during the time period prior to the Effective Time
and shall be deemed Affiliates of Partnership for time periods
subsequent to the Effective Time. 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, the term "Affiliate" when applied to DETTCO shall not
include Duke Energy Trading and Marketing, L.L.C., a Delaware limited
liability company ("DETM"), Texas Eastern Products Pipeline Company, a
Delaware corporation and the general partner of Partnership ("General
Partner" or "TEPPCO"), or any entities controlled, directly or
indirectly, by Partnership or the General Partner (such entities
controlled by Partnership or the General Partner, together with the
General Partner and Partnership, the "TEPPCO
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Entities"); and as applied to Partnership, shall not include DETM, Duke
Energy Corporation, a Delaware corporation, or any entities controlled,
directly or indirectly, by Duke Energy Corporation other than the
TEPPCO Entities;
"Amended Limited Partnership Agreement" shall mean
Partnership's Second Amended and Restated Agreement of Limited
Partnership to be dated on or before the Effective Time in such form
and substance as shall be satisfactory to both Parties;
"Assets" shall mean the DETTCO Assets, the DEPLC Assets and
the LSI Assets, collectively, but shall not include the Excluded
Assets;
"Assignment of Subject Interest" shall mean the agreement by
and between DETTCO and Partnership or its designee regarding the
assignment of the Subject Interest to Partnership, in the form of
Exhibit A attached hereto;
"Assumed Obligations" shall mean those obligations and
liabilities listed in Exhibit H;
"Balance Sheet Date" shall have the meaning given that term in
Section 5.6(a);
"Balance Sheets" shall have the meaning given that term in
Section 5.6(a), and "Balance Sheet" shall refer to such balance sheets
individually as the context requires;
"Businesses" shall mean the crude oil and natural gas liquids
gathering, transportation and storage business, together with the
related marketing and trading activities conducted by any of the DE
Entities or the LLCs, utilizing the DETTCO Assets and the DEPLC Assets,
and the petroleum lubricant storage and distribution businesses
conducted by any of the DE Entities or the LLCs, utilizing the LSI
Assets;
"Business Day" shall mean any day on which federal commercial
banks are open for business for the purpose of sending and receiving
wire transfers in Houston, Texas;
"Buy/Sell Agreement" shall mean an agreement between the
Parties or certain of their Affiliates for the purchase and sale of
crude oil and condensate in such form and substance as shall be
satisfactory to both Parties;
"Capital Projects" shall have the meaning given that term in
Section 5.21;
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. Section 9601 et
seq.;
"Certain LLC Obligations" shall have the meaning given such
term in Section 2.2 of the Disclosure Schedule;
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"Certain Transaction Costs" shall have the meaning given such
term in Section 10.10;
"Claim" shall mean any demand, demand letter, claim or notice
of noncompliance or violation (written or oral) or Proceeding;
"Claim Notice" shall have the meaning given such term in
Section 11.5(a);
"Class B Units" shall mean one of that certain class of
limited partnership interests of Partnership with those special rights
and obligations specified in the Amended Limited Partnership Agreement
as being appurtenant to a "Class B Unit";
"Closing" shall have the meaning given such term in Article
IV;
"Closing Date" shall have the meaning given such term in
Article IV;
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any amending or superseding tax laws of the United States
of America;
"Condensate Purchase Agreement" shall mean an agreement among
the Parties and/or certain of their Affiliates for the purchase of
crude oil, condensate, including drip, and natural gas liquids in such
form and substance as shall be satisfactory to both Parties;
"Consideration" shall have the meaning given such term in
Section 2.2(a);
"Contracts" shall have the meaning given such term in Section
5.5(a);
"Credit Facility" shall have the meaning given such term in
Section 7.1(k);
"Crude Contracts" shall mean any agreement to acquire, buy,
sell, exchange, transport, market or trade crude oil, condensate,
including drip, or natural gas liquids in connection with the
Businesses;
"Designated Plans" shall have the meaning given such term in
Section 5.13;
"DE Entities" shall mean, collectively, DETTCO, DEPLC and LSI,
and "DE Entity" shall refer to the individual DE Entities as the
context requires (see also Section 1.2(d));
"DEPLC" shall mean Duke Energy Pipe Line Company, a Delaware
corporation;
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"DEPLC Assets" shall be those assets and properties listed or
described on Exhibit B and any other asset relating to, or used by
DEPLC or DEPLC LLC in, the Businesses, other than the Excluded Assets;
"DEPLC LLC" shall have the meaning given such term in the
preamble;
"DETTCO" shall have the meaning given such term in the
preamble and any successor or assign permitted by this Agreement;
"DETTCO Assets" shall be those assets and properties listed or
described on Exhibit C and any other asset relating to, or used by
DETTCO or DETTCO LLC in, the Businesses, other than the Excluded
Assets;
"DETTCO Indemnitees" shall have the meaning given such term in
Section 11.4;
"DETTCO LLC" shall have the meaning given such term in the
preamble;
"DETTCO's Damages" shall mean Claims against and Losses
incurred by DETTCO Indemnitees;
"DETTCO Property Tax" shall have the meaning given such term
in Section 2.4(a);
"Disclosure Schedule" shall mean the disclosure schedule of
even date with this Agreement prepared and delivered to Partnership by
DETTCO;
"Disputes" shall have the meaning given such term in Section
15.1;
"Division Order Contracts" shall mean any contract evidenced
only by a division order or similar document, or by the parties' course
of dealing, for the purchase or sale of crude oil, condensate,
including drip, or natural gas liquids.
"Effective Time" shall mean 7:00 a.m., Houston, Texas time on
November 1, 1998 or such other time and date as the Parties shall
agree;
"Environmental Condition" shall mean any environmental
pollution, contamination, degradation, damage or injury caused by,
related to, arising from, or in connection with the generation,
handling, use, treatment, storage, transportation, disposal, discharge,
release or emission of any Hazardous Materials, or violation of or
remediation required under any Environmental Law;
"Environmental Laws" shall mean all laws, rules, regulations,
statutes, ordinances, decrees or orders of any Governmental Authority
in effect as of the Closing Date relating to (a) the control of any
pollutant or potential pollutant or
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protection of the air, water, or land, (b) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or
transportation, including all Hazardous Materials, and (c) exposure to
hazardous, toxic or other substances alleged to be harmful and includes
without limitation, (1) the terms and conditions of any Environmental
Permits and (2) judicial, administrative, or other regulatory decrees,
judgments, and orders of any Governmental Authority. "Environmental
Laws" shall include, but not be limited to, the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 11001, et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq. and CERCLA. The term
"Environmental Laws" shall also include all state, local and municipal
laws, rules, regulations, statutes, ordinances and orders dealing with
the same subject matter or promulgated by any Governmental Authority
thereunder or to carry out the purposes of any federal, state, local
and municipal law;
"Environmental Liabilities" shall mean any and all
liabilities, responsibilities, claims, suits, losses, costs (including
remedial, removal, response, abatement, clean-up, investigative, or
monitoring costs and any other related costs and expenses), other
causes of action, damages, settlements, expenses, charges, assessments,
liens, penalties, fines, pre-judgment and post-judgment interest,
attorneys' fees and other legal fees (a) pursuant to any agreement,
order, notice, or responsibility, directive (including directives
embodied in Environmental Laws), injunction, judgment, or similar
documents (including settlements), arising out of or in connection with
any Environmental Laws, or (b) pursuant to any claim by a Governmental
Authority or other Person for personal injury, property damage, damage
to natural resources, remediation, or payment or reimbursement of
response costs incurred or expended by the Governmental Authority or
Person pursuant to common law or statute and relating to an
Environmental Condition;
"Environmental Material Adverse Effect" shall mean any
Environmental Liabilities that are reasonably expected to exceed
$100,000 per occurrence, or $250,000 in the aggregate;
"Environmental Permit" shall mean any permit, license,
approval, registration, identification number or other authorization
covering the ownership or operation of the Assets granted under or
pursuant to any applicable law, regulation or other requirement of the
United States or of any state, municipality or other subdivision
thereof relating to the control of any pollutant or protection of
health or the environment, including, without limitation, all
applicable Environmental Laws;
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
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"ERISA Affiliate" shall mean any entity (whether or not
incorporated) that is treated as a single employer, together with any
LLC under section 414 of the Code but excluding the TEPPCO Entities;
"Exchange Act" shall have the meaning given such term in
Section 6.6;
"Excluded Assets" shall mean those assets and properties
listed or described on Exhibit D;
"[F]air market value" as such term is used in Section 10.4
hereof shall mean the market value of the Other Inventory or the
Inventory Deficit, as the case may be, as of the Closing Date as
determined by the mutual agreement of the Parties;
"Financial Statements" shall have the meaning given such term
in Section 5.6(a);
"GAAP" means generally accepted accounting principles in the
United States consistently applied for the time periods involved;
"General Partner" shall mean Texas Eastern Products Pipeline
Company, a Delaware corporation and the general partner of Partnership;
"Governmental Authority" shall mean any entity of or
pertaining to government, including any federal, state, local, other
governmental or administrative authority, agency, court, tribunal,
arbitrator, commission, board or bureau;
"Guaranty Agreement" shall mean an agreement between Duke
Energy Natural Gas Corporation, a Delaware corporation, and
Partnership, in form and substance as shall be satisfactory to the
Parties, pursuant to which Duke Energy Natural Gas Corporation shall
guarantee the performance of the obligations of DETTCO and its
Affiliates under this Agreement and the Other Agreements;
"Hazardous Materials" shall mean (a) toxic or hazardous
materials or substances; (b) solid wastes, including asbestos,
polychlorinated biphenyls, mercury, buried contaminants, chemicals,
flammable or explosive materials; (c) radioactive materials; (d)
petroleum wastes and any spills or releases of any crude oil, petroleum
wastes or petroleum products; and (e) any other chemical, pollutant,
contaminant, substance or waste that is regulated by any Governmental
Authority under any Environmental Law;
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended;
"Indemnified Party" shall have the meaning given such term in
Section 11.5;
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"Indemnifying Party" shall have the meaning given such term in
Section 11.5;
"Intellectual Property" shall mean any and all technical
information, know-how, trade secrets, shop rights, designs, plans,
manuals, computer software, specifications and other proprietary and
nonproprietary technology, data and information used in connection with
the operation of the Assets or the Businesses;
"Inventory Deficit" shall have the meaning given such term in
Section 10.4(a).
"IRS" shall mean the Internal Revenue Service of the United
States of America;
"LLC Agreement" shall have the meaning given such term in
Section 5.1(b);
"LLCs" shall have the meaning given such term in the preamble,
and "LLC" shall refer to such limited liability companies individually
as the context requires;
"Lien" shall mean, except for the Permitted Encumbrances, any
lien, mortgage, pledge, claim, charge, security interest, collateral
assignment, clouds-on- title, irregularities, defects, options,
imperfections of title or other encumbrance;
"Limited Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of Partnership dated as of
July 21, 1998;
"Losses" shall mean any and all damages, losses, liabilities,
payments, obligations, penalties, assessments, costs, disbursements or
expenses (including interest, awards, judgments, settlements, fines,
costs of remediation, diminutions in value, fees, disbursements and
expenses of attorneys, accountants and other professional advisors and
of expert witnesses and costs of investigation and preparation of any
kind or nature whatsoever);
"LSI" shall mean Lubrication Services, Inc., a Colorado
corporation;
"LSI Assets" shall mean those assets and properties listed or
described on Exhibit F and any other asset relating to, or used by LSI
or LSI LLC in, the Businesses, other than the Excluded Assets;
"LSI LLC" shall have the meaning given such term in the
preamble;
"Lubrication Sales Agreement" shall mean the two agreements
for the sale and purchase of products distributed by LSI LLC, to be
between such party and each of Duke Energy Field Services, Inc. and
Panhandle Field Services Company, and in such form and substance as
shall be satisfactory to the Parties;
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"Material Adverse Effect" shall mean a single event,
occurrence or fact that, alone or together with all other events,
occurrences and facts, could reasonably be expected to result in a
material loss to or material diminution in value of the Assets to an
acquirer thereof or prohibit or delay the consummation of the
transactions contemplated hereby; provided that the term "Material
Adverse Effect" shall not include changes in general economic, industry
or market conditions, or changes in law, including Environmental Laws,
or regulatory policy;
"Membership Interests" shall mean, with respect to each of
DETTCO LLC, DEPLC LLC and LSI LLC, all of the limited liability company
membership interests of such limited liability company;
"Minimum Operating Inventory" shall mean the minimum operating
inventory of crude oil, condensate, including drip, and natural gas
liquids owned by the LLCs and utilized as linefill (including any
linefill in third-party pipelines) and minimum operating inventory in
tanks and other of the Assets which is necessary to operate such Assets
and consists of those volumes shown on Exhibit E;
"Mobil Contract" shall mean that certain letter agreement
dated July 15, 1996 between DETTCO and Mobil Oil Corporation concerning
the exchange of 100,000 bbls of WTI crude oil;
"NGL Transportation Agreement" shall mean an agreement for the
transportation of natural gas liquids, to be between the Parties and/or
certain of their Affiliates and in such form and substance as shall be
satisfactory to both Parties;
"NOTTI Walk-Away Fee" shall mean any fee, charge or other cost
payable by DETTCO or an Affiliate to Dynegy Inc. pursuant to that
certain Letter of Intent between such parties dated July 17, 1998
("LOI") or in connection with the purported or actual termination or
breach of such LOI;
"Other Agreement" shall mean any of the Condensate Purchase
Agreement, Lubrication Sales Agreement, NGL Transportation Agreement,
Transition Services Agreement and Buy/Sell Agreement, and "Other
Agreements" means all of the foregoing agreements;
"Other Inventory" shall mean the aggregate amount of crude
oil, condensate, including drip, and natural gas liquids owned by any
of the DE Entities or LLCs in excess of the Minimum Operating Inventory
and the petroleum lubricants and chemicals owned and held in storage by
LSI or LSI LLC;
"Other Sites" shall mean all properties and interests in
properties (including right-of-ways, listed on Exhibits B, C and F), or
which comprise a part of the Assets or are used in conjunction with the
Assets or the Businesses, excluding in each case, the Phase II Sites;
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"Partnership" shall have the meaning given that term in the
preamble and any successor or assign permitted by this Agreement;
"Partnership Assumed Obligations" shall mean one-half of
Certain LLC Obligations;
"Partnership's Damages" shall mean Claims against and Losses
incurred by Partnership Indemnitees;
"Partnership Indemnitees" shall have the meaning given such
term in Section 11.1;
"Partnership Material Adverse Effect" shall mean a single
event, occurrence or fact that, alone or together with all other
events, occurrences and facts, could reasonably be expected to result
in a material loss to or material diminution in value of the Class B
Units to an acquirer thereof or prohibit or delay the consummation of
the transactions contemplated hereby; provided, however, that the term
"Partnership Material Adverse Effect" shall not include changes in
general economic, industry or market conditions, or changes in law,
including Environmental Laws, or regulatory policy;
"Party" shall mean DETTCO or Partnership; and "Parties" means
DETTCO and Partnership;
"Party Indemnitee" shall mean the DETTCO Indemnitees or the
Partnership Indemnitees, as the context requires;
"PBGC" shall mean the Pension Benefit Guaranty Corporation;
"Permit" shall mean any license, permit, concession, franchise
or other authorization or approval granted by any Governmental
Authority;
"Permitted Encumbrances" shall mean (a) Liens for current
taxes and assessments not yet due or which DETTCO is contesting in good
faith, (b) inchoate mechanic and materialmen liens for construction in
progress, (c) workmen, repairmen, warehousemen, customer, employee and
carriers liens arising in the ordinary course of business for
liquidated amounts for which the LLCs or the DE Entities have agreed to
pay or are contesting in good faith; (d) liens or security interests
created by law or reserved in the instruments creating the Assets
comprised of leases, easements, rights-of-way or similar Assets for
rental or created within such instruments to secure compliance with the
terms of such instruments; (e) any obligations or duties affecting the
Assets to any Governmental Authority with respect to any Permit and all
applicable laws, rules, regulations and orders of any Governmental
Authority; (f) preferential rights to purchase the Assets which are not
applicable to the transfer of the Assets to the LLCs or transfer of the
Subject Interest contemplated by this
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Agreement or which have been waived or with respect to which the
appropriate time periods for asserting the rights have expired; (g)
third-party consent requirements and similar restrictions (x) which are
not applicable to the transfer of the Assets to the LLCs or the
transfer of the Subject Interest contemplated by this Agreement, (y)
with respect to which waivers or consents are obtained from the
appropriate parties prior to the Closing Date or the appropriate time
period for asserting the right has expired or (z) with respect to which
arrangements have been made in accordance with Section 2.6 hereof for
Partnership or the LLCs to receive the same economic benefit as if such
consents have been obtained; (h) easements, rights-of-way, servitudes,
permits, surface leases and other similar rights encumbering surface
property to the extent the same do not materially interfere in the
conduct of the Businesses; (i) any encumbrance on or affecting the
Assets which is expressly assumed or waived by Partnership at or prior
to Closing pursuant to a written agreement specifically identifying
such encumbrance or which is discharged by the DE Entities or the LLCs
at or prior to Closing; (j) any matters shown on Exhibit K; (k) Liens
created by Partnership or the LLCs post-Closing; and (l) Liens that,
singly or in the aggregate, would not have a Material Adverse Effect;
"Person" shall mean any individual, corporation, partnership,
joint venture, association, limited liability company, joint stock
company, trust, unincorporated organization, Governmental Authority or
government (or agency or political subdivision thereof);
"Phase II Sites" shall mean those properties comprising part
of or used in connection with the Assets and/or Businesses listed on
Exhibit J at which Partnership completed its sampling and analysis of
soils, water, and/or groundwater;
"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;
"RCRA" shall mean the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Section 6901 et seq.;
"Records" shall mean all agreements, documents, books, records
and files relating to the Assets and the LLCs, including without
limitation, accounting records, operating records, charts, maps,
surveys, drawings, prints and any physical embodiment of the
Intellectual Property, however, Records shall not include the
corporate, financial, tax and litigation files of any DE Entity or
records relating to Excluded Assets, the transactions contemplated
herein or any gas purchase, processing and/or gathering agreements of
any DE Entity;
"Retained Obligations" shall have the meaning given such term
in Article III;
"Securities Act" shall have the meaning given such term in
Section 5.18;
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"Short Term Contracts" shall mean the Crude Contracts and any
contracts relating to the sale of petroleum lubricants and chemicals by
LSI or LSI LLC that, in each case, expire or are terminable in 30 days
or less or upon 30 days or less notice, and any Division Order
Contracts;
"Software" shall mean all computer programs and software
systems, regardless of format or medium, including both object code and
source code (to the extent available to the DE Entities), automated
routines used to cause a computer or computer aided device to perform a
desired task, and all firmware and embedded systems;
"Subject Employees" shall mean those individuals who are
listed on Section 10.5(a) of the Disclosure Schedule;
"Subject Interest" shall mean the Membership Interest of
DETTCO LLC;
"Suspense Account Funds" shall have the meaning given such
term in Section 10.7(a);
"Suspense Cash Assets" shall have the meaning given such term
in Section 10.7(b);
"Tax" or "Taxes" shall mean any United States or foreign
federal, state or local 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 Return" shall mean any report, statement, form, return or
other document or information required to be supplied to a taxing
authority in connection with Taxes;
"TEPPCO" shall mean the General Partner;
"TEPPCO Entities" shall have the meaning given such term in
the definition of "Affiliate";
"Territory" shall have the meaning given such term in Section
9.1;
"Third Party" shall mean any Person other than the Parties,
any Affiliate of a Party or DETM;
"Third Party Affected Site" shall have the meaning given such
term in Section 11.2(b);
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"Transition Services Agreement" shall mean an agreement
between the Parties or their Affiliates providing for the provision of
certain specified administrative and other services for the benefit of
the LLCs, and in such form and substance as shall be satisfactory to
both Parties;
"Units" shall have the meaning given such term in Section
2.2(b); and
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Sections 2101-2109.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) As used in this Agreement, unless expressly stated
otherwise, references to (a) "including" mean "including, without limitation",
and the words "hereof", "herein", and "hereunder", and similar words, refer to
this Agreement as a whole and not to any particular article, provision, section
or paragraph of this Agreement and (b) "or" mean "either or both". Unless
otherwise specified, all references in this Agreement to Sections, paragraphs or
Exhibits are deemed references to the corresponding Sections, paragraphs or
Exhibits in this Agreement.
(b) Whenever a statement is qualified by the term "knowledge,"
"best knowledge" or similar term or phrase, it is intended to indicate actual
knowledge of the Persons identified below. As applied to DETTCO, such terms or
phrases shall be limited to the actual knowledge of the Persons listed in Part I
of Section 1.2(b) of the Disclosure Schedule; and as applied to Partnership,
such terms or phrases shall be limited to the actual knowledge of the Persons
listed in Part II of Section 1.2(b) of the Disclosure Schedule.
(c) Reference to "day" or "days" in this Agreement shall refer
to Business Days unless otherwise stated.
(d) The Parties recognize that as of the Closing the DE
Entities will be merged, with DETTCO being the surviving corporation.
Accordingly, the term "DE Entities" in this Agreement shall refer to only the
surviving DE Entity except where the context refers to or includes periods
during which the other DE Entities were in existence or to actions or omissions
of all of such other DE Entities, in which event, the use of the term "DE
Entities" refers to all such entities.
(e) Reference to the "predecessor" of an LLC shall mean, in
the case of DETTCO LLC, DETTCO; in the case of DEPLC LLC, DEPLC; and in the case
of LSI LLC, LSI.
1.3 HEADINGS. The headings of the Articles and Sections of this
Agreement and of the Disclosure Schedule 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.
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ARTICLE II.
CONTRIBUTION OF THE SUBJECT INTEREST AND
ISSUANCE OF THE CLASS B UNITS
2.1 THE TRANSACTION. At the Closing, but effective for all purposes as
of the Effective Time, DETTCO shall contribute to Partnership the Subject
Interest in exchange for the issuance of the Consideration to DETTCO by
Partnership.
2.2 CONSIDERATION AND ASSUMED OBLIGATIONS.
(a) In consideration for the contribution of the Subject
Interest, Partnership shall issue and deliver to DETTCO at the Closing one or
more certificates duly registered in the name of DETTCO and representing
3,916,547 Class B Units of Partnership (the "Consideration").
(b) Notwithstanding any other provision in this Agreement,
should the average closing price for the outstanding units of limited
partnership interest in Partnership listed on the New York Stock Exchange (the
"Units") fall below $24.56 for the ten (10) Business Days immediately preceding
the Closing Date as reported by The Wall Street Journal, either Party shall be
entitled to terminate this Agreement upon written notice to the other Party.
(c) The LLCs shall retain or shall otherwise assume the
Assumed Obligations consisting solely of those described in Exhibit H.
2.3 ADJUSTMENTS.
(a) The value of the Consideration shall be subject to cash
adjustments pursuant to Sections 2.4 and 10.4.
(b) All adjustments to the value of the Consideration provided
for in this Section 2.3 shall be made by payment in cash and not by
adjustment of the number of Class B Units received by DETTCO. Each
payment of an adjustment to the Consideration shall be made at Closing
if the adjustment is determined by such date, or otherwise, within
ninety (90) days of the resolution or determination of the amount of
such adjustment, and shall be made in immediately available funds by
wire transfer to an account specified in writing by the Party receiving
such payment.
(c) The Parties shall use all commercially reasonable efforts
to agree upon the adjustments set forth in Section 2.3, and to resolve
any differences with respect thereto, prior to the first anniversary
date of the Closing Date.
2.4 PRORATIONS OF EXPENSES AND CERTAIN PROPERTY TAXES.
(a) Any general property Tax assessed against or pertaining to
the Assets for the taxable period that includes the Effective Time
shall be prorated between
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DETTCO and the LLCs as of the Effective Time. Prior to the Closing,
DETTCO shall determine, in accordance with Section 2.4(b), the portion
of such general property Tax attributable to the period from January 1,
1998 to the Effective Time (the "DETTCO Property Tax"), and shall
provide Partnership with a reasonable opportunity to review and comment
on such determination. DETTCO and Partnership shall cooperate in good
faith with each other to reach agreement as to the aggregate amount of
the DETTCO Property Tax, and DETTCO shall pay the amount of the DETTCO
Property Tax to Partnership at Closing.
(b) The DETTCO Property Tax shall be an amount equal to the
product of (i) the amount of such general property Tax for the entire
taxable period that includes the Effective Time (or the amount of such
general property Tax for the immediately preceding taxable period in
the case of those Assets, if any, for which such general property Tax
for the current period cannot be determined), times (ii) a fraction,
the numerator of which is the number of days from January 1, 1998 to
the Effective Time and the denominator of which is the total number of
days in the entire taxable period. Notwithstanding anything in this
Agreement to the contrary, no further adjustment shall be made for such
general property Tax, Partnership hereby agreeing to cause the LLCs to
assume the payment of all such general property Tax effective upon the
Closing.
(c) Except as otherwise provided in this Agreement, DETTCO and
Partnership agree that amounts payable with respect to utility charges
and other items of expense attributable to the operation of the Assets
shall be prorated as of the Effective Time to the extent the charges
and expenses cannot be identified as to the Party who received the
benefits to which the charges and expenses relate.
(d) To the extent the amounts described in Section 2.4(c) are
estimated at Closing and the prorations are inaccurate, DETTCO and
Partnership agree to make or cause to be made such payment (or
reimbursement) to the other after the amounts are correctly computed,
that is necessary to allocate the charges properly between DETTCO and
Partnership as of the Effective Time.
2.5 CONSENTS. DETTCO shall use all reasonable commercial efforts to
secure, prior to the Closing Date, any and all Third Party consents, except
those relating to Short Term Contracts, that are necessary and proper to
consummate the (i) conveyance of the Assets to the LLCs as contemplated by the
Parties and this Agreement, including without limitation, contracts,
rights-of-way, easements and Permits included in the Assets or otherwise used in
the Businesses, and (ii) transfer of the Subject Interest to Partnership.
However, in the event that any such Third Party consents have not been obtained
prior to Closing which Partnership, in the exercise of its reasonable business
judgment, deems to be material, DETTCO will enter into an agency agreement(s) or
other arrangements as are mutually satisfactory to the Parties to allow
Partnership to receive substantially the same economic benefits as if such
consents had been obtained. In the event mutual agreement cannot be achieved as
to such arrangements, either Party shall have the right to terminate this
Agreement upon written notice to the other Party prior to the Closing Date, and
both Parties shall be released from all further obligations related to this
Agreement and the transactions contemplated by it.
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ARTICLE III.
RETAINED OBLIGATIONS
LIABILITIES NOT ASSUMED BY PARTNERSHIP. Except for the Assumed
Obligations, the Partnership Assumed Obligations and as otherwise provided in
Section 11.4(e), DETTCO and its Affiliates shall pay and discharge in due course
all of the liabilities, debts and obligations, whether known or unknown, now
existing or hereafter arising, contingent or liquidated as the same relate to
the Assets or the Businesses for all periods of time prior to the Effective
Time, including without limitation, all trade and other payables of the DE
Entities and the LLCs and those items listed on Exhibit I (collectively, the
"Retained Obligations"). Except as otherwise provided in Section 11.4(e),
neither Partnership nor any of its Affiliates shall assume, or in any way be
liable or responsible for, any of the Retained Obligations.
ARTICLE IV.
CLOSING DATE AND EFFECTIVE TIME
The closing of the contribution of the Subject Interest from DETTCO to
Partnership (the "Closing") shall take place at the offices of Fulbright &
Xxxxxxxx L.L.P., 0000 XxXxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, or at such
other place as the Parties may mutually agree to in writing. The Closing shall
take place at 10:00 a.m. on the later of (i) November 1, 1998, (ii) five (5)
Business Days after the date DETTCO and Partnership obtain all necessary
regulatory approvals, if any, required by each of them, respectively, containing
terms and conditions acceptable to both Parties, or (iii) such other date and
time as the Parties may agree. The date of the Closing is referred to herein as
the "Closing Date". Regardless of the actual Closing Date, the transactions
contemplated by this Agreement shall be effective as of the Effective Time.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF DETTCO
Except as set forth in the Disclosure Schedule (whereunder disclosure
under any Section thereof shall constitute disclosure under all other Sections
thereof provided appropriate cross-references are included to such other
Sections) delivered to Partnership herewith, DETTCO represents and warrants to
Partnership as follows:
5.1 CORPORATE MATTERS.
(a) DETTCO is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado and has
all requisite corporate power and authority to own, operate and lease
its properties and assets and to carry on its
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business in the places and in the manner currently conducted.
Partnership has been provided with a true and correct copy of DETTCO's
Articles of Incorporation and Bylaws as currently in effect. DETTCO has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, including, without
limitation, the transfer by DETTCO of the Subject Interest in
accordance with this Agreement. DETTCO is duly licensed or qualified
and in good standing as a foreign corporation authorized to do business
in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted, by it make such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not constitute a Material Adverse Effect.
Such jurisdictions as of the Closing Date are listed in Section 5.1(a)
of the Disclosure Schedule. This Agreement and the transactions
contemplated hereby have been duly authorized by all requisite
corporate and stockholder action on the part of DETTCO, and the
Agreement has been duly executed and delivered by DETTCO.
(b) Each of the LLCs is a duly organized and validly existing
limited liability company in good standing under the laws of the State
of Delaware and has all requisite power and authority for the ownership
and operation of its properties and assets and for the carrying on of
its business as now conducted or as now proposed to be conducted. Upon
Closing, each of the LLCs will be duly licensed or qualified and in
good standing as a foreign limited liability company authorized to do
business in all jurisdictions wherein the character of the property
owned or leased, or the nature of the activities conducted (including
its respective portion of the Businesses), by it make such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not constitute a Material Adverse Effect. Such
jurisdictions for each of the LLCs as of the Closing Date are listed in
Section 5.1(b) of the Disclosure Schedule. DETTCO has delivered to
Partnership true and correct copies of the Certificate of Formation and
Limited Liability Company Agreement ("LLC Agreement") of each of the
LLCs as currently in effect. The transactions contemplated by this
Agreement, including the transfers of the Assets referred to in Section
5.4(b) by the DE Entities to the LLCs, have been duly authorized by all
requisite corporate and stockholder action on the part of each of the
DE Entities (to the extent applicable to such entity) and all requisite
limited liability company action on the part of each of the LLCs (to
the extent applicable to such entity).
(c) Each of the DE Entities (other than DETTCO) was, during
the period in which such entity conducted its portion of the
Businesses, duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in all jurisdictions
wherein the character of the property owned or leased, or the nature of
the activities conducted, by it in connection with the Businesses made
such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have had during such period, or
would not today constitute, a Material Adverse Effect. Such
jurisdictions for each of the other DE Entities immediately prior to
the respective transfer of the Assets by such entity to the respective
LLC, are listed in Section 5.1(c) of the Disclosure Schedule.
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(d) DETTCO owns, beneficially and otherwise, all of the
Subject Interest, and as of the Closing DETTCO LLC will own,
beneficially and otherwise, all of the Membership Interests of DEPLC
LLC and LSI LLC, in each case, free and clear of all Liens, options,
warrants or claims (contingent or absolute) of any kind or character
except as arise out of this Agreement and subject to the terms of the
respective LLC Agreements. Upon transfer of the Subject Interest to
Partnership at the Closing, Partnership will own, beneficially and
otherwise, the Subject Interest, and DETTCO LLC will continue to own,
beneficially and otherwise, the Membership Interests of DEPLC LLC and
LSI LLC, in each case, free and clear of any Lien, option, warrant or
claim, except for (i) any Lien, option, warrant or claim created by or
through Partnership or, in the case of the Membership Interests of
DEPLC LLC and LSI LLC, DETTCO LLC from and after the Closing, (ii) the
terms of the applicable LLC Agreement and (iii) any restriction on
transferability of the Subject Interest arising under applicable
securities laws.
5.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement is a legal, valid and binding obligation of
DETTCO, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
that affect creditors' rights generally and by legal and equitable
limitations on the availability of specific remedies.
(b) The execution, delivery and performance of this Agreement
by DETTCO and the other agreements and documents to be delivered by
DETTCO to Partnership hereunder, the consummation of the transactions
contemplated hereby or thereby, and the compliance with the provisions
hereof or thereof, by DETTCO will not, with or without the passage of
time or the giving of notice or both:
(i) conflict with, constitute a breach, violation or
termination of any provision of, or give rise to any right of
termination, cancellation or acceleration, or loss of any
right or benefit or both, under any agreement to which DETTCO,
any DE Entity or any LLC is a party or by which DETTCO, any DE
Entity or any LLC or the Assets or Membership Interests are
bound;
(ii) conflict with or violate (x) the Articles of
Incorporation or Bylaws of DETTCO or (y) the LLC Agreement or
the Certificate of Formation of any LLC;
(iii) result in the creation or imposition of any
Lien on any of the Assets or the Membership Interests; or
(iv) to DETTCO's knowledge, violate any law, statute,
ordinance, regulation, judgment, writ, injunction, rule,
decree, order or any other
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restriction of any kind or character applicable to DETTCO or
its properties or assets;
except any matters described in clauses (i), (iii) or (iv) that would not have a
Material Adverse Effect.
5.3 CONSENTS, APPROVALS, AUTHORIZATIONS AND PERMITS.
(a) Except (i) as set forth in Section 5.3(a) of the
Disclosure Schedule, (ii) as contemplated in Section 8.1, (iii) as
required pursuant to any Short Term Contract and (iv) for any required
filings with the SEC pursuant to the Exchange Act, no order, license,
consent, waiver, authorization, filing or approval of any Person not a
Party hereto, including any Governmental Authority, is necessary on
behalf of DETTCO to authorize the execution, delivery and performance
of this Agreement or any other agreement contemplated hereby to be
executed and delivered by it and the consummation of the transactions
contemplated hereby or thereby, including the transfers of the Assets
to the LLCs by the DE Entities, or to effect the legality, validity,
binding effect or enforceability of such transactions, other than (x)
any requirement that is applicable to Partnership or as a result of any
other facts that specifically relate to the business or activities in
which Partnership is engaged or (y) as will not have a Material Adverse
Effect if not obtained.
(b) Except as set forth in Section 5.3(b), Part I of the
Disclosure Schedule, prior to the transfer of the Assets and the
Businesses to the LLCs, all Permits required or necessary for the DE
Entities and the LLCs to own and operate the Assets and to conduct the
Businesses in the places and in the manner currently or previously
conducted by them have been duly obtained, are in full force and effect
and are accurately set forth in Section 5.3(b), Part II of the
Disclosure Schedule. All of such Permits shall be transferred by the
applicable DE Entity to the applicable LLC in connection with the
transfer of the Assets and Businesses to the LLCs. Neither the DE
Entities nor the LLCs, nor any of them, has received notification
concerning, and DETTCO has no knowledge of, violations that are in
existence with respect to those Permits and no Proceeding is pending
or, to the knowledge of DETTCO, threatened with respect to the
revocation or limitation of any of the Permits.
5.4 TITLE TO AND CONDITION OF THE ASSETS.
(a) (i) A complete listing of all material assets owned or
leased by DETTCO (other than Excluded Assets) is set forth in Exhibit
C. As of the Closing, all of the tangible DETTCO Assets will be in
DETTCO LLC's possession and control or subject to valid and existing
Contracts. DETTCO owns all of the DETTCO Assets free and clear of all
Liens except the Permitted Encumbrances and, as of the Closing, DETTCO
LLC will own all of the DETTCO Assets, free and clear of all Liens
except the Permitted Encumbrances.
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(ii) A complete listing of all material assets owned
or leased by DEPLC (other than Excluded Assets) is set forth in Exhibit
B. As of the Closing, all of the tangible DEPLC Assets will be in DEPLC
LLC's possession and control or subject to valid and existing
Contracts. DEPLC owns all of the DEPLC Assets free and clear of all
Liens except the Permitted Encumbrances and, as of the Closing, DEPLC
LLC will own all of the DEPLC Assets, free and clear of all Liens
except the Permitted Encumbrances.
(iii) A complete listing of all material assets owned
or leased by LSI (other than Excluded Assets) is set forth in Exhibit
F. As of the Closing, all of the tangible LSI Assets will be in LSI
LLC's possession and control or subject to valid and existing
Contracts. LSI owns all of the LSI Assets free and clear of all Liens
except the Permitted Encumbrances and, as of the Closing, LSI LLC will
own all of the LSI Assets, free and clear of all Liens except the
Permitted Encumbrances.
(b) As of the Closing, and except for the Excluded Assets and
assets sold in the ordinary course of business, all of the assets
utilized by DETTCO in its business operations will have been
transferred by it to DETTCO LLC; all of the assets utilized by DEPLC in
its business operations will have been transferred by it to DEPLC LLC;
and all of the assets utilized by LSI in its business operations will
have been transferred by it to LSI LLC.
(c) Except as would not have a Material Adverse Effect, as of
Closing, all of the pipelines, plants and fixtures comprising a part of
the Assets will be located on lands owned in fee by, or covered by a
lease, easement, license or right-of-way agreement owned by, one of the
LLCs and which leases, easements, licenses or rights-of-way agreements
are in full force and effect and to the extent material, are listed on
the respective lists of the Assets of the LLCs in Exhibits B, C and F.
Except as would not have a Material Adverse Effect, all real property
and real property interests included in the Assets are described in
Exhibits B, C and F and constitute the only interest in real property
included in the Assets. Except as would not have a Material Adverse
Effect, as to those Assets that are pipeline assets, all rights-of-way
(including lease, license and easement agreements) are contiguous.
(d) None of the DE Entities or any of the LLCs has received
any notice of infringement, misappropriation or conflict with respect
to the Intellectual Property of any other Person relating to the
operation of the Assets or the Businesses except as noted in Section
5.4(d) of the Disclosure Schedule, and the operation of the Assets or
the Businesses has not (and does not) infringed, misappropriated or
otherwise conflicted with any Intellectual Property.
(e) Except as described in Section 5.4(e) of the Disclosure
Schedule, the operation of the Businesses in the ordinary course of
business as they are now conducted is not dependent upon the right to
use the property of Persons other than the DE Entities' or the LLCs',
except (i) as would not cause a Material Adverse Effect
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or (ii) such property as is leased, covered by an easement or other
contract for the use thereof or licensed to the DE Entities or the LLCs
pursuant to any of the Assets, which leases, easements, contracts
(other than Short Term Contracts) and licenses, to the extent material,
are listed in Exhibits B, C and F. As of Closing, except for
contractual rights of parties to contracts other than the DE Entities
or the LLCs and as would not have a Material Adverse Effect, no Person,
other than the LLCs, will own or have any interest in any of the Assets
or any asset currently used by the DE Entities or LLCs in the operation
of the Businesses, except such assets as are leased, covered by an
easement contract or license that will be owned, as of the Closing, by
one of the LLCs and which are, to the extent material, listed in
Exhibits B, C and F.
(f) Except as described in Section 5.4(f) of the Disclosure
Schedule, the Assets listed in Exhibits B, C and F which consist of
plants, pipelines, fixtures or equipment are, in all material respects,
(i) in good operating condition and repair, in accordance with
standards generally acceptable in the industry, ordinary wear and tear
excepted, (ii) adequate and sufficient for the operations of the
Businesses and (iii) conforming in use to all applicable laws.
(g) Except as set forth in Section 5.4(g) of the Disclosure
Schedule, upon consummation of the transactions contemplated by this
Agreement, each of the LLCs shall have a nonexclusive right to use the
Intellectual Property in connection with its ownership and operation of
the Assets and its operation of its respective Business, in the manner
now owned or conducted.
5.5 CONTRACTS AND COMMITMENTS.
(a) Except for this Agreement, the Short Term Contracts, those
contracts covered by Section 5.5(b) below and as set forth in Section
5.5(a) of the Disclosure Schedule, none of the LLCs are party to, and
none of the Assets are subject to or include, the following (the
"Contracts"):
(i) any agreement, contract or commitment requiring
the expenditure or series of related expenditures of funds in
excess of $100,000;
(ii) any agreement, contract or commitment requiring
the payment for goods or services (whether or not the goods or
services are actually provided) or the provision of goods or
services at a price less than the LLCs' cost of producing the
goods or providing the services;
(iii) any loan or advance to, or investment in, any
Person or any agreement, contract, commitment or understanding
relating to the making of any loan, advance or investment;
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(iv) other than as contemplated by the Credit
Facility, any contract, agreement, indenture, note or other
instrument relating to the borrowing of money or any guarantee
or other contingent liability in respect of any indebtedness
or obligation of any Person (other than the endorsement of
negotiable instruments for deposit or collection in the
ordinary course of business);
(v) any management service, union, employment,
consulting, severance or other similar type contract or
agreement;
(vi) any agreement, contract or commitment that would
limit the freedom of Partnership, any LLCs or any Affiliate of
Partnership following the Effective Time to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any
of the Assets or to compete with any Person or to engage in
any business or activity in any geographic area;
(vii) any agreement, lease, contract or commitment or
series of related agreements, leases, contracts or commitments
not entered into in the ordinary course of business;
(viii) other than rights-of-way, easement agreements,
licenses, access agreements and surface leases, any agreement
or contract that would obligate or require Partnership or any
LLC or any subsequent owner of any of the Assets to provide
for indemnification or contribution with respect to any
matter;
(ix) any license, royalty or similar agreement;
(x) any other agreement, contract or commitment that
could reasonably be expected to have a Material Adverse
Effect;
(xi) any agreement, written or oral, or other
continuing transactions between a DE Entity or an LLC, on the
one hand, and any other Affiliate of DETTCO, on the other
hand, except for the Other Agreements or as otherwise
contemplated by this Agreement;
(xii) any agreement or other commitment relating to
rights, options, warrants or agreements granted or issued by
or binding upon an LLC for the purchase or acquisition of
Membership Interests of such LLC or any outstanding
preemptive, conversion or other such rights with respect to
such interests;
(xiii) any agreements containing preferential rights
to purchase all or any portion of the Assets (other than in
the ordinary
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course of business) which rights have not, or by the Closing
Date will not have been, terminated or expired;
(xiv) any swaps or futures instruments; or
(xv) except for the transactions contemplated by this
Agreement, any agreement binding upon any of the LLCs to make
any acquisitions of any business or business operations other
than the Businesses, whether by way of acquisition of assets
or equity interest in another entity, by merger or otherwise.
(b) Section 5.5(b) of the Disclosure Schedule, as of the date
hereof, identifies and summarizes the principal terms (in the opinion
of DETTCO) of the following described contracts (other than Short Term
Contracts), which summary is substantially correct to the knowledge of
DETTCO:
(i) Crude Contracts to which DETTCO or any of the
other DE Entities or the LLCs is a party.
(ii) Contracts to which LSI or LSI LLC is a party and
pursuant to which it may purchase or sell the lubrication
products currently and historically handled by such entities.
(c) None of the DE Entities is, and as of the Closing, none of
the LLCs that is a party thereto will be, in material breach of any
Contract, or is in material default (or knows of any event or
circumstance that with notice, or lapse of time or both, would
constitute an event of a material default) under the terms of any of
the Contracts and all of such Contracts are valid and enforceable
against such Person, and to DETTCO's knowledge, against such other
parties to such Contracts, and are in full force and effect. DETTCO has
no knowledge of any pending or threatened disputes, or of any
occurrence or event which in DETTCO's reasonable judgement could
reasonably lead to a material dispute, with respect to any of such
Contracts.
5.6 FINANCIAL STATEMENTS; LIABILITIES.
(a) Set forth in Section 5.6(a) of the Disclosure Schedule are
true and complete copies of the unaudited consolidated balance sheets
of the DE Entities (collectively, the "Balance Sheets") as of December
31, 1997 and August 31, 1998 (the "Balance Sheet Date") and the
unaudited consolidated statements of income of the DE Entities for
their respective 12 and eight month periods then ended (collectively,
with the Balance Sheets, the "Financial Statements"). The Financial
Statements fairly present the consolidated financial position of the DE
Entities as of their respective dates and the results of their
respective operations for the 12 and eight month periods, respectively,
then ended. The Financial Statements were prepared in
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accordance with GAAP except for the inclusion of notes and, as to the
interim Financial Statements, normal and reoccurring year-end
adjustments.
(b) As of the Effective Time, none of the LLCs will have any
liabilities or obligations, contingent or otherwise, other than the
Assumed Obligations, Certain LLC Obligations and obligations arising on
or after the Effective Time by operation of law.
5.7 TAXES.
(a) The LLCs have not, and will not on or prior to the Closing
Date, file an election under Treasury Reg Section 301.7701-3 to be
classified as a corporation for U.S. federal income tax purposes.
During the entirety of the period from the date of its formation
through the Effective Time, each of the LLCs has been and will be a
business entity that has had and will have a single owner at any given
point in time and is and will be disregarded as an entity separate from
its owner for federal Tax purposes under Treasury Regulation Sections
301.7701-2 and -3 and any comparable provision of applicable state or
local Tax law that permits such treatment.
(b) Each of the DE Entities and the LLCs has filed when due in
accordance with all applicable laws (or properly and timely filed an
extension therefor) all Tax Returns required under applicable statutes,
rules or regulations to be filed with respect to Taxes relating to such
entity. Such Tax Returns are true, accurate and complete in all
respects and all Taxes with respect to which any of the DE Entities or
the LLCs has become obligated (whether or not shown on any Tax Return)
have been paid in full.
(c) There are no liens for Taxes upon the assets of any of the
DE Entities or of the LLCs, other than with respect to ad valorem Taxes
which are not yet delinquent. Section 5.7(c) of the Disclosure Schedule
sets forth all material elections made by or relating to each such
entity. Each of the DE Entities and the LLCs has fully complied with
all applicable federal, state and local employment tax, withholding and
contribution obligations with respect to its employees, and all other
Tax withholding obligations required by law.
(d) None of the LLCs (i) has agreed to make, or 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, or (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. No asset of any of such entities: (X) is
property such entity is required to treat as owned by another person
pursuant to the "safe-harbor lease" provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, (Y) is "tax-exempt use property"
within the meaning of Section 168(h) of the Code or (Z) directly or
indirectly secures any debt the interest on which is tax-exempt under
the Code.
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(e) The Assets are not, and on the Effective Time will not be,
subject to or liable for any special Tax assessments (other than
general property Taxes).
5.8 NO VIOLATIONS OF LAW. None of the DE Entities or any of the LLCs
has violated any order of any Governmental Authority or any law, ordinance,
regulation, order, judgment, writ, injunction, requirement, statute, rule or
other governmental authorization relating or applicable to the ownership or
operation of any of the Assets or the Businesses that would have a Material
Adverse Effect.
5.9 NO ADVERSE CHANGES OR EVENTS. Since the Balance Sheet Date, the DE
Entities (and upon the transfer of the Assets and the Businesses to the LLCs,
the LLCs) have operated the Assets, and have conducted the Businesses only in
the ordinary course, consistent with past practices, and there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), results of operations or
prospects of the Assets or the Businesses;
(b) any material damage, destruction or loss, whether or not
covered by insurance, adversely affecting the Assets or the Businesses;
(c) any mortgage, pledge or creation of any Lien (other than a
Permitted Encumbrance) with respect to any of the Assets;
(d) any sale, transfer or other disposition of any of the
Assets (other than the sale or other disposition of inventory or
disposable assets or assets that have become obsolete or unusable, all
in the ordinary course of business);
(e) any material change in the customary methods used in
operating the Assets or conducting the Businesses;
(f) any adverse change in the Crude Contracts (other than
termination or expiration pursuant to the terms of such contract)
which, in the aggregate, might reasonably be expected to have a
Material Adverse Effect; or
(g) Any declaration, setting aside or payment of any dividend
or other distribution or payment (including equity securities or
property but specifically excluding cash) in respect of any equity
interest in any of the DE Entities or LLCs, or any redemption or other
acquisition of any such equity interest by any of the DE Entities or
LLCs, other than the transactions contemplated by this Agreement.
5.10 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.10 of the
Disclosure Schedule:
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(a) Except as would not have an Environmental Material Adverse
Effect, the DE Entities and the LLCs have operated the Assets and the
Businesses in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other
Governmental Authority;
(b) Except as would not have an Environmental Material Adverse
Effect, there are no Claims or Proceedings pending or to the knowledge
of DETTCO, threatened by or before any court or any other Governmental
Authority directed against any of the DE Entities or the LLCs that
pertain or relate to (i) any remedial obligations under any applicable
Environmental Law, (ii) violations by any of the DE Entities or the
LLCs of any Environmental Law, (iii) personal injury or property damage
claims relating to a release of chemicals or Hazardous Materials, or
(iv) response, removal, or remedial costs under CERCLA, RCRA or any
similar state laws in each case to the extent pertaining to the
operation of the Assets or Businesses;
(c) Except as would not have an Environmental Material Adverse
Effect, (i) all Environmental Permits required under Environmental Laws
that are necessary to the operation of the Assets or the Businesses by
the DE Entities or the LLCs have been obtained and are in full force
and effect and DETTCO is unaware of any basis for revocation or
suspension of any such Environmental Permits; and (ii) the DE Entities'
and the LLCs' facilities subject to such Environmental Permits were
constructed and have been operated by the DE Entities and/or the LLCs
during their ownership or operation thereof in accordance with the
representations and conditions made or set forth in the Environmental
Permit applications and the Environmental Permits for the DE Entities
and the LLCs;
(d) Except as would not have an Environmental Material Adverse
Effect, no portion of any of the Assets is listed on the National
Priorities List or the Comprehensive Environmental Response,
Compensation, and Liability Information System list under CERCLA, or
any similar ranking or listing under any state law;
(e) To the knowledge of DETTCO, except as would not have an
Environmental Material Adverse Effect, all Hazardous Materials
generated by the DE Entities or the LLCs in connection with the
operation of the Assets or the Businesses have been transported,
stored, treated and disposed of by carriers or treatment, storage and
disposal facilities authorized or maintaining valid Environmental
Permits under all applicable Environmental Laws;
(f) To the knowledge of DETTCO, except as would not have an
Environmental Material Adverse Effect, no person has disposed of or
released any Hazardous Materials on, at, or under any properties
included in the Assets, except in compliance with Environmental Laws;
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(g) Except as would not have an Environmental Material Adverse
Effect, DETTCO has no knowledge of any specific facts or circumstances
which could reasonably be expected to result in any liability to the DE
Entities, the LLCs or Partnership with respect to the current or past
operations of the Assets or the Businesses in connection with (i) any
release, transportation or disposal of any Hazardous Materials, or (ii)
any action taken or omitted that was not in full compliance with or was
in violation of any applicable Environmental Law; and
(h) There are no written notices of violation, non-compliance,
or similar notifications relating to Environmental Liabilities
currently pending or, to DETTCO's knowledge, threatened, relating or
pertaining to the Assets or Businesses.
Except with respect to the representation of DETTCO contained in Section 5.3(a),
notwithstanding anything to the contrary in this Agreement (including without
limitation the representations contained in Sections 5.3(b), 5.8 and 5.14), the
foregoing representations and warranties in this Section 5.10 are the exclusive
representations made by DETTCO with respect to any Environmental Conditions or
Environmental Liabilities.
5.11 PRODUCT LIABILITY. To DETTCO's knowledge and except as disclosed
in Section 5.11 of the Disclosure Schedule, there are no facts or events forming
the basis of any present claim for Losses based on any "product liability"
theory against the DE Entities or the LLCs not fully covered by insurance,
except for deductibles and self-insurance retentions, for personal injury or
property damage alleged to be caused by products, materials or other goods
produced or sold by or on behalf of the DE Entities or the LLCs.
5.12 NO UNTRUE STATEMENTS. This Agreement, the Disclosure Schedule and
the Exhibits hereto, and all other documents and certificates delivered to
Partnership and its representatives at Closing in connection with this Agreement
or the transactions contemplated hereby, do not and will not contain when
delivered any untrue statement of any material fact and do not and will not omit
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they are made, not
misleading. To the knowledge of DETTCO, there is no material fact relating to
the Assets or the Businesses that has not been disclosed in writing to
Partnership by DETTCO that could reasonably be expected to have a Material
Adverse Effect.
5.13 EMPLOYEE BENEFITS. Section 5.13 of the Disclosure Schedule
contains a complete and correct list of (i) all employee welfare benefit and
employee pension benefit plans as defined in sections 3(1) and 3(2) of ERISA
including, but not limited to, plans that provide retirement income or result in
deferrals of income by employees for periods extending to their terminations of
employment or beyond, and plans that provide medical, surgical, or hospital care
benefits or benefits in the event of sickness, accident, disability, death or
unemployment and (ii) all other material employee benefit agreements or
arrangements, including without limitation, deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock purchase
plans, stock award plans, golden parachute agreements, severance pay plans,
dependent care plans, cafeteria plans, employee assistance programs, scholarship
programs, employment contracts, retention incentive agreements, noncompetition
agreements, consulting agreements, confidentiality agreements, vacation
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policies, and other similar plans, agreements and arrangements that are
sponsored or maintained by DETTCO or any Affiliate of DETTCO, for the benefit of
Subject Employees (or their beneficiaries or dependents) (such plans and benefit
arrangements being collectively referred to as "Designated Plans"). Section 5.13
of the Disclosure Schedule identifies each of the Designated Plans that is
subject to section 302 or Title IV of ERISA or section 412 of the Code.
(a) With respect to each Designated Plan, DETTCO has
heretofore or prior to Closing will have delivered to Partnership or an
Affiliate of Partnership possesses, as applicable, complete and correct
copies of each of the following documents:
(i) the Designated Plan and any amendments thereto
(or if the Designated Plan is not a written agreement, a
description thereof);
(ii) the most recent actuarial report; and
(iii) the most recent summary plan description and
summaries of material modifications thereto.
(b) No asset of any LLC or any ERISA Affiliate is the subject
of any lien arising under section 302(f) of ERISA or section 412(n) of
the Code; no LLC or ERISA Affiliate has been required to post any
security under section 307 of ERISA or section 401(a)(29) of the Code;
and no fact or event exists that could reasonably be expected to give
rise to any such lien or requirement to post any such security.
(c) The PBGC has not instituted proceedings to terminate any
pension benefit plan as defined in section 3(2) of ERISA that is
maintained by any ERISA Affiliate and no condition exists that presents
a material risk that such proceedings will be instituted.
(d) No pension benefit plan as defined in section 3(2) of
ERISA that is maintained by any ERISA Affiliate had an accumulated
funding deficiency as defined in section 302 of ERISA and section 412
of the Code, whether or not waived, as of the last day of the most
recent fiscal year of the plan ending on or prior to the Closing Date.
(e) No ERISA Affiliate has ever maintained, had an obligation
to contribute to, contributed to, or incurred any liability with
respect to a plan that is both a multiemployer plan (as defined in
section 3(37) of ERISA) and a pension plan (as defined in section 3(2)
of ERISA) or a plan described in section 4063(a) of ERISA that could
give rise to any liability under Title IV of ERISA that would have a
Material Adverse Effect on Partnership or the LLCs.
(f) No ERISA Affiliate has engaged in a transaction that could
result in the imposition upon any LLC of a civil penalty under ERISA or
a tax under the Code
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with respect to any Designated Plan, and no fact or event exists that
could give rise to any such liability that would have a Material
Adverse Effect on Partnership or the LLC.
(g) Except as otherwise provided by the PanEnergy Corp. Change
in Control Severance Benefits Plan, no Designated Plan provides
medical, surgical, hospitalization, or life insurance benefits (whether
or not insured by a Third Party) for Subject Employees for periods
extending beyond their retirements or other terminations of service,
other than coverage mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"); and neither DETTCO
nor an Affiliate of DETTCO has made any commitment to provide retiree
medical, surgical, hospitalization or life insurance coverage for any
Subject Employees (except as required by COBRA).
(h) Neither any LLC nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA that has not been satisfied (other
than liability to the PBGC for the payment of premiums pursuant to
section 4007 of ERISA). No condition exists for which the PBGC is
authorized to seek from any LLC or an ERISA Affiliate a late payment
charge under section 4007(b) of ERISA except in any case that would not
have a Material Adverse Effect on Partnership or the LLC. No condition
exists that presents a risk that any LLC or an ERISA Affiliate will
incur any liability under Title IV of ERISA (other than liability to
the PBGC for the payment of premiums pursuant to section 4007 of
ERISA).
(i) No LLC has ever had any employees.
(j) No LLC has entered into any agreement to assume
responsibility for contributions to or benefits under any Designated
Plan.
(k) None of the LLCs is liable or obligated under any employee
benefit plan or for any other employee benefits that may have been
established by DETTCO or an Affiliate of DETTCO for its employees.
5.14 LITIGATION.
(a) Except as set forth in Section 5.14(a) of the Disclosure
Schedule, there are no actions, suits, examinations or proceedings
relating to any of the Assets, the LLCs or the DE Entities that are
pending or, to the knowledge of DETTCO, threatened with respect to any
of such assets or parties before or by any Governmental Authority or
other Person.
(b) Except as set forth in Section 5.14(b) of the Disclosure
Schedule, there is no Proceeding or written Claim relating to, or, to
DETTCO's knowledge, any change in, any zoning or building ordinance
pending or threatened against or affecting any of the Assets or the
ownership or operation of such Assets, at law or in equity,
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before or by any Governmental Authority and to the knowledge of DETTCO,
no basis exists for any such Claim.
5.15 INVESTMENTS IN OTHER PERSONS. Except as set forth in Section 5.15
of the Disclosure Schedule, none of the LLCs has made any loan or advance to any
Person which is outstanding on the date of this Agreement, nor is it committed
or obligated to make any such loan or advance, nor does any LLC own any equity
interest in any other Person except (i) that, as of the Closing, DETTCO LLC will
own the Membership Interests of DEPLC LLC and LSI LLC and (ii) for trade
receivables and other current assets as disclosed in this Agreement.
5.16 INSURANCE. Section 5.16 of the Disclosure Schedule lists the
insurance policies carried by any of the DE Entities or the LLCs covering the
Assets and/or the Businesses.
5.17 FINDER'S FEES. Except for Xxxxxxx Xxxxx & Co., whose fees will be
paid by DETTCO, no investment banker, broker or finder has acted directly or
indirectly for DETTCO or any Affiliate of DETTCO in connection with this
Agreement or the transactions contemplated hereby. No other 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 DETTCO or any of its
Affiliates. DETTCO agrees to indemnify and hold Partnership harmless from and
against any and all claims, liabilities or obligations with respect to all fees,
commissions or expenses asserted by any Person on the basis of any act,
statement, agreement or commitment alleged to have been made by DETTCO or any of
its Affiliates with respect to any such fee, expense or commission.
5.18 INVESTMENT INTENT. DETTCO is acquiring the Class B Units for
DETTCO's own account, and not with a view to, or for sale in connection with,
the distribution thereof in violation of state or federal law. DETTCO
acknowledges that the Class B Units have not been registered under the
Securities Act of 1933, as amended, ("Securities Act") or the securities laws of
any state. Without such registration, the Class B Units may not be sold,
pledged, hypothecated or otherwise transferred unless it is determined that
registration is not required. DETTCO, 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 Class B Units, and DETTCO, either alone or through its
officers, employees or agents, has evaluated the merits and risks of the
investment in the Class B Units.
5.19 PERSONNEL INFORMATION; LABOR RELATIONS. Except as and to the
extent set forth in Section 5.19 of the Disclosure Schedule: (i) there is no
labor strike, stoppage, lockout or material dispute or material slowdown pending
that involves the Subject Employees or, to the knowledge of DETTCO, threatened,
and there has not been any such action during the last three years; (ii) no
Subject Employee is represented by any labor organization and, to the knowledge
of DETTCO, there are no current union organizing activities among the Subject
Employees and; (iii) except for those Duke Energy Corporation policies, rules or
procedures that are common to DETTCO and the General Partner, there are no
material written personnel policies, rules or procedures applicable to Subject
Employees.
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5.20 YEAR 0000 XXXXXXXX.
(a) Except as to (i) Year 2000 compliance matters included in
the Assumed Obligations, (ii) Software utilized by both DETTCO and
Partnership and provided by Duke Energy Corporation or its Affiliate
and (iii) information provided in Section 5.20(a) of the Disclosure
Schedule, when used in accordance with applicable supplied
documentation, all Software utilized in connection with the Businesses
(whether or not forming a part of the Assets) will to DETTCO's
knowledge, (x) operate accurately prior to, during and after the
calendar year 2000 A.D. with respect to date and time dependent data,
computations, output or other functions, will accurately process,
calculate, compare and sequence date and time data from, into and
between the twentieth and twenty-first centuries, and further including
leap year calculations, and will properly exchange accurate date and
time data during or related to the aforementioned time periods with all
relevant hardware, firmware, software and embedded systems used in
connection with it, or (y) be modified, repaired or replaced so as to
comply prior to the earlier of (A) June 1, 1999, or (B) the earliest
date on which the Software may be required to perform date/time
processing involving dates later than December 31, 1999.
(b) With respect to any Software that DETTCO or its Affiliates
is acquiring or may acquire prior to the Closing Date to be used in
connection with the Businesses, all such Software will comply with the
provisions of paragraph (a) above or, alternatively, DETTCO will
require by written contract that the vendor of such Software will place
such Software in compliance in accordance with the time schedule set
forth in paragraph (a) above.
(c) Except as would not have a Material Adverse Effect, all
Software and computer hardware used by DETTCO or its Affiliates in
conjunction with, and which are necessary for, the Businesses as of the
Closing Date that will not be a part of the Assets and that will not be
available to the LLCs following the Closing on substantially the same
terms as immediately prior to the Closing Date are listed in Section
5.20(c) of the Disclosure Schedule.
5.21 CAPITAL PROJECTS. Section 5.21 of the Disclosure Schedule contains
a complete and accurate summary description of all capital projects relating to
the Assets or the Businesses currently in progress, and all material capital
projects currently planned, by any of the DE Entities or the LLCs ("Capital
Projects"). Section 5.21 of the Disclosure Schedule also sets forth, as of the
date set forth therein, (i) the total capital expenditures appropriated for each
such project, (ii) amounts expended for each such project, (iii) the forecast
for each such project for the amounts remaining to be expended, (iv) the total
estimated cost for each such project and (v) all material Contracts relating to
such projects. The total estimated costs for each such project are DETTCO's good
faith estimate, based upon facts currently known by DETTCO as of the date
hereof, as to the cost of each such project through completion.
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ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARTNERSHIP
6.1 LIMITED PARTNERSHIP MATTERS. Partnership is a limited partnership
duly organized, 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, operate and lease its properties and assets and to carry on its business
in the places and in the manner currently conducted. DETTCO has been provided
with a true and correct copy of Partnership's Limited Partnership Agreement.
Partnership has all requisite limited partnership power and authority to enter
into this Agreement and to perform its obligations under this Agreement. This
Agreement and the transactions contemplated hereby have been duly authorized by
all requisite limited partnership action on the part of Partnership. This
Agreement has been duly executed and delivered by Partnership.
6.2 VALIDITY OF AGREEMENT; NO CONFLICT.
(a) This Agreement is a legal, valid and binding obligation of
Partnership, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and the other
agreements and documents to be delivered by Partnership to DETTCO
hereunder, the consummation of the transactions contemplated hereby or
thereby, and the compliance with the provisions hereof or thereof, by
Partnership will not, with or without the passage of time or the giving
of notice or both:
(i) conflict with, constitute a breach, violation or
termination of any provision of, or give rise to any right of
termination, cancellation or acceleration, or loss of any
right or benefit or both, under any material agreement to
which Partnership is a party or by which Partnership or its
assets are bound;
(ii) conflict with or violate the organization
documents of Partnership or the General Partner;
(iii) result in the creation or imposition of any
Lien on any of the assets of Partnership, the Consideration or
the Units; or
(iv) to Partnership's knowledge, violate any law,
statute, ordinance, regulation, judgment, writ, injunction,
rule, decree, order or any other restriction of any kind or
character applicable to Partnership or its properties or
assets;
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except any matters described in clauses (i), (iii) or (iv) that would not have a
Partnership Material Adverse Effect.
6.3 INVESTMENT INTENT. Partnership is acquiring the Subject Interest
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. Partnership
acknowledges that the Subject Interest has not been registered under the
Securities Act or the securities laws of any state and neither DETTCO nor any of
its Affiliates has any obligation to register the Subject Interest. Without such
registration, the Subject Interest may not be sold, pledged, hypothecated or
otherwise transferred unless it is determined that registration is not required.
Partnership, 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 Interest, and Partnership, either alone or through its officers,
employees or agents, has evaluated the merits and risks of the investment in the
Subject Interest.
6.4 FINDER'S FEE. Except for Xxxxxxx & Company International and The
Xxxxx Companies, whose fees will be paid by Partnership, no investment banker,
broker or finder has acted directly or indirectly for Partnership or any
Affiliate of Partnership in connection with this Agreement or the transactions
contemplated hereby. No other 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 Partnership or any of its Affiliates. Partnership agrees to
indemnify and hold DETTCO harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Partnership or any of its Affiliates
with respect to any such fee, expense or commission.
6.5 SECTION 704(c) ALLOCATIONS. Partnership agrees to adopt the
remedial method described in Treas. Reg. Section 1.704-3(d) in allocating
income, gains, losses and deductions with respect to the Assets for U.S. federal
and state income tax purposes.
6.6 SEC REPORTS. Partnership has filed all required forms, reports and
documents with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
January 1, 1998 (collectively, "Partnership's SEC Reports"). Partnership's SEC
Reports have complied in all material respects with all applicable requirements
of the Exchange Act. As of their respective dates, none of Partnership's SEC
Reports, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Partnership has heretofore delivered to DETTCO, in the form filed
with the SEC, all of Partnership's SEC Reports.
6.7 FINANCIAL STATEMENTS. The audited consolidated financial statements
of Partnership included in Partnership's Annual Report on Form 10-K for the year
ended December 31, 1997 (the "1997 10-K"), which consist of (i) consolidated
balance sheets as of December 31, 1997 and 1996,
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(ii) consolidated statements of income, partners' capital and cash flows for
each of the three years in the period ended December 31, 1997 and (iii) the
notes thereto, certified by KPMG Peat Marwick LLP, whose report thereon is
included therewith, were prepared in accordance with GAAP and present fairly
Partnership's consolidated financial position and the consolidated results of
its operations and cash flows as of the relevant dates thereof and for the
periods covered thereby. The unaudited consolidated financial statements of
Partnership contained in Partnership's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1998 ("Partnership 10-Q"), which consist of (a)
a consolidated balance sheet as of June 30, 1998 and December 31, 1997, (b)
consolidated statements of income for the three months and six months ended June
30, 1998 and 1997, (c) consolidated statements of cash flows for the six months
ended June 30, 1998 and (d) the notes thereto, were prepared in accordance with
GAAP, subject to the absence of notes and schedules, and present fairly
Partnership's consolidated financial position and the consolidated results of
its operations and cash flows as of the relevant dates thereof and for the
periods covered thereby, subject to normal and recurring year-end adjustments.
6.8 ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed in
Partnership's SEC Reports (without further amendment), since June 30, 1998 there
have not been any events or conditions of any character that, individually or in
the aggregate, have or would reasonably be expected to have a Partnership
Material Adverse Effect.
6.9 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Partnership nor any of
its subsidiaries has any material indebtedness, liability or obligation of the
type required by GAAP to be reflected on a balance sheet that is not reflected
or reserved against in the balance sheet dated as of June 30, 1998 included in
Partnership 10-Q or otherwise disclosed in Partnership SEC Reports, except for
such indebtedness, liabilities or obligations which have arisen after such date
in the ordinary course of business.
6.10 CONSENTS, APPROVALS, AUTHORIZATIONS AND PERMITS. The issuance and
sale of the Class B Units to DETTCO hereunder does not require any vote of the
holders of the outstanding Units under the rules or policies of the New York
Stock Exchange. Except for the matters described in Section 8.1, no other
consent, authorization or approval of, any Person not a Party, including any
Governmental Authority, is necessary on behalf of Partnership to authorize the
execution, delivery and performance of this Agreement or any other agreement
contemplated hereby to be executed and delivered by it and the consummation of
the transactions contemplated hereby or thereby, except as would not have a
Partnership Material Adverse Effect.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATIONS OF PARTNERSHIP AT CLOSING. The obligation
of Partnership to acquire the Subject Interest and to issue the Consideration to
DETTCO as contemplated hereby is, at the option of Partnership, subject to the
satisfaction on or before the Closing Date of the conditions set forth below,
any of which may be waived by Partnership in writing.
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(a) Representations, Warranties and Covenants. DETTCO shall
have performed, satisfied, and complied in all material respects with
all covenants, agreements, and conditions required by this Agreement to
be performed, satisfied, or complied with by it on or before the
Closing, and all representations and warranties of DETTCO contained in
this Agreement or in any certificate, document, instrument or writing
delivered to Partnership by or on behalf of DETTCO pursuant to this
Agreement, to the extent qualified as to materiality, shall be accurate
in all respects, and, to the extent not so qualified, shall be accurate
in all material respects, on and as of the Closing Date with the same
force and effect as though they had been made on and as of such date,
and Partnership shall have received a certificate, dated as of the
Closing Date, signed by a duly authorized officer of DETTCO certifying
the same.
(b) Corporate Approvals. Partnership shall have received a
certificate, dated as of the Closing Date, signed by DETTCO's Secretary
or Assistant Secretary certifying (i) the accuracy and completeness of
the copies of, as well as the current effectiveness of, the resolutions
to be attached thereto of the Board of Directors of DETTCO authorizing
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the
transfer of the DETTCO Assets to the DETTCO LLC, (ii) the incumbency of
the officers executing this Agreement on behalf of DETTCO and any
documents to be executed and delivered by DETTCO at the Closing, and
(iii) that attached to the certificate are true and correct copies of
the charter documents and bylaws of DETTCO, as in force and effect on
the Closing Date.
(c) Subsidiary Approvals. Partnership shall have received
certificates, dated as of the Closing Date, signed by the Secretary or
Assistant Secretary or comparable officer of DETTCO, as to the DE
Entities (other than DETTCO), and of each of the LLCs, as to
themselves, certifying (i) the accuracy and completeness of the copies
of, as well as the current effectiveness of, all resolutions to be
attached thereto of the Board of Directors or Board of Managers, as the
case may be, of such entities authorizing the execution, delivery and
performance of all transactions relating to the transfer of Assets and
of Membership Interests or other transactions contemplated by this
Agreement, (ii) the incumbency of the officers or managers of each such
party executing documents to be executed and delivered at or in
connection with the Closing or such transfer of Assets and Membership
Interests, and (iii) that attached to the certificate are true and
correct copies of the charter documents and bylaws, as applicable, of
each such entity (other than DETTCO), as in force and effect on the
Closing Date.
(d) Good Standing. DETTCO shall have delivered to Partnership
certificates issued by appropriate Governmental Authorities evidencing
the good standing and existence of DETTCO and each of the LLCs, as of a
date not more than ten (10) Business Days prior to the Closing Date, in
each of the jurisdictions listed in Section 5.1 of the Disclosure
Schedule for such entity. To the extent provided for under applicable
law, DETTCO shall have delivered to Partnership certificates or
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other writings issued by appropriate Governmental Authorities
evidencing that all applicable state franchise and similar Taxes have
been paid in such jurisdictions for the DE Entities and the LLCs.
(e) Instruments of Transfer. DETTCO shall have executed and
delivered to Partnership the Assignment of Subject Interest.
(f) No Adverse Effect. There shall have been no Material
Adverse Effect on the Assets or the Businesses since the Balance Sheet
Date (regardless of insurance coverage).
(g) Consents. All consents, licenses and approvals from all
third Persons necessary or appropriate for Partnership to consummate
the transactions contemplated by this Agreement and for the
consummation of the transactions with respect to the transfer of the
Assets to the LLCs, including those listed in Section 5.3(a) of the
Disclosure Schedule, shall have been received.
(h) Delivery of Other Agreements. DETTCO or its Affiliates, as
the case may be, shall have executed and delivered to Partnership or
its Affiliates all of the Other Agreements to which such Person is a
party.
(i) No Litigation. No Proceeding that is meritorious in the
opinion of counsel to Partnership shall have been instituted or
threatened relating to this Agreement or the transactions contemplated
hereby, and no Governmental Authority shall have taken any other action
to challenge or delay the transactions contemplated hereby.
(j) HSR Act. Any required waiting period under the HSR Act
shall have expired or early termination shall have been granted with
respect to such period.
(k) Credit Facility. DETTCO or an Affiliate of DETTCO shall
have established for the benefit of the LLCs a credit facility that is
satisfactory for the operations for the LLCs in Partnership's and
DETTCO's reasonable judgment ("Credit Facility").
(l) Truck Lease Agreement. DETTCO LLC shall have entered into
a new lease agreement with Ryder Trucks on terms reasonably
satisfactory to Partnership with respect to the tractor-trailers used
in connection with the Assets and Businesses, and which are currently
under lease from Ryder Trucks to DETTCO.
(m) Due Diligence. Partnership shall have completed its due
diligence reviews with results satisfactory to Partnership.
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(n) Employment Agreements. Satisfactory employment agreements
shall have been entered into between Partnership or its Affiliates and
those employees of DETTCO and its Affiliates as Partnership may
reasonably require.
(o) Guaranty Agreement. The Guaranty Agreement shall have been
executed and delivered.
(p) Amended Limited Partnership Agreement; Capital
Contribution. The Amended Limited Partnership Agreement shall have been
adopted and approved by all appropriate partnership action on the part
of Partnership and shall be effective on or prior to the Effective
Time. The General Partner shall have contributed to Partnership the
capital contribution required pursuant to Section 4.1(d) of the Amended
Limited Partnership Agreement as a result of the issuance of the
Consideration.
(q) Adjustments. Settlement of all adjustments to the value of
the Consideration shall have been agreed to as provided in Section
2.3(a).
(r) Side Letter Agreements. Side letter agreements
satisfactory to both Parties shall have been entered into between:
(i) the General Partner and Duke Energy Corporation
pursuant to which the amount of indirect costs, general and
administrative costs and other similar costs charged to the
LLCs shall not exceed $300,000 per year for the period ending
on the fifth anniversary date of the Closing Date; and
(ii) DETTCO and the Partnership providing for the
resolution of the amounts payable by such parties pursuant to
the Mobil Contract.
7.2 CONDITIONS TO OBLIGATIONS OF DETTCO AT CLOSING. The obligation of
DETTCO to transfer the Subject Interest and acquire the Consideration as
contemplated hereby is, at the option of DETTCO, subject to the satisfaction on
or before the Closing Date of the conditions set forth below, any of which may
be waived by DETTCO in writing.
(a) Representations, Warranties and Covenants. Partnership
shall have performed, satisfied, and complied in all material respects
with all covenants, agreements, and conditions required by this
Agreement to be performed, satisfied, or complied with by it on or
before the Closing, and the representations and warranties of
Partnership contained in this Agreement or in any certificate,
document, instrument or writing delivered to DETTCO by or on behalf of
Partnership pursuant to this Agreement, to the extent qualified as to
materiality, shall be accurate in all respects, and, to the extent not
so qualified, shall be accurate in all material respects, on and as of
the Closing Date with the same force and effect as though they had been
made on and as of such date, and DETTCO shall have received a
certificate, dated as of the
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Closing Date, signed by the President or a Vice President of
Partnership's General Partner certifying the same.
(b) Partnership Approvals. DETTCO shall have received a
certificate, dated as of the Closing Date, signed by the Secretary or
Assistant Secretary of the General Partner certifying (i) the accuracy
and completeness of the copies of, as well as the current effectiveness
of, the resolutions to be attached thereto of (A) the Special Committee
of the Board of Directors of the General Partner authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and (B)
resolutions of the Board of Directors of the General Partner
establishing the Special Committee and approving the Amended Limited
Partnership Agreement and the issuance and sale of the Class B Units,
(ii) the incumbency of the officers executing this Agreement on behalf
of Partnership and any documents to be executed and delivered by
Partnership or its Affiliates at the Closing, and (iii) that attached
to the certificate are true and correct copies of the Amended Limited
Partnership Agreement and the charter documents and bylaws of the
General Partner, as in force and effect on the Closing Date.
(c) Good Standing. Partnership shall have delivered to DETTCO
certificates issued by appropriate Governmental Authorities evidencing
the good standing and existence of Partnership, as of a date not more
than ten (10) Business Days prior to the Closing Date, in Texas and
Delaware. To the extent provided for under applicable law, Partnership
shall have delivered to DETTCO certificates or other writings issued by
appropriate Governmental Authorities evidencing that all applicable
state franchise and similar Taxes have been paid in such jurisdictions.
(d) Delivery of Other Agreements. Partnership or its
Affiliates, as may be the case, shall have executed and delivered to
DETTCO or its Affiliates all of the Other Agreements to which such
Person is a party.
(e) No Litigation. No Proceeding that is meritorious in the
opinion of counsel to DETTCO shall have been instituted or threatened
relating to this Agreement or the transactions contemplated hereby, and
no Governmental Authority shall have taken any other action to
challenge or delay the transactions contemplated hereby.
(f) Consents. All consents, licenses and approvals from all
third Persons necessary or appropriate for DETTCO to consummate the
transactions contemplated by this Agreement, and for the consummation
of the transactions with respect to the transfer of the Assets to the
LLCs including those listed in Section 5.3(a) of the Disclosure
Schedule, shall have been received.
(g) HSR Act. Any required waiting period under the HSR Act
shall have expired or early termination shall have been granted with
respect to such period.
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(h) Delivery of the Consideration. Partnership shall have
delivered to DETTCO on the Closing Date the Consideration in accordance
with Sections 2.1 and 2.2.
(i) Amended Limited Partnership Agreement; Capital
Contribution. The Amended Limited Partnership Agreement shall have been
adopted and approved by all appropriate partnership action on the part
of Partnership and shall be effective on or before the Effective Time.
The General Partner shall have contributed to Partnership the capital
contribution required of it pursuant to Section 4.1(d) of the Amended
Limited Partnership Agreement as a result of the issuance of the
Consideration.
(j) Adjustments. Settlement of all adjustments to the value of
the Consideration shall have been agreed to as provided in Section
2.3(a).
(k) Credit Facility. The Credit Facility shall have been
established for the benefit of the LLCs that is satisfactory for the
operations for the LLCs in Partnership's and DETTCO's reasonable
judgment.
(l) Truck Lease Agreement. DETTCO LLC shall have entered into
a new lease agreement with Ryder Trucks on terms reasonably
satisfactory to Partnership with respect to the tractor-trailers used
in connection with the Assets and Businesses, and which are currently
under lease from Ryder Trucks to DETTCO.
(m) Side Letter Agreement. DETTCO and the Partnership shall
have entered into a side letter agreement satisfactory to both Parties
providing for the resolution of the amounts payable by such parties
pursuant to the Mobil Contract.
ARTICLE VIII.
HSR FILING; ACCESS TO INFORMATION BY
PARTIES; MATTERS PENDING CLOSING
8.1 HSR FILING. Each Party shall (i) file promptly with the Department
of Justice ("DOJ") and the Federal Trade Commission ("FTC") any notification and
report form required for the transactions contemplated hereunder by the HSR Act,
requesting early termination of the waiting period thereunder, (ii) respond
promptly to any inquiries from the DOJ or the FTC in connection with such
filings and (iii) comply in all material respects with the requirements of the
HSR Act. Subject to regulatory constraints, DETTCO and Partnership shall
cooperate with each other and promptly furnish all information to the other
Party that is necessary in connection with the Parties' compliance with the HSR
Act. DETTCO and Partnership shall coordinate their initial filing of the
notification and report form so that such filings are made on the same day.
Subject to regulatory constraints, DETTCO and Partnership shall each keep the
other Party fully advised with respect to any requests from or communications
with the DOJ or FTC and shall consult with the other Party with respect to all
filings and responses thereto.
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8.2 DUE DILIGENCE PRIOR TO CLOSING. Until the Closing, during normal
business hours and subject to the confidentiality provisions of Section 9.5,
DETTCO will allow Partnership and its employees, officers, accountants,
attorneys, agents, investment bankers and other authorized representatives to
examine all financial, operating and other data and information relating to the
ownership and operation of the Assets and the Businesses as Partnership shall
from time to time reasonably request and will afford Partnership and its
employees, officers, accountants, attorneys, agents and other authorized
representatives access to offices, facilities, properties, books, records,
contracts and documents of DETTCO, the DE Entities and the LLCs, and will be
given the opportunity to ask questions of, and receive answers from,
representatives of DETTCO, the DE Entities and the LLCs with respect to the
Businesses and the Assets. Except as specifically provided herein, no
investigations by Partnership or its employees, representatives or agents shall
reduce or otherwise affect the obligation or liability of DETTCO with respect to
any representations, warranties, covenants or agreements made herein or in the
Disclosure Schedule or any Exhibit or other certificate, instrument, agreement
or document executed and delivered in connection with this Agreement. Each Party
will cooperate with the other Party and its employees, officers, accountants,
attorneys, agents and other authorized representatives in the preparation of any
documents or other materials that may be required by any Governmental Authority.
8.3 PUBLIC ANNOUNCEMENTS. Until the Closing or termination hereof,
Partnership and DETTCO 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 and, except with respect to public announcements or
disclosures that are, in the opinion of the Party proposing to make the
announcement or disclosure, legally required to be made, all public
announcements and disclosures shall require the consent of Partnership and
DETTCO, which consent shall not be unreasonably withheld. Should an announcement
or disclosure be made by one Party, the other Party shall be immediately advised
of the text and time of release of such announcement or disclosure.
8.4 ACTIONS PENDING CLOSING. (a) From the date hereof until the
Closing, except as contemplated by this Agreement, DETTCO covenants that, unless
the prior written consent of Partnership is obtained, it will not take, and it
will cause the DE Entities and the LLCs not to take, any direct or indirect
action that would result in a violation of any of the following:
(i) The DE Entities, and upon conveyance of the Assets and
Businesses to the LLCs, the LLCs will operate the Assets and the
Businesses diligently and in the usual, regular and ordinary manner.
(ii) None of the DE Entities or the LLCs will enter into or
modify any Contract or other commitment not in the usual and ordinary
course of its business consistent with past business practices, or
engage in any transaction not in the usual and ordinary course of its
business consistent with past business practices.
(iii) None of the DE Entities or the LLCs will:
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(A) create, assume or permit to exist any Lien
(except Permitted Encumbrances) upon any of the Assets,
whether now owned or hereafter acquired; or
(B) sell, assign, lease or otherwise transfer or
dispose of any of the Assets, except for the sale of inventory
in the ordinary course of business.
(iv) All tangible property that constitutes part of the Assets
will be maintained in accordance with past practice.
(v) The DE Entities or the LLCs will maintain insurance on the
Assets in accordance with the DE Entities' past practices and will not
permit any insurance policy naming it as a beneficiary or a loss payee
to be canceled or terminated or any of the coverage thereunder to lapse
unless simultaneously with such termination or cancellation replacement
policies providing substantially the same coverage are in full force
and effect.
(vi) To the extent related to the ownership and operation of
the Assets, each of DETTCO and the LLCs will maintain its books,
accounts and records in the usual, regular and ordinary manner, on a
basis consistent with prior years, and will not introduce any method of
accounting inconsistent with that used in prior periods, and will
comply with all laws applicable to it and to the conduct of its
business.
(vii) DETTCO and its Affiliates will timely file all Tax
Returns and all reports required to be filed with any federal, state or
local governmental agency or regulatory body to the extent they relate
to the Assets or the Businesses.
(viii) The DE Entities will not, and will cause the LLCs not
to, enter into any transaction, make any agreement or commitment or
take any other action that would result in any of the representations
or warranties contained in this Agreement not being true and correct as
of the Closing Date or that would in any material way hinder or prevent
DETTCO's performance of its obligations under this Agreement.
(ix) Except with respect to the Businesses, the LLCs will not
make any acquisitions of any other business or business operations,
whether by way of acquisition of assets or equity interests in any
other entity, by merger or otherwise, nor will they enter into any
agreements, understandings, negotiations or letters of intent with
third parties with respect to any such acquisition. Any such agreements
or understandings currently existing are listed in Section 8.4 of the
Disclosure Schedule.
(b) From the date hereof until the Closing, except as contemplated by
this Agreement, Partnership covenants that, unless the prior written consent of
DETTCO is obtained, it will not take, and it will cause its subsidiaries not to
take, any direct or indirect action that would result in a violation of any of
the following:
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(i) The assets and the businesses of Partnership and its
subsidiaries shall be operated diligently and in the usual, regular and
ordinary manner.
(ii) Partnership will not, and will cause its subsidiaries not
to, enter into any transaction, make any agreement or commitment or
take any other action that would result in any of Partnership's
representations or warranties contained in this Agreement not being
true and correct as of the Closing Date or that would in any material
way hinder or prevent Partnership's performance of its obligations
under this Agreement.
(iii) Partnership will not split or combine the Units or cause
the Units to be delisted from the New York Stock Exchange.
8.5 NO-SHOP. DETTCO represents that neither it nor its Affiliates have
entered into or executed any instrument with any other Person which would
constitute a currently binding purchase and sale agreement or right to match any
proposed sale relating to the sale of the Membership Interests, the Assets
(other than in the ordinary course of business), the Businesses or any part
thereof. DETTCO agrees promptly to (i) terminate any and all negotiations and
discussions in which DETTCO may be currently involved with any other Persons
with regard to the sale of all or any part of the Membership Interests, the
Assets (other than in the ordinary course of business) or the Businesses, and
(ii) neither solicit nor evaluate additional bids nor discuss with or provide
information to third Persons with respect to the purchase by or sale to any
other Person of all or any part of the Membership Interests, the Assets (other
than in the ordinary course of business) or the Businesses.
8.6 NOTICE OF DEFAULT BY DETTCO. From the date hereof until the
Closing, DETTCO shall give written notice to Partnership promptly after DETTCO
obtains knowledge of or receives any notice claiming or alleging the occurrence
of:
(a) Any breach or default, or event which notice or the
passage of time or both might constitute a breach or default, with
respect to any Contracts, Permits, or rights-of-way or similar rights
relating to any portion of the Assets;
(b) Any damages or losses reasonably estimated to exceed
$100,000 in the aggregate with respect to the Assets;
(c) Any circumstance, event or omission which would result in
(i) any of DETTCO's or Partnership's representations or warranties
contained in this Agreement being or becoming inaccurate or misleading,
or (ii) the creation of any Lien on any of the Assets except for any
Permitted Encumbrance; or
(d) Any breach by DETTCO of this Agreement.
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8.7 NOTICE OF DEFAULT BY PARTNERSHIP. From the date hereof until the
Closing, Partnership shall give written notice to DETTCO promptly after
Partnership obtains knowledge of or receives any notice claiming or alleging the
occurrence of:
(a) Any circumstance, event or omission which would result in
any of Partnership's or DETTCO's representations or warranties
contained in this Agreement being or becoming inaccurate or misleading;
or
(b) Any breach by Partnership of this Agreement.
8.8 EFFORTS TO SATISFY CONDITIONS. Partnership and DETTCO agree to use
their commercially reasonable efforts to bring about the satisfaction of the
conditions specified in Article VII hereof.
8.9 DISCLAIMERS. The Assets are being transferred to the LLCs by the DE
Entities without warranty and "AS IS, WHERE IS" with all faults. Partnership
acknowledges that (a) it has had and pursuant to this Agreement will have prior
to the Closing access to the DE Entities, the LLCs and the Assets and the
officers and employees of the DE Entities and (b) in making the decision to
enter into this Agreement and consummate the transactions contemplated hereby,
Partnership has relied solely on the basis of its own independent investigation
and upon the expressed representations, warranties, covenants and agreements set
forth in this Agreement and written agreements and certificates delivered at
Closing as contemplated by this Agreement. Except as specifically set forth
herein and in the written agreements and certificates delivered at Closing as
contemplated by this Agreement, DETTCO (on behalf of itself and the other DE
Entities) hereby expressly disclaims and negates to Partnership and the LLCs ALL
WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, REGARDING THE ASSETS INCLUDING
WITHOUT LIMITATION, (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, DESIGN, PERFORMANCE, CONDITION, CERTIFICATE,
MAINTENANCE, OR SPECIFICATION AND (ii) ANY INFORMATION, DATA OR OTHER MATERIALS
(WRITTEN OR ORAL) FURNISHED TO PARTNERSHIP BY OR ON BEHALF OF DETTCO, AND
PARTNERSHIP WILL HAVE SOLE RESPONSIBILITY FOR ANY ACTION TAKEN BY PARTNERSHIP,
OR BY OTHERS RELYING ON PARTNERSHIP'S ADVICE, BASED ON THE RECORDS. As used in
the disclaimer provisions of this Section 8.9, "DETTCO" shall include all of the
DETTCO Indemnitees.
ARTICLE IX.
NONCOMPETITION AGREEMENT; CONFIDENTIALITY
9.1 NONCOMPETITION COVENANT. DETTCO agrees that, for a period beginning
on the Closing Date and ending on the second anniversary of the Closing Date,
neither it nor any of its Majority Affiliates will engage or participate in, or
carry on, either as owner, proprietor, partner, stockholder, agent, member,
consultant, advisor, trustee or otherwise, whether or not for compensation, the
operation of a business that competes with the Businesses in the Territory, nor
will such parties acquire assets which are used for, or acquire entities or
enter into joint ventures which
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are engaged principally in, a business that competes with the Businesses in the
Territory. For purposes of Sections 9.1, 9.2 and 9.3, the defined terms:
(i) "Territory" shall mean North America with the exception of
Canada, the Gulf of Mexico and the area within 25 miles of the Gulf
Coast of Louisiana, Mississippi and Alabama.
(ii) "Businesses" shall mean the crude oil gathering,
transportation and storage business, together with related marketing
and trading activities, excluding, however any such activities to the
extent arising or occurring in connection with the ownership or
operation of any exploration and production business or assets.
(iii) "Majority Affiliate" shall mean any entity in which Duke
Energy Corporation owns, directly or indirectly, the following
interests: with respect to each such entity that is: (x) a corporation,
the majority of all outstanding equity interests which are, in the
normal course of business, entitled to elect the Board of Directors (or
equivalent governing body) of such entity, (y) a partnership, the
majority of the partnership interests thereof, or (z) a limited
partnership or limited liability company, a majority of the equity
interest (as specified in this paragraph 9.1(iii)) of the entity
serving as the managing general partner or managing member, as
applicable (provided that the term "Majority Affiliate" shall not
include DETM or the TEPPCO Entities).
(iv) "Engaged principally in" or any similar phrase shall mean
that the majority of the assets in question, or assets of the entity in
question, based on the value of such assets as determined in good faith
by DETTCO, are utilized for the Businesses.
(v) "Crude Oil Assets" shall mean assets principally used to
engage in the Businesses.
9.2 EXCEPTIONS. Notwithstanding the provisions of Section 9.1, the
restrictions specified in Section 9.1: (i) shall terminate with respect to any
asset or entity that is sold by DETTCO or a Majority Affiliate to another Person
that is not a Majority Affiliate, and (ii) shall not apply to (w) assets
constructed by DETTCO or a Majority Affiliate, (x) the acquisition of any entity
or the entering into of a joint venture by DETTCO or a Majority Affiliate, which
entity or joint venture is not engaged principally in the Business, (y) Crude
Oil Assets acquired in any particular transaction if the majority of the
aggregate assets acquired in such transaction are not Crude Oil Assets, or (z)
the business of DETTCO or a Majority Affiliate as currently conducted with
respect to Crude Oil Assets currently owned by DETTCO or a Majority Affiliate
(other than the Assets). Notwithstanding anything herein to the contrary, with
respect to Crude Oil Assets acquired as permitted by this Section 9.2 or the
Crude Oil Assets of entities acquired or currently owned as permitted by this
Section 9.2, the continued operation of such Crude Oil Assets shall not be
deemed to violate the restrictions of Section 9.1 hereof. DETTCO agrees to give
Partnership written notice of all determinations by DETTCO made in accordance
with Section 9.1(iv) with respect to assets or entities
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acquired; provided, however, that there shall be no obligation to provide such
notice with respect to acquisitions (of entities or assets) which involve a de
minimus amount of assets in the Businesses.
9.3 REASONABLENESS OF COVENANT. DETTCO acknowledges that the covenant
provided in Section 9.1 hereof is manifestly reasonable on its face and is no
more restrictive than is required for the protection of Partnership in its
acquisition and operation of the LLCs and the Businesses in that such covenant
is given in consideration for Partnership's performance of its obligations under
this Agreement and the other agreements called for herein. In the event the
provisions of Section 9.1 should ever be deemed to exceed the time and
geographic limitations permitted by applicable law, then such provisions shall
be reformed to the maximum time or geographic limitations permitted by
applicable law.
9.4 INJUNCTIVE RELIEF. It is specifically understood and agreed that
any breach or threatened breach of the provisions of Section 9.1 hereof is
likely to result in irreparable harm to Partnership and that an action at law
for damages alone will be an inadequate remedy for such breach or threatened
breach, and that Partnership would suffer irreparable harm in the event DETTCO
or its Affiliates fail to comply with its obligations hereunder. Therefore, in
addition to any other remedy that may be available to it, Partnership shall be
entitled to enforce the specific performance of Section 9.1 by DETTCO and its
Affiliates and to seek both temporary and permanent injunctive relief (to the
extent permitted by law) without the necessity of proving actual damages, and
such other relief as the court may allow. The provisions of Article XV (except
for Sections 15.4 and 15.5) shall not be applicable to the injunctive relief
provided in this Section 9.4 or to the enforcement of the injunctive remedies
provided in this Section 9.4.
9.5 CONFIDENTIALITY.
(a) Prior to the Closing, each of DETTCO and Partnership shall
not use or provide, and shall prohibit any of its Affiliates,
employees, agents, accountants, legal counsel or other representatives
from directly or indirectly using or providing to any Person, any
confidential information of any kind provided by the other Party in
connection with the transactions contemplated by this Agreement except
as otherwise required to be disclosed by applicable law or regulation
or as may reasonably be deemed necessary by DETTCO or Partnership, as
the case may be, in the prosecution of any Proceeding; provided,
however, that as to any disclosure that shall be made, the Party making
such disclosure shall as soon as practicable give written notification
to the other Party that explains in reasonable detail the information
disclosed and the basis for such disclosure.
(b) In the event the Closing does occur, for a period ending
on the second anniversary date of the Closing, DETTCO shall not use or
provide, and shall prohibit any of its Affiliates, employees, agents,
accountants, legal counsel or other representatives from directly or
indirectly using or providing to any Person any confidential
information of any kind concerning the Assets or the Businesses, except
as otherwise required to be disclosed by applicable law or regulation
or as may reasonably be deemed necessary by DETTCO in the prosecution
of any Proceeding;
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provided, however, that as to any disclosure that shall be made, DETTCO
shall as soon as practicable give Partnership written notification that
explains in reasonable detail the information disclosed and the basis
for such disclosure.
(c) In the event the Closing does not occur, for a period
ending on the second anniversary date of the date hereof, Partnership
shall not use or provide, and shall prohibit any of its Affiliates,
employees, agents, accountants, legal counsel or other representatives
from directly or indirectly using or providing to any Person any
confidential information of any kind obtained by it from DETTCO in
connection with the transactions contemplated by this Agreement, except
as otherwise required to be disclosed by applicable law or regulation
or as may reasonably be deemed necessary by Partnership in the
prosecution of any Proceeding; provided, however, that as to any
disclosure that shall be made, Partnership shall as soon as practicable
give DETTCO written notification that explains in reasonable detail the
information disclosed and the basis for such disclosure.
(d) Information shall not be subject to the provisions of this
Section 9.5 which (i) is or becomes generally available to the public
other than as a result of a disclosure in breach of these or other
confidentiality provisions, (ii) was in the possession of the recipient
on a nonconfidential basis prior to its disclosure in connection with
the transactions contemplated by this Agreement, or (iii) was or
becomes available to the recipient Party on a nonconfidential basis
from a third Person who is not bound by a similar confidentiality
arrangement.
9.6 RESTRICTIONS REGARDING EMPLOYEES. Until the second anniversary date
of the Closing Date, without the prior written approval of the Chief Executive
Officer of the General Partner, which approval shall not be unreasonably
withheld, neither DETTCO nor its Affiliates will hire or seek to hire those
former employees of DETTCO or its Affiliates who enter into employment
agreements with an Affiliate of Partnership at the Closing or within ninety (90)
days following the Closing in connection with the transactions contemplated by
this Agreement.
ARTICLE X.
ADDITIONAL AGREEMENTS
10.1 DELIVERY OF CORPORATE DOCUMENTS. As soon as practical after the
Closing, DETTCO shall deliver to Partnership a copy of all Records, including
computer disks reflecting such Records. DETTCO agrees that Partnership and its
authorized representatives, upon the execution of DETTCO's standard
confidentiality agreement, shall have the right to inspect and, at Partnership's
expense, copy, at any time during regular business hours for any proper purpose,
the corporate, accounting, auditing and tax books, records (including work
papers) and other books and records relating to the ownership and operation of
the Assets as are retained by DETTCO or its Affiliates.
10.2 FURTHER ASSURANCES. DETTCO and its Affiliates shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered to
Partnership at or following the
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Closing such other instruments of transfer, assignment and conveyance, in form
and substance satisfactory to counsel for Partnership, as shall be necessary or
desirable to vest in Partnership all the right, title and interest in and to the
Subject Interest and in the Membership Interests other than the Subject Interest
and to vest in the LLCs the Assets pursuant to the terms of this Agreement and
shall take and shall cause its Affiliates to take, and shall use all
commercially reasonable efforts to cause non-affiliated Persons to take, all
other action as Partnership reasonably may require, before or after Closing, to
more effectively implement and carry into effect the transactions contemplated
by this Agreement.
10.3 COOPERATION AFTER CLOSING.
(a) For the greater of five years from the Closing Date and
the period as may be required by any statute, regulation or
Governmental Authority or any then pending litigation, Partnership
shall permit DETTCO and its representatives reasonable access to the
Records that are transferred to Partnership in connection herewith in
anticipation of, or preparation for, existing or future litigation or
any Tax audit in which DETTCO or any of its Affiliates is involved and
which is related to the Businesses or the Assets, during regular
business hours and upon reasonable notice at Partnership's principal
places of business or at any location where the Records are stored;
provided that (i) any access shall be had or done in a manner so as to
not interfere with the normal conduct of the Businesses, (ii)
Partnership shall not be required to provide access to any confidential
record or records, the disclosure of which would violate any statute or
regulation or applicable confidentiality agreement with any Person, and
(iii) Partnership shall not be required to provide access to any
confidential record or records, the disclosure of which would cause
Partnership or any of its Affiliates to waive its attorney-client
privilege or attorney work product privilege.
(b) For the greater of five years from the Closing Date and
the period as may be required by any statute, regulation or
Governmental Authority or any then pending litigation, DETTCO shall
permit Partnership and its representatives reasonable access to the
general business records and files of DETTCO in anticipation of, or
preparation for, existing or future litigation or any Tax audit in
which Partnership or any of its Affiliates is involved and which is
related to the Businesses or the Assets, during regular business hours
and upon reasonable notice at DETTCO's principal places of business or
at any location where the records or files are stored; provided that
(i) any access shall be had or done in a manner so as to not interfere
with the normal conduct of DETTCO's business, (ii) DETTCO shall not be
required to provide access to any confidential record or records, the
disclosure of which would violate any statute or regulation or
applicable confidentiality agreement with any Person, and (iii) DETTCO
shall not be required to provide access to any confidential records or
files, the disclosure of which would cause DETTCO or any of its
Affiliates to waive its attorney-client privilege or attorney work
product privilege.
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10.4 PAYMENT FOR OTHER INVENTORY AND IMBALANCES.
(a) Within sixty (60) calendar days following the Closing
Date, Partnership shall deliver to DETTCO a schedule setting forth all
Other Inventory as of the Effective Time, as determined in the manner
set forth in Part I of Exhibit G. The Other Inventory comprises a part
of the Assets and after the Closing shall continue to be owned by the
LLC owning such Assets as of the Closing. The value of the
Consideration shall be adjusted upwardly, however, by cash payment by
Partnership to DETTCO for the fair market value of the Other Inventory.
Should such schedule disclose that the total inventory of crude oil,
condensate, including drip, and natural gas liquids is less than the
Minimum Operating Inventory ("Inventory Deficit"), the value of the
Consideration shall be adjusted downwardly by cash payment by DETTCO to
Partnership for the fair market value of such deficit. The
Consideration adjustment payment shall equal the fair market value of
the Other Inventory or the Inventory Deficit, as the case may be, as of
the Effective Time. A Consideration adjustment payment made pursuant to
this paragraph (a) shall be treated: (i) if made by Partnership to
DETTCO, as a purchase by Partnership of the Other Inventory; and (ii)
if made by DETTCO to Partnership, as a contribution to the capital of
Partnership by DETTCO in the amount of the Inventory Deficit.
(b) Within ninety (90) calendar days after the Closing Date,
the Parties shall settle by cash payment any and all buy/sell, exchange
and other imbalances of crude oil, condensate, including drip, and
natural gas liquids in accordance with Part II of Exhibit G. A cash
settlement payment made pursuant to this paragraph (b) shall be
treated: (i) if made by Partnership to DETTCO, as a purchase by
Partnership from DETTCO of a net receivable for other imbalances; and
(ii) if made by DETTCO to Partnership, as a payment by DETTCO in
exchange for Partnership's assumption of a net payable for other
imbalances.
10.5 EMPLOYEES.
(a) Effective as of and contingent upon the Closing, an
Affiliate of Partnership shall offer to hire those individuals who
perform services with respect to the LLCs, the Businesses or the Assets
and are listed on Section 10.5(a) of the Disclosure Schedule ("Subject
Employees"). Each such offer shall contain the following terms: (1) the
Subject Employee's base rate of salary or hourly rate of pay (not
including any bonus amounts) will not be less than the amount reported
by DETTCO to the Chief Executive Officer of General Partner pursuant to
Section 10.5(f), (2) the Subject Employee will be employed in
substantially the same position as is reported by DETTCO to the Chief
Executive Officer of General Partner pursuant to Section 10.5(f) with
substantially the same authority as such Subject Employee has in his
position with DETTCO or an Affiliate of DETTCO immediately prior to
Closing, and (3) the Subject Employee's regular assigned work place
will not be relocated by more than 25 miles further from his residence
than was his regular assigned work place with DETTCO or an Affiliate of
DETTCO immediately prior to Closing.
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(b) No successor clause or successor agreement in any labor
contracts or other labor arrangements to which DETTCO or any Affiliate
of DETTCO is a party shall be applicable to the transfer of the Assets
to the LLCs or otherwise affect or impose any conditions or obligations
upon Partnership, or the LLCs, except to the extent such conditions or
obligations may arise as a matter of law independently of the terms of
this Agreement.
(c) [Intentionally omitted.]
(d) With respect to each of the Subject Employees, DETTCO
shall comply with all applicable laws, including, without limitation,
the WARN Act.
(e) Partnership hereby agrees to fully pay or otherwise
satisfy any Claims by Subject Employees that arise under the PanEnergy
Corp Change in Control Severance Benefits Plan to the extent that such
Subject Employees are hired by an Affiliate of Partnership.
(f) DETTCO will provide to the Chief Executive Officer of the
General Partner within five (5) days of the date of this Agreement a
complete and correct list of the following information with respect to
each Subject Employee: such individual's title and/or job description,
date of hire by DETTCO or its Affiliate, annual salary or hourly rate
of compensation, and, for each individual who is compensated on a
salaried basis, the last date of increase of his/her salary and a
description of any incentive compensation arrangements with DETTCO or
its Affiliates.
10.6 REVENUES AND REMITTANCE OF MONIES.
(a) Revenues. Subject to the terms hereof, all monies,
proceeds, receipts, credits and income attributable to the Assets or
the Businesses or for any delivery or performance by Partnership or the
LLCs for any period of time on or subsequent to the Effective Time
shall be the sole property and entitlement of Partnership (or the
LLCs), and to the extent received by DETTCO or its Affiliates, DETTCO
shall promptly and fully disclose, account for and transmit same to
Partnership or the appropriate LLC. Unless otherwise provided herein or
by the Parties in writing, all monies, proceeds, receipts and income
attributable to the Assets or the Businesses (including, without
limitation, any imbalance of crude oil, condensate, including drip, and
natural gas liquids for which a settlement payment has not been made
pursuant to Section 10.4(b)) or for any delivery or performance by any
of the DE Entities or the LLCs for any period of time prior to the
Effective Time shall be the sole property and entitlement of DETTCO
and, to the extent received by Partnership (or the LLCs), Partnership
shall (or shall cause the LLCs to) promptly and fully disclose, account
for and transmit same to DETTCO.
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(b) Expenses. Subject to the terms of this Agreement, all
operating costs and expenses attributable to the Assets or the
Businesses (including, without limitation, any imbalance of crude oil,
condensate, including drip, or natural gas liquids for which a
settlement payment has not been made pursuant to Section 10.4(b)) or
for any delivery or performance by any of the DE Entities or the LLCs
for any period of time prior to the Effective Time, regardless of when
due or payable, shall be (subject to the further provisions hereof) the
sole obligation of DETTCO, and DETTCO shall promptly pay such costs and
expenses to, or if paid by Partnership (or the LLCs), promptly
reimburse, Partnership. All operating costs and expenses attributable
to the Assets or the Businesses or for any delivery or performance by
DETTCO or the LLCs for any periods of time on or subsequent to the
Effective Time shall be the sole obligation of the appropriate LLC and,
Partnership shall (or shall cause the LLCs to) promptly pay such costs
and expenses to, or if paid by DETTCO, promptly reimburse, DETTCO.
10.7 SUSPENSE ACCOUNT FUNDS AND DIVISION ORDERS.
(a) DETTCO acknowledges that certain funds otherwise payable
to operators and/or working and royalty interest owners in xxxxx
connected, or other owners delivering crude oil, condensate, including
drip, or natural gas liquids to the Assets have been placed in suspense
pending resolution of questions of title, execution of division or
transfer orders, or for similar reasons (the "Suspense Account Funds"),
provided that the definition of Suspense Account Funds shall not
include any negative suspense amounts or entries (i.e., funds payable
to a DE Entity by operators and/or working and royalty interest
owners).
(b) On or before the Closing Date, DETTCO shall make a good
faith estimate of the DE Entities' liability as of the Effective Time
for Suspense Account Funds. As of the Closing, each of the LLCs shall
have acquired cash (the "Suspense Cash Assets") equal to the Suspense
Account Funds attributable to their respective Assets. Notwithstanding
anything in this Agreement to the contrary, the LLCs shall assume and
agree to be solely responsible for all Suspense Account Funds to the
extent of the amount of the Suspense Cash Assets received by the LLCs.
(c) If any negative suspense account is subsequently collected
by any LLC (which the LLCs shall exercise reasonable commercial efforts
to accomplish to the extent they are able to do so), the amount thereof
(less actual out of pocket expenses of collection) shall be remitted
promptly to the appropriate DE Entity.
(d) Within ninety (90) days following the Closing Date, DETTCO
shall determine the actual amount of Suspense Account Funds for which
the DE Entities are liable as of the Effective Time, and shall provide
to Partnership a statement thereof with reasonable evidence confirming
the actual amount of such liability as of the Effective Time. If the
actual amount of liability exceeds the amount of Suspense Cash Assets,
then DETTCO shall pay to the appropriate LLC(s) in cash the amount of
such
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excess contemporaneously with furnishing to Partnership said statement.
If, however, the actual amount of liability for Suspense Account Funds
is less than the amount of Suspense Cash Assets, Partnership shall
cause the LLCs to reimburse to the appropriate DE Entities in cash the
amount of such difference promptly upon receipt by Partnership of said
statement. Partnership and DETTCO agree to cooperate and to make
available to each other all information necessary to calculate and to
confirm and verify the actual amount of Suspense Account Funds
(including all computer data files). Partnership agrees that DETTCO may
retain copies of such records as are necessary for DETTCO to make the
calculations herein provided to be made by DETTCO. The Assets shall
also include all of the DE Entities rights under division orders
relating to properties for which the LLCs shall distribute revenues
after Closing.
(e) For each specific suspense account within the Suspense
Account Funds for which an LLC receives Suspense Cash Assets, such LLC
shall assume and shall be solely responsible for Claims relating to
such specific suspense account to the extent that such Claims
(including Claims for the actual payment of the Suspense Account Funds
for which such LLC receives a Suspense Cash Asset in such amount) are
attributable solely to periods on or after the Effective Time,
including, but not limited to, Claims arising from (i) identifying and
verifying the rightful owners of the suspended funds, (ii) litigation
in the event that litigation over the suspended funds arises, and (iii)
demands for and the actual payment of interest (whether statutory,
contractual, common law, or otherwise) on the suspended funds. Each LLC
shall also assume and be responsible for payment of each Suspense
Account Fund for which it receives Suspense Cash Assets and Claims
relating thereto, but only to the extent of such Suspense Cash Assets.
Claims relating to Suspense Account Funds (excluding Claims for the
actual payment of the Suspense Account Funds for which an LLC receives
a Suspense Cash Asset in such amount), to the extent that such Claims
are attributable solely to periods prior to the Effective Time, shall
be a Retained Obligation listed on Exhibit I and shall be the
responsibility of DETTCO, together with the Claims listed in clauses
(i), (ii) and (iii) above related to such Suspense Account Funds.
10.8 NON-INSTIGATION OF CLAIMS. Partnership agrees that it shall not
(and it shall cause its Affiliates, including the LLC's, to not) (i) file any
lawsuit seeking declaratory relief with respect to the potential claim(s) of any
Third Party for Environmental Liabilities that may be subject to the
indemnification provisions of Section 11.2 hereof, and (ii) actively encourage
or solicit Third Parties to instigate Claims against DETTCO or its Affiliates on
account of Environmental Liabilities, provided, however, in no event shall the
Partnership or its Affiliates be deemed to have breached this Section 10.8 by
(a) making any notifications required under any law, or under any order or
directive of any Governmental Authority, (b) responding to requests for
information from Third Parties, or (c) taking any actions that the Partnership
or its Affiliates deem necessary, in their discretion, to complete the
investigation or remediation of any Environmental Condition, or remedy any
non-compliances, that may be subject to the indemnification provisions of
Section 11.2 hereof.
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10.9 CAPITAL ACCOUNT ADJUSTMENTS. The contribution by DETTCO of the
Subject Interest to Partnership and the issuance by Partnership of the Class B
Units in exchange for such Subject Interest shall be treated as an event
requiring adjustment of the capital accounts of the holders of the Units in
accordance with the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(f).
10.10 CERTAIN TRANSACTION COSTS. DETTCO's contribution to Partnership
of the Subject Interest in exchange for the issuance of the Consideration to
DETTCO by Partnership, subject to certain cash adjustments and the assumption
and/or retention of certain obligations and liabilities, is the contribution of
intangible personal property in exchange for other intangible personal property,
which the Parties understand is not subject to any sales, use, transfer or other
similar Taxes or any recording, filing and other fees (collectively, "Certain
Transaction Costs"). In the event any Certain Transaction Costs are asserted in
connection with the consummation of such contribution and exchange, each of the
Parties hereto shall consult and cooperate in good faith with each other on a
timely basis in order to effectively contest, defend, prosecute, settle and/or
compromise any audit, examination, investigation or administrative, court or
other proceeding relating to such Certain Transaction Costs and to mutually
agree on the handling thereof. Any costs, disbursements or expenses (including,
but not limited to, fees, disbursements and expenses of attorneys, accountants
and other professional Tax advisors and of expert witnesses) incurred in
connection with any such audit, examination, investigation or administrative,
court or other proceeding shall be borne equally by Partnership and DETTCO. In
the event any Certain Transaction Costs are imposed in connection with the
consummation of such contribution and exchange, such Certain Transaction Costs
shall be borne equally by Partnership and DETTCO. Notwithstanding any other
provision herein to the contrary, the respective rights and obligations of the
Parties under this Section 10.10 shall survive the Closing indefinitely and
shall not be subject to any of the limitations contained in Section 11.6 and
Section 11.8(c).
10.11 CHANGE IN NAME. As promptly as practicable, but in any case (i)
within 30 days after the Closing Date, the Partnership shall change the name of
the LLCs to eliminate any references to the names "DETTCO" or "Duke", and (ii)
within 360 days after the Closing Date, Partnership shall eliminate (or cause
the LLCs to eliminate) from the Assets and the Businesses the names "DETTCO" and
"Duke" and, except with respect to such grace period for eliminating existing
usage, shall have no right to use any logos, trademarks or trade names belonging
to DETTCO or any of its Affiliates.
ARTICLE XI.
INDEMNIFICATION
11.1 DETTCO'S INDEMNITY. Assuming the Closing occurs and subject to the
provisions of this Article XI, DETTCO agrees to indemnify, defend (with counsel
reasonably acceptable to Partnership) and hold Partnership and its Affiliates
and their respective officers, directors, shareholders, unitholders, members,
managers, agents, employees, representatives, successors and permitted assigns
(said Persons being sometimes referred to as "Partnership Indemnitees") harmless
from and against and in respect of any Partnership's Damages arising out of or
resulting from, and shall pay Partnership Indemnitees the full amount of
Partnership's Damages that Partnership Indemnitees may be obligated to pay on
account of:
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(a) any breach of a representation or breach of warranty
contained in this Agreement (or in the certificate delivered to
Partnership pursuant to Section 7.1(a) of this Agreement) or any
failure to perform any covenant or agreement made or undertaken by
DETTCO in this Agreement (or any omission relating thereto from the
certificate delivered to Partnership pursuant to Section 7.1(a) of this
Agreement);
(b) the Retained Obligations;
(c) the ownership or operation of the Assets or the Businesses
prior to the Effective Time or the occurrence of any damages or
injuries prior to the Effective Time related to the operation of the
Assets or the Businesses prior to the Effective Time regardless of when
a Claim is recognized or asserted with respect to such damages or
injuries; or
(d) one-half of all Certain Transaction Costs.
Notwithstanding the foregoing, there shall be no obligation or
liability of DETTCO or its Affiliates with respect to the Assumed Obligations
specified in Exhibit H or Partnership Assumed Obligations, including any
obligations for indemnification under this Section 11.1, or any breach of its
representations and warranties contained herein relating to such matters.
Indemnification by DETTCO of the Partnership Indemnitees with respect
to all Environmental Liabilities shall be governed solely by Section 11.2
hereof.
11.2 ENVIRONMENTAL INDEMNIFICATION AND OTHER MATTERS.
(a) Assuming the Closing occurs and subject to the provisions
of this Article XI, DETTCO agrees to indemnify, defend and hold each
Partnership Indemnitee harmless from and against and in respect of any
and all Partnership's Damages for Environmental Liabilities that may be
imposed upon or incurred by any Partnership Indemnitees with respect to
the Other Sites, arising out of or in connection with:
(i) the acts or omissions of any of the DE Entities
or the LLCs prior to the Effective Time relating to the
ownership or operation of the Other Sites;
(ii) the on-site or off-site handling, storage,
release, treatment or disposal of any Hazardous Materials
generated by the DE Entities or the LLCs at the Other Sites
prior to the Effective Time;
(iii) any and all Environmental Conditions, known or
unknown, existing prior to the Effective Time on, at or
underlying or that migrated from any of the Other Sites; or
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(iv) any breach by DETTCO of a representation or
warranty contained in Section 5.10 with respect to any of the
Other Sites.
(b) DETTCO further agrees to indemnify, defend and hold each
Partnership Indemnitee harmless from and against and in respect of any
and all Partnership's Damages for Environmental Liabilities asserted by
any Third Party that may be imposed upon or incurred by any Partnership
Indemnitees with respect to the Phase II Sites, arising out of or in
connection with any spill, release, handling, or disposal of any
Hazardous Materials on, at, or underlying any property owned by a Third
Party, where such Hazardous Materials have migrated, flowed, or been
carried through any environmental media from any Phase II Site prior to
the Effective Time (hereinafter "Third Party Affected Site"); provided,
however, that the investigation and remediation of any such Hazardous
Materials on the Phase II Sites or any Third Party Affected Site shall
be excluded from this Section 11.2(b) and shall be the responsibility
of Partnership. The indemnification set forth in this Section 11.2(b)
shall be DETTCO's sole liability with respect to Environmental
Liabilities relating to any Third Party Affected Site.
(c) (i) To the extent that remediation is required at any
Other Sites on or after the Effective Time, and notwithstanding any
related Proceedings which DETTCO retains as a Retained Obligation,
Partnership will use, or will cause each of the LLCs to use, its
commercially reasonable efforts to undertake and diligently complete
such remediation, with the reasonable costs incurred by Partnership or
the LLCs, to be reimbursed pursuant to the indemnification obligations
under the terms of this Agreement as and to the extent applicable; and
(ii) to the extent that remediation of any Environmental Condition
existing as of the Effective Time at, on, or underlying any of the
Phase II Sites or Third Party Affected Sites is required to be
remediated under applicable Environmental Laws, the Partnership agrees
to use, or to cause each LLC to use, its commercially reasonable
efforts to undertake and diligently complete such remediation.
(d) Notwithstanding anything herein to the contrary, any
indemnification by DETTCO under this Agreement for any Partnership's
Damages for Environmental Liabilities shall be deemed to specifically
exclude, and neither DETTCO nor its Affiliates shall be liable for, any
Partnership's Damages for Environmental Liabilities resulting from a
change in any Environmental Law on or after the Effective Time.
11.3 EMPLOYEE BENEFITS AND EMPLOYMENT MATTERS.
Assuming the Closing occurs and subject to the provisions of this
Article XI, DETTCO agrees to indemnify, defend and hold each Partnership
Indemnitee harmless from and against and in respect of any and all Partnership's
Damages arising out of or resulting from, and shall pay Partnership Indemnities
the full amount of Partnership's Damages that Partnership Indemnitees may be
obligated to pay on account of:
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(a) any breach by DETTCO of a representation or warranty
contained in Section 5.13.
(b) the employment of the Subject Employees by DETTCO or its
Affiliates or the cessation of such employment (including, but not
limited to unfair labor practice charges, employment discrimination
charges, wrongful termination claims, workers' compensation claims, and
any employment-related tort claims),
(c) any employment contract with DETTCO or an Affiliate of
DETTCO which is not expressly assumed by Partnership or an Affiliate of
Partnership,
(d) any Designated Plan or other benefit liabilities of DETTCO
or its Affiliates (including, without limitation, liabilities arising
under the PanEnergy Corp Change in Control Severance Benefits Plan with
respect to Subject Employees, whether or not they are hired by an
Affiliate of Partnership other than those liabilities that are
expressly assumed by Partnership under Section 10.5(e)),
(e) any law or regulation requiring DETTCO or its Affiliates
to provide severance benefits or notices of termination of employment,
and
(f) any COBRA claims pertaining to individuals (and their
spouses and children) who are or were employed by DETTCO or its
Affiliates other than Subject Employees (and their spouses and
children) who are hired by an Affiliate of the Partnership.
Notwithstanding any other provision of this Agreement, the agreements contained
in this Section 11.3 shall survive indefinitely and inure to the benefit of all
successors and permitted assigns of Partnership.
11.4 PARTNERSHIP'S INDEMNITY. Assuming the Closing occurs and subject
to the provisions of this Article XI, Partnership agrees to indemnify, defend
(with counsel reasonably acceptable to DETTCO) and hold DETTCO and its
Affiliates and their respective officers, directors, shareholders, unitholders,
members, managers, agents, employees, representatives, successors and permitted
assigns (said Persons being sometimes referred to as the "DETTCO Indemnitees")
harmless from and against and in respect of any DETTCO's Damages arising out of
or resulting from, and shall pay the DETTCO Indemnitees the full amount of
DETTCO's Damages that the DETTCO Indemnitees may be obligated to pay on account
of:
(a) any breach of a representation or breach of warranty
contained in this Agreement (or in the certificate delivered to DETTCO
pursuant to Section 7.2(a) of this Agreement) or any failure to perform
any covenant or agreement made or undertaken by Partnership in this
Agreement (or any omission relating thereto from the certificate
delivered to DETTCO pursuant to Section 7.2(a) of this Agreement);
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(b) the ownership or operation of the Assets or the Businesses
from and after the Effective Time, or the occurrence of any damages or
injuries on or subsequent to the Effective Time related to the
operation of the Assets or the Businesses regardless of when the fact
or event giving rise to such damages or injuries occurs, and regardless
of when a Claim is recognized or asserted with respect to such damages
or injuries;
(c) one-half of all Certain Transaction Costs;
(d) the Assumed Obligations and the Partnership Assumed
Obligations;
(e) following the fifth anniversary of the Closing Date, (i)
the ownership or operation of the Assets or the Businesses prior to the
Closing Date, including without limitation, the matters specified in
Section 11.1 (except for Section 11.1(d) and the Retained Obligations
described in Exhibit I) and in Section 11.2, and (ii) the Retained
Obligations other than those Retained Obligations described in Exhibit
I; or
(f) any failure to perform the covenant by Partnership made in
Section 11.2(c) of this Agreement.
11.5 PROCEDURE. All claims for indemnification by a Party or a Party
Indemnitee under this Article XI (the Party or the Party Indemnitee claiming
indemnification and the Party against whom such claims are asserted being
hereinafter called the "Indemnified Party" and the "Indemnifying Party",
respectively) shall be asserted and resolved as follows:
(a) In the event that any Claim for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a
Third Party, such Indemnified Party shall, within 45 calendar days of
the receipt thereof, give notice (the "Claim Notice") to the
Indemnifying Party of such Claim, specifying the nature of and specific
basis for such Claim and the amount or the estimated amount thereof to
the extent then feasible, which estimate shall not be binding upon the
Indemnifying Party in its effort to collect the final amount of such
Claim. The failure to give any such notice shall not affect the rights
of the Indemnified Party to indemnification hereunder unless the
Indemnified Party has proceeded to contest, defend or settle the Claim
with respect to which it has failed to give prior notice to the
Indemnifying Party. Additionally, to the extent the Indemnifying Party
is prejudiced thereby, the failure to so notify the Indemnifying Party
of any such Claims shall relieve the Indemnifying Party from liability
that it may have to the Indemnified Party under the indemnification
provisions contained in this Article XI, but only to the extent of the
loss directly attributable to such failure to notify, and shall not
relieve the Indemnifying Party from any liability that it may have to
the Indemnified Party otherwise than under this Article XI.
(b) The Indemnifying Party shall be given the opportunity, at
its cost and expense, to contest and defend by all appropriate legal
proceedings any Claim with
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respect to which it is called upon to indemnify the Indemnified Party
under the provisions of this Agreement; provided, however, that notice
of the intention so to contest and defend shall be delivered by the
Indemnifying Party to the Indemnified Party within thirty (30) days
following receipt of the notice provided for in Section 11.5(a) above.
If the Indemnifying Party does not give notice to the Indemnified Party
of its election to contest and defend any such Claim within such 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. The Claim which the
Indemnifying Party elects to contest and defend may be conducted in the
name and on behalf of the Indemnifying Party or the Indemnified Party
as may be appropriate. Such Claim shall be conducted by counsel
employed by the Indemnifying Party who shall be reasonably satisfactory
to the Indemnified Party, and the Indemnified Party shall have the
right to participate in such Claim and to be represented by counsel of
its own choosing at its 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;
provided that if the Indemnifying Party reserves its rights with
respect to its indemnification obligations under this Agreement as to
such Claim, then the Indemnified Party shall have the full authority to
determine all action to be taken with respect thereto. At any time
after the commencement of defense 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, provided the Indemnifying
Party agrees in writing to be solely liable for all losses relating to
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. In the event that the Indemnified Party
determines that the contest should be continued, the amount for which
the Indemnifying Party would otherwise be liable hereunder shall not
exceed the amount which the Indemnifying Party had agreed to pay in
payment or consideration of such Claim, provided the other party 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.
(c) If requested by the Indemnifying Party, the Indemnified
Party agrees, at the Indemnifying Party's expense, to cooperate with
the Indemnifying Party and its counsel in contesting any Claim that the
Indemnifying Party elects to contest, or, if appropriate and related to
the Claim in question, in making any counterclaim against the person
asserting the Third Party Claim, or any cross-complaint against any
person other than an affiliate of the Indemnified Party.
(d) If any Indemnified Party should have a Claim against the
Indemnifying Party hereunder that does not involve a Claim being
asserted against or sought to be
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collected from it by a Third Party, the Indemnified Party shall send a
Claim Notice with respect to such Claim to the Indemnifying Party. If
the Indemnifying Party disputes such Claim, such dispute shall be
resolved in the manner set forth in Article XV hereof.
(e) The Indemnified Party agrees to afford the Indemnifying
Party and its counsel the opportunity, at the Indemnifying Party's
expense, to be present at, and to participate in, conferences with all
Persons, asserting any Claim against the Indemnified Party and
conferences with representatives of or counsel for such Persons.
(f) Notwithstanding anything contained in Section 11.5(a)
through (e) to the contrary, each of the Parties hereto shall, or shall
cause their Affiliates to, consult and cooperate in good faith with
each other on a timely basis in order to effectively contest, defend,
prosecute, settle and/or compromise any audit, examination,
investigation or administrative, court or other proceeding relating to
the Certain LLC Obligations and to mutually agree on the handling
thereof.
11.6 INDEMNIFICATION THRESHOLD. Except for the matters described in
Exhibits H and I or covered by Sections 10.10, 11.1(d), 11.3 and 11.4(b), (c),
(d) or (f) which shall have no minimum threshold:
(a) DETTCO shall not be obligated to indemnify Partnership
Indemnitees pursuant to Section 11.1 or 11.2 unless and until
Partnership's Damages have exceeded in the aggregate $3,000,000, and
then DETTCO's obligation to indemnify shall apply only to amounts in
excess of such threshold.
(b) Partnership shall have no obligation to indemnify the
DETTCO Indemnitees pursuant to Section 11.4(a) or (e) unless and until
the DETTCO's Damages have exceeded in the aggregate $500,000 and then
such Partnership's obligation to indemnify shall apply only to amounts
in excess of such threshold.
11.7 EXPRESS NEGLIGENCE. TO THE EXTENT A PARTY OR A PARTY INDEMNITEE
HEREUNDER IS ENTITLED TO INDEMNIFICATION UNDER THIS ARTICLE XI, SUCH
INDEMNIFICATION SHALL APPLY NOTWITHSTANDING THE NEGLIGENCE, GROSS NEGLIGENCE,
WILLFUL OR OTHER ACT BY THE PARTY OR THE PARTY INDEMNITEE TO BE SO INDEMNIFIED
AND NOTWITHSTANDING SUCH ACT MAY OCCUR IN THE FUTURE, IT BEING THE INTENT OF THE
PARTIES HERETO THAT SUCH INDEMNIFICATION SHALL APPLY TO ALL SUCH ACTS.
11.8 EXCLUSIVE REMEDY; LIMITATIONS.
(a) PARTNERSHIP AND DETTCO (I) AGREE THAT ONLY ACTUAL DAMAGES
SHALL BE RECOVERABLE UNDER THIS AGREEMENT AND (II) HEREBY WAIVE ANY
RIGHT TO RECOVER SPECIAL, PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR
EXEMPLARY DAMAGES EXCEPT TO THE EXTENT ANY SUCH PARTY
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(OR A PARTY INDEMNITEE, AS THE CASE MAY BE) SUFFERS SUCH DAMAGES TO AN
UNAFFILIATED THIRD-PARTY IN CONNECTION WITH A THIRD-PARTY CLAIM, IN
WHICH EVENT SUCH DAMAGES SHALL BE RECOVERABLE. NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THIS AGREEMENT, THE INDEMNIFICATION PROVISIONS OF
THIS AGREEMENT SHALL BE THE EXCLUSIVE REMEDIES FOR ANY CLAIM BASED UPON
THIS AGREEMENT OR THE TRANSACTIONS DESCRIBED HEREIN FOLLOWING CLOSING
(EXCEPT WITH RESPECT TO THE PARTIES' OR THEIR AFFILIATES' OBLIGATIONS
UNDER THE OTHER AGREEMENTS OR ANY OTHER WRITTEN AGREEMENT ENTERED INTO
BY THE PARTIES OR THEIR RESPECTIVE AFFILIATES AS OF THE CLOSING DATE).
IN FURTHERANCE OF THE FOREGOING AND EXCEPT FOR THE INDEMNIFICATION
PROVISIONS OF THIS AGREEMENT, EFFECTIVE UPON THE CLOSING, DETTCO AND
PARTNERSHIP, ON BEHALF OF THEMSELVES AND THEIR AFFILIATES, EACH
RELEASE, REMISE AND FOREVER DISCHARGE THE OTHER PARTY AND ITS
AFFILIATES AND ALL SUCH PARTIES' STOCKHOLDERS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ADVISORS AND REPRESENTATIVES FROM ANY AND ALL CLAIMS
AND LOSSES, IN LAW OR IN EQUITY, KNOWN OR UNKNOWN, WHICH SUCH PARTIES
MIGHT NOW OR SUBSEQUENTLY MAY HAVE, BASED ON, RELATING TO OR ARISING
OUT OF THIS AGREEMENT, OWNERSHIP, USE OR OPERATION OF THE ASSETS, OR
THE CONDITION, QUALITY, STATUS OR NATURE OF THE ASSETS, INCLUDING
RIGHTS TO CONTRIBUTION UNDER APPLICABLE ENVIRONMENTAL LAWS, EVEN IF
CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR
CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED
PERSON, EXCLUDING, HOWEVER, ANY CONTRACTUAL RIGHTS ARISING UNDER THE
OTHER AGREEMENTS OR ANY OTHER WRITTEN AGREEMENT ENTERED INTO BY THE
PARTIES OR THEIR RESPECTIVE AFFILIATES AS OF THE CLOSING DATE.
(b) No Claim of indemnification hereunder can be brought by
any Indemnified Party against an Indemnifying Party unless written
notice of such Claim has been given on or before the termination date
of the representation, warranty or covenant relating thereto. Indemnity
obligations of any Indemnifying Party shall be reduced by any insurance
proceeds realized by any Indemnified Party.
(c) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, DETTCO shall not be required to indemnify
the Partnership Indemnitees for aggregate Partnership's Damages in
excess of $25,000,000.
11.9 EXCLUSION OF MATERIALITY. For purposes of this Article XI and
notwithstanding any provision to the contrary in this Agreement, in determining
whether there has occurred a breach of a representation or warranty of either
DETTCO or Partnership contained in or made pursuant to this Agreement, as well
as the amount of any Loss resulting therefrom, (i) the provisions of Article V
that are qualified by (a) "material" (except with respect to Sections 5.4(a),
5.4(c) and 5.4(e)), (b) Material Adverse Effect or (c) Environmental Material
Adverse Effect shall be read and interpreted as if such qualification was not
included therein, and (ii) the provisions of Article VI that are qualified
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by "material" or a Partnership Material Adverse Effect shall be read and
interpreted as if such qualification was not included therein.
ARTICLE XII.
TERMINATION
12.1 TERMINATION. The obligations to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of Partnership and DETTCO;
(b) Partnership, if a material default shall be made in the
observance or performance by DETTCO of any agreements and covenants of
DETTCO herein contained, or if there shall have been a material breach
by DETTCO of any warranties and representations and the same is not
cured within thirty (30) days after receipt of written notice from
Partnership;
(c) DETTCO, if a material default shall be made by Partnership
in the observance or performance by Partnership of any agreements and
covenants of Partnership herein contained, or if there shall have been
a material breach by Partnership of any warranties and representations
and the same is not cured within thirty (30) days after receipt of
written notice from DETTCO;
(d) the Party, and in accordance with the provisions,
specified in Sections 2.2(b) or 2.6, or
(e) either Party if the Closing has not occurred by December
1, 1998, upon giving of ten (10) days' prior written notice to the
other Party.
12.2 LIABILITY UPON TERMINATION. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 12.1, then neither Party shall be under any liability to
the other Party hereto other than as provided in Section 9.5 and Article XIV
hereof. Section 9.5 and Articles XIV, XV and XVI shall survive any termination
of this Agreement.
ARTICLE XIII.
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
13.1 NO MERGER. All representations, warranties, covenants and
agreements made by the Parties in this Agreement or pursuant hereto shall
survive the Closing as hereinafter provided, notwithstanding any investigation
heretofore or hereafter made by or on behalf of any of them and shall not be
deemed merged into any instruments or agreements delivered at Closing.
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13.2 INACCURACIES AND DEFECTS. Notwithstanding the foregoing, there
shall be no indemnification obligation by DETTCO under this Agreement with
respect to (i) any inaccuracies in any representations or warranties made by
DETTCO herein or (ii) defects relating to the Assets, to the extent such
inaccuracies or defects have been specifically disclosed to Partnership in
writing by DETTCO prior to the Closing Date. Likewise, there shall be no
indemnification obligation by Partnership under this Agreement with respect to
any inaccuracies in any representations or warranties made by Partnership herein
to the extent such inaccuracies have been specifically disclosed to DETTCO in
writing by Partnership prior to the Closing Date. Any such inaccuracies or
defects shall provide a basis for the other Party electing not to close the
transactions contemplated by this Agreement, but shall not form any basis for a
cause of action or indemnity hereunder.
13.3 SURVIVAL PERIOD. All representations, warranties and
indemnifications herein (and the corresponding representations and warranties
set forth in certificates given at Closing), the covenants of the Parties and
the indemnification obligations of the Parties shall survive until the fifth
anniversary date of the Closing Date, except that (i) all representations,
warranties and indemnities relating to Tax matters and matters relating to
employees, employee Claims or employee benefit matters shall survive until
ninety (90) calendar days following the termination of any statute of
limitations applicable to such matter, (ii) DETTCO's indemnification obligation
under Sections 11.1(b) as it relates to the matters described on Exhibit I and
Section 11.1(d) shall survive indefinitely, and (iii) Partnership's
indemnification obligations under Section 11.4 (b) through (e) shall survive
indefinitely. Notwithstanding the foregoing, in the event a Claim for
indemnification is made in accordance with the provisions hereof on or before
the expiration of the respective survival period set forth above, the
obligations of the indemnifying party under Article XI shall continue as to such
claim until it has been finally resolved.
ARTICLE XIV.
EXPENSES
Except as otherwise set forth herein, and whether or not the
transactions contemplated by this Agreement shall be consummated, each Party
agrees to pay, without right of reimbursement from the other Party, the costs
incurred by the Party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including the fees and
disbursements of legal counsel, accountants and consultants employed by the
Party in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, each Party agrees to share equally the filing fee
for filings made pursuant to the HSR Act.
ARTICLE XV.
DISPUTES
15.1 NEGOTIATION. Except for the injunctive remedies provided by
Section 9.4, in the event of any claims, counterclaims, demands, causes of
action, disputes, controversies, and other matters in question arising out of or
relating to this Agreement, any provision hereof, the alleged breach thereof, or
in any way relating to the subject matter of this Agreement or the relationship
between
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the Parties created by this Agreement, involving the Parties and/or their
respective representatives and/or Affiliates, including, without limitation,
arising out of the Other Agreements or the Guaranty Agreement (all of which are
referred to herein as "Disputes"), the Parties shall promptly seek to resolve
any such Dispute by negotiations between senior executives of the Parties who
have authority to settle the Dispute. When a Party believes there is a Dispute
under this Agreement, that Party will give the other Party written notice of the
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 its position, and (ii) the name, title, fax
number, and telephone number of the executive who will represent that Party. In
the event the Dispute involves a claim arising out of the actions of any Person
or entity 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 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
Dispute. If one of the executives is an attorney or intends to be accompanied at
a meeting by an attorney, the other executive shall be given at least five (5)
days' notice of such intention and may also be accompanied by an attorney. All
negotiations and communications pursuant to this Article XV shall be treated and
maintained by the Parties as confidential information and shall be treated as
compromise and settlement negotiations for the purposes of the Federal and State
Rules of Evidence.
15.2 FAILURE TO RESOLVE. If the Dispute has not been resolved within
sixty (60) days after the date of the response given pursuant to Section 15.1
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 15.1 or otherwise refuses to participate under the
provisions of Section 15.1, either Party may initiate binding arbitration
pursuant to the provisions of Section 15.3 below.
15.3 ARBITRATION. Any Disputes not settled pursuant to the foregoing
provisions shall be submitted to binding arbitration in accordance with the
following provisions. Arbitration shall be the sole and exclusive manner in
which to resolve any Disputes hereunder.
(a) The Party desiring to initiate arbitration in connection
with any Dispute shall send, via certified mail, written notice of
demand of arbitration to the other Party and the name of the arbitrator
appointed by the Party demanding arbitration together with a statement
of the matter in controversy.
(b) Within fifteen (15) days after receipt of such demand, the
receiving Party shall name its arbitrator. If the receiving Party fails
or refuses to name its arbitrator within such 15-day period, the second
arbitrator shall be appointed, upon request of the Party demanding
arbitration, by the Chief U.S. District Court Judge for the Southern
District of Texas or such other person designated by such judge. The
two arbitrators so selected shall within fifteen (15) days after their
designation select a third arbitrator; provided, however, that if the
two arbitrators are not able to agree on a third arbitrator within such
15-day period, either Party may request the Chief U.S. District Court
Judge for the Southern District of Texas or such other person
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designated by such judge to select the third arbitrator as soon as
possible. In the event the Judge declines to appoint an arbitrator,
appointment shall be made, upon application of either Party, pursuant
to the Commercial Arbitration Rules of the American Arbitration
Association. If any arbitrator refuses or fails to fulfill his or her
duties hereunder, such arbitrator shall be replaced by 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.
(c) Each arbitrator selected by the Parties shall be a
certified public accountant or licensed attorney with at least fifteen
(15) years of oil and gas experience as a certified public accountant
and/or practicing attorney. The arbitrators selected by the Parties are
not required to be neutral, but the third arbitrator shall be neutral
and shall be a retired judge.
(d) The Parties hereto hereby request and consent to the three
(3) arbitrators conducting a hearing in Houston, Texas no later than
sixty (60) days following their selection 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.
(e) Arbitration shall be conducted in accordance with the
Commercial Arbitration Rules and procedures of the American Arbitration
Association.
(f) The Federal Rules of Civil Procedure, as modified or
supplemented by the local rules of civil procedure for the U.S.
District Court for the Southern District of Texas, shall apply in the
arbitration. The Parties shall make their witnesses available in a
timely manner for discovery pursuant to such rules. If a Party fails to
comply with this discovery agreement within the time established by the
arbitrators, after resolving any discovery disputes, the arbitrators
may take such failure to comply into consideration in reaching their
decision. All discovery disputes shall be resolved by the arbitrators
pursuant to the procedures set forth in the Federal Rules of Civil
Procedure.
(g) Adherence to formal rules of evidence shall not be
required. The arbitrators shall consider any evidence and testimony
that they determine to be relevant.
(h) The Parties hereto hereby request that the arbitrators
render their decision within thirty (30) calendar days following
conclusion of the hearing.
(i) Any decision by a majority of the arbitration panel shall
be final, binding and non-appealable. Any such decision may be filed in
any court of competent jurisdiction and may be enforced by either Party
as a final judgment in such court. There shall be no grounds for appeal
of any arbitration award hereunder.
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(j) 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 a Dispute as provided in Section 15.1 above until such time
as the Dispute has been resolved pursuant to Section 15.1, or an
arbitration award has been entered pursuant to this Section 15.3.
15.4 RECOVERY OF COSTS AND ATTORNEYS' FEES. In the event arbitration
(or, despite the Parties' agreement to resolve the Disputes through binding
arbitration, litigation) arising out of this Agreement is initiated by either
Party, the prevailing Party, after the entry of a final non-appealable order,
shall be entitled to recover from the other Party, as a part of said order, all
court costs, fees and expenses of such arbitration (or litigation), including,
without limitation, reasonable attorneys' fees.
15.5 CHOICE OF FORUM. If, despite the Parties' agreement to submit any
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 the federal or state courts situated
in the City of Houston, Texas.
15.6 JURY WAIVERS. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO
DEMAND A TRIAL BY JURY.
ARTICLE XVI.
GENERAL PROVISIONS
16.1 NOTICES. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing and delivered personally or sent via first-class,
postage prepaid, registered or certified mail (return receipt requested), or by
overnight delivery service or facsimile transmission addressed as follows:
If to DETTCO:
Duke Energy Transport and Trading Company
000 - 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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and copy to:
Duke Energy Field Services, Inc.
000 - 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Partnership:
TEPPCO Partners, L.P.
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and copy to:
Texas Eastern Products Pipeline Company
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either Party may change the address to which the communications are to
be directed to it by giving notice to the other in the manner provided in this
Section 16.1. Notice by mail shall be deemed to have been given and received on
the third day after posting. Notice by overnight delivery service, facsimile
transmission or personal delivery shall be deemed given on the date of actual
delivery.
16.2 GOVERNING LAW. This Agreement and the performance of the
transactions contemplated hereby shall be governed by and construed and enforced
in accordance with the laws of the State of Texas, without regard to any
conflict-of-laws provision thereof that would otherwise require the application
of the law of any other jurisdiction.
16.3 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, together
with the Disclosure Schedule and the Assignment of Subject Interest, the
transfer documents pursuant to which the Assets are to be transferred to the
LLCs and the other documents effecting such transfer of the Assets, the Other
Agreements and all certificates, documents, instruments and writings that are
delivered pursuant hereto at Closing set forth the entire agreement and
understanding of the Parties with respect of the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof. No representation, promise, inducement or
statement of intention with respect to the subject matter of this Agreement has
been
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made by either Party that is not embodied in this Agreement and the Exhibits
hereto, the Disclosure Schedule, the Assignment of Subject Interest, the Other
Agreements, the other documents referred to hereinabove in this Section 16.3 and
the certificates, documents, instruments and writings that are delivered
pursuant hereto at Closing, and neither of the Parties shall be bound by or
liable for any alleged representation, promise, inducement or statement of
intention not so set forth.
16.4 ASSIGNMENT. Neither Party to this Agreement may sell, transfer,
assign, pledge or hypothecate, in each case, by operation of law, change in
control or otherwise, its rights, interests or obligations under this Agreement
without the consent of the other Party; provided, however, that (i) Partnership
may assign its rights to an Affiliate, but such Party shall remain liable for
the performance of its obligations hereunder, and (ii) DETTCO may assign its
rights to an Affiliate, but such Party shall remain liable for the performance
of its obligations hereunder.
16.5 SUCCESSORS. This Agreement shall inure to the benefit of, be
binding upon, and be enforceable by the Parties hereto and their respective
successors and permitted assigns.
16.6 AMENDMENTS; WAIVER. This Agreement may be amended, superseded or
canceled, and any of the terms hereof may be waived, only by a written
instrument specifically stating that it amends, supersedes or cancels this
Agreement or waives any of the terms herein, executed by all Parties or, in the
case of a waiver, by the Party waiving compliance. The failure of either Party
at any time to require performance of any provision herein shall in no manner
affect the right at a later time to enforce the same. No waiver by either Party
of any condition, or of any breach of any term, covenant, representation or
warranty, shall be deemed or constitute a waiver of any other condition, or
breach of any other term, covenant, representation or warranty, nor shall the
waiver constitute a continuing waiver unless otherwise expressly provided.
16.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
16.8 SEVERABILITY. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16.9 NO THIRD PARTY BENEFICIARIES. Except to the extent a Third Party
is expressly given rights herein, any agreement contained, expressed or implied
in this Agreement shall be only for the benefit of the Parties hereto and their
respective legal representatives, successors and permitted assigns, and such
agreements shall not inure to the benefit of the obligees of any indebtedness of
either Party hereto, it being the intention of the Parties hereto that no Person
shall be deemed a third party beneficiary of this Agreement, except to the
extent a Third Party is expressly given rights herein. Notwithstanding anything
herein to the contrary, nothing herein shall be deemed to create any rights with
respect to any employee of either Party or any employee of any Affiliate of a
Party, except as expressly provided herein with respect to Party Indemnitees.
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16.10 NEGOTIATED TRANSACTION. The provisions of this Agreement were
negotiated by the Parties hereto, and this Agreement shall be deemed to have
been drafted by all of the Parties hereto.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first set forth above.
DETTCO:
DUKE ENERGY TRANSPORT AND TRADING
COMPANY
By: /s/ X.X. Xxxx
-------------------------------------------
Name: X.X. Xxxx
-----------------------------------------
Title: Vice Chairman
----------------------------------------
PARTNERSHIP:
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline Company,
its General Partner
By: /s/ X.X. Xxxxxxx
-------------------------------------------
Name: X.X. Xxxxxxx
-----------------------------------------
Title: Chairman, President & CEO
----------------------------------------
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