EXHIBIT 10.13
PURCHASE AND SALE AGREEMENT
BY AND AMONG
REGENCY ACQUISITION LLC,
REGENCY SERVICES, LLC,
REGENCY GAS SERVICES LLC,
THE MEMBERS OF REGENCY SERVICES, LLC
AND
THE PARTNERS OF CB OFFSHORE EQUITY FUND V - HOLDINGS, L.P.,
ALL AS SET FORTH ON SCHEDULE A ATTACHED HERETO,
DATED
OCTOBER 21, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I
CERTAIN DEFINITIONS...................................................... 2
1.1 Certain Defined Terms............................................. 2
1.2 Other Definitional Provisions..................................... 22
1.3 Headings.......................................................... 22
1.4 Other Terms....................................................... 22
ARTICLE II
THE TRANSACTION.......................................................... 22
2.1 The Transaction................................................... 23
2.2 Purchase Price.................................................... 23
2.3 Adjustments....................................................... 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PARTNERS.................... 27
3.1 Partner Representations........................................... 27
3.2 Parent Representations............................................ 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REGENCY................................ 30
4.1 Organization, Good Standing, Authority, Capitalization............ 30
4.2 Enforceability.................................................... 31
4.3 No Conflicts...................................................... 31
4.4 Regulation and Authorizations..................................... 32
4.5 Consents and Authorizations....................................... 32
4.6 Properties........................................................ 33
4.7 Taxes............................................................. 34
4.8 Compliance with Laws.............................................. 35
4.9 Insurance......................................................... 36
4.10 Material Contracts............................................... 36
4.11 Intellectual Property............................................ 37
4.12 Broker's or Finder's Fees........................................ 37
4.13 Employees........................................................ 37
4.14 Employee Benefit Plans........................................... 38
4.15 Financial Statements; Absence of Undisclosed Liabilities......... 39
4.16 Environmental Matters............................................ 40
4.17 Litigation....................................................... 41
4.18 Bankruptcy....................................................... 42
4.19 Absence of Certain Changes....................................... 42
4.20 Pipeline Matters................................................. 42
4.21 Affiliate Relationships.......................................... 43
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER.................................. 43
5.1 Organization, Good Standing, and Authorization.................... 43
5.2 Enforceability.................................................... 43
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Table of Contents
(continued)
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5.3 No Conflicts...................................................... 43
5.4 Consents; and Authorizations...................................... 43
5.5 Litigation........................................................ 44
5.6 Broker's or Finder's Fees......................................... 44
5.7 Investment Intent................................................. 44
5.8 Financing......................................................... 44
ARTICLE VI
COVENANTS................................................................ 45
6.1 Conduct of Business............................................... 45
6.2 Access, Information and Access Indemnity.......................... 47
6.3 Regulatory Filings; Xxxx-Xxxxx-Xxxxxx Filing...................... 48
6.4 Preservation and Access to Records; and Further Assurances........ 49
6.5 Phantom Stock Plan and Annual Performance Incentive Plan.......... 50
6.6 Payoff Letters; and Reaffirmation of Mutual Releases.............. 50
6.7 Cooperation and Reasonable Efforts................................ 51
6.8 Indemnification of Managers, Directors and Officers............... 51
6.9 Tax Matters....................................................... 51
6.10 Financing........................................................ 53
6.11 Transfer Taxes................................................... 54
6.12 Purchase Price Allocation........................................ 54
6.13 Oxy Contract..................................................... 54
ARTICLE VII
CONDITIONS TO CLOSING.................................................... 55
7.1 Regency's, Parent's and the Partners' Conditions.................. 55
7.2 Buyer's Conditions................................................ 55
ARTICLE VIII
CLOSING.................................................................. 57
8.1 Time and Place of Closing......................................... 57
8.2 Deliveries at Closing............................................. 57
ARTICLE IX
TERMINATION.............................................................. 58
9.1 Termination at or Prior to Closing................................ 58
9.2 Effect of Termination............................................. 59
ARTICLE X
INDEMNIFICATION.......................................................... 59
10.1 Survival......................................................... 59
10.2 Indemnification by Buyer......................................... 60
10.3 Indemnification by Parent, the Parent Members and the Partners... 60
10.4 Certain Limitations.............................................. 63
10.5 Notice of Asserted Liability; Opportunity to Defend.............. 66
10.6 Exclusive Remedy................................................. 68
10.7 Limitation on Damages............................................ 68
10.8 Bold and/or Capitalized Letters.................................. 69
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(continued)
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10.9 Independent Investigation........................................ 69
10.10 Projections..................................................... 69
ARTICLE XI
ESCROW................................................................... 70
11.1 Escrow Fund...................................................... 70
11.2 Release from Escrow.............................................. 70
11.3 Distributions.................................................... 71
11.4 Subsequent Distribution(s)....................................... 72
ARTICLE XII
MISCELLANEOUS PROVISIONS................................................. 72
12.1 Expenses......................................................... 72
12.2 Assignment....................................................... 72
12.3 Entire Agreement, Amendments and Waiver.......................... 72
12.4 Severability..................................................... 73
12.5 Counterparts..................................................... 73
12.6 Governing Law and Dispute Resolution............................. 73
12.7 Notices and Addresses............................................ 74
12.8 Press Releases................................................... 76
12.9 Offset........................................................... 76
12.10 No Partnership; Third Party Beneficiaries....................... 76
12.11 Negotiated Transaction.......................................... 76
12.12 Regency Disclosure Schedule..................................... 76
12.13 Time of the Essence............................................. 77
12.14 Representation.................................................. 77
12.15 Specific Performance............................................ 77
12.16 Affiliate Liability............................................. 77
12.17 No Waiver of Claims for Fraud................................... 78
12.18 No Recovery..................................................... 78
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EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Mutual Release
Exhibit C Legal Opinion of Gardere Xxxxx Xxxxxx LLP
Exhibit D Legal Opinion of Xxxxxx & Xxxxxx L.L.P.
SCHEDULES
Regency Disclosure Schedule
Schedule A Parent Members and Partners
Schedule B Sample Balance Sheet
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") dated October 21, 2004
is by and among Regency Acquisition LLC, a Delaware limited liability company
("Buyer"), Regency Services, LLC, a Delaware limited liability company
("Parent"), Regency Gas Services LLC, a Delaware limited liability company
("Regency"), the members of Parent listed on Schedule A attached hereto
(individually a "Parent Member" and collectively, the "Parent Members"), and the
partners of CB Offshore Equity Fund V - Holdings, L.P., a Cayman Islands limited
partnership which is a Parent Member (the "Partnership"), listed on Schedule A
attached hereto (individually a "Partner", collectively, the "Partners"). Buyer,
Parent, Regency, the Partnership, the Parent Members and the Partners are
sometimes referred to collectively herein as the "Parties" and individually as a
"Party"; and the term Parent Members as used in this Agreement includes the
Partnership unless otherwise provided.
RECITALS
1. Parent owns the number and type of outstanding membership interests of
Regency set forth opposite Parent's name on Schedule A, which membership
interests constitute 100% of the outstanding membership interests of
Regency (collectively, together with any and all other Equity Interests in
Regency hereafter issued to or otherwise held by Parent, the "Interests").
2. The Parent Members collectively own all of the outstanding membership
interests of Parent.
3. Each Partner owns the number and type of outstanding partnership interests
of the Partnership set forth opposite such Partner's name on Schedule A
attached hereto, which partnership interests constitute 100% of the
outstanding partnership interests in the Partnership (collectively,
together with any and all other partnership interest or other Equity
Interest of the Partnership hereafter issued to or otherwise held by such
Partners, the "Partnership Interests").
4. Buyer desires to purchase, and Parent desires to sell, the Interests for
the consideration set forth below, subject to the terms and conditions of
this Agreement.
5. The Parent Members and the Partners join in the execution of this Agreement
for the purpose of evidencing their consent to the consummation of the
foregoing transaction and for the purpose of making certain covenants and
agreements with Buyer, including the acknowledgement of their obligations
under Section 2.3(d), Section 2.3(f) and ARTICLE X of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Defined Terms. Capitalized terms used in this Agreement shall
have the meanings given such terms as are set forth below.
"Administaff shall mean Administaff Companies II, L.P.
"Administaff Agreement" shall have the meaning given such term in
Section 4.14(c).
"Affiliate" shall mean, when used with respect to a specified Person,
any other Person directly or indirectly (through one or more intermediaries or
otherwise) controlling, controlled by or under common control with the specified
Person. For purposes of this definition, "control," when used with respect to
any specified Person, shall mean the power to direct or cause the direction of
the management and policies of the Person whether through the ownership of
voting securities, by contract or otherwise; and the term "controlled" has the
meanings correlative to the foregoing.
"Agreement" shall have the meaning given such term in the opening
paragraph of this Agreement.
"Approved Acquisition" shall have the meaning given such term in
Section 6.1(b)(iv).
"Assets" shall have the meaning given such term in Section 4.6(a).
"Audit Fees" shall have the meaning given such term in Section 2.3(f).
"Audit Firm" shall Ernst & Young, LLP ("EY") or if EY shall not accept
the engagement as Audit Firm, a national accounting firm with no prior material
relationship with Buyer, Buyer Affiliates, Regency or the Parent Members with
experience in auditing the financial statements of a natural gas pipeline
company, reasonably acceptable to Buyer and Parent.
"Audited Financial Statements" shall have the meaning given such term
in Section 4.15(a)(i).
"Authorization" shall mean any franchise, permit, license,
authorization, order, certificate, registration or other consent or approval
that a Governmental Authority has the legal authority to grant or issue.
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"Base Capital Expenditures" shall mean (a) $6,400,000 if the
Measurement Date is December 31, 2004 and (b) $5,400,000 if the Measurement Date
is November 30, 2004.
"Base Working Capital" shall mean $3,900,000.
"Bonus Plan" shall mean the Annual Performance Incentive Plan of
Regency.
"Business Day" shall mean any day, other than Saturday and Sunday, on
which federally-insured commercial banks in Dallas, Texas are generally open for
business and capable of sending and receiving wire transfers.
"Buyer" shall have the meaning given such term in the opening
paragraph of this Agreement.
"Buyer Affiliates" shall have the meaning given such term in Section
12.16(a).
"Buyer Indemnified Taxes" shall mean any and all Taxes together with
any Losses (including court and administrative costs and reasonable legal fees
and expenses incurred in investigating and preparing for any Proceeding) arising
out of or incident to the determination, assessment or collection of such Taxes
(i) imposed on any Regency Company or for which any Regency Company is otherwise
liable for any Taxable period ending on or prior to the Closing Date or the
portion of any Straddle Period ending on the Closing Date (determined in
accordance with the provisions of Section 6.9(c)), or (ii) resulting from a
breach of the representations and warranties set forth in Section 4.7 (without
giving effect to any materiality or knowledge qualifiers that may be contained
therein and without regard to any scheduled items) or resulting from a breach by
Parent, the Parent Members or the Partners of the covenants set forth in Section
6.9, (iii) of any member of an affiliated, consolidated, combined or unitary
group of which any Regency Company (or any predecessor) is or was a member on or
prior to the Closing Date by reason of Treasury Regulation Section 1.1502-6(a)
or any analogous or similar state or local law, or (iv) of any other Person for
which any Regency Company is or has been liable as a transferee or successor, or
by contract or otherwise; provided, however, that any such Tax described in this
definition shall not be a Buyer Indemnified Tax to the extent such Tax was
included as a Current Liability in the determination of Net Working Capital; and
provided further, however, that a Buyer Indemnified Tax shall not include any
Tax of any Regency Company that is imposed on any transaction involving any
Regency Company (other than transactions in the ordinary course of business)
that occurs on the Closing Date after Buyer's purchase of the Interests as a
result of any actions taken by Buyer or any Regency Company after Buyer's
purchase of the Interests.
"Buyer Indemnitees" shall have the meaning given such term in Section
10.3(a).
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"Buyer's Knowledge" or any similar term, shall mean the actual
knowledge, after due inquiry, of Xxx Xxxxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxx, and
Xxxxx Xxxxxxxx.
"Capital Expenditure Deficit" shall mean the amount, if any, by which
Base Capital Expenditures exceed Capital Expenditures.
"Capital Expenditure Surplus" shall mean the amount, if any, by which
Capital Expenditures exceed Base Capital Expenditures.
"Capital Expenditures" shall mean the capital expenditures paid or
accrued by the Regency Companies in the ordinary course of business in
connection with the matters set forth in Section 6.1(b)(ix) of the Regency
Disclosure Schedule or as permitted by Section 6.1(b)(ix) from September 1,
2004, to 11:59 p.m. on the Measurement Date and determined in accordance with
GAAP (as applied on a basis consistent with past practice) minus any Oxy Advance
to the extent not already deducted from capital expenditures; provided, that,
Capital Expenditures (i) shall include only authorization for expenditure
projects greater than $1,000 that are related to (1) new capital improvement
projects that have a useful life of greater than one year, or (2) improvements
to existing property, plant and equipment that extend such existing asset's
useful life by greater than one year, (ii) shall include capital expenditures
paid or accrued by any Regency Company in accordance with the Oxy Contract from
September 1, 2004 to 11:59 p.m. on the Measurement Date and (iii) shall exclude
any increases in the property, plant, and equipment accounts as a result of
purchase accounting revaluations related to past transactions or the
transactions contemplated by this Agreement.
"Cash" shall mean cash on deposit with financial institutions net of
overdrafts and outstanding checks.
"Change of Control Amounts" shall mean any bonus, retention bonus,
consent or other fee, compensation (including the estimated costs of benefits
required to be provided) or other similar payments that any Regency Company upon
Closing, to the extent not paid as of 11:59 p.m. on the Measurement Date, will
become obligated to pay (other than Severance Obligations) as a result of the
consummation of the transactions contemplated by the Transaction Documents,
regardless of whether such amounts are payable at or after Closing and shall
also include all amounts payable under the Phantom Stock Plan and all amounts
payable under the Bonus Plan as a result of the transactions contemplated by
this Agreement, whether payable by their terms at Closing.
"Charlesbank" shall mean Charlesbank Capital Partners, LLC, a
Massachusetts limited liability company.
"Charlesbank Agreement" shall mean the Corporate Development and
Administrative Services Agreement dated May 30, 2003, between Charlesbank and
Regency.
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"Claim" shall mean any demand, claim or notice sent or given by a
Person to another Person in which the former asserts that it has suffered a Loss
or has become party to a Proceeding which is the responsibility of the latter.
"Claim Notice" shall mean a written notice of a claim for
indemnification pursuant to this Agreement specifying in reasonable detail the
specific nature of the Claim for which indemnification is sought.
"Closing" shall have the meaning given such term in Section 8.1.
"Closing Amount" shall have the meaning given such term in Section
2.2(b)(ii).
"Closing Date" shall have the meaning given such term in Section 8.1.
"Closing Parent Amount" shall have the meaning given such term in
Section 2.2(b)(i).
"Commitment" shall mean the commitment of UBS Loan Finance LLC,
pursuant to a commitment letter dated October 21, 2004, to provide $240,000,000
in debt financing to Buyer in order to consummate the transactions contemplated
by this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between Hicks, Muse, Xxxx & Xxxxx Incorporated and Regency dated on or about
June 24, 2004.
"Consolidated Balance Sheet" shall have the meaning given such term in
Section 4.15(a)(i).
"Continuing Claims" shall mean Claims, or any portion thereof, for
indemnification properly asserted pursuant to ARTICLE X prior to the Final
Distribution Date that have not been resolved as of the Final Distribution Date.
"Contract" shall mean any binding agreement, contract, lease,
commitment, consensual obligation, arrangement, promise or undertaking (whether
written or oral and whether express or implied).
"Credit Agreement" shall mean that certain Amended and Restated Credit
Agreement dated as of March 1, 2004 among Regency, Parent, Regency Intrastate,
Regency Midcon, Regency Liquids, Regency Gathering, Gulf States, Waha GP, Waha
LP, Regency Waha, Regency Treating, Treating GP, NGL GP, Regency Marketing,
Xxxxx Fargo and each of the other banks or other lending institutions a
signatory thereto.
"Current Assets" shall mean the sum of all current assets as of 11:59
p.m. on the Measurement Date of the Regency Companies as determined in
accordance with
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GAAP (as applied on a basis consistent with past practice and the preparation of
the Audited Financial Statements), as adjusted (whether or not in accordance
with GAAP) to (1) give effect to this Agreement (2) utilize the methodologies
and procedures otherwise specified in or consistent with the Sample Balance
Sheet and (3) give effect to the exclusion of the following: (a) Restricted
Cash, (b) Indebtedness, accounts and obligations owed by any one or more of
Parent, any Parent Member, any Partner, any Regency Company or any of its or
their Affiliates to any of the Regency Companies, (c) amounts receivable from
Officers, Directors, Managers or any other employees, officers, managers or
directors of any Regency Company or Parent, (d) deferred Tax assets, (e) prepaid
expenses and deposits except to the extent usable in or benefiting the business
of Regency, (f) any current assets obtained in any Approved Acquisition, (g) any
receivables from El Paso or any Affiliate thereof under the El Paso Acquisition
Agreement (other than trade receivables from El Paso or any Affiliate thereof
which shall be included as Current Assets) and (h) assets from risk management
activities in connection with derivatives. The computation of Current Assets as
of July 31, 2004, is illustrated in the Sample Balance Sheet.
"Current Liabilities" shall mean the sum of all current liabilities as
of 11:59 p.m. on the Measurement Date of the Regency Companies as determined in
accordance with GAAP (as applied on a basis consistent with past practice and
the preparation of the Audited Financial Statements), as adjusted (whether or
not in accordance with GAAP) to (1) give effect to this Agreement, (2) utilize
the methodologies and procedures otherwise specified in or consistent with the
Sample Balance Sheet, and (3) give effect to the exclusion of the following: (a)
Expenses paid, (b) Third Party Debt, including the current portion of Third
Party Debt and accrued and unpaid interest on Third Party Debt, (c) accounts and
obligations owed by any one or more Regency Company to any other Regency
Company, (d) deferred Tax liabilities, (e) Severance Obligations Adjustment
Amount, (f) Change of Control Amounts, (g) any current liabilities obtained in
any Approved Acquisition, (h) escrow payables to the extent corresponding
amounts held in escrow are excluded from Current Assets, (i) any payables to El
Paso or any Affiliate thereof under the El Paso Acquisition Agreement (other
than trade payables to El Paso or any Affiliate thereof which shall be included
as Current Liabilities), and (j) liabilities from risk management activities in
connection with derivatives. For purposes of determining Current Liabilities to
be used in the determination of Net Working Capital, (x) no reserves, allowances
or accrued Liability of the Regency Companies reflected in the Consolidated
Balance Sheet or the balance sheet included in the Interim Financial Statements
shall be reduced or eliminated, except in the case of a reduction or elimination
by reason of a payment or credit occurring in the ordinary course of business
consistent with the past practice of the Regency Companies, and (y) all capital
expenditures (including Capital Expenditures) and Reimbursable Acquisition
Expenditures accrued but not paid as of 11:59 p.m. on the Measurement Date shall
be reflected as a Current Liability. The computation of Current Liabilities as
of July 31, 2004 is illustrated by the Sample Balance Sheet.
"DEFS" shall mean Duke Energy Field Services, LP, a Delaware limited
partnership.
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"Debt Payoff Letters" shall mean the pay-off letters, in form and
substance reasonably satisfactory to Buyer, from each lender of Third Party Debt
setting forth (i) the aggregate amount, including interest, breakage costs,
prepayment penalties, and other fees, required to be paid to fully satisfy all
Third Party Debt and (ii) wire transfer instructions for such lender. Each Debt
Pay-Off Letter will provide for the release and termination of all Liens,
recourse and other obligations associated with the Third Party Debt that is the
subject of such Debt Pay-Off Letter upon receipt of the amount specified in such
Debt Pay-Off Letter to be paid on the Closing Date.
"Deductible" shall mean an amount equal to $4,000,000.
"Director/Officer Indemnitees" shall have the meaning given such term
in Section 6.8.
"Directors" shall mean each of Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xx.
and X. Xxxx Lawrence, in his capacity as a member of the board of directors of
Gulf States, and any successor to any of them serving in such capacity prior to
the Closing Date.
"Disputed Amount" shall have the meaning given such term in Section
11.2(b).
"DOJ" shall mean the Department of Justice of the United States of
America.
"Easement" shall mean all easements, rights-of-way, servitudes,
property use agreements, line rights and real property licenses (including
right-of-way permits from railroads and road crossing permits or other
right-of-way permits from Governmental Authorities) held by any Regency Company
relating to real property used in the business of the Regency Companies but
owned by other Persons.
"El Paso" shall mean El Paso Field Services, L.P., a Delaware limited
partnership.
"El Paso Acquisition Agreement" shall mean that certain Purchase and
Sale Agreement dated April 23, 2003, by and among El Paso, Dubach Gas Company,
L.L.C., El Paso Dubach Liquids Pipeline Company, Colorado Interstate Gas
Company, CIG Field Services Company, ANR Production Company, Gulf States
Pipeline Corporation, El Paso Gas Gathering and Processing Company and Gulf
States Gas Pipeline Company, as sellers, and Regency, as buyer, as amended by
the First Amendment to Purchase and Sale Agreement dated May 2, 2003 and the
Second Amendment to Purchase and Sale Agreement dated May 30, 2003, including
all exhibits and schedules thereto.
"Environmental Costs and Liabilities" shall mean those Losses incurred
(i) under or pursuant to the requirements of any Environmental Law, (ii) under
or pursuant to any Order issued pursuant to Environmental Law prior to the
Closing, (iii) with respect to any monitoring or cleanup required by any
Environmental Law, and (iv) under any
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Contract between any Regency Company and any Third Person relating to
environmental matters that existed prior to the Closing.
"Environmental Law" shall mean any and all Laws, Regulations or rules
of common law, or Orders of any Governmental Authority in existence and as
amended on the Closing Date pertaining to the protection of the environment,
health or natural resources or to Hazardous Materials in any and all
jurisdictions in which the party in question owns property or conducts business,
including the Clean Air Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Federal Water Pollution
Control Act, the Occupational Safety and Health Act of 1970, the Resource
Conservation and Recovery Act of 1976, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Hazardous & Solid Waste Amendments Act of 1984, the
Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials
Transportation Act, the Oil Pollution Act of 1990, any state or local Laws
implementing, analogous to, or similar to the foregoing federal Laws, and any
state or local Laws pertaining to the handling of oil and gas exploration,
production, gathering, and processing wastes or the use, maintenance, and
closure of pits and impoundments.
"Equity Commitment" shall mean the commitment of Xxxxx, Muse Xxxx &
Xxxxx Equity Fund V, pursuant to a commitment letter dated October 21, 2004, to
provide $180,000,000 in equity financing to Buyer, the proceeds of which,
together with the proceeds of the Commitment, are to be used to consummate the
transactions contemplated by this Agreement or as otherwise provided by this
Agreement.
"Equity Interest" shall mean (i) the equity ownership rights in a
business entity, whether a corporation, company, joint stock company, limited
liability company, general or limited partnership, joint venture, bank,
association, trust, trust company, land trust, business trust, sole
proprietorship or other business entity or organization, and whether in the form
of capital stock, ownership unit, limited liability company interest, limited or
general partnership interest or any other form of ownership, and (ii) also
includes all Equity Interest Equivalents.
"Equity Interest Equivalents" shall mean all rights, warrants,
options, convertible securities or indebtedness, exchangeable securities or
other instruments, or other rights that are outstanding and exercisable for or
convertible or exchangeable into, directly or indirectly, any Equity Interest at
the time of issuance or upon the passage of time or occurrence of some future
event.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning given such term in Section
4.14(a)
"Escrow Agent" shall mean Xxxxx Fargo.
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"Escrow Agreement" shall mean an agreement to be entered into by and
among Buyer, Parent and the Escrow Agent on or before the Closing Date, in
substantially the form attached hereto as Exhibit A, or such other form as
Parent and Buyer shall reasonably agree.
"Escrow Amount" shall mean $12,500,000.
"Escrow Fund" shall have the meaning given such term in Section 11.1.
"Escrow Indemnity Claims" shall mean any and all claims for
indemnification brought by a Buyer Indemnitee other than Non-Escrow Indemnity
Claims.
"Estimated Closing Statement" shall have the meaning given such term
in Section 2.3(a)(i).
"Estimated Purchase Price" shall have the meaning given such term in
Section 2.3(a)(i).
"Exhibits" shall mean any or all of the exhibits attached to and made
a part of this Agreement.
"Existing Consulting Agreements" shall mean the Consulting Agreements,
each dated May 30, 2003, between Regency and each of Xxxxx Xxxxxxx and Xxxxxxx
Xxxxxx ("Consulting Agreements").
"Existing Employment Agreements" shall mean the Employment Agreements,
each dated May 30, 2003, between Regency and each of Xxxxx Xxxxxx, Xxxxxxx X.
Xxxxxx, and Xxxx Xxxxxxxx ("Employment Agreements").
"Expense Payoff Letters" shall mean the pay-off letters, in form and
substance reasonably satisfactory to Parent and Buyer, (a) from each Person to
whom Change of Control Amounts or Severance Obligations are owed, (i) setting
forth the aggregate amount required to be paid to fully satisfy such
obligation(s), and payment instructions for such payee and (ii) providing for
the release and termination of all Liens, recourse and other obligations
associated with the Change of Control Amounts and/or Severance Obligations that
is or are the subject of such Expense Pay-Off Letter upon receipt of the amount
specified in such Expense Pay-Off Letter to be paid on or after the Closing
Date, as applicable and (b) from each Person to whom Expenses are owed, setting
forth the aggregate amount required to be paid to fully satisfy such
obligation(s), and wire transfer instructions for such payee.
"Expenses" shall mean, to the extent existing at 11:59 p.m. on the
Measurement Date, the aggregate amount of unpaid fees, expenses and other
similar amounts arising from the provision of services through the Closing that
have been or are expected to be incurred by any Regency Company on or prior to
the Closing Date on behalf of Parent, Regency, the Regency Subsidiaries, the
Parent Members, the Partners, the Officers, the Directors, the Managers or any
other officer or directors of Parent or any
9
Regency Company in connection with the preparation, negotiation and execution of
this Agreement and the other Transaction Documents and the consummation of this
Agreement and the transactions contemplated hereby, including the following: (i)
the fees and disbursements of, or other similar amounts charged by, counsel to
Parent, Regency (Gardere Xxxxx Xxxxxx LLP), and/or the Partners and Parent
Members, (ii) the fees and expenses of, or other similar amounts charged by, any
accountants (including Deloitte & Touche LLP), agents, financial advisors
(including Xxxxxx Bros, and Charlesbank), consultants and experts employed by
Parent, Regency, the Partners and/or the Parent Members, and (iii) the
out-of-pocket expenses, if any, of Parent, Regency, the Partners and/or the
Parent Members incurred in such capacity.
"FERC" shall mean the Federal Energy Regulatory Commission of the
United States Government.
"Final Closing Statement" shall have the meaning given such term in
Section 2.3(c).
"Final Distribution Date" shall mean the date that is the 545 days
after the Closing Date (or if such date is not a Business Day, the next Business
Day).
"Financial Statements" shall have the meaning given such term in
Section 4.15(a)(ii).
"First Distribution Amount" shall mean $6,250,000 plus one half of all
interest or other income on the Escrow Amount from the Closing Date through the
First Distribution Date and minus the sum of (i) all amounts paid out of the
Escrow Fund through the First Distribution Date and (ii) the aggregate of all
amounts claimed by any Buyer Indemnitee pursuant to Claim Notices with respect
to Claims pending as of the First Distribution Date in excess of the Deductible
(to the extent such Claims are subject to the Deductible).
"First Distribution Date" shall mean 270 days after the Closing Date
(or if such date is not a Business Day, the next Business Day).
"FTC" shall mean the Federal Trade Commission of the United States of
America.
"Future Adjustments" shall have the meaning given such term in Section
4.15(b).
"GAAP" shall mean U.S. generally accepted accounting principles for
financial reporting applied consistently with the Regency Company's past
practices.
"Gas Contracts" shall mean the Contracts that (a) collectively
represent at least 85% of volumes of Hydrocarbons supplying the Major Assets for
the six months period ended August 31, 2004, or (b) are Contracts for the sale
of Hydrocarbons by any Regency Company to Third Persons with a term greater than
three months, as of the date of this Agreement.
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"Governmental Authorities" shall mean (a) the United States of America
or any state or political subdivision thereof and (b) any court or any
governmental or administrative department, commission, board, bureau, agency or
arbitration tribunal of the United States of America or of any state or
political subdivision thereof.
"Gulf States" shall mean Gulf States Transmission Corporation, a
Louisiana corporation and wholly-owned subsidiary of Regency.
"Hazardous Materials" shall mean: (a) any chemicals, materials or
substances defined or included in the definition of "hazardous substances,"
"hazardous materials," "toxic substances," "solid wastes," "pollutants,"
"contaminants," or words of similar import intended to define, list or classify
substances by reason of deleterious properties under any Environmental Law, (b)
any radioactive materials, asbestos, and polychlorinated biphenyls, (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any Governmental Authority; or (d) oil, waste oil, petroleum,
waste petroleum, natural gas, natural gas liquids or liquefied natural gas.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the Regulations thereunder.
"HSR Approval" shall mean (a) the receipt of any Authorization
required, or (b) the expiration of any applicable waiting period, under the HSR
Act.
"Hydrocarbons" shall mean crude oil, condensate, natural gas,
casinghead gas and other liquid or gaseous hydrocarbons.
"Indebtedness" shall mean, without duplication, (i) any obligations of
any Regency Company for borrowed money (including all obligations for principal,
interest, premiums, penalties, fees, expenses and breakage costs), (ii) any
obligations of any Regency Company evidenced by any note, bond, debenture or
other debt security, (iii) any obligations of any Regency Company for or on
account of capitalized leases, (iv) any obligations of a Person other than a
Regency Company secured by a Lien against any Regency Company's Assets, (v) any
obligations of any Regency Company for the reimbursement of letters of credit,
bankers' acceptance or similar credit transactions, (vi) any obligations of any
Regency Company under any currency, commodity or interest rate swap, hedge or
similar protection device, (vii) amounts owed to El Paso or any Affiliate
thereof under the El Paso Acquisition Agreement, and (viii) any obligations of
the types described in clauses (i) through (vii) above of any Person other than
any Regency Company, the payment of which is guaranteed, directly or indirectly,
by any Regency Company.
"Indemnified Party" or "Indemnitee" shall have the meaning given such
term in Section 10.5 (a).
"Indemnifying Party" or "Indemnitor" shall have the meaning given such
term in Section 10.5(a).
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"Intellectual Property" shall have the meaning given such term in
Section 4.11.
"Interests" shall have the meaning given such term in the first
recital to this Agreement.
"Interim Financial Statements" shall have the meaning given such term
in Section 4.15(a)(ii).
"IRS" shall mean the United States Internal Revenue Service.
"Joint Instructions" shall have the meaning given such term in Section
11.2(b).
"Laws" shall mean all laws, statutes and ordinances of the United
States, any state of the United States and any political subdivision thereof,
including all decisions of any Governmental Authority having the effect of law
in each such jurisdiction.
"Liability" shall mean any direct or indirect liability, Indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether known or unknown, and whether accrued,
absolute, contingent, matured or unmatured.
"Lien" shall mean any lien, mortgage, pledge, adverse or other claim,
charge, security interest, production payment, restriction, burden, encumbrance,
right of purchase, rights of a vendor under any title retention or conditional
sale agreement, or lease or other arrangement substantially equivalent thereto
or other encumbrance, option or defect in title.
"Loss" or "Losses" shall mean any and all damages, payments,
penalties, assessments, disbursements, costs and expenses, including interest,
awards, judgments, settlements, fines, costs of remediation, fees, costs of
defense and reasonable attorneys' fees, costs of accountants, expert witnesses
and other professional advisors and costs of investigation and preparation of
any kind or nature whatsoever.
"Major Assets" shall mean the following Regency Companies' facilities:
(a) the Hugoton Xxxxx gathering and processing facilities, (b) the
Mocane-Xxxxxxx gathering and processing facilities, (c) the Greenwood gathering
facility, (d) the Waha gathering and processing facilities, (e) the Dubach and
Lisbon gathering and processing facilities, (f) the Regency Intrastate
transportation facility and (g) the Gulf States transmission facilities.
"Manager" shall mean each of Xxx Xxxxxx and Xxxx Xxxxx, in his
capacity as a manager of Waha LP, and each of Xxxxx Xxxxxxx, Xxx Xxxxxx, Xxxxx
X. Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx, and X. Xxxx Lawrence, in
his capacity as a manager of Parent, and any of their respective successors.
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"Material Adverse Effect" shall mean (i) with respect to the Regency
Companies, any result, occurrence, change, event, effect or circumstance
(whether or not foreseeable) that, individually or in the aggregate with any
such other result, occurrence, change, event, effect or circumstance, is or
could reasonably be expected to be materially adverse to (A) the near-term or
long-term condition (financial or otherwise) or results of operations of the
Regency Companies, taken as a whole; provided, however, that the foregoing
definitions exclude (x) the effect of any change that is generally applicable to
the industry and markets in which the Regency Companies operate, or (y) the
effect of any change that is generally applicable to the United States economy
or securities markets, provided that the changes and effects in the case of
clauses (x) or (y) of this sentence do not disproportionately affect the Regency
Companies, or (B) the ability of Regency to perform its obligations under or
consummate the transactions contemplated by the Transaction Documents to which
it is a party or (ii) with respect to Buyer, Parent, any Parent Member or any
Partner, any result, occurrence, change, event, effect or circumstance or effect
of any of the foregoing that, individually or in the aggregate with any such
other result, occurrence, change, event, effect or circumstance, is or could
reasonably be expected to be materially adverse to the ability of such Person to
perform its obligations under or consummate the transactions contemplated by the
Transaction Documents to which it is a party.
"Material Contract" shall mean:
(a) each of the Gas Contracts;
(b) each Contract to which any Regency Company is a party, other than
any of the Gas Contracts, that is reasonably expected to require payments of
cash to or by the Regency Companies, or the incurrence of Liabilities by the
Regency Companies during the period of twelve months following the date of this
Agreement in an amount of more than $250,000;
(c) the El Paso Acquisition Agreement, the Waha Acquisition Agreement
and each other material acquisition, partnership, joint venture, teaming or
other similar Contract entered into by any Regency Company during the three year
period preceding the date of this Agreement;
(d) each Contract of any Regency Company restricting or otherwise
affecting the ability of such Regency Company to conduct or compete in any line
of business in any jurisdiction;
(e) each Contract between any Regency Company, on the one hand, and
any of the Regency Companies' employees, directors, officers or managers,
Parent, any of Parent's officers, directors or managers, any Parent Member,
Manager, any Partner or any of their or its Affiliates or financial advisors, or
financial advisors or consultants of any Regency Company, Parent or any Parent
Member on the other hand, under which there are remaining obligations of any
party thereto after the Closing, including indemnification agreements and any
financial advisory, oversight or similar agreement with Charlesbank or any of
its Affiliates;
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(f) each lease for capital equipment that provides for ongoing
payments by any Regency Company in excess of $100,000 annually;
(g) any indenture, mortgage, promissory note, loan or other Contract
for Indebtedness; and
(h) each other existing Contract of any Regency Company, not otherwise
covered by clauses (a) through (g), which otherwise is material to the Regency
Companies or the loss of which could reasonably be expected to have a Material
Adverse Effect on Regency.
"Measurement Date" shall mean November 30, 2004 (if the Closing Date
is on or after December 1, 2004 but on or before December 3, 2004) or December
31, 2004, (if the Closing Date is on or after January 1, 2005 but on or before
January 3, 2005).
"Mutual Release" shall mean the Mutual Release in the form of Exhibit
B attached hereto executed concurrently with the execution and delivery of this
Agreement, but to be effective and reaffirmed as of the Closing, by Parent, each
of the Parent Members, each of the Managers, each of the Partners, each Officer,
each Director and each other officer and director (if any) of Parent or the
Regency Companies, on one hand, and the Buyer and the Regency Companies, on the
other hand.
"Net Working Capital" shall mean the amount by which Current Assets
exceed Current Liabilities as of 11:59 p.m. Dallas, Texas time, on the
Measurement Date.
"NGA" shall have the mean the Natural Gas Act of 1938, as amended.
"NGL GP" shall mean Regency NGL GP, LLC, a Delaware limited liability
company and wholly-owned subsidiary of Regency.
"NGPA" shall mean the Natural Gas Policy Act of 1978.
"Noncompetition Agreements" shall mean the Non-Competition Agreements
executed concurrently with or prior to the execution and delivery of this
Agreement, but effective as of the Closing, by each of Xxxxx Xxxxxxx, Xxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, Xx. and R. Xxxx Xxxxxxxx, on the one hand, and Buyer
and the Regency Companies, on the other hand.
"Non-Escrow Indemnity Claim" means any and all claims for
indemnification brought by a Buyer Indemnitee pursuant to Section 10.3(a),
Section 10.3(b)(v), Section 10.3(b)(vi), or, to the extent relating to a claim
for indemnification under Section 10.3(a), Section 10.3(b)(v) or Section
10.3(b)(vi), pursuant to Section 10.3(c).
"Notice Period" shall have the meaning given such term in Section
10.5(c).
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"Notification" shall mean any notice to or filing with any Person or
Governmental Authority required under the terms of any Contract to which any
Regency Company is a party, by the terms of any Authorization held by or
applicable to any Regency Company or by Law that is necessary for Regency to
execute, deliver and perform its obligations under this Agreement and the
Transaction Documents to which it is or shall be party or is otherwise required
as a result of the consummation by any Regency Company of the transactions
contemplated hereby or thereby.
"Officer" shall mean each of Xxxxx Xxxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxxx, Xx. and X. Xxxx Lawrence, in his capacity as an officer of Regency
and any of the Regency Subsidiaries, and any successor to any of them serving in
such capacity prior to the Closing Date.
"Order" shall mean all applicable writs, judgments, injunctions,
decrees and other official acts of or by any Governmental Authority.
"Organizational Documents" shall mean with respect to any particular
entity: (a) if a corporation, its articles or certificate of incorporation and
its bylaws; (b) if a limited partnership, its limited partnership agreement and
its articles or certificate of limited partnership; (c) if a limited liability
company, its articles of organization or certificate of formation and its
limited liability company agreement or operating agreement; (d) all related
equityholders' agreements, voting agreements, voting trust agreements, joint
venture agreements or registration rights agreements; and (e) any amendment or
supplement to any of the foregoing.
"Oxy Advance" shall mean the amount of cash received by any Regency
Company pursuant to Article 7.4(b) (or any similar provision) of the Oxy
Contract received from September 1, 2004 to 11:59 p.m. on the Measurement Date.
"Oxy Contract" shall mean the Gathering and Processing Agreement
proposed to be entered into between Regency Midcon and Oxy USA Inc., in the form
attached to the letter agreement dated as of the date of this Agreement between
Parent and Buyer pursuant to which Buyer agrees that such form as attached to
such letter agreement is satisfactory to Buyer.
"Parent" shall have the meaning given such term in the opening
paragraph of this Agreement.
"Parent Affiliate" shall have the meaning given such term in Section
12.16(b).
"Parent Member" or "Parent Members" shall have the meaning given such
term in the opening paragraph of this Agreement.
"Parent Title Representations" shall mean the representations and
warranties in Section 3.2(a).
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"Partner" or "Partners" shall have the meaning given such term in the
opening paragraph of this Agreement.
"Partnership" shall have the meaning given such term in the opening
paragraph of this Agreement.
"Partnership Interests" shall have the meaning given such term in the
second recital to this Agreement.
"Parties" or "Party" shall have the meaning given such term in the
opening paragraph of this Agreement.
"Payoff Amount" shall mean the amount of all unpaid Third Party Debt
of the Regency Companies as of the Closing Date (including principal, accrued
and unpaid interest, breakage costs and prepayment fees or penalties or change
in control payments that will be incurred in connection with the payment and
discharge of such Third Party Debt on the Closing Date).
"Permitted Encumbrances" shall mean the following:
(a) terms, conditions, restrictions, exceptions, reservations,
limitations, and other matters contained in any document creating or
transferring any Real Property Interests, or in any Authorizations or Contract
(including those arising under the Credit Agreement) that, singularly or in the
aggregate, do not materially adversely affect the value of the Real Property
Interest to which such matters relate or materially interfere with the
ownership, use or operation of such Real Property Interests and which are of a
nature that would be reasonably acceptable to a prudent pipeline or plant
operation and, in any event, do not prevent or prohibit the use of such Real
Property Interests by the Regency Companies as currently used or as otherwise
necessary for the conduct of their respective businesses as presently conducted
and as presently proposed to be conducted by any Regency Company;
(b) Liens for Taxes and assessments that are not yet due and payable
(or that are being contested in good faith by appropriate Proceedings and for
which adequate reserves have been made in the Financial Statements);
(c) mechanic's, materialmen's, repairmen's and other statutory Liens
arising in the ordinary course of business and securing obligations incurred
prior to the Closing Date that are not delinquent, that will be paid and
discharged in the ordinary course of business and for which adequate reserves
have been made in the Financial Statements;
(d) utility easements, restrictive covenants, defects and other
irregularities in title, that, singularly or in the aggregate, do not materially
adversely affect the value of the assets to which such matters relate or
materially interfere with the ownership, use or operation of such assets and
which are of a nature that would be reasonably acceptable to a prudent pipeline
or plant operator and, in any event, do not prevent or prohibit the use of such
assets by the Regency Companies as currently used or
16
as otherwise necessary for the conduct of their respective business as presently
conducted and as presently proposed to be conducted by any Regency Company;
(e) required Third Person consents to assignment, preferential
purchase rights and other similar agreements with respect to which consents or
waivers are obtained from the appropriate Person prior to Closing for the sale
contemplated hereby, or as to which the appropriate time for asserting such
rights has expired as of the Closing without an exercise of such right, or the
effects of which, singularly or in the aggregate, could not reasonably be
expected to interfere materially with the ownership, use or operation of the
assets to which such matters relate and which are of a nature that would be
reasonably acceptable to a prudent pipeline or plant operator and, in any event,
do not prevent or prohibit the use of such assets by the Regency Companies as
currently used or as otherwise necessary for the conduct of their respective
business as presently conducted and as presently proposed to be conducted by any
Regency Company;
(f) any Post-Closing Notification;
(g) Liens created by Buyer or its successors or assigns; and
(h) the Liens listed in Section 1.1 (a) of the Regency Disclosure
Schedule.
"Person" shall mean any natural person, corporation, company,
partnership (general or limited), limited liability company, trust, joint
venture, joint stock company, unincorporated organization, Governmental
Authority or other entity or association.
"Permitted Indemnification/Contribution" shall have the meaning given
such term in Section 12.18.
"Phantom Stock Plan" shall mean the Regency Gas Services LLC
Performance Share Plan.
"Pipeline Assets" shall mean shall mean the pipelines, equipment,
other tangible personal property, Easements and other similar assets and rights
used by any Regency Company in connection with its natural gas pipeline,
gathering, compression, treating and processing operations as presently
conducted.
"Post-Closing Notification" shall mean any Notification to or with any
Person or Governmental Authority that is customarily effected following the
closing of a transaction similar to the transaction contemplated hereby,
including those listed in Section 1.1(b) of the Regency Disclosure Schedule, but
shall not include any Notification that constitutes a Required Consent.
"Pre-Existing Environmental Matters" shall have the meaning given such
term in Section 10.3(b)(vii).
17
"Proceeding" shall mean any action, suit, claim, investigation, review
or other judicial or administrative proceeding, at Law or in equity, before or
by any Governmental Authority or arbitration proceeding.
"Proposed Closing Statement" shall have the meaning given such term in
Section 2.3(b).
"Purchase Price" shall have the meaning given such term in Section
2.2(a).
"Purchase Price Deficit" shall have the meaning given such term in
Section 2.3(d)(i).
"Purchase Price Surplus" shall have the meaning given such term in
Section 2.3(d)(i).
"Purchased Assets" shall have the meaning given such term in Section
6.12.
"Real Property Interests" shall mean all interests in real property
used or held for use by any Regency Company, including fee properties,
rights-of-way, Easements, surface use agreements, licenses and leases that are
used or held for use in connection with the ownership, operation or maintenance
of the assets owned by or leased by any Regency Company, and all fixtures,
pipelines, gathering facilities, buildings and improvements located thereon or
appertaining thereto that are owned or held by leasehold interest by any Regency
Company.
"Records" shall mean all Contract, land, title, engineering,
environmental, operating, accounting, business, marketing, and other data,
files, documents, instruments, notes, papers, ledgers, journals, reports,
abstracts, surveys, maps, books, records and studies that relate to the
ownership, operation or maintenance of the assets owned by any Regency Company.
"Regency" shall have the meaning given such term in the opening
paragraph of this Agreement.
"Regency Benefit Program or Agreement" shall have the meaning given
such term in Section 4.14(a).
"Regency Company" shall mean any of Regency or any Regency Subsidiary
and "Regency Companies" shall mean Regency and the Regency Subsidiaries,
collectively.
"Regency Disclosure Schedule" shall mean the disclosure schedules
delivered by Regency to Buyer concurrently with the execution and delivery of
this Agreement.
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"Regency Employee Benefit Plans" shall have the meaning given such
term in Section 4.14(a).
"Regency Gathering" shall mean Regency Gas Gathering and Processing
LLC, a Delaware limited liability company and wholly-owned subsidiary of
Regency.
"Regency Indemnitees" shall have the meaning given such term in
Section 10.2.
"Regency Intrastate" shall mean Regency Intrastate Gas LLC, a Delaware
limited liability company and wholly-owned subsidiary of Regency.
"Regency Liquids" shall mean Regency Liquids Pipeline LLC, a Delaware
limited liability company and wholly-owned subsidiary of Regency.
"Regency Marketing" shall mean Regency NGL Marketing LP, a Delaware
limited partnership and indirect wholly-owned subsidiary of Regency.
"Regency Midcon" shall mean Regency Midcon Gas LLC, a Delaware limited
liability company and wholly-owned subsidiary of Regency.
"Regency Plan" shall have the meaning given such term in Section
4.14(a).
"Regency Subsidiaries" shall mean Gulf States, NGL GP, Regency
Gathering, Regency Intrastate, Regency Liquids, Regency Marketing, Regency
Midcon, Regency Treating, Regency Waha, Treating GP, Waha LP and Waha GP.
"Regency Title Representations" shall mean the representations and
warranties in Section 4.1(b), Section 4.l(d) and Section 4.1(f).
"Regency Treating" shall mean Regency Gas Treating LP, a Delaware
limited partnership and indirect wholly-owned subsidiary of Regency.
"Regency Waha" shall mean Regency Gas Services Waha, LP, a Delaware
limited partnership and indirect wholly-owned subsidiary of Regency.
"Regency's Knowledge" or any similar term, shall mean the actual
knowledge, after due inquiry, of each Officer and any other officer of Parent or
any Regency Company having a title of vice president or higher.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any
self-regulatory organization.
"Reimbursable Acquisition Expenditures" shall mean the amount of funds
spent by any Regency Company, after the date of this Agreement and before the
Closing
19
Date, on any Approved Acquisitions (including any funds spent on legal,
accounting, and consulting fees and expenses in connection with any such
Approved Acquisition).
"Required Consents" shall have the meaning given such term in Section
4.5(a).
"Restricted Cash" shall mean, as of 11:59 p.m. on the Measurement
Date, the amount of cash of the Regency Companies that would be deemed to be
"restricted" in accordance with GAAP as consistently applied by Regency in the
preparation of the Audited Financial Statements: provided, however, that the
amount so determined shall (whether or not in compliance with GAAP) include the
following: (i) amounts held in escrow, (ii) restricted balances, (iii) the
proceeds of any casualty loss with respect to any asset (to the extent any such
asset has not been repaired or replaced or the liability for the repair or
replacement of such asset has not been paid or accrued as a current liability)
and (iv) proceeds of indemnification settlements to the extent that the
indemnified losses have not been paid or accrued as current liabilities.
"Retained Escrow Amount" shall have the meaning given such term in
Section 11.3.
"Review Period" shall have the meaning given such term in Section
2.3(c).
"Sample Balance Sheet" shall mean the sample calculation of Current
Assets and Current Liabilities and sample calculation of Net Working Capital as
of 11:59 p.m. on the Sample Balance Sheet Date as set forth on Schedule B
attached hereto.
"Sample Balance Sheet Date" shall mean July 31, 2004.
"Schedule" shall mean the schedules referenced in this Agreement and
attached hereto.
"Severance Obligations" shall mean any payment or other obligation of
any Regency Company or Parent to any officer, employee, manager, director,
independent contractor or agent of any Regency Company, pursuant to any Contract
with such officer, employee, manager, director, independent contractor or agent
existing as of or prior to the Closing that would arise from the termination
(including termination with or without cause and voluntary termination) of the
position, office, employment or engagement of such Person upon or at any time
after Closing, or that exists as of the Closing as a result of any such
termination prior to Closing, including any severance, bonus, accrued vacation
or tax indemnification obligations or other similar payments and the Regency
Companies' portion of any Medicaid, Social Security or unemployment Taxes in
respect of such payments, but excluding salary through the date of any such
termination.
"Severance Obligations Adjustment Amount" shall mean amounts payable
with respect to Severance Obligations that exist as a result of a termination
prior to or at Closing, and shall include all amounts payable under the Existing
Employment and the
20
Existing Consulting Agreements as a result of their termination as contemplated
by Section 6.5(c), to the extent not paid prior to 11:59 p.m. on the Measurement
Date.
"Straddle Period" shall mean any Taxable period beginning on or before
and ending after the Closing Date.
"Tax" or "Taxes" shall mean any tax, assessment, duty, fee, levy or
similar charge assessed by any Governmental Authority, including any income tax,
ad valorem tax, excise tax, sales tax, use tax, franchise tax, real or personal
property tax, transfer tax, gross receipts tax or employment tax, together with
and including, any and all interest, fines, penalties, assessments, and
additions to Tax resulting from, relating to, or incurred in connection with any
of those and any amount asserted as such by any Governmental Authority in or any
contest or dispute thereof and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any Person.
"Tax Return" shall mean any declaration, report, statement, form,
return or other document or information required to be supplied to a taxing
authority in connection with Taxes including any schedule or attachment thereto,
and including any amendment thereof.
"Third Party Debt" shall mean all outstanding Indebtedness for
borrowed money of any Regency Company from any Person other than another Regency
Company.
"Third Person" shall mean (i) any Person other than a Party or its
Affiliates and (ii) any Governmental Authority.
"Third Person Claim" shall have the meaning given such term in Section
10.5(c)
"Third Person Protection Contracts" shall have the meaning given such
term in Section 10.4(g).
"Title Defect" shall mean any Lien, encroachment or defect associated
with a Regency Company's title to the Assets, other than a Permitted
Encumbrance, that causes any Regency Company's title thereto not to constitute
good and marketable title to 100% of the right, title and interest in any Asset
(or a valid leasehold interest in any Asset leased or represented as leased by
any Regency Company from a Third Person).
"Transaction Documents" shall mean this Agreement, the Escrow
Agreement, the Noncompetition Agreements, the Mutual Releases, and any other
Contract among the Parties that is expressly agreed by the Parties to constitute
a Transaction Document for purposes of this Agreement.
"Treating GP" shall mean Regency Treating GP, LLC, a Delaware limited
liability company and wholly-owned subsidiary of Regency.
21
"Waha Acquisition Agreement" shall mean that certain Purchase and Sale
Agreement dated January 29, 2004, by and between Duke Energy Field Services, LP,
as seller, and Regency Waha, as buyer, including all exhibits and schedules
thereto, as amended by that certain Amendment to Purchase and Sale Agreement
dated March 1, 2004.
"Waha GP" shall mean Regency Waha GP, LLC, a Delaware limited
liability company and wholly-owned subsidiary of Regency.
"Waha LP" shall mean Regency Waha LP, LLC, a Delaware limited
liability company and wholly-owned subsidiary of Regency.
"Xxxxx Fargo" shall mean Xxxxx Fargo Bank, N.A., a national banking
association.
"Working Capital Deficit" shall mean the amount, if any, by which the
Net Working Capital as reflected on the Final Closing Statement is less than the
applicable Base Working Capital.
"Working Capital Surplus" shall mean the amount, if any, by which Net
Working Capital as reflected on the Final Closing Statement exceeds the Base
Working Capital.
"Worksite Employees" shall have the meaning given such term in Section
4.14(a).
1.2 Other Definitional Provisions. As used in this Agreement, unless
expressly stated otherwise or the context requires otherwise, (a) all references
to an "Article," "Section," or "subsection" shall be to an Article, Section, or
subsection of this Agreement, (b) the words "this Agreement," "hereof,"
"hereunder," "herein," "hereby," or words of similar import shall refer to this
Agreement as a whole and not to a particular Article, Section, subsection,
clause or other subdivision hereof, (c) the words used herein shall include the
masculine, feminine and neuter gender, and the singular and the plural, (d) the
word "including" shall mean "including, without limitation" and (e) the word
"day" or "days" shall mean a calendar day or days, unless denoted as a Business
Day.
1.3 Headings. The headings of the Articles and Sections of this Agreement
and of the Schedules and Exhibits are included for convenience only and shall
not be deemed to constitute part of this Agreement or to affect the construction
or interpretation hereof or thereof.
1.4 Other Terms. Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this Agreement.
ARTICLE II
THE TRANSACTION
22
2.1 The Transaction. Subject to and upon the terms and conditions of this
Agreement, at the Closing, Parent shall sell, transfer, convey, assign and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Parent, all
the Interests. At the Closing Parent shall deliver to Buyer the certificates
evidencing the Interests duly endorsed, or with accompanying assignments duly
executed by Parent.
2.2 Purchase Price.
(a) The aggregate purchase price to be paid by Buyer for the Interests
shall be (i) $405,000,000 plus (ii) the sum of (A) Reimbursable Acquisition
Expenditures, if any, (B) the Capital Expenditure Surplus, if any, and (C) the
Working Capital Surplus, if any, minus (iii) the sum of (A) the Payoff Amount,
(B) the Capital Expenditure Deficit, if any, (C) the Working Capital Deficit, if
any, and (D) to the extent unpaid prior to 11:59 p.m. on the Measurement Date,
the Expenses, the Severance Obligations Adjustment Amount and the Change of
Control Amounts (the "Purchase Price"). The Purchase Price shall be payable in
the manner described in Section 2.2(b) and Section 2.3.
(b) At the Closing, Buyer shall:
(i) pay to Parent, by wire transfer of immediately available
funds to the account designated in writing by Parent to Buyer at least two
Business Days prior to Closing, an amount equal to the Estimated Purchase Price
(the "Closing Parent Amount");
(ii) deliver to the Escrow Agent, by wire transfer of immediately
available funds, the Escrow Amount (the Closing Parent Amount and the Escrow
Amount are collectively, the "Closing Amount");
(iii) pay to each holder of any Third Party Debt, by wire
transfer of immediately available funds to the account(s) designated by such
Persons in the applicable Debt Payoff Letters, the amounts specified in the Debt
Payoff Letters; and
(iv) to the extent unpaid, pay to the payees of any Expenses,
Change of Control Amounts and/or Severance Obligations Adjustment Amounts, by
wire transfer of immediately available funds to the account(s) designated by
such Persons in the applicable Expenses Payoff Letters, the amounts specified in
the Expense Payoff Letters less, to the extent applicable, any Medicaid, Social
Security, unemployment tax and other amounts required to be withheld; provided
that any payment of Severance Obligations Adjustment Amounts and Change of
Control Amounts shall be subject to receipt by Regency of the releases, if any,
required, and the expiration, without revocation of such releases, of all time
periods during which such release could be revoked, under the Existing
Employment Agreements, the Phantom Stock Plan, the Bonus Plan or other Contract,
Regency Employee Benefit Plan or other instrument pursuant to which such
Severance Obligations Adjustment Amounts or Change of Control Amounts are
payable.
2.3 Adjustments.
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(a) Preparation of Estimated Closing Statement.
(i) At least four Business Days prior to the Closing Date,
Regency shall prepare in good faith and deliver to Buyer, at the sole expense of
Regency, an estimated closing statement of Regency and the Regency Subsidiaries
as of Closing Date (the "Estimated Closing Statement"), setting forth a detailed
determination of the Estimated Purchase Price. The "Estimated Purchase Price"
shall be $405,000,000 plus (A) the sum of (1) estimated amount of Reimbursable
Acquisition Expenditures, if any, (2) the estimated amount of Capital
Expenditure Surplus, if any, and (3) the estimated amount of Working Capital
Surplus, if any, minus (B) the sum of (1) the Payoff Amount, (2) the estimated
amount of Capital Expenditure Deficit, if any, (3) the estimated amount of
Working Capital Deficit, if any, (4) the Escrow Amount, (5) to the extent unpaid
prior to 11:59 p.m. on the Measurement Date, the Expenses, the Severance
Obligations Adjustment Amount and Change of Control Amounts (based on amounts
set forth in the Debt Payoff Letters and the Expense Payoff Letters, or, to the
extent a Debt Payoff Letter or an Expense Payoff Letter has not been provided
for a Third Party Debt, Change of Control Amount, Severance Obligations
Adjustment Amount or Expense, an estimate of such amounts, and in each case
subject to final determination in the preparation of the Final Closing
Statement). The Estimated Closing Statement shall also set forth the resulting
estimated Closing Parent Amount. Each estimation shall be made as of 11:59 p.m.
on the Measurement Date.
(ii) If Buyer has any questions or disagreements regarding the
Estimated Closing Statement, Buyer shall contact Regency at least two Business
Days prior to the Closing Date, and in such case Regency and Buyer shall in good
faith attempt to resolve any disagreements. If Buyer and Regency agree on
changes to the estimated Closing Parent Amount based on such discussions, then
the Closing Parent Amount shall be paid at Closing based on such changes. If
Buyer and Regency do not agree on changes to the estimated Closing Parent
Amount, then the Closing Parent Amount shall be paid at the Closing based on the
amounts set forth in the Estimated Closing Statement. In either such case,
appropriate adjustments to the Purchase Price shall be made after the Closing
pursuant to Sections 2.3(b), (c), and (d).
(b) Preparation of Closing Statement. As soon as reasonably
practicable after the Closing Date (and, in any event, within 90 days after the
Closing Date), Buyer shall prepare and deliver to Parent, at the sole expense of
Buyer, a closing statement of the Regency Companies as of 11:59 p.m. on the
Measurement Date (the "Proposed Closing Statement"), setting forth the proposed
final calculation of (i) Capital Expenditures, (ii) Net Working Capital, (iii)
Reimbursable Acquisition Expenditures, if any, (iv) the Payoff Amount, (v)
Expenses, the Severance Obligations Adjustment Amount and Change of Control
Amounts, in each case, if any, (vi) the Purchase Price and (vii) the final
Closing Parent Amount. If Buyer does not deliver the Proposed Closing Statement
when required, Parent may prepare and deliver it to Buyer, and in such case,
Buyer shall have Parent's objection rights under Section 2.3(c). Buyer shall
provide Parent access to the Records in accordance with Section 6.4 in order to
confirm Buyer's calculations or to prepare the Proposed Closing Statement, as
the case may be.
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(c) Examination of Proposed Closing Statement. Parent shall review the
Proposed Closing Statement to confirm the accuracy of the Proposed Closing
Statement and Buyer's calculations. If Parent fails to give Buyer written notice
of any disputed amounts within 30 days after Parent receives the Proposed
Closing Statement (the "Review Period"), then the Proposed Closing Statement
shall become the Final Closing Statement for purposes hereof. If Parent gives
Buyer written notice of any disputed items within the Review Period, Buyer and
Parent shall attempt in good faith to agree on any adjustments that should be
made to the Proposed Closing Statement. If Buyer and Parent fail to resolve any
disputed amounts within 60 days after Parent receives the Proposed Closing
Statement, Buyer and Parent will engage the Audit Firm to resolve any such
disputed matters in accordance with the terms of this Agreement, and in
connection with such engagement Buyer, Regency and Parent shall execute any
engagement, indemnity and other agreements as the Audit Firm may require as a
condition to such engagement. The Parties shall cooperate diligently with any
reasonable request of the Audit Firm in an effort to resolve any disputed matter
as soon as reasonably possible after the Audit Firm is engaged. If possible, the
decision of the Audit Firm shall be made within 30 days after being engaged and
shall be final and binding on the Parties. The Proposed Closing Statement shall
be revised, if necessary, to reflect the final determination of (i) Capital
Expenditures, (ii) Net Working Capital, (iii) Reimbursable Acquisition
Expenditures, if any, (iv) the Payoff Amount, (v) Expenses, the Severance
Obligations Adjustment Amount and Change of Control Amounts, if any, (vi) the
Purchase Price, and (vii) the final Closing Parent Amount (the final form of the
Proposed Closing Statement, including any revisions which are made thereto
pursuant to this Section 2.3(c), is referred to herein as the "Final Closing
Statement").
(d) Adjustments.
(i) If the Purchase Price as reflected on the Final Closing
Statement is less than the Closing Amount (the amount of such shortfall, if any,
is hereinafter referred to as the "Purchase Price Deficit"). Parent shall,
within five Business Days after the final determination of the Final Closing
Statement, pay Buyer an amount equal to the Purchase Price Deficit. If Parent
shall not pay Buyer an amount equal to the Purchase Price Deficit within five
Business Days after the final determination of the Final Closing Statement, each
Parent Member (based on its respective ownership of Parent as set forth on
Schedule A), shall pay Buyer (within ten Business Days after final determination
of the Final Closing Statement) its respective proportionate share of the
Purchase Price Deficit (and each Partner, based on its respective ownership of
the Partnership as set forth on Schedule A, shall pay to Buyer its respective
proportionate share of the Partnership's proportionate share of any Purchase
Price Deficit payable by the Partnership pursuant hereto in the event the
Partnership fails to timely pay such amount). If any Parent Member or any
Partner shall not timely deliver to Buyer its respective proportionate share of
the amount of the Purchase Price Deficit, Buyer shall be entitled to recover
such amounts not timely paid from the Escrow Fund and enforce its rights under
this Section 2.3(d)(i) to require each such Parent Member and Partner who shall
have failed to deliver its respective proportionate share of the amount of the
Purchase Price Deficit to contribute to the Escrow Fund an amount such Parent
Member or such Partner was required to pay as provided herein.
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(ii) If the Purchase Price as reflected on the Final Closing
Statement is greater than the Closing Amount (the amount of such excess is
hereinafter referred to as the "Purchase Price Surplus"), Buyer shall pay Parent
an amount equal to the Purchase Price Surplus. The Purchase Price Surplus, if
any, shall be paid by Buyer to Parent within five Business Days after of the
final determination of the Final Closing Statement.
(iii) The determination of the Purchase Price Deficit or the
Purchase Price Surplus, as the case may be, shall be made by Buyer and Parent as
promptly as practicable following the final determination of the Final Closing
Statement.
(e) No Duplicative Effect. The provisions of this Section 2.3 and of
any other Transaction Document shall apply in such a manner so as not to give
the components and calculations duplicative effect to any item of adjustment
and, except as otherwise expressly provided in this Agreement or as described in
the Sample Balance Sheet, the Parties covenant and agree that no amount shall be
(or is intended to be) included, in whole or in part (either as an increase or
reduction) more than once in the calculation of (including any component of)
Capital Expenditures, Net Working Capital, Reimbursable Acquisition
Expenditures, if any, Expenses, the Severance Obligations Adjustment Amount or
Change of Control Amounts, in each case, if any, or the Purchase Price, or any
other calculated amount pursuant to this Agreement if the effect of such
additional inclusion (either as an increase or reduction) would be to cause such
amount to be overstated or understated for purposes of such calculation. The
Parties acknowledge and agree that if there is a conflict between a
determination, calculation or methodology set forth in the Sample Balance Sheet,
on the one hand, and those provided by GAAP, on the other hand, the
determination, calculation or methodology set forth in the Sample Balance Sheet,
shall control to the extent that the matter is included in the Sample Balance
Sheet as a line item or specific adjustment and (ii) the determination,
calculation or methodology prescribed by GAAP shall control to the extent the
matter is not so addressed in the Sample Balance Sheet or requires
reclassification as an asset or liability to be included in a line item or
specific adjustment.
(f) Fees and Expenses of the Audit Firm. If the Parties submit any
disputed amounts to the Audit Firm for resolution as provided in Section 2.3(c)
above, the fees and expenses of the Audit Firm (the "Audit Fees") will be paid
by and apportioned between Buyer and the Parent based on the aggregate dollar
amount of the amount in dispute and the relative recovery as determined by the
Audit Firm of Parent and Buyer, respectively. The Parent and Buyer shall
promptly, and in any event within five Business Days after the final
determination of the Final Closing Statement, pay to the Audit Firm the amount
of Audit Fees payable by Parent and Buyer pursuant to the preceding sentence. If
Parent shall not pay the Audit Firm its portion of the Audit Fees within five
Business Days after the final determination of the Final Closing Statement, each
Parent Member (based on its respective ownership of Parent as set forth on
Schedule A) shall pay Buyer (within ten Business Days after final determination
of the Final Closing Statement) its respective proportionate share of Parent's
proportionate share of the Audit Fees (and each Partner, based on its respective
ownership of the Partnership as set forth on Schedule A, shall be obligated to
pay to Buyer its respective
26
proportionate share of the Partnership's proportionate share of the Audit Fees
payable by the Partnership pursuant hereto in the event the Partnership fails to
timely pay such amount). If any Parent Member or any Partner shall not timely
deliver to the Audit Firm its respective proportionate share of the amount of
the Audit Fees owed by the Parent, Buyer shall be entitled to recover such
amounts not timely paid from the Escrow Fund, and enforce its rights under this
Section 2.3(f) to require each such Parent Member and Partner who shall have
failed to deliver its respective proportionate share of the amount of the Audit
Fees to contribute to the Escrow Fund an amount (without duplication) such
Parent Member or such Partner was required to pay as provided herein.
(g) Parent Holdback. As security to Buyer for the performance of its
obligations under Sections 2.3(d) and under Section 2.3(f). Parent shall, until
the amount of any Purchase Price Deficit and Audit Fees for which Parent is
responsible under Sections 2.3(d) and Section 2.3(f) has been paid or, if none,
then the date of delivery of the Final Closing Statement, maintain (A) Parent's
limited liability company existence and (B) liquid assets of not less than
$2,000,000 to satisfy its potential obligation to pay Buyer any Purchase Price
Deficit and to pay any Audit Fees under Section 2.3(f).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT,
PARENT MEMBERS AND PARTNERS
3.1 Partnership and Partner Representations. The Partnership and each
Partner severally, and not jointly, represents and warrants to Buyer that,
except as set forth in Section 3.1 to the Regency Disclosure Schedule:
(a) The Partnership is a limited partnership duly organized, validly
existing and in good standing (to the extent such concepts exist under the Laws
of the Cayman Islands) under the Laws of the Cayman Islands, with all requisite
partnership power and authority to own, lease and operate its properties and to
carry on its business as it is now conducted.
(b) Schedule A attached hereto sets forth a true and correct
description of all Partnership Interests owned by each Partner, and such Partner
owns such Partnership Interest of record and beneficially.
(c) The Partnership and such Partner has the full right, power and
authority to enter into this Agreement and the Transaction Documents to which it
is or shall be a party. This Agreement and the other Transaction Documents to
which the Partnership and/or such Partner is a party to be executed concurrently
herewith have been duly executed and delivered by the Partnership and/or such
Partner, as applicable, and each other Transaction Document to which the
Partnership and/or such Partner will be a party at Closing will have been duly
executed and delivered by the Partnership and/or such Partner, as applicable,
and (assuming due authorization, execution and delivery hereof by the other
Parties hereto) such Transaction Documents constitute, or, if not yet executed,
at Closing will constitute, legal, valid and binding obligations of the
Partnership and such Partner, enforceable against the Partnership and such
Partner in
27
accordance with their terms, except as the same may be limited by legal
principles of general applicability governing the application and availability
of equitable remedies.
(d) The Partnership and such Partner is not a party to, subject to or
bound by any Contract, any Law or Regulation or any Order which would prevent
the execution or delivery by the Partnership or such Partner of this Agreement
or any other Transaction Document to which it is or as of the Closing will be a
party or the performance by such Party of its obligations under each Transaction
Document to which it is, or at Closing will be, a party in accordance with its
terms.
(e) Except as set forth in Section 4.12 of the Regency Disclosure
Schedule, no investment banker, broker, finder or other Person is entitled to
any brokerage or finder's fees or similar commission in respect thereof based in
any way on Contracts made by or on behalf of the Partnership or such Partner.
(f) All of the Partnership's outstanding Equity Interests are owned of
record by the Partners in the percentages set forth on Schedule A. Except for
the Partnership Interests set forth on Schedule A, there are not, and on the
Closing Date there will not be, outstanding any other Equity Interests of the
Partnership.
The Representations and Warranties made by the Partnership and the Partners
in this Section 3.1 are made in recognition of Buyer's reliance on the
undertakings made by the Partnership and each Partner in this Agreement and in
any Transaction Document to which it is or at Closing will be a party.
3.2 Parent Representations. Parent represents and warrants to Buyer that,
except as set forth in Section 3.2 to the Regency Disclosure Schedule:
(a) Parent has good and valid record and beneficial title to the
Interests, free and clear of any and all Liens. Schedule A attached hereto sets
forth a true and correct description of all Interests owned by Parent, which
Interests constitute all of the outstanding Equity Interests in Regency. Upon
the Closing, Buyer will acquire good title to all of the issued and outstanding
Interests, free and clear of any Liens, other than any Liens created by Buyer.
(b) Parent has the full right, power and authority to enter into this
Agreement and the Transaction Documents to which it shall be a party and to
transfer, convey and sell to Buyer at the Closing the Interests. This Agreement
and the other Transaction Documents to which it is a Party to be executed
concurrently herewith by Parent have been duly executed and delivered by Parent,
and each other Transaction Document to which it will be a party at Closing will
have been duly executed and delivered by it, and (assuming due authorization,
execution and delivery hereof by the other party hereto) such Transaction
Documents constitute, or, if not yet executed, at Closing will constitute,
legal, valid and binding obligations of Parent, enforceable against Parent in
accordance with their terms, except as the same may be limited by legal
principles of general applicability governing the application and availability
of equitable remedies.
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(c) Parent is not a party to, subject to or bound by any Contract, any
Law or Regulation or any Order which would prevent the execution or delivery of
this Agreement by Parent, the transfer, conveyance and sale of the Interests to
Buyer pursuant to the terms hereof or the performance by Parent of its
obligations under this Agreement each other Transaction Document to which it is,
or at Closing will be, a Party in accordance with its terms.
(d) Except for the requirements of the HSR Act, no filing or
registration with, no waiting period imposed by and no Authorization of any
Governmental Authority is required under any Law applicable to Parent to permit
Parent to execute, deliver or perform this Agreement and the other Transaction
Documents to which Parent is or shall be a party or any instrument required
hereby or thereby to be executed and delivered by it at Closing.
(e) Except as set forth in Section 4.12 of the Regency Disclosure
Schedule, no investment banker, broker, finder or other Person is entitled to
any brokerage or finder's fee or similar commission in respect thereof based in
any way on agreements, arrangements or understandings made by or on behalf of
Parent.
(f) All of Parent's outstanding Equity Interests are owned of record
by the Parent Members. At least two Business Days prior to the Closing Date, the
Parent Members will deliver to Buyer a supplement to Schedule A setting forth,
as of the Closing Date, the ownership percentage of each Parent Member in
Parent. There are not, and on the Closing Date there will not be, outstanding
any Equity Interests of the Parent other than Equity Interests owned by the
Parent Members.
3.3 Parent Member Representations. Each Parent Member severally, and not
jointly, represents and warrants to Buyer that, except as set forth in Section
3.3 to the Regency Disclosure Schedule.
(a) All of Parent's outstanding Equity Interests are owned of record
by the Parent Members. At least two Business Days prior to the Closing Date, the
Parent Members will deliver to Buyer Schedule A setting forth, as of the Closing
Date, the ownership percentage of each Parent Member in Parent. There are not,
and on the Closing Date there will not be, outstanding any Equity Interests of
Parent other than Equity Interests owned by the Parent Members.
(b) Such Parent Member has the full right, power and authority to
enter into this Agreement and the Transaction Documents to which it is or shall
be a party. This Agreement and the other Transaction Documents to which the such
Parent Member is a party to be executed concurrently herewith have been duly
executed and delivered by such Parent Member, and each other Transaction
Document to which it will be a party at Closing will have been duly executed and
delivered by it, and (assuming due authorization, execution and delivery hereof
by the other Parties hereto) such Transaction Documents constitute, or, if not
yet executed, at Closing will constitute, legal, valid and binding obligations
of such Parent Member, enforceable against such Parent Member in
29
accordance with their terms, except as the same may be limited by legal
principles of general applicability governing the application and availability
of equitable remedies.
(c) Such Parent Member is not a party to, subject to or bound by any
Contract, any Law or Regulation or any Order which would prevent the execution
or delivery by such Parent Member of this Agreement or any other Transaction
Document to which it is or as of the Closing will be a party or the performance
by such Parent Member of its obligations under each Transaction Document to
which it is, or at Closing will be, a party in accordance with its terms.
(d) Except as set forth in Section 4.12 of the Regency Disclosure
Schedule, no investment banker, broker, finder or other Person is entitled to
any brokerage or finder's fees or similar commission in respect thereof based in
any way on Contracts made by or on behalf of the such Parent Member.
The Representations and Warranties made by the Parent Members in this
Section 3.3 are made in recognition of Buyers reliance on the undertakings made
by the each Parent Member in this Agreement and in any Transaction Document to
which it is or at Closing will be a party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REGENCY
Except as set forth in the Regency Disclosure Schedule, Regency represents
and warrants to Buyer as follows:
4.1 Organization, Good Standing, Authority, Capitalization.
(a) Regency is a limited liability company duly formed, validly
existing and in good standing under the Laws of the State of Delaware and has
all requisite limited liability company power and authority to carry on its
business as it is now being conducted and to own, operate and lease the assets
it now owns, operates or holds under lease. Regency is duly qualified to
transact business and is in good standing in Delaware. All the outstanding
membership interests of Regency have been duly authorized and validly issued and
were not issued in violation of any preemptive rights or other preferential
rights of subscription or purchase of any Person. Regency is duly qualified to
do business as a foreign limited liability company in good standing in each
jurisdiction set forth on Section 4.1 (a) of the Regency Disclosure Schedule,
which are all the jurisdictions in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, except jurisdictions in which the failure to be so qualified would
not have a Material Adverse Effect on Regency.
(b) Regency, directly or indirectly through another Regency
Subsidiary, owns, of record and beneficially, all of the outstanding Equity
Interest of each other Regency Subsidiary. The Regency Subsidiaries are the only
corporations, limited partnerships, limited liability companies and other
Persons in which Regency owns, directly or indirectly, an Equity Interest.
30
(c) Each Regency Subsidiary is duly organized or incorporated, validly
existing and in good standing under the Laws of its respective jurisdiction of
organization or incorporation, is duly qualified to do business as a foreign
limited liability company, limited partnership or corporation in good standing
to conduct business in each jurisdiction set forth opposite such Regency
Subsidiary's name on Section 4.1(c) of the Regency Disclosure Schedule, which
are all the jurisdictions in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, except jurisdictions in which the failure to be so qualified would
not have a Material Adverse Effect on Regency. Each Regency Subsidiary has the
requisite power and authority (as a corporation, limited partnership or limited
liability company) to carry on its respective business as it is now being
conducted and to own, operate and lease the assets it now owns, operates or
holds under lease.
(d) All the outstanding shares of capital stock, partnership
interests, membership interests and other Equity Interests of each Regency
Subsidiary (i) have been duly authorized and validly issued (and with respect to
Gulf States, are fully paid and non-assessable), (ii) were not issued in
violation of any preemptive rights or other preferential rights of subscription
or purchase of any Person and (iii) are owned of record and beneficially by
Regency or another Regency Subsidiary, free and clear of all Liens other than
those set forth in Section 4.1(d) of the Regency Disclosure Schedule.
(e) Regency has heretofore made available to Buyer true and complete
copies of the Organizational Documents of each of Regency and the Regency
Subsidiaries. Section 4.1(e) of the Regency Disclosure Schedule sets forth a
true and complete list of the Regency Subsidiaries together with (A) a
specification of the nature of the legal organization of each such entity, and
(B) the jurisdiction of organization of each such entity and (C) the authorized,
issued and outstanding Equity Interest and record and beneficial owner thereof
of each Regency Subsidiary.
(f) All of the outstanding membership interests and other Equity
Interests of Regency are owned of record by Parent and, except as set forth on
Schedule A, there are no outstanding Equity Interests in Regency. All of such
membership interests and other Equity Interests, if any, of Regency will be
transferred, directly or indirectly, to Buyer, free and clear of any and all
Liens other than those created by Buyer. No shares or other membership interests
or other Equity Interests of Regency are reserved for issuance. Except for the
Interests, there are not, and on the Closing Date there will not be, outstanding
or in existence (i) any other Equity Interests of Regency or (ii) any Equity
Interest Equivalents of Regency.
4.2 Enforceability. This Agreement constitutes and each of the other
Transaction Documents to which Regency is or shall be a party will constitute a
valid and binding obligation of Regency, enforceable against Regency in
accordance with its terms, except as the same may be limited by legal principles
of general applicability governing the application and availability of equitable
remedies.
4.3 No Conflicts.
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(a) The execution, delivery and performance by Regency of this
Agreement and the other Transaction Documents to which Regency is or shall be a
party and the consummation of the transactions contemplated hereby and thereby
by Regency, will not conflict with or violate the Organizational Documents of
Regency or any of the Regency Subsidiaries.
(b) Assuming the effectuation of all filings and registrations with,
the termination or expiration of any applicable waiting periods imposed by and
the receipt of all Authorizations and Orders of Governmental Authorities
indicated as required in Section 4.3(b) of the Regency Disclosure Schedule,
neither the execution and delivery by Regency of this Agreement, any other
Transaction Documents to which Regency is or shall be a party or any instrument
required hereby or thereby to be executed and delivered by it at Closing nor the
performance by Regency of its obligations hereunder or thereunder will conflict
with, violate or breach the terms of, cause a default (without or without notice
or lapse of time or both) or give rise to right of termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or result in
the creation of any Lien on any of the Assets of any Regency Company under (A)
any Law, Regulation or Order applicable to any Regency Company, (B) the
Organizational Documents of any Regency Company or (C) any Contract to which any
Regency Company is a party or by which it or any of its properties or assets is
bound, other than, in the case of clause (A) or (C), any such conflict,
violation, breach, default, right, loss of benefit, or creation of Lien that,
individually or in the aggregate, has not had and could not reasonably be
expected to result in a Material Adverse Effect on Regency.
4.4 Regulation and Authorizations. Except as set forth in Section 4.4 of
the Regency Disclosure Schedule, during Regency's period of ownership and to
Regency's Knowledge (i) no Regency Company has engaged in any activities that
would subject any Regency Company, its activities, or its facilities to the NGA
jurisdiction of the FERC, and (ii) all of the facilities of the Regency
Companies used to transport natural gas are intrastate pipelines or "gathering"
facilities within the meaning of the NGA and/or NGPA. Except as set forth in
Section 4.4 of the Regency Disclosure Schedule, the representations made by
Regency and the Regency Subsidiaries during the period of Regency's ownership
concerning the jurisdictional status of their facilities and operations to
natural gas purchasers and interstate or intrastate pipelines in order to effect
sales or to facilitate transportation transactions (whether for Regency, any
Regency Subsidiary or any Third Person) were when made and are true and correct
in all material respects, and Regency and the Regency Subsidiaries have complied
in all material respects with the terms and conditions of such sales,
transportation or interconnect or similar arrangements (including "on behalf of"
certificates).
4.5 Consents and Authorizations.
(a) Except for (i) Post-Closing Notifications, (ii) HSR Approval and
(iii) as set forth in Section 4.5(a) of the Regency Disclosure Schedule (the
"Required Consents"), no Authorization, Notification or any consent, waiver,
permission, authorization or approval of, or exemption by, or the giving of
notice to any Third Person, is necessary for Regency to execute, deliver and
perform this Agreement and the
32
other Transaction Documents to which it is or it shall be a party other than
such Authorizations, consents, waivers, permission, authorization or approvals
or exemptions or notices which if not obtained or given, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Regency.
(b) Each Regency Company possesses all material Authorizations,
including all certificates of public convenience and necessity and rate
authorizations required by the FERC and the Governmental Authority of each state
with jurisdiction over such matters, as are necessary to carry on its businesses
as currently conducted. Such Authorizations are in full force and effect and, to
Regency's Knowledge, have not been violated in any material respect and no
suspension, revocation or cancellation thereof has been threatened. To Regency's
Knowledge, no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) could reasonably be expected to
constitute or result in a material violation by Regency or any of the Regency
Subsidiaries of, or a material failure on the part of any member thereof to
comply with the terms of, any such Authorization. Except as set forth on Section
4.5(b) of the Regency Disclosure Schedule, neither Regency nor any of the
Regency Subsidiaries has received from any Governmental Authority written
notification that any such Authorizations (i) are not in full force and effect,
(ii) have been violated in any material respect or (iii) are subject to any
suspension, revocation, modification or cancellation. Except as set forth on
Section 4.5(b) of the Regency Disclosure Schedule, there is no Proceeding
pending or, to Regency's Knowledge, threatened regarding suspension, revocation,
modification or cancellation of any of such Authorizations.
4.6 Properties.
(a) Regency and the Regency Subsidiaries, individually or together,
have title to all of the properties reflected in the Consolidated Balance Sheet
(other than any properties reflected in the Consolidated Balance that have been
sold or otherwise disposed of since the date of the Consolidated Balance Sheet
without breaching any of Section 4.15(b), Section 4.15(c) or Section 6.1(b)) and
all other assets (including Real Property Interests) owned by them or held by
them under valid leaseholds (the "Assets") free and clear of all Title Defects,
other than the Pipeline Assets, as to which they have such title or interest as
is sufficient to enable them to conduct their business as currently conducted
without material interference. Neither Regency nor any of the Regency
Subsidiaries has received any written notice of any adverse claim to the title
to any material properties owned by it or with respect to any lease under which
any material properties are held by it. To Regency's Knowledge, there are no
assessments against the Assets for public improvements. As of the date of this
Agreement, there has been no actual or, to Regency's Knowledge, threatened
taking (whether permanent, temporary, whole or partial) of any part of the
Assets by reason of condemnation or, to Regency's Knowledge, the threat of
condemnation.
(b) The Assets constitute all of the assets, rights and properties,
tangible or intangible, real or personal, which are used or necessary for use in
connection with the operation of the business of the Regency Companies
consistent with past practice and as currently operated. The personal property
owned or leased by the
33
Regency Companies is sufficient to enable them to conduct their business as
currently conducted. There are no preferential or similar rights to purchase any
material Asset or material portion of the Assets.
(c) None of the matters set forth in Section 1 of Section 4.6 of the
Regency Disclosure Schedule has had or will have an adverse effect on the
ability of the Regency Companies to conduct their business as currently
conducted without material interference.
4.7 Taxes. Except as set forth in Section 4.7 of the Regency Disclosure
Schedule:
(a) All Taxes payable by or imposed against any Regency Company have
been timely and fully paid. Each Regency Company has duly complied with all
withholding Tax and Tax deposit requirements imposed on them and their
respective assets.
(b) All Tax Returns that are required to have been filed for, by, on
behalf of or with respect to each Regency Company have been duly and timely
filed with the appropriate Governmental Authority and all such Tax Returns are
correct and complete in all material respects.
(c) To Regency's Knowledge, (i) no Regency Company is under audit or
examination by any Governmental Authority with respect to Taxes, (ii) there are
no Claims or Proceedings now pending or threatened against any Regency Company
with respect to any Tax or any matters under discussion with any Governmental
Authority relating to any Tax, (iii) there are no Claims for any additional Tax
and no assessment, deficiency or adjustment has been asserted by any
Governmental Authority against any Regency Company, and (iv) no claim has ever
been made by a Governmental Authority in a jurisdiction where the Regency
Companies do not file Tax Returns that it is or may be subject to taxation in
that jurisdiction.
(d) There are no outstanding Contracts or waivers extending the
statutory period of limitation applicable to (a) the filing of any Tax Return by
or with respect to, or (b) any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to, any Regency Company for any
taxable period.
(e) No Regency Company has agreed to make any material adjustment
pursuant to Section 481 (a) of the Code (or any similar provision of foreign,
state or local law or any predecessor provision) by reason of any change in any
accounting method, and there is no application pending with any Governmental
Authority requesting permission for any changes in any accounting method of any
Regency Company.
(f) No Regency Company will be required to include in any period
ending after the Closing Date any income that accrued in a prior period but was
not recognized in any prior period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting or the cash method of accounting.
34
(g) None of the Regency Companies (a) has been a member of an
affiliated, consolidated, combined, unitary or similar group filing a
consolidated federal income Tax Return, or (b) has any liability for the Taxes
of any Person (other than another Regency Company).
(h) No Regency Company is a party to, is bound by, or has any
obligation under, any Tax sharing agreement, Tax allocation agreement or similar
Contract.
(i) No Regency Company has executed or entered into with the IRS, or
any other Governmental Authority, a closing agreement pursuant to Section 7121
of the Code or any similar provision of state, local, foreign or other income
tax law, which will require any increase in taxable income or alternative
minimum taxable income, or any reduction in Tax deductions or Tax credits for,
any Regency Company for any taxable period ending after the Closing Date.
(j) No Regency Company has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that would not be deductible under Section 280G
of the Code.
(k) From and at all times since its inception, Regency has been
classified as a disregarded entity for U.S. federal income tax purposes under
Treasury Regulation Section 301.7701-3 and all Tax Returns have been prepared
consistently therewith. All of the Regency Subsidiaries, other than Gulf States,
from and at all times since their inception, have been classified as entities
disregarded from Regency for U.S. federal income tax purposes under Treasury
Regulation Section 301.7701-3 and all Tax Returns have been prepared
consistently therewith.
4.8 Compliance with Laws.
(a) Each Regency Company is in compliance in all material respects
with all applicable Laws and Regulations and no Regency Company has received
specific written notice from any Governmental Authority that it is not in
compliance in any material respects with any applicable Law. Notwithstanding
anything herein to the contrary, the provisions of this Section 4.8 shall not
relate to or cover Environmental Laws.
(b) Subject to Section 4.4. no provision of any Law, Regulation or
Order applicable to any Regency Company (i) would preclude any Regency Company
from charging and collecting, without the necessity for approvals of any
Governmental Authority and without refund obligation, market based rates for
gathering, transporting, treating, processing, compressing, purchasing, or
selling Hydrocarbons; (ii) would preclude any Regency Company from constructing
additions to, modifications of or interconnections with Third Persons with
respect to, its gathering, transportation, treating, processing or compression
facilities; or (iii) has required or could reasonably be expected
35
to require any Regency Company to make refunds of amounts collected for sales or
services.
(c) Except as set forth in Section 4.8(c) of the Regency Disclosure
Schedule, none of the Regency Companies is engaged in any natural gas or other
futures or options trading or is a party to any price swaps, xxxxxx, futures or
similar instruments.
4.9 Insurance. Section 4.9 of the Regency Disclosure Schedule sets forth a
list, including the name of the insurer, the risks insured, and related limits
of the insurance policies currently maintained by the Regency Companies. All
such policies are in full force and effect. There is no material claim
outstanding under any such insurance policy and to Regency's Knowledge, no event
has occurred, and no circumstance or condition exists, that has given rise to or
serves as the basis for or (with or without notice or lapse of time) could
reasonably be expected to give rise to or serve as the basis for any such claim
under any such policy. No Regency Company has received any written notice from
any insurer or reinsurer of any reservation of rights with respect to pending or
paid claims. No Regency Company is a party to any Contract, and the insurance
policies listed on Section 4.9 of the Regency Disclosure do not contain any
provision, that would affect the rights of any Regency Company under such
insurance policies upon or as a result of the consummation of the transactions
contemplated by this Agreement.
4.10 Material Contracts.
(a) Section 4.10 of the Regency Disclosure Schedule contains a
description of all Material Contracts. A true, correct and complete copy of each
Material Contract has been made available to Buyer. None of the Regency
Companies has received from any other party to a Material Contract any written
notice, or to Regency's Knowledge any oral notice, of any material breach or
material violation by any Regency Company of any Material Contract or
termination or intention to terminate such Material Contract and, to Regency's
Knowledge, no event has occurred which (with notice or lapse of time, or both)
would constitute a default or an event of default by any Regency Company under
the terms of any Material Contract or give any Regency Company or any other
party to a Material Contract the right to terminate or modify the terms of such
Material Contract. The Regency Companies have performed all of their material
obligations under the Material Contracts. Except as listed in Section 4.10 of
the Regency Disclosure Schedule, (a) each of the Material Contracts is
enforceable and in full force and effect and constitutes a legal, valid and
binding obligation of the Regency Company a party thereto and, to Regency's
Knowledge, each other party thereto and (b) to Regency's Knowledge, no other
party to any Material Contract is in material breach of the terms, provisions or
conditions of such Material Contract.
(b) A copy of each Contract entered into between any Regency Company
and El Paso or any Affiliate of El Paso after the date of the El Paso
Acquisition Agreement, and any Contract currently being negotiated and proposed
to be entered into among such parties, including without limitation any such
Contract regarding the resolution of responsibility or liability for the
remediation or other clean-up of any Pre-existing Environmental Matters, is
listed on Schedule 4.10 of the Regency Disclosure
36
Schedule and true and correct copies of each such Contract (or the current
version of each such Contract currently being negotiated), has been made
available to Buyer.
4.11 Intellectual Property. Except as set forth in Section 4.11 of the
Regency Disclosure Schedule, there are no material trademarks, trade names,
patents, service marks, brand names, computer programs, databases, industrial
designs, copyrights or other intangible property ("Intellectual Property"), that
are necessary for the operation, or continued operation, of the business of any
Regency Company, or for the ownership and operation, or continued ownership and
operation, of any assets of any Regency Company, for which the Regency Companies
do not hold valid and continuing authority in connection with the use thereof.
No Regency Company has received any written notice of infringement,
misappropriation or conflict with respect to Intellectual Property from any
Person with respect to the operation of the Assets owned by any Regency Company.
4.12 Broker's or Finder's Fees. Except as set forth in Section 4.12 of the
Regency Disclosure Schedule, no investment banker, broker, finder or other
Person is entitled to any brokerage or finder's fee or similar commission in
respect of the transactions contemplated by this Agreement or any Transaction
Document based in any way on agreements, arrangements or understandings made by
or on behalf of any Regency Company.
4.13 Employees.
(a) Except as set forth in Section 4.13(a) of the Regency Disclosure
Schedule, none of the Regency Companies has agreed to recognize any labor union
or other collective bargaining representative and, to Regency's Knowledge, no
labor union or other collective bargaining representative claims to or is
seeking to represent any employees of the Regency Companies. To Regency's
Knowledge, no union organizational campaign or representation petition is
currently pending with respect to any employees of any Regency Company.
(b) Except as set forth in Section 4.13(b) of the Regency Disclosure
Schedule, no Regency Company is a party to or bound by any collective bargaining
agreement, other labor contract or individual agreement applicable to any
employees of the Regency Companies. No collective bargaining agreements, other
labor contract or individual agreements relating to any employees of the Regency
Companies are being negotiated.
(c) There is no labor strike or labor dispute, slow down, lockout or
stoppage actually pending or, to Regency's Knowledge, threatened against or
affecting the Regency Companies, and none of the Regency Companies has
experienced any labor strikes or material labor disputes, slowdowns, lockouts or
stoppages. None of the Regency Companies is engaged, nor has engaged, in any
unfair labor practices, and has not had any, unfair labor practice charges or
complaints before any Governmental Authority pending or, to Regency's Knowledge,
threatened against any Regency Company. None of the Regency Companies has had
any grievances, arbitrations, or other proceedings arising or asserted to arise
out of or under any employment or similar
37
Contract or individual Contract, pending or, to Regency's Knowledge, threatened,
against any of them.
(d) Except as provided in Section 4.13(d) of the Regency Disclosure
Schedule, none of the Regency Companies is a party to any Contract or subject to
any requirement that are, in any way, inconsistent with such employees' possible
future status with Buyer or any Regency Company as employees-at-will who may be
terminated at any time without cause or notice, except as otherwise provided by
applicable Law.
4.14 Employee Benefit Plans.
(a) Regency has entered into an agreement with Administaff pursuant to
which Administaff provides personnel management services to Regency and the
other Regency Companies and Administaff and Regency are treated as co-employers
of individuals performing employee-type services to Regency (the "Worksite
Employees").
(b) Section 4.14(b) of the Regency Disclosure Schedule sets forth a
complete and accurate list of each of the following (whether oral or in writing)
which is or has been sponsored, maintained or contributed to since January 1,
2001 by Regency or any trade or business, whether or not incorporated, that
together with Regency would be considered affiliated with Regency under Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(l) of ERISA (an "ERISA
Affiliate") for the benefit of any person who, as of the Closing, is a current
or former Worksite Employee or employee or subcontractor of Regency: (i) each
"employee benefit plan," as such term is defined in Section 3(3) of ERISA (each,
a "Regency Plan"); and (ii) each equity compensation, bonus, incentive award,
severance, deferred compensation, executive compensation, supplemental income,
retiree benefit, fringe benefit (whether or not taxable), employee loan,
vacation, or change of control plan, policy or agreement, each employment and
consulting agreement, each personnel policy and each other employee benefit
plan, contract, program or practice which is not described in Section 4.14(b)(i)
(each, a "Regency Benefit Program or Agreement") (such Regency Plans and Regency
Benefit Programs or Agreements are sometimes collectively referred to in this
Agreement as the "Regency Employee Benefit Plans").
(c) Regency has furnished to the Buyer true, correct and complete
copies of (i) all documentation made available to Worksite Employees by
Administaff with respect to the Regency Employee Benefit Plans, (ii) the
Administaff 401 (k) Plan, the favorable determination letter for the Administaff
401(k) Plan issued by the Internal Revenue Service on September 8, 2004, and
Form 5500 filed with respect to such plan for its 2003 plan year, (iii) the
Phantom Stock Plan, (iv) the Bonus Plan, and (v) all agreements with Administaff
(each, an "Administaff Agreement").
(d) Neither Regency nor any ERISA Affiliate contributes to or has an
obligation to contribute to, nor has at any time since January 1, 2001,
contributed to or had an obligation to contribute to, a multiemployer plan
within the meaning of Section 3(37) of ERISA or any other plan subject to Title
IV of ERISA; Regency and each ERISA Affiliate has performed all obligations,
whether arising by operation of law or by
38
contract, including ERISA and the Code, required to be performed by it in
connection with the Regency Employee Benefit Plans and Administaff Agreements,
and there have been no material defaults or violations by any other party to the
Regency Employee Benefit Plans or Administaff Agreements; each of the Regency
Plans intended to be qualified under Section 401 (a) of the Code has received a
favorable determination letter from the IRS regarding such qualified status and
has not been amended, operated or administered in a way which would adversely
affect such qualified status; there are no actions, suits or claims pending
(other than routine claims for benefits) or, to Regency's Knowledge,
contemplated or threatened against, or with respect to, any of the Regency
Employee Benefit Plans or their assets; and Regency and the ERISA Affiliates
have no liabilities or other obligations, whether actual or contingent, under
any Regency Employee Benefit Plan for post-employment benefits of any nature
(other than continuation coverage under the requirements of Section 4980B of the
Code and Sections 601-609 of ERISA).
(e) Except as set forth in Section 4.14(e) of the Regency Disclosure
Schedule, neither the execution or delivery of this Agreement or the Transaction
Documents nor the consummation of the transactions contemplated hereby or
thereby will result in any payment becoming due to any employee or group of
employees of Regency.
(f) Section 4.14(f) of the Regency Disclosure Schedule sets forth (i)
the name of each employee of any Regency Company that might be entitled to a
payment pursuant to the requirements of Section 7.14(e)(i) of the Waha
Acquisition Agreement if such employee's employment were terminated within one
year of the closing of the Waha Acquisition Agreement and as of the date of this
Agreement, the amount that would be payable to each such employee and (ii) all
other Change of Control Amounts and Severance Obligations, to the extent not
otherwise set forth on Sections 6.5(a) and 6.5(b) of the Regency Disclosure
Schedule.
4.15 Financial Statements; Absence of Undisclosed Liabilities,
(a) Regency has delivered to Buyer the following:
(i) the audited consolidated balance sheet (the "Consolidated
Balance Sheet") and related audited consolidated income statements, statements
of cash flows and statements of changes in member interest of Regency and its
subsidiaries (for the period from inception, April 2, 2003 through December 31,
2003, together with the notes thereto and the related audit report of Deloitte &
Touche LLP) (the "Audited Financial Statements"); and
(ii) the unaudited consolidated balance sheet and related
unaudited consolidated income statements, statements of cash flows and
statements of changes in member interest of Regency and its subsidiaries (for
the seven-month period ended July 31, 2004) (the "Interim Financial
Statements"). The Audited Financial Statements and the Interim Financial
Statements are hereinafter referred to, collectively, as the "Financial
Statements."
39
(b) The Financial Statements have been prepared in accordance with the
books and records of Regency and the Regency Subsidiaries. Each of the balance
sheets included in the Financial Statements (including any related notes and
schedules) fairly presents in all material respects the consolidated financial
position of Regency and the Regency Subsidiaries, as of the date thereof, and
each of the consolidated income statements, statements of cash flows and
statements of changes in member interests included in the Financial Statements
(including any related notes and schedules) fairly presents in all material
respects the consolidated results of operations, cash flows and changes in
member interests, as the case may be, of Regency and the Regency Subsidiaries
for the periods set forth therein, in each case in accordance with GAAP,
subject, in the case of the Interim Financial Statements, to normal year-end
adjustments and the absence of notes or other textual disclosures required under
GAAP which are not, indirectly or in the aggregate, material. Regency has
informed Buyer that: (a) imbalances and line losses or line gains may occur from
time to time, causing the sums or gas volumes payable or receivable under the
Contracts of the Regency Companies to increase or decrease after the date of
invoice (collectively, "Future Adjustments"), (b) it is common industry practice
to discover Future Adjustments through meter readings, calculations,
integrations and adjustments performed substantially after a particular gas
purchase, sale, transportation, gathering, processing or treating transaction
has been completed, invoiced for and settled by payment, (c) when a Future
Adjustment is discovered, it is common in gas industry contracts to require the
parties to correct the Future Adjustment by making adjusted deliveries or
payments as required to settle all accounts based on the actual volumes
delivered, transported, gathered, processed, treated or received, and (d) the
Financial Statements were prepared based on the Regency Companies' invoiced
volumes and have not been adjusted for, and no amounts have been reserved for,
Future Adjustments that may be required under any Regency Company's Contracts;
provided, however, Regency has made all Future Adjustments that were known or
estimable as of the dates of the Financial Statements are reflected in such
Financial Statements; provided, further, nothing contained in this sentence
shall limit or otherwise affect the rights of Buyer to rely (without
qualification or limitation by this sentence) on the representations and
warranties otherwise set forth in this Section 4.15 or otherwise in this ARTICLE
IV or affect any rights or remedies of any Buyer Indemnitee under ARTICLE X.
(c) Except as set forth in Section 4.15(c) of the Regency Disclosure
Schedule, there are no Liabilities of Regency or any Regency Subsidiaries that
are not reflected or reserved against in the Interim Financial Statements, other
than Liabilities that are (i) current liabilities incurred in the ordinary
course of business and consistent with past practices of the Regency Companies
since July 31, 2004, (ii) not required to be presented in unaudited interim
financial statements prepared in conformity with GAAP and that are not,
individually or in the aggregate, material to the Regency Companies, taken as a
whole, (iii) Liabilities under this Agreement or (iv) Liabilities for Expenses.
4.16 Environmental Matters. Except as set forth in Section 4.16 of the
Regency Disclosure Schedule:
40
(a) No Regency Company is in violation of any Environmental Law that
could reasonably expected to have a Material Adverse Effect on Regency, nor has
any Governmental Authority or other Third Person alleged that any Regency
Company is in violation of any Environmental Law that could reasonably be
expected to have a Material Adverse Effect on Regency, except for such
allegations of violation that have been resolved to the satisfaction of the
party making such allegation.
(b) To Regency's Knowledge, none of the Real Property Interests, none
of any other properties used by any Regency Company, and none of the properties
to which Hazardous Materials generated by any Regency Company or as a result of
the operations of the Regency Company may have migrated or been transported to
is (i) listed on the CERCLA National Priorities List or any other similar list
of sites of environmental concern maintained by any Governmental Authority, or
(ii) is the subject of any remediation, removal, cleanup, investigation,
response action, claim, judgment, or enforcement action regarding any actual or
alleged presence or release of Hazardous Materials.
(c) No Regency Company has released, and to Regency's Knowledge there
have not been any releases of, Hazardous Materials on, under, from, or into any
of the Real Property Interests or any other property formerly owned, operated,
or used by any Regency Company during or before the time of such Regency
Company's ownership, operation, or use of such properties that could be
reasonably expected to have a Material Adverse Effect on Regency.
(d) Each Regency Company currently holds all material permits,
licenses, and approvals required under any Environmental Law for its ownership,
operation, or use of the Real Property Interests and the conduct of its
operations. There are no outstanding or unresolved notices of violation or
notices of noncompliance with respect to such permits, licenses, and approvals.
(e) There are no civil, criminal, or administrative actions, suits,
demands, claims, hearings, proceedings, or notices pending or, to Regency's
Knowledge, threatened against any Regency Company under any Environmental Law,
including without limitations those related to allegations of economic loss,
personal injury, illness, or damage to real or personal property or the
environment.
(f) No Regency Company is a party or a successor in interest to any
Contract under which any Regency Company has assumed or agreed to be responsible
for any current or contingent Liabilities with respect to any Hazardous
Materials or any matters arising under Environmental Laws.
4.17 Litigation. Except as set forth in Section 4.17 of the Regency
Disclosure Schedule:
(a) there are no Proceedings pending or, to Regency's Knowledge,
threatened against any Regency Company, their Assets or that question the
validity or enforceability of this Agreement or any other Transaction Document
to be executed and
41
delivered by the Regency Companies in connection with the transactions
contemplated hereby;
(b) to Regency's Knowledge, there are no facts or circumstances
existing which could reasonably give rise to any litigation, arbitration,
investigation or proceeding which, if resolved in a manner adverse to the
Regency Companies, could reasonably be expected to give rise to a material
Liability or have a Material Adverse Effect on Regency;
(c) no Regency Company is subject to any outstanding injunction,
judgment, order, decree, compliance or settlement agreement, conciliation
agreement, memorandum of understanding, writ, letter of commitment, deficiency
letter or ruling (other than routine oil and gas field regulatory orders); and
(d) no Regency Company is subject to any settlement agreement,
conciliation agreement, memorandum of understanding, writ, letter of commitment,
deficiency letter or consent decree with any present or former employee of the
Regency Companies or applicant for employment with the Regency Companies
relating to claims of unfair labor practices, employment discrimination or other
claims with respect to employment and labor practices and policies.
Notwithstanding anything herein to the contrary, the provisions of Sections
4.17(a), 4.17(b) and 4.17(d) shall not relate to or cover Environmental Laws.
4.18 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, planned or being contemplated by Regency or any of the
Regency Subsidiaries, or any of their respective Assets, or to Regency's
Knowledge, being threatened against Regency or any of the Regency Subsidiaries.
4.19 Absence of Certain Changes. Except as set forth in Section 4.19 of the
Regency Disclosure Schedule or as reflected in the Interim Financial Statements,
since July 31, 2004, (a) neither Regency nor any Regency Subsidiary has acted or
failed to act in a manner that would have been prohibited by Section 6.1 if the
terms of such Section had been in effect as of and after such date and (b) there
has not occurred, and neither Regency nor any Regency Subsidiary has incurred or
suffered, any result, occurrence, change, event, effect or circumstance that has
had or could reasonably be expected to have, a Material Adverse Effect on
Regency.
4.20 Pipeline Matters. Section 4.20 of the Regency Disclosure Schedule sets
forth summary historical throughput data and information (but only to the extent
Regency possesses such throughput data and information) for the periods June 1,
2003 through August 31, 2004 relating to the Assets, including volumes of
Hydrocarbons transported through the Pipeline Assets for the periods indicated.
To Regency's Knowledge, such throughput data and information are accurate and
complete in all material respects with respect to such periods. To Regency's
Knowledge, subsequent to such periods, there have been no material adverse
changes in the volumes of Hydrocarbons transported through the Pipeline Assets.
As of the date hereof, to Regency's Knowledge, no fact or circumstance exists
that would result in a material decrease in such volumes excluding,
42
however, changes that may result from (a) market conditions, (b) matters that
affect the energy industry in general or in the area in which the Assets are
located, or (c) non-performance by a party under the Gas Contracts other than a
Regency Company.
4.21 Affiliate Relationships. Except as set forth in Section 4.21 of the
Regency Disclosure Schedule, there are no Contracts or other arrangements
involving any Regency Company in which any member, manager, officer, director,
or Affiliate of Regency or the Regency Subsidiaries has a financial interest.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Regency, Parent, the Parent Members and
the Partners as follows:
5.1 Organization, Good Standing, and Authorization. Buyer is a limited
liability company duly formed, validly existing and in good standing under the
Laws of the State of Delaware. Buyer has all requisite power and authority to
enter into this Agreement and the other Transaction Documents to which it is or
shall be a party, to perform its obligations hereunder and thereunder and to
carry out the transactions contemplated herein and therein. The execution and
delivery of this Agreement and the other Transaction Documents to which it is or
shall be a party and the consummation by Buyer of the transactions contemplated
herein have been duly and validly authorized by all necessary action by Buyer.
This Agreement and the other Transaction Documents to which it is or shall be a
party has been or will be duly executed and delivered by Buyer.
5.2 Enforceability. This Agreement and the other Transaction Documents to
be executed by Buyer concurrently herewith have been duly executed and delivered
by Buyer and (assuming due authorization, execution and delivery hereof by each
other Party) constitute a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their terms, except as the same may
be limited by legal principles of general applicability governing the
application and availability of equitable remedies.
5.3 No Conflicts.
(a) The execution, delivery and performance by Buyer of this Agreement
and the other Transaction Documents to which Buyer is or shall be a party and
the consummation of the transactions contemplated hereby and thereby, will not
conflict with or violate the Organizational Documents of Buyer.
(b) Buyer is not a party to, subject to or bound by any Contract or
any judgment, order, writ, prohibition, injunction or decree or any Governmental
Authority which would prevent the execution, delivery or performance by Buyer of
its obligations under this Agreement.
5.4 Consents; and Authorizations. Except for the requirements of the HSR
Act, no filing or registration with, no waiting period imposed by and no
Authorization or Order of any Governmental Authority is required under any Law
applicable to Buyer to
43
permit Buyer to execute, deliver or perform this Agreement or any instrument
required hereby to be executed and delivered by it at Closing.
5.5 Litigation. There are no Proceedings pending, or, to Buyer's Knowledge,
threatened, against Buyer or any of its assets, at law or in equity, in any
court or before or by any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect on Buyer.
5.6 Broker's or Finder's Fees. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar commission
in respect of the transactions contemplated by this Agreement or any Transaction
Document based in any way on agreements, arrangements or understandings made by
or on behalf of Buyer or any of its Affiliates which is, or following the
Closing would be, an obligation of Regency, Parent, the Parent Members, the
Partners or any of their respective Affiliates.
5.7 Investment Intent. Buyer is acquiring the Interests for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and Buyer has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
5.8 Financing. Buyer has received and furnished to Regency, Parent, the
Parent Members and the Partners an accurate and complete copy of the Commitment
and the Equity Commitment. The debt proceeds to be provided pursuant to the
Commitment (assuming the satisfaction of the conditions thereto), together with
the equity proceeds to be provided pursuant to the Equity Commitment, are
sufficient to enable Buyer to perform its obligations to consummate the
transactions contemplated by this Agreement and the financial projections
prepared by Buyer reflect that such proceeds and revenues from operations after
the Closing will be sufficient to enable the Regency Companies to operate their
anticipated businesses after the Closing consistent with past practice and to
pay their anticipated obligations in ordinary course of business. As of the date
hereof, to Buyer's Knowledge there is no fact or circumstance that could
reasonably be expected to have a Material Adverse Effect on Buyer. As of the
date hereof, to Buyer's Knowledge there is no fact or circumstance that could
reasonably be expected to cause the conditions to provide financing set forth in
the Commitment and Equity Commitment to not be satisfied; provided, however,
that (i) Buyer makes no representation or warranty as to the materiality or past
or future effect on the Regency Companies of any matter disclosed in the Regency
Disclosure Schedule or otherwise made available or provided to Buyer or its
advisors in its due diligence of the Regency Companies, including without
limitation whether any such fact or circumstance has had or could reasonably be
expected to have a Material Adverse Effect on Regency and (ii) this sentence and
any representations or warranties made herein shall terminate as of the Closing
and shall not affect any rights or remedies of any Buyer Indemnitee under
ARTICLE X.
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ARTICLE VI
COVENANTS
6.1 Conduct of Business.
(a) Regency covenants and agrees that until the earlier of the Closing
or the termination of this Agreement, except as otherwise set forth in Section
6.1 (a) of the Regency Disclosure Schedule or unless Buyer otherwise agrees in
writing (and the Parties agree that if Buyer agrees in writing to any of the
following, each applicable Section of the Regency Disclosure Schedules shall be
automatically updated for all purposes under this Agreement to include such
action agreed to by Buyer), Regency and the Regency Subsidiaries shall:
(i) operate in the usual and ordinary course of business
consistent with past practice;
(ii) use commercially reasonable efforts to preserve
substantially intact their business organizations, to maintain their rights,
privileges and immunities, to retain the services of their key employees
(subject to work force requirements) and to maintain their relationships with
their customers and suppliers;
(iii) use commercially reasonable efforts consistent with past
practice to maintain and to keep their properties and assets in good repair and
condition, ordinary wear and tear excepted; if there is any casualty loss or
damage to any properties or assets of any Regency Company prior to Closing,
Regency shall consult with Buyer regarding the replacement or repair of such
property or asset;
(iv) use commercially reasonable efforts to keep in full force
and effect insurance applicable to Regency and the Regency Subsidiaries
comparable in amount and scope of coverage to that currently maintained; and
(v) (A) keep and maintain accurate books, records and accounts;
(B) pay or accrue all Taxes, assessments and other governmental charges imposed
upon any of its Assets or with respect to its franchises, business, income or
assets when due and before any penalty or interest accrues thereon or, if due
and payable, the validity of which is being contested in good faith by
appropriate legal proceedings and for which adequate reserves have been set
aside; (C) pay or accrue all wages and other compensation incurred with respect
to all employees of and consultants to the Regency Companies, or otherwise
providing services to any Regency Company under the Administaff Agreement,
through the Closing Date when they become due and payable in accordance with the
obligations of the Regency Companies under the Administaff Agreement or under
any labor or employment practices and policies, or other labor or individual
Contract to which a Regency Company is a party, or by which the Regency
Companies may be bound; and (D) comply in all material respects with the
requirements of all applicable Laws, Regulations and Orders, obtain or take all
Governmental Actions necessary in the operation of its business, and comply and
enforce (in all material respects) the provisions of all Material Contracts.
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(b) Except pursuant to the terms of this Agreement, as otherwise set
forth in Section 6.1(b) of the Regency Disclosure Schedule or unless Buyer
otherwise agrees in writing (and the Parties agree that if Buyer agrees in
writing to any of the following, each applicable Section of the Regency
Disclosure Schedules shall be automatically updated for all purposes under this
Agreement to include such action agreed to by Buyer) from and after the
execution of this Agreement and until the earlier of the Closing or the
termination of this Agreement, Regency shall not, and Regency, Parent, the
Parent Members and the Partners shall use their commercially reasonable efforts
to not permit any Regency Company to;
(i) sell, transfer or otherwise dispose of, or to grant any Lien
with respect to, any of the Equity Interests of any Regency Company;
(ii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any of their outstanding Equity Interests, (B) effect any
reorganization or recapitalization, (C) split, combine or reclassify any of the
their Equity Interests, or (D) declare, set aside or pay any dividend or other
distribution, other than wholly in cash, in respect of its Equity Interests;
(iii) (A) offer, sell, issue or grant, or authorize the offering,
sale, issuance or grant of, any of their Equity Interests or (B) grant, or
authorize the grant of, any Lien with respect to any of their Equity Interests;
(iv) acquire, directly or indirectly, (A) whether by merger or
consolidation, by purchasing an Equity Interest or otherwise, any business or
division of any Person or (B) any material assets or properties other than the
acquisition of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice (any acquisition of any business or
division of any Person or any material assets or properties by any Regency
Company that has been approved by Buyer is referred to as an "Approved
Acquisition");
(v) sell, lease, exchange or otherwise dispose of, or grant any
Lien with respect to, any of their respective assets, except for dispositions of
Hydrocarbon inventories or leases of their properties, in each case in the
ordinary course of business consistent with past practice;
(vi) adopt any amendments to their respective Organizational
Documents;
(vii) (A) make any change in their methods of accounting in
effect on the date hereof, except as may be required to comply with changes in
GAAP, (B) make or revoke any Tax election or change (or make a request to
change) its Tax accounting methods, policies, or procedures or (C) settle or
compromise any Proceeding relating to Taxes, except, in each case, as may be
required by Law; or (D) revalue any asset except as required by GAAP
consistently applied on a basis consistent with past practice and the
preparation of the Interim Financial Statements;
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(viii) incur any Indebtedness, except for draws against the
working capital facility provided by the Credit Agreement;
(ix) incur, or commit to incur any liability or obligation to
make capital expenditures in excess of $50,000 individually or $500,000 in the
aggregate, except for capital expenditures that (A) have been approved by
Regency's management prior to the date hereof and are set forth in Section
6.1(b)(ix) of the Regency Disclosure Schedule, or (B) have been approved by
Buyer;
(x) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing a liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization;
(xi) enter into, assume, amend, modify, cancel, waive, assign any
rights or obligations under or otherwise change in any respect any Material
Contract other than in the ordinary course of business;
(xii) enter into any Contract with any Person (including an
Affiliate), other than Contracts entered into in the ordinary course of business
with a Third Person consistent with past practice;
(xiii) (A) increase any compensation (including salary, bonuses,
benefits and other forms of current and deferred compensation) payable to any
officer, director or employee or group of officers, directors or employees, (B)
enter into, or otherwise become liable or obligated under or pursuant to or pay,
(1) any employee benefit, pension or other plan (whether or not subject to
ERISA), (2) any other equity based, incentive or deferred compensation plan or
arrangement or other fringe benefit plan, (3) any consulting, employment,
severance, bonus, termination or similar Contract with any Person or (4) any
amendment or extension of any such plan or Contract; (C) except for payments
made pursuant to any existing Regency Plans, grant, pay, or otherwise become
liable for or obligated to pay, any Severance Obligation, Change of Control
Obligation, bonus or increase in compensation or benefits to, or forgive any
Indebtedness of, any employee or consultant of any Regency Company; or (D) make
any loan to, or enter into any other transaction with, any of its directors,
officers or employees;
(xiv) engage in any practice or take any action that would cause
or result in, or permit by inaction, any of the representations and warranties
contained in ARTICLE IV to become untrue; and
(xv) agree in writing or otherwise to do any of the foregoing.
6.2 Access, Information and Access Indemnity.
(a) Until the earlier of the Closing or the termination of this
Agreement, on Business Days and during the business hours of 8:00 a.m. to 5:00
p.m. (local time), Regency will continue to make available to Buyer and Buyer's
authorized representatives for examination as Buyer may reasonably request, all
Records, including
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land files, regulatory files, abstracts, title opinions, engineering data,
environmental data or information, reports, maps, drawings, surveys, books,
records, and agreements in any Regency Companies' possession or control relating
to the assets and operations of any Regency Company; provided, however, such
material shall not include (i) any information described in Section 6.2 of the
Regency Disclosure Schedule subject to Third Person confidentiality agreements
for which a consent or waiver cannot be secured by Regency after reasonable
efforts, or (ii) the information described in Section 6.2 of the Regency
Disclosure Schedule which, if disclosed, would violate an attorney-client
privilege or might constitute a waiver of rights as to attorney work product or
attorney-client privileged communications; and provided further that, Buyer
shall not unreasonably interfere with the day-to-day operations of the business
of any Regency Company.
(b) Subject to Section 6.2(a) above, Regency shall permit Buyer and
Buyer's authorized representatives to consult with Regency's employees on
Business Days and during the business hours of 8:00 a.m. to 5:00 p.m. (local
time), and to conduct, at Buyer's sole risk and expense, inspections and
inventories of the assets owned by any Regency Company over which any Regency
Company has control. Regency shall also coordinate, in advance, with Buyer to
allow site visits and inspections at the field sites on Saturdays unless
operational conditions would reasonably prohibit such access. Notwithstanding
anything to the contrary, prior to the Closing Buyer shall not conduct any
physical environmental assessments. Neither Buyer nor any of its representatives
shall contact any customer of any Regency Company without the prior written
consent of Regency, which consent shall not be unreasonably withheld.
(c) BUYER SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD THE REGENCY
INDEMNITEES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS AND LOSSES CAUSED
DIRECTLY OR INDIRECTLY BY THE ACTS OR OMISSIONS OF BUYER, BUYER'S AFFILIATES OR
ANY PERSON ACTING ON BUYER'S OR ITS AFFILIATE'S BEHALF IN CONNECTION WITH ANY
DUE DILIGENCE CONDUCTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ANY SITE VISITS AND ENVIRONMENTAL SAMPLING. Buyer shall comply fully
with all rules, regulations, policies and instructions issued by any Regency
Company or any Third Person operator and provided to Buyer regarding Buyer's
actions while upon, entering or leaving any property, including any insurance
requirements that any Regency Company may impose on contractors authorized to
perform work on any property owned or operated by any Regency Company. Buyer
shall not unreasonably interfere with the day-to-day operations of the business
of any Regency Company.
6.3 Regulatory Filings; Xxxx-Xxxxx-Xxxxxx Filing.
(a) The Parties will take all commercially reasonable actions
necessary or desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts, as promptly as practicable, to obtain all
consents, approvals or actions of, to make all filings with, and to give all
notices to, Governmental Authorities required to accomplish the transactions
contemplated by this Agreement.
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(b) The Parties shall make any filings required under the HSR Act on
or prior to eight Business Days after the date hereof and provide such
information to the FTC and DOJ as is required in connection with the HSR Act as
soon as practicable after a request therefor.
(c) Notwithstanding any provision herein to the contrary, each of the
Parties will (i) use reasonable efforts to comply as expeditiously as possible
with all lawful requests of Governmental Authorities for additional information
and documents pursuant to the HSR Act, (ii) not (A) extend any waiting period
under the HSR Act or (B) enter into any voluntary agreement with any
Governmental Authority not to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other Parties, and (iii)
cooperate with each other and use reasonable efforts to obtain the requisite
approval of the FTC and DOJ; provided, however, that the Parties are not
obligated to accept any conditional approval or divest any of their assets or
properties.
(d) The filing fees and other costs required with respect to any
filing under the HSR Act shall be paid at the time of filing one-half by the
Buyer and one-half by Regency.
(e) Regency shall, at its option, prior to Closing either (i) cause
Gulf States to (A) prepare and file with the FERC (and if Regency elects this
clause (i), Regency shall cause Gulf States to do so within 30 days after the
date of this Agreement) an application requesting that Gulf States be exempt
from the obligation to comply with the FERC's regulations set forth in Part 358
of the Code of Federal Regulations and (B) use commercially reasonable efforts
in prosecuting such application until Gulf States has received a final order
from the FERC ruling on the merits of the application or (ii) use commercially
reasonable efforts to cause Gulf States to come into, and continue to operate
in, compliance with the FERC's regulations set forth in Part 358 of the Code of
Federal Regulations.
6.4 Preservation and Access to Records; and Further Assurances.
(a) For a period of at least seven years after the Closing Date (or at
the request of any Party, until 60 days after the expiration of any applicable
statute of limitations), the Party in possession of the originals of the Records
will retain such Records at its sole cost and expense and will make such Records
(including reasonable access during regular office hours to personnel familiar
therewith) available to any other Party upon reasonable notice for inspection
and/or copying, at the expense of the requesting Party, at the headquarters of
the Party in possession (or at such other location in the United States as the
Party in possession may reasonably designate in writing to the requesting Party)
at reasonable times and during regular office hours. If Buyer, at any time,
directly or indirectly, transfers the Records to a Third Person, then Buyer will
obligate Regency and/or the transferee to maintain the Records as herein
required and will retain access to the Records for the benefit of itself and the
other Parties.
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(b) From time to time, and without further consideration, each Party
will execute and deliver to any other Party such documents and take such actions
as any other Party may reasonably request in order to more effectively implement
and carry into effect the transactions contemplated by this Agreement and the
other Transaction Documents.
6.5 Phantom Stock Plan; Annual Performance Incentive Plan: Termination of
Agreements.
(a) Section 6.5(a) of the Regency Disclosure Schedule sets forth the
name and the number of performance shares that have been awarded to each
participant in the Phantom Stock Plan. Parent and Regency represent and warrant
to Buyer that no participant in the Phantom Stock Plan is entitled to any cash
bonus under Section 5 of the Phantom Stock Plan attributable to any
distributions paid by Parent on its Equity Interest. Parent, Regency and Buyer
agree and acknowledge that the consummation of the transactions contemplated by
this Agreement shall constitute a "pre-determination cash- out event" within the
meaning of Section 10 of the Phantom Stock Plan, and each participant in the
Phantom Stock Plan shall be fully vested in the performance shares awarded to
such participant upon the Closing. At the Closing, the aggregate amount payable
to each participant in the Phantom Stock Plan on account of such participant's
performance shares under the Phantom Stock Plan shall be included in the Change
of Control Amounts.
(b) Section 6.5(b) of the Regency Disclosure Schedule sets forth the
name and the bonus amount that would be payable to each participant in the
Regency Gas Services LLC Annual Performance Incentive Plan if the EBITDA target
for 2004 was met. At the Closing, the aggregate amount of the target bonus
amounts specified on Section 6.5(b) of the Regency Disclosure Schedule shall be
included in the Change of Control Amount.
(c) Regency shall terminate each of the Existing Employment
Agreements, Existing Consultant Agreements and the Charlesbank Agreement prior
to the Closing Date with no further Liability or obligations of any Regency
Company thereunder other than Severance Obligations thereunder as described in
Section 4.14(e) of the Regency Disclosure Schedule and (ii) use commercially
reasonable efforts to obtain from each of the employees under the Existing
Employment Agreements the release required under the Existing Employment
Agreements as a condition to paying the Severance Obligations Adjustment Amounts
owed under such Existing Employment Agreements.
6.6 Payoff Letters: and Reaffirmation of Mutual Releases. Within five
Business Days prior to the Closing Date, Regency shall use its commercially
reasonable efforts to cause each payee of Third Party Debt, Expenses, Change of
Control Amounts and Severance Obligations, as the case may be, to deliver a Debt
Payoff Letter or an Expense Payoff Letter to Regency, copies of which shall be
promptly delivered to Buyer. Regency shall use its commercially reasonable
efforts to cause each Mutual Release to be
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reaffirmed by each of the Parent Members, Managers and Partners and each Officer
and Director of the Regency Companies.
6.7 Cooperation and Reasonable Efforts. The Parties agree to cooperate with
each other and to use commercially reasonable efforts to cause all of the
conditions precedent to Closing to be satisfied as promptly as practicable. In
addition, Parent shall cooperate with Buyer, upon Buyer's request, to obtain the
consent of any Third Person as may be required under any Law or Regulation or
any Contract to which any Regency Company is a party and which requires consent
as a result of the transactions contemplated by this Agreement.
6.8 Indemnification of Managers, Directors and Officers. To the fullest
extent permitted by Law, from and after the Closing Date, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors, managers and/or officers (the "Director/Officer Indemnitees") of any
Regency Company with respect to Third Person Claims related to or arising out of
or based upon their activities as such prior to the Closing, as provided in
their respective Organizational Documents in effect on the date immediately
prior to the Closing Date, shall survive the Closing and shall continue in
effect for a period of not less than six years following the Closing. If Buyer
or any of its successors or assigns (i) shall consolidate with or merge into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) shall transfer all or substantially all
of its properties and assets to any other Person, then Buyer shall make proper
provisions in connection with any such transaction so that the successors and
assigns of Buyer shall assume (specifically or by operation of law) the
obligations set forth in this Section 6.8. The provisions of this Section 6.8
are intended to be for the benefit of, and shall be enforceable by, each
Director/Officer Indemnitee and his or her heirs and his or her representatives,
in any case, as a third party beneficiary of this Section 6.8.
6.9 Tax Matters.
(a) From and after the Closing, if any Taxing authority informs Buyer
or any Regency Company of a claim, assessment, dispute or other Proceeding
concerning an amount of Taxes for which Parent or the Parent Members are or may
be liable, Buyer shall promptly inform Parent, and Parent shall have the right
to control any resulting Proceedings and to determine whether and when to settle
any such claim, assessment, dispute or other Proceeding to the extent such
Proceedings affect the amount of Taxes for which Parent or Parent Members are or
may be liable; provided that Parent shall take no action without the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed, that increases or could reasonably be expected to increase the amount
of Taxes payable by any Regency Company (i) for any period with respect to which
Parent, the Parent Members and the Partners are not obligated to indemnify Buyer
pursuant to ARTICLE X, (ii) at any time after the Final Distribution Date or
(iii) by any amount in excess of 50% the remaining amount of the Escrow Fund.
Buyer shall also use commercially reasonable efforts to cooperate with Parent,
at Parent's expense, in connection with any such claim, assessment, dispute or
other Proceeding and provide access to the Records in accordance with Section
6.4.
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(b) Parent shall cause to be prepared and duly filed all Tax Returns
required to be filed by or with respect to the Regency Companies for all Taxable
years and periods ending on or before the Closing Date. Not later than 30 days
prior to the due date of each such Tax Return (including extensions thereof),
Parent shall deliver to Buyer a copy of such Tax Return for Buyer's review and
comment which comments shall not be unreasonably withheld. Parent shall provide
a copy of all such Tax Returns to Buyer promptly after filing. Buyer shall cause
to be prepared and duly filed all Tax Returns required to be filed by or with
respect to the Regency Companies for all Straddle Periods. Not later than 30
days prior to the due date of each such Tax Return (including extensions
thereof), Buyer shall deliver to Parent a copy of such Tax Return for Parent's
review and comment which comments shall not be unreasonably withheld. Buyer
shall provide a copy of all such Tax Returns to Parent promptly after filing.
(c) In the case of Taxes that are payable with respect to any Straddle
Period, the portion of any such Tax that is attributable to the portion of the
period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or
related to income or receipts, or (B) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible), deemed equal to the amount that would be payable if the Taxable
years of each of Regency Company ended with (and included) the Closing Date; and
(ii) in the case of Taxes that are imposed on a periodic basis
with respect to the assets of the Regency Companies deemed to be the amount of
such Taxes for the entire period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of calendar days
in the portion of the period ending on the Closing Date and the denominator of
which is the number of calendar days in the entire period.
(d) From and after the date hereof, (i) Parent, the Parent Members and
the Partners shall not, and shall not permit any of their respective affiliates
to, amend any Tax Return previously filed which includes information relating to
any Regency Company, without prior written consent of Buyer, which consent shall
not be unreasonably withheld or delayed, and (ii) Buyer shall not, and shall not
permit any of its respective affiliates to, amend any Tax Return with respect to
the Straddle Periods, without prior written consent Parent, which consent shall
not be unreasonably withheld or delayed.
(e) Buyer, Parent, the Parent Members, and the Partners shall
cooperate fully, and shall cause each Regency Company to cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section and any audit or Proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which are
reasonably relevant to any such audit or Proceeding and making employees
available on a mutually convenient basis to provide additional
52
information and explanation of any material provided hereunder. Buyer, Parent,
the Parent Members and the Partners further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed on Parent or the Parent
Members or on Buyer, or any Regency Company (including, but not limited to, with
respect to the transactions contemplated hereby). Buyer, Parent, the Parent
Members and Partners further agree, upon request, to provide the other party
with all information regarding any Regency Company that either Party may be
required to report to any Governmental Authority.
(f) Any refund of Taxes of any Regency Company (including any interest
with respect thereto) for any Taxable period ending on or prior to the Closing
Date or for the portion of any Straddle Period ending on the Closing Date
(determined in accordance with the provisions of Section 6.9(c)) that is not
attributable to the carryback of Losses from Taxable periods beginning after the
Closing Date or the portion of any Straddle Period beginning after the Closing
Date (determined in accordance with Section 6.9(c) shall be the property of
Parent, shall be paid over promptly to Parent and if received by the Buyer or
any Regency Company after the Closing Date shall be payable promptly to Parent.
(g) The Parties agree that any Tax of any Regency Company that is
imposed on any transaction involving any Regency Company (other than
transactions in the ordinary course of business) that occurs on the Closing Date
but after Buyer's purchase of the Interests shall be the responsibility of the
Buyer.
(h) All payments of Change of Control Amounts, Severance Obligations
and other Expenses made by a Regency Company on or before the Closing Date shall
be allocated entirely to the Taxable period that ends on the Closing Date or the
portion of any Straddle Period ending on the Closing Date (determined in
accordance with the provisions of Section 6.9(c)).
(i) Buyer covenants that Buyer (and in the case of an assignment by
Buyer pursuant to Section 12.2 hereof, such assignee) is a single member limited
liability company whose legal domicile, within the meaning of Texas
Administrative Code, Title 34, Section 3.557(b)(8), and Section 3.549(b)(6) is
Delaware.
6.10 Financing.
(a) Buyer shall use its commercially reasonable efforts to obtain the
financing under the Commitment required to effect the transactions contemplated
by this Agreement. In the event that any portion of the funds to be provided
under the Commitment becomes unavailable, regardless of the reason therefor,
Buyer shall, upon learning thereof, promptly so advise Parent, Regency, the
Parent Members and the Partners and shall use its commercially reasonable
efforts to obtain alternative financing from other sources. Buyer shall not
change, amend, modify, supplement or terminate the Commitment or the Equity
Commitment without Regency's prior written consent.
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(b) Prior to the Closing, Parent and Regency shall reasonably
cooperate with Buyer, Buyer's financing sources, and Buyer's auditors and
attorneys in connection with the financing of the purchase of the Interests and
the Partnership Interests by Buyer. Parent and Regency shall use commercially
reasonable efforts to (i) furnish to Buyer, as promptly as practicable, any
updated financial statements of the Regency Companies with respect to subsequent
periods, to the extent reasonably requested by Buyer (copies of which may be
provided to lenders providing financing pursuant to the Commitment) and (ii)
cause Regency's auditor, at Buyer's expense, to take such actions as Buyer may
reasonably request in connection with the Commitment, including to obtain the
consent of such auditor to the use of its report on the Audited Financial
Statements.
6.11 Transfer Taxes. All sales, transfer, use, gross receipts,
registration, and similar Taxes (including, without limitation, real estate
transfer Taxes), if any, that are payable by any Party hereto or any of the
Regency Subsidiaries arising out of or in connection with the consummation of
the transactions contemplated hereby shall be borne by Buyer.
6.12 Purchase Price Allocation. For Tax purposes, the Parties intend that,
and agree to report, the Parent's sale to Buyer of all of the Interests
hereunder be treated as a sale of (i) all of the Equity Interests of Gulf
States, and (ii) all of the assets of the Regency Companies other than Gulf
States, except that any asset of a Regency Company consisting of an Equity
Interest in another Regency Company shall be ignored (collectively, the assets
described under clause (i) and (ii) of this Section 6.12 are referred to as the
"Purchased Assets"). The allocation of the Purchase Price, all other applicable
capitalized costs and other items among the Purchased Assets shall be made in
accordance with Section 1060 of the Code and the Treasury Regulations thereunder
and any comparable provisions of state or local Law, as applicable. Parent and
Buyer shall use commercially reasonable efforts to agree upon such allocation
within 30 days after the Closing Date. Parent and Buyer shall each file Internal
Revenue Service Form 8594 (and any applicable forms required under state or
local Law) in a timely manner consistent with such allocation and will not take
any position inconsistent therewith in any Tax Return, in any refund claim, in
any Proceeding or otherwise, unless otherwise required pursuant to a final
determination as defined in Section 1313 of the Code. Buyer shall provide
evidence to the Parent and Parent shall provide evidence to Buyer that such
forms were filed. Any adjustments to the Purchase Price made subsequent to
Closing shall be allocated to the Purchased Assets in the same manner as set
forth in this Section 6.12.
6.13 Oxy Contract. Parent shall use its commercially reasonable efforts to
cause Regency Midcon to enter into the Oxy Contract containing terms
substantially similar to the draft approved by Buyer, or such other terms as are
reasonably acceptable to Parent and Buyer.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Regency's, Parent's Conditions. The obligation of Parent to close the
transaction contemplated by this Agreement is subject to the satisfaction of the
following conditions, any of which may be waived by Parent in its sole
discretion:
(a) The representations and warranties of Buyer contained in ARTICLE V
of this Agreement shall be true and correct in all material respects (provided
that any such representation or warranty of Buyer contained in ARTICLE V that is
qualified by a materiality standard or a Material Adverse Effect qualification
shall not be further qualified by materiality for purposes of this Section 7.1
(a) on and as of the Closing Date as if made on and as of such date, except (i)
as affected by transactions specifically permitted by this Agreement, (ii) to
the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct in all material respects as of such specified date;
(b) Buyer shall have performed in all material respects the
obligations, covenants and agreements of Buyer contained herein and in the
Transaction Documents to which it is a party and required before Closing;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction that
restrains, enjoins or otherwise prohibits the consummation of the transactions
contemplated by this Agreement shall be effective as of the Closing;
(d) HSR Approval shall have been obtained;
(e) The Escrow Agent shall have executed and delivered the Escrow
Agreement to Buyer and Parent; and
(f) Buyer shall have delivered the items required to be delivered by
Buyer pursuant to Section 8.2(b).
7.2 Buyer's Conditions. The obligation of Buyer to close the transactions
contemplated by this Agreement is subject to the satisfaction of the following
conditions, any of which may be waived in its sole discretion:
(a) The Parent Title Representations shall be true and correct on and
as of the Closing Date as if made on the Closing Date and all other
representations and warranties contained in ARTICLE III shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date, except as affected by transactions contemplated or permitted by
this Agreement and except to the extent that any such representation or warranty
is made as of a specified date, in which case such representation or warranty
shall have been true and correct in all material respects as of such specified
date;
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(b) The Regency Title Representations shall be true and correct on and
as of the Closing Date as if made on such date and all other representations and
warranties of Regency in ARTICLE IV shall be true and correct in all material
respects (provided that any such other representation or warranty of Regency
contained in ARTICLE IV that is qualified by a materiality standard or a
Material Adverse Effect qualification shall not be further qualified by
materiality for purposes of this Section 7.2(b)) on and as of the Closing Date
as if made on and as of such date, except (i) as affected by transactions
specifically permitted by this Agreement and (ii) to the extent any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true or correct in all material
respects as of such specified date;
(c) Regency, Parent and the Partners shall have performed, in all
material respects, the obligations, covenants and agreements of Regency, Parent
and the Partners contained herein and in the Transaction Documents and required
before Closing;
(d) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction that
restrains, enjoins or otherwise prohibits the consummation of the transactions
contemplated by this Agreement shall be effective as of the Closing;
(e) HSR Approval shall have been obtained;
(f) There shall have been no event or other occurrence that,
individually or in the aggregate, has had or reasonably could be expected to
have a Material Adverse Effect on Regency;
(g) The Escrow Agent shall have executed and delivered the Escrow
Agreement to Buyer and Parent;
(h) Buyer shall have available to it debt financing in the full amount
of the Commitment on terms and conditions substantially consistent with the
terms and conditions of the Commitment;
(i) Parent, the Partners, as applicable, shall have delivered the
items required to be delivered by them pursuant to Section 8.2;
(j) Each of the Existing Employment Agreements, the Existing
Consulting Agreements and the Charlesbank Agreement shall have been terminated
with no further Liability or obligations of any Regency Company thereunder other
than Severance Obligations thereunder as described in Section 4.14(e) of the
Regency Disclosure Schedule; and
(k) Regency Midcon and Oxy USA Inc. shall have entered into the Oxy
Contract containing terms substantially similar to the draft approved by Buyer,
or such other terms as are reasonably acceptable to Parent and Buyer, and such
Contract shall be in full force and effect (but need not be effective) as of the
Closing; provided if
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such Oxy Contract is not effective as of the Closing, it shall become effective
by its terms on or before March 1, 2005.
ARTICLE VIII
CLOSING
8.1 Time and Place of Closing. The consummation of the transactions
contemplated hereby (the "Closing"), shall take place at 10:00 a.m. local time
on December 1, 2004 (or on or before December 3, 2004, to be effective as of
December 1, 2004; (and with a Measurement Date of November 30, 2004); or if such
Closing shall not take place by December 3, 2004, on January 3, 2005, to be
effective as of January 1, 2005), (and with a Measurement Date of December 31,
2004); in the offices of Xxxxxx & Xxxxxx, L.L.P, 3700 Xxxxxxxx Xxxx Center, 0000
Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 or such other time and place as the Parties
agree to in writing (the "Closing Date"). Subject to the provisions of ARTICLE
IX hereof, failure to consummate the Closing on the date and at the place
determined pursuant to this Section 8.1 will not result in the termination of
this Agreement and will not relieve any Party of any obligation under this
Agreement.
8.2 Deliveries at Closing. At the Closing,
(a) Parent will:
(i) deliver to Buyer the certificates representing the Interests
duly endorsed in accordance with Section 2.1 of this Agreement;
(ii) execute and deliver, or cause to be executed and delivered,
to Buyer a certificate of Parent's officers certifying the satisfaction of the
conditions specified in Sections 7.2(a), 7.2(b), and 7.2(c);
(iii) deliver to Buyer a certificate of the Secretary of State of
the State of Delaware as to the legal existence and good standing (including
tax) of each of Parent and Regency in Delaware;
(iv) deliver to Buyer the original minute books of each Regency
Company;
(v) deliver to Buyer a legal opinion rendered by Gardere Xxxxx
Xxxxxx LLP in substantially the form attached as Exhibit C, which opinion Buyer
shall be entitled to deliver to the lenders providing the debt financing under
the Commitment;
(vi) cause the Managers, Directors and Officers and each other
officer or director of each Regency Company to execute and deliver to Buyer the
written resignation of each such Person in his or her capacity as such,
effective concurrently with the Closing on the Closing Date;
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(vii) execute and deliver to Buyer and the Escrow Agent the
Escrow Agreement; and
(viii) deliver to Buyer a certificate of non-foreign status of
Parent which meets the requirements of Treasury Regulation Section
1.1445-2(b)(2).
(b) Buyer will:
(i) execute and deliver to Parent a certificate of Buyer's
officers certifying the satisfaction of the conditions specified in Sections 7.1
(a) and 7.1(b);
(ii) deliver to Parent a certificate of the Secretary of State of
the State of Delaware as to the legal existence and good standing (including
tax) of Buyer in Delaware;
(iii) deliver to Parent, Parent Members and the Partners a legal
opinion rendered by Xxxxxx & Xxxxxx L.L.P. in substantially the form attached as
Exhibit D;
(iv) make by wire transfer those payments specified in Section
2.2(b);
(v) execute and deliver to Parent and the Escrow Agent the Escrow
Agreement.
ARTICLE IX
TERMINATION
9.1 Termination at or Prior to Closing. This Agreement may be terminated
prior to Closing and the transactions contemplated hereby abandoned as follows:
(a) Regency, and Parent (on behalf of Parent, the Parent Members and
the Partners) and Buyer may elect to terminate this Agreement at any time prior
to the Closing by mutual written consent;
(b) Either Regency and Parent (on behalf of Parent, the Parent Members
and the Partners) on one hand, or Buyer, on the other hand, by written notice
may terminate this Agreement if the Closing shall not have occurred on or before
December 3, 2004 (with the Closing to be effective as of December 1, 2004 (and
with a Measurement Date of November 30, 2004)); provided, however, that if HSR
Approval shall not have been obtained on or prior to such date Buyer or Regency
shall have the right, in its sole discretion, to extend such date to January 3,
2005 (with the Closing to be effective as of January 1, 2005 (and with a
Measurement Date of December 31, 2004));
(c) Regency and Parent (on behalf of Parent, the Parent Members and
the Partners) by written notice to Buyer may terminate this Agreement at any
time prior to the Closing if Buyer shall have breached any representations,
warranties or covenants
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of such Buyer herein contained in such a manner such that the conditions to
Closing contained in Section 7.1(a) and 7.1(b) would not be satisfied; provided,
however, if such breach may be cured by the Buyer through the use of its
commercially reasonable efforts and for so long as Buyer continues to use such
efforts, Regency and Parent may not terminate this Agreement under this Section
9.1(c); or
(d) Buyer by written notice to Parent may terminate this Agreement at
any time prior to the Closing if Regency, Parent, any Parent Member, or any
Partner shall have breached any representations, warranties or covenants of such
Party herein contained in such a manner such that the conditions to Closing
contained in Section 7.2(a), 7.2(b) and 7.2(c) would not be satisfied; provided,
however, if such breach may be cured by any such breaching Party through the use
of its commercially reasonable efforts and for so long as any such breaching
Party continues to use such efforts, Buyer may not terminate this Agreement
under this Section 9.1(d); or
(e) Buyer by written notice may terminate this Agreement upon the
occurrence of an event or other occurrence that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on Regency.
Notwithstanding anything in the foregoing to the contrary, a Party that is in
material breach of any provision of this Agreement shall not be entitled to
terminate this Agreement except, in the case of a material breach by Regency,
Parent, the Parent Members or the Partners, with the consent of Buyer, or in the
case of a material breach by Buyer, with the consent of Regency and Parent (on
behalf of Parent, the Parent Members and Partners).
9.2 Effect of Termination. In the event that Closing does not occur as a
result of a Party exercising its right to terminate pursuant to Section 9.1,
then no Party shall have any further rights or obligations under this Agreement,
except that (i) nothing herein shall relieve a Party from any liability for any
breach of this Agreement, and (ii) the provisions of Section 6.2(c), this
Section 9.2, Section 10.7 and Section 12.1 and the Confidentiality Agreement
shall survive any termination of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Survival.
(a) Representations and Warranties. Regardless of any investigation at
any time made by or on behalf of any Party hereto or of any information any
Party may have in respect thereof, each of the representations and warranties
made in this Agreement or any other Transaction Document shall survive the
Closing as follows:
(i) each of the Parent Title Representations and the Regency
Title Representations shall terminate 30 days after the expiration of all
statutes of limitations applicable to any claim of breach of such
representations and warranties; and
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(ii) each of the other representations and warranties set forth
in ARTICLE III and ARTICLE IV and each of the representations and warranties set
forth in ARTICLE V shall terminate on the Final Distribution Date.
(b) Survival of Covenants. The covenants and agreements of the Parties
hereto contained in this Agreement, to the extent that, by their terms, they are
to be performed or complied with (i) prior to or on the Closing Date, shall
terminate on the Final Distribution Date, and (ii) after the Closing, shall
terminate on the expiration of all applicable statutes of limitations applicable
to any claim with respect to such covenant or agreement; provided however, that
any such covenant or agreement that specifies a term or period expiring before
the expiration of all applicable statutes or limitations will survive for a
period of 60 days following the expiration of such specified term or period.
(c) Pending Claims. Notwithstanding the foregoing, if a Claim Notice
is provided in accordance with ARTICLE X before the termination of the
applicable representation, warranty, covenant or agreement pursuant to Section
10.1(a) or Section 10.1(b), then (notwithstanding such termination) the
representation, warranty, covenant or agreement giving rise to such claim will
survive until, but only for the purpose of, the resolution of such claim by
final, nonappealable judgment or settlement and, if applicable, subject to
Section 11.3, the distribution from the Escrow Fund to the Buyer Indemnities
entitled thereto as a result of such resolution of such claim.
10.2 Indemnification by Buyer. Effective upon the Closing and subject to
the terms of this ARTICLE X, Buyer shall defend, indemnify and hold harmless
Parent and its Affiliates, and all of their respective managers, directors,
officers, and owners (collectively, the "Regency Indemnitees") from and against
any and all Losses asserted against, resulting from, imposed upon or incurred by
any of the Regency Indemnitees as a result of or arising out of (a) any breach
by Buyer of its representations, warranties, covenants or agreements contained
in this Agreement and (b) other than with respect to any Losses arising as a
result of a breach by Parent, any Parent Member or any Partner of any
representation, warranty, covenant or agreement contained in this Agreement, the
ownership, management, or operation of any Regency Company from and after the
Closing Date.
10.3 Indemnification by Parent, the Parent Members and the Partners.
(a) Effective upon the Closing and subject to the terms of this
ARTICLE X, Parent shall defend, indemnify and hold harmless Buyer and its
Affiliates, and all of their respective managers, directors, officers, and
owners (collectively, the "Buyer Indemnitees") from and against any and all
Losses asserted against, resulting from, imposed upon or incurred by any of the
Buyer Indemnitees as a result of or arising out of any breach (i) by Parent of
any Parent Title Representation or (ii) by Regency of any Regency Title
Representation. The liability of Parent under this Section 10.3(a) shall be
limited to, in addition to amounts that are recovered from the Escrow Fund, the
amount actually distributed to Parent pursuant to the provisions of this
Agreement and the Escrow Agreement.
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(b) Effective upon the Closing and subject to the terms of this
ARTICLE X, Parent, solely through the Escrow Fund (other than with respect to
any Claim for indemnification pursuant to Section 10.3(b)(v) or (vi), which
Losses shall not be limited solely to the Escrow Fund), shall defend, indemnify
and hold harmless the Buyer Indemnitees from and against any and all Losses
asserted against, resulting from, imposed upon or incurred by any of the Buyer
Indemnitees as a result of or arising out of:
(i) any breach by (A) Regency of its representations or
warranties contained in this Agreement other than the Regency Title
Representations (for which indemnity is provided pursuant to Section 10.3(a) or
(B) Parent, any Parent Member or any Partner of its representations or
warranties contained in this Agreement other than the Parent Title
Representations (for which indemnity is provided pursuant to Section 10.3(a));
(ii) any failure by Parent, Regency, any Parent Member or any
Partner to comply with any covenant or agreement contained in this Agreement,
whether or not any such failure was discovered or known before or after Closing;
(iii) any Third Party Debt, Expenses, Change of Control Amounts
and Severance Obligations Adjustment Amounts that do not result in a reduction
in the Purchase Price pursuant to Section 2.3;
(iv) any Buyer Indemnified Taxes;
(v) any Purchase Price Deficit;
(vi) any Loss incurred by Regency's failure to obtain the
reaffirmation of a Mutual Release at the Closing;
(vii) any Environmental Costs or Liabilities arising out of or in
connection with or as a result of any conditions, facts or circumstances
existing on or before the Closing Date relating to the operations of any Regency
Company at any time on or before the Closing Date (regardless of whether such
matters have been disclosed in the Regency Disclosure Schedule or otherwise)
(collectively, the "Pre-Existing Environmental Matters"), including any
Environmental Costs or Liabilities that any Buyer Indemnitee may sustain in
connection with any remediation, clean-up, modification, monitoring, repairs,
work, construction, alterations or installations required as a result of the
Pre-Existing Environmental Matters (except any increased Environmental Costs or
Liabilities to the extent such increased Environmental Costs or Liabilities are
caused by the actions of any Buyer Indemnitee or its employees, agents, or
consultants, but excluding environmental consultants engaged to investigate,
monitor, clean up or remediate any matter that includes a Pre-Existing
Environmental Matter), including any Environmental Costs or Liabilities relating
to capital improvements, physical upgrading or maintenance and repairs required
by or otherwise required to correct any Regency Company's noncompliance with
Environmental Laws with respect to Pre-Existing Environmental Matters; and
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(viii) any Losses incurred as a result of Gulf States' failure at
or prior to the Closing to be in compliance with the FERC's regulations set
forth in Part 358 of the Code of Federal Regulations.
(c) To the extent Parent fails to perform in any respect its
obligations under Section 10.3(a) or Section 10.3(b)(V), each Parent Member and
each Partner, proportionally (based on its respective ownership of Parent as set
forth in Schedule A) shall defend, indemnify and hold harmless the Buyer
Indemnitees from and against any and all Losses for which Parent is obligated to
provide Indemnification pursuant to Section 10.3(a) or Section 10.3(b)(v). To
the extent Parent fails to perform in any respect its obligations under Section
10.3(b)(vi) because of a Parent Member's or Partner's failure to reaffirm its
Mutual Release at Closing, such Parent Member and or Partner, as applicable,
severally and not jointly, shall defend, indemnify and hold harmless the Buyer
Indemnitees from and against any and all Losses for which Parent is obligated to
provide Indemnification pursuant to Section 10.3(b)(vi). The liability of each
Parent Member under this Section 10.3(c) shall be limited to, in addition to
amounts attributed to such Parent Member, based on its respective ownership
interest in Parent, that are recovered from the Escrow Fund, the amount actually
distributed to such Parent Member by Parent at or after the Closing. The
liability of each Partner under this Section 10.3(c) shall be limited to, in
addition to amounts that may be attributed to the Partnership (and to each
Partner based on its respective ownership interest in the Partnership) that are
recovered from the Escrow Fund, the amount actually distributed by Parent or the
Partnership to such Partner at or after the Closing.
(d) Notwithstanding that the Party whose breach of any of the
representations or warranties or whose failure to perform any covenant or
agreement gave rise to any liability or obligation of any Parent Member or any
Partner pursuant to Section 10.3(c), or any liability or obligation of Parent
pursuant to Section 10.3(a) or Section 10.3(b), may be a Party other than
Parent, a Parent Member or a Partner, Parent, the Parent Members and the
Partners agree that, in the event of any dispute regarding the propriety of
indemnification of any Claim or series of related Claims by any Buyer Indemnitee
under this ARTICLE X, the Buyer Indemnitee may initiate a Proceeding relating to
the recovery of the Claim against Parent or, to the extent such claim arises
under Section 2.3(d), Section 2.3(f) or Section 10.3(c), one or more Parent
Members or Partners as a party defendant with respect to its indemnification
obligations under Section 2.3(d), Section 2.3(f), Section 10.3(a), Section
10.3(b) or Section 10.3(c), as applicable, without joining any Regency Company
or any other Party as a party defendant (Buyer acknowledges that Section 10.3(a)
and Section 10.3(c) provides Buyer's sole recourse for breach of any Regency
Title Representations or Parent Title Representations and that no Buyer
Indemnitee shall have recourse, other than through the Escrow Fund, against
Parent, or any Partner or Parent Member, except for any Loss under Section
10.3(a), Section 10.3(b)(v), Section 10.3(b)(vi), Section 10.3(c), Section
2.3(d) and Section 2.3(f)); and
(i) none of Parent, any Parent Member or any Partner will assert
any defense thereto predicated on the fact that such representations or
warranties were made or such obligations were incurred by a Party other than
Parent, such Parent
62
Member or such Partner, as applicable, all of which defenses are hereby
irrevocably waived by Parent, each Parent Member and each Partner; and
(ii) none of Parent, any Parent Member or any Partner will assert
any suretyship defense thereto predicated on the concept that Parent, such
Parent Member or such Partner was a guarantor of Regency's or any other Party's
obligations relating to its obligations, representations, warranties or
obligations or otherwise stood in a suretyship relationship with any Regency
Company or any other Party in that regard, all of which defenses are hereby
irrevocably waived by Parent, each Parent Member and each Partner.
10.4 Certain Limitations. The Buyer Indemnitees and Regency Indemnitees
rights to indemnification under this ARTICLE X shall be limited as follows:
(a) No Claim Notice for indemnification may be provided with respect
to any Claim for breach of a representation, warranty, covenant or other
agreement in this Agreement beyond the applicable period specified in Section
10.1.
(b) If the Buyer Indemnitees shall seek indemnification pursuant to
Section 10.3(b)(i), 10.3(b)(ii), 10.3(b)(iii), 10.3(b)(iv), 10.3(b)(vii) or
10.3(b)(viii) such Buyer Indemnitees shall be entitled to recover Losses with
respect to such claim only to the extent of the Escrow Fund, and shall not be
entitled to recover any Losses in excess of the Escrow Fund. Notwithstanding the
foregoing, any claim for indemnification (and the Losses recoverable therefrom)
that may be brought under both Section 10.3(a) or Section 10.3(c), on the one
hand, and Section 10.3(b), on the other hand, shall not be subject to any
limitation under this Section 10.4(b). Notwithstanding the preceding sentence,
in the event that the Escrow Fund shall be insufficient to cover any Escrow
Indemnity Claim, the Buyer Indemnitees shall have personal recourse, in
accordance with Section 10.3(c), Section 2.3(d) or Section 2.3(f), to Parent,
the Parent Members and/or the Partners, as applicable, with respect to any
Escrow Indemnity Claim as to which the balance of the Escrow Fund is
insufficient to cover in full for amounts up to, and only up to, amounts
distributed from the Escrow Fund to cover Losses relating to a Non-Escrow
Indemnity Claims.
(c) None of the Buyer Indemnitees shall be entitled to recover
pursuant to Section 10.3(b)(i); or Section 10.3(b)(vii) unless:
(i) the Buyer Indemnitees, collectively, shall have suffered or
incurred aggregate Losses otherwise recoverable under this ARTICLE X in an
amount in excess of the Deductible, and then recovery shall be permitted only to
the extent of such excess; and
(ii) after the Deductible has been met, the Buyer Indemnitees
suffer or incur Losses with respect to the individual Claim or series of related
Claims which arise out of substantially the same facts and circumstances for
which recovery is sought in excess of $ 100,000, in which case the full amount
of such Losses shall be recoverable, subject to the limitations in Section
10.4(b).
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Notwithstanding the foregoing, any claim for indemnification (and the Losses
recoverable therefrom) that may be brought under both Section 10.3(b)(i) or
Section 10.3(b)(vii) on the one hand, and any other subsection of Section 10.3
(other than Section 10.3(b)(i) or Section 10.3(b)(vii)), on the other hand shall
not be subject to any limitation specified in this Section 10.4(c).
(d) If an indemnification claim is brought by a Buyer Indemnitee
pursuant to Section 10.3(a), Section 10.3(b)(vi) or, to the extent relating to a
claim under Section 10.3(a) or Section 10.3(b)(vi), Section 10.3(c), the Buyer
Indemnitee may, at its option, recover Losses incurred with respect to such
Claim from the Escrow Fund in accordance with ARTICLE XI to the extent of
amounts available in the Escrow Fund (and shall be entitled pursuant to Section
10.3(a) and Section 10.3(c) to recover any Losses not recovered from the Escrow
Fund from, as applicable, Parent or one or more Parent Members or Partners).
(e) If an indemnification claim is brought by a Buyer Indemnitee
pursuant to Section 10.3(b):
(i) with respect to a breach by Parent, any Parent Member or a
Partner of ARTICLE III or any covenant or agreement in this Agreement of Parent,
any Parent Member or any Partner, the Person whose breach gives rise to or forms
the basis for such Claim shall be severally liable for all Losses incurred by
the Buyer Indemnitee with respect to such breach; and
(ii) the Buyer Indemnitee may, at its option, recover Losses
incurred with respect to such claim from the Escrow Fund in accordance with
ARTICLE XI to the extent of amounts available in the Escrow Fund (and shall be
entitled pursuant to Section 2.3(d), Section 2.3(f), Section 10.3(b)(v) and, to
the extent relating to a claim under Section 2.3(d), Section 2.3(f) or Section
10.3(b)(v), Section 10.3(c) to recover any Losses not recovered from the Escrow
Fund from Parent, one or more Parent Members or Partners, whichever Person whose
breach gave rise to or forms the basis of such Losses).
Notwithstanding the foregoing, any claim for indemnification (and the Losses
recoverable therefrom) that may be brought under Section 10.3(a) or Section
10.3(c) for a breach of the Parent Title Representation or the Regency Title
Representation or under Section 10.3(b)(vi) or, to the extent relating to a
Claim under Section 10.3(b)(vi), Section 10.3(c) shall not be subject to this
Section 10.4(e).
(f) Notwithstanding anything to the contrary in this Agreement:
(i) the Buyer Indemnitees' recovery for Claims under this ARTICLE
X (including amounts recovered by set-off) shall not exceed, in the aggregate,
an amount equal to the Purchase Price;
(ii) the Regency Indemnitees' recovery for Claims under Section
10.2(a) (including amounts recovered by set-off) shall not exceed, in the
aggregate, an amount equal to $12,500,000;
64
(iii) for purposes of determining whether a representation or
warranty has been breached for purposes of this ARTICLE X and determining the
amount of Losses suffered by any Buyer Indemnitee or Regency Indemnitee, as the
case may be, each representation and warranty set forth in this Agreement, and
any qualification with respect to any representation or warranty set forth in
the Regency Disclosure Schedule, shall be read without regard or giving effect
to any "material," "materiality," "Material Adverse Effect," and "substantial"
or "Knowledge" qualifications that may be contained in any such representation
or warranty, except with respect to the representations and warranties in
Section 4.15 and Section 4.19 and the defined term "Material Contract" and all
"material," "materiality," "Material Adverse Effect," and "substantial" or
"Knowledge" qualifications that are contained in any defined term shall be given
effect;
(iv) No investigation or knowledge of any Party, whenever
undertaken or however obtained, shall limit such Party's right to
indemnification hereunder in any manner; and
(v) The provisions of this ARTICLE X shall apply in such a manner
as not to give duplicative effect to any item of adjustment and if there has
been an adjustment to the Purchase Price for any Loss, there shall not be any
charge against the Deductible or the Escrow Fund and no Indemnitee may claim a
breach of any representation or warranty with respect to any Loss that gave rise
to such adjustment in the Purchase Price pursuant to Section 2.3 to the extent
of the amount of such Loss given effect in such adjustment to the Purchase
Price.
(g) Notwithstanding anything in this ARTICLE X to the contrary, no
Buyer Indemnitee may seek indemnification hereunder with respect to any breach
of any representation or warranty of Regency for which facts and circumstances
Regency is entitled to recovery under the environmental insurance policy or
title insurance policy referenced in the Waha Acquisition Agreement, the terms
and provisions of the Waha Acquisition Agreement, the terms and provisions of
the El Paso Acquisition Agreement or any other Contract or right unless and
until (i) Buyer and/or Regency shall have made a claim for recovery under such
insurance policy or Contract (with a copy thereof to Parent) and (ii) such
insurer or other Third Person party to such Contract, as the case may be, have
either disputed or contested such claim or failed to acknowledge responsibility
for such claim within the time periods prescribed in such insurance policy or
Contract. In the event such insurer, or Third Person shall dispute, contest or
fail to acknowledge responsibility for such claim, the Buyer Indemnitees shall
be entitled to recover Losses with respect to such breach from the Escrow Fund
in accordance with this ARTICLE X (to the extent the Deductible has been
satisfied, if applicable, and the other requirements satisfied) and, upon the
recovery from the Escrow Fund of any such Losses and the request of Parent,
Regency shall either (i) assign the relevant claim against the aforesaid
insurer, DEFS, El Paso or Third Person to Parent or (ii) prosecute such claim at
the expense of Parent and remit the proceeds (net of reasonable expenses) of
such prosecution to Parent. In the event and to the extent that such breach
shall have resulted in any disputed amount being withheld from distribution from
the Escrow Fund to Parent, Regency shall remit the proceeds (net of reasonable
expenses) of such prosecution to
65
Parent. If after the Closing Date Buyer, Regency or any Regency Company directly
or indirectly takes, or fails to take (other than failing to renew any Contract
that expires in accordance with its terms), any action that diminishes, reduces
or eliminates any right of recovery under the environmental insurance policy or
title insurance policy referenced in the Waha Acquisition Agreement, the terms
and provisions of the Waha Acquisition Agreement, the terms and provisions of
the El Paso Acquisition Agreement or any other Contract to which any Regency
Company is a party as of the Closing (the "Third Person Protection Contracts"),
no Buyer Indemnitee shall be entitled to recover from the Escrow Fund (or charge
against the Deductible) any Losses that would have been recoverable under the
Third Person Protection Contracts (or chargeable against the Deductible) but for
such diminishment, reduction or elimination of recovery rights.
(h) The amount of Losses required to be paid pursuant to this ARTICLE
X shall be reduced to the extent of any tax benefits actually realized, or
insurance proceeds directly or indirectly received by the Indemnified Party.
10.5 Notice of Asserted Liability: Opportunity to Defend.
(a) All claims for indemnification hereunder shall be asserted and
handled pursuant to this Section 10.5. Any Person claiming indemnification
hereunder is referred to herein as the "Indemnified Party" or "Indemnitee" and
any Person against whom such claims are asserted hereunder is referred to herein
as the "Indemnifying Party" or "Indemnitor."
(b) If any Claim is asserted against or any Loss is sought to be
collected from an Indemnifying Party, the Indemnified Party shall with
reasonable promptness (and in any event prior to the expiration of the relevant
survival period set forth in Section 10.1 (a)) provide to the Indemnifying Party
a Claim Notice. The failure to notify the Indemnifying Party shall not relieve
it of any liability that it may have to any Indemnified Party with respect to
such action except to the extent the Indemnifying Party shall have been
prejudiced by such failure or to the extent the Claim Notice was provided after
the expiration of the relevant survival period set forth in Section 10.1 (a).
Notice to Parent shall be sufficient to provide notice to Parent, the Parent
Members and the Partners.
(c) The Indemnifying Party shall have 30 days from the personal
delivery or receipt of the Claim Notice (the "Notice Period") to notify the
Indemnified Party in writing (i) whether or not it disputes the liability to the
Indemnified Party hereunder with respect to the Claim or Loss, (ii) in the case
where Losses are asserted against or sought to be collected from an Indemnifying
Party by the Indemnified Party, whether or not the Indemnifying Party desires at
its own sole cost and expense to attempt to remedy such Losses or (iii) in the
case where Claims are asserted against or sought to be collected from an
Indemnified Party by a Third Person ("Third Person Claim"), whether or not the
Indemnifying Party desires at its own sole cost and expense to defend the
Indemnified Party against such Third Person Claim. The Parties agree that, after
the Closing Date, the reasonable expenses of Parent (including fees or expenses
of attorneys or other advisors) in (a) defending a Third Person Claim for which
a Claim for
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indemnification by a Buyer Indemnitee has been made and (b) in prosecuting a
claim assigned to Parent under Section 10.4(g) shall be paid from the Escrow
Fund as provided herein and subject to ARTICLE XI. Parent shall be entitled to
submit monthly to the Buyer and the Escrow Agent invoices for such costs and
expenses to Parent, including the fees, costs and expenses of its experts
(including expert witnesses), consultants and any other representatives engaged
by Parent, incurred by Parent in connection with any claim as described in
clause (a) and (b) of the immediately preceding sentence and receive
reimbursement from the Escrow Fund within 10 days after submission of such
invoices.
(d) If the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified Party against a
Third Person Claim, the Indemnifying Party shall have the right to defend all
appropriate Proceedings, and with counsel of its own choosing (but reasonably
satisfactory to the Indemnified Party) and such Proceedings shall be promptly
settled or prosecuted by it to a final conclusion. If the Indemnified Party
desires to participate in any such defense or settlement, other than at the
request of the Indemnifying Party, it may do so at its sole cost and expense. If
the Indemnified Party joins in defending in any such Third Person Claim, the
Indemnifying Party shall have full authority to determine all action to be taken
with respect thereto. If the Indemnifying Party elects not to defend the
Indemnified Party against a Third Person Claim or does not provide an answer
within the Notice Period, the Indemnified Party shall be entitled to assume the
defense of all appropriate Proceedings related thereto, with counsel of its
choosing. If a Proceeding is asserted against both the Indemnifying Party and
the Indemnified Party and there are one or more defenses available to the
Indemnified Party that are not available to the Indemnifying Party or there is a
conflict of interest which renders it inappropriate for the same counsel to
represent both the Indemnifying Party and the Indemnified Party, the
Indemnifying Party shall be responsible for paying for separate counsel for the
Indemnified Party; provided, however, that if there is more than one Indemnified
Party, the Indemnifying Party shall not be responsible for paying for more than
one separate firm of attorneys (in addition to local counsel) to represent the
Indemnified Parties, regardless of the number of Indemnified Parties. No
compromise or settlement of any Proceeding may be effected by the Indemnifying
Party without the Indemnified Party's written consent unless the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party and
such settlement includes the granting by each claimant or plaintiff to each
Indemnified Party of an unconditional release from all liability in respect of
such Third Person Claim and related Proceeding.
(e) If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel, at the cost and
expenses of the Indemnifying Party in contesting any Third Person Claim and in
making any counterclaim against the Third Person asserting the Third Person
Claim, or any cross-complaint against any Person. Notwithstanding anything to
the contrary contained in this Agreement, no Third Person Claim may be settled
or otherwise compromised without the prior written consent of the Indemnifying
Party.
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(f) The costs and expenses of a Buyer Indemnitee, including the fees,
costs and expenses of its separate counsel, experts (including expert
witnesses), consultants and any other representatives engaged by it, incurred in
connection with the (i) defense and settlement or final resolution of any Third
Person Claim as to which the Buyer Indemnitee has the right to control and (ii)
in prosecuting a claim under Section 10.4(g) shall be treated as "Losses" for
all purposes hereunder. With respect to a Third Person Claim that is subject to
the Deductible and (giving effect to such costs and expenses) the Deductible has
been met, and with respect to any Third Person Claim that is not subject to the
Deductible, the Buyer Indemnitee shall be entitled to submit monthly to Parent
and the Escrow Agent invoices for such costs and expenses to which they are
entitled under this Section 10.5(f) and receive reimbursement from the Escrow
Fund within 10 days after submission of such invoices.
10.6 Exclusive Remedy. AS BETWEEN THE BUYER INDEMNITEES AND THE REGENCY
INDEMNITEES, OTHER THAN WITH RESPECT TO CLAIMS FOR FRAUD, AFTER CLOSING (A) THE
PROVISIONS SET FORTH IN THIS ARTICLE X AND ARTICLE XI AND THE ESCROW AGREEMENT
WILL BE THE SOLE AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES
WITH RESPECT TO SAID AGREEMENTS, THE EVENTS GIVING RISE THERETO, AND THE
TRANSACTIONS PROVIDED FOR HEREIN OR CONTEMPLATED HEREBY AND (B) NO PARTY NOR ANY
OF ITS SUCCESSORS OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST ANY OTHER PARTY OR
ITS AFFILIATES OTHER THAN AS IS EXPRESSLY PROVIDED IN THIS ARTICLE X AND ARTICLE
XI AND THE ESCROW AGREEMENT.
10.7 Limitation on Damages.
(A) SUBJECT TO SECTION 10.7(B) NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL ANY PARTY BE LIABLE TO ANY OTHER
PARTY, OR TO THE OTHER'S INDEMNITEES, UNDER THIS AGREEMENT FOR ANY EXEMPLARY,
PUNITIVE, REMOTE, SPECULATIVE, CONSEQUENTIAL, OR SPECIAL DAMAGES, AND NO CLAIM
SHALL BE MADE OR AWARDED AGAINST THE ESCROW FUND OR ANY PARTY, FOR ANY SUCH
DAMAGES; PROVIDED, HOWEVER, THIS SECTION 10.7 SHALL NOT LIMIT THE RIGHT OF BUYER
TO RECOVER FROM THE ESCROW FUND (A) ANY LOSS OF PROFITS, TO THE EXTENT ACTUALLY
SUFFERED, INCURRED OR PAID BY BUYER OR (B) ANY LOSS OF PROFITS, TO THE EXTENT
ACTUALLY SUFFERED, INCURRED OR PAID BY BUYER, ARISING AS A RESULT OF ANY BREACH
OF ANY REPRESENTATION OR WARRANTY CONTAINED IN SECTION 4.15 WHICH HAVE NOT BEEN
THE SUBJECT OF AN ADJUSTMENT PURSUANT TO SECTION 2.3(D).
(B) NOTHING CONTAINED IN SECTION 10.7(A), OR OTHERWISE IN THIS
AGREEMENT SHALL LIMIT OR OTHERWISE AFFECT ANY RIGHTS OF BUYER TO RECOVER ANY
LOSSES OR
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DAMAGES IN THE EVENT BUYER TERMINATES THIS AGREEMENT PURSUANT TO SECTION 9.1(D)
AND WITHIN SIX MONTHS AFTER THE DATE OF SUCH TERMINATION ANY THIRD PERSON (A)
ENTERS INTO AN AGREEMENT WITH PARENT, ANY REGENCY COMPANY OR THE PARENT MEMBERS
(OR ANY OF THEIR RESPECTIVE SUCCESSORS) PROVIDING FOR, AND PURSUANT TO SUCH
AGREEMENT CONSUMMATES, REGARDLESS OF WHETHER SUCH CONSUMMATION IS WITHIN SUCH
SIX MONTH PERIOD OR THEREAFTER, A TRANSACTION, OR (B) OTHERWISE CONSUMMATES A
TRANSACTION WHICH, IN THE CASE OF (A) OR (B), RESULTS IN THE ACQUISITION BY A
THIRD PERSON (OR A GROUP OF RELATED THIRD PERSONS), THROUGH A PURCHASE OF THE
EQUITY INTEREST, ASSETS, MERGER, CONSOLIDATION OR SIMILAR BUSINESS TRANSACTION,
OF PARENT, REGENCY OR THE REGENCY COMPANIES, OF ALL OR A SUBSTANTIAL PORTION OF
THE OUTSTANDING EQUITY INTEREST IN, OR ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF, THE REGENCY COMPANIES; PROVIDED, HOWEVER, THAT THE TOTAL AMOUNT OF LOSSES
AND DAMAGES THAT BUYER SHALL BE ENTITLED TO RECOVER IN SUCH EVENT SHALL BE
LIMITED TO THE AMOUNT BY WHICH THE CONSIDERATION TO BE PAID BY THE PURCHASERS
(INCLUDING DEBT TO BE ASSUMED) IN SUCH TRANSACTION EXCEEDS $405,000,000; AND
PROVIDED FURTHER, THAT IN CALCULATING SUCH LOSSES AND DAMAGES, APPROPRIATE
EFFECT SHALL BE GIVEN TO ANY PURCHASES OR SALES OF ANY EQUITY INTERESTS,
BUSINESSES, DIVISIONS, ASSETS OR PROPERTIES AFTER THE DATE OF THIS AGREEMENT BY
ANY REGENCY COMPANY.
10.8 Bold and/or Capitalized Letters. THE PARTIES AGREE THAT THE BOLD
AND/OR CAPITALIZED LETTERS IN THIS AGREEMENT CONSTITUTE CONSPICUOUS LEGENDS.
10.9 Independent Investigation. Buyer is knowledgeable in the business of
owning and operating natural gas, natural gas liquids, condensate and refined
product facilities. In making the decision to enter into this Agreement and
consummate the transaction contemplated hereby, Buyer has relied solely on its
own independent due diligence investigations and inspection of the Assets of the
Regency Companies, and the representations, warranties, covenants and
undertakings of Parent, Regency, the Parent Members and the Partners in this
Agreement.
10.10 Projections. WITHOUT DIMINISHING THE REPRESENTATIONS AND WARRANTIES
SET FORTH IN ARTICLE IV, BUYER ACKNOWLEDGES THAT: (I) THE ASSETS OWNED BY THE
REGENCY SUBSIDIARIES HAVE BEEN USED FOR NATURAL GAS, NATURAL GAS LIQUIDS,
CONDENSATE AND/OR REFINED PRODUCT OPERATIONS AND PHYSICAL CHANGES IN SUCH ASSETS
AND IN THE LANDS BURDENED THEREBY MAY HAVE OCCURRED AS A RESULT OF SUCH USES AND
(II) SUCH ASSETS INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, THE LOCATIONS OF
69
WHICH MAY NOT BE READILY APPARENT BY A PHYSICAL INSPECTION OF SUCH ASSETS OR THE
LANDS BURDENED THEREBY.
EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, NEITHER REGENCY, PARENT, THE
PARENT MEMBERS NOR THE PARTNERS MAKE ANY REPRESENTATION, COVENANT OR WARRANTY,
EXPRESS, IMPLIED OR STATUTORY, AS TO (A) THE ACCURACY OR COMPLETENESS OF ANY
DATA OR RECORDS DELIVERED TO BUYER WITH RESPECT TO THE ASSETS, INCLUDING,
WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS, PRICING ASSUMPTIONS, QUALITY
OR QUANTITY OF THE INTERESTS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR
(B) FUTURE VOLUMES OF HYDROCARBONS OR OTHER PRODUCTS GATHERED, TRANSPORTED,
TREATED, STORED OR PROCESSED THROUGH OR AT THE ASSETS. WITH RESPECT TO ANY
PROJECTION OR FORECAST DELIVERED BUYER BY OR ON BEHALF OF REGENCY, PARENT, THE
PARENT MEMBERS, THE PARTNERS OR ANY OF THEIR RESPECTIVE AFFILIATES, BUYER
ACKNOWLEDGES THAT (I) THERE ARE UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE
SUCH PROJECTIONS AND FORECASTS, (II) BUYER IS FAMILIAR WITH SUCH UNCERTAINTIES,
AND (III) BUYER IS TAKING FULL RESPONSIBILITY FOR MAKING ITS OWN EVALUATION OF
THE ADEQUACY AND ACCURACY OF ALL SUCH PROJECTIONS AND FORECASTS FURNISHED.
ARTICLE XI
ESCROW
11.1 Escrow Fund. On the Closing Date, Buyer shall deposit with the Escrow
Agent, in accordance with Section 2.2(b)(ii), the Escrow Amount in immediately
available funds (the funds held by the Escrow Agent pursuant to the Escrow
Agreement (i.e., the Escrow Amount, as adjusted from time to time by any
disbursements in accordance with this Agreement and the Escrow Agreement and
interest or other income on investments), the "Escrow Fund") pursuant to the
Escrow Agreement, which shall provide that the Escrow Fund shall be held in
escrow. The Escrow Agent shall act as escrow agent and hold, safeguard and
disburse the Escrow Fund pursuant to the terms and conditions of this Agreement
and the Escrow Agreement. The Escrow Fund will not be subject to any lien or
attachment of any creditor of any Party and will be used solely for the purposes
and subject to the conditions set forth in this Agreement and the Escrow
Agreement.
11.2 Release from Escrow.
(a) At any time, or from time to time, before the Final Distribution
Date, Buyer may deliver a Claim Notice to Parent and the Escrow Agent (i)
specifying in reasonable detail the nature and dollar amount of a Claim it may
have under ARTICLE X (including without limitation any Claim that it may have
pursuant to Section 2.3(d) to receive a distribution from the Escrow Fund with
respect to any Purchase Price Deficit or any Claim under Section 10.5(f) to
receive a distribution from the Escrow Fund with respect to fees, costs and
expenses) and (ii) requesting a disbursement of the amount of
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the Claim from the Escrow Fund; provided that to the extent the amount of any
Claim exceeds the amount of the Escrow Fund then held in escrow, Buyer shall not
be entitled to recover from the Escrow Agent any amounts in excess of the Escrow
Fund.
(b) Subject to Section 11.2(d) and Section 11.2(e) if Buyer and Parent
agree as to the liability of such Claim and the amount or any portion thereof,
Buyer and Parent each shall provide to the Escrow Agent a written notice jointly
executed instructing the Escrow Agent to release to Buyer an amount equal to the
amount of the liability for such Claim or the undisputed portion thereof ("Joint
Instructions"). If Parent and Buyer do not deliver Joint Instructions to the
Escrow Agent, then the Escrow Agent shall not disburse the monies requested
pursuant to the Claim Notice but rather hold such amount (the "Disputed Amount")
until the earliest of (i) the receipt by the Escrow Agent of Joint Instructions
with respect to such Disputed Amount instructing the Escrow Agent to release
monies, specifying the amount of such monies to be released and to whom, (ii)
subject to Section 11.3(b), the Final Distribution Date or (iii) a final written
non-appealable order issued by a court of competent jurisdiction with respect
to such Disputed Amount.
(c) At any time, or from time to time, before the Final Distribution
Date, Parent may deliver a written notice to Buyer and the Escrow Agent (i)
specifying in reasonable detail the nature and dollar amount, which shall never
exceed the amount of the Escrow Fund then held in escrow, of fees, costs and
expenses (which written notice shall include a copy of all invoices to which
such fees, costs and expenses relate) it is entitled to receive pursuant to
Section 10.5(c) and (ii) requesting a disbursement of the amount of such fees,
costs and expenses from the Escrow Fund.
(d) At any time, or from time to time, before the Final Distribution
Date, Buyer may deliver a written notice to Parent and the Escrow Agent (i)
specifying in reasonable detail the nature and dollar amount, which shall never
exceed the amount of the Escrow Fund then held in escrow, of fees, costs and
expenses (which written notice shall include a copy of all invoices to which
such fees, costs and expenses relate) it is entitled to receive pursuant to
Section 10.5(f) and (ii) requesting a disbursement of the amount of such fees,
costs and expenses from the Escrow Fund.
(e) If Buyer or Parent submits a written notice pursuant to Section
11.2(c) or Section 11.2(d), as applicable, the Escrow Agent shall disburse the
amounts requested in such written notice without any further direction by the
other Party. If the Escrow Agent shall not have distributed such amounts to the
appropriate Party hereunder within 10 days after the Escrow Agent's receipt of
written notice, Buyer and Parent each shall provide to the Escrow Agent a
written notice jointly executed instructing the Escrow Agent to release to Buyer
or Parent, as applicable, the amount requested in such written notice.
11.3 Distributions.
(a) On the First Distribution Date, the Escrow Agent shall distribute
to Parent the First Distribution Amount and, if required, Buyer and Parent shall
at least one
71
Business Day prior to the First Distribution Date provide written notice jointly
executed instructing the Escrow Agent to distribute to Parent the First
Distribution Amount.
(b) On the Final Distribution Date (i) the Escrow Agent shall
distribute to Parent the balance of the Escrow Fund minus the amount of any
Continuing Claims that are (A) the subject of litigation between the Parties or
(B) unresolved Third Person Claims that Parent has agreed the Buyer Indemnitees
are entitled to be indemnified against pursuant to the terms of ARTICLE X
(collectively, the "Retained Escrow Amount"), (ii) and, if required, Buyer and
Parent shall at least one Business Day prior to the Final Distribution Date
provide written notice jointly executed instructing the Escrow Agent to
distribute to Parent the balance of the Escrow Fund minus the Retained Escrow
Amount, and (iii) the escrow shall continue until the resolution of such
Continuing Claims, and during such continuance, the Escrow Agent shall continue
to hold the Escrow Fund in an amount not to exceed the Retained Escrow Amount.
11.4 Subsequent Distribution(s). The Retained Escrow Amount shall only be
distributed by the Escrow Agent pursuant to (b) Joint Instructions or (c) a
final written non-appealable order issued by a court of competent jurisdiction
with respect to any Continuing Claim.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Expenses. Each Party will bear its own respective costs and expenses
(including legal fees and expenses) incurred in connection with the negotiation
of this Agreement and the transactions contemplated hereby (and Buyer
acknowledges that Regency shall pay the costs and expenses of Parent, the Parent
Members and the Partners).
12.2 Assignment. No Party may assign this Agreement or any of its rights or
obligations arising hereunder without the prior written consent of the other
Parties; provided, however, that, subject to Section 6.9(i) without the consent
of Regency, Parent, the Parent Members or the Partners, Buyer may, without
relieving Buyer from its liabilities or obligations hereunder, (a) assign this
Agreement, and its rights and obligations hereunder, to an Affiliate of Buyer or
to an entity formed, controlled and primarily owned by Buyer, and/or (b)
collaterally assign this Agreement to any entity providing financing to Buyer.
12.3 Entire Agreement, Amendments and Waiver. This Agreement (together with
any Exhibits and schedules hereto), the Escrow Agreement and all certificates,
documents, instruments and writings that are delivered pursuant hereto contain
the entire understanding of the Parties with respect to the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof other than the
Confidentiality Agreement which is hereby ratified by Buyer, as if Buyer were a
party thereto, and shall continue to be binding on Regency and Buyer. This
Agreement may be amended, superseded or canceled only by a written instrument
duly executed by Regency, Parent (on behalf of Parent, the Parent Members
72
and the Partners) and Buyer, specifically stating that it amends, supersedes or
cancels this Agreement. Any of the terms of this Agreement and any condition to
a Party's obligations hereunder may be waived only in writing by that Party
specifically stating that it waives a term or condition hereof. No waiver by a
Party of any one or more conditions or defaults by the other in performance of
any of the provisions of this Agreement shall operate or be construed as a
waiver of any future conditions or defaults, whether of a like or different
character, nor shall the waiver constitute a continuing waiver unless otherwise
expressly provided.
12.4 Severability. Each portion of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
12.5 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.6 Governing Law and Dispute Resolution.
(a) Governing Law. This Agreement shall be governed by, enforced in
accordance with, and interpreted under, the Laws of the State of Texas, without
reference to applicable principles of conflicts of Laws.
(b) Consent to Jurisdiction. The Parties hereby irrevocably submit to
the jurisdiction of the courts of the State of Texas and the federal courts of
the United States of America located in Dallas, Texas, and appropriate appellate
courts therefrom, over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby, and each Party hereby
irrevocably agrees that all claims in respect of such dispute or proceeding may
be heard and determined in such courts. The Parties hereby irrevocably waive, to
the fullest extent permitted by Law, any objection which they may now or
hereafter have to the laying of venue of any dispute arising out of or relating
to this Agreement or any of the transactions contemplated hereby brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each Party agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
This consent to jurisdiction is being given solely for purposes of this
Agreement and is not intended to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a Party to this Agreement may become
involved. Each Party consents to process being served by any other Party to this
Agreement in any Proceeding of the nature specified in this Section 12.6(b) by
the mailing of a copy thereof in the manner specified by the provisions of
Section 12.7.
(c) Recovery of Costs and Attorneys' Fees. If there are any
Proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby, after the entry of a final written non-appealable order, if
one Party has predominantly prevailed in the dispute, it shall be entitled to
recover from the other Party all court costs, fees and expenses relating to such
Proceeding, including reasonable
73
attorneys' fees that are specifically included in such court award (and Buyer
acknowledges that if it has predominantly prevailed in any matter relating to a
claim for indemnification under ARTICLE X (other than a claim for
indemnification under Section 10.3(a)), all such court costs, fees and expenses
shall only be recoverable from the Escrow Funds).
(d) Settlement Proceedings. All aspects of any settlement proceedings,
including discovery, testimony and other evidence, negotiations and
communications pursuant to this Section 12.6, briefs and the award shall be held
confidential by each Party, and shall be treated as compromise and settlement
negotiations for the purposes of the federal and state rules of evidence.
12.7 Notices and Addresses. Any notice, request, instruction, waiver or
other communication to be given hereunder by any Party shall be in writing and
shall be considered duly delivered if personally delivered, mailed by certified
mail with the postage prepaid (return receipt requested), sent by messenger or
overnight delivery service, or sent by facsimile to the addresses of the Parties
as follows:
BUYER:
Regency Acquisition LLC
c/o Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxx
with a copy to (which shall not constitute notice):
Xxxxxx & Xxxxxx LLP
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
REGENCY:
Regency Services, LLC
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
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With a copy to (which shall not constitute notice):
Gardere Xxxxx Xxxxxx LLP
3000 Thanksgiving Tower
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
PARENT MEMBERS AND PARTNERS:
To the address set forth below each such Parent Member's or Partner's
name on Schedule A
PARENT:
Regency Services, LLC
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
and
Charlesbank Capital Partners LLC
000 Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxx
Copy to: Xxxx Xxxxx
With a copy to (which shall not constitute notice):
Gardere Xxxxx Xxxxxx LLP
3000 Thanksgiving Tower
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
or at such other address as a Party may designate by written notice to the other
Parties in the manner provided in this Section 12.7. Notice by mail shall be
deemed to have been
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given and received on the third day after posting. Notice by messenger,
overnight delivery service, facsimile transmission or personal delivery shall be
deemed given on the date of actual delivery.
12.8 Press Releases. Except as may otherwise be required by securities Laws
and public announcements or disclosures that are, in the reasonable opinion of
the Party proposing to make the announcement or disclosure, legally required to
be made, prior to Closing there shall be no press release or public
communication concerning the transactions contemplated by this Agreement by any
Party except with the prior written consent of the Party not originating such
press release or communication, which consent shall not be unreasonably withheld
or delayed. Prior to Closing Buyer and Regency will consult in advance on the
necessity for, and the timing and content of, any communications to be made to
the public and, subject to legal constraints, to the form and content of any
application or report to be made to any Governmental Authority that relates to
the transactions contemplated by this Agreement.
12.9 Offset. Nothing contained herein shall impair or constitute a waiver
of any right of offset or setoff for any Party.
12.10 No Partnership; Third Party Beneficiaries. Nothing in this Agreement
shall be deemed to create a joint venture, partnership, tax partnership, or
agency relationship between the Parties. Nothing in this Agreement shall provide
any benefit to any Third Person or entitle any Third Person to any claim, cause
of action, remedy or right of any kind, it being the intent of the Parties that
this Agreement shall not be construed as a third-party beneficiary contract;
provided, however, that the indemnification provisions of ARTICLE X shall inure
to the benefit of the Buyer Indemnitees and the Regency Indemnitees as provided
therein and the provisions of Section 6.8 are intended to benefit the
Director/Officer Indemnitees and their heirs and representatives.
12.11 Negotiated Transaction. The Parties, each represented by legal
counsel, have each participated in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation should arise,
this Agreement shall be construed as if drafted by all Parties and no
presumption or burden of proof shall arise favoring or burdening any Party
hereto by virtue of the authorship of any of the provisions of this Agreement.
12.12 Regency Disclosure Schedule. The information in the Regency
Disclosure Schedule constitutes (a) exceptions or qualifications to particular
representations, warranties, covenants and obligations of Regency, Parent, the
Parent Members and the Partners as set forth in this Agreement or (b)
descriptions or lists of assets and liabilities and other items referred to in
this Agreement. The Regency Disclosure Schedule shall not be construed as
indicating that any disclosed information is required to be disclosed, and no
disclosure shall be construed as an admission that such information is material
to, or required to be disclosed by Regency, Parent, the Parent Members or the
Partners. Capitalized terms used in the Regency Disclosure Schedule which are
not defined therein and defined in this Agreement shall have the meaning given
them in this Agreement. The
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statements in the Regency Disclosure Schedule relate only to the provisions in
the Section of this Agreement to which they expressly relate and not to any
other provision in this Agreement, unless its applicability to another Section
of this Agreement is readily apparent.
12.13 Time of the Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
12.14 Representation. Each Party (other than Regency and Parent)
acknowledges and understands that Gardere Xxxxx Xxxxxx LLP has represented only
Regency and Parent in connection with the preparation of this Agreement and that
Gardere Xxxxx Xxxxxx LLP has not represented any other Party regarding this
Agreement or the transactions contemplated hereby. Further, each Party (other
than Regency and Parent) acknowledges and affirms that such Party has had the
opportunity to consult with legal counsel of its choosing regarding this
Agreement and the transactions contemplated hereby and that it has not relied
upon Gardere Xxxxx Xxxxxx LLP to provide it with any legal advice, nor has
Gardere Xxxxx Xxxxxx LLP provided any such advice.
12.15 Specific Performance.
The Parties recognize that in the event Parent or Regency should refuse to
perform under the provisions of this Agreement, monetary damages alone will not
be adequate. Buyer shall therefore be entitled, in addition to any other
remedies which may be available, including money damages, and without the
necessity of posting bond or proving actual damages have resulted or would
result in the absence thereof, to obtain specific performance of the terms of
this Agreement. In the event of any action to enforce this Agreement
specifically, Parent and Regency hereby waive the defense that there is an
adequate remedy at law. In no event shall Parent or Regency be entitled to seek
specific performance with respect to any obligations of Buyer arising under this
Agreement.
12.16 Affiliate Liability.
(a) Each of the following is herein referred to as a "Buyer
Affiliate": (a) any direct or indirect holder of the capital stock or other
Equity Interests in Buyer (whether limited or general partners, members,
stockholders or otherwise), and (b) any director, officer, manager, employee,
representative or agent of (i) Buyer or (ii) any Person who directly or
indirectly controls Buyer. Except to the extent that a Buyer Affiliate is an
express signatory thereto or an express assignee of Buyer, no Buyer Affiliate
shall have any liability or obligation to any of Parent, Regency, any Parent
Member or any Partner of any nature whatsoever in connection with or under this
Agreement, any of the Transaction Documents or the transactions contemplated
herein or therein, and each of Regency, Parent, the Parent Members and the
Partners hereby waive and release all claims of any such liability and
obligation.
77
(b) Each of the following is herein referred to as a "Parent
Affiliate": (a) any direct or indirect holder of Equity Interests in Parent
(whether limited or general partners, members, stockholders or otherwise), and
(b) any partner, member, shareholder, director, officer, manager, employee,
representative or agent of (i) Parent or (ii) any Person who directly or
indirectly controls Parent. Except to the extent that a Parent Affiliate is an
express signatory thereto or an express assignee of Parent, and except as
expressly set forth in Section 2.3(c), Section 2.3(f) and ARTICLE X, no Parent
Affiliate shall have any liability or obligation to any Regency Company or Buyer
or Buyer Indemnitee of any nature whatsoever in connection with or under this
Agreement, any of the Transaction Documents or the transactions contemplated
herein or therein, and Buyer on behalf of itself and Buyer Affiliates hereby
waives and releases all claims of any such liability and obligation.
12.17 No Waiver of Claims for Fraud. The liability of any Party under
ARTICLE X shall be in addition to, and not exclusive of, any other liability
that such Party may have at law or equity based on such Party's fraudulent acts
or omissions. None of the provisions set forth in this Agreement shall be deemed
a waiver by any Party of any right or remedy which such Party may have at law or
equity based on any other Party's fraudulent acts or omissions, nor shall any
such provisions limit, or be deemed to limit, (a) the amounts of recovery sought
or awarded in any such claim for fraud, (b) the time period during which a claim
for fraud may be brought, or (c) the recourse which any such Party may seek
against another Party with respect to a claim for fraud; provided, however, that
with respect to such rights and remedies at law or equity, the Parties further
acknowledge and agree that none of the provisions of this Section 12.17 shall be
deemed a waiver of any defenses which may be available in respect of actions or
claims for fraud, including but not limited to, defenses of statutes of
limitations or limitations of damages.
12.18 No Recovery. Neither Parent, any Partner or any Parent Member shall
be entitled to indemnification or contribution from Buyer or any Regency Company
for any Losses that any of them is obligated to pay pursuant to any Claim
brought by a Buyer Indemnitee. The foregoing does not apply to (a) Claims made
against Buyer for a breach of any of the representations, warranties, covenants
and agreements of Buyer set forth in this Agreement or (b) a claim for
indemnification by a Director/Officer Indemnitee under the Organizational
Documents of any Regency Company with respect to any Third Person Claim related
to or arising out of or based upon such Director/Officer Indemnitee's activities
as such prior to the Closing except to the extent any such Third Person Claim
relates to or arises out of any activities which constitute a breach of any
representation or warranty contained in Article III or Article IV or Section 6.5
of this Agreement, any breach of any covenant under this Agreement to be
performed prior to Closing by Parent or any Regency Company or any other matter
giving rise to a right to any Buyer Indemnitee to indemnification under ARTICLE
X (collectively, a "Permitted Indemnification/Contribution"). If any right of
indemnification or contribution from any Regency Company under the
Organizational Documents of such Regency Company relating to a Claim (other than
a claim for Permitted Indemnification/Contribution) is ultimately determined to
be unwaivable, Parent, each Partner and each Parent Member recovering pursuant
to such provision shall indemnify the Buyer or the applicable Regency Company to
the full extent of such recovery. Except as set forth in this Section
78
12.18, Parent, each Partner and each Parent Member hereby waives and releases
any and all rights that it may have to assert claims of indemnification or
contribution against Buyer or any Regency Company under this Agreement, any
other Transaction Document, any other Contract or any provision under the
Organizational Documents of any of them for any Losses that any of them is
obligated to pay pursuant to any Claim brought by a Buyer Indemnitee (other than
a claim for Permitted Indemnification/Contribution). Effective as of the
Closing, Buyer and Regency, on behalf of itself and each Regency Company, waive
and release any and all rights and claims against Parent, each Partner, each
Parent Member, each Officer, each Director and each Manager, excluding only
Claims made by Buyer (i) for a breach of any of the representations, warranties,
covenants and agreements of Parent, any Partner, any Parent Member, any Officer,
any Director and any Manager under this Agreement and each other Transaction
Document to which such Person is a party or (ii) under Section 2.3(d), Section
2.3(f), or ARTICLE X of this Agreement.
[SIGNATURE PAGES FOLLOW]
79
THE PARTIES HAVE signed this Agreement as of the date first set forth
above.
BUYER:
REGENCY ACQUISITION LLC
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
PARENT:
REGENCY SERVICES, LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
REGENCY:
REGENCY GAS SERVICES LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
PARENT MEMBERS:
CHARLESBANK EQUITY FUND V, LIMITED PARTNERSHIP
By: Charlesbank Equity Fund V GP, Limited Partnership,
its General Partner
By: Charlesbank Capital Partners, LLC,
its General Partner
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
------------------------------- ------------------------------
Title: Managing Director Title: Managing Director
------------------------------ ------------------------------
Signature Page
CHARLESBANK EQUITY CO-INVESTMENT FUND V, LIMITED PARTNERSHIP
By: Charlesbank Equity Fund V GP, Limited Partnership,
its General Partner
By: Charlesbank Capital Partners, LLC,
its General Partner
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
CHARLESBANK COINVESTMENT PARTNERS, LIMITED PARTNERSHIP
By: Charlesbank Equity Fund V GP, Limited Partnership,
its General Partner
By: Charlesbank Capital Partners, LLC,
its General Partner
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
/s/ R. Xxxx Xxxxxxxx
-------------------------------------
R. Xxxx Xxxxxxxx
Signature Page
CARDINAL EQUITY HOLDINGS LLC
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------
Title: President
------------------------------
XXXXXXXX & COMPANY LIMITED
By: H-Jam, Inc.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx
CB Offshore Equity Fund V - Holdings,
LP
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
PARTNERS:
CB OFFSHORE EQUITY FUND V GP, LLC
BY: Charlesbank Capital Partners, LLC,
as sole member
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
Signature Page
CB OFFSHORE EQUITY FUND V GP,
LIMITED PARTNERSHIP
By: Charlesbank Capital Partners,
LLC, Its General Partner
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
By: CB Offshore Equity Fund V GP, LLC
its Administrative General Partner
By: Charlesbank Capital Partners,
LLC, as sole member
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx Xxxxxx
Title: Managing Director Title: Managing Director
Signature Page
AMENDMENT NO. 1
TO
PURCHASE AND SALE AGREEMENT
This Amendment No. 1 to Purchase and Sale Agreement (this "Amendment") is
entered into effective November 2, 2004 by and among Regency Acquisition LLC, a
Delaware limited liability company ("Buyer"), Regency Gas Services LLC, a
Delaware limited liability company ("Regency"), and Regency Services, LLC, a
Delaware limited liability company ("Parent"), on behalf of itself, the members
of Parent (the "Parent Members"), and the partners (the "Partners") of CB
Offshore Equity Fund V - Holdings, L.P., a Cayman Islands limited partnership.
This Amendment is and constitutes an amendment to the Purchase Agreement.
RECITALS
WHEREAS, Buyer, Regency, Parent, the Parent Members, and the Partners are
parties to that certain Purchase and Sale Agreement (the "Purchase Agreement")
dated October 21, 2004.
WHEREAS, the Parties have agreed to amend the Purchase Agreement in the
manner provided below; and
WHEREAS, pursuant to Section 12.3 of the Purchase Agreement, Parent is
executing this Amendment on behalf of itself, the Parent Members, and the
Partners.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein and defined
in the Purchase Agreement have the meanings provided in the Purchase Agreement.
2. Amendments.
2.1 Section 6.3(b) of the Purchase Agreement hereby is amended and
restated in its entirety to read as follows:
"(b) The Parties shall make any filings required under the HSR
Act on or prior to November 4, 2004 and provide such information
to the FTC and DOJ as is required in connection with the HSR Act
as soon as practicable after a request therefor."
3. Miscellaneous. Sections 12.4, 12.5 and 12.6(a) of the Purchase Agreement
are hereby incorporated by reference into this Amendment, mutatis mutandis. The
parties hereby agree that the terms and provisions of the Purchase Agreement, as
amended hereby, shall continue in full force and effect.
THE PARTIES HAVE executed and delivered this Amendment effective as of the
date first set forth above.
BUYER:
REGENCY ACQUISITION LLC
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
REGENCY:
REGENCY GAS SERVICES LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
PARENT (ON BEHALF OF ITSELF, THE PARENT MEMBERS AND THE
PARTNERS):
REGENCY SERVICES, LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
Signature Page
AMENDMENT NO. 2
TO
PURCHASE AND SALE AGREEMENT
This Amendment No. 2 to Purchase and Sale Agreement (this "Amendment") is
entered into effective November 4, 2004 by and among Regency Acquisition LLC, a
Delaware limited liability company ("Buyer"), Regency Gas Services LLC, a
Delaware limited liability company ("Regency"), and Regency Services, LLC, a
Delaware limited liability company ("Parent"), on behalf of itself, the members
of Parent (the "Parent Members"), and the partners (the "Partners") of CB
Offshore Equity Fund V - Holdings, L.P., a Cayman Islands limited partnership.
This Amendment is and constitutes an amendment to the Purchase Agreement.
RECITALS
WHEREAS, Buyer, Regency, Parent, the Parent Members, and the Partners are
parties to that certain Purchase and Sale Agreement dated October 21, 2004, as
amended by Amendment No. 1 to Purchase and Sale Agreement dated November 2, 2004
(the "Purchase Agreement").
WHEREAS, the Parties have agreed to amend the Purchase Agreement in the
manner provided below; and
WHEREAS, pursuant to Section 12.3 of the Purchase Agreement, Parent is
executing this Amendment on behalf of itself, the Parent Members, and the
Partners.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein and defined
in the Purchase Agreement have the meanings provided in the Purchase Agreement.
2. Amendments.
2.1 Section 6.3(b) of the Purchase Agreement hereby is amended and
restated in its entirety to read as follows:
"(b) The Parties shall make any filings required under the HSR
Act on or prior to November 5, 2004 and provide such information
to the FTC and DOJ as is required in connection with the HSR Act
as soon as practicable after a request therefor."
3. Miscellaneous. Sections 12.4, 12.5 and 12.6(a) of the Purchase Agreement
are hereby incorporated by reference into this Amendment, mutatis mutandis. The
parties hereby agree that the terms and provisions of the Purchase Agreement, as
amended hereby, shall continue in full force and effect.
THE PARTIES HAVE executed and delivered this Amendment effective as of the
date first set forth above.
BUYER:
REGENCY ACQUISITION LLC
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
Vice President
REGENCY:
REGENCY GAS SERVICES LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
PARENT (ON BEHALF OF ITSELF, THE PARENT MEMBERS AND THE PARTNERS):
REGENCY SERVICES, LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
Signature Page
CLOSING AGREEMENT
AND
AMENDMENT NO. 3
TO
PURCHASE AND SALE AGREEMENT
This Closing Agreement and Amendment No. 3 to Purchase and Sale Agreement
(this "Agreement") is entered into effective December 1, 2004 by and among
Regency Acquisition LLC, a Delaware limited liability company ("Buyer"), Regency
Gas Services LLC, a Delaware limited liability company ("Regency"), and Regency
Services, LLC, a Delaware limited liability company ("Parent"), on behalf of
itself, the members of Parent (the "Parent Members"), and the partners (the
"Partners") of CB Offshore Equity Fund V - Holdings, L.P., a Cayman Islands
limited partnership, in connection with the closing of the transactions
contemplated by that certain Purchase and Sale Agreement dated October 21, 2004
by and among Buyer, Regency, Parent, the Parent Members and the Partners, as
amended by Amendment No. 1 to Purchase and Sale Agreement dated November 2,
2004, and Amendment No. 2 to Purchase and Sale Agreement dated November 4, 2004
(as amended, the "Purchase Agreement"), to clarify and agree upon the matters
set below. This Agreement is and constitutes an amendment to the Purchase
Agreement.
1. Definitions. Capitalized terms used but not defined herein and defined
in the Purchase Agreement have the meanings provided in the Purchase Agreement.
2. Purchase Price.
2.1 The Estimated Purchase Price has been computed in accordance with
the terms of Section 2.3(a) of the Purchase Agreement as follows:
$405,000,000.00
PLUS ESTIMATED AMOUNT OF:
Reimbursable Acquisition Expenditures $ 0.00
Capital Expenditure Surplus $ 0.00
Working Capital Surplus $ 1,500,000.00
MINUS:
Payoff Amount $114,948,059.19
Estimated Amount of Capital Expenditure Deficit $ 973,953.00
Estimated Amount of Working Capital Deficit $ 0.00
Escrow Amount $ 12,500,000.00
Unpaid as of 11:59 p.m. on the Measurement
Date:
Expenses ($3,857,000.00)
Severance Obligations Adjusted Amount
($0.00)
Change of Control Amounts ($0.00) $ 3,857,000.00
---------------
ESTIMATED PURCHASE PRICE $274,220,987.81
2.2 Based on the calculation in the foregoing Section 2.1, the
Estimated Purchase Price and Closing Parent Amount shall be deemed to
be $274,220,987.81.
3. Xxxxx Fargo Debt Payoff. Buyer acknowledges that (a) it was contemplated
that upon Closing the Payoff Amount would include an appropriate adjustment for
the termination of that certain ISDA Master Agreement dated May 4, 2004 between
Xxxxx Fargo and Regency ("ISDA Hedge Agreement"), the related documents
thereunder (including without limitation the Schedule to the ISDA Master
Agreement dated May 4, 2004 between Xxxxx Fargo and Regency, Exhibit I, Form of
Confirmation relating to the ISDA Hedge Agreement, Hedging Authority for the
ISDA Hedge Agreement) and all interest rate swap transactions under the ISDA
Hedge Agreement and (b) at or prior to Closing, Xxxxx Fargo is unable to
calculate the appropriate credit or debit to Regency upon termination of the
ISDA Hedge Agreement and the interest rate swap transaction thereunder.
Therefore the Parties agree that (i) upon termination of the ISDA Hedge
Agreement and the interest rate swap transaction, and Xxxxx Fargo's calculation
of the appropriate credit or debit relating to such termination, any such credit
or debit shall inure solely to the benefit of, and be the sole responsibility
of, Parent, (ii) Parent shall pay any such amounts as may be owed to Xxxxx Fargo
or any other Person as a result of the termination of the ISDA Hedge Agreement
and interest rate swap transactions thereunder directly to Xxxxx Fargo within
five Business Days after Xxxxx Fargo determines the appropriate amount, (iii) if
Buyer receives any funds from Xxxxx Fargo relating to the termination of the
ISDA Hedge Agreement and interest rate swap transactions thereunder, Buyer shall
remit such funds to Parent within five Business Days after the receipt thereof
and (iv) Parent shall indemnify the Buyer Indemnities for any failure of Parent
to comply with its obligations under this Section 3.
4. Phantom Stock Plan. Parent shall deliver to each participant in the
Phantom Stock Plan a letter in the form attached hereto as Exhibit A (the
"Phantom Letter") and perform its obligations as stated in the Phantom Letter,
and Buyer shall be entitled to enforce the compliance by Parent with the
provisions of the Phantom Letter for the benefit of each participant in the
Phantom Stock Plan.
5. Amendments. The Purchase Agreement hereby is amended as set forth in
this Section 5.
5.1 Section 1.1 of the Purchase Agreement hereby is amended by adding
in the correct alphabetical order the following definitions:
2
""Caddo Lawsuit" means the Suit No. 490001-A in the First
Judicial District Court, Caddo Parish, Louisiana, styled Caddo
Gas Gathering LLC v. Regency Intrastate Gas LLC and Regency Gas
Services LLC."
5.2 The definition of the term "Change of Control Amounts" set forth
in Section 1.1 of the Purchase Agreement hereby is amended and
restated in its entirety to read as follows:
""Change of Control Amounts" shall mean any bonus, retention
bonus, consent or other fee, compensation (including the
estimated costs of benefits required to be provided) or other
similar payments that any Regency Company upon Closing, to the
extent not paid as of 11:59 p.m. on the Measurement Date, will
become obligated to pay (other than Severance Obligations) as a
result of the consummation of the transactions contemplated by
the Transaction Documents, regardless of whether such amounts are
payable at or after Closing and shall also include all amounts
payable under the Bonus Plan as a result of the transactions
contemplated by this Agreement, whether payable by their terms at
Closing. The term Change of Control Amounts shall not include any
amounts payable under the Phantom Stock Plan."
5.3 The definition of the term "Non-Escrow Indemnity Claim" set forth
in Section 1.1 of the Purchase Agreement hereby is amended and
restated in its entirety to read as follows:
""Non-Escrow Indemnity Claim" means any and all claims for
indemnification brought by a Buyer Indemnitee pursuant to Section
10.3(a), Section 10.3(b)(v), Section 10.3(b)(vi), Section
10.3(b)(ix), Section 10.3(b)(x), or, to the extent relating to
a claim for indemnification under Section 10.3(a), Section
10.3(b)(v), Section 10.3(b)(vi), Section lO.3(b)(ix) or Section
lO.3(b)(x), pursuant to Section 10.3(c)."
5.4 The first paragraph of Section 10.3(b) hereby is amended and
restated in its entirety to read as follows:
"Effective upon the Closing and subject to the terms of this
Article X, Parent, solely through the Escrow Fund (other than
with respect to any Claim for indemnification pursuant to Section
10.3(b)(v), (vi), (ix} or (x), which Losses shall not be
limited solely to the Escrow Fund), shall defend, indemnify and
hold harmless the Buyer Indemnitees from and against any and all
Losses asserted against, resulting from, imposed upon or incurred
by any of the Buyer Indemnitees as a result of or arising out
of:"
5.5 Section lO.3(b)(vii) of the Purchase Agreement hereby is amended
by deleting the word "and" at the end thereof.
3
5.6 Section 10.3(b)(viii) of the Purchase Agreement hereby is amended
by replacing the period at the end thereof with ";".
5.7 A new Section 10.3(b)(ix) and a new Section 10.3(b)(x) hereby are
added to the Purchase Agreement to read as follows:
"(ix) any Claim related to the Phantom Stock Plan and any Loss
incurred by any Buyer Indemnitee arising as of a result of any
Claim asserted by any participant in the Phantom Stock Plan with
respect to actual or alleged benefits or covenants to which such
participant may be entitled under the Phantom Stock Plan; and
(x) any Claim related to any amounts payable to Xxxxx Fargo or
any other Person, and any Loss incurred by any Buyer Indemnitee
arising, as a result of the termination of the ISDA Hedge
Agreement (as defined in Section 4.8(c) of the Regency Disclosure
Schedule), the related documents thereunder (including without
limitation the Schedule to the ISDA Master Agreement dated May 4,
2004 between Xxxxx Fargo and Regency, Exhibit I, Form of
Confirmation relating to the ISDA Hedge Agreement, Hedging
Authority for the ISDA Hedge Agreement) and all interest rate
swap transactions under the ISDA Hedge Agreement and all interest
rate swap transactions under the ISDA Hedge Agreement, including
as a result of Parent's failure to comply with its obligations
under Section 3 of the Closing Agreement and Amendment No. 3 to
Purchase and Sale Agreement, dated December 1, 2004, between
Buyer, Regency and Parent (on behalf of Parent, the Parent
Members and the Partners)."
5.8 Section 7.2(j) of the Purchase Agreement hereby is amended and
restated in its entirety to read as follows:
"Each of the Existing Employment Agreements, the Existing
Consulting Agreements and the Charlesbank Agreement shall have
been terminated with no further Liability or obligations of any
Regency Company thereunder other than Severance Obligations
thereunder as described in Section 4.14(e) of the Regency
Disclosure Schedule and Xxxxxxx Xxxxxx shall have executed and
delivered to Buyer a Non Competition Agreement in the form
attached as Exhibit E; and"
5.9 The Purchase Agreement is amended by addition thereto a new
Exhibit E in the form attached hereto as Exhibit E.
6. Officers Certificate. The parties hereto acknowledge and agree that (i)
the certificate dated December 1, 2004, delivered by Parent pursuant to Section
8.2(a)(ii) of the Purchase Agreement (the "Certificate"') contains exceptions as
set forth on Section 2(iii) of the Certificate (the "Exceptions"), (ii)
notwithstanding the disclosure of the Exceptions, the Closing is occurring and
4
(iii) the disclosure of the Exceptions does not affect any rights of any Buyer
Indemnitee under Article X of the Purchase Agreement with respect to any
Exceptions.
7. Caddo Lawsuit. Parent and Buyer acknowledge that a Claim Notice with
respect to the Caddo Lawsuit is deemed to have been given to Parent for purposes
of Section 10.5 of the Agreement as of the date of this Agreement and such Claim
Notice shall be deemed to have been delivered to Parent on a timely manner so as
to not entitle Parent to assert that Parent has been prejudiced by the timing of
delivery of such Claim Notice.
8. Miscellaneous. Sections 12.4, 12.5 and 12.6(a) of the Purchase
Agreement are hereby incorporated by reference into this Agreement, mutatis
mutandis. The parties hereby agree that the terms and provisions of the Purchase
Agreement, as amended hereby, shall continue in full force and effect.
5
THE PARTIES HAVE executed and delivered this Agreement effective as of the
date first set forth above.
BUYER:
REGENCY ACQUISITION LLC
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Vice President
PARENT:
REGENCY SERVICES, LLC, on behalf of itself,
the Parent Members and the Partners
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
REGENCY:
REGENCY GAS SERVICES LLC
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman
Signature Page
