PURCHASE AGREEMENT by and among DENBURY RESOURCES INC., ENCORE PARTNERS GP HOLDINGS LLC, ENCORE PARTNERS LP HOLDINGS LLC, AND ENCORE OPERATING, L.P. as Selling Parties, and VANGUARD NATURAL GAS, LLC, as Buyer, and VANGUARD NATURAL RESOURCES, LLC for...
Exhibit 99.1
Execution Version
by and among
ENCORE PARTNERS GP HOLDINGS LLC,
ENCORE PARTNERS LP HOLDINGS LLC, AND
ENCORE OPERATING, L.P.
as Selling Parties,
and
VANGUARD NATURAL GAS, LLC,
as Buyer,
as Buyer,
and
VANGUARD NATURAL RESOURCES, LLC
for the purchase and sale of
all of the member interests of
ENCORE ENERGY PARTNERS GP LLC,
a Delaware Limited Liability Company
a Delaware Limited Liability Company
and
20,924,055 Common Units of
ENCORE ENERGY PARTNERS LP,
a Delaware Limited Partnership
a Delaware Limited Partnership
Dated as of November 16, 2010
TABLE OF CONTENTS
PAGE | ||||
ARTICLE I SALE AND PURCHASE |
2 | |||
Section 1.1 Agreement to Sell and to Purchase |
2 | |||
Section 1.2 Deliveries at Closing |
3 | |||
Section 1.3 Purchase Price |
5 | |||
Section 1.4 Deposit |
5 | |||
Section 1.5 Transfer Restriction |
5 | |||
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES |
6 | |||
Section 2.1 Organization |
6 | |||
Section 2.2 Validity of Agreement; Authorization |
7 | |||
Section 2.3 No Conflict or Violation |
7 | |||
Section 2.4 Consents and Approvals |
8 | |||
Section 2.5 Capitalization of ENP GP; General Partner Interest;
Subject Common Xxxxx |
0 | |||
Xxxxxxx 0.0 Xxxxxxxx xx XXX XX; Absence of Undisclosed Liabilities |
9 | |||
Section 2.7 Absence of Certain Changes or Events |
9 | |||
Section 2.8 Litigation |
9 | |||
Section 2.9 Regulatory Matters |
9 | |||
Section 2.10 Solvency |
9 | |||
Section 2.11 Brokers |
10 | |||
Section 2.12 Employee Plans |
10 | |||
Section 2.13 Selling Parties Status |
11 | |||
Section 2.14 Investment Intent; Investment Experience; Restricted
Securities |
11 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES
CONCERNING ENP GP AND THE PARTNERSHIP ENTITIES |
11 | |||
Section 3.1 Organization |
11 | |||
Section 3.2 No Conflict or Violation |
12 | |||
Section 3.3 Consents and Approvals |
12 | |||
Section 3.4 Partnership Capitalization, Title to Subject Common
Units |
12 |
i
PAGE | ||||
Section 3.5 Subsidiaries; Equity Interests; Business of ENP GP |
13 | |||
Section 3.6 Financial Statements; Partnership SEC Reports |
13 | |||
Section 3.7 Controls |
14 | |||
Section 3.8 Absence of Certain Changes or Events |
14 | |||
Section 3.9 Compliance with Law |
14 | |||
Section 3.10 Tax Matters |
15 | |||
Section 3.11 Absence Of Undisclosed Liabilities |
16 | |||
Section 3.12 Regulatory Matters |
16 | |||
Section 3.13 Books And Records; Other Information |
16 | |||
Section 3.14 Employees; Employee Plans |
17 | |||
Section 3.15 Properties, Oil and Gas Matters |
17 | |||
Section 3.16 Environmental Matters |
20 | |||
Section 3.17 Derivative Transactions and Hedging |
20 | |||
Section 3.18 Material Contracts |
21 | |||
Section 3.19 Litigation |
22 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER |
22 | |||
Section 4.1 Organization |
23 | |||
Section 4.2 Validity Of Agreement; Authorization |
23 | |||
Section 4.3 No Conflict Or Violation |
23 | |||
Section 4.4 Consents And Approvals |
24 | |||
Section 4.5 Brokers |
24 | |||
Section 4.6 Buyer Status |
24 | |||
Section 4.7 Investment Intent; Investment Experience; Restricted
Securities |
24 | |||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF VANGUARD |
24 | |||
Section 5.1 Organization |
25 | |||
Section 5.2 Capitalization; Issuance of Vanguard Common Units |
25 | |||
Section 5.3 Validity of Agreement; Authorization |
26 | |||
Section 5.4 No Conflict or Violation |
26 | |||
Section 5.5 Consents and Approvals |
27 | |||
Section 5.6 Financial Statements; Vanguard SEC Reports |
27 | |||
Section 5.7 Controls |
27 | |||
Section 5.8 Absence of Certain Changes or Events |
28 |
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PAGE | ||||
Section 5.9 Compliance with Law |
28 | |||
Section 5.10 Tax Matters |
28 | |||
Section 5.11 Absence of Undisclosed Liabilities |
29 | |||
Section 5.12 Regulatory Matters |
29 | |||
Section 5.13 Properties, Oil and Gas Matters |
29 | |||
Section 5.14 Environmental Matters |
31 | |||
Section 5.15 Material Contracts |
32 | |||
Section 5.16 Litigation |
33 | |||
Section 5.17 Brokers |
33 | |||
ARTICLE VI COVENANTS |
34 | |||
Section 6.1 Conduct of Business |
34 | |||
Section 6.2 Access To Properties And Records |
35 | |||
Section 6.3 Consents And Approvals |
36 | |||
Section 6.4 Further Assurances |
36 | |||
Section 6.5 Commercially Reasonable Efforts |
37 | |||
Section 6.6 Notice Of Certain Events |
37 | |||
Section 6.7 Confidential Information |
38 | |||
Section 6.8 Tax Covenants |
39 | |||
Section 6.9 Indemnification and Insurance |
40 | |||
Section 6.10 Post-Closing Payments to Selling Parties and
Affiliates; Administrative Services Agreement |
41 | |||
Section 6.11 No Negotiation |
41 | |||
Section 6.12 Partnership Credit Agreement |
41 | |||
Section 6.13 Employee Matters |
42 | |||
Section 6.14 Books and Records; Financial Statements; Litigation
Support |
42 | |||
Section 6.15 Director Resignations |
44 | |||
Section 6.16 Migration of Records; Information |
44 | |||
ARTICLE VII CONDITIONS TO CLOSING |
44 | |||
Section 7.1 Shared Conditions to the Parties’ Obligations |
44 | |||
Section 7.2 Conditions to Buyer’s Obligations |
45 | |||
Section 7.3 Conditions to Selling Parties’ Obligations |
46 | |||
ARTICLE VIII TERMINATION |
48 | |||
Section 8.1 Methods Of Termination |
48 |
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PAGE | ||||
Section 8.2 Effect Of Termination |
50 | |||
ARTICLE IX SURVIVAL; INDEMNIFICATION |
52 | |||
Section 9.1 Survival |
52 | |||
Section 9.2 Indemnification Coverage |
53 | |||
Section 9.3 Procedures |
56 | |||
Section 9.4 No Speculative Damages |
57 | |||
Section 9.5 Compliance With Express Negligence Rule |
57 | |||
Section 9.6 Remedy |
57 | |||
Section 9.7 Tax Treatment Of Indemnity Payments |
57 | |||
ARTICLE X MISCELLANEOUS PROVISIONS |
57 | |||
Section 10.1 Publicity |
57 | |||
Section 10.2 Successors And Assigns; Third-Party Beneficiaries |
57 | |||
Section 10.3 Fees And Expenses |
58 | |||
Section 10.4 Notices |
58 | |||
Section 10.5 Entire Agreement |
59 | |||
Section 10.6 Waivers and Amendments |
59 | |||
Section 10.7 Severability |
59 | |||
Section 10.8 Titles and Headings |
59 | |||
Section 10.9 Signatures And Counterparts |
59 | |||
Section 10.10 Enforcement Of The Agreement; Damages |
60 | |||
Section 10.11 Governing Law |
60 | |||
Section 10.12 Disclosure |
60 | |||
Section 10.13 Consent To Jurisdiction |
60 | |||
Section 10.14 Waiver of Trial by Jury |
61 | |||
Section 10.15 Construction |
61 | |||
ARTICLE XI DEFINITIONS |
61 |
Exhibit 1.2(a)(vi)
|
Form of Opinion of Xxxxx & Xxxxxxxxx LLP | |
Exhibit 1.2(a)(vii)
|
Form of Registration Rights Agreement | |
Exhibit 1.2(a)(viii)
|
Form of Second Amended and Restated Administrative Services Agreement | |
Exhibit 1.2(c)(ii)
|
Form of Opinion of Xxxxxx & Xxxxxx L.L.P. |
iv
THIS PURCHASE AGREEMENT (this “Agreement”), dated as of November 16, 2010 (the
“Execution Date”), by and among Denbury Resources Inc., a Delaware corporation
(“Parent”), Encore Partners GP Holdings LLC, a Delaware limited liability company (“GP
Holdings”), Encore Partners LP Holdings LLC, a Delaware limited liability company (“LP
Holdings”), and Encore Operating, L.P., a Texas limited partnership (“Operating,” and
together with Parent, GP Holdings and LP Holdings, the “Selling Parties”), Vanguard Natural
Gas, LLC, a Kentucky limited liability company (“Buyer”) and Vanguard Natural Resources,
LLC (“Vanguard”). The Selling Parties, Buyer and Vanguard are referred to collectively herein as
the “Parties” and individually as a “Party.” Capitalized terms not otherwise
defined shall have the meanings assigned to such terms in Article XI.
WITNESSETH:
WHEREAS, Parent indirectly owns all of the outstanding equity interests in GP Holdings, LP
Holdings and Operating;
WHEREAS, GP Holdings owns all of the member interests (the “Member Interests”) in, and
is the sole member of, Encore Energy Partners GP LLC, a Delaware limited liability company
(“ENP GP”);
WHEREAS, ENP GP is the sole general partner of Encore Energy Partners LP, a Delaware limited
partnership (the “Partnership”), and ENP GP owns 504,851 General Partner Units of the
Partnership (the “GP Units”) which represent a 1.10% Percentage Interest (as that term is
defined in the Partnership Agreement) in the Partnership;
WHEREAS, LP Holdings owns 9,995,801 Common Units representing limited partner interests in the
Partnership (the “Common Units”), which represent a 21.80% Percentage Interest in the
Partnership, and Operating owns 10,928,254 Common Units, which represent a 23.84% Percentage
Interest in the Partnership (collectively the “Subject Common Units”);
WHEREAS, Buyer desires to purchase the Member Interests from GP Holdings and become the sole
member of ENP GP, and GP Holdings desires to sell the Member Interests to Buyer and cease to be a
member of ENP GP, and Buyer desires to purchase the Subject Common Units from LP Holdings and
Operating, and LP Holdings and Operating desire to sell their respective Subject Common Units to
Buyer and cease to be limited partners of the Partnership, in each case upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set
forth herein, the Parties hereby agree as follows:
ARTICLE I
SALE AND PURCHASE
SALE AND PURCHASE
Section 1.1 Agreement to Sell and to Purchase.
(a) On the Closing Date (as hereinafter defined) and upon the terms and subject to the
conditions set forth in this Agreement, in consideration of the Purchase Price (as hereinafter
defined):
(i) GP Holdings shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase and accept from GP Holdings, the Member Interests; and
(ii) LP Holdings and Operating shall sell, assign, transfer, convey, and deliver to
Buyer, and Buyer shall purchase and accept from LP Holdings and Operating their respective
Subject Common Units,
in each case free and clear of any pledges, restrictions on transfer, proxies, voting or other
agreements, liens, claims, charges, mortgages, security interests or other legal or equitable
encumbrances, limitations or restrictions of any nature whatsoever (“Encumbrances”), except
for (1) restrictions on transfer arising under applicable securities Laws, (2) the applicable terms
and conditions of the Partnership Agreement, (3) in the case of the Member Interests, the
applicable terms and conditions of the Limited Liability Company Agreement of ENP GP dated as of
February 13, 2007, as amended (the “ENP GP LLC Agreement”), and (4) Encumbrances that
result from the actions of Buyer.
(b) The closing of the sales and purchases set forth in Section 1.1(a) (the
“Closing”) shall take place at 9:00 a.m. (Central Time) at the offices of Xxxxx & Xxxxxxxxx
LLP in Houston, Texas or at such other place as the Parties shall agree in writing, on a date to be
specified by the Parties, which shall be the later of (i) the second Business Day following the
satisfaction or (to the extent permitted by Law) waiver by the party or parties entitled to the
benefits thereof of the conditions set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing and (ii) December 31, 2010. The date on which the
Closing occurs is referred to in this Agreement as the “Closing Date.”
(c) Buyer hereby agrees that effective simultaneously with the Closing and its acquisition of:
(i) the Member Interests, it will be bound by and subject to the terms and conditions
of the ENP GP LLC Agreement, and acknowledges that ENP GP is a party to, bound by, and
subject to the terms and conditions of, the Partnership Agreement; and
(ii) the Subject Common Units, it will be bound by and subject to the terms and
conditions of the Partnership Agreement.
(d) Buyer hereby agrees that effective simultaneously upon consummation of the Closing and the
delivery of the Member Interests Xxxx of Sale by GP Holdings to Buyer, Buyer will assume and agree
to pay, perform and discharge when due all of GP Holding’s obligations, duties and liabilities
under the ENP GP LLC Agreement from and after the consummation of the
2
Closing. Effective simultaneously with the Closing, GP Holdings will cause Buyer to be
admitted as the member of ENP GP with the right to participate in the management of the business
and affairs, and to exercise the rights and powers of a member, of ENP GP, and concurrently
therewith GP Holdings will cease to be the member of ENP GP and cease to have or exercise any right
or power as a member of ENP GP except for the rights of indemnification as provided by the ENP GP
LLC Agreement and the Partnership Agreement. The assignment and transfer of the Member Interests,
the admission of Buyer as a member of ENP GP, and GP Holdings ceasing to be a member of ENP GP,
will not dissolve ENP GP and ENP GP will continue without dissolution subsequent to the Closing.
Section 1.2 Deliveries at Closing.
(a) Prior to Closing the parties shall take the following actions, and at the Closing, the
Selling Parties shall make the following deliveries to Buyer and take the following further
actions:
(i) Transfer of Membership Interests. A xxxx of sale in a form to be agreed
upon by Buyer and the Selling Parties, evidencing the assignment, transfer and delivery to
Buyer of the Member Interests, duly executed by GP Holdings (the “Member Interests Xxxx
of Sale”).
(ii) Transfer of the Subject Common Units. Prior to Closing each of LP
Holdings and Operating will deliver to the Transfer Agent for the Common Units (the
“Transfer Agent”) the certificates representing their respective Subject Common
Units, in each case with the assignment properly completed and duly executed and with the
signature(s) thereon guaranteed. Prior to Closing, Buyer will deliver to the Transfer Agent
a properly completed and duly executed Transfer Application with respect to the Subject
Common Units. At the Closing ENP and the Partnership will cause the Transfer Agent to issue
certificates for the Subject Common Units registered in the name of Buyer or its designee.
If the Buyer elects to provide an Equity Portion of the Purchase Price in accordance with
Section 1.3, then at the Closing, the Selling Parties shall identify and designate
the Subject Common Units to be transferred to Buyer in exchange for such Equity Portion (the
“Contributed Subject Common Units”).
(iii) FIRPTA Certificates. Each Selling Party will deliver to Buyer a
certificate of such Selling Party meeting the requirements of Treasury Regulation Section
1.1445-2(b)(2) certifying that such Seller Party is not a “foreign person” within the
meaning of Section 1445 of the Code, duly executed by such Selling Party.
(iv) Closing Certificates. The officers’ certificates contemplated by
Section 7.2(c), Section 7.2(d) and Section 7.2(e), in each case,
executed by a duly authorized executive officer of each of the Selling Parties.
(v) Resignations. Duly executed copies of the resignations of each of the
Resigning Directors and each of the officers of ENP GP listed in Section 6.15.
3
(vi) Legal Opinion. An opinion from Xxxxx & Xxxxxxxxx LLP, counsel to the
Selling Parties, dated as of the Closing Date and reasonably satisfactory to Buyer, a form
of which is attached hereto as Exhibit 1.2(a)(vi).
(vii) Registration Rights Agreement. If the Buyer elects to provide an Equity
Portion of the Purchase Price in accordance with Section 1.3 below, a counterpart of
a Registration Rights Agreement in the form attached as Exhibit 1.2(a)(vii) hereto
(the “Registration Rights Agreement”) duly executed by the Selling Party or Selling
Parties to whom Vanguard will issue Vanguard Common Units comprising the Equity Portion of
the Purchase Price.
(viii) Second Amended and Restated Administrative Services Agreement. A
counterpart of the Second Amended and Restated Administrative Services Agreement in the form
attached as Exhibit 1.2(a)(viii) hereto (the “Second Amended and Restated
Administrative Services Agreement”) duly executed by Denbury Resources Inc. and all
parties signatory to that agreement.
(b) At the Closing, the Buyer shall make the following deliveries to the applicable Selling
Parties and take the following further actions:
(i) Purchase Price. At the Closing, the Buyer shall (A) make payment to the
Selling Parties of the Cash Portion (as hereinafter defined) of the Purchase Price, and
shall cause the Escrow Agent (as hereinafter defined) to release the Deposit to the Selling
Parties, all as provided in Section 1.3 below, allocated among the Selling Parties
in such amounts as provided on Exhibit 1.3 hereto.
(ii) Second Amended and Restated Administrative Services Agreement. At the
Closing, the Buyer shall deliver a counterpart of the Second Amended and Restated
Administrative Services Agreement, duly executed by Buyer and all parties signatory to that
agreement.
(c) If the Buyer elects to provide an Equity Portion of the Purchase Price in accordance with
Section 1.3, then at the Closing, Buyer or Vanguard, as applicable, shall make the
following deliveries to the applicable Selling Parties or Selling Party designees:
(i) Vanguard Common Units. Vanguard shall issue and deliver to such Person or
Persons designated in writing by the Selling Parties common units representing membership
interests in Vanguard (the “Vanguard Common Units”) comprising the Equity Portion of
the Purchase Price, as provided in Section 1.3 below.
(ii) Legal Opinion. An opinion from Xxxxxx & Xxxxxx L.L.P., counsel to Buyer,
a form of which is attached hereto as Exhibit 1.2(c)(ii).
(iii) Registration Rights Agreement. A counterpart of the Registration Rights
Agreement, duly executed by Vanguard.
4
(iv) Closing Certificates. The officers’ certificates contemplated by
Section 7.3(b) and Section 7.3(c), and if applicable Section 7.3(d)
and Section 7.3(e), in each case, executed by a duly authorized executive officer of
Buyer.
Section 1.3 Purchase Price. The Purchase Price will be $380,000,000, (i) $20,000,000
of which (the “Deposit”) the Escrow Agent (as hereinafter defined) shall release on the
Closing Date by wire transfer to the Selling Parties in immediately available funds made to such
bank account or accounts as designated in writing by the Selling Parties, (ii) up to $80,000,000 of
which may, at the election of Buyer in its sole discretion, be paid in Vanguard Common Units valued
at $25.50 per unit (if any, the “Equity Portion”), and (iii) the remainder of which shall
be paid in cash by Buyer to the Selling Parties at Closing (the “Cash Portion”) by wire
transfer to the Selling Parties in immediately available funds made to such bank account or
accounts as designated in writing by the Selling Parties on or before the Closing Date. The
election described in (ii) must be made in writing by the Buyer prior to the close of business on
December 21, 2010 (unless prior to that date Buyer and the Selling Parties agree that closing will
not take place on or before December 31, 2010, in which case such election must be made ten days
prior to the Closing Date); if Buyer fails to make such election by such date, no portion of the
payment may be paid in Vanguard Common Units. The Purchase Price will be allocated as agreed to by
Buyer and the Selling Parties prior to Closing. The Purchase Price will be allocated among the
Member Interests and the Subject Common Units as agreed to by Buyer and the Selling Parties prior
to Closing. Any adjustments under Section 743(b) of the Code and any gain under Section 751 of the
Code will be allocated in accordance with the Partnership’s past practices.
Section 1.4 Deposit. Simultaneously with the execution of this Agreement, Buyer has
paid to JPMorgan Chase Bank, National Association (the “Escrow Agent”) the Deposit and
Buyer, the Selling Parties and the Escrow Agent have each executed and delivered to the others an
agreement (the “Escrow Agreement”) regarding the terms and conditions on which the Escrow
Agent will hold and pay out the Deposit.
Section 1.5 Transfer Restriction.
(a) In the event that Buyer elects to provide an Equity Portion of the Purchase Price in
accordance with Section 1.3, then each of the Selling Parties who receives any of the
Equity Portion (such Vanguard Common Units so received being referred to herein as the “Equity
Portion Consideration Common Units”) agrees with Buyer that, during the period beginning on
and including Closing Date through July 31, 2011 (the “Lock-up Period”), such Selling
Party will not, without the prior written consent of Buyer, directly or indirectly:
(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any Equity Portion Consideration Common Units; or
(ii) enter into any swap or other agreement, arrangement or transaction that transfers
to another, in whole or in part, directly or indirectly, any of the economic consequences of
ownership of any Equity Portion Consideration Common Units;
5
whether any transaction described in clause (i) or (ii) above is to be settled by delivery of
Equity Portion Consideration Common Units, other securities, in cash or otherwise; provided that
commencing July 1, 2011, the Selling Parties may make sales of a portion of the Equity Portion
Consideration Common Units, in compliance with and pursuant to the provisions of Rule 144
promulgated under the Securities Act of 1933 applicable to an “affiliate” as defined therein.
(b) Subject to Section 1.5 above, each Selling Party further agrees that Vanguard
may, with respect to any Equity Portion Consideration Common Units, cause its transfer agent or
other registrar to enter stop transfer instructions and implement stop transfer procedures with
respect to such securities during the Lock-up Period.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
As of the Execution Date, and also as of the Closing Date (except to the extent that any
representation is specifically limited by the terms of such representation to the date of this
Agreement or another specified date), each of the Selling Parties hereby represents and warrants to
Buyer as follows:
Section 2.1 Organization.
(a) Each of the Selling Parties (i) is a corporation, limited liability company or limited
partnership, as the case may be, duly incorporated or formed, as the case may be, validly existing
and in good standing under the Laws of Delaware or Texas, as the case may be, (ii) has all
requisite legal and corporate or other entity power and authority, as the case may be, to own,
lease and operate its properties and to conduct its businesses as currently owned and conducted,
(iii) except with respect to Parent, has all material governmental licenses, authorizations,
permits, consents and approvals required to own, lease and operate its properties and to conduct
its businesses as currently owned and conducted, (iv) is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by it or the ownership
or leasing of its properties requires it to so qualify, except with respect to (iii) and (iv) for
circumstances which, individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement or to impair such Selling Parties’ ability to perform their
obligations under this Agreement. Each of the Selling Parties has made available to Buyer true
and complete copies of the Organizational Documents of each Selling Party, as in effect on the
Execution Date.
(b) ENP GP (i) is a limited liability company duly formed, validly existing and in good
standing under the Laws of Delaware, (ii) has all requisite legal and limited liability company
power and authority to own, lease and operate its properties and to conduct its businesses as
currently owned and conducted, (iii) has all material governmental licenses, authorizations,
permits, consents and approvals required to own, lease, and operate its properties and to conduct
its business as currently owned and conducted, and (iv) is duly qualified to do business and is in
good standing in each jurisdiction where the nature of the business conducted by it or the
ownership or leasing of its properties requires it to so qualify, except with respect to (iv) for
circumstances which, individually or in the aggregate, could not
6
reasonably be expected to have a Material Adverse Effect or to prevent or materially delay
the consummation of the transaction contemplated by this Agreement or to impair any Selling
Party’s ability to perform its obligations under this Agreement. Schedule 2.1(b) sets
forth all of the jurisdictions in which ENP GP is qualified to do business.
Section 2.2 Validity of Agreement; Authorization. Each of the Selling Parties has
(with respect to this Agreement and the Escrow Agreement), or on the Closing Date and at the time
of Closing will have (with respect to all other Transaction Documents to which it is a party), full
power and authority to enter into this Agreement and the other Transaction Documents to which it is
party and to perform its obligations hereunder and thereunder and to comply with the terms and
conditions hereunder and thereunder. The execution and delivery of this Agreement and such other
Transaction Documents and the performance by the Selling Parties of their obligations hereunder and
thereunder have or will have been duly authorized by the Board of Directors or other governing body
of each of the Selling Parties, and no other proceedings on the part of any of the Selling Parties
are necessary to authorize such execution, delivery and performance. This Agreement and the other
Transaction Documents to which any of the Selling Parties is party have been (in the case of this
Agreement and the Escrow Agreement), or will be at the Closing (in the case of such other
Transaction Documents), duly executed and delivered by each of the Selling Parties that is a party
thereto, as applicable, and constitute (in the case of this Agreement and the Escrow Agreement), or
will constitute at the Closing (in the case of such other Transaction Document) such Selling
Party’s valid and binding obligation enforceable against each such Selling Party in accordance with
its terms.
Section 2.3 No Conflict or Violation. Except as set forth in Schedule 2.3,
the execution, delivery and performance of this Agreement and the other Transaction Documents to
which each of the Selling Parties is a party does not and will not: (a) violate or conflict with
any provision of the Organizational Documents of any Selling Party, ENP GP or the Partnership; (b)
violate any applicable provision of law, statute, judgment, order, writ, injunction, decree, award,
rule, or regulation (“Law”) of any Governmental Authority binding on the Selling Parties or
on ENP GP acting on its own behalf (rather than on behalf of the Partnership); (c) violate, result
in a breach of, constitute (with due notice or lapse of time or both) a default or cause any
obligation, penalty or premium to arise or accrue under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument to which any of the
Selling Parties is a party or by which any of them in such capacities is bound or to which any of
their respective properties or assets are subject; (d) result in the creation or imposition of any
Encumbrances, limitations or restrictions upon any of the properties or assets of any of the
Selling Parties; or (e) result in the cancellation, modification, revocation or suspension of any
consent, license, permit, certificate, franchise, authorization, registration or filing with any
Governmental Authority of any of the Selling Parties or of ENP GP obtained, held or made on its own
behalf (rather than on behalf of the Partnership), except in the case of clauses (c) and (d), as is
resolved by (A) any consent or waiver of Parent’s lenders under the Denbury Credit Agreement (the
“Denbury Lender Consent”) to permit the transactions contemplated by this Agreement, which
is to be obtained by the Selling Parties in accordance with the terms of such Credit Agreement
prior to Closing or (B) the Partnership Bank Waivers if obtained pursuant to Section 6.12,
and (C) as could not reasonably be expected to have a Material Adverse Effect or to prevent or
materially delay the consummation of the transactions contemplated by this Agreement or to impair
such Selling Party’s ability to perform its obligations under this Agreement (provided this clause
(C)
7
will not modify Selling Parties’ representations regarding Encumbrances affecting the Member
Interests or the Subject Common Units).
Section 2.4 Consents and Approvals. Except for (i) the Denbury Lender Consent, (ii)
the Partnership Bank Waivers, (iii) as disclosed on Schedule 2.4, or (iv) as could not
reasonably be expected to have a Material Adverse Effect or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or to impair the Selling Parties’
ability to perform their obligations under this Agreement, the Selling Parties’ execution and
delivery of this Agreement or the other Transaction Documents to which any of the Selling Parties
is party or performance of their respective obligations hereunder or thereunder, does not require
the consent, approval, waiver or authorization of, or filing, registration or qualification with,
any Person, by any of the Selling Parties or ENP GP (acting on its own behalf rather than on behalf
of the Partnership).
Section 2.5 Capitalization of ENP GP; General Partner Interest; Subject Common Units.
(a) GP Holdings is the sole member of and the sole record and beneficial owner of, and has
valid title to, the Member Interests in ENP GP, free and clear of any Encumbrances except for (i)
restrictions on transfer arising under applicable securities Laws, (ii) the applicable terms and
conditions of the ENP GP LLC Agreement, (iii) the applicable terms and conditions of the
Partnership Agreement, and (iv) matters described on Schedule 2.5(a). The Member
Interests have been duly authorized and validly issued in accordance with the ENP GP LLC
Agreement, are fully paid (to the extent required by the ENP GP LLC Agreement) and nonassessable
(except as such nonassessability may be affected by Section 18-607 of the Delaware Limited
Liability Company Act (the “Delaware LLC Act”)). There are no preemptive or other rights
to subscribe for or to purchase, and except as set forth in Schedule 2.5(a), no
restriction upon the voting or transfer of, any interest in ENP GP. Other than this Agreement,
there are no outstanding options, warrants or similar rights to purchase or acquire from ENP GP or
any of the Selling Parties any equity interests in ENP GP. ENP GP has no outstanding bonds,
debentures, notes or other obligation the holders of which have the right to vote (or are
convertible into or exercisable for securities having the right to vote) with the holders of
Member Interests in ENP GP. The Selling Parties have delivered a true, correct and complete copy
of the ENP GP LLC Agreement to Buyer.
(b) ENP GP is the sole general partner of the Partnership. ENP GP is the sole record and
beneficial owner of the GP Units, which represents a 1.10% Percentage Interest in the Partnership.
The GP Units have been duly authorized and validly issued in accordance with the Partnership
Agreement and are held free and clear of any Encumbrances except for (i) restrictions on transfer
arising under applicable securities Laws, (ii) matters described on Schedule 2.5(b), if
any, and (iii) applicable terms and conditions of the Partnership Agreement. Other than the GP
Units, ENP GP does not own any equity interest in any other Person.
(c) LP Holdings and Operating are the sole record and beneficial owners of, and have valid
title to, their respective Subject Common Units free and clear of any Encumbrances except for (i)
restrictions on transfer arising under applicable securities Laws, (ii) matters described on
Schedule 2.5(c), if any, and (iii) applicable terms and conditions of the Partnership
8
Agreement. The Subject Common Units have been duly authorized and validly issued in
accordance with the Partnership Agreement, are fully paid (to the extent required by the
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP
Act”)). Other than this Agreement, there are no outstanding options, warrants or similar
rights to purchase or acquire from LP Holdings or Operating any of the Subject Common Units.
Section 2.6 Business of ENP GP; Absence of Undisclosed Liabilities. ENP GP has never
engaged in or conducted, directly or indirectly, any business or other activities other than acting
as the general partner of the Partnership and owning the GP Units, or incurred any indebtedness,
liability or obligations, absolute or contingent except in connection with or incidental to (i) its
performance as general partner of the Partnership, or (ii) the acquiring, owning or disposing of
any debt or equity securities of the Partnership Entities.
Section 2.7 Absence of Certain Changes or Events. Since December 31, 2009, the
business of ENP GP has been conducted in the ordinary course of business consistent with past
practices. Since December 31, 2009 there has not been or occurred any event or condition that has
had or could reasonably be expected to have a Material Adverse Effect, and ENP GP has not suffered
any damage, destruction or other casualty loss (whether or not covered by insurance) to its
properties or assets (recognizing that properties and assets of the Partnership are not properties
and assets of ENP GP) that are material to the business of ENP GP, provided,
however, that for purposes of this Section 2.7, all references to the Partnership
Entities will be disregarded in the definition of “Material Adverse Effect.”
Section 2.8 Litigation. There are no Legal Proceedings pending or, to the Knowledge
of the Selling Parties threatened, against or involving the Selling Parties that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect or to prevent or
delay the consummation of the transaction contemplated by this Agreement or to impair such Selling
Party’s ability to perform its obligations under this Agreement, and there is no order, judgment,
injunction or decree of any Governmental Authority outstanding against any of the Selling Parties
that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or to prevent or delay the consummation of the transaction contemplated by this Agreement or
to impair such Selling Party’s ability to perform its obligations under this Agreement,
provided, however, that for purposes of this Section 2.8, all references to
the Partnership Entities will be disregarded in the definition of “Material Adverse Effect.”
“Legal Proceeding” shall mean any judicial or administrative, suits, proceedings (public or
private), claims, investigations or proceedings before any Governmental Authority or arbitral
actions.
Section 2.9 Regulatory Matters.
(a) ENP GP is not a “public utility company,” “holding company” or “subsidiary” or
“affiliate” of a holding company as such terms are defined in the Public Utility Holding Company
Act of 1935, as amended.
(b) ENP GP is not an “investment company” or a company “controlled by” an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
9
Section 2.10 Solvency. Each of the Selling Parties is, and immediately after giving
effect to the transactions contemplated by this Agreement and the Transaction Documents will be
Solvent. For purposes of this Section 2.10, “Solvent” means, with respect to the
applicable party on any date of determination, that on such date (a) the fair value of the property
of such party is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such party that would constitute liabilities under GAAP, (b) the present
fair equivalent value of the assets of such party is not less than the amount that will be required
to pay its debts as they become absolute and matured, taking into account the possibility of
refinancing such obligations and selling assets, (c) such party does not intend to, and does not
believe that it will, incur debts or liabilities beyond such party’s ability to pay such debts as
they mature taking into account the possibility of refinancing such obligations and selling assets,
and (d) such party is not engaged in business or a transaction, and does not intend to engage in
business or a transaction, for which such party’s property remaining after such transaction would
constitute unreasonably small capital.
Section 2.11 Brokers. Subject to Schedule 2.11, no broker, investment banker,
financial advisor or other Person, other than Xxxxx Fargo Securities (the fees and expenses of
which will be paid by Parent), is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with this Agreement or any of the transactions contemplated
hereby based upon arrangements made by or on behalf of any Selling Party, ENP GP, the Partnership
or its Subsidiaries.
Section 2.12 Employee Plans.
(a) There does not now exist, nor do any circumstances exist that could reasonably be
expected to result in, any Plan Liability with respect to the Employee Plans sponsored,
maintained, contributed to, or required to be sponsored, maintained, or contributed to by the
Selling Parties and any Person that, together with the Selling Parties, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (an “ERISA Affiliate”), that
would be a liability of ENP GP or the Partnership Entities following the Closing.
(b) Schedule 2.12(b) sets forth a list as of the date hereof of the job titles and
annual salaries or hourly wages for the previous year (if the Closing Date occurs after December
31, 2010) for all employees of the Selling Parties and their Affiliates who spend all of their
business time providing services related to ENP GP or the Partnership Entities (the “Subject
Employees”). As of the date hereof (i) none of the Subject Employees are subject to any
collective bargaining agreements or other labor contract with any of the Selling Parties or their
Affiliates, (ii) to the Knowledge of the Selling Parties, none of ENP GP or any of the Partnership
Entities has currently agreed to recognize any union or other collective bargaining
representative, and (iii) since January 1, 2010 through the date hereof, no union or other
collective bargaining representative, to the Knowledge of the Selling Parties, has attempted to
organize or been certified as the exclusive bargaining representative of any Subject Employee.
There is no labor strike or work stoppage pending or, to the Knowledge of the Selling Parties,
threatened that involves the Subject Employees. There is no pending or, to the Knowledge of the
Selling Parties, threatened labor dispute, grievance or litigation relating to labor matters
involving the Subject Employees (including those alleging any material violation of any labor,
safety or employment Laws, charges of unfair labor practices, wage complaints or
10
discrimination complaints). No Subject Employee is subject to any individual employment
agreement or change in control payments other than those payments to be made by Parent under
Section 6.13 of this Agreement, and each Subject Employee is an at-will employee.
Section 2.13 Selling Parties Status. None of the Selling Parties is an employee
benefit plan or other organization exempt from taxation pursuant to Section 501(a) of the Code, a
non-resident alien, a foreign corporation or other foreign Person, or a regulated investment
company within the meaning of Section 851 of the Code. None of the Selling Parties nor any Person
that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is
under common control with, any of the Selling Parties, within the meaning of the HSR Act and the
rules promulgated thereunder, owns any Vanguard Common Units or other equity interests in the
Vanguard. Each of the Selling Parties (including to the best of the Knowledge of the Selling
Parties any Person for whom any of the Selling Parties will hold any Vanguard Common Units
comprising the Equity Portion of the Purchase Price, if any) is an Eligible Holder (as that term is
defined in the Vanguard LLC Agreement).
Section 2.14 Investment Intent; Investment Experience; Restricted Securities. In
acquiring the Vanguard Common Units comprising the Equity Portion of the Purchase Price, if any,
none of the Selling Parties is offering or selling, and shall not offer or sell such Vanguard
Common Units, in connection with any distribution of any of such Vanguard Common Units, and each of
the Selling Parties has no participation and shall not participate in any such undertaking or in
any underwriting of such an undertaking except in compliance with applicable federal and state
securities Laws. The Selling Parties that receive such Vanguard Common Units acknowledge that they
can bear the economic risk of their investment in the Vanguard Common Units comprising the Equity
Portion of the Purchase Price, if any, and have such knowledge and experience in financial and
business matters that they are capable of evaluating the merits and risks of an investment in such
Vanguard Common Units. Such Selling Parties are “accredited investors” as such term is defined in
Regulation D under the Securities Act. Such Selling Parties understand that the Vanguard Common
Units comprising the Equity Portion of the Purchase Price, if any, will not have been registered
pursuant to the Securities Act or any applicable state securities Laws, that such Vanguard Common
Units shall be characterized as “restricted securities” under federal securities Laws and that
under such Laws and applicable regulations such Vanguard Common Units cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption therefrom.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES CONCERNING ENP GP AND THE PARTNERSHIP ENTITIES
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES CONCERNING ENP GP AND THE PARTNERSHIP ENTITIES
As of the Execution Date, and also as of the Closing Date (except to the extent that any
statement is specifically limited by the terms thereof to the date of this Agreement or another
specified date), each of the Selling Parties hereby represents and warrants to Buyer as follows:
Section 3.1 Organization. Each of the Partnership Entities (i) is a corporation,
limited partnership or limited liability company, as the case may be, duly incorporated or formed,
as the case may be, validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation, (ii) has all requisite legal and corporate or other entity power and
11
authority, as the case may be, to own, lease and operate its properties and to conduct its
businesses as currently owned and conducted, (iii) has all material governmental licenses,
authorizations, permits, consents and approvals required to own, lease and operate its properties
and to conduct its businesses as currently owned and conducted, and (iv) is duly qualified to do
business and in good standing in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties requires it to so qualify, except with respect to
clause (iv) for circumstances which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect or to prevent or materially delay the consummation of
the transactions contemplated by this Agreement or to impair such Selling Party’s ability to
perform its obligations under this Agreement.
Section 3.2 No Conflict or Violation. The execution, delivery and performance of this
Agreement and the Transaction Documents to which any of the Selling Parties is party by each of the
Selling Parties does not and will not: (a) violate or conflict with any provision of the
Organizational Documents of any of the Partnership Entities; (b) violate any Law of any
Governmental Authority binding on any of the Partnership Entities or ENP GP; (c) violate, result in
a breach of, constitute (with due notice or lapse of time or both) a default or cause any
obligation, penalty or premium to arise or accrue under any contract, lease, loan agreement,
mortgage, security agreement, trust indenture or other agreement or instrument to which any of the
Partnership Entities is a party or ENP GP is a party or by which any of them is bound or to which
any of their respective properties or assets is subject; (d) result in the creation or imposition
of any Encumbrance upon any of the properties or assets of any of the Partnership Entities; or (e)
result in the cancellation, modification, revocation or suspension of any consent, license, permit,
certificate, franchise, authorization, registration or filing with any Governmental Authority of
any of the Partnership Entities, except in the case of clauses (c) and (d) as will be resolved by
obtaining Partnership Bank Waivers under the Partnership Credit, or where such violations,
breaches, defaults or Encumbrances in the aggregate would not reasonably be expected to have a
Material Adverse Effect or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement or to impair the Partnership’s ability to perform its obligations
under this Agreement.
Section 3.3 Consents and Approvals. Except for any Partnership Bank Waivers, or as
could not reasonably be expected to have a Material Adverse Effect or to prevent or delay
materially the consummation of the transaction contemplated by this Agreement, the Selling Parties’
execution and delivery of this Agreement or the other Transaction Documents to which any of the
Selling Parties is party or performance of their respective obligations hereunder or thereunder,
does not and will not require the consent, approval, waiver or authorization of, or filing,
registration or qualification with, any Person, by any of the Partnership Entities or ENP GP
(acting on behalf of the Partnership).
Section 3.4 Partnership Capitalization, Title to Subject Common Units.
(a) As of the Execution Date, no Partnership Common Units were subject to issuance upon the
vesting of outstanding phantom units. The Partnership has no limited partner interests issued and
outstanding other than the Common Units reflected in the Form 10-Q quarterly report for the quarter
ended September 30, 2010. All of the limited partner interests in the Partnership have been duly
authorized and validly issued in accordance with the Partnership
12
Agreement; and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except to the extent such nonassessability may be affected by Section 17-607 of the Delaware LP Act).
(b) Except as described in the Partnership Agreement or as disclosed in the Partnership SEC
Reports, there are no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of any interest in the Partnership (provided that the
foregoing shall not apply to any such rights to purchase or restriction on voting or transfer that
any holder of Common Units (other than the Selling Parties) may have imposed upon such Common
Units). Except as described in the Partnership Agreement or in Schedule 3.4(b) or as
disclosed in the Partnership SEC Reports, there are no outstanding options, warrants or similar
rights to purchase or acquire from any of the Partnership Entities any equity interests in any of
the Partnership Entities or any stock appreciation, phantom stock or similar rights with respect
to the Partnership Entities. No Partnership Entity has any outstanding bonds, debentures, notes
or other obligation the holders of which have the right to vote (or are convertible into or
exercisable for securities having the right to vote) with the limited partners of the Partnership.
Section 3.5 Subsidiaries; Equity Interests; Business of ENP GP. Except as set forth
on Schedule 3.5 or in the Partnership Agreement or as disclosed in the Partnership SEC
Reports, (i) neither ENP GP nor the Partnership has any Subsidiaries, and does not own, directly or
indirectly, any shares of capital stock, voting rights or other equity interests or investments in
any other Person; and (ii) neither ENP GP nor the Partnership has any obligation or rights to
acquire by any means, directly or indirectly, any capital stock, voting rights, equity interests or
investments in another Person. Except for Encumbrances set forth on Schedule 3.5(a) or
those that exist under the Partnership Credit Agreement, the Partnership owns, directly or
indirectly, all of the issued and outstanding partnership, membership or other equity interests of
each of such Subsidiaries free and clear of any Encumbrances. The Partnership and each of such
Subsidiaries of the Partnership are collectively referred to herein as the “Partnership
Entities.”
Section 3.6 Financial Statements; Partnership SEC Reports. The Partnership has timely
made all filings required to be made under the Securities Act of 1933, as amended (the
“Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) since January 1, 2010 (such documents, including exhibits and other information
incorporated therein, collectively, the “Partnership SEC Reports”). Since January 1, 2010,
(a) all Partnership SEC Reports filed by the Partnership, at the time filed (in the case of
documents filed pursuant to the Exchange Act) or when declared effective by the Securities and
Exchange Commission (the “SEC”) (in the case of registration statements filed under the
Securities Act) complied as to form in all material respects with the applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations of the SEC thereunder, (b) no
such SEC Report, at the time described above, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein in order to make the statements
contained therein, in the light of the circumstances under which they were made, not misleading,
and (c) all financial statements contained or incorporated by reference in such Partnership SEC
Reports complied as to form when filed in all material respects with the rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto) and fairly
present in all
13
material respects the financial condition of the Partnership and its consolidated subsidiaries
at and as of the respective dates thereof and the consolidated results of operations and changes in
cash flows for the periods indicated (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments consistent with prior periods). The Partnership SEC Reports
included all certifications required to be included therein pursuant to Section 13a-14(a) and
Section 13a-14(b) of the Exchange Act and the statements made by such certifications are true and
correct. No Subsidiary of the Partnership is required to file periodic reports with the SEC,
either pursuant to the requirements of the Exchange Act or by contract.
Section 3.7 Controls.
(a) The “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) of the Partnership are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Partnership in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC, and that all such information is
accumulated and communicated to the management of ENP GP as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the chief executive officer and
chief financial officer of ENP GP required under the Exchange Act with respect to such reports.
(b) Neither the Board of Directors of ENP GP, the officers of ENP GP, nor any of the Selling
Parties has received or otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, regarding the accounting or auditing practices procedures, methodologies or
methods of the Partnership Entities or their respective internal accounting controls relating to
periods after January 1, 2010, including any material complaint, allegation, assertion or claim
that any of the Partnership Entities has engaged in questionable accounting or auditing practices,
and (ii) no attorney representing the Partnership Entities, whether or not employed by the
Partnership Entities, has reported evidence of a material violation of securities Laws or breach
of fiduciary duty, relating to periods after January 1, 2010, by the officers, directors,
employees or agents of any of the Partnership Entities to the Board of Directors of ENP GP or to
any director or officer of ENP GP.
Section 3.8 Absence of Certain Changes or Events. Except as set forth on Schedule
3.8 or in the Partnership SEC Reports (excluding any disclosures included in any “risk factor”
section, any other disclosures in such Partnership SEC Reports to the extent they are predictive or
forward looking in nature), since December 31, 2009 (a) the business of the Partnership Entities
has been conducted in the ordinary course of business consistent with past practices, (b) there has
not been or occurred any event or condition that has had or could reasonably be expected to have a
Material Adverse Effect, and (c) the Partnership and its Subsidiaries (taken as a whole) have not
suffered any damage, destruction or other casualty loss (whether or not covered by insurance) to
its properties or assets that are material to the business of the Partnership and its Subsidiaries.
Section 3.9 Compliance with Law. Except as set forth in the Partnership SEC Reports
(excluding any disclosures included in any “risk factor” section, any other disclosures in such
Partnership SEC Reports to the extent they are predictive or forward looking in nature and any
14
disclosures contained in exhibits to or other documents incorporated by reference into, such
Partnership SEC Reports), and except with respect to the matters addressed in Sections 3.10,
3.12, 3.14, 3.15, 3.16 and 3.18, which matters are addressed only in those sections, the
operations of ENP GP and the Partnership Entities have been conducted, and currently are being
conducted, in material compliance with all applicable Laws and other requirements of all
Governmental Authorities having jurisdiction of ENP GP or the Partnership Entities and their
respective assets, properties and operations.
Section 3.10 Tax Matters.
(a) For purposes of this Agreement, “Tax Returns” shall mean returns, reports,
exhibits, schedules, information statements, declaration, claim for refund, and other
documentation (including any additional or supporting material) filed or maintained, or required
to be filed or maintained, in connection with the calculation, determination, assessment or
collection of any Tax or provided to any Tax authority, including any amendments thereto. For
purposes of this Agreement, “Tax” or “Taxes” shall mean any and all federal,
state, local, foreign and other taxes, levies, fees, imposts and duties of whatever kind
(including any interest, penalties or additions to the tax imposed in connection therewith or with
respect thereto), including, without limitation, taxes imposed on, or measured by, income,
franchise, profits or gross receipts, and also ad valorem, value added, sales, use, service, real
or personal property, capital stock, license, payroll, withholding, employment, social security,
workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp,
occupation, premium, windfall profits, transfer and gains taxes and customs duties.
(b) Except as disclosed on Schedule 3.10(b), (i) each of ENP GP and each of the
Partnership Entities has timely filed (or joined in the filing of) all Tax Returns required by
applicable Law to be filed (taking into account any extensions of time within which to file) by or
with respect to each of ENP GP and each of the Partnership Entities; (ii) all such Tax Returns
were true, correct and complete in all material respects and all material Taxes have been paid in
full; (iii) there is no action, suit, proceeding, investigation, audit, dispute or claim
concerning any Taxes of ENP GP or any of the Partnership Entities either claimed or raised by any
Tax authority in writing; (iv) none of ENP GP or any of the Partnership Entities has any
outstanding request for any extension of time within which to pay its Taxes or file its Tax
Returns; (v) there are no outstanding waivers or extensions of any applicable statute of
limitations for the assessment or collection of any Taxes of any of ENP GP or any of the
Partnership Entities; (vi) neither ENP GP nor any Partnership Entity is a party to, or is bound
by, any Tax allocation, Tax indemnity, Tax sharing, or similar agreement or arrangement that
imposes liability on ENP GP or any Partnership Entity for the Taxes of another Person; (vii) each
of the Partnership Entities that is a partnership for federal income Tax purposes has made, or
shall be eligible to make, an election pursuant to Section 754 of the Code; (viii) each of the
Partnership Entities has withheld and paid all Taxes required to be withheld by such Partnership
Entity in connection with any amounts paid or owing to any employee, creditor, independent
contractor or other third party; (ix) no material liens for Taxes exist with respect to any of the
Partnership Entities’ assets, except for statutory liens for Taxes not yet due and payable or that
are being contested in good faith and reserved for in accordance with GAAP; and (x) neither ENP GP
nor any Partnership Entity has engaged in a transaction that would be reportable by or with
respect to any Partnership Entity under Treas. Reg. §1.6011-4 or any predecessor thereto.
15
(c) In each tax year since the formation of the Partnership up to and including the current
tax year, at least 90% of the Partnership’s gross income has been income which is “qualifying
income” within the meaning of Section 7704(d) of the Code.
(d) Except as disclosed on Schedule 3.10(d), none of the Partnership Entities has
elected to be treated as a corporation.
(e) ENP GP is qualified as a disregarded entity under Treasury Regulation Section 301.7701-2
and -3.
Section 3.11 Absence Of Undisclosed Liabilities. Except as disclosed on Schedule
3.11 or in the Partnership SEC Reports (excluding any disclosures included in any “risk factor”
section, any other disclosures in such Partnership SEC Reports to the extent they are predictive or
forward looking in nature), none of the Partnership Entities has any indebtedness or liability,
absolute or contingent, which is not shown or provided for in the consolidated financial statements
of the Partnership included in the Partnership SEC Reports, other than (a) liabilities incurred or
accrued in the ordinary course of business consistent with past practice, including liens for
current taxes and assessments not in default, since December 31, 2009, or (b) other liabilities of
the Partnership or any of its Subsidiaries that individually or in the aggregate are not material
to the Partnership and its Subsidiaries, taken as a whole, and that are not required by GAAP to be
included in the consolidated financial statements of the Partnership.
Section 3.12 Regulatory Matters.
(a) None of the Partnership Entities is a “public utility company,” “holding company” or
“subsidiary” or “affiliate” of a holding company as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(b) None of the Partnership Entities is an “investment company” or a company “controlled by”
an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 3.13 Books And Records; Other Information.
(a) The minute books and other similar records of the Partnership Entities and of ENP GP
contain true and correct copies of all actions taken at all meetings of the Partnership’s limited
partners, ENP GP’s equityholders, the Board of Directors of ENP GP or any committee thereof and
all written consents executed in lieu of any such meetings. Complete copies of all such minute
books and other similar records have been made available to Buyer.
(b) The Partnership Entities and ENP GP (i) make and keep books, records and accounts, which,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets
and (ii) maintain systems of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management’s general or specific
authorization; (B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management’s general or specific authorization; and (D) the
recorded accountability for assets
16
is compared with existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
Section 3.14 Employees; Employee Plans.
(a) None of the Partnership Entities currently has any employees and, except as set forth on
Schedule 3.14(a), none of the Partnership Entities has ever had any employees.
(b) Except as disclosed on Schedule 3.14(b), the Partnership Entities and their ERISA
Affiliates do not sponsor, maintain or contribute to or have an obligation (secondary, contingent
or otherwise) to contribute to and, at no time during the past five (5) years, have sponsored,
maintained or contributed to or had an obligation to contribute to, any Employee Plans
(collectively, the “Partnership Plans”).
(c) ENP GP currently has no employees and, except as set forth on Schedule 3.14(c),
ENP GP has never had any employees.
(d) Except as disclosed on Schedule 3.14(d), ENP GP does not have any Plan Liability
with respect to any Employee Plans sponsored, maintained, contributed to, or required to be
sponsored, maintained, or contributed to by its ERISA Affiliates. ENP GP does not sponsor,
maintain or contribute to or have an obligation (secondary, contingent or otherwise) to contribute
to and, at no time during the past five (5) years, has sponsored, maintained or contributed to or
had an obligation to contribute to, any Employee Plans (collectively, the “ENP GP Plans”
and together with the Partnership Plans, the “Plans”).
(e) With respect to any Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the Knowledge of the Selling Parties,
threatened that could result in any material liability to Buyer, ENP GP or any Partnership Entity.
(f) Neither the negotiation or execution of this Agreement, nor the consummation of the
transactions contemplated by this Agreement will, either alone or in combination with another
event, result in any Plan Liability or other liability to the Subject Employees for compensation
or benefits, including severance and change in control benefits, that will be a liability of the
Partnership Entities, ENP GP or the Buyer at or following the Closing.
Section 3.15 Properties, Oil and Gas Matters.
(a) For purposes of this Agreement, “Partnership Oil and Gas Agreements” means the
following types of agreements or contracts to which the Partnership or any of the Partnership
Entities is a party, whether as an original party, by succession or assignment or otherwise with
respect to the Oil and Gas Properties forming the basis for the reserves reflected in the
Partnership Reserve Report: oil and gas leases, farm-in and farm-out agreements, agreements
providing for an overriding royalty interest, agreements providing for a royalty interest,
agreements providing for a net profits interest, crude oil or natural gas sales or purchase
contracts, joint operating agreements, unit operating agreements, unit agreements, field equipment
leases, and agreements restricting any of the Partnership Entities’ ability to operate, obtain,
explore for or develop interests in a particular geographic area. Set forth in
17
Schedule 3.15 is a list of all Partnership Oil and Gas Agreements that contain any
material restriction on any of the Partnership Entities’ ability to operate, obtain, explore for
or develop interests in a particular geographic area. Complete copies of all such Partnership Oil
and Gas Agreements have been made available to Buyer.
(b) The Partnership has furnished an internal reserve report containing estimates of the oil
and gas reserves that are owned by the Partnership Entities as of June 30, 2010, prepared by the
Partnership (the “Partnership Reserve Report”). The factual, non-interpretive data
relating to the Oil and Gas Properties of the Partnership Entities on which the Partnership
Reserve Report were based for purposes of estimating the oil and gas reserves set forth therein
was accurate in all material respects at the time such data was provided to the reserve engineers.
With respect to the proved reserves reflected in the Partnership Reserve Report, the Partnership
Reserve Report conforms in all material respects to the guidelines with respect thereto of the
SEC. Except for changes (including changes in Hydrocarbon commodity prices) generally affecting
the oil and gas industry and normal depletion by production, there has been no material change in
respect of the matters addressed in the Partnership Reserve Report.
(c) All material items of operating equipment, pipelines and facilities owned or leased by
any of the Partnership Entities and used or necessary for use in the operation of the Oil and Gas
Properties forming the basis for the reserves reflected in the Partnership Reserve Report are in a
state of repair so as to be adequate for reasonably prudent operations in the areas in which they
are operated.
(d) Except for goods and other property sold, used or otherwise disposed of since the date of
the Partnership Reserve Report in the ordinary course of business or reflected as having been
sold, used or otherwise disposed of in the Partnership SEC Reports (excluding any disclosures
included in any “risk factor” section, any other disclosures in such Partnership SEC Reports to
the extent they are predictive or forward looking in nature and any disclosures contained in
exhibits to or other documents incorporated by reference into, such Partnership SEC Reports), as
of the date hereof, the Partnership Entities own or have valid leases or contractual rights to,
all material equipment and other personal property used or necessary for use in the operation of
their respective Oil and Gas Properties forming the basis for the reserves reflected in the
Partnership Reserve Report in the manner in which such properties were operated as of the date
hereof.
(e) Except for property sold or otherwise disposed of since the dates of the respective
Partnership Reserve Report in the ordinary course of business or reflected as having been sold or
otherwise disposed of in the Partnership SEC Reports (excluding any disclosures included in any
“risk factor” section, any other disclosures in such Partnership SEC Reports to the extent they
are predictive or forward looking in nature and any disclosures contained in exhibits to or other
documents incorporated by reference into, such Partnership SEC Reports), the Partnership Entities
have good and defensible title to all Oil and Gas Properties forming the basis for the reserves
reflected in the Partnership Reserve Report, in each case relating to the interests referred to
therein as of the date of each such report, and in each case as attributable to interests owned by
the Partnership Entities, free and clear of any Encumbrances, except: (i) Encumbrances reflected
in the Partnership SEC Reports filed prior to the date of this Agreement, (ii) Permitted
Encumbrances, and (iii) such imperfections of title, easements, liens,
18
government or tribal approvals or other matters and failures of title as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(f) All material proceeds from the sale of Hydrocarbons produced from the Oil and Gas
Properties of the Partnership Entities are being received by them in a timely manner and are not
being held in suspense for any reason.
(g) The Partnership Oil and Gas Agreements affecting any real or personal property given
material value in the Partnership Reserve Report, including the Oil and Gas Properties, are in
good standing, valid and effective, and all material rentals due by any of the Partnership
Entities to any lessor of any oil and gas leases forming the basis for the reserves reflected in
the Partnership Reserve Report have been properly paid. The Partnership Entities have paid all
material royalties, overriding royalties and other burdens on production due by the Partnership
Entities with respect to their respective Oil and Gas Properties forming the basis for the
reserves reflected in the Partnership Reserve Report.
(h) All Oil and Gas Properties operated by any of the Partnership Entities have been operated
in all material respects in accordance with reasonable, prudent oil and gas field practices and in
material compliance with the applicable oil and gas leases and applicable law.
(i) Except as set forth in Schedule 3.15(i), none of the material Oil and Gas
Properties of the Partnership or the other Partnership Entities forming the basis for the reserves
reflected in the Partnership Reserve Report is subject to any preferential purchase, consent or
similar right that would become operative as a result of the transactions contemplated by this
Agreement.
(j) Except as set forth in Schedule 3.15(j), none of the Oil and Gas Properties of
the Partnership Entities forming the basis for the reserves reflected in the Partnership Reserve
Report are subject to any tax partnership agreement or provisions requiring a partnership income
tax return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.
(k) None of the Partnership Entities has received any material advance, take-or-pay or other
similar payments that entitle purchasers of production from the Oil and Gas Properties forming the
basis for the reserves reflected in the Partnership Reserve Report to receive deliveries of
Hydrocarbons without paying therefor, and, on a net basis, across the Partnership Entities, the
Partnership Entities, taken as a whole, are neither underproduced nor overproduced, in either
case, to any material extent, under gas balancing or similar arrangements, except as set forth in
Schedule 3.15(k).
(l) Each of the Partnership Entities (i) has such consents, rights-of-way, or licenses from
any Person (collectively, “Rights-of-Way”) as are necessary to use, own and operate each
Partnership Entity’s material Oil and Gas Properties in the manner such assets are currently used,
owned and operated by each Partnership Entity in all material respects and (ii) has fulfilled and
performed, in all material respects, all of its obligations with respect to such Rights-of-Way.
To the Knowledge of the Seller Parties, no event has occurred that allows, or after the giving of
notice or the passage of time, or both, would allow revocation or termination
19
thereof or would result in any material impairment of the rights of the holder of any such
Right-of-Way.
Section 3.16 Environmental Matters. Except as set forth in Schedule 3.16:
(a) Each of the Partnership Entities and their respective properties is, and during the
relevant time periods specified in all applicable statutes of limitations, has been, in material
compliance with all applicable Environmental Laws.
(b) Each of the Partnership Entities has obtained all material permits, licenses, franchise
authorities, consents and approvals, made all material filings and maintained all material data,
documentation and records necessary for owning and operating its assets and business as it is
presently conducted under all applicable Environmental Laws, and all such permits, licenses,
franchises, authorities, consents, approvals and filings remain in full force and effect, and are
issued in the correct entity’s name, and there are no circumstances existing that could reasonably
be expected to result in such permits, licenses, franchises, authorities, consents, approvals and
filings being revoked or not renewed or in pending applications for such permits, licenses,
franchises, authorities, consents, approvals and filings being denied.
(c) There are no pending or threatened material claims, demands, actions, administrative
proceedings, lawsuits or investigations against any of the Partnership Entities or affecting any
of their respective properties under any Environmental Laws.
(d) There has been no Release of any Hazardous Material into the environment by the
Partnership Entities or onto or beneath any of their respective properties or assets that could
reasonably be expected to result in any material remedial or corrective action obligation on the
part of the Partnership Entities under Environmental Laws.
(e) There has been no exposure of any person or property to any Hazardous Material from, by,
or in connection with the Partnership Entities’ properties or operations that could reasonably be
expected to form the basis of a claim for material damages or compensation.
(f) The Selling Parties have made available to Buyer all internal and external environmental
assessments, reports, audits ,and studies and all correspondence on environmental matters relating
to the Partnership Entities’ properties, assets, and operations that are reasonably expected to
have a material impact that are known to them to be in the possession, custody, or control of or
otherwise reasonably available to the Selling Parties.
(g) Notwithstanding anything to the contrary contained elsewhere in this Agreement, no
statement or representation is made in this Agreement regarding any compliance or failure to
comply with, or any actual or contingent liability under, or claims, demands, actions,
proceedings, lawsuits or investigations with respect to any Environmental Law, except as set forth
in this Section 3.16.
Section 3.17 Derivative Transactions and Hedging. Schedule 3.17 contains a
complete and correct list as of the Execution Date of all outstanding commodity or financial
hedging positions of any of the Partnership Entities pursuant to which any such party has
outstanding
20
rights or obligations (collectively, “Derivative Transactions”). All such Derivative
Transactions were, and any Derivative Transactions entered into after the date of this Agreement
will be, in all material respects entered into in accordance with applicable laws, and in
accordance with the investment, securities, commodities, risk management and other policies,
practices and procedures employed by the Partnership, and were, and will be, in all material
respects entered into with counterparties believed at the time and currently to be financially
responsible. Each of the Partnership Entities has, and will have, duly performed, in all material
respects, all of its respective obligations under the Derivative Transactions to the extent that
such obligations to perform have accrued, and there are and will be no breaches, violations,
collateral deficiencies, requests for collateral or demands for payment, or defaults or allegations
or assertions thereof by any party thereunder.
Section 3.18 Material Contracts.
(a) As of the date of this Agreement, except for (i) contracts filed as an exhibit to or
incorporated by reference in a Partnership SEC Report filed prior to the Execution Date, (ii)
contracts related to properties or operations that have been, or are under contract to be,
purchased or sold or otherwise disposed of or are in the process of being purchased or sold or
otherwise disposed of to the extent such sales and/or dispositions have been disclosed in
Partnership SEC Reports, or (iii) as otherwise set forth on Schedule 3.18(a), none of the
Partnership Entities is a party to or bound by any contract (whether written or oral) that is:
(i) a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC);
(ii) a loan, guarantee of indebtedness or credit agreement, note, bond, mortgage,
indenture or other binding commitment (other than those solely between or among any of the
Partnership Entities) relating to indebtedness in an amount in excess of $1.0 million
individually, other than the Partnership Credit Agreement;
(iii) a contract, lease (other than oil and gas leases) or license (including any
seismic licensing agreement) (x) pursuant to which any of the Partnership Entities paid or
received amounts in excess of $1.0 million individually within the 12 month period prior to
the date of this Agreement or are reasonably expected to pay or receive amounts in excess of
$1 million within the 12 month period following the date of this Agreement (if such
agreement cannot be terminated on 90 days or less notice without payment by any of the
Partnership Entities of any material penalty) or (y) that is material to the Partnership
Entities taken as a whole;
(iv) a contract that purports to limit materially the right of any of the Partnership
Entities to engage or compete in any line of business in which any of the Partnership
Entities is engaged or to compete with any person or operate in any location;
(v) a contract that creates a partnership or joint venture or similar arrangement
(other than a joint operating agreement entered into in the ordinary course of business)
with respect to any significant portion of the business of the Partnership Entities taken as
a whole;
21
(vi) a settlement or similar agreement with any Governmental Authority or order or
consent of a Governmental Authority involving future performance by any of the Partnership
Entities that is material to the Partnership Entities taken as a whole;
(vii) a contract which includes any of the Selling Parties or any Affiliate of any
Selling Parties (other than ENP GP and the Partnership Parties) as a counterparty or third
party beneficiary, other than the Administrative Services Agreement; or
(viii) an executory contract which includes the acquisition or sale of assets with a
book value in excess of $50 million (whether by merger, sale of stock, sale of assets or
otherwise).
All contracts of the type described in this Section 3.18(a) together with the contracts for
the sale of Hydrocarbons produced from any of the Partnership Entities’ Oil and Gas Properties
described in the Partnership Reserve Report that are not terminable on 90 days or less notice
without payment by any of the Partnership Entities of any material penalty and are set forth on
Schedule 3.18(a), are referred to herein as the “Partnership Material Contracts.”
(b) Other than as a result of the expiration or termination of any Partnership Material
Contract in accordance with its terms and except as would not have either individually or in the
aggregate a Material Adverse Effect, (i) each Partnership Material Contract is valid and binding
on each of the Partnership Entities that is a party thereto, as applicable, and is in full force
and effect and enforceable in accordance with its terms against such Partnership Entity and, to
the Knowledge of the Selling Parties, is valid and binding on the other party or parties thereto,
and in full force and effect and enforceable against such other parties thereto, (ii) each of the
Partnership Entities has performed all material obligations required to be performed by it to date
under each Partnership Material Contract, and (iii) none of the Partnership Entities has knowledge
of, or has received notice of, the existence of any event or condition which constitutes, or,
after notice or lapse of time or both, would constitute, a material default on the part of any of
the Partnership Entities or of any other party under any such Partnership Material Contract.
Section 3.19 Litigation. Except as set forth on Schedule 3.19, there are no
Legal Proceedings pending or, to the Knowledge of the Selling Parties, threatened, against or
involving the Partnership Entities or ENP GP that, individually or in the aggregate, have or are
reasonably likely to have a Material Adverse Effect. Except as set forth on Schedule 3.19,
there is no order, judgment, injunction or decree of any Governmental Authority outstanding against
any of the Partnership Entities or ENP GP that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect or to prevent or delay the consummation of the
transactions contemplated by this Agreement or to impair such Selling Party’s ability to perform
its obligations under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof, and also as of the Closing Date (except to the extent that any
representation is specifically limited by the terms of such representation to the date of this
22
Agreement or another specified date), Buyer hereby represents and warrants to each of the
Selling Parties as follows:
Section 4.1 Organization. Buyer is (i) a limited liability company duly formed,
validly existing and in good standing under the Laws of Kentucky, (ii) has all requisite legal and
entity power and authority to own, lease and operate its properties and to conduct its businesses
as currently owned and conducted, (iii) has all material governmental licenses, authorizations,
permits, consents and approvals required to own, lease and operate its properties and to conduct
its businesses as currently owned and conducted, (iv) is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by it or the ownership
or leasing of its properties requires it to so qualify, except with respect to (iii) and (iv) for
circumstances which, individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on Buyer or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or to impair Buyer’s ability to perform its obligations
under this Agreement. Buyer has made available to the Selling Parties true and complete copies of
the Organizational Documents of Buyer, as in effect on the Execution Date.
Section 4.2 Validity Of Agreement; Authorization. Buyer has (with respect to this
Agreement and the Escrow Agreement), or on the Closing Date and at the time of Closing will have
(with respect to all other Transaction Documents to which it will be a party), the power and
authority to enter into this Agreement and the other Transaction Documents to which it is or will
be a party and to carry out its obligations hereunder and thereunder. The execution and delivery of
this Agreement and such other Transaction Documents and the performance of Buyer’s obligations
hereunder and thereunder have been duly authorized by the Board of Directors of Buyer, and no other
proceedings on the part of Buyer are necessary to authorize such execution, delivery and
performance. This Agreement and the other Transaction Documents to which Buyer is a party have
been (in the case of this Agreement and the Escrow Agreement), or will be at the Closing (in the
case of such other Transaction Documents), duly executed and delivered by Buyer and constitute (in
the case of this Agreement and the Escrow Agreement), or will constitute (in the case of such other
Transaction Documents) at the Closing, as applicable, Buyer’s valid and binding obligation
enforceable against Buyer in accordance with its terms.
Section 4.3 No Conflict Or Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which Buyer is or will be a party does not and
will not: (a) violate or conflict with any provision of its Organizational Documents; (b) violate
any applicable provision of Law; (c) violate, result in a breach of, constitute (with due notice or
lapse of time or both) a default or cause any obligation, penalty or premium to arise or accrue
under any contract, lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which Buyer is a party or by which Buyer is bound or to which any of its
properties or assets is subject; (d) result in the creation or imposition of any Encumbrance upon
any of its properties or assets, or (e) result in the cancellation, modification, revocation or
suspension of any consent, license, permit, certificate, franchise, authorization, registration or
filing with any Governmental Authority of Buyer except where such violations, breaches, defaults or
Encumbrances in the aggregate would not have a material adverse effect on the transactions
contemplated hereby.
23
Section 4.4 Consents And Approvals. No consent, approval, waiver or authorization of,
or filing, registration or qualification with, any Governmental Authority or any other Person (on
the part of Buyer) is required for Buyer to execute and deliver this Agreement or the Transaction
Documents to which Buyer is a party or to perform its respective obligations hereunder or
thereunder.
Section 4.5 Brokers. No broker, investment banker, financial advisor or other Person,
other than RBC Capital Markets Corporation (the fees and expenses of which will be paid by Buyer),
is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with this Agreement or any of the transactions contemplated hereby based upon
arrangements made by or on behalf of Buyer.
Section 4.6 Buyer Status. Buyer is not an employee benefit plan or other organization
exempt from taxation pursuant to Section 501(a) of the Code, a non-resident alien, a foreign
corporation or other foreign Person, or a regulated investment company within the meaning of
Section 851 of the Code. Neither Buyer nor any Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with, the Buyer, within
the meaning of the HSR Act and the rules promulgated thereunder, owns any Common Units or other
equity interests in the Partnership. Buyer (including to the best of the Knowledge of the Buyer
any Person for whom Buyer will hold the Subject Common Units) is an Eligible Holder (as that term
is defined in the Partnership Agreement).
Section 4.7 Investment Intent; Investment Experience; Restricted Securities. In
acquiring the Member Interests and the Subject Common Units, Buyer is not offering or selling, and
shall not offer or sell the Member Interests or the Subject Common Units, in connection with any
distribution of any of such Member Interests or Subject Common Units, and Buyer has no
participation and shall not participate in any such undertaking or in any underwriting of such an
undertaking except in compliance with applicable federal and state securities Laws. Buyer
acknowledges that it can bear the economic risk of its investment in the Member Interests and the
Subject Common Units, and has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the Member Interests and the
Subject Common Units. Buyer is an “accredited investor” as such term is defined in Regulation D
under the Securities Act. Buyer understands that the Member Interests and the Subject Common Units
will not have been registered pursuant to the Securities Act or any applicable state securities
Laws, that the Member Interests and the Subject Common Units shall be characterized as “restricted
securities” under federal securities Laws and that under such Laws and applicable regulations the
Member Interests and the Subject Common Units cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF VANGUARD
REPRESENTATIONS AND WARRANTIES OF VANGUARD
As of the Execution Date, and also as of the Closing Date (except to the extent that any
representation is specifically limited by the terms of such representation to the date of this
24
Agreement or another specified date), Vanguard hereby represents and warrants to each of the
Selling Parties as follows:
Section 5.1 Organization
(a) Vanguard beneficially owns all of the issued and outstanding limited liability company
interests in each of Buyer and VNR Holdings, LLC, a Delaware limited liability company (“VNR
Holdings”), and all of the issued and outstanding common stock, par value $0.01, of VNR Finance
Corp., a Delaware corporation (“VNR Finance”). VNG beneficially owns all of the issued and
outstanding limited liability company interests in each of Ariana Energy, LLC, a Tennessee limited
liability company (“AE”), Trust Energy Company, LLC, a Kentucky limited liability company
(“TEC”), and Vanguard Permian, LLC, a Delaware limited liability company
(“Permian”).
(b) Each of Vanguard, Buyer, TEC, Permian, VNR Holdings, VNR Finance and AE (collectively,
the “Vanguard Entities”) (i) is a corporation or limited liability company, as the case
may be, duly incorporated or formed, as the case may be, validly existing and in good standing
under the Laws of Delaware, Tennessee or Kentucky, as the case may be, (ii) has all requisite
legal and corporate or other entity power and authority, as the case may be, to own, lease and
operate its properties and to conduct its businesses as currently owned and conducted, (iii) has
all material governmental licenses, authorizations, permits, consents and approvals required to
own, lease and operate its properties and to conduct its businesses as currently owned and
conducted, and (iv) is duly qualified to do business and in good standing in each jurisdiction in
which the nature of the business conducted by it or the ownership or leasing of its properties
requires it to so qualify, except with respect to clause (iv) for circumstances which,
individually or in the aggregate, could not reasonably be expected to have a Vanguard Material
Adverse Effect or to prevent or materially delay the consummation of the transactions contemplated
by this Agreement or to impair Vanguard’s ability to perform its obligations under this Agreement.
Section 5.2 Capitalization; Issuance of Vanguard Common Units
(a) As of the Execution Date, except as provided on Schedule 5.2(a), no Vanguard
Common Units were subject to issuance upon the vesting of outstanding phantom units. Except as
provided on Schedule 5.2(a), Vanguard has no limited partner interests issued and
outstanding other than the Vanguard Common Units reflected in the Form 10-Q quarterly report for
the quarter ended September 30, 2010. All of the limited liability company interests in Vanguard
have been duly authorized and validly issued in accordance with the Vanguard LLC Agreement; and are
fully paid (to the extent required under the VNR LLC Agreement) and nonassessable (except to the
extent such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC
Act).
(b) Except as described in the VNR LLC Agreement or as disclosed in filings required to be
made by Vanguard under the Securities Act and the Securities Exchange Act since January 1, 2010
(such documents, including exhibits and other information incorporated therein, collectively, the
“Vanguard SEC Reports”), there are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of any interest in
25
Vanguard (provided that the foregoing shall not apply to any such rights to purchase or
restriction on voting or transfer that any holder of Vanguard Common Units may have imposed upon
such Vanguard Common Units). Except as described in the Vanguard LLC Agreement or as disclosed in
the Vanguard SEC Reports, there are no outstanding options, warrants or similar rights to purchase
or acquire from any of the Vanguard Entities any equity interests in any of the Vanguard Entities
or any stock appreciation, phantom stock or similar rights with respect to the Vanguard Entities.
No Vanguard Entity has any outstanding bonds, debentures, notes or other obligation the holders of
which have the right to vote (or are convertible into or exercisable for securities having the
right to vote) with the limited liability company members of Vanguard.
(c) The Vanguard Common Units comprising the Equity Portion of the Purchase Price, if any,
which may be issued and delivered by Vanguard to the Selling Parties pursuant to this Agreement
have been duly authorized in accordance with the Vanguard LLC Agreement and, if issued and
delivered to and paid for by the Selling Parties in accordance with this Agreement and the Vanguard
LLC Agreement, will be validly issued in accordance with the Vanguard LLC Agreement, fully paid (to
the extent required in the Vanguard LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act).
Section 5.3 Validity of Agreement; Authorization. Vanguard has (with respect to this
Agreement), or on the Closing Date and at the time of Closing will have (with respect to all other
Transaction Documents to which it will be a party), the power and authority to enter into this
Agreement and the other Transaction Documents to which it is or will be a party and to carry out
its obligations hereunder and thereunder. The execution and delivery of this Agreement and such
other Transaction Documents and the performance of Vanguard’s obligations hereunder and thereunder
have been duly authorized by the Board of Directors of Vanguard, and no other proceedings on the
part of Vanguard are necessary to authorize such execution, delivery and performance. This
Agreement and the other Transaction Documents to which Vanguard is a party have been (in the case
of this Agreement), or will be at the Closing (in the case of such other Transaction Documents),
duly executed and delivered by Vanguard and constitute (in the case of this Agreement), or will
constitute (in the case of such other Transaction Documents) at the Closing, as applicable,
Vanguard’s valid and binding obligation enforceable against Vanguard in accordance with its terms.
Section 5.4 No Conflict or Violation. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which Vanguard is or will be a party does not and
will not: (a) violate or conflict with any provision of the Vanguard LLC Agreement; (b) violate any
applicable provision of Law; (c) except as set forth on Schedule 5.4, violate, result in a
breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation,
penalty or premium to arise or accrue under any contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which any of the Vanguard Parties is
a party or by which any of them is bound or to which any of their properties or assets is subject;
(d) result in the creation or imposition of any Encumbrance upon any of its properties or assets,
or (e) result in the cancellation, modification, revocation or suspension of any consent, license,
permit, certificate, franchise, authorization, registration or filing with any Governmental
Authority of any Vanguard Entity, except in the cause of clauses (c) and (d), where such
violations, breaches, defaults or Encumbrances in the aggregate would
26
not reasonably be expected to have a Vanguard Material Adverse Effect or to prevent or
materially delay the consummation of the transactions contemplated by this Agreement or to impair
Vanguard’s ability to perform its obligations under this Agreement.
Section 5.5 Consents and Approvals. Except as could not reasonably be expected to
have a Vanguard Material Adverse Effect or to prevent or delay materially the consummation of the
transaction contemplated by this Agreement or to impair Vanguard’s ability to perform its
obligations under this Agreement, no consent, approval, waiver or authorization of, or filing,
Vanguard’s execution and delivery of this Agreement or the other Transaction Documents to which
Vanguard is party or performance of its respective obligations hereunder or thereunder, does not
and will not require the consent, approval, waiver or authorization of, or filing, registration or
qualification with, any Person, by Vanguard.
Section 5.6 Financial Statements; Vanguard SEC Reports. Vanguard has timely filed all
Vanguard SEC Reports. Since January 1, 2010, (a) all Vanguard SEC Reports filed by Vanguard, at
the time filed (in the case of documents filed pursuant to the Exchange Act) or when declared
effective by the SEC (in the case of registration statements filed under the Securities Act)
complied as to form in all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations of the SEC thereunder, (b) no such Vanguard SEC
Report, at the time described above, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein in order to make the statements contained
therein, in the light of the circumstances under which they were made, not misleading, and (c) all
financial statements contained or incorporated by reference in such Vanguard SEC Reports complied
as to form when filed in all material respects with the rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly present in all
material respects the financial condition of Vanguard and its consolidated subsidiaries at and as
of the respective dates thereof and the consolidated results of operations and changes in cash
flows for the periods indicated (subject, in the case of unaudited financial statements, to normal
year-end audit adjustments consistent with prior periods). The Vanguard SEC Reports included all
certifications required to be included therein pursuant to Section 13a-14(a) and Section 13a-14(b)
of the Exchange Act and the statements made by such certifications are true and correct. No
Subsidiary of Vanguard is required to file periodic reports with the SEC, either pursuant to the
requirements of the Exchange Act or by contract.
Section 5.7 Controls.
(a) The “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) of Vanguard are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Partnership in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC, and that all such information is
accumulated and communicated to the management of Vanguard as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the chief executive officer and
chief financial officer of Vanguard required under the Exchange Act with respect to such reports.
27
(b) Neither the Board of Directors of Vanguard or the officers of Vanguard has received or
otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim,
regarding the accounting or auditing practices procedures, methodologies or methods of the
Partnership Entities or their respective internal accounting controls relating to periods after
January 1, 2010, including any material complaint, allegation, assertion or claim that any of the
Vanguard Entities has engaged in questionable accounting or auditing practices, and (ii) no
attorney representing the Vanguard Entities, whether or not employed by the Vanguard Entities, has
reported evidence of a material violation of securities Laws or breach of fiduciary duty, relating
to periods after January 1, 2010, by the officers, directors, employees or agents of any of the
Vanguard Entities to the Board of Directors of Vanguard or to any director or officer of Vanguard.
Section 5.8 Absence of Certain Changes or Events. Except as disclosed in the Vanguard
SEC Reports (excluding any disclosures included in any “risk factor” section, any other disclosures
in such Vanguard SEC Reports to the extent they are predictive or forward looking in nature and any
disclosures contained in exhibits to or other documents incorporated by reference into, such
Vanguard SEC Reports), since December 31, 2009 (a) the business of the Vanguard Entities has been
conducted in the ordinary course of business consistent with past practices, (b) there has not been
or occurred any event or condition that has had or could reasonably be expected to have a Vanguard
Material Adverse Effect, and (c) the Vanguard Entities (taken as a whole) have not suffered any
damage, destruction or other casualty loss (whether or not covered by insurance) to its properties
or assets that are material to the business of the Vanguard Entities.
Section 5.9 Compliance with Law. Except as disclosed in the Vanguard SEC Reports
(excluding any disclosures included in any “risk factor” section, any other disclosures in such
Vanguard SEC Reports to the extent they are predictive or forward looking in nature and any
disclosures contained in exhibits to or other documents incorporated by reference into, such
Vanguard SEC Reports), and except with respect to the matters addressed in Sections 5.10,
5.12, 5.13 and 5.14, which matters are addressed only in those sections,
the operations of the Vanguard Entities have been conducted, and currently are being conducted, in
material compliance with all applicable Laws and other requirements of all Governmental Authorities
having jurisdiction of the Vanguard Entities and their respective assets, properties and
operations.
Section 5.10 Tax Matters.
(a) Each of the Vanguard Entities has timely filed (or joined in the filing of) all Tax
Returns required by applicable Law to be filed (taking into account any extensions of time within
which to file) by or with respect to each of the Vanguard Entities; (i) all such Tax Returns were
true, correct and complete in all material respects and all material Taxes have been paid in full;
(ii) there is no action, suit, proceeding, investigation, audit, dispute or claim concerning any
Taxes of any of the Vanguard Entities either claimed or raised by any Tax authority in writing;
(iii) none of the Vanguard Entities has any outstanding request for any extension of time within
which to pay its Taxes or file its Tax Returns; (iv) there are no outstanding waivers or extensions
of any applicable statute of limitations for the assessment or collection of any Taxes of any of
the Vanguard Entities; (v) none of the Vanguard Entities is a party to, or is bound by, any Tax
allocation, Tax indemnity, Tax sharing, or similar agreement or arrangement that imposes
28
liability on any Vanguard Entity for the Taxes of another Person; (vi) each of the Vanguard
Entities that is a partnership for federal income Tax purposes has made, or shall be eligible to
make, an election pursuant to Section 754 of the Code; (vii) each of the Vanguard Entities has
withheld and paid all Taxes required to be withheld by such Vanguard Entity in connection with any
amounts paid or owing to any employee, creditor, independent contractor or other third party;
(viii) no material liens for Taxes exist with respect to any of the Vanguard Entities’ assets,
except for statutory liens for Taxes not yet due and payable or that are being contested in good
faith and reserved for in accordance with GAAP; and no Vanguard Entity has engaged in a transaction
that would be reportable by or with respect to any Partnership Entity under Treas. Reg. §1.6011-4
or any predecessor thereto.
(b) In each tax year since the formation of Vanguard up to and including the current tax year,
at least 90% of Vanguard’s gross income has been income which is “qualifying income” within the
meaning of Section 7704(d) of the Code.
(c) Except as disclosed on Schedule 5.10(c), none of the Vanguard Entities has elected
to be treated as a corporation.
Section 5.11 Absence of Undisclosed Liabilities. Except as disclosed in the Vanguard
SEC Reports excluding any disclosures included in any “risk factor” section, any other disclosures
in such Vanguard SEC Reports to the extent they are predictive or forward looking in nature, none
of the Vanguard Entities has any indebtedness or liability, absolute or contingent, which is not
shown or provided for in the consolidated financial statements of Vanguard included in the Vanguard
SEC Reports, other than (a) liabilities incurred or accrued in the ordinary course of business
consistent with past practice, including liens for current taxes and assessments not in default,
since December 31, 2009, or (b) other liabilities of any of the Vanguard Entities that individually
or in the aggregate are not material to Vanguard, taken as a whole, and that are not required by
GAAP to be included in the consolidated financial statements of Vanguard.
Section 5.12 Regulatory Matters.
(a) None of the Vanguard Entities is a “public utility company,” “holding company” or
“subsidiary” or “affiliate” of a holding company as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(b) None of the Vanguard Entities is an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 5.13 Properties, Oil and Gas Matters.
(a) Except as described in the Vanguard SEC Reports, the oil and natural gas reserve estimates
of the Vanguard Parties contained in or incorporated by reference into the Vanguard SEC Reports
(the “Vanguard Reserve Reports”) have been prepared by Netherland, Xxxxxx & Associates,
Inc. (“NSAI”) and XxXxxxxx and XxxXxxxxxxx (“D&M”), each an independent petroleum
engineer with respect to the Vanguard Parties, in accordance with the SEC guidelines applied on a
consistent basis throughout the periods involved, and none of the Vanguard Parties
29
has any reason to believe that such reserve estimates do not fairly reflect the oil and
natural gas reserves of Vanguard and its Subsidiaries as of the dates indicated in the Vanguard SEC
Reports.
(b) Except for changes (including Hydrocarbon commodity prices) generally affecting the oil
and gas industry, normal depletion by production and changes due to acquisitions made by Vanguard
or its Subsidiaries since the date of the Vanguard Reserves Reports, there has been no material
change in respect of the matters addressed in the Vanguard Reserve Reports.
(c) All material items of operating equipment, pipelines and facilities owned or leased by any
of the Vanguard Entities and used or necessary for use in the operation of the Oil and Gas
Properties forming the basis for the reserves reflected in the Vanguard Reserve Report are in a
state of repair so as to be adequate for reasonably prudent operations in the areas in which they
are operated.
(d) Except for goods and other property sold, used or otherwise disposed of since the date of
the Vanguard Reserve Reports in the ordinary course of business or reflected as having been sold,
used or otherwise disposed of in the Vanguard SEC Reports (excluding any disclosures included in
any “risk factor” section, any other disclosures in such Vanguard SEC Reports to the extent they
are predictive or forward looking in nature and any disclosures contained in exhibits to or other
documents incorporated by reference into, such Vanguard SEC Reports), as of the date hereof,
Vanguard Entities own or have valid leases or contractual rights to, all material equipment and
other personal property used or necessary for use in the operation of their respective Oil and Gas
Properties forming the basis for the reserves reflected in the Vanguard Reserve Reports in the
manner in which such properties were operated as of the date hereof.
(e) Except for property sold or otherwise disposed of since the dates of the respective
Vanguard Reserve Reports in the ordinary course of business or reflected as having been sold or
otherwise disposed of in the Vanguard SEC Reports (excluding any disclosures included in any “risk
factor” section, any other disclosures in such Vanguard SEC Reports to the extent they are
predictive or forward looking in nature and any disclosures contained in exhibits to or other
documents incorporated by reference into, such Vanguard SEC Reports), the Vanguard Entities have
good and defensible title to all Oil and Gas Properties forming the basis for the reserves
reflected in the Vanguard Reserve Reports, in each case relating to the interests referred to
therein as of the date of each such report, and in each case as attributable to interests owned by
the Vanguard Entities, free and clear of any Encumbrances, except: (i) Encumbrances reflected in
the Vanguard SEC Reports filed prior to the date of this Agreement, (ii) Permitted Encumbrances,
and (iii) such imperfections of title, easements, liens, government or tribal approvals or other
matters and failures of title as could not, individually or in the aggregate, reasonably be
expected to have a Vanguard Material Adverse Effect.
(f) All material proceeds from the sale of Hydrocarbons produced from the Oil and Gas
Properties of the Partnership Entities are being received by them in a timely manner and are not
being held in suspense for any reason.
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(g) The Oil and Gas Agreements affecting any real or personal property given material value in
the Vanguard Reserve Reports, including the Oil and Gas Properties, are in good standing, valid and
effective, and to the Knowledge of the Buyer, all material rentals due by any of the Vanguard
Entities to any lessor of any oil and gas leases forming the basis for the reserves reflected in
the Vanguard Reserve Reports have been properly paid. The Vanguard Entities have paid all material
royalties, overriding royalties and other burdens on production due by the Vanguard Entities with
respect to their respective Oil and Gas Properties forming the basis for the reserves reflected in
the Vanguard Reserve Reports.
(h) To the Knowledge of the Buyer, all Oil and Gas Properties operated by any of the Vanguard
Entities have been operated in all material respects in accordance with reasonable, prudent oil and
gas field practices and in material compliance with the applicable oil and gas leases and
applicable law.
(i) None of the Vanguard Entities has received any material advance, take or pay or other
similar payments that entitle purchasers of production from the Oil and Gas Properties forming the
basis for the reserves reflected in the Vanguard Reserve Reports to receive deliveries of
Hydrocarbons without paying therefor, and, on a net basis, across the Vanguard Entities, the
Vanguard Entities, takes as a whole, are neither underproduced nor overproduced, in either case, to
any material extent, under gas balancing or similar arrangements, except as set forth in
Schedule 5.13(i).
(j) Each of the Vanguard Entities (i) has such Rights-of-Way as are necessary to use, own and
operate each Vanguard Entity’s material Oil and Gas Properties in the manner such assets are
currently used, owned and operated by each Partnership Entity in all material respects and (ii) has
fulfilled and performed, in all material respects, all of its obligations with respect to such
Rights-of-Way. To the Knowledge of the Buyer, no event has occurred that allows, or after the
giving of notice or the passage of time, or both, would allow revocation or termination thereof or
would result in any material impairment of the rights of the holder of any such Right-of-Way.
Section 5.14 Environmental Matters.
(a) Each of the Vanguard Entities and their respective properties is, and during the relevant
time periods specified in all applicable statutes of limitations, has been, in material compliance
with all applicable Environmental Laws.
(b) Each of the Vanguard Entities has obtained all material permits, licenses, franchise
authorities, consents and approvals, made all material filings and maintained all material data,
documentation and records necessary for owning and operating its assets and business as it is
presently conducted under all applicable Environmental Laws, and all such permits, licenses,
franchises, authorities, consents, approvals and filings remain in full force and effect, and are
issued in the correct entity’s name, and there are no circumstances existing that could reasonably
be expected to result in such permits, licenses, franchises, authorities, consents, approvals and
filings being revoked or not renewed or in pending applications for such permits, licenses,
franchises, authorities, consents, approvals and filings being denied.
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(c) There are no pending or threatened material claims, demands, actions, administrative
proceedings, lawsuits or investigations against any of the Vanguard Entities or affecting any of
their respective properties under any Environmental Laws.
(d) There has been no Release of any Hazardous Material into the environment by the Vanguard
Entities or onto or beneath any of their respective properties or assets that could reasonably be
expected to result in any material remedial or corrective action obligation on the part of the
Vanguard Entities under Environmental Laws.
(e) There has been no exposure of any person or property to any Hazardous Material from, by,
or in connection with the Vanguard Entities’ properties or operations that could reasonably be
expected to form the basis of a claim for material damages or compensation.
(f) Notwithstanding anything to the contrary contained elsewhere in this Agreement, no
statement or representation is made in this Agreement regarding any compliance or failure to comply
with, or any actual or contingent liability under, or claims, demands, actions, proceedings,
lawsuits or investigations with respect to any Environmental Law, except as set forth in this
Section 5.14.
Section 5.15 Material Contracts.
(a) As of the date of this Agreement, except for (i) contracts filed as an exhibit to or
incorporated by reference in a Vanguard SEC Report filed prior to the Execution Date, (ii)
contracts related to properties or operations that have been, or are under contract to be,
purchased or sold or otherwise disposed of or are in the process of being purchased or sold or
otherwise disposed of to the extent such sales and/or dispositions have been disclosed in Vanguard
SEC Reports, or (iii) as otherwise set forth on Schedule 5.15(a), none of the Vanguard
Entities is a party to or bound by any contract (whether written or oral) that is:
(i) a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC);
(ii) a loan, guarantee of indebtedness or credit agreement, note, bond, mortgage,
indenture or other binding commitment (other than those solely between or among any of the
Vanguard Entities) relating to indebtedness in an amount in excess of $1.0 million
individually, other than the VNG Credit Agreement;
(iii) a contract that purports to limit materially the right of any of the Vanguard
Entities to engage or compete in any line of business in which any of the Vanguard Entities
is engaged or to compete with any person or operate in any location;
(iv) a contract that creates a partnership or joint venture or similar arrangement
(other than a joint operating agreement entered into in the ordinary course of business)
with respect to any significant portion of the business of the Vanguard Entities taken as a
whole;
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(v) a settlement or similar agreement with any Governmental Authority or order or
consent of a Governmental Authority involving future performance by any of the Vanguard
Entities that is material to the Vanguard Entities taken as a whole; or
(vi) a contract which includes any Affiliate of any of the Vanguard Parties (other than
any other Vanguard Party) as a counterparty or third party beneficiary.
All contracts of the type described in this Section 5.15(a) together with the contracts for
the sale of Hydrocarbons produced from any of the Vanguard Entities’ Oil and Gas Properties
described in the Vanguard Reserve Report that are not terminable on 90 days or less notice without
payment by any of the Vanguard Entities of any material penalty and are set forth on Schedule
5.15(a), are referred to herein as the “Vanguard Material Contracts.”
(b) Other than as a result of the expiration or termination of any Vanguard Material Contract
in accordance with its terms and except as would not have either individually or in the aggregate a
Vanguard Material Adverse Effect, (i) each Vanguard Material Contract is valid and binding on each
of the Vanguard Entities that is a party thereto, as applicable, and is in full force and effect
and enforceable in accordance with its terms against such Vanguard Entity and, to the Knowledge of
the Buyer, is valid and binding on the other party or parties thereto, and in full force and effect
and enforceable against such other parties thereto, (ii) each of the Vanguard Entities has
performed all material obligations required to be performed by it to date under each Vanguard
Material Contract, and (iii) none of the Vanguard Entities has knowledge of, or has received notice
of, the existence of any event or condition which constitutes, or, after notice or lapse of time or
both, would constitute, a material default on the part of any of the Vanguard Entities or of any
other party under any such Vanguard Material Contract.
Section 5.16 Litigation. Except as set forth on Schedule 5.16, there are no
Legal Proceedings pending or, to the Knowledge of the Buyer, threatened, against or involving the
Vanguard Entities that, individually or in the aggregate, are reasonably likely to have a Vanguard
Material Adverse Effect. Except as set forth on Schedule 5.16, there is no order,
judgment, injunction or decree of any Governmental Authority outstanding against any of the
Vanguard Entities that, individually or in the aggregate, could reasonably be expected to have a
Vanguard Material Adverse Effect or to prevent or delay the consummation of the transactions
contemplated by this Agreement or to impair Vanguard’s ability to perform its obligations under
this Agreement.
Section 5.17 Brokers. No broker, investment banker, financial advisor or other
Person, other than RBC Capital Markets Corporation (the fees and expenses of which will be paid by
Buyer), is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or
commission in connection with this Agreement or any of the transactions contemplated hereby based
upon arrangements made by or on behalf of Vanguard.
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ARTICLE VI
COVENANTS
COVENANTS
Section 6.1 Conduct of Business
(a) Except as required under applicable Law or by any Governmental Authority or unless the
Board of Directors of ENP GP is advised by counsel that doing so would be a breach of its
fiduciary duty to the limited partners of the Partnership, or to the extent Buyer otherwise
consents in writing (which consent shall not be unreasonably withheld), during the period from the
Execution Date to the Closing Date, GP Holdings shall take no action to prevent ENP GP or the
Partnership Entities from:
(i) conducting their activities in the ordinary course of business consistent with past
practice;
(ii) using commercially reasonable efforts to preserve intact their goodwill and
relationships with customers, suppliers and others having business dealings with them with
respect thereto;
(iii) complying in all material respects with all applicable Laws relating to them;
(iv) using commercially reasonable efforts to maintain in full force without
interruption their present insurance policies, or comparable insurance coverage; and
(v) promptly notifying Buyer of any material change in the condition or business or any
material litigation or proceedings (including arbitration and other dispute resolution
proceedings) or material government complaints, investigations, inquiries or hearings (or
communications indicating that the same may be contemplated) or any material developments in
any such litigation, proceedings, complaints, investigations, inquiries or hearings.
(b) Without limiting the generality of the foregoing, and except as contemplated by this
Agreement, or as required by applicable Law or by any Governmental Authority, prior to the Closing
Date, without the prior written consent of Buyer (which consent shall not be unreasonably
withheld), GP Holdings shall not cause ENP GP or the Partnership Entities (unless the Board of
Directors of ENP GP is advised by counsel that failure to do so would be a breach of its fiduciary
duty to the limited partners of the Partnership) to:
(i) modify, amend or voluntarily terminate, prior to the expiration date thereof, any
Material Contract or waive any material default by, or release, settle or compromise any
material claim against, any other party thereto, other than as may be required in connection
with the Selling Parties’ obligations to Buyer under this Agreement;
(ii) make any change in their Organizational Documents that would be materially adverse
to Buyer;
34
(iii) make any material change in their Tax methods, principles or elections;
(iv) materially increase the compensation or benefits (except for normal increases in
the ordinary course of business consistent with past practice) of any director, officer or
employee of any Partnership Entity or (B) establish any new employee benefit plan, contract
or arrangement for employees of any such entities;
(v) enter into any joint venture or similar arrangement with a third party other than
in the ordinary course;
(vi) settle any claims, demands, lawsuits or state or federal regulatory proceedings
for damages to the extent such settlements in the aggregate assess damages in excess of
$5,000,000 (other than claims, demands, lawsuits or proceedings to the extent insured (net
of deductibles), reserved against in the Partnership’s financial statements or covered by an
indemnity obligation not subject to dispute or adjustment from a solvent indemnitor) or (B)
settle any claims, demands, lawsuits or state or federal regulatory proceedings seeking an
injunction or other equitable relief where such settlements would have or would reasonably
be expected to have a Material Adverse Effect; or
(vii) make any material change to its financial reporting and accounting methods other
than as required by a change in GAAP.
Section 6.2 Access To Properties And Records.
(a) Each of the Selling Parties shall use all commercially reasonable efforts to facilitate
each of the Partnership Entities (i) affording to Buyer and Buyer’s accountants, counsel,
financial advisors and other representatives (collectively “Buyer Representatives”), upon
reasonable advance notice to the Selling Parties, reasonable access (which will not include
invasive or subsurface testing) during normal business hours throughout the period commencing on
the Execution Date and ending on the Closing Date (or the earlier termination of this Agreement
pursuant to Article VIII hereof) to all personnel, properties, offices, books, contracts,
and records of each of ENP GP and the Partnership Entities and their agents, including legal
representatives, accountants and environmental and engineering consultants, and (ii) during such
period, furnishing promptly to Buyer all financial and operating data and all other information
concerning the business, properties, liabilities and personnel of any of the Partnership Entities
or ENP GP as Buyer may reasonably request.
(b) Subject to the execution of a mutually agreeable confidentiality agreement, Vanguard
shall use all commercially reasonably efforts to facilitate each of the Vanguard Entities (i)
affording to Seller and Seller’s accountants, counsel, financial advisors and other
representatives (collectively “Seller’s Representatives”), upon reasonable advance notice
to Vanguard, reasonable access (which will not include invasive or subsurface testing) during
normal business hours throughout the period commencing on the Execution Date and ending on the
Closing Date (or the earlier termination of this Agreement pursuant to Article VIII
hereof) to all personnel, properties, offices, books, contracts, and records of each of the
Vanguard Entities and their agents, including legal representatives, accountants and environmental
and
35
engineering consultants, and (ii) during such period, furnishing promptly to Seller all
financial and operating data and all other information concerning the business, properties,
liabilities and personnel of any of the Vanguard Entities as Seller may reasonably request.
Section 6.3 Consents And Approvals.
(a) The Selling Parties and Buyer shall each use all commercially reasonable efforts to
obtain, and if reasonably requested by Buyer to do so the Selling Parties will use all
commercially reasonable efforts to facilitate ENP GP and the Partnership Entities being able to
obtain, or assist Buyer in obtaining, as appropriate, all necessary consents, licenses or permits
from Governmental Authorities (including operator permits), waivers, orders, authorizations and
approvals of all Governmental Authorities and of all other Persons required in connection with the
execution and delivery of, and performance by such Party of its obligations under, this Agreement
(including, in the case of the Selling Parties, obtaining the Denbury Lender Consent), and will
cooperate fully with the other Parties in promptly seeking to obtain all such authorizations,
consents, licenses, permits, orders, waivers and approvals, giving such notices, and making such
filings.
(b) As promptly as practicable following execution of this Agreement the Parties shall
determine if it is necessary to comply with the filing requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 (the “HSR Act”), and if it is necessary each Party
shall (i) file or cause to be filed, as promptly as practicable (and in any event within ten (10)
business days after the execution and delivery of this Agreement), with the Federal Trade
Commission and the United States Department of Justice, all reports and other documents required
to be filed by such Party under the HSR Act concerning the transactions contemplated hereby and
(ii) promptly comply with or cause to be complied with any requests by the Federal Trade
Commission or the United States Department of Justice for additional information concerning such
transactions, in each case so that any and all waiting periods applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall expire or be terminated as soon as
practicable after the execution and delivery of this Agreement. Each Party agrees to request, and
to cooperate with the other Party in requesting, early termination of any applicable waiting
period under the HSR Act. The costs of any filing fees required in connection with any HSR filing
shall be borne equally between Buyer, on the one hand, and the Selling Parties, on the other hand;
provided, however, that any and all costs and expenses otherwise incurred by any of the Parties in
connection with obtaining any other necessary consents, waivers, authorizations and approvals
hereunder shall be borne solely by the Party required to obtain or deliver such consents, waivers,
authorizations and approvals.
(c) The Parties agree to cooperate with each other and use reasonable best efforts to contest
and resist, any Legal Proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or permanent of any
Governmental Authority that is in effect and that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement.
Section 6.4 Further Assurances. Upon the request of any Party at any time on or
after the Closing Date, each of the other Parties will promptly execute and deliver, such further
instruments of assignment, transfer, conveyance, endorsement, direction or authorization and
36
other documents as the requesting Party or its counsel may reasonably request in order to
perfect title of Buyer and its successors and assigns to the Member Interests and the Subject
Common Units or otherwise to effectuate the purposes of this Agreement.
Section 6.5 Commercially Reasonable Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the Parties will use all commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable consistent with applicable Law to consummate and make effective in the most
expeditious manner practicable the transactions contemplated hereby. GP Holdings shall use all
commercially reasonable efforts to promptly cause to be held special meetings of the Board of
Directors of ENP GP and/or the Conflicts Committee of the Board of Directors of ENP GP, in each
case if necessary in connection with consummation of the transactions contemplated by this
Agreement.
Section 6.6 Notice Of Certain Events.
(a) Each Party shall give to the other Parties written notice (a “Notification”)
promptly upon a matter, fact or circumstance that constitutes a Breach by the notifying Party
becoming within the Knowledge of the notifying Party, specifying with particularity such Breach.
Except as provided in this Agreement, such Notification will not modify or otherwise affect in any
manner the representations, warranties, agreements, obligations or covenants of the Parties or the
conditions to the obligations of the Parties under this Agreement and will not be deemed to amend
any Schedules hereto or to cure any related breaches of the representations, warranties,
agreements, obligations or covenants contained in this Agreement.
(b) Each Party shall give to the other Parties written notice (also a “Notification”)
promptly upon:
(i) a matter, fact or circumstance that constitutes a Breach by the other Parties
becoming within the Knowledge of the notifying Party, specifying with particularity such
Breach, provided such Notification will not affect any representation or warranty of the
other Parties, or the notifying parties right to rely thereon;
(ii) receiving any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(iii) receiving any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; or
(iv) within the Knowledge of the notifying Party any Legal Proceedings are commenced
that would be reasonably expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or materially impair the notifying Party’s
ability to perform its obligations under this Agreement.
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Section 6.7 Confidential Information.
(a) The Selling Parties and their Affiliates (which after Closing will not include ENP GP and
the Partnership Entities) shall not, directly or indirectly, disclose after the Closing Date to
any Person any information not in the public domain or generally known in the industry, in any
form, acquired prior to the Closing Date, relating to the business and operations of the
Partnership Entities. Notwithstanding the foregoing, the Selling Parties may disclose any
information relating to the business and operations of the Partnership Entities (i) if required by
Law, applicable stock exchange rule or in relation to any Tax Returns, (ii) to such other Persons
if, at the time such information is provided, such Person is already in the possession of such
information, or (iii) such information relates to ongoing commercial relationships between the
Selling Parties or any of their Affiliates and any Partnership Entity or to the Administrative
Services Agreement, and such disclosure is reasonably necessary in furtherance of the business and
operations of the Selling Parties or any such Affiliate; provided, that, the Selling Parties and
their Affiliates may not disclose such information pursuant to this clause (iii) to the extent
that disclosure is restricted by a written agreement entered into in connection with any such
ongoing commercial relationship.
(b) Except as consented to by Buyer in writing, none of the Selling Parties and their
Affiliates shall release any Person from any Bidder Confidentiality Agreement (as defined below)
now existing with respect to the confidential information of the Partnership Entities or waive or
amend any provision thereof. After the Closing Date, the Selling Parties shall use commercially
reasonable efforts to have all confidential information either returned to the Selling Parties or
destroyed. Furthermore, if any parties to the Bidder Confidentiality Agreements breach the terms
of their respective agreement, upon the request of Buyer, the Selling Parties shall cooperate with
Buyer to enforce the terms of such Bidder Confidentiality Agreements at Buyer’s cost and expense.
The term “Bidder Confidentiality Agreements” shall mean the confidentiality agreements
between any of the Selling Parties or any of their Affiliates or advisors and prospective
purchasers (other than Buyer or its Affiliates) of the Member Interests and the Subject Common
Units.
(c) If this Agreement is terminated, any information regarding the Selling Parties, ENP GP or
the Partnership Entities furnished to Buyer or its representatives (as defined in the
Confidentiality Agreement) in connection with Buyer’s consideration or negotiation of the
transaction contemplated by this Agreement, obtained by Buyer or its representatives pursuant to
Section 6.2 above, or disclosed on any Schedule to this Agreement, will be considered
“Evaluation Materials” as that term is defined in, and shall be subject to the confidentiality and
use restrictions, and the remedy (including equitable relief) and other provisions, contained in
the Confidentiality Agreement. Buyer acknowledges that the “Possible Transaction” referred to in
the Confidentiality Agreement is the transaction contemplated by this Agreement.
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Section 6.8 Tax Covenants.
(a) For all tax periods that begin before the Closing Date and end after the Closing Date
(the “Straddle Period”), Buyer shall cause ENP GP to prepare and timely file all Tax
Returns for the Partnership Entities (each, a “Straddle Period Return”). Each such
Partnership Tax Return shall be prepared in accordance with the Partnership Agreement and in a
manner consistent with past practice, except as otherwise required by applicable Tax Law. Buyer
shall deliver to Selling Parties for Selling Parties’ review, comment and approval any Straddle
Period Return at least thirty (30) days before the due date (including extensions) for filing the
Straddle Period Return. Buyer shall be responsible for the cost and expense of preparing and
filing the Straddle Period Returns. ENP GP shall make or cause to be made any changes in such
Straddle Period Return as the Selling Parties may reasonably request, subject to Buyer’s approval,
which shall not be unreasonably withheld. Buyer shall be responsible for the cost and expense of
preparing and filing the Straddle Period Returns.
(b) For all tax periods that begin before the Closing Date and end on or before the Closing
Date (the “Pre-Closing Period”), Selling Parties shall cause ENP GP to prepare and timely
file all Tax Returns for the Partnership Entities (each of the foregoing, a “Pre-Closing
Period Return”). Each such Pre-Closing Period Return shall be prepared in a manner consistent
with past practice, except as otherwise required by applicable Tax Law. The Partnership shall be
responsible for the cost and expense of preparing and filing all Pre-Closing Period Returns.
(c) After the Closing Date, the Parties shall make available to each other, as reasonably
requested, and to any taxing authority, which is legally permitted to receive pursuant to its
subpoena power or its equivalent, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of ENP GP or the Partnership Entities for all periods
prior to or including the Closing Date and shall preserve all such information, records and
documents until the expiration of any applicable statute of limitations for assessment or refund
of Taxes, including any extensions, tollings or suspensions thereof. After the Closing Date, the
Parties shall cooperate fully as and to the extent reasonably requested by the other, in
connection with the filing of Partnership Entity Tax Returns pursuant to this Section 6.8
and any audit, litigation, appeal, hearing or other proceeding with respect to Partnership Taxes.
Such cooperation shall include providing the information, records and documents described above
and any other books, records and information appropriate to the preparation or review of a
Partnership Tax Return and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided.
(d) Any sales tax, use tax, real property transfer tax, documentary stamp tax, transfer tax,
motor vehicle tax, registration tax or similar tax or recording expense or other charge, expense
or fee attributable to, imposed upon or arising directly from the consummation of the transactions
contemplated hereby (collectively, the “Transfer Taxes”) shall be borne equally by Buyer,
on the one hand, and the Selling Parties, on the other hand. Buyer shall file all Tax Returns
with respect to such Transfer Taxes, charges, expenses and fees, and if requested by Buyer, the
Selling Parties shall execute and deliver such certificates or forms as may be necessary and
appropriate for Buyer to establish an exemption from (or otherwise reduce) such Transfer Taxes,
charges, expenses and fees. Buyer will use reasonable best efforts to provide such Tax Returns to
Parent at least ten days prior to the due date for such Tax
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Returns. Upon the filing of Tax Returns in connection with Transfer Taxes, Buyer shall
provide Parent with evidence satisfactory to Parent that such Transfer Taxes have been filed and
paid.
(e) For a period ending on the earlier of (i) Selling Parties disposing of all of their
Vanguard Common Units acquired under this Agreement or (ii) eighteen (18) months following the
Closing Date, Buyer shall not have the authority, without the prior written consent of the Selling
Parties, to sell, transfer or otherwise convey any of the Contributed Subject Common Units or any
of the Partnership’s assets, or any interest therein, in a taxable transaction unless Buyer
reimburses the Selling Parties for the amount of the Interest on the Accelerated Income Tax.
(f) For income tax purposes, items of income, gain, depreciation, gain or loss with respect
to the Contributed Subject Common Units shall be allocated to take into account the variation
between the Buyer’s tax basis in such Contributed Subject Common Units and fair market value of
such Contributed Subject Common Units in the manner provided under Section 704(c) of the Code and
Treas. Reg. § 1.704-3(d) (i.e., the “remedial method”).
Section 6.9 Indemnification and Insurance.
(a) Buyer shall ensure that all rights to exculpation, indemnification and advancement of
expenses existing in favor of the current and former members, directors, officers, fiduciaries and
employees either of ENP GP and its Subsidiaries, or of the Selling Parties (or any of their
Affiliates who perform services under the Administrative Services Agreement) (“Indemnified
Persons”) that are included in the Organizational Documents of ENP GP or the Partnership as of
the date of this Agreement for any matters or Proceedings (defined below) relating to any action
or alleged action or failure to act or alleged failure to act occurring prior to Closing
(including the matters contemplated by this Agreement) shall survive Closing and shall continue in
full force and effect for a period of six (6) years after the Closing Date, without amendment or
modification, unless otherwise required by Law, provided that all rights to indemnification in
respect of any claim asserted or made during said six-year period shall continue until the final
disposition of such claim. “Proceeding” means any threatened or actual claim, action,
suit, proceeding or investigation (whether arising before or after Closing), whether civil,
criminal, administrative or investigative.
(b) In the event Buyer or ENP GP or the Partnership or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be the continuing or
surviving company or entity of such consolidation or merger or converts into any other person or
(ii) transfers all or substantially all of its properties and assets to any Person, then, and in
each such case, Buyer shall cause proper provision to be made so that the successors and assigns
of Buyer, ENP GP or the Partnership shall assume the obligations set forth in this Section
6.9.
(c) The obligations of Buyer, ENP GP and the Partnership under this Section 6.9 shall
not be terminated or modified in such a manner as to adversely affect any Indemnified Persons
without the consent of such Indemnified Person (it being expressly agreed that the Indemnified
Persons shall be third-party beneficiaries of this Section 6.9). The rights of each
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Indemnified Person hereunder shall be in addition to any other rights such Indemnified
Persons may have under the Organizational Documents of ENP GP and the Partnership, under the Laws
of the State of Delaware or otherwise.
Section 6.10 Post-Closing Payments to Selling Parties and Affiliates; Administrative
Services Agreement.
(a) From and after the Closing Date, Buyer shall cause ENP GP, the Partnership and its
Affiliates to timely pay, as and when due, any and all amounts owed by ENP GP, the Partnership or
its Affiliates to any of the Selling Parties or their Affiliates as of the Closing Date. From and
after the Closing Date, Selling Parties and their Affiliates shall timely pay, as and when due,
any and all amounts owed by the Selling Parties or their Affiliates to ENP GP, the Partnership or
its Affiliates as of the Closing Date. The Parties agree that the amounts owed by ENP GP or the
Partnership Entities to the Selling Parties and their Affiliates include all amounts owing to the
Selling Parties (specifically including payments for services rendered by the Selling Parties
through the Closing Date) pursuant to that certain Amended and Restated Administrative Services
Agreement among ENP GP, ENP, Operating, Encore Energy Partners Operating LLC, and Encore
Acquisition Company entered into on September 17, 2007 and effective on March 7, 2007 (the
“Administrative Services Agreement”), which are estimated through December 31, 2010 as set
forth on Schedule 6.10(a). The Parties agree to update and confirm such amounts following
Closing.
(b) Prior to the Closing Date the Partnership will continue to make regular quarterly
distributions from Available Cash (as defined in the Partnership Agreement) to the limited
partners and general partner of the Partnership, and ENP GP will continue to distribute to GP
Holdings any such distribution which it receives. From and after the Closing Date, Buyer will
cause ENP GP to pay to GP Holdings, and Buyer will pay to LP Holdings and Operating (i) any
distributions received by ENP GP with respect to the GP Units, and (ii) any distributions received
with respect to the Subject Common Units, respectively, when the record date for such
distributions occurs prior to the Closing Date and the distribution is made on or after the
Closing Date. Any such payment by ENP GP or the Buyer shall be made within 10 days of receipt of
such distribution by ENP GP or the Buyer.
Section 6.11 No Negotiation. From and after the date hereof, the Selling Parties
will not, and will cause their Affiliates not to, directly or indirectly, through any officer,
director, employee, stockholder, agent, partner, representative, affiliate, or otherwise, enter
into any agreement, agreement in principle or other commitment (whether or not legally binding),
relating to any merger of the Partnership, or sale of all or substantially all of the assets of the
Partnership, or purchase or sale or other disposition of any of the Member Interests or Subject
Common Units or relating to any other similar transaction (a “Competing Transaction”) or
solicit, encourage or enter into discussions or negotiations with respect to (including by way of
furnishing any non-public information concerning ENP GP’s or the Partnership’s business, properties
or assets) any proposal relating to a Competing Transaction unless this Agreement has been
terminated pursuant to and in accordance with Article VIII hereof.
Section 6.12 Partnership Credit Agreement. The Selling Parties shall request the
Partnership to (a) use commercially reasonable efforts to obtain the written consent to, and/or
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waivers of default or amendment of the Partnership Credit Agreement in connection with, the
transactions contemplated by this Agreement (the “Partnership Bank Waivers”), from the
Administrative Agent named in, and the required other lenders party to (collectively with the
Administrative Agent, the “Partnership Lenders”), the Partnership Credit Agreement, and
shall provide all commercially reasonable assistance requested by the Partnership in connection
therewith, and (b) use their reasonable best efforts to permit Buyer and its representatives to
participate in any and all discussions or negotiations with the Partnership Lenders in connection
with obtaining such consent and/or waiver. Buyer agrees to pay one-half of any fee and Parent
agrees to pay one-half of any fee required by the Partnership Lenders to be paid in order to secure
the Partnership Bank Waivers.
Section 6.13 Employee Matters. Buyer may make offers of employment to those Subject
Employees who are designated on Schedule 6.13, and Parent shall be responsible for any
severance payments or other severance liabilities payable by Selling Parties or their Affiliates to
those scheduled employees whose employment by the Selling Parties or their Affiliates is terminated
in connection with their accepting offers of employment from Buyer or its Affiliates. For a period
of one year from and after the Closing Date, no Selling Party shall solicit for employment or hire
any of the individuals listed on Schedule 6.13. The restrictions in this Section
6.13 regarding the prohibition on solicitations (as opposed to hires) shall not apply to any
solicitation directed at the general public.
Section 6.14 Books and Records; Financial Statements; Litigation Support.
(a) The Selling Parties shall provide Buyer access to the Selling Parties’ accounting books
and records relating to ENP GP, the Partnership and its Subsidiaries to the extent reasonably
necessary to enable Buyer to prepare financial statements of ENP GP, the Partnership and its
Subsidiaries and financial statements of Buyer and its Affiliates in such forms and covering such
periods as may be required by any applicable securities laws to be filed with the SEC by Buyer or
any Affiliate of Buyer in connection with or as a consequence of the transactions contemplated by
this Agreement. The Selling Parties shall (i) request the Partnership’s and its Subsidiaries’
independent accountants to provide (at Buyer’s expense) any consent necessary for the filing of
such financial statements with the SEC; and (ii) request ENP GP to provide such customary
representation letters as are necessary in connection therewith.
(b) The Selling Parties hereby consent to the inclusion or incorporation by reference of the
financial statements of ENP GP, the Partnership and its Subsidiaries in any registration
statement, report or other filing of Buyer or any of its Affiliates, as to which such financial
statements are required to be included or incorporated by reference to satisfy any rule or
regulation of the SEC or to satisfy relevant disclosure obligations under the Securities Act or
the Exchange Act, and in each case in connection with or as a consequence of the transactions
contemplated by this Agreement; provided, however, Buyer shall indemnify the Selling Parties for
any liabilities they incur resulting from the use of such information in any financial statements
prepared by Buyer or its Affiliates, except for those liabilities based solely upon the
information provided by the Selling Parties.
(c) The Selling Parties shall cooperate with Buyer and its Affiliates in connection with the
preparation of any pro forma financial statements of Buyer or any of its Affiliates that
42
are derived in part from the financial statements of ENP GP, the Partnership and its
Subsidiaries and are required to be included or incorporated by reference in any registration
statement, report or other filing of Buyer or its Affiliates to satisfy any rule or regulation of
the SEC or to satisfy relevant disclosure obligations under the Securities Act or the Exchange
Act, in each case in connection with or as a consequence of the transactions contemplated by this
Agreement; provided, however, Buyer shall indemnify the Selling Parties for any liabilities they
incur resulting from the use of such information in any financial statements prepared by Buyer or
its Affiliates, except for those liabilities based solely upon the information provided by the
Selling Parties.
(d) The Selling Parties shall provide Buyer access to the Selling Parties’ accounting books
and records relating to ENP GP and the Partnership Entities as may be reasonably necessary for
Buyer or any of its Affiliates, or any of their respective advisors or representatives, to conduct
customary due diligence with respect to the financial statements of ENP GP or the Partnership
Entities for any offering of securities by Buyer or any of its Affiliates in which such financial
statements are required to be included, or to enable an accounting firm to prepare and deliver a
customary comfort letter with respect to financial information relating to ENP GP or the
Partnership Entities for any such offering.
(e) In the event and for so long as any Party actively is contesting or defending against any
third-party Legal Proceeding (other than any Legal Proceedings in which Buyer or any of its
Affiliates and the Selling Parties or any of their Affiliates are adverse parties) in connection
with (i) the transactions contemplated by this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing Date involving ENP GP, the Partnership
or its Subsidiaries, each of the other Parties will cooperate with it and its counsel in the
contest or defense, make available their personnel, and provide such testimony and access to their
books and records as shall be reasonably requested and necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party; provided, however,
that nothing in this Section 6.14(e) shall limit in any respect any rights a Party may
have with respect to discovery or the production of documents or other information in connection
with any such litigation.
(f) The Selling Parties hereby agree that upon the consummation of the transactions
contemplated hereby, Buyer and the ENP GP shall have the sole right to the use of the names
“Encore Energy Partners,” “Encore Energy Partners Operating,” “Encore Energy Partners Finance,”
“Encore Clear Fork Pipeline,” “Encore Energy Partners GP,” and “Encore Partners LP Holdings” or
similar names or any service marks, trademarks, trade names, identifying symbols, logos, emblems,
signs or insignia related thereto or containing or comprising the foregoing, including any name or
xxxx confusingly similar thereto (collectively, the “Company Marks”). The Selling Parties
shall not, and shall not permit their respective Affiliates to, use such name or any variation or
simulation thereof or any of the Company Marks. Each of the Selling Parties shall, and shall
cause each of its respective Affiliates to, immediately after the Closing, cease to hold itself
out as having any affiliation with Buyer, ENP GP, the Partnership Entities or any of their
respective Affiliates, and Buyer shall request ENP GP and the Partnership Entities to cease,
immediately after Closing, to hold themselves out as having any affiliation with any of the
Selling Parties.
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(g) The Selling Parties shall cause ENP GP and the Partnership to carry out the preparation
of financial statements and other information required to be included in the Partnership’s Annual
Report on Form 10-K for the year ended December 31, 2010 (the “2010 Form 10-K”) in such a
manner and on such a schedule as is consistent with ENP GP’s and the Partnership’s customary past
practices for financial and SEC reporting and to assist in the preparation of the 2010 Form 10-K
as reasonably requested by Buyer, including but not limited to (i) cooperating with the
Partnership’s outside auditors in connection with such auditor’s conducting the year-end audit for
the fiscal year ending December 31, 2010; and (ii) preparing initial drafts of the 2010 Form 10-K.
Third party engineering, accounting, legal and other third party costs incurred in connection
with preparation of the 2010 Form 10-K shall be borne by the Partnership.
Section 6.15 Director Resignations. On the Closing Date, the Selling Parties shall
cause to be delivered to Buyer duly executed resignations of the officers of ENP GP listed on
Schedule 6.15, and of directors Xxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxxxx and Xxxx Xxxxx
(each being a “Resigning Director”), and immediately following such resignations, Buyer
will designate new individuals to fill the vacancies so created in compliance with applicable stock
exchange rules and the ENP GP LLC Agreement.
Section 6.16 Migration of Records; Information. From and after the Closing Date, as
soon as reasonably practicable the Selling Parties shall or shall cause their Affiliates to,
transfer to Buyer all books, records and information, including copies of all maps, surveys,
drawings, technical data, geographical and engineering data, programs, customer lists, business
plans, marketing studies, works of authorship and other similar materials, and all recordings,
graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the
foregoing, in any form, including electronic form, whether or not specifically listed herein,
related to the business, assets or operations of ENP GP or the Partnership Entities (collectively,
the “Partnership Entities Records”) to the extent any such Partnership Entities Records are
in the possession of any of the Selling Parties or their Affiliates following the Closing.
Specifically, and without limiting the foregoing, the Selling Parties shall or shall cause their
Affiliates to, as soon as reasonably practicable following the Closing Date, transfer all property
or oil and gas related information related to ENP GP or any Partnership Entity stored in any
Selling Party’s or any Affiliate of such Selling Party’s PETRA software, including information
related to project data management, well log analysis, mapping, cross-sections, seismic integration
and interpretation, production and reservoir analysis, and 3D visualization provided Vanguard
furnishes evidence of its holding a PETRA license, and limited to data within PETRA that can
lawfully be transferred and that covers ENP properties exclusively. Notwithstanding the foregoing
in this Section 6.16, the Selling Parties may retain copies of all books, records and
information necessary to fulfill their obligations in Section 6.14, after which the Selling
Parties shall and shall cause their Affiliates to transfer all such books, records and information
to Buyer.
ARTICLE VII
CONDITIONS TO CLOSING
CONDITIONS TO CLOSING
Section 7.1 Shared Conditions to the Parties’ Obligations. The obligation of the
Parties to proceed with the Closing contemplated hereby is subject to the satisfaction on or prior
to the
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Closing Date of all of the following conditions, any one or more of which may be waived, in
whole or in part, by a written waiver executed by the waiving Party or Parties:
(a) Partnership Credit Agreement. The Partnership shall have obtained the Partnership Bank
Waivers from the Partnership Lenders.
(b) HSR Act. In the event it is necessary to comply with the HSR Act, the expiration, or
early termination, of any applicable waiting period under the HSR Act has occurred and neither the
Federal Trade Commission nor the Department of Justice has instituted, or threatened to institute,
a legal proceeding which seeks to or does prohibit, restrain or enjoin consummation of the
transactions contemplated hereby.
(c) No Order. No preliminary or permanent injunction or other order issued by any
Governmental Authority that declares this Agreement or any of the Transaction Documents invalid or
unenforceable in any respect or that prohibits, restrains or enjoins the consummation of the
transactions contemplated hereby or thereby shall be in effect; and no action or other proceeding
before any Governmental Authority shall be pending or have been threatened that seeks to prevent
or delay the consummation of the transactions contemplated by this Agreement or any of the
Transaction Documents or that challenges the validity or enforceability of this Agreement or any
of the Transaction Documents; provided that all Parties shall have used commercially reasonable
efforts to have any such preliminary or permanent injunction or other order lifted or to contest
any action or other proceeding before any Governmental Authority and such preliminary or permanent
injunction or other order has not been lifted within 30 days after the entry thereof (or if
earlier on the Closing Date) or such action or other proceeding is still pending 30 days following
the commencement thereof (or if earlier on the Closing Date). Notwithstanding anything to the
contrary in this Agreement, Buyer’s commercially reasonable efforts shall not include agreeing to
hold separate (including by trust or otherwise) or divest, dispose of, discontinue or assign any
of its businesses, Affiliates or assets.
Section 7.2 Conditions to Buyer’s Obligations. The obligations of Buyer to consummate
the transactions contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be waived in writing by
Buyer in its sole discretion:
(a) Receipt Of Documents. The Selling Parties shall have delivered, or be standing ready to
deliver, to Buyer the items specified in Section 1.2(a), in each case duly executed and
dated the Closing Date.
(b) No Material Adverse Effect. Since the date hereof there shall not have occurred a
Material Adverse Effect.
(c) MAE Certificates. Buyer shall have received a certificate, dated as of the Closing Date,
of an executive officer of each of the Selling Parties certifying that to the Knowledge of the
Selling Parties no Material Adverse Effect has occurred.
(d) Representations and Warranties of the Selling Parties in Article II and
Article III. All representations and warranties made by the Selling Parties in
Article II and Article III of this Agreement that:
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(i) are not qualified by materiality or Material Adverse Effect shall be true and
correct in all material respects on and as of the date hereof and, except to the extent that
any representation is specifically limited by the terms of such representation to the date
of this Agreement or another specified date, on the Closing Date as if again made by the
Selling Parties on and as of the Closing Date; and
(ii) are qualified by materiality or Material Adverse Effect shall be true and correct
in all respects on the date hereof and, except to the extent that any representation is
specifically limited by the terms of such representation to the date of this Agreement or
another specified date, on the Closing Date as if made by the Selling Parties on and as of
the Closing Date;
and Buyer shall have received a certificate dated the Closing Date and signed by an executive
officer of each of the Selling Parties certifying to the matters set forth in this Section
7.2(d).
(e) Performance of Selling Parties’ Obligations. The Selling Parties shall have performed in
all material respects all agreements, obligations and covenants required under this Agreement to
be performed by them on or before the Closing Date, and Buyer shall have received a certificate
dated the Closing Date and signed by an executive officer of each of the Selling Parties
certifying to the matters set forth in this Section 7.2(e).
(f) Consents and Approvals. All consents, waivers, authorizations and approvals set forth on
Schedule 2.3 (No Conflict or Violation), Schedule 2.4 (Consents and Approvals),
Schedule 3.3 (Consents and Approvals), Schedule 4.4 (Consents and Approvals), or
Schedule 5.5 (Consents and Approvals), shall have been duly obtained, shall contain terms
reasonably satisfactory to Buyer and shall be in full force and effect on the Closing Date and
copies thereof shall have been provided to Buyer at Closing.
(g) Legal Opinion. Buyer shall have received an opinion of Xxxxx Xxxxxxxxx LLP, counsel to
the Selling Parties, dated the Closing Date, substantially in the form of Exhibit
1.2(a)(vi).
(h) Denbury Lender Consent. The Selling Parties shall have obtained the Denbury Lender
Consent.
(i) Director and Officer Resignations. Buyer shall have received the resignations of each of
the Resigning Directors and each of the officers of ENP GP listed on Schedule 6.15.
Section 7.3 Conditions to Selling Parties’ Obligations. The obligations of the
Selling Parties to consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing Date, of the following conditions, any one or more of which
may be waived in writing by the Selling Parties in their sole discretion:
(a) Receipt of Payment. Buyer shall have paid to the Selling Parties the Cash Portion of the
Purchase Price and the Escrow Agent shall have released the Deposit to the Selling Parties, all as
provided in Section 1.3.
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(b) Representations and Warranties of Buyer. All representations and warranties made by
Buyer in this Agreement that:
(i) are not qualified by materiality or material adverse effect shall be true and
correct in all material respects on and as of the date hereof and, except to the extent that
any representation is specifically limited by the terms of such representation to the date
of this Agreement or another specified date, on the Closing Date as if again made by Buyer
on and as of the Closing Date; and
(ii) are qualified by materiality or material adverse effect shall be true and correct
in all respects on the date hereof and, except to the extent that any representation is
specifically limited by the terms of such representation to the date of this Agreement or
another specified date, on the Closing Date as if made by the Buyer on and as of the Closing
Date;
and the Selling Parties shall have received a certificate dated the Closing Date and signed
by an executive officer of Buyer certifying to the matters set forth in this Section
7.3(b).
(c) Performance of Buyer’s Obligations. Buyer shall have performed in all material respects
all agreements, obligations and covenants required under this Agreement to be performed by it on
or before the Closing Date, and the Selling Parties shall have received a certificate dated the
Closing Date and signed by an executive officer of Buyer certifying to the matters set forth in
this Section 7.3(c).
(d) Representations and Warranties of Vanguard. If the Buyer elects to provide an Equity
Portion of the Purchase Price in accordance with Section 1.3, then all representations and
warranties made by Vanguard in this Agreement that:
(i) are not qualified by materiality or a Vanguard Material Adverse Effect shall be
true and correct in all material respects on and as of the date hereof and, except to the
extent that any representation is specifically limited by the terms of such representation
to the date of this Agreement or another specified date, on the Closing Date as if again
made by Vanguard on and as of the Closing Date; and
(ii) are qualified by materiality or a Vanguard Material Adverse Effect shall be true
and correct in all respects on the date hereof and, except to the extent that any
representation is specifically limited by the terms of such representation to the date of
this Agreement or another specified date, on the Closing Date as if made by the Vanguard on
and as of the Closing Date;
and the Selling Parties shall have received a certificate dated the Closing Date and signed by an
executive officer of Vanguard certifying to the matters set forth in this Section 7.3(d).
For the avoidance of doubt, if the Buyer elects not to provide an Equity Portion of the Purchase
Price in accordance with Section 1.3, then the condition contained in this Section
7.3(d) shall not apply.
(e) Performance of Vanguard’s Obligations. If the Buyer elects to provide an Equity Portion
of the Purchase Price in accordance with Section 1.3, Vanguard shall have performed in all
material respects all agreements, obligations and covenants required under this
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Agreement to be performed by it on or before the Closing Date, and the Selling Parties shall
have received a certificate dated the Closing Date and signed by an executive officer of Vanguard
certifying to the matters set forth in this Section 7.3(e). For the avoidance of doubt,
if the Buyer elects not to provide an Equity Portion of the Purchase Price in accordance with
Section 1.3, then the condition contained in this Section 7.3(e) shall not apply.
(f) Consents and Approvals. All consents, waivers, authorizations and approvals set forth on
Schedule 2.3 (No Conflict or Violation), Schedule 2.4 (Consents and Approvals),
Schedule 3.3 (Consents and Approvals), Schedule 4.4 (Consents and Approvals), or
Schedule 5.5 (Consents and Approvals) shall have been duly obtained, shall contain terms
reasonably satisfactory to the Selling Parties and shall be in full force and effect on the
Closing Date and copies thereof shall have been provided to Selling Parties at Closing.
(g) Legal Opinion. The Selling Parties shall have received an opinion of Xxxxxx & Xxxxxx
L.L.P., counsel to Buyer, dated the Closing Date, substantially in the form of Exhibit
1.2(c)(ii). For the avoidance of doubt, if Buyer elects not to provide an Equity Portion of
the Purchase Price in accordance with Section 1.3, then the condition contained in this
Section 7.3(g) shall not apply.
(h) Receipt of Documents. Buyer and Vanguard, as applicable, shall have delivered to the
Selling Parties the items specified in Section 1.2(b), in each case duly executed and
dated the Closing Date.
ARTICLE VIII
TERMINATION
TERMINATION
Section 8.1 Methods Of Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the Closing:
(a) by the mutual written agreement of the Selling Parties and Buyer;
(b) by written notice from Selling Parties to the Buyer specifying with particularity the
applicable Breach, if Buyer has committed a Breach, and such Breach would result in the failure of
any condition to Closing set forth in Section 7.3(c) or, if Buyer elects to provide an
Equity Portion of the Purchase Price in accordance with Section 1.3, Section
7.3(e); provided, if such Breach is curable through the exercise of commercially reasonable
efforts, then the Selling Parties may only terminate this Agreement if such Breach is not cured by
Buyer or Vanguard, as applicable, within thirty (30) days after the receipt by the Selling Parties
or Buyer, as the case may be, of a Notification provided pursuant to Section 6.6
specifying with particularity such Breach; provided, further, that any right of Buyer or Vanguard,
as applicable, to cure a Breach will terminate on the Outside Date;
(c) by written notice from Selling Parties to the Buyer specifying with particularity the
applicable Breach, if Buyer has committed a Breach, and such Breach would result in the failure of
any condition to Closing set forth in Section 7.3(b) or, if Buyer elects to provide an
Equity Portion of the Purchase Price in accordance with Section 1.3, Section
7.3(d); provided, if such Breach is curable through the exercise of commercially reasonable
efforts, then Selling Parties may only terminate this Agreement if such Breach is not cured by
Buyer or Vanguard,
48
as applicable, within thirty (30) days after the receipt by Buyer or Vanguard, as applicable,
as the case may be, of a Notification provided pursuant to Section 6.6 specifying with
particularity such Breach; provided, further, that any right of Buyer or Vanguard, as applicable,
to cure a Breach will terminate on the Outside Date;
(d) by written notice from Buyer to the Selling Parties specifying with particularity the
applicable Breach, if the Selling Parties have committed a Breach, and such Breach would result in
the failure of the condition to Closing set forth in Section 7.2(e); provided, if such
Breach is curable through the exercise of commercially reasonable efforts, then Buyer may only
terminate this Agreement if such Breach is not cured within thirty (30) days after the receipt by
the Buyer or the Selling Parties, as the case may be, of a Notification provided pursuant to
Section 6.6 specifying with particularity such Breach; provided, further, that any right
of Selling Parties to cure a Breach will terminate on the Outside Date;
(e) by written notice from Buyer to the Selling Parties specifying with particularity the
applicable Breach, if the Selling Parties have committed a Breach, and such Breach would result in
the failure of the condition to Closing set forth in Section 7.2(d); provided, if such
Breach is curable through the exercise of commercially reasonable efforts, then the Buyer may only
terminate this Agreement if such Breach is not cured by the Selling Parties within thirty (30)
days after the receipt by the Selling Parties or Buyer, as the case may be, of a Notification
provided pursuant to Section 6.6 specifying with particularity such Breach; provided,
further, that any right of the Selling Parties to cure a Breach will terminate on the Outside
Date;
(f) by written notice from either the Selling Parties or Buyer to the other Party, if any
condition to the terminating Party’s obligation to proceed with the Closing is not satisfied on or
before February 1, 2011 (the “Outside Date”), or if satisfied prior thereto, does not
remain satisfied on the Closing Date, and non-satisfaction of such condition was not the result of
the other Party’s Breach, provided that no Party whose Breach has resulted in a condition to such
Party’s obligation to proceed with Closing not being satisfied will have the right to terminate
this Agreement under this Section 8.1(f);
(g) by written notice from Buyer to the Selling Parties, if after the date of this Agreement a
Material Adverse Effect has occurred and is continuing;
(h) by written notice from the Selling Parties to Buyer, if (i) Buyer elects for there to be
an Equity Portion of the Purchase Price in accordance with Section 1.3 and (ii) after the
date of this Agreement, a Vanguard Material Adverse Effect has occurred and is continuing; and
(i) by written notice from Buyer to the Selling Parties upon the occurrence of any of the
following actions by ENP GP or the Partnership Entities, unless Buyer consents in writing (which
consent shall not be unreasonably withheld) within twenty Business Days from the receipt of written
notice from the Selling Parties of the intent of ENP GP or the Partnership Entities to effect such
event:
(i) the issuance, delivery, sale, pledge or disposition of any (A) equity securities or
partnership units of any class, (B) debt securities having the right to vote on any matters
on which holders of capital stock or members or partners of the same issuer
49
may vote or (C) securities convertible into or exercisable for, or any rights,
warrants, calls or options to acquire, any such securities;
(ii) the creation, incurrence, guarantee or assumption any new indebtedness for
borrowed money in excess of $10,000,000 in the aggregate;
(iii) the acquisition of any material properties or assets in excess of $5,000,000 in
the aggregate;
(iv) the redemption, retirement, purchase or other acquisition, directly or indirectly,
of the equity interests of the Partnership or declaration, setting aside or payment of
distributions other than regular quarterly cash distributions by the Partnership (with such
amounts determined using the same methodology as recent quarterly distributions);
(v) the making of any capital expenditures in excess of $5,000,000 in addition to the
amounts of capital expenditures that were included in the 2010 budget delivered to Buyer;
(vi) the entering into of any leases of real property, other than renewals of existing
leases in the ordinary course of business, the net present value (calculated at the weighted
average interest rate on the Partnership’s indebtedness) of which exceeds $5,000,000; and
(vii) the sale of any assets with proceeds to ENP GP or the Partnership Entities in
excess of $5,000,000 in the aggregate, except in the ordinary course of business and
consistent with past practice.
During the pendency of any such action, the Selling Parties agree to use commercially reasonable
efforts to keep Buyer reasonably informed as to the progress of such action. Any of the foregoing
actions that are consented to by Buyer pursuant to this Section 8.1(i) shall not be the
basis for Buyer to assert either that Selling Parties have committed a Breach for any purpose under
this Agreement, or that any condition to Closing would fail or has failed as a result of such
action.
Section 8.2 Effect Of Termination. The following provisions shall apply in event of a
termination of this Agreement:
(a) If the Selling Parties have the right to terminate this Agreement pursuant to Section
8.1(b)and the Buyer does not have the right to terminate this Agreement, then the Selling
Parties may elect either to (i) specifically enforce the covenants and obligations of Buyer under
this Agreement, or (ii) terminate this Agreement, in which latter event the Deposit shall be
released to the Selling Parties on the terms and conditions of the Escrow Agreement and Buyer
shall be obligated to pay the Selling Parties an additional $30,000,000 within ten (10) days of
such termination.
(b) If the Selling Parties have the right to terminate this Agreement pursuant to Section
8.1(c) and the Buyer does not have the right to terminate this Agreement, then the
50
Selling Parties may elect either to (i) specifically enforce the covenants and obligations of
Buyer under this Agreement, or (ii) terminate this Agreement, in which latter event the Deposit
shall be released to the Selling Parties on the terms and conditions of the Escrow Agreement and
Buyer shall be obligated to pay the Selling Parties an additional $30,000,000 within ten (10) days
of such termination; provided, however, if the Breach giving rise to that termination right
results from matters, facts or circumstances first arising after the date hereof, or first arising
before the date hereof but not within the Knowledge of the Buyer until after the date hereof (any
such breach, a “Buyer Unknown Matter Breach”), then Buyer will not be obligated to pay any
amount to the Selling Parties pursuant to this Section 8.2(b).
(c) If Buyer has the right to terminate this Agreement pursuant to Section 8.1(d) and
the Selling Parties do not have the right to terminate this Agreement, then Buyer may elect either
to (i) specifically enforce the covenants and obligations of the Selling Parties under this
Agreement or (ii) terminate this Agreement, in which latter event the Buyer is entitled to a
return of the Deposit and Selling Parties shall be obligated to pay the Buyer $50,000,000 within
ten (10) days of such termination.
(d) If Buyer has the right to terminate this Agreement pursuant to Section 8.1(e) and
the Selling Parties do not have the right to terminate this Agreement, then Buyer may elect either
to (i) specifically enforce the covenants and obligations of the Selling Parties under this
Agreement, or (ii) terminate this Agreement, in which latter event the Deposit shall be released
to Buyer on the terms and conditions of the Escrow Agreement and the Selling Parties shall be
obligated to pay Buyer $50,000,000 within ten (10) days of such termination; provided, however, if
the Breach giving rise to that termination right results from matters, facts or circumstances
first arising after the date hereof, or first arising before the date hereof but not within the
Knowledge of the Selling Parties until after the date hereof (any such breach, a “Selling
Parties Unknown Matter Breach”), then the Selling Parties will not be obligated to pay any
amount to Buyer pursuant to this Section 8.2(d).
(e) If Buyer has the right to terminate this Agreement pursuant to Section 8.1(i),
then Buyer may elect either to (i) specifically enforce the covenants and obligations of the
Selling Parties under this Agreement, or (ii) terminate this Agreement, in which latter event the
Deposit shall be released to Buyer on the terms and conditions of the Escrow Agreement and the
Selling Parties shall be obligated to pay Buyer its out-of-pocket expenses (including attorneys
fees and fees of its financial advisor) up to a maximum of $200,000 within ten (10) days of such
termination.
(f) In the event of termination of this Agreement for any reason other than those specified
in Section 8.2(a) or (b), the Deposit shall be released to Buyer on the terms and
conditions of the Escrow Agreement.
(g) In the event of termination of this Agreement pursuant to Section 8.1 hereof,
then except as otherwise set forth in this Section 8.2, this Agreement shall forthwith
become void and there shall be no other liability hereunder on the part of Buyer or the Selling
Parties (or their respective officers or directors), except based upon obligations set forth in
Section 6.7(c).
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(h) The Selling Parties and the Buyer hereby acknowledge that (i) the extent of damages to
the Selling Parties or Buyer caused by the failure of the transaction contemplated by this
Agreement to be consummated in the event of an election to terminate this Agreement pursuant to
Sections 8.2(a), (b), (c), (d) or (e) would be impossible or extremely difficult
to ascertain, (ii) the amount of the liquidated damages set forth in Sections 8.2(a), (b),
(c), (d) or (e), as applicable, is a fair and reasonable estimate of such damages
under such circumstances, and (iii) receipt of such amount by the Selling Parties, or Buyer, as
applicable, does not constitute a penalty and will be the Selling Parties’ or Buyer’s, as
applicable, sole and exclusive remedy in the event of termination of this Agreement pursuant to
respectively Sections 8.2(a), (b), (c), (d) or (e), as applicable.
(i) Each of the Parties hereto acknowledges and agrees that in the event that the other Party
has the right to terminate this Agreement pursuant to respectively Sections 8.2(a), (b), (c),
(d) or (e), then the other Party shall be entitled as an election of remedies, and
instead of terminating this Agreement, to seek an injunction or injunctions to prevent Breach by
the acknowledging Party, and to specifically enforce the covenants and obligations of the
acknowledging Party to be performed at Closing, in any courts of the State of Texas, and in the
federal courts of the United States of America, in each case located in Xxxxxx County, Texas.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival.
(a) The representations and warranties of the Selling Parties contained herein or in any
certificates or other documents delivered pursuant to this Agreement on the Closing Date shall
survive the Closing for a period of twelve (12) months following the Closing Date; provided,
however, that (i) the representations and warranties set forth in Section 2.2 (Validity of
Agreement; Authorization), Section 2.5 (Capitalization of ENP GP; General Partner
Interest; Subject Common Units) and Section 2.11 (Brokers), shall survive indefinitely,
and (ii) the representations and warranties set forth in Section 2.12 (Employee Plans),
Section 3.10 (Tax Matters), and Section 3.14 (Employees; Employee Plans) shall
survive for a period ending thirty (30) days after the expiration of the applicable statute of
limitations.
(b) The representations and warranties of Buyer and Vanguard contained herein or in any
certificates or documents delivered pursuant to this Agreement or the Closing shall survive the
Closing for a period of twelve (12) months following the Closing Date; provided, however, that (i)
the representations and warranties set forth in Section 4.2 (Validity of Agreement),
Section 4.5 (Brokers) Section 5.2(c) (Issuance of Vanguard Common Units),
Section 5.3 (Validity of Agreement) and Section 5.17 (Brokers) shall survive
indefinitely, and (ii) the representations and warranties set forth in Section 5.10 (Tax
Matters) shall survive for a period ending thirty (30)days after the expiration of the applicable
statute of limitations; provided further, however, that in the event that if Buyer elects not to
provide an Equity Portion of the Purchase Price in accordance with Section 1.3, then all
of the representations and warranties of Vanguard contained in Article V shall expire at Closing
and have no further force or effect.
52
(c) The covenants and agreements in this Article IX shall survive the Closing
and shall remain in full force and effect for such period as is necessary to resolve any claim
made with respect to any representation, warranty, covenant or agreement contained herein during
the survival period thereof. The covenants and agreements of the Parties to be performed after
Closing contained in Articles VI and X of this Agreement shall survive the Closing
for (x) the time period(s) set forth in the respective Sections contained in such Articles, or (y)
if no time period is so specified, without any contractual limitation on the period of survival.
If Closing occurs then no claim may be asserted nor may any action be commenced against any Party
for failure to perform or observe any term, provision, covenant or agreement by such Party to be
performed or observed under this Agreement at or prior to the Closing, to the extent that such
Party has an indemnification obligation with respect thereto, unless written notice of such claim
or action is received by such Party describing in reasonable detail the facts and circumstances
with respect to the subject matter of such claim or action on or prior to two (2) years following
the Closing Date.
Section 9.2 Indemnification Coverage.
(a) From and after the Closing, the Selling Parties shall indemnify and defend, save and hold
Buyer and ENP GP and their Affiliates (other than the Partnership Entities) and each of their
respective officers, directors, employees and agents (collectively, the “Buyer Indemnified
Parties”) harmless if any such Buyer Indemnified Party shall suffer any damage, judgment,
fine, penalty, demand, settlement, liability, loss, cost, Tax, expense (including reasonable
attorneys’, consultants’ and experts’ fees), claim or cause of action (each, a “Loss,” and
collectively, “Losses”) arising out of, relating to or resulting from:
(i) any breach or inaccuracy in any representation or warranty by the Selling Parties
contained in this Agreement or any certificates or other documents delivered by any Selling
Party pursuant to this Agreement at the Closing; provided, that in determining whether any
such representation or warranty has been breached or is inaccurate, such representation or
warranty shall be construed as if Material Adverse Effect or materiality is not a
qualification thereto and provided, further, that a Selling Parties Unknown Matter Breach of
Sections 3.15, 3.16 or 3.18 will not result in any Buyer Indemnified Party
suffering Losses for which it is entitled to indemnification, defense or being saved and
held harmless pursuant to this Article IX;
(ii) any failure by the Selling Parties to perform or observe any term, provision,
covenant, or agreement on the part of the Selling Parties to be performed or observed under
this Agreement;
(iii) Selling Parties’ Taxes;
(iv) any broker or other Person claiming to be entitled to an investment banker’s,
financial advisor’s, broker’s, finder’s or similar fee or commission in respect of the
execution of this Agreement or the consummation of the transactions contemplated hereby, by
reason of the claiming Person acting at the request of the Selling Parties or any of their
Affiliates; and
53
(v) any Plan or Plan Liability.
(b) From and after the Closing, Buyer shall indemnify and defend, save and hold the Selling
Parties and their Affiliates and their respective officers, directors, employees and agents
(collectively, the “Seller Indemnified Parties”) harmless if any such Seller Indemnified
Party shall suffer any Loss arising out of, relating to or resulting from:
(i) any breach or inaccuracy in any representation or warranty by Buyer contained in
this Agreement or any certificates or other documents delivered by Buyer pursuant to this
Agreement at the Closing; provided that in determining whether any such representation or
warranty has been breached or is inaccurate, such representation or warranty shall be
construed as if material adverse effect or materiality is not a qualification thereto;
(ii) any failure by Buyer to perform or observe any term, provision, covenant, or
agreement on the part of Buyer to be performed or observed under this Agreement;
(iii) any broker or other Person claiming to be entitled to an investment banker’s,
financial advisor’s, broker’s, finder’s or similar fee or commission in respect of the
execution of this Agreement or the consummation of the transactions contemplated hereby, by
reason of the claiming Person acting at the request of Buyer, Vanguard or any of their
respective Affiliates;
(iv) all Taxes (or nonpayment thereof) of ENP GP and the Partnership Entities that are
attributable to any taxable period beginning after the Closing Date, or the portion of the
Straddle Period beginning after the Closing Date; and
(v) any breach or inaccuracy in any representation or warranty by Vanguard contained in
Article V of this Agreement or any certificates or other documents delivered by
Vanguard pursuant to this Agreement at the Closing; provided that in determining whether any
such representation or warranty has been breached or is inaccurate, such representation or
warranty shall be construed as if material adverse effect or materiality is not a
qualification thereto; provided further, that if Buyer elects not to provide an Equity
Portion of the Purchase Price in accordance with Section 1.3, a breach or inaccuracy
in any representation or warranty by Vanguard contained in Article V of this
Agreement will not result in any Seller Indemnified Party suffering Losses for which it is
entitled to indemnification, defense or being saved and held harmless pursuant to this
Article IX.
(c) The foregoing indemnification obligations shall be subject to the following limitations:
(i) the Selling Parties’ cumulative aggregate liability for Losses under Section
9.2(a)(i) and Buyer’s cumulative aggregate liability under Section 9.2(b)(i) and
9.2(b)(v), in each case, shall not exceed $50 million (the “Cap”); provided,
however, that the Cap shall not be applicable with respect to (i) Breaches under
Sections 2.2 (Validity of Agreement), 2.5 (Capitalization of ENP GP; General
Partner Interest; Subject Common Units), 2.11 (Brokers), 3.4 (Partnership
Capitalization, Title to Subject Common Units), 4.2 (Validity of Agreement;
Authorization) or 4.5 (Brokers), 5.2(c) (Issuance of
54
Vanguard Common Units), 5.3 (Validity of Agreement) and 5.17 (Brokers)
hereof, (ii) Losses with respect to matters that constitute fraud or intentional
misrepresentation, (iii) Losses with respect to Taxes, the liability with respect to which
shall be as set forth in Sections 9.2(a)(iii) and 9.2(b)(iv), or (iv) Losses
with respect to any Plans or Plan Liability, the liability with respect to which shall be as
set forth in Section 9.2(a)(v);
(ii) Buyer’s cumulative aggregate liability for Losses under Section 9.2(b)(v)
shall not exceed thirteen percent of the value of the Equity Portion of the Purchase Price,
if any (the “Vanguard Cap”); provided, however, that the Vanguard Cap shall not be
applicable with respect to (i) breaches under Sections 5.2(c) (Issuance of Vanguard
Common Units), 5.3 (Validity of Agreement), 5.10 (Tax Matters), and
5.17 (Brokers) hereof or (ii) Losses with respect to matters that constitute fraud
or intentional misrepresentation;
(iii) no indemnification for any Losses asserted against the Selling Parties under
Section 9.2(a)(i) or against Buyer under Section 9.2(b)(i) and Section
9.2(b)(v) shall be required unless and until the cumulative aggregate amount of such
Losses, in each case, exceeds $3,800,000 (the “Deductible”), at which point the
Selling Parties shall be obligated to indemnify the Buyer Indemnified Parties or Buyer shall
be obligated to indemnify the Seller Indemnified Parties, as the case may be, only for the
amount of such Losses in excess of the Deductible, provided, however, that the Deductible
shall not be applicable with respect to (i) breaches under Sections 2.2 (Validity of
Agreement), 2.5 (Capitalization of ENP GP; General Partner Interest; Subject Common
Units), 2.11 (Brokers), 3.4 (Partnership Capitalization, Title to Subject
Common Units), 4.2 (Validity of Agreement; Authorization), 4.5 (Brokers),
5.2(c) (Issuance of Vanguard Common Units), 5.3 (Validity of Agreement), and
5.17 (Brokers) hereof, (ii) Losses with respect to matters that constitute fraud or
intentional misrepresentation, (iii) Losses with respect to those Taxes the liability with
respect to which are set forth in Sections 9.2(a)(iii) and 9.2(b)(iv), or
(iv) Losses with respect to any Plans or Plan Liability, the liability with respect to which
shall be as set forth in Section 9.2(a)(v);
(iv) the amount of any Losses suffered by a Seller Indemnified Party or a Buyer
Indemnified Party, as the case may be (such party seeking indemnification pursuant to this
Article IX, the “Indemnified Party,” and the other party, the
“Indemnifying Party”), shall be determined without giving effect to any materiality
or Material Adverse Effect qualifiers and shall be reduced by any third-party insurance
benefits or third party recoveries actually received by the Indemnified Party with respect
to such Loss (net of costs incurred to recover such insurance benefits and third party
recoveries, deductibles, and retropremiums). To the extent an Indemnified Party suffers
Losses for which the Indemnifying Party is liable for indemnification, the Indemnified Party
shall submit a claim to collect any amounts available under third-party insurance coverage
and from other third parties reasonably liable for any Loss suffered by the Indemnified
Party;
(v) no claim may be asserted nor may any action be commenced against any Party for
breach or inaccuracy of any representation or breach of a warranty, unless written notice of
such claim or action is received by the other Party describing in
55
reasonable detail the facts and circumstances with respect to the subject matter of
such claim or action on or prior to the date on which the representation or warranty on
which such claim or action is based ceases to survive as set forth in Section 9.1;
(vi) no Indemnified Party shall be entitled under this Agreement to multiple recovery
for the same Losses; and
(vii) if the Closing occurs, no Indemnified Party is entitled to indemnification or any
other recovery under this Agreement with respect to any breach or inaccuracy in any
representation or warranty of an Indemnifying Party (A) that would have given the
Indemnified Party a right to terminate this Agreement under Section 8.1 of this
Agreement, and (B) of which the Indemnified Party had Knowledge before the Closing, whether
pursuant to a notice delivered under Section 6.6 or otherwise.
Section 9.3 Procedures. Any Indemnified Party shall notify the Indemnifying Party
(with reasonable detail) promptly after it becomes aware of facts supporting a claim or action for
which indemnification is provided under this Article IX, and shall provide to the
Indemnifying Party as soon as practicable thereafter all reasonably available information and
documentation necessary to support and verify any Losses associated with such claim or action.
Subject to Section 9.2(c)(v), the failure to so notify or provide information to the
Indemnifying Party shall not relieve the Indemnifying Party of any liability that it may have to
any Indemnified Party, except to the extent that the Indemnifying Party demonstrates that it has
been materially prejudiced by the Indemnified Party’s failure to give such notice, in which case
the Indemnifying Party shall be relieved from its obligations hereunder to the extent of such
material prejudice. The Indemnifying Party shall participate in and defend, contest or otherwise
protect the Indemnified Party against any such claim or action by counsel of the Indemnifying
Party’s choice at its sole cost and expense; provided, however, that the Indemnifying Party shall
not make any settlement or compromise without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld or delayed) unless the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party, there is no admission or
statement of fault or culpability on the part of the Indemnified Party and there is an
unconditional release of the Indemnified Party from all liability on any claims that are the
subject of such claim or action. The Indemnified Party shall use commercially reasonable efforts
upon the reasonable request of the Indemnifying Party to cooperate with and assist the Indemnifying
Party in defending, contesting, or otherwise protecting the Indemnified Party against any suit,
action, investigation, claim, or proceeding in connection with which a claim for indemnification is
made. The Indemnified Party shall have the right, but not the obligation, to participate at its
own expense in the defense thereof by counsel of the Indemnified Party’s choice; provided, however,
that the Indemnifying Party shall pay the fees and expenses of separate counsel for the Indemnified
Party if (a) the Indemnifying Party has agreed to pay such fees and expenses, or (b) counsel for
the Indemnifying Party reasonably determines that representation of both the Indemnifying Party and
the Indemnified Party by the same counsel would create a conflict of interest. If the Indemnifying
Party fails timely to defend, contest or otherwise protect against such suit, action,
investigation, claim or proceeding, the Indemnified Party shall have the right to do so, including,
without limitation, the right to make any compromise or settlement thereof, and the Indemnified
Party shall be entitled to recover the entire cost thereof from the Indemnifying
56
Party, including, without limitation, reasonable attorneys’ fees, disbursements and amounts
paid as the result of such suit, action, investigation, claim or proceeding.
Section 9.4 No Speculative Damages. In no event shall any Party be liable for (and
the term Losses shall exclude) any Loss that results from any untrue representation or warranty in
this Agreement or a breach by any Party of any provision of this Agreement or the other Transaction
Documents or related hereto or thereto that is not within the reasonable contemplation of the
Parties as of the date hereof as a probable and reasonably foreseeable result of that untruth or
breach.
Section 9.5 Compliance With Express Negligence Rule. TO THE FULLEST EXTENT PERMITTED
BY LAW, ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND INDEMNITIES IN THIS AGREEMENT,
INCLUDING THOSE IN THIS ARTICLE VIII, SHALL APPLY EVEN IN THE EVENT OF THE SOLE, JOINT, AND/OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED,
DISCLAIMED, LIMITED, OR INDEMNIFIED.
Section 9.6 Remedy. The Parties agree that equitable relief for matters arising
under this Agreement after Closing is only available to the extent provided for in Section
6.7(c) or in Section 10.10. Except for actions involving fraud or intentional
misrepresentation, and for equitable relief as provided in the preceding sentence, from and after
the Closing the sole remedy of a Party in connection with matters arising under this Agreement
shall, in each case, be indemnification under and as set forth in this Article IX.
Section 9.7 Tax Treatment Of Indemnity Payments. Each Party, to the extent permitted
by applicable Law, agrees to treat any payments made pursuant to this Article IX as
adjustments to the Purchase Price for all federal and state income and franchise Tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
MISCELLANEOUS PROVISIONS
Section 10.1 Publicity. On or prior to the Closing Date, no Party shall, nor shall
it permit its Affiliates to, issue or cause the publication of any press release or other
announcement with respect to this Agreement or the transactions contemplated hereby without the
consent of the other Parties. Each Party hereby agrees to the form of press releases announcing
this transaction exchanged prior to the Execution Date. Notwithstanding the foregoing, in the
event any such press release or announcement is required by Law or stock exchange rule to be made
by the Party proposing to issue the same, such Party may issue or cause publication thereof without
consent of the other Parties, but shall use its commercially reasonable efforts to consult in good
faith with the other Parties prior to such issuance or publication.
Section 10.2 Successors And Assigns; Third-Party Beneficiaries. This Agreement shall
inure to the benefit of, and be binding upon, the Parties and their respective successors and
permitted assigns; provided, however, that no Party shall assign or delegate any of its rights or
obligations created under this Agreement without the prior written consent of the other Parties.
Except as contemplated by Section 6.9 or by Article IX, nothing in this Agreement
shall confer
57
upon any Person not a party to this Agreement, or the legal representatives of such Person,
any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement.
Section 10.3 Fees And Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting, financial advisory and other fees, costs and expenses of a Party
incurred in connection with this Agreement and the transactions contemplated hereby shall be paid
by the Party incurring such fees, costs or expenses.
Section 10.4 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made if delivered
personally or sent by overnight courier or sent by facsimile (with evidence of confirmation of
receipt) to the Parties at the following addresses:
(a) If to Buyer, to:
Vanguard Natural Gas LLC
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2500 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx and
Xxxxxxx X. Xxxx
2500 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx and
Xxxxxxx X. Xxxx
If to the Selling Parties, to:
Denbury Resources Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Xxxxx Xxxxxxxxx LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
58
or to such other Persons or at such other addresses as shall be furnished by any Party by like
notice to the other Party, and such notice or communication shall be deemed to have been given or
made as of the date so delivered or mailed. No change in any of such addresses shall be effective
insofar as notices under this Section 10.4 are concerned unless such changed address is
located in the United States of America and notice of such change shall have been given to such
other Party as provided in this Section 10.4.
Section 10.5 Entire Agreement. This Agreement, together with the Schedules and the
Exhibits hereto, and the other Transaction Documents, represent the entire agreement and
understanding of the parties with reference to the transactions set forth herein and therein and no
representations or warranties have been made in connection herewith and therewith other than those
expressly set forth herein or therein. This Agreement, together with the Schedules and the
Exhibits hereto, and the other Transaction Documents, supersede all prior negotiations,
discussions, correspondence, communications, understandings and agreements between the parties
relating to the subject matter hereof or thereof and all prior drafts of such documents, all of
which are merged into such documents. No prior drafts of such documents and no words or phrases
from any such prior drafts shall be admissible into evidence in any action or suit involving such
documents.
Section 10.6 Waivers and Amendments. The Selling Parties or Buyer may, by written
notice to the other Party: (a) extend the time for the performance of any of the obligations or
other actions of the other Party; (b) waive any inaccuracies in the representations or warranties
of the other Party contained in this Agreement or in any document delivered pursuant to this
Agreement by the other Party; (c) waive compliance with any of the covenants of the other Party
contained in this Agreement; (d) waive performance of any of the obligations of the other Party
created under this Agreement; or (e) waive fulfillment of any of the conditions to its own
obligations under this Agreement or in any documents delivered pursuant to this Agreement by the
other Party. The waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach, whether or not similar, unless such
waiver specifically states that it is to be construed as a continuing waiver. This Agreement may
be amended, modified or supplemented only by a written instrument executed by the Parties.
Section 10.7 Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect the validity or
enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of
any such invalid or unenforceable term or provision, the Parties shall negotiate in good faith to
modify this Agreement to include a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
Section 10.8 Titles and Headings. The Article and Section headings and any table of
contents contained in this Agreement are solely for convenience of reference and shall not affect
the meaning or interpretation of this Agreement or of any term or provision hereof.
Section 10.9 Signatures And Counterparts. Facsimile or electronic transmission of
any signed original document and/or retransmission of any signed facsimile or electronic
transmission shall be the same as delivery of an original. At the request of Buyer or the Selling
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Parties, the Parties will confirm facsimile or electronic transmission by signing a duplicate
original document. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall be considered one and the same agreement.
Section 10.10 Enforcement Of The Agreement; Damages. Each of the Parties hereto
acknowledges and agrees that in the event any covenant or obligation of the acknowledging Party to
be performed after Closing is not performed in accordance with the specific terms of this Agreement
or is otherwise breached, then the other Party shall be entitled to an injunction or injunctions to
prevent such non-performance or breach and to specifically enforce the covenants and obligations of
the acknowledging Party to be performed after Closing, in any courts of the State of Texas, and in
the federal courts of the United States of America located in Xxxxxx County, Texas, in addition to
any other remedy to which it may be entitled for such non-performance or breach.
Section 10.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal and substantive Laws of the State of Texas and without regard to any
conflicts of Laws concepts that would apply the substantive Law of some other jurisdiction.
Section 10.12 Disclosure. Certain information set forth in the Schedules is included
solely for informational purposes, is not an admission of liability with respect to the matters
covered by the information, and may not be required to be disclosed pursuant to this Agreement.
Disclosure of any item in any section of the Schedules shall serve to qualify the correspondingly
numbered representation and warranty or covenant in this Agreement to the extent specified therein
and any other representation and warranty or covenant only to the extent the applicability of such
disclosure to such other representation and warranty or covenant is reasonably apparent to the
non-disclosing party. The specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the Schedules is not intended
to imply that such amounts (or higher or lower amounts) or specific item are or are not material,
and no party shall use the fact of the setting of such amounts or the fact of the inclusion of any
such item in the Schedules in any dispute or controversy between the Parties as to whether any
obligation, item, or matter not described herein or included in a Schedule is or is not material
for purposes of this Agreement.
Section 10.13 Consent To Jurisdiction. To the fullest extent permitted by applicable
Law, the Parties hereby irrevocably submit to the jurisdiction of the courts of the State of Texas,
and of the federal courts of the United States of America located in Xxxxxx County, Texas, over any
dispute arising out of or relating to this Agreement or any of the transactions contemplated
hereby, and each Party irrevocably agrees that all claims in respect of such dispute or proceeding
shall be heard and determined in such courts. The Parties hereby irrevocably waive, to the fullest
extent permitted by applicable Law, any objection which they may now or hereafter have to the 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 dispute heard in the venue specified by this
section may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable Law.
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Section 10.14 Waiver of Trial by Jury. Each of the Parties hereby irrevocably
waives, to the fullest extent permitted by Law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement.
Section 10.15 Construction. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references
to Articles and Sections refer to Articles and Sections of this Agreement; (c) references to
Schedules and Exhibits refer to the Schedules and Exhibits attached to this Agreement, each of
which is made a part hereof for all purposes; (d) the terms “include”, “includes”, “including” and
words of like import shall be deemed to be followed by the words “without limitation”; (e) the
terms “hereof,” “herein” and “hereunder” refer to this Agreement as a whole and not to any
particular provision of this Agreement; and (f) references to money refer to legal currency of the
United States of America. The table of contents and headings contained in this Agreement are for
reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.
ARTICLE XI
DEFINITIONS
DEFINITIONS
For purposes of this Agreement, the term:
Section 11.1 “2010 Form 10K” has the meaning assigned to such term in Section
6.14(g).
Section 11.2 “Accelerated Income Tax” means the amount of federal, state and local
income tax on allocations to the Selling Parties of income or gain pursuant to Section 704(c) of
the Code with respect to the built-in gain in the Contributed Subject Common Units at the time of
the Closing that results from a sale, transfer or other disposition of (i) the Contributed Subject
Common Units by the Buyer or (ii) the Partnership’s underlying assets by the Partnership; provided
however, that Accelerated Income Tax does not include a continuation of the existing built-in gain
upon a subsequent contribution to a partnership.
Section 11.3 “Administrative Services Agreement” has the meaning assigned to such
term in Section 6.10(a).
Section 11.4 “AE” has the meaning assigned to such term in Section 5.1(a).
Section 11.5 “Affiliate” or “Affiliates” of a Person means a Person that
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, the first- mentioned Person. From and after Closing, ENP GP and the
Partnership Entities will not be Affiliates of the Selling Parties.
Section 11.6 “Agreement” has the meaning assigned to such term in the Preamble.
Section 11.7 “Bidder Confidentiality Agreements” has the meaning assigned to such
term in Section 6.7(b).
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Section 11.8 “Breach” means any matter, fact or circumstance that constitutes a
breach by a Party of any representation, warranty, agreement, obligation, or covenant of such Party
contained in this Agreement.
Section 11.9 “Business Day” means any day of the year on which national banking
institutions in Texas are open to the public for conducting business and are not required or
authorized to close.
Section 11.10 “Buyer” has the meaning assigned to such term in the Preamble.
Section 11.11 “Buyer Indemnified Parties” has the meaning assigned to such term in
Section 9.2(a).
Section 11.12 “Buyer Representatives” has the meaning assigned to such term in
Section 6.2(a).
Section 11.13 “Buyer Unknown Matter Breach” has the meaning assigned to such term in
Section 8.2(b).
Section 11.14 “Cap” has the meaning assigned to such term in Section
9.2(c)(i).
Section 11.15 “Cash Portion” has the meaning assigned to such term in Section
1.3.
Section 11.16 “Closing” has the meaning assigned to such term in Section
1.1(b).
Section 11.17 “Closing Date” has the meaning assigned to such term in Section
1.1(b).
Section 11.18 “Code” means the Internal Revenue Code of 1986, as amended.
Section 11.19 “Common Units” has the meaning assigned to such term in the Recitals.
Section 11.20 “Competing Transaction” has the meaning assigned to such term in
Section 6.11.
Section 11.21 “Company Marks” has the meaning assigned to such term in Section
6.14(f).
Section 11.22 “Confidentiality Agreement” means that certain Bidder Confidentiality
Agreement between Parent and Vanguard Natural Resources, LLC dated September 8, 2010.
Section 11.23 “Contributed Subject Common Units” has the meaning assigned to such
term in Section 1.2(a)(ii).
Section 11.24 “D&M” has the meaning assigned to such term in Section 5.13(a).
Section 11.25 “Deductible” has the meaning assigned to such term in Section
9.2(c)(iii).
Section 11.26 “Delaware LLC Act” has the meaning assigned to such term in Section
2.5(a).
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Section 11.27 “Delaware LP Act” has the meaning assigned to such term in Section
2.5(c).
Section 11.28 “Denbury Credit Agreement” means the Credit Agreement among Denbury
Resources Inc., et al, and JPMorgan Chase Bank, N.A., et al, dated as of March 9, 2010, as amended.
Section 11.29 “Denbury Lender Consent” has the meaning assigned to such term in
Section 2.3.
Section 11.30 “Deposit” has the meaning assigned to such term in Section 1.4.
Section 11.31 “Derivative Transactions” has the meaning assigned to such term in
Section 3.17.
Section 11.32 “Employee Plans” means any “employee benefit plan,” as defined under
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or any
other bonus, pension, stock/unit option, stock/unit purchase, benefit, welfare, profit-sharing,
retirement, disability, vacation, severance, hospitalization, insurance, incentive, deferred
compensation and other similar fringe or employee benefit plans, funds, programs or arrangement,
whether written or oral.
Section 11.33 “Encumbrances” has the meaning assigned to such term in Section
1.1(a).
Section 11.34 “ENP GP” has the meaning assigned to such term in the Recitals.
Section 11.35 “ENP GP LLC Agreement” has the meaning assigned to such term in
Section 1.1.
Section 11.36 “ENP GP Plans” has the meaning assigned to such term in Section
3.14(d).
Section 11.37 “Environmental Laws” means collectively, all applicable federal, state
and local laws (including common law), ordinances, rules and regulations relating to the prevention
of pollution, remediation of contamination or restoration of environmental quality, protection of
human health or the environment (including natural resources), or workplace health and safety,
including, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act of
1976, 42 U.S.C. § 6901, et seq., the Clean Air Act, 42 U.S.C. § 7401, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. § 1251, et seq., the Oil Pollution Act of 1990, 33 U.S.C.§ 2701,
et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through
2629, the Emergency Planning and Community Right to Xxxx Xxx, 00 X.X.X. § 00000 et seq., the
Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j, and the Occupational Safety and Health
Act, 29 U.S.C. § 651 et seq.; in each case, as amended and the regulations promulgated pursuant
thereto and as each is in effect on the date of this Agreement.
Section 11.38 “Equity Portion” has the meaning assigned to such term in Section
1.3.
Section 11.39 “Equity Portion Consideration Common Units” has the meaning assigned to
such term in Section 1.5(a).
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Section 11.40 “ERISA” has the meaning assigned to such term in the definition of
“Employee Plans.”
Section 11.41 “ERISA Affiliate” has the meaning assigned to such term in Section
2.12(a).
Section 11.42 “Escrow Agent” has the meaning assigned to such term in Section
1.4.
Section 11.43 “Escrow Agreement” has the meaning assigned to such term in Section
1.4.
Section 11.44 “Exchange Act” has the meaning assigned to such term in Section
3.6.
Section 11.45 “Execution Date” has the meaning assigned to such term in the preamble.
Section 11.46 “GAAP” means generally accepted accounting principles at the time.
Section 11.47 “GP Holdings” has the meaning assigned to such term in the Preamble.
Section 11.48 “Governmental Authority” means any foreign, federal, tribal, state or
local government, court, agency or commission or other governmental or regulatory body or authority
or of any arbitrator.
Section 11.49 “GP Units” has the meaning assigned to such term in the Recitals.
Section 11.50 “Hazardous Material” shall mean any substance that, by its nature or its
use, is regulated or as to which liability might arise under any Environmental Law including any:
(a) chemical, product, material, substance or waste defined as or included in the definition of
“hazardous substance,” “hazardous material,” “hazardous waste,” “restricted hazardous waste,”
“extremely hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” toxic
substance,” “toxic pollutant,” “contaminant,” “pollutant,” or words of similar meaning or import
found in any Environmental Law; (b) petroleum hydrocarbons, petroleum products, petroleum
substances, natural gas, crude oil, or any components, fractions, or derivatives thereof; and (c)
asbestos containing materials, polychlorinated biphenyls, radioactive materials, urea formaldehyde
foam insulation, or radon gas.
Section 11.51 “HSR Act” has the meaning assigned to such term in Section
6.3(b).
Section 11.52 “Hydrocarbons” means oil, condensate, gas, casinghead gas and other
liquid or gaseous hydrocarbons.
Section 11.53 “Indemnified Party” has the meaning assigned to such term in Section
9.2(c)(iv).
Section 11.54 “Indemnified Persons” has the meaning assigned to such term in
Section 6.9(a).
Section 11.55 “Indemnifying Party” has the meaning assigned to such term in
Section 9.2(c)(iv).
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Section 11.56 “Interest on Accelerated Income Tax” means an amount of interest equal
to three percent (3%) of the Accelerated Income Tax accruing from the time of a sale, transfer or
other conveyance of the Contributed Subject Common Units by the Buyer until the earlier to occur of
(i) Selling Parties dispose of all of their Vanguard Common Units acquired under this Agreement or
(ii) eighteen (18) months following the Closing Date
Section 11.57 “Knowledge of the Buyer” means matters, facts or circumstances that
Xxxxx Xxxxx, Xxxxxxx Xxxxxx or Xxxxx Xxxxx are aware of (without a duty of inquiry) either because
such matters, facts or circumstances were disclosed to them or otherwise brought to their attention
in their capacities as members of management of Vanguard.
Section 11.58 “Knowledge of the Selling Parties” means matters, facts or circumstances
that Xxxx Xxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxxx, Xxx Xxxxxxxxx or Xxx Xxxx are aware
of (without a duty of inquiry) either because such matters, facts or circumstances were disclosed
to them or otherwise brought to their attention in their capacities as members of management of the
Selling Parties, or in the case of Xx. Xxxxxxxxx in his capacity as Vice President, Legal of
Parent.
Section 11.59 “Law” has the meaning assigned to such term in Section 2.3.
Section 11.60 “Legal Proceeding” has the meaning assigned to such term in Section
2.8.
Section 11.61 “Lock-up Period” has the meaning assigned to such term in Section
1.5(a).
Section 11.62 “Loss” or “Losses” has the meaning assigned to such term in
Section 9.2(a).
Section 11.63 “LP Holdings” has the meaning assigned to such term in the Preamble.
Section 11.64 “Material Adverse Effect” means any change, effect, event or occurrence
with respect to the condition (financial or otherwise), assets, properties, business, operations or
results of operations of ENP GP or the Partnership Entities, that is material and
adverse to the Partnership Entities, taken as a whole, or material and adverse to ENP GP, or
that materially and adversely affects the ability of the Selling Parties to consummate the
transactions contemplated hereby; it being understood that none of the following shall be deemed to
constitute a Material Adverse Effect: any effect resulting from (a) entering into, or the
announcement of the transactions contemplated by, this Agreement, (b) changes in oil and gas
prices, including changes in price differentials, (c) changes in general economic conditions in the
industry in which any of the Partnership Entities operates, or (d) changes in the United States or
global economy as a whole, unless in the case of clauses (b) — (d) above such change has a
disproportionately adverse effect on the Partnership Entities or ENP GP relative to other
participants in the industry or industries in which ENP and the Partnership Entities operate.
Section 11.65 “Member Interests” has the meaning assigned to such term in the
Recitals.
Section 11.66 “Member Interests Xxxx of Sale” has the meaning assigned to such term in
Section 1.2(a)(i).
Section 11.67 “NSAI” the meaning assigned to such term in Section 5.13(a).
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Section 11.68 “Notification” has the meaning assigned to such term in Sections
6.6(a) and (b).
Section 11.69 “Oil and Gas Properties” means all interests in and rights with respect
to oil, gas, mineral, and similar properties of any kind and nature, including working, leasehold
and mineral interests and operating rights and royalties, overriding royalties, production
payments, net profit interests and other non-working interests and non-operating interests
(including all oil and gas leases, operating agreements, unitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds, royalty deeds, and in each case, interests
thereunder), surface interests, fee interests, reversionary interests, reservations, and
concessions).
Section 11.70 “Operating” has the meaning assigned to such term in the Preamble.
Section 11.71 “Organizational Documents” means with respect to any entity, the
certificate of incorporation, by-laws, certificate of formation, limited liability company
operating agreement, partnership or limited partnership agreement or other formation or governing
documents of a such entity.
Section 11.72 “Outside Date” has the meaning assigned to such term in Section
8.1(f).
Section 11.73 “Parent” has the meaning assigned to such term in the Preamble.
Section 11.74 “Parties” or “Party” has the meaning assigned to such term in
the Preamble.
Section 11.75 “Partnership” has the meaning assigned to such term in the Recitals.
Section 11.76 “Partnership Agreement” means the Second Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of September 17, 2007, which amends and restates
in its entirety the Agreement of Limited Partnership dated as of February 13, 2007, which was
amended and restated by the First Amended and Restated Agreement of Limited Partnership dated as of
May 10, 2007.
Section 11.77 “Partnership Bank Waivers” has the meaning assigned to such term in
Section 6.12.
Section 11.78 “Partnership Credit Agreement” means the Credit Agreement entered into
as of March 7, 2007, among Encore Energy Partners Operating LLC, as the Borrower, the Partnership,
as a Guarantor, each lender from time to time a party thereto, and Bank of America, N.A., as the
Administrative Agent, as it may have been amended from time to time.
Section 11.79 “Partnership Entities” has the meaning assigned to such term in
Section 3.5.
Section 11.80 “Partnership Entities Records” has the meaning assigned to such term in
Section 6.16.
Section 11.81 “Partnership Lenders” has the meaning assigned to such term in
Section 6.12.
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Section 11.82 “Partnership Material Contracts” has the meaning assigned to such term
in Section 3.18(a).
Section 11.83 “Partnership Oil and Gas Agreements” has the meaning assigned to such
term in Section 3.15(a).
Section 11.84 “Partnership Plans” has the meaning assigned to such term in Section
3.14(b).
Section 11.85 “Partnership Reserve Report” has the meaning assigned to such term in
Section 3.15(b).
Section 11.86 “Partnership SEC Reports” the meaning assigned to such term in
Section 3.6.
Section 11.87 “Percentage Interest” has the meaning assigned to such term in the
Partnership Agreement.
Section 11.88 “Permian” the meaning assigned to such term in Section 5.1(a).
Section 11.89 “Permitted Encumbrances” means:
(a) to the extent waived prior to Closing, preferential purchase rights and rights of first
refusal;
(b) inchoate mechanics’ and materialmens’ liens for amounts not yet delinquent and liens for
Taxes or assessments that are not yet delinquent or, in all instances, if delinquent, that are
being contested in good faith in the ordinary course of business and for which adequate reserves
have been established by the party responsible for payment thereof;
(c) liens arising under operating agreements or sales, processing, gathering, storage and
transportation contracts securing amounts not yet delinquent, or if delinquent, that are being
contested in good faith in the ordinary course of business and for which adequate reserves have
been established by the party responsible for payment thereof;
(d) easements, rights-of-way, servitudes, permits, surface leases and other rights in respect
of surface operations, to the extent (a) shown of record in the jurisdiction where located and (b)
valid and enforceable in accordance with the terms thereof;
(e) rights reserved to or vested in any governmental, statutory, municipal or public
authority to control or regulate any of the Partnership Entities’ properties or assets in any
manner and all applicable laws, rules and orders of any Governmental Authority;
(f) all other liens, charges, encumbrances, defects and irregularities that are not such as
to materially interfere with the operation, value or use of the property or asset affected; and
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(g) such filings made with, or notices to, the Bureau of Ocean Energy Management, Regulation,
and Enforcement and any other applicable Governmental Authority, as are customarily made after the
transactions contemplated by this Agreement.
Section 11.90 “Person” means an individual, corporation, association, trust, limited
liability company, limited partnership, limited liability partnership, partnership, incorporated
organization, other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
Section 11.91 “Plan Liability” means any and all liabilities under (i) Title IV of
ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv) the continuation
coverage requirements of Section 601 et. seq. of ERISA and Section 4980B of the Code, or (v) any
other provision of ERISA or the Code.
Section 11.92 “Plans” has the meaning assigned to such term in Section
3.14(d).
Section 11.93 “Pre-Closing Period” has the meaning assigned to such term in
Section 6.8(b).
Section 11.94 “Pre-Closing Period Return” has the meaning assigned to such term in
Section 6.8(b).
Section 11.95 “Proceeding” has the meaning assigned to such term in Section
6.9(a).
Section 11.96 “Purchase Price” has the meaning assigned to such term in Section
1.3.
Section 11.97 “Registration Rights Agreement” the meaning assigned to such term in
Section 1.2(a)(vii).
Section 11.98 “Release” means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping,
leaching, dumping, or disposing into the indoor or outdoor environment.
Section 11.99 “Resigning Director” has the meaning assigned to such term in
Section 6.15.
Section 11.100 “Rights-of-Way” has the meaning assigned to such term in Section
3.15(l).
Section 11.101 “SEC” has the meaning assigned to such term in Section 3.6.
Section 11.102 “Second Amended and Restated Administrative Services Agreement has the
meaning assigned to such term in Section 1.2(a)(viii).
Section 11.103 “Securities Act” has the meaning assigned to such term in Section
3.6.
Section 11.104 “Seller Indemnified Parties” has the meaning assigned to such term in
Section 9.2(b).
Section 11.105 “Seller’s Representatives” has the meaning assigned to such term in
Section 6.2(b).
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Section 11.106 “Selling Parties” has the meaning assigned to such term in the
Preamble.
Section 11.107 “Selling Parties’ Taxes” means any federal, state or local income taxes
payable with respect to (i) any taxable gain recognized upon the sale of the Member Interests or
the Subject Common Units and (ii) the portion of any items of Partnership income loss deduction
gain or credit properly allocable to the GP Units and the Subject Common Units attributable to any
Pre-Closing Period and for the portion of any Straddle Period commencing on the beginning of such
Straddle Period and ending on the Closing Date.
Section 11.108 “Selling Parties Unknown Matter Breach” has the meaning assigned to
such term in Section 8.2(d).
Section 11.109 “Solvent” has the meaning assigned to such term in Section
2.10.
Section 11.110 “Straddle Period” has the meaning assigned to such term in Section
6.8(a).
Section 11.111 “Straddle Period Return” has the meaning assigned to such term in
Section 6.8(a).
Section 11.112 “Subject Common Units” has the meaning assigned to such term in the
Recitals.
Section 11.113 “Subject Employees” has the meaning assigned to such term in
Section 2.12(b).
Section 11.114 “Subsidiary” when used with respect to any Party means any corporation
or other organization of which such Party directly or indirectly owns at least a majority of the
securities or other interests having by their terms ordinary voting power to elect a majority of
the board of directors or others performing similar functions with respect to such corporation or
other organization.
Section 11.115 “Tax” or “Taxes” has the meaning assigned to such term in
Section 3.10(a).
Section 11.116 “Tax Returns” has the meaning assigned to such term in Section
3.10(a).
Section 11.117 “TEC” the meaning assigned to such term in Section 5.1(a).
Section 11.118 “Transaction Documents” means this Agreement and the other agreements,
contracts, documents, instruments and certificates provided for in this Agreement to be entered
into by one or more of the parties hereto or any of their Affiliates in connection with the
transactions contemplated by this Agreement.
Section 11.119 “Transfer Agent” has the meaning assigned to such term in Section
1.2(a)(ii).
Section 11.120 “Transfer Application” means the form of transfer application included
as part of Exhibit A to the Partnership Agreement.
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Section 11.121 “Transfer Taxes” has the meaning assigned to such term in Section
6.8(d).
Section 11.122 “Vanguard” has the meaning assigned to such term in the Preamble.
Section 11.123 “Vanguard Cap” has the meaning assigned to such term in Section
9.2(c)(ii).
Section 11.124 “Vanguard Common Units” has the meaning assigned to such term in
Section 1.2(c)(i).
Section 11.125 “Vanguard Entities” has the meaning assigned to such term in
Section 5.1(b).
Section 11.126 “Vanguard Material Adverse Effect” means any change, effect, event or
occurrence with respect to the condition (financial or otherwise), assets, properties, business,
operations or results of operations of Vanguard or the Vanguard Entities, that is
material and adverse to the Vanguard Entities, taken as a whole, or material and adverse to
Vanguard, or that materially and adversely affects the ability of Buyer to consummate the
transactions contemplated hereby; it being understood that none of the following shall be deemed to
constitute a Material Adverse Effect: any effect resulting from (a) entering into, or the
announcement of the transactions contemplated by, this Agreement, (b) changes in oil and gas
prices, including changes in price differentials, (c) changes in general economic conditions in the
industry in which any of the Vanguard Entities operates, or (d) changes in the United States or
global economy as a whole, unless in the case of clauses (b) — (d) above such change has a
disproportionately adverse effect on the Vanguard Entities or Vanguard relative to other
participants in the industry or industries in which Vanguard and the Vanguard Entities operate.
Section 11.127 “Vanguard Material Contracts” has the meaning assigned to such term in
Section 5.15(a).
Section 11.128 “Vanguard SEC Reports” has the meaning assigned to such term in
Section 5.2(b).
Section 11.129 “Vanguard Reserve Reports” has the meaning assigned to such term in
Section 5.13(a).
Section 11.130 “VNG Credit Agreement” means the Amended and Restated Credit
Agreement, dated February 14, 2008, by and between Buyer (f/k/a Nomi Holding Company, LLC),
Citibank N.A., as administrative agent and L/C issuer and the lender party thereto, as amended.
Section 11.131 “VNR Finance” has the meaning assigned to such term in Section
5.1(a).
Section 11.132 “VNR Holdings” has the meaning assigned to such term in Section
5.1(a).
Section 11.133 “VNR LLC Agreement” means the Second Amended and Restated Limited
Liability Company Agreement of Vanguard dated as of October 29, 2007.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
SELLING PARTIES: | DENBURY RESOURCES INC. |
|||
By: | /s/ Xxxx Xxxxxxx | |||
Name: | Xxxx Xxxxxxx | |||
Title: | Chief Executive Officer | |||
ENCORE PARTNERS GP HOLDINGS LLC |
||||
By: | /s/ Xxxx Xxxxxxx | |||
Name: | Xxxx Xxxxxxx | |||
Title: | Chief Executive Officer | |||
ENCORE PARTNERS LP HOLDINGS LLC |
||||
By: | /s/ Xxxx Xxxxxxx | |||
Name: | Xxxx Xxxxxxx | |||
Title: | Chief Executive Officer | |||
ENCORE OPERATING, L.P. |
||||
By: | EAP Operating, LLC, | |||
its general partner | ||||
By: | /s/ Xxxx Xxxxxxx | |||
Name: | Xxxx Xxxxxxx | |||
Title: | Chief Executive Officer |
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BUYER: | VANGUARD NATURAL GAS, LLC |
|||
By: | /s/ Xxxxx X. Xxxxx | |||
Name: | Xxxxx X. Xxxxx | |||
Title: | President and Chief Executive Officer | |||
VANGUARD: | VANGUARD NATURAL RESOURCES, LLC |
|||
By: | /s/ Xxxxx X. Xxxxx | |||
Name: | Xxxxx X. Xxxxx | |||
Title: | President and Chief Executive Officer | |||
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