1 Exhibit B-2
JOINT EVALUATION AND COST SHARING AGREEMENT
This Joint Evaluation and Cost Sharing Agreement (this "Agreement"),
dated November 28, 1995, is by and between PANHANDLE INTERNATIONAL DEVELOPMENT
CORPORATION, a Delaware corporation ("PIDC"), SONAT AMERICAS INC., a Delaware
corporation ("Sonat"), El Paso Energy Development Company, a Delaware company
("EPED"), and CNG Energy Services Corporation ("CNG"), a Delaware corporation
(individually a "Party" and collectively the "Parties").
RECITALS
The Bolivian government is soliciting proposals for the capitalization
of a Bolivian company to which certain transportation assets and liabilities of
Yacimientos Petroliferos Fiscales Bolivianos will be transferred (the "Bolivia
Project").
The Parties desire to set forth herein their agreement to jointly
evaluate the transportation assets and liabilities involved in the Bolivia
Project and, subject to the terms hereof, jointly submit one or more proposals
with respect to the Bolivia Project.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each of the Parties, the Parties hereby agree as follows:
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1. Certain Defined Terms. (a) As used herein, the term "Evaluation
Activities" shall mean such activities as may be reasonably necessary to
evaluate the transportation assets and liabilities constituting a part of the
Bolivia Project and determine the potential viability of bidding on the Bolivia
Project, including, without limitation, the following activities:
qualification of existing pipeline assets; market evaluation; economic analysis
of the Brazil to Bolivia pipeline project; evaluation of supply; service design
and pricing; new pipeline system design and routing; bid quality estimates for
design construction and operating costs; identification of permits and other
approvals; preparation of certain documents; environmental requirements;
public, industry and governmental relations; development of government and
regulatory issues and related strategies; financial planning; and such
activities as may be necessary to (i) develop a common set of assumptions and
projects for any proposals to be submitted by the Parties with respect to the
Bolivia Project, (ii) to determine the most desirable legal and financial
structure for any such proposals and (iii) prepare, document and submit any
proposals to be submitted by the Parties in connection with the Bolivia Project
and coordinate the activities of the Parties in connection therewith.
(b) As used herein the term "Affiliate" shall mean, with respect to a
Party, any other entity directly or indirectly controlling, controlled by or
under common control with such Party.
(2) Performance of Evaluation Activities. Subject to the terms of this
Agreement, PIDC agrees to perform or cause to be performed, and to coordinate,
all Evaluation Activities for the joint benefit of PIDC, Sonat, EPED and CNG.
To the extent deemed necessary by PIDC and provided that such costs are
included in the Budget (as defined below) or otherwise approved by the Project
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Committee in writing, PIDC may retain third parties, any Party and its
Affiliates, or utilize its Affiliates for the performance of the Evaluation
Activities.
3. Joint Submission of Proposals. Subject to the terms and conditions
of this Agreement, the Parties agree to jointly submit one or more proposals
with respect to the Bolivia Project in accordance in all material respects with
the terms of the requests for proposals distributed by the Bolivian government
and any other applicable bidding rules or procedures if the Parties agree
unanimously in writing to the terms and conditions of any such proposals. In
connection with any such proposals to be submitted by the Parties, the Parties
shall agree that any such proposals must be based upon a common set of
assumptions and projections for the Bolivia Project and the most desirable
legal and financial structure for the investment contemplated by any such
proposals.
4. Cost Sharing; Budget, Cash Calls, Record and Inspection Rights.
(a) Provided that such costs and expenses are contemplated by the
Budget or otherwise approved by the Project Committee in writing, all costs and
expenses (other than general and administrative costs and expenses) incurred
from August 12, 1995 forward with respect to the Evaluation Activities shall be
shared equally by PIDC, Sonat, EPED and CNG.
(b) PIDC has prepared and submitted to Sonat, EPED and CNG for their
review and approval a reasonably detailed work plan and budget, a copy of which
is attached hereto as Exhibit "A" that sets forth a schedule for the
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performance of the Evaluation Activities and the costs and expenses anticipated
to be incurred in connection therewith (such work plan and budget, as same may
be amended or modified pursuant to the terms hereof, being herein referred to
as the "Budget"). Upon the execution by the Parties of this Agreement, each
such Party shall be deemed to have approved the Budget attached hereto and
agreed to fund 25% of all costs or expenses incurred by PIDC that are included
in such Budget. From time to time during the term of this Agreement, any Party
may propose amendments to or modifications of the Budget, and the other Parties
shall respond in writing to such requested amendments or modifications within
10 days following receipt thereof. Failure by any Party to respond in writing
within such 10-day period shall be deemed to constitute approved by such Party
of the proposed amendment or modification. In addition, any expenditures that
are approved in writing by the Project Committee shall be deemed to constitute
a part of the Budget. Any budgetary disputes among the Parties will be
referred to the Project Committee for review and consideration.
(c) On a monthly basis, PIDC may invoice each Party for its share of
any unreimbursed costs and expenses contemplated by the Budget that have been
approved by the Parties and incurred by PIDC.
(d) PIDC shall keep a record of the costs and expenses incurred in
connection with the performance of the Evaluation Activities and shall, on a
monthly basis, furnish to the Parties during the term hereof an itemized
statement of such costs, together with such other information as may be
reasonably necessary to describe the Evaluation Activities performed since the
date of the most recent statement.
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(e) Each Party, through its authorized representatives, shall have the
right, at all reasonable times and upon twenty-four hours prior written notice
to the other Parties, to inspect the books and records of the other Parties
that relate to costs and expenses incurred in connection with the performance
of the Evaluation Activities, provided that such inspection occurs no later
than the 24th month (the "Inspection Deadline") following the month in which
the applicable costs were reported as having been incurred. All costs and
expenses incurred by PIDC in connection with the performance of the Evaluation
Activities shall conclusively be presumed to be true and correct after the
Inspection Deadline, unless a Party has notified the other Parties of detailed
exceptions prior to such date. The Party conducting the inspection shall pay
all costs and expenses associated with it.
5. Project Committee. The Parties shall form a committee (the
"Project Committee") for the purpose of reviewing the progress and results of
the Evaluation Activities, reviewing and approving the Budget and any proposed
amendments or modification thereto and discussing any matters relating to
proposals being considered by the Parties with respect to the Bolivia Project.
The Project Committee shall consist of four persons, one appointed by each
Party. Each Party shall have one vote on all matters to be decided by the
Project Committee. Unless otherwise stated herein, any approval fo the Project
Committee shall require the affirmative vote of three persons. Any approvals
granted or decisions made by a Party's representative on the Project Committee
shall be binding on such Party. PIDC will, from time to time, provide
information and reports to the Project Committee regarding the progress and
results of the Evaluation Activities. Unless the Parties agree otherwise, all
meetings of the Project Committee will be held in Houston, Texas, at mutually
agreeable times and locations
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6. Confidentiality. With respect to any and all data, plans,
proposals or other material related to the bidding, design, construction,
operation or financing of the Bolivia Project, in each case that has been or is
hereafter developed by or provided to a Party or any of its Affiliates by oro n
behalf of another Party or Affiliate of a Party in connection with the Bolivia
Project ("Confidential Information"), each Party shall, and shall cause its
Affiliates to, use any such Confidential Information only with regard to the
Bolivia Project and not for any other purpose and to hold such Confidential
Information in strict confidence and not disclose same to any third party
without the written consent of the members of the Project Committee.
Notwithstanding the foregoing, the obligation of confidentiality shall not
apply to any disclosure:
(a) of information that is in or enters the public domain through
no fault of the receiving person or entity;
(b) of information that was in the possession of the receiving
person or entity prior to its receipt of similar information from
another Party (or an Affiliate of a Party) in connection with the
Bolivia Project;
(c) required by law, regulations, legal process or order of any
court or governmental body having jurisdiction;
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(d) to a Party, lender or direct or indirect prospective purchaser
of interests in the Bolivia Project, in each case provided that such
person or entity has agreed in writing to be bound by use and
confidentiality restrictions as least as restrictive as those set forth
in this Section 6;
(e) to directors, officers, employees or representatives of such
Parties if such persons have been informed of the obligations set forth
in this Section 6 and the Party has agreed to cause such persons to use
and maintain the confidentiality of such Confidential Information only
in accordance with the terms of this Section 6; or
(f) to any and all governmental authorities in connection with
obtaining permits for the Bolivia Project or with the investment by the
Parties in the Bolivia Project.
7. Withrawal and Termination. (a) A Party may voluntarily withdraw
from its participation under this Agreement for any reason by providing 5 days'
prior written notice to the other Parties. Any such withdrawal shall be
effective on the first business day following the expiration of such 5-day
period. A Party shall be deemed to have withdrawn if following the completion
of the Evaluation Activities (but prior to the deadline for submission of
proposals with respect to the Bolivia Project), it is the only Party that is
not in agreement with the terms of a proposal or proposals to be submitted for
the Bolivia Project. In the event of a voluntary or deemed withdrawal, the
withdrawing Party shall have no further rights or obligations under this
Agreement except for:
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(i) the obligation to pay its share of any costs and expenses
contemplated by the Budget and previously approved by the Parties as in
effect on the effective date of such Party's withdrawal;
(ii) the obligation to continue to abide by the confidentiality
provisions and obligations set forth in Section 6 hereof and the
obligations set forth in Section 8 hereof; and
(iii) any obligations or liabilities attributable to the breach by
such Party of its obligations prior to the effective date of such
withdrawal.
(b) This Agreement shall terminate on the earliest to occur of (i) the
mutual agreement of all of the Parties to terminate this Agreement, (ii) the
award of the Bolivia Project by the Bolivian government to a third party, (iii)
the issuance by the Bolivian government of an official announcement canceling
the Bolivia Project and (iv) following the completion of the Evaluation
Activities (but prior to the deadline for submission of proposals with respect
to the Bolivia Project), the failure of at least 3 of the Parties to reach
agreement on the terms of a proposal or proposals to be submitted. Subject to
the terms of Section 7(a), this Agreement shall terminate as to a Party
withdrawing pursuant to Section 7(a). If this Agreement is terminated, the
rights and obligations of the Parties hereunder shall cease and be of no
further force and effect, except that each Party shall continue thereafter to
be liable for performance obligations, and any breach by such Party of the
provisions of this Agreement, that matured or occurred prior to the date of
such termination
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Right to Participate in Proposals and Exclusivity. (a) At the conclusion
of the Evaluation Activities, each Party (other than a Party withdrawing
pursuant to Section 7(a)) shall have the right, but not the obligation, to
participate in the making of a joint proposal with respect to the Bolivia
Project on a mutually agreeable basis set forth in writing including the right,
if any such proposal is successful, to participate equally (unless otherwise
agreed in writing) in the equity ownership of the Bolivia Project. If a
proposal submitted by the Parties is successful, it is contemplated that the
Parties would form a special purpose company for the purpose of making such
investment, which company would qualify as an entity with characteristics of a
partnership for U.S. tax purposes, would be located in a tax efficient
jurisdiction and would otherwise be structured in a manner acceptable to the
Parties.
(b) In the event a Party (the "Non-Proceeding Party") voluntarily
withdraws or is deemed to have withdrawn pursuant to Section 7(a), and all of
the other Parties are willing to go forward with the Bolivia Project, then the
Parties who are willing to go forward with the Bolivia Project may do so, and
the Non-Proceeding Party will no longer be associated with or have any right to
participate in the Bolivia Project, whether such participation is with any
third parties or on its own. Upon written request of the Parties, all
Confidential Information shall be promptly returned by the Non-Proceeding Party
to the other Parties and the Non-Proceeding Party shall be subject to the
confidentiality provisions and obligations set forth in Section 6 hereof for a
period of two years following the date of such withdrawal. In the event that
no Party goes forward with the Bolivia Project beyond the Evaluation
Activities, there is no need to return all Confidential Information
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(c) Without the prior written consent of all of the other Parties and
except as contemplated hereunder, each Party shall not, and will cause its
Affiliates not to, (i) negotiate with any person or entity or enter into any
agreement or understanding with any person or entity regarding the Bolivia
Project or (ii) directly or indirectly solicit, encourage or consider inquiries
or proposals from any person or entity, or furnish informaiton to any person or
entity, in either case regarding the Bolivia Project, except with regard to
Evaluation Activities as contemplated by this Agreement. Each Party
understands that the other Parties and their Affiliates are incurring
substantial costs and expenses in reliance on their rights under this Agreement
and that the right to participate in proposals and the right of exclusivity
provided for in this Section 8 are material inducements to such Parties to
enter into and perform its obligations under this Agreement.
9. Representations and Warranties. Each Party represents and warrants
to the other Parties that:
(a) It is a duly organized, validly existing entity of the type
described in the introduction to this Agreement and is in good standing
under the laws of the jurisdiction of its formation. It has all
requisite power and authority to enter into and to perform its
obligations under this Agreement.
(b) Its execution, delivery, and performance of this Agreement
have been duly authorized, and do not and will not (i) violate any law,
rule, regulation, order, or decree applicable to it or (ii) violate its
organizational documents.
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(c) This Agreement is a legal and binding obligation of that
Party, enforceable against that Party in accordance with its terms,
except to the extent enforceability is modified by bankruptcy,
reorganization and other similar laws affecting the rights of creditors
generally and by general principles of equity.
(d) There is no litigation or, to the best of its knowledge,
threatened to which that Party or any of its Affiliates is a party that,
if adversely determined, would have a material adverse effect on the
financial condition, prospects, or business of the Bolivia Project or
that Party's ability to perform its obligations under this Agreement.
10. General. (a) The Parties shall act as independent contractors in
the performance of any activities under this Agreement and, except as expressly
provided herein, no Party shall act as agent for or partner of the other
without its prior written consent. This Agreement is not intended to create a
partnership or joint venture. The rights and obligations of the Parties shall
be limited to those expressly set forth xxxxx.
(b) Each Party shall execute and deliver such additional instruments
and other documents and shall take such further actions as may be necessary or
appropriate to effectuate, carry out and comply with all of the terms of this
Agreement and the transactions contemplated hereby.
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(c) Each Party undertakes that neither it nor its Affiliates, nor any
officer, director, shareholder, representative, employee or agent thereof has
made, will make, will promise to make or will cause to be made, in connection
with this Agreement, any payments, loans or gifts of any money or anything of
value, directly or indirectly, (i) to or for the use or benefit of any official
or employee of any government, (ii) to any political party or official or
candidate thereof or (iii) to any other person either for an advance or
reimbursement, if it knows that any party of such payment, loan or gift will be
directly or indirectly given or paid by such other person, or will reimburse
such other person for payments, gifts or loans previously made, to any
governmental official or political party, or candidate or official thereof. In
addition, each Party represents that it is familiar with the provisions of the
Foreign Corrupt Practices Act and shall comply with such provisions.
(d) This Agreement and with regard to Sonat only, that certain Letter
Agreement from Sonat to PIDC dated September 15, 1995, constitutes the entire
agreement between the Parties and supersedes all prior agreements or
understandings with respect to the matters referred to herein. This Agreement
may be modified or amended only by an instrument in writing that is signed by
all of the Parties.
(e) Any notice or other communication required to be given under this
Agreement shall be made in writing and may be delivered by telecopier, air
courier, messenger delivery or regular mail, addressed to the Party's address
set forth below. Notice or communications shall be effective upon receipt
during regular business hours. Any Party may, by notice in writing to the
other Party in the manner specified in this Section 10(e), specify an
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additional person or persons to receive copies of all subsequent notices
thereafter directed to such Party or to provide other addresses for any person
to whom notices or communications are to be directed pursuant to this
Agreement. The addresses of the Parties for purposes of this Agreement shall
be as follows:
If to PIDC:
Panhandle International Development Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Project Manager
Facsimile No. (000) 000-0000
If to Sonat:
Sonat Americas Inc.
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Facsimile No. (000) 000-0000
If to CNG:
CNG Energy Services Corporation
c/o 000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Facsimile No. (000) 000-0000
If to EDEP:
El Paso Energy Development Company
000 Xxxxx Xxxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile No. (000) 000-0000
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(f) Unless expressly provided herein, a delay on the part of any Party
in exercising its rights hereunder or failure to exercise its rights shall not
operate as a waiver of such rights. Any tacit or implicit waiver by any Party
of a right or remedy hereunder in a particular instance shall not operate as a
waiver of such right or remedy in any other instance or as to any other Party.
(g) If any provision of this Agreement is determined to be invalid or
unenforceable in a jurisdiction, the invalidity or unenforceability of that
provision in that jurisdiction and such determination shall not affect any
other provision of this Agreement in that or any other jurisdiction. To the
extent permitted by applicable law, the Parties waive any provision of law
which renders any provision of this Agreement invalid or unenforceable in any
respect.
(h) (i) All disputes, controversies or claims arising out of,
relating to or in conection with this Agreement, or the breach, default,
termination or invalidity thereof, shall be finally determined under the
Commercial Arbitration Rules of the American Arbitration Association by
three arbitrators to be appointed by the American Arbitration Association
in accordance with its rules. The proceedings shall be conducted in
Houston, Texas. NO PARTY SHALL BE AWARDED OR ENTITLED TO SEEK THE
RECOVERY OF PUNITIVE AND/OR CONSEQUENTIAL DAMAGES;
(ii) the federal and state courts located in the State of Texas
are hereby given nonexclusive jurisdiction to enter judgment upon, and to
enforce, an arbitration award, and the Parties hereby expressly consent
and submit to the jurisdiction of such courts;
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(iii) each Party hereby agrees that the arbitration procedure
provided herein shall be the sole and exclusive method of resolving any
of the aforesaid disputes, controversies or claims, including, without
limitation, all questions, claims and other matters arising, related to
or in connection with this Agreement and the transactions, agreements and
instruments contemplated hereby; and
(iv) any monetary award of the arbitrators shall be made and shall
be payable in U.S. dollars, net of any tax or deductions or reductions
whatsoever. Any such monetary award shall include interest from the date
of any breach or any violation of this Agreement. The arbitrators shall
fix an appropriate rate of interest from the date of the breach or other
violation to the date when the award is paid in full.
(v) This agreement is governed by and shall be construed in
accordance with the laws of Delaware, excluding any conflict-of-laws rule
or principle that might refer the governance or the construction of the
Agreement to the law of another jurisdiction.
(i) This Agreement shall be binding upon the Parties and their
permitted sucessors and assigns. Except as otherwise set forth herein, no
Party may assign its rights or delegate its obligations or duties hereunder
without the express written consent of the other Parties. Notwithstanding the
prior sentence, a Party may assign to an Affiliate its rights or delegate its
obligations and duties hereunder without the express written consent of the
other Parties.
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(j) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute but one
agreement.
IT WITNESS WHEREOF, the Parties have entered into this Agreement on the
date and year first hereinabove written.
PANHANDLE INTERNATIONAL DEVELOPMENT
CORPORATION
By:
Name:
Title:
SONAT AMERICAS INC.
By:
Name:
Title:
EL PASO ENERGY DEVELOPMENT COMPANY
By:
Name:
Title:
CNG ENERGY SERVICES CORPORATION
By:
Name:
Title:
