PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is
entered into as of __________, 1998, by and between El Paso Field
Services Company, a Delaware corporation (the "Seller"), and
Midcoast Gas Services, Inc., a Delaware corporation (the
"Buyer"). The Seller and the Buyer are referred to collectively
herein as the "Parties."
RECITALS
WHEREAS, the Seller owns the properties and assets
comprising the Anadarko gas gathering system (collectively, the
"Assets") described in Section 2 hereof;
WHEREAS, this Agreement contemplates a transaction in
which the Buyer will purchase from the Seller, and the Seller
will sell to the Buyer, all of the Assets in return for the
consideration specified herein;
NOW, THEREFORE, in consideration of the premises and
the mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained, the
Parties agree as follows:
1. Definitions.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and attorneys' fees and
expenses, but excluding consequential damages.
"Affiliate" has the meaning set forth in Rule 12b-
2 of the regulations promulgated under the Securities Exchange
Act.
"Assets" has the meaning set forth in Section 2.
"Buyer" has the meaning set forth in the preface
above.
"Closing" has the meaning set forth in Section
2(f) below.
"Closing Date" has the meaning set forth in
Section 2(f) below.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" means the
Confidentiality Agreement between the Buyer's parent and the
Seller dated May 12, 1998.
"Customary Post-Closing Consents" means consents
and approvals from Governmental Authorities that are customarily
obtained after closing in connection with a sale of ownership
interests or assets of the nature of the Assets.
"Employee Pension Benefit Plan" has the meaning
set forth in ERISA section 3(2).
"Encumbrance" means any mortgage, pledge, lien,
encumbrance, charge, other security interest or defect in title.
"Environmental Law" or "Environmental Laws" has
the meaning given to that term in Section 4(i) of this Agreement.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Excluded Assets" has the meaning set forth in
Section 2(b).
"Excluded Liabilities" has the meaning set forth
in Section 2(d).
"Governmental Authority" means the United States
and any state, county, city or other political subdivision,
agency, court or instrumentality.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended.
"Hazardous Substances" means all materials,
substances and wastes which are regulated under any Environmental
Law or which may form the basis for liability under any
Environmental Law.
"Indemnified Party" has the meaning set forth in
Section 8(d) below.
"Indemnifying Party" has the meaning set forth in
Section 8(d) below.
"Knowledge" means, in the case of the Seller, the
actual knowledge of the individuals listed on SCHEDULE 1(a)
hereto without independent investigation and, in the case of the
Buyer, the actual knowledge of the individuals listed on SCHEDULE
1(b) hereto without independent investigation.
"Laws" means any constitution, statute, code,
regulation, rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any applicable Governmental
Authority.
"Material Adverse Effect" means any change or
effect that, individually or in the aggregate with other changes
or effects, is adverse to the business, operations and/or
properties comprising the Assets, in the amount of Twenty-Five
Thousand Dollars ($25,000.00) or more.
"Ordinary Course of Business" means the ordinary
course of business consistent with the affected party's past
custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface
above.
"Permitted Encumbrances" means any of the
following: (i) any liens for taxes and assessments not yet
delinquent or, if delinquent, that are being contested in good
faith in the ordinary course of business; (ii) any obligations or
duties reserved to or vested in any municipality or other
Governmental Authority to regulate any Asset in any manner
including all applicable Laws; (iii) mechanic's, materialmen's,
and similar liens identified in SCHEDULE 1; (iv) purchase money
liens and liens securing rental payments under capital lease
arrangements; and (v) any Customary Post-Closing Consents with
respect to the Assets.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental
entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in
Section 2(e) below.
"Securities Act" means the Securities Act of 1933,
as amended.
"Securities Exchange Act" means the Securities
Exchange Act of 1934, as amended.
"Seller" has the meaning set forth in the preface
above.
"Tax(es)" means any federal, state, local or
foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code 59A), custom duties,
capital stock, franchise profits, withholding, social security
(or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
"Tax Return" means any return, declaration,
report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
"Third Party Claim" has the meaning set forth in
Section 8(d) below.
"Year 2000 Compliant" means that the Assets and
all data processing related to the Assets will be able to
function without interruption or human intervention with four-
digit year processing on all Date Data, including errors or
interruptions from functions which may involve Date Data from
more than one century or leap years, regardless of the date of
processing or date of Date Data ("Date Data" ("Date Datameans any
data, input, or output which includes an indication of date), and
provide results from any operation accurately reflecting any Date
Data used in the operation performed, with output in any form,
except graphics, having four-digit years, or provide data
interchange in the ISO 8601:1988 standard of CCYYMMDD.
2. Purchase and Sale of the Assets.
(a) Assets. Subject to the terms and conditions
of this Agreement, the Seller agrees to sell, and the Buyer
agrees to purchase from the Seller, the Assets, consisting of:
(i) the Anadarko gathering system,
compression facilities and dehydration facilities
depicted on the maps attached hereto as SCHEDULE
2(a)(i) together with all valves, taps,
interconnections and flow meters attached thereto or
used in connection therewith;
(ii) all equipment whether owned or leased
which is routinely used or held for use in connection
with the Anadarko gathering system and facilities
described or referred to in clause (a)(i) above,
including but not limited to the compressor units,
scrubbers, dehydration units, tanks, traps, cathodic
protection equipment, radios (not radio frequencies),
remote terminal units, the communication tower at
Canadian, Texas, flow computers, laptop computers, and
other personal property listed on the attached SCHEDULE
2(a)(ii);
(iii) all real property interests
currently used by the Seller in connection with the
Anadarko gathering system and facilities described or
referred to in clause (a)(i) above, including those fee
interests, surface leases, easements, rights-of-way,
surface use agreements and other similar agreements
listed on the attached SCHEDULE 2(a)(iii) (collectively
the "Rights-of-Way");
(iv) the vehicles and heavy motorized
equipment, trailers and like equipment listed on the
attached SCHEDULE 2(a)(iv);
(v) the gas purchase contracts, residue gas
sales contracts, gas gathering agreements, processing
agreements, treating agreements, compression agreements
and third party contractor or supplier agreements,
together with all amendments thereto and ratifications
thereof, listed on the attached SCHEDULE 2(a)(v)
(collectively, the "Gas Contracts");
(vi) any and all other facilities, equipment,
tools, office furniture and equipment, operating
supplies, gasoline or diesel fuel, spare parts,
chemicals and other tangible assets currently located
at or attached or appurtenant to the Anadarko gathering
system and facilities described or referred to in
clause (a)(i) above, whether in use or non-use, and
whether specifically described or not described in the
schedules attached to this Agreement;
(vii) all books, files, maps, records and
reports (including electronic data files that would not
violate any license or law) pertaining primarily to the
Anadarko gathering system and facilities described or
referred to in clause (a)(i) above and the equipment
referred to in clause (a)(ii) above, including, but not
limited to, all pipeline and plant construction and
testing records, vessel and pipe certifications and
weld x-rays, equipment specifications and operating
manuals and inspection reports, and reports and filings
to and with the U.S. Department of Transportation, the
U.S. Environmental Protection Agency and the states of
Oklahoma and Texas;
(viii) all permits, licenses, orders,
certificates of occupancy and other governmental
authorizations obtained by the Seller pertaining or
relating to the Anadarko gathering system and
facilities described or referred to in clause (a)(i)
above set forth on SCHEDULE 2(a)(viii) hereto, to the
extent legally assignable or transferable; and
(ix) the office building and property located
at Xxxxx Xxxxxxx 00, Xxxxxxxx, Xxxxx 00000, and all of
the furnishings, fixtures and equipment therein.
(b) Excluded Assets. Notwithstanding any
provision of Section 2(a) hereof, the Assets do not include, and
the Seller shall retain all right, title and interest in and to
the following assets (the "Excluded Assets"):
(i) all cash and cash equivalents of the
Seller;
(ii) all accounts and notes receivable
arising out of, resulting from or relating to the
business and operations of the Assets for periods up to
the Effective Time, and all claims, causes of action
and rights relating thereto and proceeds thereof, other
than those notes and/or accounts listed on the attached
SCHEDULE 2(b) and the claims, causes of action and
rights relating thereto and proceeds thereof to the
extent relating to periods after the Effective Time;
(iii) all rights under insurance policies
of the Seller and its Affiliates relating to the
Assets;
(iv) the items listed on SCHEDULE 2(b)(iv);
(v) all computer equipment (except as listed
in Section 2(a) herein);
(vi) Tax credits, Tax refunds or other
Tax assets relating to whole or partial taxable periods
on or before the Closing Date;
(vii) Tax Returns, Tax workpapers and
other Tax records and information;
(ix) all equipment located in the
Seller's offices located in Houston, Texas, El Paso,
Texas, and Farmington, New Mexico; and
(x) that certain payment by Exxon Company,
U.S.A. to the Seller described as the past settlement
for litigation and the purchase of the Northeast
Xxxxxxxx Treating Plant in Beckham County, Oklahoma.
(c) Assumed Liabilities. Except for the
liabilities and obligations described in Section 2(d) below,
subject to the terms and conditions of, and the Closing of, this
Agreement, effective as of the Effective Time, the Buyer shall
assume and shall thereafter be responsible for and shall pay and
discharge when due, all liabilities and obligations arising out
of, resulting from or relating to any of the Assets, whether
absolute, contingent, matured or unmatured, and whether arising
prior to, on or after the Effective Time (collectively, the
"Assumed Liabilities"). The assumption of the Assumed
Liabilities by the Buyer hereunder shall not be deemed to create,
confirm or give rise to any rights of any third party, as third-
party beneficiary or otherwise, or to waive any defenses
available to the Seller or the Buyer with respect to any such
liabilities; it being understood that such assumption is for the
purpose of allocating responsibility between the Seller and the
Buyer. Further, assumption of the Assumed Liabilities by the
Buyer hereunder shall not be deemed a waiver of any breach of any
representation, warranty, covenant, agreement or undertaking of
the Seller under this Agreement even though such breach gives
rise to Assumed Liabilities.
(d) Excluded Liabilities. Notwithstanding
Section 2(c) hereof, the Buyer is not assuming, and the Seller
shall retain and be responsible for and shall pay and discharge
when due, the following liabilities and obligations
(collectively, the "Excluded Liabilities"):
(i) all accounts and notes payable arising
out of, resulting from or relating to the Assets to the
extent relating to or for periods up to and including
the Effective Time;
(ii) all indebtedness of the Seller; and
(iii) all Taxes arising out of, resulting
from or relating to the Assets for whole or partial
taxable periods on or before the Closing Date.
(e) Purchase Price. The Buyer agrees to pay to
the Seller, at the Closing, Thirty- Five Million Dollars
($35,000,000.00) (the "Purchase Price"), as adjusted at Closing
pursuant to this Agreement, payable by wire transfer or delivery
of other immediately available funds.
(f) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of the Seller, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000, commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with
respect to actions each Party will take at the Closing itself) or
such other date as the Buyer and the Seller may mutually
determine (the "Closing Date"). Notwithstanding the consummation
of the purchase and sale contemplated by this Agreement on the
Closing Date, the Closing will be deemed to be effective as of
9:00 a.m. on August 1, 1998 (the "Effective Time").
(g) Deliveries at the Closing. At the Closing,
(i) the Seller will deliver to the Buyer the various
certificates, instruments and documents referred to in Section
7(a) below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments and documents referred to in Section
7(b) below, (iii) the Seller will deliver to the Buyer such
instruments of assignment, conveyance and transfer, with special
warranty of title as to all claims by, through and under the
Seller only, and otherwise in form and content mutually
acceptable to the Seller and the Buyer, as shall be necessary to
transfer to the Buyer all of the Assets, and (iv) the Buyer will
deliver to the Seller the Purchase Price specified in Section
2(e) above.
(h) Apportionments. (i) Subject to Section 2(ii)
below, all accounts and notes receivable and accounts and notes
payable with respect to any or all of the Assets shall be
prorated between the Seller and the Buyer as of the Effective
Time. Any account or note receivable shall be deemed to have
accrued when it was earned (whether or not billed); any account
or note payable shall be deemed to have accrued when the event
giving rise to such account or note payable occurred (whether or
not such account or note payable was invoiced or paid at the
Effective Time).
(ii) The Buyer shall be responsible for the
actual payment of all ad valorem and property Taxes with
respect to the Assets for the calendar year in which the
Closing occurs; provided, however, that the Seller shall
reimburse the Buyer for its pro rata share of such Taxes to
the extent not previously paid by the Seller. An estimate
of such Taxes shall be made at the Closing and such amount
shall be paid to the Buyer at Closing. The ad valorem and
property Taxes for the year of Closing for which the Seller
is responsible shall be determined by applying a fraction
based on the number of days in the calendar year prior to
the Effective Time to such Taxes for the calendar year.
Payment of any amount owed by the Buyer to the Seller or by
the Seller to the Buyer shall be made within thirty (30)
days after the actual ad valorem and property Taxes with
respect to the Assets for the calendar year in which Closing
occurs have been determined.
(i) Imbalances. The Seller shall make reasonable
efforts to cause the individual physical natural gas cumulative
imbalances with respect to the Assets to be reduced to as close
to zero as possible as of the Closing Date. To the extent all
necessary information is available, a determination of the
imbalances existing on the Assets shall be made as of the Closing
Date. To the extent all necessary information is not available
prior to the Closing Date, such determination of imbalances shall
be made within 180 days after Closing Date (the "Imbalance
Adjustment Period"). The Seller shall prepare a schedule of
imbalances as of the Closing Date, which shall set forth by
shipper, estimated imbalance receivables and imbalance payables.
To the extent that there are any remaining imbalances
attributable to actions which occurred prior to the Closing Date
at the end of the Imbalance Adjustment Period, the Seller and the
Buyer shall agree to an imbalance settlement statement, and based
upon such statement (i) the Buyer shall "cash out" and pay the
Seller for any imbalances due from shippers by multiplying the
imbalance quantity by the "Imbalance Price" set forth below, and
(ii) the Seller shall "cash out" and pay the Buyer for any
imbalances due to shippers by multiplying the imbalance quantity
by the "Imbalance Price" described below. The "Imbalance Price"
shall be arithmetic average of the monthly Index Prices found in
the first issue of the month (pertaining to the last month in
the Imbalance Adjustment Period) of The XxXxxx-Xxxx Companies,
Inc.'s "Inside F.E.R.C.'s Gas Market Report" under the table
labeled PRICES OF SPOT GAS DELIVERED TO PIPELINES for ANR
Pipeline Co. (Oklahoma), Natural Gas Pipeline of America (Mid-
Continent Zone), and Panhandle Eastern Pipe Line Co. (Texas-
Oklahoma mainline)
(j) Purchase Price Allocation. For the
purpose of making the requisite filings under
Section 1060 of Code and the regulations thereunder,
the Seller and the Buyer will, within one hundred-
twenty (120) days following the Closing Date, agree to
allocate the Purchase Price among the Assets and set
forth the same in a letter agreement between them. The
Seller and the Buyer each agree to report the federal,
state and local income and other Tax consequences of
the transactions contemplated herein, and in particular
to report the information required by Section 1060(b)
of the Code, in a manner consistent with such
allocation. The Seller and the Buyer agree that each
will furnish the other a copy of Form 8594 (Asset
Acquisition Statement under Section 1060) as filed with
the Internal Revenue Service by such party or any
affiliate thereof within 30 days of the filing of such
form with the Internal Revenue Service.
(k) Adjustments to the Purchase Price. The
Purchase Price shall be increased or decreased by the
following amounts: (a) capital expenditures or
acquisitions or construction of fixed assets agreed to
by the Buyer in accordance with Section 4 (d) (viii);
(b) if a positive number increased, and if a negative
number decreased, by the amount of revenues less Taxes
(to the extent such Taxes are the responsibility of the
Buyer under this Agreement and have not previously been
paid by the Seller) and expenses arising out of,
resulting from or relating to the Assets (to the extent
such expenses are the responsibility of the Buyer under
this Agreement and have not previously been paid by the
Seller) from the Effective Time to the Closing Date as
agreed in writing by the Seller and the Buyer on or
prior to the Closing and (c) any other amount provided
for in this Agreement or agreed upon in writing by the
Buyer and the Seller.
3. Representations and Warranties Concerning the
Transaction.
(a) Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer that the
statements contained in this Section 3(a) are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(a)), except as set forth in
SCHEDULE 3(a) attached hereto.
(i) Organization of the Seller. The Seller
is a corporation duly organized, validly existing and
in good standing under the laws of the state of
Delaware.
(ii) Authorization of Transaction. The
Seller has full power and authority (including full
corporate power and authority) to execute and deliver
this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable
in accordance with its terms and conditions, subject,
however, to the effects of bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally, and to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The
Seller need not give any notice to, make any filing
with or obtain any authorization, consent or approval
of, any Governmental Authority in order to consummate
the transactions contemplated by this Agreement, except
for the filings required under the Xxxx-Xxxxx-Xxxxxx
Act and approvals of or filings with the Oklahoma
Corporation Commission and the Texas Railroad
Commission.
(iii) Noncontravention. Except for the
approvals and filings specified in Section 3(a)(ii) or
as set forth in SCHEDULE 3(a)(iii), neither the
execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling,
charge or other restriction of any Governmental
Authority to which the Seller is subject or any
provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default
under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or
cancel, or require any notice under any agreement,
contract, lease, license, instrument or other
arrangement to which the Seller is a party or by which
it is bound or to which any of its assets is subject,
except for such violations, defaults, breaches or other
occurrences that do not, individually or in the
aggregate, have a material adverse effect on the
ability of the Seller to consummate the transactions
contemplated by this Agreement.
(iv) Brokers' Fees. The Seller has no
liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
(v) Buyer's Breach of Representation or
Warranty. To the Seller's Knowledge as of the date of
this Agreement, there is no fact or circumstance that
would cause the Buyer to be in material breach of any
representation or warranty set forth in this Agreement.
(b) Representations and Warranties of the Buyer. The
Buyer represents and warrants to the Seller that the statements
contained in this Section 3(b) are correct and complete as of the
date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section 3(b)), except as set forth in SCHEDULE 3(b) attached
hereto.
(i) Organization of the Buyer. The Buyer is
a corporation duly organized, validly existing, and in
good standing under the laws of the state of Delaware.
(ii) Authorization of Transaction. The Buyer
has full power and authority (including full corporate
power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in
accordance with its terms and conditions, subject,
however, to the effects of bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The
Buyer need not give any notice to, make any filing with
or obtain any authorization, consent or approval of any
Governmental Authority in order to consummate the
transactions contemplated by this Agreement, except for
the approvals and filings specified in Section
3(a)(ii).
(iii) Noncontravention. Except for the
approvals and filings specified in Section 3(a)(ii),
neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any Governmental
Authority to which the Buyer is subject or any
provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default
under, result in the acceleration of, create in any
Party the right to accelerate, terminate, modify or
cancel, or require any notice under any agreement,
contract, lease, license, instrument or other
arrangement to which the Buyer is a party or by which
it is bound or to which any of its assets is subject,
except for such violations, defaults, breaches or other
occurrences that do not, individually or in the
aggregate, have a material adverse effect on the
ability of the Buyer to consummate the transactions
contemplated by this Agreement.
(iv) Brokers' Fees. The Buyer has no
liability or obligation to pay any fees or commissions
to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which
the Seller could become liable or obligated.
(v) Financing. Buyer has sufficient cash,
available lines of credit or other sources of
immediately available funds (excluding financing tied
specifically to or secured primarily by the Assets) to
enable it to make payment of the Purchase Price at
Closing.
(vi) Seller's Breach of Representation or
Warranty. To the Buyer's Knowledge as of the date of
this Agreement, there is no fact or circumstance that
would cause the Seller to be in material breach of any
representation or warranty set forth in this Agreement.
4. Representations and Warranties Concerning the
Assets. The Seller represents and warrants to the Buyer that the
statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in SCHEDULE 4.
(a) Noncontravention. Except for the approvals
and filings specified in Section 3(a)(ii) or as set forth in
SCHEDULE 4(a), neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any Governmental Authority to which any
Asset is subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or
cancel, or require any notice or trigger any rights to payment or
other compensation under any agreement, contract, lease, license,
instrument or other arrangement to which any Asset is subject (or
result in the imposition of any Encumbrance upon any of the
Assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, right to payment or other compensation, or
Encumbrance would not have a Material Adverse Effect, or
materially adversely affect the ability of the Seller to
consummate the transactions contemplated by this Agreement.
(b) Title to Assets; Condition. The Seller owns
good title to all real property included in the Assets, and owns
good title or (in the case of leases and contractual rights) a
valid and subsisting contractual right to its interest in, all of
the other assets included in the Assets, free and clear of all
Encumbrances, except for (1) Permitted Encumbrances, and (2) the
Encumbrances disclosed in SCHEDULE 4(b). The tangible assets
included in the Assets are in good operating condition and
repair, ordinary wear and tear excepted, and are suitable for the
use for which such assets are currently used. Except as set
forth in Schedule 4(b) and except for the Excluded Assets, the
Assets include all assets or rights used primarily by the Seller
in connection with the business and operations conducted with the
Assets.
(c) Financial Statements. SCHEDULE 4(c) sets
forth the unaudited earnings before interest, taxes, depreciation
and amortization ("EBITDA") for the Assets for the period January
1, 1996 through June 30, 1998 (collectively, the "Financial
Data"). The Financial Data is derived from the books and records
of the Seller which were prepared in accordance with Generally
Accepted Accounting Principles, has been prepared consistent with
the past practices of the Seller in reporting such Financial
Data, and is true and correct and presents fairly the EBITDA in
all material respects.
(d) Material Change. Except as set forth in
SCHEDULE 4(d), since the date of this Agreement:
(i) there has not been any Material Adverse
Effect;
(ii) the Assets have been operated and
maintained in the Ordinary Course of Business;
(iii) there has not been any damage,
destruction or loss to any material portion of the
Assets, whether or not covered by insurance, except as
would not have a Material Adverse Effect;
(iv) there has been no purchase, sale or
lease of assets included in the Assets, except as would
not have a Material Adverse Effect;
(v) there has been no actual, pending or, to
the Knowledge of the Seller, threatened change
affecting any of the Assets with any customers,
licensors, suppliers, distributors or sales
representatives, except such as has not had a Material
Adverse Effect;
(vi) there has been no contract or
commitment entered into outside the Ordinary Course of
Business;
(vii) there has been no contract which
grants to a Person a preferential right to purchase any
of the Assets;
(viii) there has been no contract or
commitment for capital expenditures or the acquisition
or construction of fixed assets for which the Buyer
shall or may have responsibility after the Closing,
except as agreed to in writing by the Buyer (and where
the Buyer agreed to a capital expenditure or
acquisition or construction of fixed assets in writing,
the Purchase Price shall be adjusted in the amount
agreed to in that writing); and
(ix) there is no contract, commitment or
agreement to do any of the foregoing, except as
expressly permitted hereby.
(e) Legal Compliance. The Seller (with respect
to the Assets) has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except
where the failure to comply would not have a Material Adverse
Effect.
(f) Tax Matters. Except as set forth in SCHEDULE
4(f),
(i) The Seller (with respect to the Assets)
has filed all Tax Returns due that it was required to
file. All Taxes owed by the Seller (with respect to
the Assets) shown on any such Tax Return have been
paid.
(ii) There is no material dispute or claim
concerning any Tax liability of the Seller (with
respect to the Assets) either (A) claimed or raised by
any authority in writing or (B) as to which the Seller
has Knowledge.
(g) Contracts and Commitments. SCHEDULE 4(g)
includes a list of all material contracts and commitments
(including, without limitation, any contract, lease, agreement or
commitment, written or oral, providing for receipt or payment,
contingent or otherwise, of Twenty Five Thousand Dollars
($25,000.00) or more or which may not be terminated without
payment or penalty, or restricting the ability of the owner of
the Assets to engage in any line of business in any geographic
area, or containing any indemnity obligation, or relating to
indebtedness or guarantee obligations) which are included in the
Assets, and each such contract is in full force and effect,
except where the failure to be in full force and effect would not
have a Material Adverse Effect. The Seller has performed all
material obligations required to be performed by it to date under
the contracts, and is not in default under any material
obligation of any such contracts, except when such default would
not have a Material Adverse Affect. To the Knowledge of the
Seller, no other party to any contract is in default thereunder.
(h) Litigation. SCHEDULE 4(h) sets forth each
instance in which any of the Assets (i) is subject to any
outstanding injunction, judgment, order, decree or ruling or (ii)
is the subject of any action, suit, proceeding, hearing or
investigation of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction, or is the subject of any pending or, to the
Knowledge of the Seller, threatened claim, demand or notice of
violation or liability from any party, except where any of the
foregoing would not have a Material Adverse Effect.
(i) Environmental Matters. Except as set forth
in SCHEDULE 4(i),
(i) The Seller (with respect to the Assets)
is and has been in compliance with all applicable
federal, state and local laws (including common law),
ordinances, orders, agreements, decisions, orders,
rules and regulations relating to protection or
enhancement of human health or the environment
including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. section 9601, et seq.,
the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. section 6901, et seq., the Clean Air
Act, as amended, 42 U.S.C. section 7401, et seq., the
Federal Water Pollution Control Act, as amended, 33
U.S.C. section 1251, et seq., and the Oil Pollution Act
of 1990, 33 U.S.C. section 2701, et seq. (collectively,
the "Environmental Laws" and individually an
"Environmental Law"), except for such instances of
noncompliance that individually or in the aggregate do
not have a Material Adverse Effect.
(ii) The Seller (with respect to the Assets)
has obtained all permits, licenses, franchises,
authorities, consents and approvals, and has made all
filings and maintained all material information,
documentation, and records, as necessary under
applicable Environmental Laws for operating the
business conducted with the Assets as it is presently
conducted, and all such permits, licenses, franchises,
authorities, consents, approvals, and filings remain in
full force and effect, except for such matters that
individually or in the aggregate do not have a Material
Adverse Effect.
(iii) There are no pending or, to the
Seller's Knowledge, threatened claims, demands,
actions, administrative proceedings, lawsuits or
investigations against the Seller (with respect to the
Assets), and the Seller (with respect to the Assets) is
not subject to any injunction, judgment, order, decree
or ruling under any Environmental Laws.
(iv) None of the real property included in
the Assets and, to the Seller's Knowledge, no off-site
location used for the treatment, storage or disposal of
waste from any Asset, is: (A) listed on the National
Priorities List or any similar state list of sites
requiring remedial action; (B) to the Knowledge of the
Seller, being considered for possible inclusion on the
National Priorities List or on any such similar state
list; or (C) to the Knowledge of the Seller, the
subject of any action or investigation that may lead to
claims under any Environmental Law.
(v) No part of any of the real property
included in the Assets is now being used, or has been
used by the Seller or its Affiliates or, to the
Knowledge of the Seller, by any third party, as a
landfill, dump or other disposal area for Hazardous
Substances.
(vi) The Seller has not received any notice
or other communication that it (with respect to the
Assets) is or may be a potentially responsible party or
otherwise liable under any Environmental Law in
connection with any site actually or allegedly
containing or used for the treatment, storage or
disposal of Hazardous Substances.
The Seller makes no representation or warranty
regarding any compliance or failure to comply with, or any actual
or contingent liability under, any Environmental Law, except as
expressly set forth in this Section 4(i), nor does the Seller
make any representation or warranty in this Section 4(i) with
respect to Taxes.
(j) Permits. Except as set forth in SCHEDULE 4(j),
the Seller owns or holds all franchises, licenses, permits,
consents, approvals and authorizations of all Governmental
Authorities necessary for the conduct of the business and
operations conducted with the Assets (collectively, the
"Permits"), except for Permits whose absence would not have a
Material Adverse Effect. Each Permit is in full force and
effect, and the Seller is in compliance with all of its
obligations with respect to each Permit, except where the failure
to be in full force and effect or to be in compliance would not
have a Material Adverse Effect, and (ii) to the Knowledge of the
Seller, no event has occurred that permits, or upon the giving of
notice or the lapse of time or otherwise would permit, revocation
or termination of any Permit except such as in the aggregate
would not have a Material Adverse Effect.
(k) No "Take or Pay". Except as expressly set forth
in SCHEDULE 4(k), there are currently no arrangements under any
of the Gas Contracts by which the Buyer will be obligated by
virtue of a prepayment arrangement, a "take-or-pay" arrangement,
a production payment or any other arrangement, to sell, transport
or deliver hydrocarbons at some future time without then or
thereafter being entitled to receive full payment therefor, or to
make payment at some future time for hydrocarbons or the
transportation or the delivery of hydrocarbons purchased or
transported prior to the date of this Agreement.
(l) Pipeline Rights-of-Way. Except as expressly set
forth in SCHEDULE 4(l), the Seller has not received written
notice from any third party and does not have Knowledge of any
deficiency in any Rights-of-Way with respect to the entire route
of all pipelines owned and used or held for use with respect to
the Assets. Other than sales or assignments to customers, the
Seller has not sold or assigned any Rights-of-Way, in whole or in
part, or any undivided interest therein to any party whatsoever,
except as expressly disclosed in SCHEDULE 4(l).
(m) Tariffs. Except as expressly set forth in
SCHEDULE 4(m), to the extent that the operations with respect to
the Assets are subject to a tariff approved by the Federal Energy
Regulating Commission ("FERC"), those operations are in
compliance with each such tariff, except where such noncompliance
would not, individually or in the aggregate, have a Material
Adverse Effect. The Seller has no Knowledge of any refund claim
of any customers or any refund obligation imposed under an order
issued by FERC and, except as expressly set forth in SCHEDULE
4(m), has no Knowledge of any facts or circumstance which would
give rise to any such refund claim or refund obligation. Except
as expressly set forth in SCHEDULE 4(m), there are no customer
complaints pending or, to the Seller's Knowledge threatened,
before FERC or any other administrative or regulatory agency,
which would, either individually or in the aggregate, have a
Material Adverse Effect.
(n) No Partnership. The Assets are not subject to any
partnership or joint venture.
(o) Real Property. The Seller has not received
written notice from any third party of any threatened termination
or reduction of the current access to or from the real property
comprising a part of the Assets to existing roads or the sewer or
other utility services presently serving such real property. The
Seller has not received any written notice that its real property
is in violation of any zoning, laws, statutes, ordinances or
building or use restrictions applicable to such real property or
which prohibit the use of such real property for its current use
or uses with respect to the Assets.
(p) Patents, Copyright, Trademarks, Etc. Except as
expressly set forth in SCHEDULE 4(p), to the Seller's Knowledge,
the present conduct of business with respect to the Assets does
not conflict with, infringe upon or violate the patents,
trademarks, servicemarks, trade names, copyrights or trade
secrets or other intangible assets of any other Person, and the
Seller has not received any written notice of any infringement
thereof, except where such conflicts, infringements and
violations would not, either individually or in the aggregate,
have a Material Adverse Effect.
(q) No Leases. Except as expressly set forth in
SCHEDULE 4(q), all the equipment and real property (other than
Rights-of-Way, easements, licenses and permits) which is material
to the operation of the Assets is owned by the Seller and not
leased or rented.
(r) Public Utility Holding Company Act. The Seller is
not a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" "of a subsidiary company" of a
"holding company", in each case within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(s) Disclaimer of Representations and Warranties
Concerning Personal Property, Equipment, and Fixtures. The Buyer
acknowledges that (a) it has had and pursuant to this Agreement
will have before Closing access to the Seller and the Assets, and
the officers and employees of the Seller, and (b) in making the
decision to enter into this Agreement and consummate the
transactions contemplated hereby, the Buyer has relied solely on
its own independent investigation and upon the express
representations, warranties, covenants and agreements set forth
in this Agreement. Accordingly, the Buyer acknowledges that,
except as expressly set forth in this Agreement, the Seller has
not made, and THE SELLER MAKES NO AND DISCLAIMS ANY
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND
WHETHER BY COMMON LAW, STATUTE OR OTHERWISE, REGARDING (i) THE
QUALITY, CONDITION OR OPERABILITY OF ANY PERSONAL PROPERTY,
EQUIPMENT OR FIXTURES, (ii) ITS MERCHANTABILITY, (iii) ITS
FITNESS FOR ANY PARTICULAR PURPOSE, (iv) ITS CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS OR (v) AS TO WHETHER ANY ASSET IS YEAR
2000 COMPLIANT, AND ALL PERSONAL PROPERTY AND EQUIPMENT IS
DELIVERED "AS IS, WHERE IS" IN THE CONDITION IN WHICH THE SAME
EXISTS.
(t) Billing Under the Gas Contracts. The Seller
has invoiced for all services (including without limitation for
compression, treating, gathering, and processing services)
provided by the Seller in accordance with the terms and
conditions in the Gas Contracts, and has administered the Gas
Contracts in accordance with their terms and conditions, except
where the failure to do so would not have a Material Adverse
Effect.
5. Pre-Closing Covenants. The Parties agree as
follows with respect to the period between the date of this
Agreement and the Closing.
(a) General. Each Party will use its reasonable
best efforts to take all action and to do all things necessary,
proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth
in Section 7 below).
(b) Notices and Consents. The Seller will give
any notices to third parties, and will use its reasonable best
efforts to obtain the third party consents, necessary to effect
the assignment of all Gas Contracts, Rights-of-Way and other
Assets to the Buyer, including those consents listed on the
attached SCHEDULE 5(b)(i). If the Seller is unable to obtain any
necessary third party consents to the assignment of any Gas
Contracts or Rights-of-Way, then the Seller shall retain its
interest in such Gas Contract or Right-of-Way after the Closing
and the Buyer shall operate and maintain such Gas Contract or
Right-of-Way as the Seller's operator under an operating
agreement in the form of SCHEDULE 5(b)(ii). Each of the Parties
will give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents
and approvals of Governmental Authorities in connection with the
matters referred to in subsection 3(a)(ii), subsection 3(b)(ii),
and section 4(b) above. Without limiting the generality of the
foregoing, each of the Parties will file any notification, report
forms and related material that it may be required to file with
the Federal Trade Commission and the Antitrust Division of the
U.S. Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will
use its reasonable best efforts to obtain a waiver from the
applicable waiting period, and will make any further filings
pursuant thereto that may be necessary in connection therewith.
(c) Operation of Business. The Seller will not,
without the consent of the Buyer, engage in any practice, take
any action or enter into any transaction with respect to the
Assets outside the Ordinary Course of Business. Without limiting
the generality of the foregoing, the Seller will not, without the
consent of the Buyer, except as expressly contemplated by this
Agreement or as contemplated by SCHEDULE 5(c), do any of the
following with respect to the Assets:
(i) cause or allow any of the Assets to
become subject to an Encumbrance, except for Permitted
Encumbrances;
(ii) (A) acquire (including, without
limitation, by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other
business organization or any division thereof or any
material amount of assets in the Ordinary Course of
Business; (B) sell, lease or otherwise dispose of any
property or assets, other than sales of goods or
services in the Ordinary Course of Business; or (C)
enter into or amend a contract, agreement, commitment
or arrangement with respect to any matter set forth in
this paragraph (ii); or
(iii) amend in any material respect any
contract or agreement relating to the Assets, or
terminate any such contract or agreement before the
expiration of the term thereof.
(d) Full Access. The Seller will permit
representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the
normal business operations of the Seller, to all premises,
properties, personnel, books, records (including tax records),
contracts and documents of or pertaining to the Assets. Any
information obtained by the Buyer, its employees,
representatives, consultants, attorneys, agents, lenders and
other advisors under this Section 5(d) shall be subject to the
confidentiality and use restrictions contained in the
Confidentiality Agreement.
(e) Notice of Developments. Each Party will give
prompt written notice to the other of any material adverse
development which would result in the failure to any condition to
Closing set forth in Section 7 hereof. No disclosure by any
Party pursuant to this subsection 5(e), however, shall be deemed
to amend or supplement any Schedule hereto or to prevent or cure
any misrepresentation or breach of warranty.
(f) Casualty Loss. If, prior to the Closing, any
portion of the Assets have been or are damaged or destroyed by
fire, flood, storm or other casualty or shall be taken by
condemnation or under the right of eminent domain (all of which
are herein called "Casualty Loss"), and the Casualty Loss does
not have a Material Adverse Effect, then the Buyer shall bear the
risk of loss, provided, however, that the Seller shall, at the
Closing, pay by means of an adjustment to the Purchase Price to
the Buyer all sums actually received by the Seller (net of actual
expenses incurred by the Seller in connection with such sums
received) from persons or Governmental Authorities by reason of
the damage, destruction or taking of such assets and shall
assign, transfer and set over unto the Buyer all of the right,
title and interest of the Seller in and to any unpaid proceeds or
other payments from third parties (net of any expenses actually
incurred by the Seller in connection with such proceeds or
payments) arising out of such destruction or taking, and all
claims and causes of action with respect to such destruction or
taking; further, provided, however, if the Casualty Loss has a
Material Adverse Effect and such Assets are not repaired or
replaced and the business operation restored to its original
state by the Seller prior to Closing, either the Buyer or the
Seller shall have the right to terminate this Agreement unless
the Parties mutually agree upon an appropriate adjustment to the
Purchase Price. Prior to the Closing, the Seller shall not
voluntarily compromise, settle or adjust any amount payable by
reason of any Casualty Loss which would be assigned to the Buyer
pursuant to the foregoing provisions of this Section 5(f).
6. Post-Closing Covenants. The Parties agree as
follows:
(a) General. In case at any time after the
Closing any further action is necessary to carry out the purposes
of this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification
therefor under Section 8 below).
(b) Litigation Support. In the event and for so
long as any Party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction on or before the Closing Date involving any Asset,
the other Party shall cooperate with the contesting or defending
Party and its counsel in the defense or contest, make available
its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the defense
or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 8 below).
(c) Employee Matters.
(i) Within five (5) business days after the
execution of this Agreement ("Interview Period"), the Buyer
shall have the right to interview the employees listed on
SCHEDULE 6(c). On or before the fifth (5th) business day
after the Interview Period, the Buyer shall deliver to the
Seller a list of any such employees ("Employees") that the
Buyer desires to make an offer of employment. At the
Closing, the Buyer shall make offers of employment to each
Employee at salaries, wages and benefits that are in the
aggregate comparable withat least as great as the salaries,
wages and benefits as paid by the Seller and its
subsidiaries on the Closing Date. The Buyer shall (i) waive
any preexisting condition limitations applicable to the
Employees and any covered dependents under the group medical
plan of the Buyer or its Affiliates, (ii) ensure that
Employees are given full credit for all copayments and
deductibles incurred by such Employees and covered
dependents under the applicable group medical plan of the
Seller and its subsidiaries for the 1998 plan year, and
(iii) cause any such plan that is an Employee Pension
Benefit Plan and that is intended to be qualified under
Section 401 of the Code to credit Employees for
participation and vesting purposes only under such plan for
their period of employment with the Seller and its
subsidiaries and their predecessors to the extent such
predecessor employment was recognized by any tax-qualified
pension plan of the Seller and its subsidiaries and credit
Employees for their period of employment with the Seller and
its subsidiaries for purposes of participation or accruals
under any vacation, sick leave or other service-based plan
or policy (other than any severance or pension plan or
policy) of the Buyer or its Affiliates.
(ii) The Buyer agrees that, if any Employee
who accepts employment with the Buyer is terminated from
employment by the Buyer on or after the Closing Date but on
or before the first anniversary thereof for any reason other
than cause, or is required to transfer to a job location
that is more than 50 miles from his or her current job
location or to take a reduction in salary, wages or
benefits, but refuses such transfer or reduction and
terminates his or her employment with the Buyer, the Buyer
shall provide the Employee with (A) a lump sum cash
severance payment equal to the severance to which such
Employee would have been entitled under the severance policy
of the Seller attached as SCHEDULE 6(c)(ii) based upon such
Employee's years of service and salary with the Seller and
its subsidiaries and their predecessors to the extent such
predecessor employment is recognized by such severance
policy, and (B) continued health insurance coverage for the
Employee and his or her dependents under Part 6 of Title I
of ERISA (COBRA) at a cost to the Employee that is not in
excess of the cost of coverage for active employees of the
Buyer or its Affiliates who were formerly employed by the
Seller or its Affiliates. For purposes of this subparagraph
(ii), termination shall be for cause if it is for conduct
such as fraud, embezzlement, theft, commission of a felony
or any other criminal act against the Buyer or its
Affiliates or deliberate and substantial disregard of
assigned duties and responsibilities.
(iii) As of the Closing Date, the
Buyer shall make available (or cause one of its Affiliates
to make available) a defined contribution plan for the
benefit of the Employees (" Buyer DC Plan"). As promptly as
practicable after the Closing Date, the Seller shall cause
the trustee of the El Paso Energy Corporation Retirement
Savings Plan ("Seller DC Plan") to transfer to the trustee
of the Buyer DC Plan, and the Buyer shall cause the trustee
of the Buyer DC Plan to accept, the account balances of each
Employee with respect to whom the Seller DC Plan maintains
an account as of the close of business on the Closing Date.
Such transfers shall be equal to the value of the
transferred account balances as of the close of business on
the day preceding the date of transfer and shall be in cash
(or, in the case of participant loans granted prior to the
Closing Date, if any, such loans and promissory notes or
other documents evidencing such loans). The Buyer DC Plan
shall protect, maintain and continue any rights or features
of the Seller DC Plan that, pursuant to the provisions of
Section 411(d)(6) of the Code, are required to be continued
for the benefit of the Employees, but only to the extent
required by Section 411(d)(6).
(d) Replacement Bonds. After Closing, the Buyer
shall promptly replace bonds as set forth in SCHEDULE 6 (d)
posted by the Seller with the Minerals Management Service with
respect to the Assets.
(e) Transition. The Seller shall, for a period
of not less than 3 months and not more than 6 months after the
Closing Date, provide to the Buyer transition services pursuant
to the Transition Agreement attached as SCHEDULE 6(e).
(f) Delivery and Retention of Records. On or
promptly after the Closing Date, the Seller will deliver or cause
to be delivered to the Buyer all files, records, information and
data relating to the Assets (other than Tax Returns, Tax
workpapers and other Tax records and information) that are in the
possession or control of the Seller and its subsidiaries
(together with all of the Seller's and its subsidiaries'
contractual rights to request other such files, records,
information and data from any third party) (the "Records"). The
Buyer agrees to (i) hold the Records and not to destroy or
dispose of any thereof for a period of six years from the Closing
Date or such longer time as may be required by law, provided
that, if it desires to destroy or dispose of such Records during
such period, it will first offer in writing at least 60 days
before such destruction or disposition to surrender them to the
Seller and if the Seller does not accept such offer within 20
days after receipt of such offer, the Buyer may take such action
and (ii) following the Closing Date to afford the Seller, its
accountants and counsel, during normal business hours, upon
reasonable request, at any time, full access to the Records and
to the Buyer's employees to the extent that such access may be
requested for any legitimate purpose at no cost to the Seller
(other than for reasonable out-of-pocket expenses); provided,
however, that such access will not be construed to require the
disclosure of Records that would cause the waiver of any attorney-
client, work product or like privilege; provided, further, that
in the event of any litigation nothing herein shall limit either
Party's rights of discovery under applicable law. The Buyer
shall have the same rights, and the Seller shall have the same
obligations, as are set forth in this Section with respect to any
copies of the Records of the Seller pertaining to the Assets that
are retained by the Seller, with the exception of Tax Returns,
Tax workpapers and other Tax records and information retained by
the Seller, provided that such access will not be construed to
require the disclosure of Records that would cause the waiver of
any attorney-client, work product or like privilege.
(g) Mail; Payments. (a) The Seller hereby
authorizes the Buyer from and after the Closing to receive and
open all mail and other communications relating to the business
conducted with the Assets, and to act with respect to such
communications in such manner as the Buyer may elect to the
extent that such communications relate to the rights and
obligations of the Buyer with respect to the Assets. If any
communication does not relate exclusively to the rights and
obligations of the Buyer with respect to the Assets, the Buyer
shall forward the original or a copy of such communication
promptly to the Seller. The Buyer shall promptly deliver to the
Seller any moneys, checks or other instruments of payment
received by the Buyer to which the Seller is entitled hereunder.
(b) The Seller shall promptly deliver to the
Buyer the original or a copy of any mail or other communication
received by it after the Closing pertaining to the Assets. The
Seller shall promptly deliver to the Buyer any moneys, checks or
other instruments of payment received by the Seller to which the
Buyer is entitled hereunder.
(h) Certificate of Non-foreign Status. On or
prior to the Closing Date, the Seller shall provide the Buyer
with a properly executed certificate of non-foreign status in
accordance with Treas. Reg. 1.1445-2(b) (a "FIRPTA Certificate")
certifying under penalties of perjury that the Seller is not a
foreign person within the meaning of Section 1445(f) of the Code
and Treas. Reg. 1.1445-2(b). Provided the Buyer is otherwise
entitled to rely on such Certificate, the Buyer shall not
withhold a portion of the Purchase Price under Section 1445 of
the Code. The Buyer and the Seller acknowledge that unless the
Seller provides the Buyer with such FIRPTA Certificate in the
time and manner described above, the Buyer shall be obligated to
withhold a portion of the Purchase Price in the amount and manner
required under Section 1445 of the Code and the applicable
Treasury Regulations.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The
obligation of the Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set
forth in Section 3(a) and Section 4 above shall be true
and correct in all material respects at and as of the
Closing Date, except for such failures to be true and
correct as do not, in the aggregate, result in Adverse
Consequences exceeding One Million Dollars
($1,000,000.00);
(ii) the Seller shall have performed and
complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) there shall not be any injunction,
judgment, order, decree or ruling in effect preventing
consummation of the transactions contemplated by this
Agreement;
(iv) the Seller shall have delivered to the
Buyer a certificate to the effect that each of the
conditions specified above in subsections 7(a)(i)-(iii)
is satisfied in all respects;
(v) all applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated and the
Parties shall have received all other authorizations,
consents, and approvals of Governmental Authorities
referred to in subsection 3(a)(ii), subsection
3(b)(iii), and Section 4(b) above (other than Customary
Post-Closing Consents) or in SCHEDULE 3(a)(ii) or
SCHEDULE 4(b) and consents, approvals and waivers of
third parties referred to in SCHEDULE 5(b)(i); and
(vi) all actions to be taken by the Seller in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this
Section 7(a) if it executes a writing so stating at or before the
Closing.
(b) Conditions to Obligation of the Seller. The
obligation of the Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set
forth in Section 3(b) above shall be true and correct
in all material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and
complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) there shall not be any injunction,
judgment, order, decree or ruling in effect preventing
consummation of the transactions contemplated by this
Agreement;
(iv) the Buyer shall have delivered to the
Seller a certificate to the effect that each of the
conditions specified above in subsections 7(b)(i)-(iii)
is satisfied in all respects;
(v) all applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated and the
Parties shall have received all other authorizations,
consents, and approvals of Governmental Authorities
referred to in subsection 3(a)(ii), subsection
3(b)(ii), and Section 4(b) above (other than Customary
Post-Closing Consents) and consents, approvals and
waivers of third parties referred to in SCHEDULE
5(b)(i); and
(vi) all actions to be taken by the Buyer in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 7(b)
if it executes a writing so stating at or before the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations, Warranties and
Certain Covenants. All of the representations and warranties of
the Seller contained in Sections 3 and 4 above (other than
Sections 4(f) and 4(t)) shall survive the Closing hereunder and
continue in full force and effect for a period of eighteen (18)
months after the Closing Date; and (ii) the representations and
warranties in Sections 4(f) and 4(t) shall survive the Closing
indefinitely with respect to any given claim that would
constitute a breach of such representation or warranty. The
representations and warranties of the Buyer contained in Section
3 above shall survive the Closing and continue in full force for
a period of eighteen (18) months after the Closing Date. The
covenants contained in this Agreement to be performed after the
Closing shall survive the Closing indefinitely.
(b) Indemnification Provisions for Benefit of the
Buyer.
(i) In the event the Seller breaches any of
its representations, warranties and covenants (it being
understood that for purposes of any claim under this
Section 8 for breach of any representation or warranty,
any representation or warranty which is qualified by
materiality, Material Adverse Effect or words of
similar import shall be deemed not to include any such
qualification) contained herein (other than the
covenants in Section 2(d) above and the representations
and warranties in Section 3(a) above) and, if there is
an applicable survival period pursuant to Section 8(a)
above, provided that the Buyer makes a written claim
for indemnification against the Seller pursuant to
Section 11(f) below within such survival period, then
the Seller agrees to indemnify the Buyer from and
against any Adverse Consequences to the extent in
excess of Ten Thousand Dollars ($10,000.00) per event
that are caused proximately by the breach and suffered
by the Buyer through and after the date of the claim
for indemnification; provided, that the Seller shall
not have any obligation to indemnify the Buyer from and
against any such Adverse Consequences caused by the
breach of any representation or warranty of the Seller
contained in Section 4 above (A) until the Buyer has
suffered Adverse Consequences by reason of all such
breaches in excess of a One Million Dollar
($1,000,000.00) aggregate deductible (after which point
the Seller will be obligated only to indemnify the
Buyer from and against further such Adverse
Consequences) or thereafter (B) to the extent the
Adverse Consequences the Buyer has suffered by reason
of all such breaches exceeds a Six Million Dollars
($6,000,000.00) aggregate ceiling (after which point
the Seller will have no obligation to indemnify the
Buyer from and against further such Adverse
Consequences).
(ii) In the event the Seller breaches any of
its representations and warranties in Section 3(a)
above, and, if there is an applicable survival period
pursuant to Section 8(a) above, provided that the Buyer
makes a written claim for indemnification against the
Seller pursuant to Section 11(f) below within such
survival period, then the Seller agrees to indemnify
the Buyer from and against the entirety of any Adverse
Consequences caused proximately by the breach and
suffered by the Buyer through and after the date of the
claim for indemnification.
(iii) Except for the rights of
indemnification provided in this Section 8 and in
Section 11(o), the Buyer hereby waives any claim or
cause of action pursuant to common or statutory law or
otherwise against the Seller or its Affiliates
regarding obligations and liabilities of any nature
whatsoever that are attributable to the Assets, whether
arising before or after the Closing Date.
(c) Indemnification Provisions for Benefit of the
Seller. In the event the Buyer breaches any of its
representations, warranties and covenants contained herein (other
than the covenants in Section 2(c) above), and, if there is an
applicable survival period pursuant to Section 8(a) above,
provided that the Seller makes a written claim for
indemnification against the Buyer pursuant to Section 11(f) below
within such survival period, then the Buyer agrees to indemnify
the Seller from and against the entirety of any Adverse
Consequences caused proximately by the breach and suffered by the
Seller through and after the date of the claim for
indemnification.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any
Party (the "Indemnified Party") with respect to any
matter (a "Third Party Claim") that may give rise to a
claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly (and in any event
within five business days after receiving notice of the
Third Party Claim) notify the Indemnifying Party
thereof in writing.
(ii) The Indemnifying Party will have the
right to assume and thereafter conduct the defense of
the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the
payment of money damages and does not impose an
injunction or other equitable relief upon the
Indemnified Party.
(iii) Unless and until the Indemnifying
Party assumes the defense of the Third Party Claim as
provided in subsection 8(d)(ii) above, however, the
Indemnified Party may defend against the Third Party
Claim in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying
Party which consent shall not be withheld unreasonably.
(e) Determination of Amount of Adverse
Consequences. The Adverse Consequences giving rise to any
indemnification obligation hereunder shall be limited to the
actual loss suffered by the Indemnified Party (i.e., reduced by
any insurance proceeds or other payment or recoupment received,
realized or retained by the Indemnified Party as a result of the
events giving rise to the claim for indemnification net of any
expenses related to the receipt of such proceeds, payment or
recoupment, including retrospective premium adjustments, if any),
and any reduction in federal, state, or local income or franchise
tax liability of the Indemnified Party (or the affiliated group
of which it is a member) occasioned by such loss or damage, but
shall include an amount equal to any increase in federal, state
or local income or franchise tax liability of the Indemnified
Party (or the affiliated group of which it is a member)
occasioned by the indemnity payment. The amount of the actual
loss and the amount of the indemnity payment shall be computed by
taking into account the timing of the loss or payment, as
applicable, using a 10 percent interest or discount rate, as
appropriate. Upon the request of the Indemnifying Party, the
Indemnified Party shall provide the Indemnifying Party with
information sufficient to allow the Indemnifying Party to
calculate the amount of the indemnity payment in accordance with
this Section 8(e).
(f) Special Indemnification Provisions.
(i) Notwithstanding any terms and provisions
of this Agreement to the contrary, the Seller hereby
covenants and agrees to protect, defend, indemnify and
save the Buyer, its successors and assigns, harmless
from and against any and all claims, demands, actions,
causes of action, arbitration proceedings, judgments,
awards, attorneys' fees and costs (including costs of
investigation and defense), and all other costs and
expenses incurred in connection with or arising out of
all breaches, if any, by the Seller of its covenants to
the Buyer under Section 2(d) above.
(ii) Notwithstanding any terms and provisions
of this Agreement to the contrary, the Buyer hereby
covenants and agrees to protect, defend, indemnify and
save the Seller, its successors and assigns, harmless
from and against any and all claims, demands, actions,
causes of action, arbitration proceedings, judgments,
awards, attorneys' fees and costs (including costs of
investigation and defense), and all other costs and
expenses incurred in connection with or arising out of
all breaches, if any, by the Buyer of its covenants to
the Seller under Section 2(c) above.
9. Termination.
(a) Termination of Agreement. The Parties may
terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate
this Agreement by mutual written consent at any time
before the Closing;
(ii) the Buyer may terminate this Agreement
by giving written notice to the Seller at any time
before Closing (A) in the event the Seller has breached
any representation, warranty or covenant contained in
this Agreement in any material respect, the Buyer has
notified the Seller of the breach, and the breach has
continued without cure for a period of 10 days after
the notice of breach or (B) if the Closing shall not
have occurred on or before October 31, 1998 (unless the
failure results primarily from the Buyer itself
breaching any representation, warranty or covenant
contained in this Agreement);
(iii) the Seller may terminate this
Agreement by giving written notice to the Buyer at any
time before the Closing (A) in the event the Buyer has
breached any representation, warranty or covenant
contained in this Agreement in any material respect,
the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of
10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before
October 31, 1998 (unless the failure results primarily
from the Seller itself breaching any representation,
warranty or covenant contained in this Agreement); and
(iv) either the Seller or the Buyer may
terminate this Agreement under the circumstances
provided in Section 5(f).
(b) Effect of Termination. If any Party
terminates this Agreement pursuant to Section 9(a) above, all
rights and obligations of the Parties hereunder shall terminate
without any liability of either Party to the other Party (except
for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in the
Confidentiality Agreement shall survive termination.
10. Prohibited Activities of the Seller.
In order to protect the goodwill and business interests
of the Buyer as to its utilization of the Assets for a period of
eighteen (18) months following the Closing, the Seller covenants
and agrees that it and its Affiliates, now or hereafter existing,
will not, acting alone or in conjunction with others, directly or
indirectly:
(a) connect or attempt to connect any xxxxx (and the
gas delivered from such xxxxx) that are connected to the Assets
as of the Closing Date to any other pipeline system of the Seller
or its Affiliates; provided, that if the Seller, or any Affiliate
of the Seller, acquires a pipeline or pipelines in connection
with the acquisition of other pipeline assets or a pipeline
company, which pipeline(s) or pipeline company at the time of
acquisition is connected to the Assets or serves any of the
present customers of the Assets, then the Seller or its
Affiliate, as applicable, can conduct business and compete in the
ordinary course of business without being in violation of this
covenant;
(b) directly or indirectly, request or advise any
party to any Gas Contract to withdraw, curtail or cancel any
service to or from the Buyer under the terms of such contract;
(c) aid, abet or otherwise assist any person, firm or
corporation seeking to interfere with the Buyer's relationship
with the parties to , or the term of, any Gas Contract.
11. Miscellaneous.
(a) Press Releases and Public Announcements. The
Parties may issue press releases upon the execution of this
Agreement, provided that each Party shall submit to the other
Party a copy of its intended press release not less that forty
eight (48) hours prior to the time of release. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement during the period after
the press release herein before mentioned and before the Closing
without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party before making
the disclosure).
(b) No Third Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors and permitted
assigns.
(c) Succession and Assignment. This Agreement
shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted
assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior
written approval of the other Party, except that the Buyer may
assign its rights hereunder to any wholly owned subsidiary of the
Buyer, provided that no such assignment shall relieve the Buyer
of any of its liabilities or obligations hereunder.
(d) Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original but
which together will constitute one and the same instrument.
(e) Headings. The section headings contained in
this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(f) Notices. All notices, requests, demands,
claims, and other communications hereunder will be in writing.
Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given two business days after it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Buyer: Midcoast Gas Services, Inc.
0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
If to the Seller: El Paso Field Services Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: President
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the
addresses set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by
the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic laws of
the state of Texas without giving effect to any choice or
conflict of law provision or rule (whether of the state of Texas
or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the state of Texas.
(h) Amendments and Waivers. No amendment of any
provision of this Agreement shall be valid unless the same shall
be in writing and signed by the Buyer and the Seller. No waiver
by any Party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(i) Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Transaction Expenses. Each of the Buyer and
the Seller will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and
the transactions contemplated hereby, except as provided in
paragraph (k) below.
(k) Certain Taxes. Notwithstanding anything in
this Agreement to the contrary, the Seller will file all
necessary Tax Returns and other documentation with respect to all
transfer, documentary, sales, use, stamp, registration and other
Taxes and fees in connection with this Agreement, and, if
required by applicable law, the Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax Returns and
other documentation. The Buyer will pay to the Seller, on or
before the date such payments are due from the Seller, any
transfer, documentary, sales, use, stamp, registration and other
Taxes and fees incurred in connection with this Agreement.
(l) Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any
federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) WAIVER OF CONSUMER RIGHTS. IT IS THE
INTENT OF THE PARTIES THAT THE BUYER'S RIGHTS AND REMEDIES WITH
RESPECT TO THIS TRANSACTION AND WITH RESPECT TO ALL ACTS OR
PRACTICES OF THE SELLER, PAST, PRESENT OR FUTURE, IN CONNECTION
WITH THIS TRANSACTION SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER
THAN THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION
ACT, TEX. BUS. & COM. CODE XXX. SECTION 17.41 ET SEQ. (XXXXXX
1987 AND SUPP. 1995) (THE "DTPA"). THE BUYER ACKNOWLEDGES,
REPRESENTS AND WARRANTS THAT IT IS NOT A CONSUMER AS DEFINED BY
THE DTPA BECAUSE (i) IT IS A CORPORATION THAT SEEKS TO ACQUIRE
THE ASSETS FOR COMMERCIAL OR BUSINESS USE AND (ii) IT HAS ASSETS
OF $25 MILLION OR MORE OR IS OWNED OR CONTROLLED BY A CORPORATION
OR ENTITY WITH ASSETS OF $25 MILLION OR MORE. IF THE BUYER IS
NONETHELESS DEEMED TO BE A CONSUMER AS DEFINED BY THE DTPA, IT
HEREBY WAIVES ITS RIGHTS UNDER THE DTPA, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION
WITH AN ATTORNEY OF THE BUYER'S OWN SELECTION, THE BUYER
VOLUNTARILY CONSENTS TO THIS WAIVER. THE BUYER ACKNOWLEDGES,
REPRESENTS AND WARRANTS THAT (i) IT IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION WITH THE SELLER; (ii) IT WAS
REPRESENTED BY LEGAL COUNSEL IN THIS TRANSACTION; AND (iii) IT
SELECTED ITS OWN LEGAL COUNSEL, WHICH WAS NOT DIRECTLY OR
INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED BY THE SELLER, A
COMPANY OR A SUBSIDIARY OR ANY AGENT THEREOF. THE BUYER
EXPRESSLY RECOGNIZES THAT THE PRICE FOR WHICH THE SELLER HAS
AGREED TO SELL THE ASSETS AND PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT HAS BEEN PREDICATED UPON THE INAPPLICABILITY OF THE
DTPA AND THE EFFECTIVENESS OF THIS WAIVER OF THE DTPA. THE BUYER
FURTHER RECOGNIZES THAT THE SELLER, IN DETERMINING TO ENTER INTO
THIS AGREEMENT, HAS EXPRESSLY RELIED ON THIS WAIVER AND THE
INAPPLICABILITY OF THE DTPA.
(o) Bulk Transfers. The Parties waive compliance
with the requirements of the bulk sales law of any jurisdiction
in connection with the sale of the Assets to the Buyer hereunder.
The Seller shall indemnify and hold harmless the Buyer and its
Affiliates against all Adverse Consequences which may be incurred
by the Buyer as a result of noncompliance with any such bulk
sales laws.
(p) ENTIRE AGREEMENT. THIS AGREEMENT (INCLUDING
THE DOCUMENTS REFERRED TO HEREIN) CONSTITUTES THE ENTIRE
AGREEMENT AMONG THE PARTIES AND SUPERSEDES ANY PRIOR
UNDERSTANDINGS, AGREEMENTS OR REPRESENTATIONS BY OR AMONG THE
PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY HAVE RELATED IN ANY
WAY TO THE SUBJECT MATTER HEREOF.
*****
IN WITNESS WHEREOF, the Parties hereto have executed
this Agreement as of the date first above written.
MIDCOAST GAS SERVICES, INC.
By:
Name: _______________________
Title:
EL PASO FIELD SERVICES COMPANY
By:
Name: Xxxxxx X. Xxxxxxxx
Title: President
