UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: September 26, 2000
Commission File Number 1-14323
ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0568219
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2727 North Loop West
Houston, Texas 77008
(Address of principal executive (Zip Code)
offices)
(713) 880-6500
(Registrant's telephone number, including area code)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 25, 2000, the Company announced that its 99% subsidiary
Operating Partnership, Enterprise Products Operating L.P., has executed a
definitive agreement to purchase Acadian Gas, LLC ("Acadian") from Coral Energy,
LLC, an affiliate of Shell Oil Company ("Coral"), for $226 million in cash,
inclusive of working capital. Coral owns approximately 21% of the equity
interests in the Company (including a 30% ownership interest in Enterprise
Products GP, LLC, the 1% General Partner of the Company and the 1.0101% General
Partner of the Operating Partnership). Two of the nine current directors of the
General Partner are nominees of Coral: (i) Curtis R. Frasier, President, Energy
Services of Coral and (ii) Stephen H. McVeigh, Manager of Production and
Surveillance for Shell Offshore, Inc.. Effective September 1, 2000, Coral's
third representative on the Board of Directors of the General Partner, Charles
R. Crisp, President and Chief Executive Officer of Coral resigned his position.
His replacement from Coral has not yet been named. The purchase price is based
on an arm's length transaction between the Operating Partnership and Coral with
the financing being provided by a drawdown on the Operating Partnership's
existing $350 Million Bank Credit Facility (a copy of which is filed as Exhibit
99.1 to the Company's Form 8-K/A-1 filed on October 27, 1999) and internally
generated funds (with the mix of debt versus internally generated funds to be
determined at closing).
The acquisition of Acadian integrates natural gas pipeline systems in South
Louisiana with the Operating Partnership's Gulf Coast natural gas processing and
natural gas liquid ("NGL") fractionation, pipeline and storage system. Acadian's
assets are comprised of the 438-mile Acadian, 577-mile Cypress and 27-mile
Evangeline natural gas pipeline systems, which together have over one billion
cubic feet ("Bcf") per day of capacity. These natural gas pipeline systems are
wholly-owned with the exception of the Evangeline system in which Acadian holds
an approximate 49.5% economic interest. The system includes a leased natural gas
storage facility at Napoleonville, Louisiana with 3.4 Bcf of capacity.
Acadian used this system to link natural gas supplies from onshore and
offshore Gulf of Mexico developments (encompassing offshore pipelines,
continental shelf and deepwater production) with local gas distribution
companies, electric generation and industrial customers, including those in the
Baton Rouge-New Orleans-Mississippi River corridor. In addition, the systems
have interconnects with twelve interstate pipelines and four intrastate
pipelines and a bi-directional interconnect with the largest U.S. natural gas
marketplace at the Henry Hub. The Operating Partnership intends to continue such
use of this system.
Completion of this transaction is subject to certain conditions,
including regulatory approvals. The purchase is expected to be completed in the
fourth quarter of 2000. A copy of the Company's press release announcing the
transaction and the Definitive Agreement are attached hereto as exhibits.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
Not applicable.
(b) Pro Forma financial information.
Not applicable.
(c) Exhibits.
10.1 Purchase and Sale Agreement by and between Coral Energy, LLC and
Enterprise Products Operating L.P. dated as of September 22, 2000
99.1 Press Release dated September 25, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTERPRISE PRODUCTS PARTNERS L.P.
By: Enterprise Products GP, LLC,
its general partner
Date: September 26, 2000 By: /s/ Michael J. Knesek
---------------------
Michael J. Knesek
Vice President, Controller, and
Principal Accounting Officer of
Enterprise Products GP, LLC
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
10.1 Purchase and Sale Agreement by and between Coral Energy, LLC and Enterprise
Products Operating L.P. dated as of September 22, 2000
99.1 Press Release dated September 25, 2000.
EXHIBIT 99.1
Enterprise Acquires Acadian Natural Gas Pipeline System
Houston, Texas (Monday, September 25, 2000) - Enterprise Products
Partners L.P. (NYSE: "EPD") today announced that its operating partnership has
executed a definitive agreement to purchase Acadian Gas, LLC from Coral Energy,
LLC, an affiliate of Shell Oil Company, for $226 million in cash, inclusive of
working capital. The acquisition of Acadian integrates one of the most extensive
and flexible natural gas pipeline systems in South Louisiana with Enterprise's
Gulf Coast natural gas processing and natural gas liquid ("NGL") fractionation,
pipeline and storage system.
Acadian's assets are comprised of the Acadian, Cypress and Evangeline
natural gas pipeline systems, which together include over 1,000 miles of
pipeline and have over one billion cubic feet ("Bcf") per day of capacity. The
system includes a leased natural gas storage facility at Napoleonville,
Louisiana with 3.4 Bcf of capacity.
These systems link growing supplies of natural gas from onshore
developments and, through receipts from offshore pipelines, continental shelf
and deepwater production to local gas distribution companies, electric
generation and industrial customers, including those in the Baton Rouge-New
Orleans-Mississippi River corridor. In addition, the systems have interconnects
with twelve interstate pipelines and four intrastate pipelines and a
bi-directional interconnect with the largest U.S. natural gas marketplace at the
Henry Hub.
"Acadian is a major and strategic investment for Enterprise," stated
O.S. "Dub" Andras, president and chief executive officer of Enterprise. "Acadian
is one of the best natural gas pipeline assets in Louisiana and has
long-standing relationships with high quality customers. The system has
excellent prospects for future growth and is well positioned to benefit from
increased natural gas production and demand."
"This acquisition is strategic because it expands our platform of
fee-based, midstream energy services to include natural gas transportation and
storage. We believe there will be many growth and investment opportunities in
natural gas and NGL infrastructure as producers respond to increasing demands
for natural gas to fuel power generation. Acadian provides us a foundation from
which to build and acquire additional natural gas pipeline assets. This segment
is very complementary and will bring additional value to our NGL asset base,"
continued Andras.
"This transaction will be immediately accretive to earnings and cash
flow," stated Andras.
Completion of this transaction is subject to certain conditions,
including regulatory approvals. The purchase is expected to be completed in the
fourth quarter of 2000.
Enterprise Products Partners L.P. is the second largest publicly
traded, midstream energy partnership with an enterprise value of approximately
$2.6 billion. Enterprise is a leading integrated provider of processing,
fractionation, storage, transportation and import/export terminalling services
to producers and consumers of natural gas liquids ("NGLs") and other liquid
hydrocarbons. The Company's assets are geographically focused on the United
States' Gulf Coast, which accounts for approximately 55 percent of domestic NGL
production and 75 percent of domestic NGL demand.
This press release includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 based on the
beliefs of the company, as well as assumptions made by, and information
currently available to, management. Although Enterprise believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct.
Contact: Randy Fowler, Vice President, Investor Relations, Enterprise Products
Partners L.P. (713) 880-6694, www.epplp.com -------------
EXHIBIT 10.1
------------
PURCHASE AND SALE AGREEMENT
by and between
CORAL ENERGY, LLC
AND
ENTERPRISE PRODUCTS OPERATING L.P.
Dated as of September 22, 2000
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND TERMS.........................................................1
1.01 Specific Definitions................................................1
1.02 General Definitions.................................................8
1.03 Construction and Interpretation.....................................9
ARTICLE II
CLOSING AND RELATED ITEMS.....................................................9
2.01 The Closing.........................................................9
2.02 The Transactions....................................................9
2.03 Other Closing Matters...............................................9
2.04 Post Closing Adjustments...........................................10
2.05 Adjustment of Consideration........................................11
2.06 Prorations of Expenses and Certain Property Taxes..................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AS TO SELLER........................12
3.01 Organization.......................................................12
3.02 Ownership of Company Interest......................................13
3.03 Validity and Enforceability........................................13
3.04 Approvals and Consents.............................................13
3.05 No Violation.......................................................13
3.06 Litigation.........................................................14
3.07 No Brokers.........................................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
AS TO THE COMPANY AND ITS SUBSIDIARIES....................................14
4.01 Organization.......................................................14
4.02 Capitalization.....................................................14
4.03 No Violation.......................................................15
4.04 Permits............................................................15
4.05 Compliance With Applicable Law.....................................16
4.06 Litigation.........................................................16
4.07 Taxes.............................................................16
4.08 Absence of Certain Changes.........................................17
4.09 Bank Accounts......................................................18
4.10 Material Contracts.................................................18
4.11 Intellectual Property Rights.......................................19
4.12 Employee Matters...................................................20
4.13 Title to Company Assets............................................20
4.14 Environmental Matters..............................................20
4.15 Financial Statements...............................................20
i
4.16 Sufficiency of Assets..............................................21
4.17 Pipeline Tariffs...................................................21
4.18 Hedging Transactions...............................................21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER..................................21
5.01 Organization.......................................................21
5.02 Authorization of Transaction Agreements............................21
5.03 Purchaser Consents.................................................21
5.04 Approvals..........................................................22
5.05 Litigation; Impairment.............................................22
5.06 Financing..........................................................22
5.07 Investment Intent..................................................22
5.08 No Brokers.........................................................23
ARTICLE VI
COVENANTS....................................................................23
6.01 Conduct of the Business Pending the Closing........................23
6.02 Access to Information..............................................25
6.03 Consents...........................................................26
6.04 Public Announcements...............................................26
6.05 Supplemental Disclosures...........................................26
6.06 Books and Records..................................................27
6.07 Removal of Tradenames..............................................27
6.08 Further Assurances.................................................27
6.09 Intercompany Indebtedness..........................................27
6.10 Collections........................................................28
6.11 Excluded Assets....................................................28
6.12 Surface Leases; Extension of Cavern Lease..........................28
6.13 Access to Financial Records........................................28
6.14 Obligations Under the Exxon Agreements.............................28
6.15 Termination of Right of First Refusal..............................28
6.16 Transaction Payments...............................................29
--------------------
ARTICLE VII
CONDITIONS TO CLOSING........................................................29
7.01 General Conditions.................................................29
7.02 Conditions to Obligations of Seller................................29
7.03 Conditions to Obligations of Purchaser.............................30
ARTICLE VIII
TERMINATION..................................................................30
8.01 Termination........................................................30
8.02 Effect of Termination..............................................31
ARTICLE IX
GENERAL PROVISIONS...........................................................32
ii
9.01 Expenses and Taxes; Tax Returns....................................32
9.02 Amendment..........................................................32
9.03 Waiver.............................................................32
9.04 Notices............................................................32
9.05 Headings...........................................................33
9.06 Applicable Law.....................................................34
9.07 No Third Party Rights..............................................34
9.08 Counterparts.......................................................34
9.09 Severability.......................................................34
9.10 Entire Agreement...................................................34
9.11 Arbitration; Waiver................................................34
9.12 Disclaimer of Other Representations and Warranties.................34
9.13 Fair Construction..................................................35
ARTICLE X
INDEMNIFICATION; SURVIVAL....................................................35
10.01 Indemnification by Purchaser.......................................35
10.02 Indemnification by Seller..........................................35
10.03 Indemnification Procedure..........................................36
10.04 Survival...........................................................37
10.05 Limitation on Claims...............................................38
iii
EXHIBITS
Exhibit A Assignment of Company Interest
Exhibit B Interim Services Agreement
Exhibit C Employee Matters Agreement
Exhibit D Arbitration Procedures
Exhibit E Pipeline Access Agreement
SCHEDULES
Schedule 1.01(a) Valuation Methodologies
Schedule 1.01(b) Seller's Knowledge
Schedule 1.01(c) Permitted Liens
Schedule 2.03 Hedging Transactions
Schedule 2.04(a)(i) Initial Working Capital
Schedule 2.04(a)(ii) Initial Inventory
Schedule 3.04 Required Consents
Schedule 3.06 Litigation
Schedule 3.07 No Brokers
Schedule 4.02(a) Options, Warrants, et al.
Schedule 4.02(b) Subsidiaries
Schedule 4.04 Permits
Schedule 4.05 Compliance with Laws
Schedule 4.06 Litigation
Schedule 4.07 Taxes
Schedule 4.08 Absence of Certain Charges
Schedule 4.09 Bank Accounts
Schedule 4.10 Material Contracts
Schedule 4.11 Intellectual Property
Schedule 4.12 Employee Matters
Schedule 4.14 Environmental Matters
Schedule 4.17 Pipeline Tariffs
Schedule 5.03 Purchaser Consents
Schedule 6.01 Conduct of Business/Capital Expenditure Schedule
iv
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT dated as of September 22, 2000, is by
and between CORAL ENERGY, LLC, a Delaware limited liability company ("Seller"),
and ENTERPRISE PRODUCTS OPERATING L.P., a Delaware limited partnership
("Purchaser").
RECITALS:
WHEREAS, Seller is the indirect owner of all of the issued and
outstanding limited liability company member interests of Acadian Gas, LLC, a
Delaware limited liability company (the "Company"), which along with its
Subsidiaries (as defined herein) owns and operates certain natural gas pipelines
and related storage facilities located in the State of Louisiana and generally
comprising the Pipeline Systems (as defined below);
WHEREAS, prior to the Closing, Seller will become the record and
beneficial owner of the member interests in the Company;
WHEREAS, Seller desires to sell the member interests in the Company to
Purchaser and Purchaser desires to purchase such member interests for the
consideration and on the terms and conditions as hereinafter provided;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration (the receipt and sufficiency of which are hereby confirmed and
acknowledged), the parties hereto hereby agree as follows:
ARTICLE IDEFINITIONS AND TERMS
1.01 Specific Definitions. As used in this Agreement, the following
terms have the following meanings: --------------------
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such Person.
For the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of such Person, by contract or
otherwise.
"Agreement" means this Purchase and Sale Agreement, as the same may be
amended or supplemented from time to time.
"Benefit Plans" means any employee pension benefit plan (whether or not
insured), as defined in Section 3(2) of ERISA, any employee welfare benefit plan
(whether or not insured) as defined in Section 3(1) of ERISA, any stock bonus,
stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock or other stock plan (whether qualified or nonqualified), and any
bonus or incentive or deferred compensation plan or fringe benefit arrangement
in which any of the present or former directors, officers, employees, agents,
consultants or other similar representatives providing services to or for the
Company or any of its Subsidiaries participate in connection with such services.
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday on which banks in Houston, Texas and New York, New York are authorized
or obligated by Law to close.
"Cavern Lease" has the meaning specified in Section 4.10(i).
"Claim Notice" has the meaning specified in Section 10.03(a).
"Closing" means the closing of the transactions provided for in this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Closing Date Inventory Value" has the meaning specified in Section
2.04(b).
"Closing Date Working Capital" has the meaning specified in Section
2.04(b).
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Company" has the meaning specified in the recitals.
"Company and its Subsidiaries" means the Company and the Subsidiaries
listed on Schedule 4.02(b) hereto, individually, collectively or in any
combination as the context may require.
"Company Assets" means the Pipeline Systems and any and all tangible
and intangible property and assets located in the State of Louisiana and used by
any of the Company and its Subsidiaries in the operation of the Pipeline
Systems, other than the Excluded Assets and the Intellectual Property Rights.
"Company Interest" means 100% of the outstanding limited liability
company interest in the Company.
"Company Inventory Value" means the Inventories of the Company and its
Subsidiaries valued in accordance with the valuation methodologies set forth on
Schedule 1.01(a) hereto at a specified date.
"Company Working Capital" means the amount of the current assets over
the amount of current liabilities (excluding current maturities on long-term
debt and Inventories) of the Company and its Subsidiaries as of a specified
date, calculated in accordance with generally accepted accounting principles.
"Confidentiality Agreement" means the Confidentiality Agreement dated
July 26, 2000, between Purchaser and Seller.
2
"Consent" means any consent, waiver, approval, authorization,
exemption, registration or declaration.
"Consideration" means the cash purchase price payable by Purchaser
under this Agreement for the Company Interest.
"Contracts" means all agreements, contracts, leases, purchase and sale
orders, arrangements, commitments and licenses to which the subject party or any
of its Subsidiaries is a party.
"Court" shall mean any federal, state, or local court, arbitration
tribunal or other judicial authority.
"Damages" means all claims, liabilities, damages, penalties, Judgments,
assessments, losses, costs and expenses, including reasonable attorneys' fees.
"Data Room" means the data room and all of its contents established by
Seller and made available to the Purchaser in connection with the transactions
contemplated by this Agreement.
"Direct Claim" has the meaning specified in Section 10.03(a).
"Environmental Law" means any Law that relates to (i) the prevention,
abatement, remediation or elimination of pollution, (ii) the protection of the
environment, (iii) the protection of individuals or property from actual or
potential exposure (or the effects of exposure) to an actual or potential spill,
release or threatened release of a Hazardous Substance, or petroleum or produced
brine, or (iv) the operation, manufacture, processing, production, gathering,
transportation, importation, use, treatment, storage or disposal, arrangement
for transportation or arrangement for disposition of a Hazardous Substance, or
petroleum or produced brine. The term "Environmental Law" includes the Clean Air
Act, the Comprehensive Environmental, Response, Compensation, and Liability Act
of 1980, the Federal Water Pollution Control Act, the Occupational Safety and
Health Act of 1970, the Resource Conservation and Recovery Act of 1976, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Hazardous & Solid
Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act
of 1986, the Hazardous Materials Transportation Act, the Oil Pollution Act of
1990, any state Laws implementing the foregoing federal Laws and any Laws
pertaining to the handling of oil and gas exploration and production wastes or
the use, maintenance, and closure of pits and impoundments, and all other
environmental conservation or protection Laws.
"Evangeline Partnership" has the meaning prescribed in Section 4.07(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulation of the Securities
and Exchange Commission promulgated thereunder, and as the same shall be in
effect from time to time.
"Excluded Assets" means (i) the Spindletop Gas Distribution System,
(ii) the Pelican Transmission System and (iii) two (2) paintings by George
Rodrigue located in the Boardroom reception area of Chevron Tower, Houston,
Texas.
3
"Facilities" means the pipeline assets and storage facilities
comprising the Pipeline Systems.
"Final Inventory" has the meaning prescribed in Section 2.04(a).
"Final Working Capital" has the meaning prescribed in Section 2.04(a).
"Governmental Authority" shall mean any federal, state or local
governmental agency or authority.
"Governmental Authorization" shall mean any required consent or
approval by a Governmental Authority.
"Hazardous Substance" means any substance, chemical, pollutant, waste
or other material (i) that consists, wholly or in part, of a substance that is
regulated as toxic or hazardous to human health or the environment under any
Environmental Law, or (ii) that exists in a condition or under circumstances
that constitute a violation of an Environmental Law. The term "Hazardous
Substance" includes any petroleum products, oils or derivatives thereof;
asbestos or asbestos-containing materials; polychlorinated biphenols; as well as
any "hazardous substance" as that term is defined in the Comprehensive
Environmental, Response, Compensation and Liability Act of 1980, any "hazardous
material" as that term is defined in the Hazardous Materials Transportation Act,
any "hazardous chemical substance" or "pollutant" as those terms are defined in
the Federal Water Pollution Control Act, and any "solid waste" or "hazardous
waste" as those terms are defined in the Resource Conservation and Recovery Act
of 1976 and any "toxic substance" as that term is defined under the Toxic
Substances Control Act.
"HSR Act" means the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indebtedness for Borrowed Money" means all obligations to third
persons for borrowed money, including, without limitation, (a) any capital lease
obligation, (b) any obligation (whether fixed or contingent) to reimburse any
bank or other Person in respect of amounts paid or payable under a standby
letter of credit (other than obligations under standby letters of credit
securing performance under contracts or agreements of the Company or its
Subsidiaries), or (c) any guarantee with respect to indebtedness for borrowed
money (of the kind otherwise described in this definition) of another Person,
but excluding (i) intercompany indebtedness, (ii) indebtedness among the Company
or its Subsidiaries and Seller or its Affiliates, as the case may be, and (iii)
purchase money indebtedness (to the extent such purchase money indebtedness
would be reflected in a Working Capital Calculation pursuant to the procedures
applied in Section 2.04).
"Indemnified Party" has the meaning specified in Section 10.03.
"Indemnifying Party" has the meaning specified in Section 10.03.
"Independent Accountants" means a "big 5" accounting firm, other than
Deloitte & Touche LLP, and Pricewaterhouse Coopers LLP, as may be mutually
agreed upon by Seller and Purchaser.
4
"Initial Inventory Value" has the meaning specified in Section 2.04(a).
"Initial Working Capital" has the meaning specified in Section 2.04(a).
"Intellectual Property Right" means all registered trade marks, trade
names, patents and copyrights, unregistered trade marks, trade names and
copyrights and all patent applications, all technology, trade secrets, designs,
drawings, computer programs, processes and know how, both domestic and foreign.
"Interim Services Agreement" has the meaning specified in Section 2.03.
"Inventories" means all natural gas, condensate, natural gas liquids
and other hydrocarbons owned by the Company and its Subsidiaries and located in
or associated with the Pipeline Systems as of the Closing Date.
"IRS" means the United States Internal Revenue Service.
---
"Judgments" means any judgments, injunctions, orders, decrees, writs,
rulings or awards of any Court or Governmental Authority of competent
jurisdiction.
"Knowledge" or "knowledge" means, with respect to any party hereto, the
actual knowledge of the executive officers of such party; provided that none of
the executive officers shall be deemed to have performed, or be obligated to
perform, any independent investigation or inquiry with respect to the matter to
which such Knowledge relates other than, in each case, making reasonable inquiry
with the head of the department who is principally responsible for the subject
matter of any representation or warranty given to the knowledge of such party,
provided, Purchaser acknowledges that the persons which Seller will make inquiry
of are those persons listed on Schedule 1.01(b).
"Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order or decree.
"Lien" means mortgages, deeds of trust, liens, pledges, security
interests, leases, conditional sale contracts, claims, rights of first refusal,
options, charges, liabilities, obligations, agreements, privileges, liberties,
easements, rights-of-way, limitations, reservations, restrictions and other
encumbrances of any kind.
"Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities or condition (financial or otherwise) of the
subject party and its Subsidiaries, taken as a whole.
"Material Contracts" has the meaning specified in Section 4.10.
"Partnerships" means each of the following general partnerships:
Acadian Gas Pipeline System, Calcasieu Gas Gathering System, Neches Pipeline
System and Pontchartrain Natural Gas System.
5
"Pelican Transmission System" means a Texas general partnership between
MCN Pelican Transmission, LLC and TXO-Acadian Gas Pipeline, LLC, which owns a
natural gas pipeline system consisting of approximately three (3) miles of
twelve-inch (12") outside diameter pipe, whose eastern terminus is in Cameron
Parish, Louisiana and western terminus is near Orange, Texas.
"Permitted Liens" means (i) Liens for or in respect of Taxes,
impositions, assessments, fees, rents and other governmental charges levied or
assessed or imposed which are not yet delinquent or are being contested in good
faith by appropriate proceedings and, if being contested, for which the
appropriate party has set forth reserves on its books, records and financial
statements, if required, in accordance with generally accepted accounting
principles applied in a manner consistent with past practice, (ii) the rights of
lessors and lessees under leases, and the rights of third parties under any
agreements, executed in the ordinary course of business, (iii) the rights of
licensors and licensees under licenses executed in the ordinary course of
business, (iv) Liens, and rights to Liens, of mechanics, warehousemen, carriers,
repairmen and others arising by operation of law and incurred in the ordinary
course of business, securing obligations not yet delinquent or being contested
in good faith by appropriate proceedings and, if being contested, for which the
appropriate party has set forth reserves on its books, records and financial
statements if required in accordance with generally accepted accounting
principles applied in a manner consistent with past practice, (v) any Liens
which are publicly recorded, (vi) Liens entered into in the ordinary course of
business which do not secure the payment of Indebtedness for Borrowed Money and
which do not materially and adversely affect the ability of Purchaser, directly
or indirectly, to use the Pipeline Systems in the conduct of its business, (vii)
any other matters which may be disclosed by a current and accurate survey of the
Pipeline Systems, (viii) any conditions relating to the real property or real
rights owned or leased by the Company and its Subsidiaries which are disclosed
on any title commitments, reports or opinions or in any leasing files, but only
if such commitments, reports, opinions or files were included in the Data Room
or otherwise provided to Purchaser by Seller and (ix) Liens set forth on
Schedule 1.01(c) of the Seller Disclosure Memorandum.
"Permits" means all permits, authorizations, approvals, registrations,
licenses, certificates or variances granted by or obtained from any Governmental
Authority.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Pipeline Systems" means the Louisiana natural gas pipeline systems of
the Company and its Subsidiaries comprising (i) the "Acadian Pipeline System"
which consists of that certain approximate 438-mile pipeline system located in
Southern Louisiana, (ii) the "Cypress Pipeline System" which consists of that
certain approximate 577-mile natural gas pipeline system located in south
central Louisiana, (iii) the "Evangeline Pipeline System" which consists of that
certain approximate 27-mile natural gas pipeline extending from Taft, Louisiana
to Westwego, Louisiana, and (iv) all leasehold and/or subleasehold interests of
the Company and its Subsidiaries in a salt dome cavern located at or near
Napoleonville, Louisiana under the Cavern Lease.
"Predecessor Agreements" means the agreements listed on Schedule
1.01(c) to the Seller Disclosure Memorandum.
6
"Proceeding" means any action, suit, demand, claim or legal,
administrative, arbitration or other alternative dispute resolution proceeding,
hearing or investigation.
"Purchase Price" has the meaning specified in Section 2.02(b).
"Purchaser" has the meaning specified in the introductory paragraph of
this Agreement.
"Purchaser Indemnified Parties" has the meaning specified in Section
10.02.
"Purchaser Representations and Warranties" has the meaning specified in
Section 10.01.
"Records Delivery Date" means the later of (i) the Closing Date or (ii)
fifteen days following receipt by a party of the notice under Section 2.01(ii).
"Required Consents" has the meaning specified in Section 3.04.
"Securities Act" means the Securities Act of 1933, as amended or any
successor or federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and as the same shall be in
effect from time to time.
"Seller" has the meaning specified in the introductory paragraph of
this Agreement.
"Seller Assignment" means the assignment agreement in the form of
Exhibit A attached hereto pursuant to which Seller will assign the Company
Interest to Purchaser.
"Seller Disclosure Memorandum" means the disclosure memorandum
delivered by Seller to Purchaser upon execution of this Agreement containing the
disclosures contemplated by this Agreement, as same may be supplemented in
accordance with the procedures set forth in this Agreement.
"Seller Indemnified Parties" has the meaning specified in Section
10.01.
"Seller Representations and Warranties" has the meaning specified in
Section 10.02.
"Shell Leases" means (i) the Agreement of Lease dated May 10, 1960,
between Dugas & LeBlanc, Ltd., as lessor, and Shell Oil Company, as lessee,
covering 54 acres more or less, recorded in Volume 153-A, Entry 57188, of the
Oil and Gas Records of Assumption Parish, La., (ii) the Agreement of Lease dated
May 10, 1960, between Albert H. LeBlanc et al, as lessor, and A. N. Simmons,
Jr., as lessee, said Agreement of Lease being assigned to Shell Oil Company by
assignment dated June 6, 1960, covering 54 acres more or less, recorded in
Volume 153-A, Entry 56881, of the Oil and Gas Records of Assumption Parish, La.,
(iii) the Agreement of Lease dated July 19, 1960, between Clarence C. Clifton,
Jr. et al, as lessor, and Shell Oil Company, as lessee, covering 54 acres more
or less, recorded in Volume 153-A, Entry 57176, of the Oil and Gas Records of
Assumption Parish, La. and (iv) the Amendment and Ratification of Leases dated
May 10, 1978, between Dugas & LeBlanc, Ltd., as lessor, and Shell Oil Company,
as lessee.
7
"Spindletop Gas Distribution System" means a Texas general partnership
between TXO-Acadian Gas Pipeline, LLC and MCN Acadian Gas Pipeline, LLC, which
owns the natural gas delivery stations at the GSU Lewis Creek Power Plant in
Montgomery County, Texas and the GSU Sabine Power Plant in Orange County, Texas.
"Subsidiary" or "Subsidiaries" of any Person means any corporation,
partnership, limited liability company, association, trust, joint venture or
other entity or organization of which such Person, either alone or through or
together with any other Subsidiary, owns, directly or indirectly, more than 50%
of the stock or other equity interests, the holder of which is generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, association,
trust, joint venture or other entity or organization.
"Taxes" means all taxes, however denominated, including any interest or
penalties that may become payable in respect thereof, imposed by any
Governmental Authority, which taxes shall include all net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, goods and
services, ad valorem or property, earnings, franchise, profits, license,
withholding (including all obligations to withhold or collect for Taxes imposed
on others), payroll, employment, excise, severance, stamp, occupation, premium,
property, excess profit or windfall profit tax, custom duty, value added or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount (whether payable directly, by withholding or otherwise).
"Tax Returns" means any report, return, declaration or other filing
required to be supplied to any taxing authority or jurisdiction with respect to
Taxes including any amendments thereto.
"Tax Statute of Limitations Date" shall mean the close of business on
the 30th day after the expiration of the applicable statute of limitations with
respect to Taxes, including any tollings or extensions thereof.
"Third Party Claim" has the meaning specified in Section 10.03(a).
"Transactions" means the transactions contemplated by the Transaction
Agreements.
"Transaction Agreements" means this Agreement, the Interim Services
Agreement, the Employee Matters Agreement, the Pipeline Access Agreement and all
other agreements to be entered into by the parties hereto pursuant to this
Agreement.
"Transaction Payments" has the meaning specified in Section 6.16.
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
1.02 General Definitions. Capitalized terms used in this Agreement and
not defined in Section 1.01 shall have the meanings ascribed to them elsewhere
in this Agreement.
8
1.03 Construction and Interpretation. The following rules of
construction and interpretation shall apply to this Agreement, unless elsewhere
specifically indicated to the contrary:
(a) all terms defined herein in the singular shall include
the plural, as the context requires, and vice-versa;
(b) pronouns stated in the neuter gender shall include the
masculine, the feminine and the neuter genders;
(c) the term "or" is not exclusive and shall be deemed to
mean "and/or;"
(d) the term "including" (or any form thereof) shall not be
limiting or exclusive and shall be deemed to mean "including, without
limitation"; and
(e) unless otherwise indicated, any reference made in this
Agreement to a Section is a reference to a section of this Agreement,
any reference to an exhibit is a reference to an exhibit to this
Agreement.
ARTICLE II
CLOSING AND RELATED ITEMS
2.01 The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the transactions contemplated by this Agreement
as set forth in Section 2.02 (the "Closing") will take place on such date as may
be agreed upon by the parties hereto at 10:00 a.m. (Houston, Texas time) at the
offices of Vinson & Elkins L.L.P., 2300 First City Tower, 1001 Fannin, Houston,
Texas 77002 or as promptly as practicable (and in any event within five (5)
Business Days) following both (i) the satisfaction or waiver of the conditions
contained in Article VII and (ii) the receipt of written notice by either party
from the other party that such conditions have been satisfied or waived.
2.02 The Transactions. Subject to the terms and conditions of this
Agreement, at the Closing:
(a) Seller will transfer and assign the Company Interest to
Purchaser by executing and delivering the Seller Assignment to
Purchaser; and
(b) Purchaser will pay to Seller an amount of cash, by wire
transfer of immediately available funds, equal to two hundred
twenty-six million dollars ($226,000,000) (the "Purchase Price").
2.03 Other Closing Matters. Subject to the terms and conditions of
this Agreement, on the Closing Date:
(a) Seller and Purchaser shall enter into the Interim
Services Agreement in substantially the form of Exhibit B attached
hereto providing for Seller to provide or cause its Affiliates to
9
provide certain computer, accounting and other administration services
to Purchaser for a specified period following the Closing Date.
(b) Seller and Coral Energy Services, LLC shall execute and
deliver, and Purchaser shall or shall cause one of its Affiliates to
execute and deliver, the Employee Matters Agreement in substantially
the form attached hereto as Exhibit C.
(c) Seller and Purchaser shall enter into the Pipeline
Access Agreement in substantially the form of Exhibit E attached
hereto providing certain preferential rights in favor of Seller and
its Affiliates to supply natural gas to various new power generation
customers through the Pipeline Systems.
(d) Seller shall deliver to Purchaser the resignation as a
signatory under any Company or Subsidiary bank account of each of the
authorized signatories referenced in Schedule 4.09 of the Seller
Disclosure Memorandum.
(e) Seller and Purchaser shall enter into such assignments,
ISDAs or other documentation as may be reasonably required to provide
the economic benefit of the hedging transactions entered into by
Seller or its Affiliates, on behalf of or for the benefit of the
Company and the Subsidiaries, referenced on Schedule 2.03 and any
additional hedging transactions entered into by Seller or its
Affiliates, on behalf of or for the benefit of the Company and its
Subsidiaries, between the date hereof and the Closing.
2.04 Post Closing Adjustments.
(a) Attached hereto as Schedule 2.04(a)(i) is Seller's calculation of
the Company Working Capital at July 31, 2000 (the "Initial Working Capital").
Attached hereto as Schedule 2.04(a)(ii) is Seller's calculation of Company
Inventory Value at July 31, 2000 (the "Initial Inventory Value").
(b) As promptly as practicable, but no later than 90 days after the
Closing Date, Purchaser (with the assistance of Seller to the extent requested
by Purchaser) will cause to be prepared and delivered to Seller a certificate
setting forth Purchaser's calculation of Company Working Capital as of the
Closing Date (the "Closing Date Working Capital") and of the Company Inventory
Value as of the Closing Date (the "Closing Date Inventory Value"). The Closing
Date Working Capital and Closing Date Inventory Value shall be prepared in good
faith and in the same manner and format as the Initial Working Capital and
Initial Inventory Value.
(c) If Seller disagrees with Purchaser's calculation of Closing Date
Working Capital or Closing Date Inventory Value delivered pursuant to paragraph
(b) above, Seller may, within 30 days after delivery of such calculations,
deliver a notice to Purchaser disagreeing with Purchaser's calculation of
Closing Date Working Capital or Closing Date Inventory Value and setting forth
Seller's calculation of Closing Date Working Capital and Closing Date Inventory
Value.
(d) If a notice of disagreement shall be duly delivered pursuant to
paragraph (c), Purchaser and Seller shall, during the 30 days following such
delivery, use their reasonable efforts to reach agreement on the amounts in
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order to determine Closing Date Working Capital and Closing Date Inventory
Value. If, during such period, Purchaser and Seller are unable to reach such
agreement, they shall promptly thereafter retain the Independent Accountants to
promptly review this Agreement and the disputed amounts for the purpose of
calculating Closing Date Working Capital and Closing Date Inventory Value. The
Independent Accountants shall deliver to Purchaser and Seller, as promptly as
practicable, a report setting forth each such calculation. Such report shall be
final and binding upon Purchaser and Seller. The cost of such review and report
shall be borne equally by Purchaser and Seller.
(e) Purchaser and Seller agree that they will, and agree to cause
their respective independent accountants to, cooperate and assist in the
preparation of the calculation of Closing Date Working Capital and Closing Date
Inventory Value, including, without limitation, making available to the extent
reasonably required books, records and personnel.
2.05 Adjustment of Consideration.
(a) If Final Working Capital (as defined below) is less than the
Initial Working Capital, Seller shall pay to Purchaser, an amount in cash equal
to such difference. If Final Working Capital is greater than the Initial Working
Capital, Purchaser shall pay to Seller, an amount in cash equal to such
difference. "Final Working Capital" means an amount calculated as (i) Closing
Date Working Capital (x) as shown in Purchaser's calculation delivered pursuant
to Section 2.04, or (y) if a notice of disagreement is delivered, as agreed by
Purchaser and Seller pursuant to Section 2.04 or in the absence of such
agreement, as shown in the Independent Accountant's calculation delivered
pursuant to Section 2.04 less (ii) the aggregate amount of the Transaction
Payments, if any, paid by Purchaser to any or all of the Transferred Employees
pursuant to Section 6.16. If the Final Inventory (as defined below) is less than
the Initial Inventory, Seller shall pay to Purchaser an amount in cash equal to
such difference. If Final Inventory is greater than the Initial Inventory,
Purchaser shall pay to Seller, an amount in cash equal to such difference.
"Final Inventory" means Closing Date Inventory Value (i) as shown in Purchaser's
calculation delivered pursuant to Section 2.04 if no notice of disagreement with
respect to Purchaser's calculation is duly delivered pursuant to Section 2.04,
or (ii) if such a notice of disagreement is delivered, as agreed by Purchaser
and Seller pursuant to Section 2.04 or in the absence of such agreement, as
shown in the Independent Accountant's calculation delivered pursuant to Section
2.04.
(b) Any payments pursuant to Section 2.05 shall be treated as an
adjustment to the Consideration and shall be made within ten days after Final
Working Capital and/or Final Inventory, as the case may be, have been
determined, by delivery by Purchaser or Seller, as the case may be, of
immediately available funds by wire transfer to an account of Purchaser or
Seller, as the case may be, designated by Purchaser or Seller as the case may
be, by notice to Purchaser or Seller, as the case may be, not later than two
Business Days prior to the payment date.
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2.06 Prorations of Expenses and Certain Property Taxes.
(a) Any general property Tax assessed against or pertaining to the
Company Assets for the taxable period that includes the Closing Date shall be
prorated between Seller and the Company and its Subsidiaries as of the Closing
Date. Prior to the Closing, Seller shall determine the portion of such general
property Tax attributable to the period from January 1, 2000 to the Closing Date
(the "Seller Property Tax"), and shall provide Purchaser with a reasonable
opportunity to review and comment on such determination. Seller and Purchaser
shall cooperate in good faith with each other to reach agreement as to the
aggregate amount of the Seller Property Tax, and Seller shall pay the amount of
the Seller Property Tax to Purchaser at Closing.
(b) The Seller Property Tax shall be an amount equal to the product of
(i) the amount of such general property Tax for the entire taxable period that
includes the Closing Date (or the amount of such general property Tax for the
immediately preceding taxable period in the case of those Company Assets, if
any, for which such general property Tax for the current period cannot be
determined), times (ii) a fraction, the numerator of which is the number of days
from January 1, 2000 to the Closing Date and the denominator of which is the
total number of days in the entire taxable period.
(c) Utility charges with respect to the Company and its Subsidiaries
for any billing period which occurs prior to the Closing Date shall be the
responsibility of, and timely paid by, Seller. Utility charges for any billing
period which relates to a period both after and prior to the Closing Date shall
be prorated between Seller and the Company and its Subsidiaries as of the
Closing Date. Seller's responsibility for such utility charges shall be an
amount equal to the product of (i) the amount of such utility charges for the
billing period that includes the Closing Date, times (ii) a fraction, the
numerator of which is the number of days from the beginning of such billing
period to (and including) the Closing Date and the denominator of which is the
total number of days in the billing period.
(d) To the extent the amounts described in Section 2.06 are estimated
at Closing and the prorations are inaccurate, Seller and Purchaser agree to make
or cause to be made such payment (or reimbursement) to the other after the
amounts are correctly computed, that is necessary to allocate the charges
properly between Seller and the Company and its Subsidiaries as of the Closing
Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AS TO SELLER
Seller represents and warrants to Purchaser that the following
statements are true and correct as of the date of this Agreement:
3.01 Organization. Seller is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, with all requisite limited liability company power and authority to
own the Company and its Subsidiaries and to carry on its business as it is now
conducted.
12
3.02 Ownership of Company Interest. Assuming that the Required Consent
listed as item 5 of "Other Required Consents" on Schedule 3.04 of the Seller
Disclosure Memorandum has been obtained, as of the Closing Date, (i) Seller will
be the owner, beneficially and of record, of all the Company Interest free and
clear of any Lien other than the Permitted Liens described on Schedule 1.01(c)
of the Seller Disclosure Memorandum and (ii) Seller will transfer and assign all
the Company Interest to Purchaser free and clear of any Lien, other than the
Permitted Liens described on Schedule 1.01(c) of the Seller Disclosure
Memorandum, as a result of which Purchaser will own 100% of the outstanding
equity interests in the Company.
3.03 Validity and Enforceability. Seller has the requisite power and
authority to execute and deliver the Transaction Agreements and to perform its
obligations under the Transaction Agreements. The execution and delivery of the
Transaction Agreements to which Seller is a party and the consummation of the
transactions contemplated thereby have been duly authorized by Seller, and no
additional authorization on the part of Seller is necessary in order to
authorize the Transaction Agreements or consummate the transactions contemplated
thereby. The Transaction Agreements to which Seller is a party have been or at
Closing will be duly executed and delivered by Seller and constitute or will
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application relating to or affecting the rights and remedies of
creditors, or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), including the
availability of specific performance.
3.04 Approvals and Consents. Except for the requirements of (a) the
HSR Act and the requirements and consents listed in Schedule 3.04 of the Seller
Disclosure Memorandum (the "Required Consents"), and (b) those Laws,
noncompliance with which could not reasonably be expected to have an adverse
effect on the ability of Seller, as the case may be, to perform its obligations
under the Transaction Agreements, no filing or notice or registration with, no
waiting period imposed by and no Permit or Judgment of, any Governmental
Authority is required under any Law applicable to Seller to permit Seller, and
no notice to or consent of any Person is required for Seller, to execute,
deliver or perform its obligations under the Transaction Agreements to be
executed and delivered by it at the Closing, except for such filing, notice,
registration or consent which if not made or obtained would not have a Material
Adverse Effect on the Company and its Subsidiaries.
3.05 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Required Consents, neither the execution and
delivery by Seller of the Transaction Agreements to be executed and delivered by
it at the Closing nor the performance by Seller of its obligations thereunder
will violate or breach the terms of or cause a default under (i) any Law or
Judgment applicable to Seller, (ii) the certificate of formation, the limited
liability company agreement or other organizational documents of Seller, or
(iii) any contract or agreement to which Seller is a party, except in any such
case for any matters described in this Section 3.05 that would not reasonably be
expected to have a Material Adverse Effect upon the ability of Seller to perform
its obligations under the Transaction Agreements.
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3.06 Litigation. Except as set forth on Schedule 3.06 of the Seller
Disclosure Memorandum, there are no Proceedings pending, or, to the Knowledge of
Seller, threatened, against Seller, at law or in equity, in any Court or before
or by any Governmental Authority that (i) question the validity of any
Transaction Agreement or seek to restrain, prohibit, invalidate, set aside,
prevent or make unlawful any Transaction Agreement or any of the Transactions,
or (ii) if adversely determined would prevent or impair the ability of Seller to
perform any of its obligations under the Transaction Agreements.
3.07 No Brokers. Except as set forth in Schedule 3.07 of the Seller
Disclosure Memorandum, none of Seller, the Company nor any of their respective
Subsidiaries or Affiliates has, directly or indirectly, entered into any
agreement with any Person that would obligate the Company, any of its
Subsidiaries or Purchaser to pay any commission, brokerage fee or "finder's fee"
in connection with the Transactions contemplated herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
AS TO THE COMPANY AND ITS SUBSIDIARIES
Seller represents and warrants to Purchaser, as to the Company and its
Subsidiaries that the following statements are true and correct as of the date
of this Agreement:
4.01 Organization. Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, limited
liability company or partnership power and authority (as the case may be) to
carry on its business as it is now being conducted and to own, lease and operate
its properties where now conducted, owned, leased or operated. Each of the
Company and its Subsidiaries is duly licensed or qualified to do business and is
in good standing in each jurisdiction where such license or qualification is
required to carry on its business as now conducted, except where the failure to
be so qualified or licensed or in good standing, as the case may be, is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries.
4.02 Capitalization.
(a) All of the issued and outstanding Company Interest has been duly
authorized and is validly issued. Except as set forth on Schedule 4.02(a) of the
Seller Disclosure Memorandum, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments, other than this Agreement, that could
require the Company to issue, sell, or otherwise cause to become outstanding any
of its member interests. Except as set forth on Schedule 4.02(a) of the Seller
Disclosure Memorandum, there are no options, warrants, rights to subscribe to or
calls relating to, or securities or rights convertible into or exchangeable or
exercisable for, membership interests of the Company or any contracts,
commitments, understandings or arrangements by which the Company is or may be
bound to issue, redeem, purchase or sell membership interests or securities
convertible into or exchangeable for any such membership interests.
14
(b) Schedule 4.02(b) of the Seller Disclosure Memorandum sets forth a
complete list of (i) all of the Subsidiaries of the Company, the jurisdiction of
incorporation or formation of each such Subsidiary and the number of issued and
outstanding membership interests of each such Subsidiary and the record holders
thereof, and (ii) all partnerships, joint ventures or other entities (other than
Subsidiaries) in which the Company or any of its Subsidiaries has an interest,
including a description of the type of such entity, the ownership interest of
the Company and its Subsidiaries therein and, to Seller's Knowledge, the names
and ownership interests of the other holders thereof. Except as set forth on
Schedule 4.02(b) of the Seller Disclosure Memorandum, all of the outstanding
membership interests of the Company's Subsidiaries are owned beneficially and of
record by the Company or the Company's Subsidiaries, free and clear of all
Liens, and no membership interests of any of the Company's Subsidiaries are or
may become required to be issued by reason of options, warrants, rights to
subscribe to, or calls relating to, or securities or rights convertible into or
exchangeable or exercisable for, membership interests of its Subsidiaries and,
other than as contemplated by this Agreement, there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may be bound to issue, redeem, purchase or sell membership
interests or securities convertible into or exchangeable for any such membership
interests.
4.03 No Violation. Assuming effectuation of all filings and
registrations with, the termination or expiration of any applicable waiting
periods imposed by, and receipt of all Required Consents, neither the execution
and delivery by Seller of the Transaction Agreements to be executed and
delivered by it at the Closing nor the performance by Seller of its obligations
hereunder or thereunder will (a) (i) violate any Law applicable to the Company
or any of its Subsidiaries, (ii) conflict with or violate any provisions of the
certificate of organization or formation, the limited liability company
agreement or other organizational documents of the Company or any of its
Subsidiaries or (iii) conflict with, or result in the breach of, or constitute a
default under, or result in the termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or both) of any right
or obligation under, any Material Contract to which the Company or any of its
Subsidiaries is a party or by which they or any of their properties or assets
are bound, or (b) result in the creation or imposition of any Lien, other than
any Permitted Liens, on any of the properties or assets of the Company or any of
its Subsidiaries, except in any such case for any matters described in this
Section 4.03 that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
4.04 Permits. To the Knowledge of Seller, except as set forth on
Schedule 4.04 of the Seller Disclosure Memorandum, the Company and each of its
Subsidiaries have all material Permits required to conduct their respective
businesses as currently conducted and the Company and each of the Subsidiaries
have been operating their respective businesses pursuant to and in compliance
with the terms of all such Permits, except for such failures to comply which
have not resulted in, individually or in the aggregate, a Material Adverse
Effect; it being understood that nothing in this Section 4.04 is intended to
address any compliance issue that is the subject of any other representation or
warranty set forth in this Article. Except as set forth on Schedule 4.04 of the
Seller Disclosure Memorandum, such Permits held by the Company and its
Subsidiaries are valid and in full force and effect and none of the Permits
will, assuming the related Required Consents have been obtained, be terminated
or become terminable as a result of the transactions contemplated by this
15
Agreement, except, in each case, such Permits the termination or impairment of
which would not have a Material Adverse Effect.
4.05 Compliance With Applicable Law. Except as set forth on Schedule
4.05 of the Seller Disclosure Memorandum, to the Knowledge of Seller, each of
the Company and its Subsidiaries is presently complying with and in the past has
complied with in all material respects with all applicable Laws and Judgments
(excluding Environmental Laws), except for such failures to comply which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
4.06 Litigation.
(a) Except as set forth on Schedule 4.06 of the Seller Disclosure
Memorandum, there are no Proceedings pending or, to the Knowledge of Seller,
threatened, involving the Company or any of its Subsidiaries.
(b) None of such Proceedings, individually or in the aggregate, would
reasonably be expected to result in a Material Adverse Effect or materially
impair the Seller's ability to effect the Closing. To Seller's Knowledge,
neither the Company nor any of its Subsidiaries is the subject of any Judgment
other than those which have been settled, discharged or accrued on the financial
statements of the Company, those which are covered by insurance, or those which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect or materially impair Seller's ability to effect the
Closing.
4.07 Taxes. (a) The Company and its Subsidiaries have not, at any time
prior to the Closing Date, filed an election under Treasury Regulation
ss.301.7701-3 to be classified as a corporation for federal income Tax purposes.
During the entirety of the period from the date of its formation through the
Closing Date, each of the Company and its Subsidiaries that is a limited
liability company has been a business entity that has had and will have a single
owner at any given point in time and is and will be disregarded as an entity
separate from its owner for federal income Tax purposes under Treasury
Regulation Sections 301.7701-2 and -3 and any comparable provision of applicable
state or local Tax law that permits such treatment. During the entirety of the
period in which the Partnerships have been owned by Affiliates of Seller, each
of the Partnerships has been a business entity that is disregarded as an entity
separate from its owner for federal income Tax purposes under Treasury
Regulation Sections 301.7701-2 and -3 and any comparable provision of applicable
state or local Tax law that permits such treatment. Evangeline Gas Pipeline
Company, L.P. (the "Evangeline Partnership") is treated and classified as a
partnership for federal income Tax purposes under Treasury Regulation ss.
3.01.7701-2 and -3.
(b) To the Knowledge of Seller, there are no Liens for Taxes
upon the assets of any of the Company, its Subsidiaries,
Evangeline Gas Corp. and the Evangeline Partnership, other
than with respect to ad valorem Taxes which are not yet
delinquent or Permitted Liens.
(c) Each of the Company and its Subsidiaries has fully complied
with all applicable federal, state and local employment Tax,
withholding and contribution obligations with respect to its
16
employees, and all other Tax withholding obligations
required by law.
(d) Except as set forth on Schedule 4.07 of the Seller
Disclosure Memorandum, all Tax Returns of the Company and
its Subsidiaries, that are required to be filed (taking into
account any extensions of time within which to file) before
the Closing Date, have been or will be filed, the
information provided in such Tax Returns is complete and
accurate in all material respects, and all Taxes shown to be
due and payable on such Tax Returns, have been or will be
timely paid in full.
4.08 Absence of Certain Changes. To the Seller's Knowledge, since
August 1, 2000 and except as set forth in Schedule 4.08 of the Seller Disclosure
Memorandum, the Company and its Subsidiaries have conducted their respective
businesses in the ordinary course consistent with past practices and there has
not been:
(a) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the Company and its
Subsidiaries which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on the
Company;
(b) any material transaction, material commitment or any
Material Contract entered into, by the Company or any of its
Subsidiaries (including the acquisition or disposition of any assets)
or any relinquishment by the Company or any of its Subsidiaries of any
Material Contract, other than transactions and commitments in the
ordinary course of business consistent with past practices and those
contemplated by the Transaction Agreements;
(c) except as contemplated by this Agreement and except for
any such change after the date of this Agreement required by reason of
a concurrent change in generally accepted accounting principles, any
change in any method of accounting or accounting practice with respect
to the Company and its Subsidiaries;
(d) any event, occurrence, development or state of
circumstances or facts (other than economic conditions or facts or
circumstances applicable to the natural gas pipeline industry in
general) which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on the
Company;
(e) any material amendment of the material terms of or
material breach of the provisions of (or any event which, with notice
or passage of time or both, would constitute a material breach by the
Company or the Subsidiaries of) any Material Contract; or
(f) the creation of any Lien (other than a Permitted Lien)
on any material asset of the Company and its Subsidiaries.
17
4.09 Bank Accounts. Schedule 4.09 of the Seller Disclosure Memorandum
includes the names and locations of all banks in which the Company or any of its
Subsidiaries has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto.
4.10 Material Contracts. (a) To the Knowledge of Seller, Schedule 4.10
to the Seller Disclosure Schedule includes a list of all Material Contracts (as
defined below). The term "Material Contracts" shall mean:
(i) Cavern Lease Agreement dated June 17, 1992 between Shell Oil
Company and Pontchartrain Natural Gas System, including a
memorandum styled Extract of Cavern Lease and Sublease
Agreement executed November 9, 1993, to be effective October
29, 1992 and filed for record in C.O.B. 190, Entry No.
173160, office of Clerk of Court and Recorder, Assumption
Parish, Louisiana (the "Cavern Lease"); Water Crossing Lease
Agreement dated June 1, 1992 between Exxon Pipeline Company
and Acadian Gas Pipeline System; and any site lease with
respect to real property providing for annual rentals of
$50,000 or more;
(ii) any partnership agreement, joint venture agreement,
agreement evidencing an equity interest or debt or equity
investment in any Person or shareholders agreement or equity
holders agreement affecting such interests to which the
Company or any Subsidiary is a party;
(iii) any agreement or series of related agreements of the Company
or any Subsidiary relating to the incurrence of Indebtedness
for Borrowed Monies by the Company or any Subsidiary;
(iv) any agreement or arrangement between the Company or any
Subsidiary on the one hand and Seller or any of its
respective Affiliates on the other hand;
(v) any lease of personal property providing for annual rental
payments or receipts of $250,000 or more;
(vi) any agreement (other than Transaction Agreements) which
involves a disposition, after July 31, 2000, of a Subsidiary
or of a material asset outside of the ordinary course of
business, other than the disposition of the Excluded Assets
or the agreements described in Schedule 4.10(a)(vi) of the
Seller Disclosure Memorandum;
(vii) any agreement which restricts the Company or its
Subsidiaries or Purchaser or any of its Affiliates from
engaging in any line of business which the Company or any of
its Subsidiaries is conducting immediately prior to the
Closing Date; and
(viii) the customer agreements listed on Schedule 4.10(a)(viii) of
the Seller Disclosure Memorandum.
18
(b) Except as described in Schedule 4.10(b) of the Seller
Disclosure Schedule, true and complete copies of each
Material Contract have been made available to Purchaser.
(c) To the Knowledge of Seller, except as disclosed in Schedule
4.10(c) of the Seller Disclosure Memorandum, each Material
Contract is a legal, valid and binding obligation of each of
the Company and/or any Subsidiary that is a party thereto
and, each other party to such Material Contract, enforceable
against the Company and/or such Subsidiary and each such
other party in accordance with its terms (except as limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles
(regardless of whether such enforceability is considered in
a proceeding at law or in equity)), and neither the Company
nor any Subsidiary nor any other party to such Material
Contract is in material default or has failed to perform any
material obligation under such Material Contract, and there
does not exist any event, condition or omission which would
constitute a material breach or material default (whether by
lapse of time or notice or both), except for any such
defaults, failure or breaches as, individually or in the
aggregate, have not had and would not reasonably be expected
to have a Material Adverse Effect.
4.11 Intellectual Property Rights. (a) To the Knowledge of Seller,
Schedule 4.11(a) of the Seller Disclosure Memorandum contains a list of all
Intellectual Property Rights that are utilized by or on behalf of the Company
and its Subsidiaries in the business involving the Company Assets.
(b) Schedule 4.11(b) of the Seller Disclosure Memorandum sets
forth a list of all material licenses, sublicenses and other
agreements involving the Intellectual Property Rights
referenced in Schedule 4.11(a) of the Seller Disclosure
Memorandum which will be held by or made available to the
Company and its Subsidiaries immediately following the
Closing. If requested by Purchaser, in writing, and if the
transfer of such Intellectual Property Rights is within the
control of Seller, Seller will transfer the Intellectual
Property Rights listed on Schedule 4.11(b) to Purchaser,
promptly following the request.
(c) (i) Except as set forth in Schedule 4.11(c) of the Seller
Disclosure Memorandum, since January 1, 2000, none of the
Company and its Subsidiaries has been a defendant in any
action, suit, investigation or proceeding relating to, or
otherwise has been notified of, any alleged claim of
infringement of any Intellectual Property Right referenced
in Schedule 4.11(a) of the Seller Disclosure Memorandum, and
none of Seller or the Company or any of its Subsidiaries has
any Knowledge of any other such infringement by the Company
or any of its Subsidiaries, and (ii) none of the Company and
its Subsidiaries has any outstanding claim or suit for, and
has no Knowledge of, any continuing infringement by any
other Person of any such Intellectual Property Rights. No
Intellectual Property Right referenced in Section 4.11(b) is
subject to any outstanding judgment, injunction, order,
decree or agreement which restricts the use of such
Intellectual Property Right by the Company or any of its
Subsidiaries in such a manner as would prohibit the Company
19
and its Subsidiaries from operating the Pipeline Systems in
the like manner operated immediately prior to the Closing
Date.
4.12 Employee Matters. Except as set forth on Schedule 4.12 of the
Seller Disclosure Memorandum, the Company (i) has no employees (ii) is not the
sponsor of and does not participate in any Benefit Plan and (iii) has no
material liability relating to any Benefit Plan. None of the employees involved
in the Pipeline Systems are covered by collective bargaining agreements and, to
the Seller's Knowledge, there are no such organizational efforts respecting such
employees.
4.13 Title to Company Assets. The Company and its Subsidiaries, as the
case may be, own or at the Closing will own the Company Assets free and clear of
any Liens, other than Permitted Liens.
4.14 Environmental Matters. The sole representations and warranties
with respect to environmental matters (including, but not limited to, the
environment, environmental liabilities and Environmental Laws) are set forth in
this Section 4.14. To the extent that any representation or warranty in any
other section of Article IV of this Agreement (or in the corresponding portions
of the Seller Disclosure Memorandum) also could apply to any environmental
matters, environmental liabilities or Environmental Laws, such representation or
warranty shall be construed to exclude all environmental matters, environmental
liabilities and Environmental Laws and to apply to matters other than
environmental matters, environmental liabilities or Environmental Laws.
Except as disclosed on Schedule 4.14 of the Seller Disclosure
Memorandum, to the Knowledge of Seller:
(i) The Company and its Subsidiaries are in compliance with all
Environmental Laws except for such noncompliance as would
not have a Material Adverse Effect on the Company and its
Subsidiaries;
(ii) There are no threatened or existing Proceedings indicating
that the Company or any of its Subsidiaries may be (a) in
material violation of any Environmental Law, (b) subject to
liabilities or obligations for any cleanup, remediation or
corrective action under any Environmental Law, (c) subject
to claims arising under any Environmental Law for personal
injury, property damage, or damage to natural resources, or
(d) subject to fines or penalties arising under any
Environmental Law, in each case which could reasonably be
expected to have a Material Adverse Effect on the Company.
4.15 Financial Statements. True and complete copies of the unaudited
financial statements of the Company and its Subsidiaries consisting of (i) a
balance sheet as of December 31, 1999 and (ii) a balance sheet as of July 31,
2000 and the related consolidated income statement, and statement of cash flows
from operations for the seven-month period then ended have been provided to
Purchaser; provided the financial statements in subsection (i) and (ii) above
have been prepared on a proforma basis to include all of the assets and business
which are intended to be included in the Company and its Subsidiaries
immediately following the Closing. Such financial statements present fairly, in
all material respects the financial condition and the results of operations of
20
the Company and its Subsidiaries at the dates and for the periods covered
thereby pursuant to this Agreement in conformity with generally accepted
accounting principles consistently applied except for the exclusion of notes.
4.16 Sufficiency of Assets. The Company Assets constitute all of the
material properties or material assets necessary to conduct the business of the
Company and its Subsidiaries as conducted immediately prior to the Closing Date.
4.17 Pipeline Tariffs. Except as set forth on Schedule 4.17 of the
Seller Disclosure Memorandum, the Company and its Subsidiaries do not have any
pipeline tariffs.
4.18 Hedging Transactions. Schedule 2.03 to the Seller Disclosure
Memorandum lists all of the hedging transactions which are outstanding as of the
date specified in Schedule 2.03 which have been entered into by Seller or its
Affiliates for or on behalf of the business of the Company and its Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the following
statements are true and correct as of the date of this Agreement:
5.01 Organization. Purchaser is duly organized, validly existing and
in good standing under the Laws of the State of Delaware with all requisite
power and authority to own, lease and operate its properties and to carry on its
business as currently conducted.
5.02 Authorization of Transaction Agreements. Purchaser has all
requisite power and authority to enter into the Transaction Agreements to be
executed and delivered by it at the Closing, to perform its obligations
thereunder and to consummate the Transactions. The execution and delivery by
Purchaser of the Transaction Agreements to be executed and delivered by it, and
the performance of their obligations thereunder, have been duly and validly
authorized by all requisite action on the part of Purchaser. The Transaction
Agreements to be executed and delivered by Purchaser will constitute legal,
valid and binding obligations of Purchaser, enforceable against it in accordance
with their terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, or by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including the availability of specific performance.
5.03 Purchaser Consents. The execution, delivery and performance by
Purchaser of the Transaction Agreements, and the consummation of the
Transactions do not and will not (i) conflict with or violate any provision of
the organizational documents of Purchaser, (ii) subject to obtaining the
consents referenced on Schedule 5.03, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the giving of notice or the lapse of time or both)
of any right or obligation of Purchaser under, any material note, bond,
mortgage, indenture, Permit, license, lease, agreement, contract, arrangement or
21
commitment to which Purchaser is a party or by which Purchaser or any of its
assets or properties are bound or affected, or (iii) subject to obtaining the
consents referenced on Schedule 5.03, violate or result in a breach of or
constitute a default under any Law or Judgment applicable to Purchaser or by
which Purchaser or any of its assets are bound or affected, except, in the cases
of clauses (ii) and (iii), for any conflict, breach, default, termination,
cancellation, acceleration, loss or violation which, individually or in the
aggregate, would not materially impair Purchaser's ability to effect the Closing
or have a Material Adverse Effect on Purchaser.
5.04 Approvals. Except for the consents listed in Schedule 5.03, no
Consent is required to be obtained by Purchaser or any of its Affiliates from,
and no notice or filing is required to be given by Purchaser or any of its
Affiliates to or made by Purchaser or any of its Affiliates with, any
Governmental Authority or other Person in connection with the execution,
delivery and performance by Purchaser of the Transaction Agreements, other than
in all cases where the failure to obtain such Consent or to give or make such
notice or filing would not, individually or in the aggregate, impair Purchaser's
ability to effect the Closing or have a Material Adverse Effect on Purchaser.
5.05 Litigation; Impairment. There are no Proceedings pending (whether
at law or in equity) or, to the Knowledge of Purchaser, threatened against or
involving Purchaser or any of its Affiliates in any Court or before or by any
Governmental Authority which (i) question the validity of any Transaction
Agreement or seek to restrain, prohibit, invalidate, set aside, prevent or make
unlawful any Transaction Agreement or any of the Transactions, or (ii) if
adversely determined (x) would prevent or impair the ability of Purchaser to
purchase the Company Interest or the ability of Purchaser to perform any of its
obligations under the Transaction Agreements or (y) would have a Material
Adverse Effect on Purchaser.
5.06 Financing. Purchaser has, or has arranged for, the funds
necessary to pay the Consideration to Seller and, subject to the satisfaction of
Purchaser's conditions to Closing set forth in Article VII, will cause the
timely availability of such funds for the purposes of consummating the
transaction contemplated herein in accordance with the terms of this Agreement
and otherwise fully performing its obligations pursuant to this Agreement and
the transactions contemplated hereby. The availability and sufficiency of funds
for the proposed Consideration is not a condition precedent to the obligations
of Purchaser under this Agreement.
5.07 Investment Intent.
(a) Purchaser is capable of evaluating the merits and risks of its
investment in the Company Interest. Purchaser is acquiring the Company Interest
for its own account and not with a view to or for sale in connection with any
distribution of such securities as such terms are defined under the Securities
Act. Purchaser has had an opportunity to discuss the Company's and its
Subsidiaries' business and financial condition, properties, operations and
prospects with Seller's and the Company's management and to ask questions of
officers of Seller and the Company.
(b) Purchaser understands that (i) the Company Interest will be
"restricted securities" under the applicable federal securities laws, and (ii)
that the Securities Act and the rules of the SEC provide in substance that such
equity holder may dispose of the Company Interest only pursuant to an effective
registration statement under the Securities Act or in a transaction exempt from
22
the registration requirements of the Securities Act, and that, accordingly,
Purchaser may be required to bear the economic risk of the investment in the
Company Interest for a substantial period of time.
5.08 No Brokers. Neither Purchaser nor any of its Affiliates has
employed any investment banker, broker, or finder in connection with the
transactions contemplated by this Agreement, nor has any of them taken any
action which would give rise to a valid claim against Seller or any of its
Affiliates hereto for a brokerage commission, finder's fee, or other like
payment.
ARTICLE VICOVENANTS
6.01 Conduct of the Business Pending the Closing. During the period
from the date of this Agreement to the Closing, except as otherwise contemplated
by this Agreement or as Purchaser shall otherwise consent in writing (which
consent shall not be unreasonably withheld or delayed), Seller shall cause the
Company and its Subsidiaries: to conduct the business and operations of the
Company and its Subsidiaries in the ordinary and usual course in a manner
consistent with past practice; to use their commercially reasonable efforts to
preserve intact, in all material respects, the business organizations and
relationships with third parties; and to keep available the services of the
present employees of Seller or Seller's Affiliates who provide services to the
Company and its Subsidiaries. During the period from the date of this Agreement
to the Closing, Seller will not, and will cause the Company and its Subsidiaries
not to, willfully take any action that would make any representation or warranty
of Seller under this Agreement inaccurate in any material respect at the Closing
Date, except (i) as may be necessary to comply with applicable Law or the terms
of this Agreement, (ii) as may be consented to by Purchaser, or (iii) as may be
required by emergency or force majeure conditions. During the period from the
date of this Agreement to the Closing, except (a) as otherwise provided for in
or permitted by this Agreement, (b) as Purchaser shall otherwise consent (which
consent shall not be unreasonably withheld or delayed), (c) as described on
Schedule 6.01 of the Seller Disclosure Memorandum, (d) as contemplated by the
ordinary course of business of the Company and its Subsidiaries, or (e) as may
be required by emergency or force majeure conditions, Seller covenants and
agrees that, with respect to the Company and its Subsidiaries, it shall not:
(i) permit the Company or its Subsidiaries to dispose of any
assets of the Company or its Subsidiaries (other than the sale of
Inventories in the ordinary course of business and the Excluded
Assets) if the greater of the book value or the fair market value,
individually or in the aggregate, of such assets exceeds $100,000;
(ii) incur, create or assume any Lien on any individual
asset of the Company or its Subsidiaries, other than Permitted Liens;
(iii) incur any new third party Indebtedness for Borrowed
Money;
(iv) other than as set forth on the capital expenditures
schedule referenced in Schedule 6.01 of the Seller Disclosure
Memorandum, permit the Company or any Subsidiary to enter into any
agreement to make capital expenditures in excess of $1,000,000
23
individually or $5,000,000 in the aggregate for the Company and its
Subsidiaries, taken as a whole;
(v) permit the Company or its Subsidiaries to amend in any
respect any Material Contract or any other Contract that would have a
Material Adverse Effect or terminate any of the Material Contracts
(except with respect to purchase orders or termination of such
Contracts caused by the termination or default of any other party
thereto) or default in the performance of any material covenant or
obligation thereunder which default is not cured within any applicable
grace period;
(vi) sell or permit the Company or any Subsidiary to issue,
sell, pledge or purchase, or agree to issue, sell, pledge or purchase,
any member interest, capital stock or other equity interest in the
Company or any Subsidiary, or any options, rights, or warrants to
acquire, or securities convertible into, any member interest, capital
stock or other equity interest in the Company or any Subsidiary, or
split, combine or reclassify or pay any equity dividend in respect of
the member interests of the Company or any Subsidiary or take any
similar action in connection with the member interests of the Company
or any Subsidiary;
(vii) settle, or permit the Company or any Subsidiary to
settle, any litigation that would have a Material Adverse Effect on
its business or for an amount that exceeds $150,000;
(viii) permit the Company or its Subsidiaries to hire any
employees or consultants or become obligated under any employee
benefit, welfare or compensation plans or arrangements;
(ix) permit the Company or any Subsidiary to enter into any
agreement, arrangement or understanding (other than the agreements
described in other subsections of this Section 6.01) involving a
commitment on the part of the Company or any Subsidiary to expend in
excess of $100,000 individually or $1,000,000 in the aggregate for the
Company and its Subsidiaries, taken as a whole;
(x) permit the Company or any Subsidiary to approve or agree
to any modification of the Company's approved operating or capital
expenditure budget with respect to any of the Pipeline Systems in
excess of $250,000 for all of the Pipeline Systems, taken as a whole;
(xi) permit the Company or any Subsidiary to fail to
maintain or repair the Pipeline System in a manner consistent with
past practices;
(xii) other than as reflected in or contemplated by the
proposed amendments to the Predecessor Agreements, copies of which
have been provided to Purchaser, permit the Company or any Subsidiary
to (A) amend any of the Predecessor Agreements to the extent it
affects the Pipeline Systems in a manner which would adversely (1)
affect the pricing, volumes, delivery term or duration under the
Predecessor Agreements, (2) require the Company or its Subsidiaries to
post any additional collateral or incur any additional capital costs,
24
in each case, beyond those currently required under the Predecessor
Agreements or (3) impose additional transfer restrictions upon a
transfer or disposition of the Pipeline Systems other than the
transfer restrictions currently existing under the Predecessor
Agreements or (B) execute any such amendment prior to Purchaser having
the opportunity to review such amendment for two (2) business days
prior to execution;
(xiii) enter into or permit the Company or any Subsidiary to
enter into hedging transactions, for or on behalf of the Company or
any Subsidiary, except for hedging transactions which are entered into
in the ordinary course of business and are consistent with the type of
hedges referenced on Schedule 2.03 hereto;
(xiv) amend or terminate any agreement (other than the
termination of any agreement specified on Schedule 4.10 as being
terminated) between the Company and its Subsidiaries, on the one hand,
and Seller or any of its Affiliates, on the other hand;
(xv) assign to the Company and its Subsidiaries any
agreement (other than the agreements specified on Schedule 4.10 as
being assigned to the Company and its Subsidiaries or which may be
assigned to the Company and its Subsidiaries pursuant to Section
2.03(e)) to which at least one of the parties thereto is Seller or one
of its Affiliates; or
(xvi) agree or commit to do any of the foregoing.
6.02 Access to Information. Prior to the Closing Date, Seller will and
will cause each of the Company and its Subsidiaries: (i) to permit
representatives of Purchaser to have reasonable access at all reasonable times,
upon reasonable prior notice and in a manner so as not to interfere with the
normal business operations of the Company and its Subsidiaries, to all premises,
properties, personnel, books, records, contracts and documents of or pertaining
to each of the Company and its Subsidiaries, and (ii) to furnish to Purchaser
and its representatives access to such information concerning the properties,
contracts, records and operations of the Company and its Subsidiaries (including
financial, operating and other data and information) as may be reasonably
requested, from time to time, by Purchaser.
(b) Notwithstanding the foregoing provisions of this Section, no party
shall be required to grant access or furnish information to the other party or
the other party's representatives to the extent that such information is subject
to an attorney/client or attorney work product or that such access or the
furnishing of such information is prohibited by Law or by a valid and binding
confidentiality agreement with a third party; provided, however, that, in the
latter instance, if so requested by the other party, each party will use its
reasonable efforts to obtain from such third party a waiver of such prohibition.
(c) To the extent reasonably necessary or desirable in connection with
Seller's ownership of the Company Interest (including tax related matters) or
other matters arising under this Agreement, after the consummation of the
transactions contemplated hereby, Seller will have reasonable access upon
reasonable prior notice and in a manner so as not to interfere with the normal
business operations of the Company and its Subsidiaries, to all premises,
25
properties, personnel, books, records, work papers, contracts and documents of
or pertaining to each of the Company and its Subsidiaries to the extent relating
to the Pipeline Systems as existing at the Closing. Purchaser shall preserve all
such information, records and documents for a period of seven (7) years
following the Closing.
(d) Each of the parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Tax Returns of or with respect
to the Company or any of its Subsidiaries or to any claims, audits or other
proceedings affecting the Company or any of its Subsidiaries until the
expiration of the statute of limitations (including extensions) applicable to
the taxable period to which such documents relate or until the final
determination of any controversy with respect to such taxable period and until
the final determination of any payments that may be required with respect to
such taxable period under this Agreement.
6.03 Consents.
(a) To the extent required by the HSR Act, each of the parties will
(i) file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice, as promptly as practicable after the execution and
delivery of this Agreement, all reports and other documents required to be filed
by such party and any other person (as defined in the HSR Act) affiliated with
such party under the HSR Act concerning the transaction contemplated hereby
(requesting early termination of the waiting period under the HSR Act) and (ii)
promptly comply with or cause to be complied with any requests by the Federal
Trade Commission or the United States Department of Justice for additional
information concerning such transactions, in each case so that the waiting
period applicable to this Agreement and the transactions contemplated hereby
under the HSR Act shall expire as soon as practicable after the execution and
delivery of this Agreement. Each party agrees to request and to cooperate with
the other party in requesting early termination of any applicable waiting period
under the HSR Act.
(b) From the date of execution of this Agreement through the Closing
Date, each of the parties will use its reasonable efforts (and will cooperate
with the other party) to obtain all other consents approvals, orders,
authorizations and waivers of, and to effect all declarations, filings and
registrations with, all third parties (including Governmental Authorities) that
are required to be made or effected by it to enable it to effect the
Transactions contemplated hereby.
6.04 Public Announcements. Purchaser and Seller will consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the transactions contemplated by this
Agreement and, except as may be required by applicable Law or any securities
exchange on which the securities of the parties or their Affiliates are listed
(following notice and consultation), neither Purchaser nor Seller shall issue
any such press release or make any such public statement without the prior
approval of the other party to this Agreement, such approval not to be
unreasonably withheld or delayed.
6.05 Supplemental Disclosures. Prior to Closing, Seller shall have the
opportunity to supplement the Schedules to the Seller Disclosure Memorandum by
delivering a written supplement to Purchaser, provided that if such supplement
26
includes any additional items which would have a Material Adverse Effect on the
Company and its Subsidiaries, then Purchaser may elect to terminate this
Agreement.
6.06 Books and Records. On or before the Records Delivery Date, Seller
will, and will cause its Affiliates to provide access to Seller's facilities
(which shall be one facility in Houston, Texas reasonably convenient to the
Purchaser) to Purchaser so as to allow Purchaser (or its designee) to take
possession of and relocate to Purchaser's offices all books, accounting records,
contracts, leases, property files and other relevant files and records located
within the State of Texas and relating to the Company Assets. On or before the
Records Delivery Date, Seller will, and will cause its Affiliates to relocate to
the offices of the Company and its Subsidiaries all books, accounting records,
contracts, leases, property files and other relevant files and records located
within the State of Louisiana and relating to the Company Assets which are not
then physically located in the offices of the Company and its Subsidiaries.
6.07 Removal of Tradenames. As soon as reasonably practicable after
the Closing (and in any event, within one hundred eighty (180) days after
Closing or such later date as may be agreed by Seller), Purchaser will remove
the "Coral", "Tejas" and "Shell" names (and all derivatives thereof), trademarks
and symbols from the properties and assets of the Company and its Subsidiaries
(including changing all pipeline markers and signage relating thereto) and
provide the requisite notices to, the appropriate federal, state or local
agencies to place the title or other evidences of ownership, including operation
of the properties and assets, in a name other than any name of Seller or any of
its Affiliates or any variations thereof.
6.08 Further Assurances.
(a) Each of the parties shall, prior to the Closing, use its
reasonable efforts to (i) take, or cause to be taken, all appropriate action and
do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate the Transactions as promptly as
practicable, and (ii) obtain expeditiously from any Governmental Authorities and
other Persons any Consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by such party in
connection with the authorization, execution and delivery of the Transaction
Agreements and the consummation of the Transactions.
(b) Purchaser and Seller shall, prior to the Closing, furnish to each
other all information required for any application or other filing to be made
pursuant to the rules and regulations of any Applicable Law in connection with
consummation of the Transactions.
(c) If it is determined during the first twelve months following the
Closing that record and beneficial title to any of the Company Assets is not
held by the Company or its Subsidiaries but rather is held by Seller or an
Affiliate of Seller as of the Closing Date, Seller agrees to execute and to
cause its Affiliates to execute such agreements as shall be reasonably required
to cause such title to be effectively transferred and conveyed from Seller or
its Affiliates to the Company and its Subsidiaries.
6.09 Intercompany Indebtedness. On or prior to the Closing, Seller
shall (i) pay or cause its Affiliates to pay to the Company and its Subsidiaries
all long-term debt (including current maturities) and other indebtedness for
27
borrowed money owed by Seller or any of its Affiliates as of such date to the
Company and its Subsidiaries and (ii) pay to the Company a capital contribution
and cause such capital contribution to be applied to pay or satisfy all
long-term debt (including current maturities) and other indebtedness for
borrowed money owed by the Company and its Subsidiaries to Seller or its
Affiliates (other than the Company and its Subsidiaries) as of such date.
6.10 Collections. After Closing, Seller agrees to cause to be paid to
the Company any amounts received by Seller after the Closing Date in respect of
accounts receivable related to the Pipeline Systems promptly upon receipt
thereof. After Closing, Purchaser agrees to and to cause the Company and its
Subsidiaries to cause to be paid to Seller any amount, received by Purchaser,
the Company or its Subsidiaries or any of their respective Affiliates after the
Closing Date in respect of the Excluded Assets.
6.11 Excluded Assets. On or prior to the Closing, Seller will cause
the Excluded Assets to be transferred and conveyed out of the Company and its
Subsidiaries.
6.12 Surface Leases; Extension of Cavern Lease. Seller agrees, for a
period of up to one (1) year following the Closing, to use reasonable commercial
efforts, at no cost to Seller, to obtain from Shell Oil Company (i) a Sublease
Agreement, in form reasonably satisfactory to Purchaser, relating to the real
property interests described in the Shell Leases which are not otherwise leased
by the Company and its Subsidiaries or by third parties, or (ii) an agreement
providing to Company and its Subsidiaries the right to extend the Cavern Lease
through 2022. Such reasonable commercial efforts shall include arranging for,
and engaging in, meetings between Purchaser and Shell Oil Company to discuss and
negotiate the foregoing.
6.13 Access to Financial Records. Seller will and will cause each of
the Company and its Subsidiaries to permit representatives of Purchaser (for a
reasonable period following the Closing Date) to have reasonable access at all
reasonable times, upon reasonable prior notice and in a manner so as not to
interfere with the normal business operations of Seller, to all premises,
personnel, books and records of or pertaining to the operations of the Company
and its Subsidiaries as may be reasonably necessary for Purchaser to prepare
financial statements required by the Securities and Exchange Commission or the
New York Stock Exchange with respect to Purchaser's acquisition of the Company
and its Subsidiaries. In this connection, Seller shall cooperate with Purchaser
in providing reasonable access to Purchaser of Seller's work papers with respect
to such historical periods.
6.14 Obligations Under the Exxon Agreement. Purchaser agrees, from and
after the Closing, to cause the Company and its Subsidiaries to provide copies
of all Tax Returns applicable to the Company and its Subsidiaries to Exxon
Corporation ("Exxon") as required under the Stock and Asset Purchase Agreement
dated September 15, 1993, between Exxon and the other parties thereto.
6.15 Termination of Right of First Refusal. On or prior to the
Closing, Seller agrees to obtain from Shell Oil Company, a letter terminating
Shell Oil Company's right of first refusal to purchase the Company and its
Subsidiaries.
28
6.16 Transaction Payments. Purchaser agrees that it will pay all
required Transaction Payments to the Transferred Employees (as defined in the
Employee Matters Agreement) within five days following the Employment
Commencement Date (as defined in the Employee Matters Agreement). "Transaction
Payments" shall mean equalization payments, if any, payable to the Transferred
Employees as reflected in a written notice delivered by Seller to the Purchaser
no later than five (5) days prior to the Employment Commencement Date. Such
notice shall specify the amounts payable to each Transferred Employee and any
conditions to such payments.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 General Conditions.
The obligations of each party to this Agreement to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
or waiver of the following conditions at or prior to the Closing:
(a) No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order by any court of
competent jurisdiction or Governmental Authority shall be in effect
that prohibits the consummation of the Transactions;
(b) All Consents required to be obtained from third parties
(other than Shell Oil Company or any of its Affiliates), Governmental
Authorities or otherwise and all filings required to be made by the
parties for the consummation of the Transactions shall have been made
and obtained by the parties; and
(c) Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement and the HSR Act shall have
lapsed or terminated by early termination or otherwise.
7.02 Conditions to Obligations of Seller. The obligations of Seller to
consummate the Transactions contemplated by this Agreement shall be subject to
the satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Purchaser shall have performed and complied with all
agreements and covenants required to be performed and complied with by
Purchaser under this Agreement at or prior to the Closing;
(b) The representations and warranties of Purchaser
contained in this Agreement shall be true and correct at and as of the
date of this Agreement and at and as of the Closing Date as though
restated on and as of such date (except in the case of any
representation or warranty that by its terms is made as of a date
specified therein, in which case such representation or warranty shall
be true and correct as of such date);
(c) Purchaser shall have delivered to Seller a certificate
signed by an officer of Purchaser stating that the representations and
warranties included in the Purchaser Representations and Warranties
29
are true and correct as of the Closing Date as though restated on and
as of such date (except in the case of any representation or warranty
that by its terms is made as of a date specified therein, in which
case such representation or warranty shall be true and correct as of
such date); and
(d) The closing of the transactions contemplated by the
Master Purchase Agreement dated as of July 14, 2000, by and among
Shell Oil Company, Shell Overseas Trading Limited and Bechtel
Enterprises Holdings, Inc. or Shell Oil Company shall have terminated
its negotiations and abandoned its efforts to close such transactions.
7.03 Conditions to Obligations of Purchaser.
The obligation of Purchaser to consummate the Transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver at
or prior to the Closing of each of the following conditions:
(a) Seller shall have performed and complied with all
agreements and covenants required to be performed and complied with by
Seller under this Agreement at or prior to the Closing;
(b) The representations and warranties of Seller in Articles
III and IV of this Agreement shall be true and correct at and as of
the date of this Agreement and at and as of the Closing Date as though
restated on and as of such date (except in the case of any
representation or warranty that by its terms is made as of a date
specified therein, in which case such representation or warranty shall
be true and correct as of such date);
(c) Seller shall have delivered to Purchaser a certificate
signed by an officer of Seller stating that the representations and
warranties included in the Seller Representations and Warranties are
true and correct as of the Closing Date as though restated on and as
of such date (except in the case of any representation or warranty
that by its terms is made as of a date specified therein, in which
case such representation or warranty shall be true and correct as of
such date); and
(d) There shall not, since the execution date of the
Agreement, have occurred any event or development that would have a
Material Adverse Effect on the Company.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing only as follows:
(a) by the mutual written agreement of Purchaser and Seller;
(b) by Seller by giving written notice of such termination
to Purchaser if the Closing shall not have occurred by June 30, 2001
30
as a consequence of a failure of any condition to Seller's obligation
to close other than the condition set forth in Section 7.02(d);
provided Seller has not materially breached any of its agreements,
covenants, representations or warranties;
(c) by Purchaser by giving written notice of such
termination to Seller, if the Closing shall not have occurred by April
15, 2001 as a consequence of a failure of any condition to Purchaser's
obligation to close; provided Purchaser has not materially breached
any of its agreements, covenants, representations or warranties;
(d) by Seller if Purchaser has breached in any material
respect any covenant or agreement of Purchaser contained herein or has
breached any representation or warranty of Purchaser herein such that
the condition to closing set forth in Section 7.02(b) would not be
satisfied, and in each case such breach is not remedied within 30 days
of notice of such breach by Seller to Purchaser; or
(e) by Purchaser if Seller has breached in any material
respect any covenant or agreement of Seller contained herein or has
breached any representation or warranty of Seller herein such that the
condition to closing set forth in Section 7.03(b) would not be
satisfied, and in each case such breach is not remedied within 30 days
of notice of such breach by Purchaser to Seller.
8.02 Effect of Termination. If this Agreement is terminated as
permitted under Section 8.01, such termination shall be without liability to any
party to this Agreement or to any Affiliate, or their respective shareholders,
directors, officers, employees, agents, advisors or representatives, and
following such termination no party shall have any liability under this
Agreement or relating to the transactions contemplated by this Agreement to any
other party; provided that:
(a) If the Closing does not occur on the Closing Date due to
any breach of this Agreement by Purchaser, then Seller, at its option,
may (i) enforce specific performance, or (ii) terminate this Agreement
in which case Seller shall be entitled to receive indemnification from
Purchaser for all Damages arising as a result of such breach; or
(b) If the Closing does not occur on the Closing Date due to
any breach of this Agreement by Seller, Purchaser, at its option, may
either (i) enforce specific performance of this Agreement, or (ii)
terminate this Agreement in which case, Purchaser shall be entitled to
receive indemnification from Seller for all Damages arising as a
result of such breach.
The provisions of this paragraph and the Confidentiality Agreement shall survive
any termination of this Agreement pursuant to this Article.
31
ARTICLE IX
GENERAL PROVISIONS
9.01 Expenses and Taxes; Tax Returns.
(a) Each party to this Agreement shall pay all fees and expenses
incurred by it in connection with this Agreement and the transactions
contemplated by this Agreement. The parties to this Agreement agree that all
applicable excise, sales, transfer, documentary, filing, recordation and other
similar Taxes, levies, fees and charges, if any, that may be imposed upon, or
payable or collectible or incurred in connection with, this Agreement and the
transactions contemplated by this Agreement shall be borne by the party on which
such Taxes, levies, fees or charges are imposed by operation of law. Each party
to this Agreement agrees to file all necessary documentation (including all Tax
Returns) with respect to such Taxes in a timely manner.
(b) Seller shall timely file (taking into account any extensions
received from the relevant Tax authorities) all Tax Returns accurately
reflecting the operations of the Company and its Subsidiaries for periods ending
prior to the Closing Date and shall pay all Taxes with respect thereto.
Purchaser shall timely file (taking into account any extensions received from
the relevant Tax authorities) all Tax Returns accurately reflecting the
operations of the Company and its Subsidiaries for periods ending on or after
the Closing Date and shall pay all Taxes with respect thereto. For purposes of
this Section 9.01(b), in the case of any Taxes based upon or related to income
or receipts, including franchise Taxes, that are payable for a Tax period that
includes (but does not end on) the Closing Date, Seller shall pay to Purchaser
at Closing, the portion of such Tax which relates to the portion of such Tax
period ending prior to the Closing Date. This amount due from Seller shall be
deemed equal to the amount which would be payable if the relevant Tax period
ended on the Closing Date. To the extent the amounts described in this Section
9.01(b) are estimated at Closing and the prorations are inaccurate, Seller and
Purchaser agree to make or cause to be made such payment or reimbursement to the
other after the amounts are correctly computed, that is necessary to allocate
the charges properly between Seller and Purchaser as of the Closing Date.
9.02 Amendment. This Agreement may not be amended except by an
instrument in writing signed by Purchaser and Seller.
9.03 Waiver. Either Purchaser or Seller may (a) extend the time for
the performance of any of the obligations or other acts of the other, (b) waive
any inaccuracies in the representations and warranties of the other contained in
this Agreement or in any document delivered by the other pursuant to this
Agreement or (c) waive compliance with any of the agreements, or satisfaction of
any of the conditions, contained in this Agreement by the other. Any agreement
on the part of a party to this Agreement to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party
against whom enforcement is sought.
9.04 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with, this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission or on
receipt after dispatch by registered or certified mail, postage prepaid,
addressed, as follows:
32
If to Seller:
Coral Energy, LLC
909 Fannin, Suite 700
Houston, Texas 77010
Attn: Chief Executive Officer
Phone: (713) 767-5400
Fax: (713) 767-5440
With a copy to:
Coral Energy, LLC
909 Fannin, Suite 700
Houston, TX 77010
Attn: General Counsel
Phone: (713) 767-5400
Fax: (713) 230-2900
If to Purchaser:
Enterprise Products Operating L.P.
2727 North Loop West, Suite 700
Houston, TX 77008
Attn: President
Phone: (713) 880-6500
Fax: (713) 880-6570
With a copy to:
Enterprise Products Operating L.P.
2727 North Loop West, Suite 700
Houston, TX 77008
Attn: Chief Legal Officer
Phone: (713) 880-6500
Fax: (713) 880-6570
or such other address as the person to whom notice is to be given has furnished
in writing to the other parties. A notice of change in address shall not be
deemed to have been given until received by the addressee.
9.05 Headings. The descriptive headings of the Articles and Sections
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement. The Seller Disclosure Memorandum constitutes an integral part
of this Agreement and modifies the respective representations, warranties,
covenants or agreements of Seller contained herein to the extent that such
33
representations, warranties, covenants or agreements expressly refer
specifically to the applicable section of the Seller Disclosure Memorandum. Each
item of disclosure set forth in the Seller Disclosure Memorandum specifically
refers to the article and section of the Agreement to which such disclosure
responds, and shall not be deemed to be disclosed with respect to any other
article or section of the Agreement.
9.06 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas regardless of principles of
conflicts of laws.
9.07 No Third Party Rights. Except as specifically provided for in
Article X, this Agreement is intended to be solely for the benefit of the
parties to this Agreement and is not intended to confer any benefits upon, or
create any rights in favor of, any Person other than the parties to this
Agreement.
9.08 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
9.09 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions of this Agreement shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
9.10 Entire Agreement. This Agreement (including the documents and
instruments referred to in this Agreement) sets forth the entire understanding
and agreement among the parties as to the matters covered in this Agreement and
supersedes and replaces any prior understanding, agreement including, the
Confidentiality Agreement or statement of intent, in each case, written or oral,
of any and every nature with respect to such understanding, agreement or
statement.
9.11 Arbitration; Waiver.
(a) Any controversy or claim, whether based on contract, tort, statute
or other legal or equitable theory (including but not limited to any claim of
fraud, misrepresentation or fraudulent inducement or any question of validity or
effect of this Agreement including this clause) arising out of or related to
this Agreement (including any amendments or extensions), or the breach of
termination hereof or any right to indemnity hereunder shall be settled by
arbitration in accordance with the arbitration terms set forth in Exhibit D
hereto.
(b) Without any way limiting Section 9.11(a), each of the parties
hereto hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of any of them in
the negotiation, administration, performance and enforcement thereof.
9.12 Disclaimer of Other Representations and Warranties. (a) Except as
expressly set forth in Article III and Article IV, SELLER MAKES NO ORAL OR
WRITTEN REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF SELLER, THE COMPANY OR ITS SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE
ASSETS, LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT
34
TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR ANY REPRESENTATION
OR WARRANTIES WITH RESPECT TO THE DESIGN, QUALITY, DURABILITY, VALUE, OR
CONDITION OR SUITABILITY OF SUCH ASSETS OR THE PRESENCE, ABSENCE OR CONDITION OF
HAZARDOUS SUBSTANCES OR POLLUTANTS IN, ON OR UNDER SUCH ASSETS, AND ANY SUCH
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
(b) PURCHASER ACKNOWLEDGES THAT, PRIOR TO ITS EXECUTION OF THIS
AGREEMENT, IT HAS CONDUCTED SUCH EXAMINATION OF THE COMPANY'S AND ITS
SUBSIDIARIES' TITLE TO THEIR RESPECTIVE PROPERTIES AND ASSETS AS IT HAS DEEMED
NECESSARY OR ADVISABLE IN ORDER TO SATISFY ITSELF AS TO THE CONDITION OF TITLE
TO SUCH PROPERTIES AND ASSETS, EXCEPT FOR THE LIMITED WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT.
9.13 Fair Construction. This Agreement shall be deemed to be the joint
work product of Purchaser and Seller without regard to the identity of the
draftsperson, and any rule of construction that a document shall be interpreted
or construed against the drafting party shall not be applicable.
ARTICLE X
INDEMNIFICATION; SURVIVAL
10.01 Indemnification by Purchaser. Subject to the limitations set
forth in this Article X, Purchaser hereby agrees to indemnify and hold harmless
Seller and any of its Affiliates and their respective officers, directors,
partners, members and shareholders (collectively the "Seller Indemnified
Parties") from and against any and all Damages incurred by Seller Indemnified
Parties in connection with (a) any breach of any representation or any warranty
made by Purchaser under Sections 5.01 (Organization), 5.02 (Authorization of
Transaction Agreements), 5.03 (Purchaser Consents), 5.04 (Approvals), 5.07
(Investment Intent) or 5.08 (No Brokers), in each case, as brought down to the
Closing Date pursuant to the certificate delivered by Purchaser pursuant to
Section 7.02(c) hereof (collectively, the "Purchaser Representations and
Warranties"); or (b) any failure by Purchaser to perform any covenant or other
agreement hereinunder, in each case regardless of whether such Damages are
caused in whole or in part by the strict liability or negligent act or omission
of the Indemnified Party.
10.02 Indemnification by Seller. Subject to the limitations set forth
in this Article X, Seller hereby agrees to indemnify and hold harmless Purchaser
and any of its Affiliates and their respective officers, directors, partners,
members and shareholders (collectively, the "Purchaser Indemnified Parties")
from and against any and all Damages arising in connection with (a) any breach
by Seller of any of its representations and warranties contained in Sections
3.01 (Organization), 3.02 (Ownership of Company Interest), 3.03 (Validity and
Enforceability), 3.04 (Approvals and Consents), 3.05 (No Violation), 3.07 (No
Brokers), 4.01 (Organization), 4.02 (Capitalization), 4.06(a) (Litigation), 4.07
(Taxes) and 4.10(a) and (b) (Material Contracts), in each case, as brought down
to the Closing Date pursuant to the certificate delivered by Seller pursuant to
Section 7.03(c) hereof (collectively, the "Seller Representations and
Warranties"), (b) any failure by Seller to perform any covenant or other
agreement hereunder or (c) any of the Excluded Assets, in each case regardless
35
of whether such Damages are caused in whole or in part by the strict liability
or negligent act or omission of the Indemnified Party.
10.03 Indemnification Procedure. The party or parties making a claim
for indemnification under this Article X shall be, for the purposes of this
Agreement, referred to as the "Indemnified Party" and the party or parties
against whom such claims are asserted under this Article X shall be, for the
purposes of this Agreement, referred to as the "Indemnifying Party." All claims
by any Indemnified Party under this Article X shall be asserted and resolved as
follows:
(a) In the event that (i) any claim, demand or Proceeding is asserted
or instituted by any Person other than the parties to this Agreement or their
Affiliates which could give rise to Damages for which an Indemnifying Party
could be liable to an Indemnified Party under this Agreement (such claim, demand
or Proceeding, a "Third Party Claim") or (ii) any Indemnified Party under this
Agreement shall have a claim to be indemnified by any Indemnifying Party under
this Agreement which does not involve a Third Party Claim (such claim, a "Direct
Claim"), the Indemnified Party shall, with reasonable promptness, send to the
Indemnifying Party a written notice specifying the nature of such claim, demand
or Proceeding and the amount or estimated amount thereof (which amount or
estimated amount shall not be conclusive of the final amount, if any, of such
claim, demand or Proceeding) (a "Claim Notice"), provided that a delay in
notifying the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations under this Agreement except to the extent that (and only to the
extent that) such failure shall have caused the Damages for which Indemnifying
Party is obligated to be greater than such Damages would have been had the
Indemnified Party given the Indemnifying Party proper notice.
(b) In the event of a Third Party Claim, the Indemnifying Party shall
be entitled to appoint counsel of the Indemnifying Party's choice at the expense
of the Indemnifying Party to represent the Indemnified Party in connection with
such claim, demand or Proceeding (in which case the Indemnifying Party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by any Indemnified Party except as set forth below); provided that such
counsel is reasonably acceptable to the Indemnified Party. Notwithstanding an
Indemnifying Party's election to appoint counsel to represent an Indemnified
Party in connection with a Third Party Claim, an Indemnified Party shall have
the right to employ separate counsel, and the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel selected by the Indemnifying Party to represent the Indemnified Party
would present such counsel with a conflict of interest or (ii) the Indemnifying
Party shall not have employed counsel to represent the Indemnified Party within
a reasonable time after notice of the institution of such Third Party Claim. If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any claim, demand or
Proceeding which the Indemnifying Party defends, or, if appropriate and related
to the claim, demand or Proceeding in question, in making any counterclaim
against the Person asserting the Third Party Claim, or any cross-complaint
against any Person. No third Party Claim may be settled or compromised (i) by
the Indemnified Party without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed or (ii) by
the Indemnifying Party without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed. In the event
any Indemnified Party settles or compromises or consents to the entry of any
36
Judgment with respect to any Third Party Claim without the prior written consent
of the Indemnifying Party, each Indemnified Party shall be deemed to have waived
all rights against the Indemnifying Party for indemnification under this Article
X.
(c) In the event of a Direct Claim, the Indemnifying Party shall
notify the Indemnified Party within 30 Business Days of receipt of a Claim
Notice whether or not the Indemnifying Party disputes such claim.
(d) From and after the delivery of a Claim Notice under this Agreement
relating to a Third Party Claim, at the reasonable request of the Indemnifying
Party, each Indemnified Party shall grant the Indemnifying Party and its
representatives all reasonable access to the books, records and properties of
such Indemnified Party to the extent reasonably related to the matters to which
the Claim Notice relates. All such access shall be granted during normal
business hours and shall be granted under conditions which will not unreasonably
interfere with the business and operations of such Indemnified Party. The
Indemnifying Party will not, and shall require that its representatives do not,
use (except in connection with such Claim Notice) or disclose to any third
Person other than the Indemnifying Party's representatives (except as may be
required by applicable Law) any information obtained pursuant to this Section
10.03(d) which is designated as confidential by an Indemnified Party.
10.04 Survival. The representations and warranties of the parties
contained in this Agreement shall terminate at and not survive the Closing;
provided that the Seller Representations and Warranties and the Purchaser
Representations and Warranties shall each survive the Closing for the periods
set forth below:
(a) the representations and warranties of Seller in Sections 3.04,
3.05, 4.02, 4.06(a) and 4.10(a) and (b) and the representations and warranties
of Purchaser in Sections 5.03, 5.04 and 5.08 shall survive the Closing until
fifteen (15) months following the Closing Date;
(b) the representations and warranties of Seller in Section 4.07 shall
survive the Closing until the expiration of the applicable Tax Statute of
Limitations Date; and
(c) the representations and warranties of Seller in Sections 3.01,
3.02, 3.03, 3.07 and 4.01 and the representations and warranties of Purchaser in
Sections 5.01, 5.02 and 5.09 shall survive the Closing until the expiration of
the applicable statute of limitations.
Following the Closing, no party shall have the right to make any claim for
indemnification for any representations or warranties under this Agreement which
do not expressly survive the Closing or after the expiration of the applicable
survival period thereof; provided that, with respect to any representation or
warranty that survives the Closing in respect of which indemnity may be sought
under this Agreement, such representation or warranty shall survive the time at
which it would otherwise terminate pursuant to the preceding sentence, only if a
bona fide, written notice of the inaccuracy of such representation or warranty
giving rise to such right of indemnity (including the specific nature of such
inaccuracy) shall have been given to the party against whom such indemnity may
be sought prior to such time. The covenants and agreements of the parties
(including, without limitation, the covenants and agreement of the parties set
forth in this Article X) contained in this Agreement or in any other Transaction
Agreement shall survive the Closing indefinitely.
37
10.05 Limitation on Claims.
(a) Each party hereto acknowledges and agrees that (except as set
forth in subsection (d) below), the provisions of this Article X shall be the
exclusive remedy of such party with respect to any matter arising under this
Agreement; provided, however, that the foregoing shall not limit the right of
any such party to seek any equitable remedy (including specific performance)
available to enforce the rights of such party under this Agreement or any other
Transaction Agreement in accordance with the terms of this Agreement.
(b) The liability of Seller for Damages for breaches of any Seller
Representations and Warranties pursuant to Section 10.02(a), other than with
respect to breaches of Sections 3.02, 3.07 and 4.07 shall be limited as follows:
(i) Seller shall not be liable for or have responsibility
for any such Damages until the aggregate of such Damages incurred by
the Purchaser Indemnified Parties with respect to such claims exceeds
$5,000,000 in the aggregate and then only to the extent of the excess
over such amount; and
(ii) The obligations and total liability of Seller for such
Damages shall not exceed $22,000,000 in the aggregate.
(c) Nothing in this Section 10.05 shall prevent any party
from making a claim against the other party for actual and intentional
fraud (as opposed to a fraud claim based on constructive knowledge, or
negligent misrepresentation or similar theory).
38
Each of the parties to this Agreement has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
CORAL ENERGY, LLC
By: /s/ Charles R. Crisp
--------------------------------------------
Name: Charles R. Crisp
Title: Chief Executive Officer and President
ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC, General Partner
By: /s/ O.S. Andras
--------------------------------------------
Name: O.S. Andras
Title: President and Chief Executive Officer
EXHIBIT A
ASSIGNMENT OF LLC MEMBERSHIP INTEREST
THIS ASSIGNMENT OF LLC MEMBERSHIP INTEREST (this "Assignment") is made
effective this _____ day of _________, 2000 by Coral Energy, LLC, a Delaware
limited liability company ("Assignor"), with offices at 909 Fannin St., Houston,
Texas 77010, in favor of Enterprise Products Operating L.P., a Delaware limited
partnership ("Assignee"), with offices at 2727 North Loop West, Suite 700,
Houston, Texas 77008.
Assignor does hereby sell, transfer and assign to Assignee all of the
membership interests in Acadian Gas, LLC, a Delaware limited liability company.
This Assignment is made pursuant to that certain Purchase and Sale
Agreement dated as of September 22, 2000, by and between Assignor and Assignee.
This Assignment and all terms and conditions contained herein are
binding upon Assignor, Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the date and year first above written.
CORAL ENERGY, LLC
By:________________________________
Name:______________________________
Title:_______________________________
ENTERPRISE PRODUCTS OPERATING L.P.
By:________________________________
Name:______________________________
Title:_______________________________
EXHIBIT B
INTERIM SERVICES AGREEMENT
THIS INTERIM SERVICES AGREEMENT (this "Agreement") is entered into as
of ____________, 200__, [but effective as of the date indicated below], by and
between Coral Energy, LLC, a Delaware limited liability company ("Coral") and
Enterprise Products Operating L.P., a Delaware limited partnership
("Purchaser"), each of which or both hereafter also referred to as the "Party"
or "Parties."
W I T N E S S E T H
-------------------
WHEREAS, Coral and Purchaser have entered into that certain Purchase
and Sale Agreement dated as of September 22, 2000 (the "Purchase Agreement"),
pursuant to which Coral has agreed to sell all of its membership interests in
Acadian Gas, LLC (the "Company") to Purchaser;
WHEREAS, in order to effect an efficient transition of the Company
into Purchaser's operations, Coral is agreeable to providing certain support for
accomplishing said transition;
WHEREAS, the execution and delivery of this Agreement by Coral is a
condition precedent to the obligations of Purchaser in the Purchase Agreement;
and
WHEREAS, terms defined in the Purchase Agreement have the same
meanings when used herein unless expressly stated otherwise.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Coral and Purchaser hereby agree
as follows:
1. TERM.
(a) The term of this Agreement shall be from the Closing Date through
the date which is twelve months following the Closing Date.
(b) At any time after the date hereof, Purchaser may, for any reason
whatsoever, terminate any Service or this entire Agreement by giving Coral at
least twenty (20) days prior written notice to that effect. Any such termination
shall be effective on the first day of the month following Coral's receipt of
the termination notice. Purchaser shall pay Coral the total amount of any and
all payments or reimbursements payable under Section 6 below in providing
services under this Agreement.
2. PERFORMANCE. To facilitate the orderly and effective transition of
the Company from Coral's ownership to Purchaser's ownership, Coral shall
perform, or will cause to be performed, for the consideration and in accordance
with the terms of this Agreement, for Purchaser for the term of this Agreement
the services described in Exhibit A (each listed service, a "Service" and
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collectively, the "Services") for the Company acquired by Purchaser pursuant to
the Purchase Agreement.
3. MANNER OF PERFORMANCE.
(a) Coral agrees that it shall, for the consideration and in
accordance with the terms of this Agreement, cause its employees or employees of
its Affiliates (collectively, the "Coral Employees") providing the Services to
perform such Services in accordance with the reasonable instructions provided by
the authorized representatives of Purchaser, or its designee, and Coral shall be
entitled to rely upon any written or oral instructions received from such
authorized representatives or designees.
(b) CORAL SHALL NOT BE LIABLE FOR ANY CLAIMS OR DAMAGES AS A RESULT OF
CORAL'S OR THE CORAL EMPLOYEES' PERFORMANCE OF, OR FAILURE TO PERFORM, ANY OF
THE SERVICES REQUIRED HEREUNDER, INCLUDING THOSE THAT RESULT FROM CORAL'S OR THE
CORAL EMPLOYEES' SOLE, JOINT AND/OR CONCURRENT NEGLIGENCE OR OTHER FAULT.
PURCHASER HEREBY WAIVES AND RELEASES CORAL AND ITS AFFILIATES, OFFICERS,
DIRECTORS, MEMBERS, EMPLOYEES, AGENTS AND REPRESENTATIVES (COLLECTIVELY, THE
"CORAL GROUP") FROM, AND PURCHASER SHALL INDEMNIFY AND HOLD HARMLESS CORAL AND
THE CORAL GROUP FROM AND AGAINST, ANY AND ALL CLAIMS DIRECTLY CAUSED BY, ARISING
OUT OF OR RESULTING FROM THE PERFORMANCE OF THE SERVICES BY CORAL OR ANY MEMBER
OF THE CORAL GROUP (INCLUDING, BUT NOT LIMITED TO, ANY AMOUNTS CORAL OR THE
CORAL GROUP IS REQUIRED TO PAY ON ACCOUNT OF THE PERFORMANCE OF THE SERVICES),
REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACT OR OMISSION OF CORAL OR ANY MEMBER
OF THE CORAL GROUP. CORAL DOES NOT MAKE ANY WARRANTY AS TO THE RESULTS OF THE
SERVICES AND HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
TO PERFORMANCE UNDER THIS AGREEMENT.
(c) NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR PROSPECTIVE PROFITS
OR INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY NATURE AND EACH PARTY SHALL RELEASE,
PROTECT, DEFEND, INDEMNIFY AND HOLD THE OTHER PARTY HARMLESS FROM AND AGAINST
ALL SUCH CLAIMS, DEMANDS, AND CAUSES OF ACTION IRRESPECTIVE OF THE CAUSE,
ARISING OUT OF OR IN CONNECTION WITH THE MATTERS COVERED BY THIS AGREEMENT.
4. RELATIONSHIP OF PARTIES. Coral and Purchaser shall act as
independent contractors, and nothing herein shall at any time be construed to
create the relationship of employer and employee, partnership, principal and
agent, broker or finder, or joint venturers as between Coral, its Affiliates and
Purchaser. Except as expressly provided herein, no Party shall have any right or
authority, and no Party shall attempt to enter into any contract, commitment, or
agreement nor incur any debt or liability of any nature, in the name of or on
behalf of the other Party. Purchaser shall look to Coral for results only and
shall have no right at any time to direct or supervise Coral or the Coral
Employees in the performance of such work or as to the manner, means, and method
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in which work or labor is performed. The detailed manner and method of
performing the work shall be under the control of Coral.
5. SERVICE LIMITATION.
(a) Purchaser acknowledges that the Coral Employees which will provide
services to Purchaser hereunder are involved in the conduct of business by Coral
or its Affiliates. Coral agrees to, or to cause one or more of its Affiliates
to, use commercially reasonable efforts to have the necessary Coral Employees
available to Purchaser throughout the term of this Agreement; provided that such
Coral Employees will be available on reasonable request and will not be required
to forego their primary employment obligations with Coral or its Affiliates or
otherwise take any actions which would have an adverse impact on the operations
of Coral or its Affiliates.
(b) Neither Coral nor any of its Affiliates shall be obligated to hire
any additional employees or retain or acquire any outside or additional
assistance, equipment, computer programs or data to enable Coral to provide the
Services. Additionally, neither Coral nor any of its Affiliates shall be
required to make any payment on behalf of Purchaser unless Purchaser has
previously furnished Coral sufficient cash to make such payment. If the
employment of a Coral Employee terminates (a "Terminated Employee"), Coral
shall, or shall cause one or more of its Affiliates to, use commercially
reasonable efforts to continue to provide the Service(s) formerly performed by
the Terminated Employee; provided, however, that if Coral or one or more of its
Affiliates are unable to continue to perform such Service(s), such Service(s)
shall be deemed to have been terminated under, and in accordance with, Section
6(c), and Purchaser shall have no further obligation to pay the monthly fee(s)
for such Service(s) from and after the date of termination of the Terminated
Employee.
6. PAYMENT OF CHARGES AND REIMBURSEMENTS.
(a) All Services provided by Coral pursuant to this Agreement will be
at the service fees included in Exhibit A plus any and all out-of-pocket costs
incurred by Coral in providing Services under this Agreement (the "Service
Fees"), which Service Fees shall be the actual costs incurred by Coral as of the
date of this Agreement. Commencing six months from the date of this Agreement,
any increase in Coral's costs with respect to a Service shall be passed on by
Coral to Purchaser, provided, such increase shall be equal to and shall have
occurred in connection with, the overall increase in the fees charged to Coral
for services of such type.
(b) Each month during the term of this Agreement, Coral or its
Affiliates shall submit to Purchaser an invoice for the Service Fees for the
prior month. Purchaser shall remit payment to Coral for the invoiced amounts
within twenty (20) days of receipt of such invoice.
(c) If Purchaser terminates Coral's obligation to perform any Service
effective as of the first day of any month, in accordance with the terms of
Section 1(b) of this Agreement, Purchaser shall have no obligation to pay the
monthly fee for such Service set forth above for any month from and after such
termination becomes effective.
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(d) In the event of a good-faith dispute as to the amount or
appropriateness of any invoices or any portions thereof submitted by Coral to
Purchaser pursuant to this Section 6, Purchaser shall pay all charges on such
invoice, but shall be entitled to dispute any amount on such invoice. In any
such case, Purchaser shall promptly notify Coral in writing of such disputed
amounts and the reasons each such charge is disputed by Purchaser. Coral shall
provide Purchaser sufficient records relating to the disputed charge so as to
enable the Parties to resolve the dispute in a timely manner. Resolution of any
such disputed amounts shall be in accordance with the procedures for resolving
disputes and disagreements in Section 9.11 of the Purchase Agreement.
7. ASSIGNABILITY. This Agreement may not be assigned by either Party
hereto. Purchaser acknowledges and agrees that Coral may obtain the assistance
of its Affiliates and subsidiaries in performing the services.
8. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of Texas without regard to conflicts of law principles.
9. WAIVER OR CONSENT. No waiver or consent by either Party, express or
implied, of any one or more defaults by the other Party in the performance of
any provision of this Agreement shall operate or be construed as a waiver or
consent of any other default or defaults whether of a like or different nature.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date shown above.
CORAL ENERGY RESOURCES, L.P. ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC,
General Partner
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
EXHIBIT C
EMPLOYEE MATTERS AGREEMENT
THIS EMPLOYEE MATTERS AGREEMENT (this "Agreement") is entered into as
of ____________, 2000, by and between Coral Energy, LLC, a Delaware limited
liability company ("Coral"), and Enterprise Products Operating L.P., a Delaware
limited partnership ("Purchaser"), each of which or both hereafter also referred
to as the "Party" or "Parties."
W I T N E S S E T H
WHEREAS, Coral and Purchaser have entered into that certain Purchase
and Sale Agreement dated as of September 22, 2000 (the "Purchase Agreement"),
pursuant to which Coral has agreed to sell all of its membership interests in
Acadian Gas, LLC (the "Company") to Purchaser;
WHEREAS, the execution and delivery of this Agreement by Coral is a
condition precedent to the obligations of Purchaser in the Purchase Agreement;
and
WHEREAS, terms defined in the Purchase Agreement have the same
meanings when used herein unless expressly stated otherwise.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Coral and Purchaser hereby agree
as follows:
Section 1. Employees. Coral has furnished Purchaser with a list of the
employees of Coral or its Affiliates who are assigned on a full-time basis to
the Pipeline Systems (the "Management and Operation Employees"), which list is
attached hereto as Schedule 1.01(a). Purchaser shall offer employment to all
Management and Operation Employees. Additionally, Purchaser shall have the
discretion in determining to which, if any, other employees of Coral or its
Affiliates who spend 50% or more of their time working for the Pipeline Systems,
excluding senior management (the "Other Employees"), which list is attached
hereto as Schedule 1.01(b), it will offer employment. The Management and
Operation Employees and the Other Employees are collectively referred to as the
"Business Employees." The terms, conditions and benefits relating to all such
offers of employment shall be substantially comparable with the terms,
conditions and benefits Purchaser provides to similarly situated employees of
Purchaser. Employment under such offers shall commence on the later of
_________, 200_, or the date such Business Employee, if not actively at work on
___________, 200_ for any reason, excluding vacation, sick leave, jury duty or
similar approved absence or regularly scheduled days off, returns to full-time
active employment with Purchaser (the "Employment Commencement Date"), provided
such Business Employee returns within 180 days of the Closing Date. The Business
Employees who accept and actually commence employment with Purchaser are
hereinafter collectively referred to as "Transferred Employees."
Section 2. Solicitation of Employees.
(a) Without the prior written consent of Purchaser, Coral
shall cause its Affiliates to refrain for a period of one year from
the Closing Date, from soliciting directly or indirectly, the
employment of or otherwise seeking to engage the services of any
Transferred Employee. Coral shall be responsible for all obligations
and liabilities, if any, under the Worker Adjustment and Retraining
Notification Act and any comparable state laws with respect to the
current and former Business Employees who do not become Transferred
Employees.
(b) Without the prior written consent of Coral, Purchaser
shall refrain, or shall cause its Affiliates to refrain, for a period
of one year from the Closing Date, from soliciting, directly or
indirectly, the employment of or otherwise seeking to engage the
services of any employee of Coral or any of its Affiliates, other than
the Transferred Employees.
(c) Notwithstanding paragraphs (a) and (b) of this Section
2, nothing herein shall prevent a party hereto (the "Hiring Party")
from hiring any employee of another party hereto if such person
responds to a general advertisement of employment which is not
directed to such individual specifically or was otherwise not directly
or indirectly solicited by the Hiring Party.
Section 3. Employee Benefit Plans. Effective as of their Employment
Commencement Dates, Purchaser shall provide, or cause to be provided, to the
Transferred Employees the employee benefit plans and programs ("Purchaser's
Benefit Plans") on substantially the same basis such plans and programs are
provided to similarly situated employees of Purchaser, except that coverage
under Purchaser's group health, life and disability plans shall commence as of
the Benefit Plan Date (as defined below). With respect to the Purchaser's
Benefit Plans, Purchaser shall grant, or shall cause its Affiliates to grant,
the Transferred Employees credit for their service with Coral or its Affiliates
as of their Employment Commencement Date for all purposes (other than the
accrual of benefits under a defined benefit pension plan) for which such service
was recognized by Coral or its Affiliates under a similar plan or program. With
respect to Purchaser's Benefit Plans that provide group health, life and
disability benefits: (i) Purchaser shall make, or shall cause its Affiliates to
make, Transferred Employees eligible to participate on their Employment
Commencement Date (the "Benefit Plan Date"), (ii) Purchaser shall cause such
plans to waive any exclusions or limitations with respect to pre-existing
conditions, waiting periods and actively-at-work exclusions, except to the same
extent the Transferred Employee is subject to a pre-existing condition or
actively-at-work exclusion on the Closing Date under any health plan of Coral or
its Affiliates, and (iii) Purchaser shall provide, or shall cause its Affiliates
to provide, that any health expenses incurred by a Transferred Employee or his
or her covered dependents during the year in which the Employment Commencement
Date commences on or before the Benefit Plan Date shall be taken into account
under such plan for purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket provisions. Purchaser's group health plan shall be
responsible for all benefit claims by Transferred Employees and their dependents
2
for covered services rendered on and after the date their participation in
Purchaser's group health plan commences, and the respective group health plans
of Coral or its Affiliates shall be responsible for all benefit claims by
Transferred Employees and their dependents for covered services rendered before
their participation in Purchaser's group health plan commences.
Section 4. Vacation. The Transferred Employees shall receive credit
under Purchaser's vacation schedule such that the vacation time they earn with
Purchaser is not less than that which they are eligible to earn (i) under the
vacation schedules of Coral or its Affiliates or (ii) pursuant to agreements
between Coral or its Affiliates and such Transferred Employee, as of the Closing
Date. Transferred Employees shall be entitled to vacation time with Purchaser
for the remainder of 2000 based only on their actual service with Purchaser, and
Purchaser's vacation schedule shall be prorated for the remainder of 2000 for
this purpose. Coral shall cause its Affiliates to pay each Transferred Employee
his or her accrued but unused paid vacation and/or personal leave (as
applicable) as soon as reasonably practicable following the Closing Date.
Section 5. Access to Information and Personnel. (a) After the Closing
Date, Coral shall cause its Affiliates to make reasonably available to Purchaser
such financial, personnel and related information as may be reasonably requested
by Purchaser with respect to any Transferred Employee, including, but not
limited to, compensation, vacation benefits and employment histories, up to a
maximum of the earlier of (i) 12 months prior to the Closing Date or (ii)
January 1, 2000, plus any records required under the regulations of the
Department of Transportation; except that neither Coral nor its Affiliates will
provide any performance related data with respect to any Transferred Employee.
(b) After the Closing Date, Purchaser shall make available, or shall
cause its Affiliates to make available, to Coral any Transferred Employees with
respect to continuing litigation, audits and other reasonable business requests
at no cost to Coral. The Parties agree to investigate the possibility of plan to
plan transfer (spin-off) of the accounts of the Transferred Employees from the
Coral Energy Services, LLC Savings Plan to the Enterprise Retirement and Savings
Plan.
Section 6. Coral and Affiliates Benefit Plans. (a) Purchaser is not
assuming any employee benefit plan or program or any liability of Coral and its
Affiliates thereunder or any other liability of Coral or any Affiliate with
respect to any Business Employee or other current or former employee of Coral or
any Affiliate, including, without limitation, any liability under COBRA.
(b) Coral and its Subsidiaries shall cause each Transferred Employee
to be fully vested as of the Closing Date in each plan of Coral and its
Affiliates that is a qualified plan under Section 401(a) of the Code.
(c) Each Transferred Employee who would be eligible to immediately
retire from Coral or its Affiliates on the Closing Date and receive retiree
health benefits under a health plan or pension plan of Coral or its Affiliates
shall be eligible notwithstanding his active employment with Purchaser and its
Affiliates to immediately begin receiving retiree health or pension benefits
under the retiree health plan or pension plan of Coral or its Affiliates subject
to the then terms of such plan.
(d) Coral will be responsible for the payment of any bonus earned by a
Transferred Employee under the Coral Energy, LLC Annual Incentive Plan for
calendar year 2000 performance and will pay such bonus to such Transferred
3
Employee on or before the date on which other Coral employees would receive such
bonus payments.
(e) Coral will be responsible for any liabilities under the Coral
Energy, LLC Long Term Incentive Compensation Plan and will treat Transferred
Employees as having terminated their employment with Coral's consent.
Section 7. Third-Party Beneficiaries. No provision of this Agreement
shall create any third-party beneficiary rights in any Transferred Employee
(including any beneficiary or dependent thereof), including, without limitation,
any right to employment or employment in any particular position with Purchaser
for any specified period of time after the Closing Date.
Section 8. Choice of Law. This Agreement shall be governed by the laws
of the State of Texas without regard to conflicts of law principles.
Section 9. Waiver or Consent. No waiver or consent by either Party,
express or implied, of any one or more defaults by the other Party in the
performance of any provision of this Agreement shall operate or be construed as
a waiver or consent of any other default or defaults whether of a like or
different nature.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date shown above.
CORAL ENERGY RESOURCES, L.P. ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC,
General Partner
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
EXHIBIT D
ARBITRATION PROVISIONS
All disputes between the parties ("Disputes") submitted to arbitration shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with, and in the following order of
priority: (i) the terms of these arbitration provisions; (ii) the Commercial
Arbitration Rules of the AAA; (iii) the Federal Arbitration Act (Title 9 of the
United States Code); and (iv) to the extent the foregoing are inapplicable,
unenforceable or invalid, the Laws of the State of Texas. The validity and
enforceability of these arbitration provisions shall be determined in accordance
with this same order of priority. In the event of any inconsistency between
these arbitration provisions and such rules and statutes, these arbitration
provisions shall control. Judgment upon any award rendered hereunder shall be
entered in any court having jurisdiction.
All statutes of limitation applicable to any Dispute shall apply to any
proceeding in accordance with these arbitration provisions.
Arbitrators are empowered to resolve Disputes by summary rulings substantially
similar to summary judgments and motions to dismiss. Arbitrators shall resolve
all Disputes in accordance with the applicable substantive Law. Any arbitrator
selected shall be required to be experienced and knowledgeable in the
substantive Laws applicable to the subject matter of the Dispute.
With respect to a Dispute in which the claims or amounts in controversy do not
exceed $250,000, a single arbitrator acceptable to all of the parties involved
in the Dispute shall be chosen and shall resolve the Dispute. In such case, the
arbitrator shall be required (unless all parties to the proceeding shall
otherwise agree in writing) to make specific, written findings of fact, and
shall have authority to render an award up to but not to exceed $250,000,
including all amounts properly payable and costs, fees and expenses. A dispute
involving claims or amounts in controversy exceeding $250,000 shall be decided
by a majority vote of a panel of three arbitrators (an "Arbitration Panel"), one
of which shall be selected by one party to such Dispute, the second of which
shall be selected by the other party to such Dispute and the third of which
shall be selected by the first two arbitrators. The determination of any two of
the three arbitrators constitutes the determination of the Arbitration Panel;
provided, however, that all three arbitrators on the Arbitration Panel must
actively participate in all hearings and deliberations. Arbitrators, including
any Arbitration Panel, may grant any remedy or relief deemed just and equitable
and within the scope of these arbitration provisions and may also grant such
ancillary relief as is necessary to make effective any award. Arbitration Panels
shall be required (unless all parties to the proceeding shall otherwise agree in
writing) to make specific, written findings of fact and conclusions of law. The
determination of an arbitrator or Arbitration Panel shall be binding on all
parties and shall not be subject to review or appeal.
To the maximum extent practicable, the AAA, the arbitrator (or the Arbitration
Panel, as appropriate) and the parties shall take any action necessary to
require that an arbitration proceeding hereunder shall be concluded within 90
days of the filing of the Dispute with the AAA. Unless the parties shall agree
otherwise, arbitration proceedings hereunder shall be conducted in Houston,
Texas.
Arbitrators shall be empowered to impose sanctions, permit or order depositions
and discovery and to take such other actions as they deem necessary to the same
extent a judge could pursuant to the Federal Rules of Civil Procedure and
applicable law. With respect to any Dispute, each party agrees that all
discovery activities shall be expressly limited to matters directly relevant to
the Dispute and any arbitrator, Arbitration Panel and the AAA shall be required
to fully enforce this requirement. To the extent permitted by applicable Law,
arbitrators, including any Arbitration Panel, shall have the power to award
recovery of all costs and fees (including attorneys' fees, administrative fees
and arbitrators' fees) to the prevailing party or, if no clear prevailing party,
as the arbitrator (or Arbitration Panel, if applicable) shall deem just and
equitable.
Each party agrees to keep all Disputes and arbitration proceedings strictly
confidential except for disclosures of information required by applicable Law.
The provisions of these arbitration provisions shall survive any termination,
amendment or expiration of this Agreement, unless the parties otherwise
expressly agree in writing.
EXHIBIT E
PIPELINE ACCESS AGREEMENT
This PIPELINE ACCESS AGREEMENT made and entered into as of this _____
day of _____________, 2000 ("Agreement"), by and between Enterprise Products
Operating L.P., a limited partnership organized and existing under the laws of
the State of Delaware ("Carrier"), and Coral Energy Resources, L.P., a limited
partnership organized and existing under the laws of the State of Delaware
("Shipper"), each of whom may be referred to in this Agreement individually as a
"Party" or collectively as the "Parties."
RECITALS:
WHEREAS, Carrier has entered into that certain Purchase and Sale
Agreement dated as of September 22, 2000, (the "Purchase Agreement") providing
for the purchase by Carrier of the membership interest owned by Coral Energy,
LLC in Acadian Gas, LLC, a Delaware limited liability company ("Acadian") which
owns the Louisiana Pipeline System;
WHEREAS, Carrier, as a portion of its total consideration payable for
the acquisition of Acadian, agreed to enter into this Agreement and to provide
to Shipper or Shipper's designated Affiliate (as defined below), from time to
time, access to Transportation Service to Designated Facilities, subject to and
in accordance with the terms and conditions herein contained;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), Shipper and Carrier
agree as follows:
ARTICLE 1
DEFINITIONS; INTERPRETATION
1.1. Definitions. For purposes of this Agreement, the terms defined
below shall have the following meanings:
"Louisiana Pipeline System" shall mean that intrastate natural gas
pipeline system that is the subject of the Purchase Agreement and any future
extensions thereto which are owned 100% by Carrier or an Affiliate; provided,
however, that any pipeline systems acquired from a third party by Carrier or an
Affiliate after the Effective Date of this Agreement shall not be considered a
part of the Louisiana Pipeline System.
"Affiliate" shall mean, with respect to a Party, any Person (i)
controlled by such Party, or (ii) which is under common control with such Party,
or (iii) which controls such Party. For purposes of this Agreement "controls"
means ownership of more than 50% of the voting securities or interests in
another entity, or the ability through contract or otherwise to direct the board
of directors or management or administration of such other entity.
"Designated Facilities" means electric power generation facilities of
at least 400 MW generating capacity, for which initial deliveries of fuel occur
after the Effective Date, that are fueled, in whole or in part, by natural gas
and are developed or constructed in the area served by the Louisiana Pipeline
System; provided, however, if the Designated Facility, as a result of a
conversion or expansion of an existing facility, includes a cogeneration
facility, then this Agreement will only apply to the incremental amount of
natural gas required for the total facility (the Designated Facility and
existing facility) as a result of the operation of the Designated Facility.
"Person" shall mean any individual, corporation, company, association,
partnership or other business entity.
"Transportation Service" shall mean the transportation of natural gas
as the Parties may mutually agree.
ARTICLE 2
ACCESS TO DESIGNATED FACILITIES
2.1. Pipeline Access. If Carrier intends to make a proposal to provide
Transportation Service to a Designated Facility or the developer of such a
Designated Facility contacts the Carrier for the purpose of discussing
Transportation Service, from or through the Louisiana Pipeline System to such
Designated Facility, and Carrier determines not to attempt to enter into an
arrangement with such Designated Facility to sell such Designated Facility 100%
of such Designated Facility's natural gas requirements, then Carrier will,
subject to any confidentiality agreement entered into on behalf of Carrier and
such Designated Facility, notify Shipper of such Designated Facility and subject
to the execution by Carrier and Shipper of a mutually agreeable confidentiality
agreement, provide Shipper with a reasonable opportunity to make a natural gas
supply proposal to such developer.
2.2. Non-Exclusive Obligations. Nothing herein shall restrict or
prohibit Carrier from providing third parties who request such information with
rates and other terms and conditions for Transportation Service to a Designated
Facility. Carrier, however, agrees that it will not endorse a third party
supplier over Shipper for service to a Designated Facility, but rather, if
Carrier determines not to attempt to sell such Designated Facility 100% of such
Designated Facility's natural gas requirements, Carrier will promote Shipper as
a preferred provider of natural gas through the Louisiana Pipeline System to the
Designated Facility.
2.3. Terms of Transportation Service. If Carrier agrees to provide
another Person with Transportation Service to a Designated Facility, Carrier
shall offer in writing, which offer shall be conditional on, and subject to,
Shipper's acceptance thereof within 60 days after the written offer is made by
Carrier to Shipper, to provide Shipper with Transportation Service to such
Designated Facility pursuant to the same volumes, rates, terms and conditions of
service as those volumes, rates, terms and conditions of service Carrier has
agreed to provide such Person.
2
ARTICLE 3
TRANSPORTATION AND DELIVERY OF GAS
3.1. Transportation Service. To the extent that Carrier has the
necessary capacity and pressure capability available in the Louisiana Pipeline
System, upon the reasonable request of Shipper, Carrier and Shipper shall
negotiate in good faith to enter into an agreement on terms and conditions
mutually agreeable to the Parties pursuant to which Carrier will receive for
Shipper's account, quantities of natural gas tendered by Shipper to Carrier at
mutually acceptable points of receipt on the Louisiana Pipeline System and
deliver such quantities to such Designated Facility. Nothing herein shall
require that Carrier shall provide Transportation Service to Shipper if doing so
would, in Carrier's reasonable opinion, impair Carrier's ability to meet its
current or pending contractual obligations to other Persons or threaten the
operational integrity of the Louisiana Pipeline System during the term of the
requested Transportation Service.
3.2. Construction of New Facilities. In the event that Carrier does
not have capacity or facilities available on the Louisiana Pipeline System to
satisfy all or part of a request made by Shipper pursuant to Section 3.1, upon
the request of Shipper, Carrier and Shipper shall negotiate in good faith to
enter into an agreement on mutually agreeable terms with respect to the
construction of any facilities necessary to satisfy such request made under
Section 3.1 and the Transportation Services to be provided by Carrier with
respect thereto.
ARTICLE 4
DURATION OF THE AGREEMENT
4.1. Term; Primary Term. This Agreement shall be effective on the date
on which this Agreement is executed by both Parties ("Effective Date"). The term
of this Agreement shall begin on the Effective Date and shall continue
thereafter for ten (10) years from the Effective Date ("Primary Term"), and
shall remain in effect from year to year thereafter unless terminated by either
Party by written notice at least sixty (60) days prior to the end of the Primary
Term or any successive term thereafter; provided, however, that (i) Carrier, at
its sole option and in its sole discretion, may terminate this Agreement if the
Louisiana Pipeline System is sold or transferred to a Person which is not an
Affiliate of Carrier and (ii) Carrier's obligations under this Agreement with
respect to any particular Designated Facility shall terminate upon the initial
commercial operations date of such Designated Facility.
ARTICLE 5
ASSIGNMENT
This Agreement may be assigned by either Party, without the consent of
the other, to an Affiliate or any other company which shall succeed an original
Party by purchase, merger, consolidation, or other transfer of substantially all
assets of the original Party (such an Affiliate or a successor company to an
original Party referred to hereinafter as a "Successor" to such Party) provided
that Shipper may assign this Agreement to Shell Gas Trading without Carrier's
consent and Carrier, in the event Carrier elects not to terminate this Agreement
pursuant to Section 4.1(i), may assign this Agreement to any transferee or
acquiree of the Louisiana Pipeline System. Any Successor to a Party shall be
entitled to the rights and shall be subject to the obligations of its
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predecessor under this Agreement. The assignment shall not act to discharge the
liability of the assigning Party without the prior written consent of the other
Party, which consent shall not be unreasonably withheld, except that if the
Louisiana Pipeline System is assigned, sold or transferred to a Person which is
not an Affiliate of Carrier and this Agreement is assigned to such Person,
Carrier shall be relieved of any obligation or liability under this Agreement to
the extent such obligation or liability arises after the date of assignment by
Carrier to such Person. Otherwise, neither Party shall assign this Agreement
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.
ARTICLE 6
NOTICE
Any notice, request, demand, and other communication ("Notice")
required under this Agreement between the Parties (except as to Notices required
to be given by telephone) shall be forwarded in a written form to the Parties at
the following addresses or telecopier numbers, as applicable:
If to Shipper: If to Carrier:
Enterprise Products Operating L.P. Coral Energy Resources, L.P.
2727 North Loop West, 7th Floor 909 Fannin, Suite 700
Houston, TX 77008 Houston, TX 77010
Attn: President Attn: President
Phone: (713) 880-6500 Phone: (713) 767-5400
Fax: (713) 880-6570 Fax: (713) 230-2900
Notice given by personal delivery, or overnight courier shall be
effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours, or
at 8:00 a.m., local time, on the next business day after receipt if not received
during the recipient's normal business hours. All Notices by telecopier shall be
confirmed promptly after transmission in writing by overnight courier or
personal delivery. Any Party may change any address to which Notices are to be
given to it by giving Notice as provided above of such change of address.
ARTICLE 7
MISCELLANEOUS
7.1. Integration. This Agreement constitutes the entire agreement
between the Parties with respect to the matters covered hereby and supersedes
all prior discussions, negotiations, representations or agreements (oral and
written) relating to the subject matter hereof.
7.2. Modification. This Agreement may not be modified, altered, or
changed in any form except by the written agreement of the Parties hereto.
7.3. Waivers. No waiver by either Party of any default(s) by the other
Party in the performance of any provision, condition or requirement herein shall
be deemed to be a waiver of, or in any manner release such other Party from,
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performance of any other provision, condition or requirement herein, nor deemed
to be a waiver of, or in any manner release the defaulting Party from, future
performance of the same provision, condition or requirement.
7.4. No Partnership. Nothing in this Agreement shall be construed to
create a partnership, joint venture or association, or establish a principal and
agent relationship or any other relationship of a similar nature between the
Parties.
7.5. Regulatory Approvals. Carrier and Shipper shall cooperate with
each other in obtaining, or causing to be obtained, all necessary state and
federal authorizations to provide the services contemplated in this Agreement.
7.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED,
INTERPRETED, AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCEPT FOR THE CONFLICT OF LAW PROVISIONS THEREOF WHICH WOULD REFER A PARTY TO
THE LAWS OF ANOTHER JURISDICTION.
7.7. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if both Parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same instrument.
7.8. Arbitration. Every dispute, controversy or claim arising out of
or relating to this Agreement, or the performance, breach, termination, or
invalidity hereof, shall be settled by arbitration in accordance with the
procedures set forth in the Purchase Agreement.
7.9. Laws. This Agreement and the rights and obligations of the
Parties hereunder are subject to all present and future valid laws with respect
to the subject matter and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction in the United
States and no Party shall have the obligation to comply with any provision of
this Agreement that is or becomes unlawful, unenforceable, or commercially
impracticable in any relevant jurisdiction.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
SHIPPER: CARRIER:
CORAL ENERGY RESOURCES, L.P. ENTERPRISE PRODUCTS OPERATING L.P.
By: Enterprise Products GP, LLC,
General Partner
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
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