CONTRIBUTION AGREEMENT among DCP LP Holdings, LLC, DCP Midstream GP, LP, DCP Midstream, LLC and DCP Midstream Partners, LP February 24, 2009
Exhibit 10.16
among
DCP LP Holdings, LLC,
DCP Midstream GP, LP,
DCP Midstream, LLC
DCP Midstream GP, LP,
DCP Midstream, LLC
and
February 24, 2009
Table of Contents
ARTICLE I CERTAIN DEFINITIONS |
1 | |||
1.1 Certain Defined Terms |
1 | |||
1.2 Other Definitional Provisions |
12 | |||
1.3 Headings |
13 | |||
1.4 Other Terms |
13 | |||
ARTICLE II CONTRIBUTION OF THE SUBJECT INTERESTS, ISSUANCE OF THE UNITS AND CONSIDERATION |
13 | |||
2.1 The Transaction |
13 | |||
2.2 Consideration |
13 | |||
ARTICLE III ADJUSTMENTS AND SETTLEMENT |
13 | |||
3.1 Adjustments |
13 | |||
3.2 Preliminary Settlement Statement |
14 | |||
3.3 Final Settlement Statement |
14 | |||
3.4 Dispute Procedures |
14 | |||
3.5 Payments |
14 | |||
3.6 Access to Records |
14 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOLDINGS |
15 | |||
4.1 Organization, Good Standing, and Authority |
15 | |||
4.2 Enforceability |
15 | |||
4.3 No Conflicts |
15 | |||
4.4 Consents, Approvals, Authorizations and Governmental Regulations |
16 | |||
4.5 Taxes |
16 | |||
4.6 Litigation; Compliance with Laws |
17 | |||
4.7 Contracts |
18 | |||
4.8 Title to Assets; Intellectual Property |
19 | |||
4.9 Preferential Rights to Purchase |
19 | |||
4.10 Broker’s or Finder’s Fees |
19 | |||
4.11 Compliance with Property Instruments |
19 | |||
4.12 Environmental Matters |
19 | |||
4.13 Employee Matters |
20 | |||
4.14 Benefit Plan Liabilities |
20 | |||
4.15 No Foreign Person |
20 | |||
4.16 Capitalization of the Subject Interests |
20 | |||
4.17 Subsidiaries and Other Equity Interests |
21 | |||
4.18 Bank Accounts |
21 | |||
4.19 [Reserved] |
21 | |||
4.20 Investment Intent |
21 | |||
4.21 Financial Statements; Internal Controls; Undisclosed Liabilities |
21 | |||
4.22 No Other Representations or Warranties; Schedules |
21 | |||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MLP |
22 | |||
5.1 Organization, Good Standing, and Authorization |
22 | |||
5.2 Enforceability |
22 |
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5.3 No Conflicts |
22 | |||
5.4 Consents, Approvals, Authorizations and Governmental Regulations |
22 | |||
5.5 Litigation |
23 | |||
5.6 Independent Investigation |
23 | |||
5.7 Broker’s or Finder’s Fees |
24 | |||
5.8 Investment Intent |
24 | |||
5.9 Available Funds |
24 | |||
ARTICLE VI COVENANTS AND ACCESS |
24 | |||
6.1 Conduct of Business |
24 | |||
6.2 Casualty Loss |
26 | |||
6.3 Access, Information and Access Indemnity |
27 | |||
6.4 Regulatory Filings; Xxxx-Xxxxx-Xxxxxx Filing |
27 | |||
6.5 Limitation on Casualty Losses and Other Matters |
28 | |||
6.6 Supplements to Exhibits and Schedules |
28 | |||
6.7 Preservation of Records |
29 | |||
6.8 [Reserved] |
29 | |||
6.9 Capital Projects |
29 | |||
6.10 [Reserved] |
30 | |||
6.11 Tax Covenants; Preparation of Tax Returns |
30 | |||
6.12 Financial Statements and Financial Records |
30 | |||
ARTICLE VII CONDITIONS TO CLOSING |
30 | |||
7.1 HOLDINGS’/GP’s Conditions |
30 | |||
7.2 MLP’s Conditions |
31 | |||
ARTICLE VIII CLOSING |
31 | |||
8.1 Time and Place of Closing |
31 | |||
8.2 Deliveries at Closing |
32 | |||
ARTICLE IX TERMINATION |
32 | |||
9.1 Termination |
32 | |||
9.2 Effect of Termination Prior to Closing |
33 | |||
ARTICLE X INDEMNIFICATION |
33 | |||
10.1 Indemnification by MLP |
33 | |||
10.2 Indemnification by HOLDINGS |
33 | |||
10.3 Deductibles, Caps, Survival and Certain Limitations |
34 | |||
10.4 Notice of Asserted Liability; Opportunity to Defend |
35 | |||
10.5 Materiality Conditions |
37 | |||
10.6 Exclusive Remedy |
37 | |||
10.7 Negligence and Strict Liability Waiver |
38 | |||
10.8 Limitation on Damages |
38 | |||
10.9 Bold and/or Capitalized Letters |
38 | |||
ARTICLE XI MISCELLANEOUS PROVISIONS |
38 | |||
11.1 Expenses |
38 | |||
11.2 Further Assurances |
38 | |||
11.3 Transfer Taxes |
39 | |||
11.4 Assignment |
39 |
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11.5 Entire Agreement, No Amendment of Prior Transaction Agreement, Amendments and Waiver |
39 | |||
11.6 Severability |
39 | |||
11.7 Counterparts |
39 | |||
11.8 Governing Law, Dispute Resolution and Arbitration |
39 | |||
11.9 Notices and Addresses |
42 | |||
11.10 Press Releases |
43 | |||
11.11 Offset |
43 | |||
11.12 No Partnership; Third Party Beneficiaries |
43 | |||
11.13 Negotiated Transaction |
43 |
Schedules
1.1(a) |
Excluded Assets | |
1.1(b) |
Excluded Contracts Including Swaps | |
1.1(c) |
HOLDINGS’ Knowledge | |
1.1(d) |
Contracts | |
1.1(e) |
Permitted Encumbrances | |
1.1(f) |
Reserved Liabilities | |
1.1(g) |
System Maps | |
4.3 |
Post Closing Consents | |
4.4 |
HOLDINGS’ Required Consents | |
4.5 |
Taxes | |
4.6 |
Litigation | |
4.9 |
Preferential Rights | |
4.11 |
Real Property Matters | |
4.12 |
Environmental Matters | |
4.17 |
Subsidiaries | |
4.18 |
Bank Accounts | |
4.21 |
Annual Financial Statements | |
5.4 |
MLP Required Consents | |
6.9 |
Capital Projects | |
10.2(e) |
Scheduled HOLDINGS Indemnified Matters |
Exhibits
A |
Form of JV LLC Agreement | |
B |
Form of Subject Interests Assignment Agreement | |
C |
Form of Certificate of Class D Units | |
D |
Form of Amendment No. 2 | |
E |
Form of Hedge Confirmation |
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This Contribution Agreement (“Agreement”) is dated as of February 24, 2009 (the
“Execution Date”) and is by and among DCP LP Holdings, LLC, a Delaware limited liability
company (“HOLDINGS”), DCP Midstream GP, LP, a Delaware limited partnership (“GP”),
DCP Midstream, LLC, a Delaware limited liability company (“MIDSTREAM”), and DCP Midstream
Partners, LP, a Delaware limited partnership (“MLP”). HOLDINGS, GP, MIDSTREAM, and MLP are
sometimes referred to collectively herein as the “Parties” and individually as a “Party”.
R E C I T A L S
A. Pursuant to the Prior Contribution Agreement, MIDSTREAM, through HOLDINGS and GP conveyed
25% of the outstanding membership interests in DCP East Texas Holdings, LLC, a Delaware limited
liability company (the “JV”) to MLP.
B. Immediately prior to the date hereof, MIDSTREAM owned 75% of the outstanding membership
interests in the JV, and MLP owned 25% of the outstanding membership interests in the JV.
C. The JV owns all of the membership interests in FCV, ET and DETG, which collectively own and
operate certain midstream gathering, compression, dehydrating, processing and fractionating assets
located in Panola, Xxxxxxxx, Xxxxxx, and Xxxx Counties, Texas, and Caddo and DeSoto Parishes,
Louisiana including the Former UP Fuels Properties and the Former Gulf South Properties, which are
generally depicted on the System Map (the “East Texas System”).
D. On the Closing Date, MIDSTREAM shall cause a 25.1% interest in the JV (the “Subject
Interests”) to be contributed to HOLDINGS and GP as capital contributions.
E. The Parties then desire that HOLDINGS and GP then contribute the Subject Interests to MLP
for the consideration and in accordance with the terms of this Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, MLP, GP, MIDSTREAM, and HOLDINGS agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
1.1 Certain Defined Terms. Capitalized terms used herein and not defined elsewhere in
this Agreement shall have the meanings given such terms as is set forth below.
“Affiliate” means, when used with respect to a specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect common control with
the specified Person as of the time or for the time periods during which such determination is
made. For purposes of this definition “control”, when used with respect to any specified Person,
means the power to direct the management and policies of the Person, directly or indirectly,
1
whether through the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have the meanings correlative to the foregoing. Notwithstanding the
foregoing, except for the JV, the term “Affiliate” when applied to (a) MLP shall not include
Spectra Energy Corp, a Delaware corporation, or ConocoPhillips, a Delaware corporation, or any
entities owned, directly or indirectly, by Spectra Energy Corp or ConocoPhillips, other than
entities owned, directly or indirectly, by MLP and GP and (b) HOLDINGS or GP shall not include MLP
or any entities owned, directly or indirectly, by MLP.
“Amendment No. 2” shall mean Amendment No. 2 to that certain Second Amended and
Restated Agreement of Limited Partnership of MLP dated as the Effective Time and in the form of
Exhibit D hereto.
“Annual Financial Statements” shall have the meaning given such term in
Section 4.21(a).
“Arbitral Dispute” means any dispute, claim, counterclaim, demand, cause of action,
controversy and other matters in question arising out of or relating to this Agreement or the
alleged breach hereof, or in any way relating to the subject matter of this Agreement or the
relationship between the Parties created by this Agreement, regardless of whether (a) allegedly
extra-contractual in nature, (b) sounding in contract, tort, or otherwise, (c) provided for by
applicable Law or otherwise, or (d) seeking damages or any other relief, whether at Law, in equity,
or otherwise.
“Arbitration Rules” shall have the meaning given such term in Section 11.8(d).
“Assets” shall mean all of the following assets and properties of the JV (and its
respective Subsidiaries), except for the Excluded Assets:
(a) Personal Property. All tangible personal property of every kind and nature that
relates to the ownership, operation, use or maintenance of the Facilities, including meters,
valves, engines, field equipment, office equipment, fixtures, trailers, tools, instruments, spare
parts, machinery, computer equipment, telecommunications equipment, furniture, supplies and
materials that are located at the Facilities, and all hydrocarbon inventory at the Facilities,
including linefill (collectively the “Personal Property”);
(b) Real Property. All fee property, rights-of-way, easements, surface use
agreements, licenses and leases that relate to the ownership, operation, use or maintenance of the
Facilities, (collectively, the “Real Property Interests”), and all fixtures, buildings and
improvements located on or under such Real Property Interests;
(c) Permits. All assignable permits, licenses, certificates, orders, approvals,
authorizations, grants, consents, concessions, warrants, franchises and similar rights and
privileges which are necessary for, or are used or held for use primarily for or in connection
with, the ownership, use, operation or maintenance of the Assets (collectively, the
“Permits”);
(d) Contract Rights. All contracts that relate to the ownership, operation, use or
maintenance of the Assets, including all gathering, processing, balancing and other agreements for
the handling of natural gas or liquids, purchase and sales agreements, storage agreements,
2
transportation agreements, equipment leases, rental contracts, and service agreements
(collectively, the “Contracts”);
(e) Intellectual Property. All technical information, shop rights, designs, plans,
manuals, specifications and other proprietary and nonproprietary technology and data used in
connection with the ownership, operation, use or maintenance of the Assets (collectively, the
“Intellectual Property”);
(f) Facilities. All meter stations, gas processing plants, treaters, dehydration
units, compressor stations, fractionators, liquid handling facilities, platforms, warehouses, field
offices, control buildings, pipelines, tanks and other associated facilities that are used or held
for use in connection with the ownership, operation or maintenance of the East Texas System
(collectively, the “Facilities”);
(g) Books and Records. All contract, land, title, engineering, environmental,
operating, accounting, business, marketing, and other data, files, documents, instruments, notes,
correspondence, papers, ledgers, journals, reports, abstracts, surveys, maps, books, records and
studies which relate primarily to the Assets or which are used or held for use primarily in
connection with, the ownership, operation, use or maintenance of the Assets; provided, however,
such material shall not include (i) any proprietary data that is not primarily used in connection
with the continued ownership, use or operation of the Assets, (ii) any information subject to Third
Person confidentiality agreements for which a consent or waiver cannot be secured by HOLDINGS or GP
after reasonable efforts, (iii) any information which, if disclosed, would violate an
attorney-client privilege or would constitute a waiver of rights as to attorney work product or
attorney-client privileged communications, or (iv) any information relating primarily to the
Reserved Liabilities or any obligations for which HOLDINGS or GP is required to indemnify the MLP
Indemnitees pursuant to Section 10.2 (collectively, the “Records”); provided,
however, that MLP shall have the right to copy any of the information specified in clause (iv); and
(h) Incidental Rights. All of the following insofar as the same are attributable or
relate primarily to any of the Assets described in clauses (a) through (g): (i)
all purchase orders, invoices, storage or warehouse receipts, bills of lading, certificates of
title and documents, (ii) all keys, lock combinations, computer access codes and other devices or
information necessary to gain entry to and/or take possession of such Assets, (iii) all rights in
any confidentiality or nonuse agreements relating to the Assets, and (iv) the benefit of and right
to enforce all covenants, warranties, guarantees and suretyship agreements running in favor of the
Entities relating primarily to the Assets and all security provided primarily for payment or
performance thereof.
“Assumed Obligations” shall mean any and all obligations and liabilities with respect
to or arising out of (i) the JV LLC Agreement and attributable to the Subject Interests, (ii) the
ownership of the Subject Interests, and (iii) the Hedge.
“Benefit Plan” shall mean any of the following: (a) any employee welfare benefit plan
or employee pension benefit plan as defined in sections 3(1) and 3(2) of ERISA, and (b) any other
material employee benefit agreement or arrangement, including a deferred compensation plan,
3
incentive plan, bonus plan or arrangement, stock option plan, stock purchase plan, stock award
plan, golden parachute agreement, severance plan, dependent care plan, cafeteria plan, employee
assistance program, scholarship program, employment contract, retention incentive agreement,
non-competition agreement, consulting agreement, vacation policy, and other similar plan, agreement
and arrangement.
“Business Day” shall mean any day, other than Saturday and Sunday, on which
federally-insured commercial banks in Denver, Colorado are generally open for business and capable
of sending and receiving wire transfers.
“Capital Projects” shall have the meaning given such term in Section 6.9.
“Casualty Loss” shall mean, with respect to all or any portion of the Assets, any
destruction by fire, storm or other casualty, or any condemnation or taking or threatened
condemnation or taking, of all or any portion of the Assets.
“Certificate of Common Units” shall mean a certificate representing Units in the MLP
in the form of the attached Exhibit C.
“Claim” shall mean any demand, demand letter, claim or notice by a Third Person of
noncompliance or violation or Proceeding.
“Claim Notice” shall have the meaning given such term in Section 10.3(c).
“Closing” shall have the meaning given such term in Section 8.1.
“Closing Date” shall have the meaning given such term in Section 8.1.
“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.
“Commercially Reasonable Efforts” shall mean efforts which are reasonably within the
contemplation of the Parties on the date hereof, which are designed to enable a Party, directly or
indirectly, to satisfy a condition to, or otherwise assist in the consummation of, the transactions
contemplated by this Agreement and which do not require the performing Party to expend any funds or
assume liabilities other than expenditures and liabilities which are reasonable in nature and
amount in the context of the transactions contemplated by this Agreement.
“Consideration” has the meaning defined in Section 2.2.
“Contracts” shall have the meaning given such term in the definition of Assets.
“Defensible Title” shall mean, as to the Assets, such title to the Assets that vests
the applicable Entity with indefeasible title in and to the Assets free and clear of Liens other
than Permitted Encumbrances.
“DETG” shall mean DCP East Texas Gathering, LLC, a Delaware limited liability company.
4
“East Texas Casualty Incident” shall mean the fire and related property damage to the
Facilities that occurred on or about February 11, 2009.
“East Texas System” shall have the meaning given such term in the Recitals.
“Effective Time” shall mean 12:01 A.M. Denver time on April 1, 2009 (or, if the
Closing Date occurs later than April 1, 2009, 12:01 A.M. Denver time on the Closing Date).
“Entities” shall mean FCV, ET, DETG and the JV.
“Environmental Law” shall mean any and all Laws, statutes, ordinances, rules,
regulations, or orders of any Governmental Authority in existence at the Effective Time pertaining
to employee health, public safety, pollution or the protection of the environment or natural
resources or to Hazardous Materials in any and all jurisdictions in which the party in question
owns property or conducts business or in which the Assets are located, including the Clean Air Act,
the Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(“CERCLA”), the Federal Water Pollution Control Act, the Occupational Safety and Health Act
of 1970 (to the extent relating to environmental matters), the Resource Conservation and Recovery
Act of 1976 (“RCRA”), the Safe Drinking Water Act, the Toxic Substances Control Act, the
Hazardous & Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Materials Transportation Act, the Oil Pollution Act of 1990, any state or local
Laws implementing or substantially equivalent to the foregoing federal Laws, and any state or local
Laws pertaining to the handling of oil and gas exploration, production, gathering, and processing
wastes or the use, maintenance, and closure of pits and impoundments.
“Environmental Matter” shall have the meaning given such term in Section
4.4(b).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ET” shall mean EasTrans, LLC, a Delaware limited liability company.
“Excluded Assets” shall mean all of the following:
(a) Any deposits or pre-paid items attributable to the operation of the Assets not paid by or
on behalf of the JV;
(b) [Reserved];
(c) Claims for refund of or loss carry forwards with respect to (i) Taxes attributable
to the business of the Entities for any period prior to the Prior Contribution Agreement
Closing Date or (ii) any Taxes attributable to any of the Excluded Assets;
(d) All work product of HOLDINGS’ or its Affiliates’ attorneys, records relating to the
negotiation and consummation of the transactions contemplated hereby and documents that are
subject to a valid attorney client privilege;
5
(e) the real property, personal property, contracts, intellectual property, Permits,
office computers or other equipment (or any leases or licenses of the foregoing), if any,
that are listed on Schedule 1.1(a);
(f) All vehicles, and all leases for vehicles that relate to the ownership, operation,
use or maintenance of the Assets;
(g) All computer software that relates to the ownership, operation, use or maintenance
of the Assets that requires a consent to transfer;
(h) All rights and obligations under those certain swaps, futures and similar
derivative based transactions listed in Schedule 1.1(b);
(i) All office equipment and accessories (including computers) that relate to the
ownership, operation, use or maintenance of the Assets, other than that located at the
Facilities; and
(j) Without limiting the obligations under Sections 6.2, all rights to claim
coverage or benefits under any insurance policies or coverage applicable to the JV, the
Entities or the Assets, including self-insurance and insurance obtained through a captive
insurance carrier, but excluding any such rights to recover amounts that are included in the
calculation of Net Working Capital.
“Exhibits” shall mean any and/or all of the exhibits attached to and made a part of
this Agreement.
“Execution Date” shall have the meaning given such term in the opening paragraph of
this Agreement.
“Existing JV Interests” shall mean the Interests in the JV acquired by MLP pursuant to
the Prior Contribution Agreement.
“Facilities” shall have the meaning given such term within the definition of Assets.
“FCV” shall mean Fuels Cotton Valley Gathering, LLC, a Delaware limited liability
company.
“Final Settlement Statement” shall have the meaning given such term in Section
3.3.
“Former Gulf South Properties” shall mean the former Gulf South gathering facilities
located in Shelby, Panola and Xxxxxxxx Counties, Texas and Caddo Parish, Louisiana, which are
generally depicted on the System Map, and which were acquired by DCP Midstream, LP or its
Affiliates on March 31, 2005.
“Former UP Fuels Properties” shall mean the former UP Fuels gathering and processing
facilities located in Panola, Shelby, Harrison and Rusk Counties, Texas, and Caddo and DeSoto
Parishes, Louisiana, which are generally depicted on the System Map, and which were acquired by DCP
Midstream, LP or its Affiliates on April 1, 1999.
6
“GAAP” means generally accepted accounting principles in the United States as of the
date hereof, consistently applied.
“GP” shall have the meaning given such term in the introductory paragraph.
“Governmental Authorities” shall mean (a) the United States of America or any state or
political subdivision thereof within the United States of America and (b) any court or any
governmental or administrative department, commission, board, bureau or agency of the United States
of America or of any state or political subdivision thereof within the United States of America.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Hazardous Materials” shall mean: (a) any wastes, chemicals, materials or substances
defined or included in the definition of “hazardous substances,” “hazardous materials,” “toxic
substances,” “solid wastes,” “pollutants,” “contaminants,” or words of similar import, under any
Environmental Law; (b) any hydrocarbon or petroleum or component thereof, (including, without
limitation, crude oil, natural gas, natural gas liquids, or condensate that is not reasonably and
commercially recoverable; (c) oil and gas exploration or production wastes including produced
water; (d) radioactive materials (other than naturally occurring radioactive materials), friable
asbestos, mercury, lead based paints and polychlorinated biphenyls, (e) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by any Governmental
Authority; or (f) any regulated constituents or substances in concentrations or levels that exceed
numeric or risk-based standards established pursuant to Environmental Laws.
“Hedge” shall mean that certain financial swap transaction, with MLP as the fixed
price payor and HOLDINGS (or its Affiliate that is acceptable to MLP) as the floating price payor
for the period of April 1, 2009 through March 31, 2010,.
“Hedge Confirmation” shall mean the document used to evidence the Hedge in the form of
Exhibit E.
“HOLDINGS” shall have the meaning given such term in the introductory paragraph.
“HOLDINGS’ Indemnitees” shall have the meaning given such term in Section
10.1.
“HOLDINGS’ Knowledge” or the “Knowledge of HOLDINGS” or any similar term,
shall mean the actual knowledge of (a) any officer of HOLDINGS having a title of Vice President or
higher, and (b) the individuals listed on Schedule 1.1(c).
“HOLDINGS’ Required Consents” shall have meaning given such term in Section
4.4(a).
“Indemnified Party” or “Indemnitee” shall have the meaning given such term in
Section 10.4(a).
“Indemnifying Party” or “Indemnitor” shall have the meaning given such term in
Section 10.4(a).
7
“Independent Accountants” shall mean PricewaterhouseCoopers.
“Inlet AFE” shall have the meaning set forth in Schedule 6.9.
“Intellectual Property” shall have the meaning given such term in the definition of
Assets.
“Interest Rate” shall mean three (3) months LIBOR plus one-half of one percent (0.5%).
“JV” shall have the meaning given such term in the Recitals.
“JV LLC Agreement” shall mean the Amended and Restated Limited Liability Company
Agreement of DCP East Texas Holdings, LLC dated July 1, 2007, and from and after the Effective
Time, as amended and restated by the Second Amended and Restated Limited Liability Company
Agreement.
“Laws” shall mean all applicable statutes, laws (including common law), regulations,
rules, rulings, ordinances, orders, restrictions, requirements, writs, judgments, injunctions,
decrees and other official acts of or by any Governmental Authority.
“Lien” shall mean any lien, mortgage, pledge, claim, charge, security interest or
other encumbrance, option or defect on title.
“LIBOR” shall mean the British Bankers’ Association interbank offered rates as of
11:00 a.m. London time for deposits in Dollars that appear on the relevant page of the Reuters
service (currently page LIBOR01) or, if not available, on the relevant pages of any other service
(such as Bloomberg Financial Markets Service) that displays such British Bankers’ Association
rates.
“Limited Partnership Agreement” shall mean the Second Amended and Restated Agreement
of Limited Partnership of MLP dated as of November 1, 2006, as amended by Amendment No. 1 dated
April 11, 2008, and from and after the Effective Time, as amended by Amendment No. 2.
“Loss” or “Losses” shall mean any and all damages, demands, payments,
obligations, penalties, assessments, disbursements, claims, costs, liabilities, losses, causes of
action, and expenses, including interest, awards, judgments, settlements, fines, fees, costs of
defense and reasonable attorneys’ fees, costs of accountants, expert witnesses and other
professional advisors and costs of investigation and preparation of any kind or nature whatsoever.
“Material Adverse Effect” shall mean a single event, occurrence or fact, or series of
events, occurrences or facts, that, alone or together with all other events, occurrences or facts
(a) would have an adverse change in or effect on the Entities or the Assets (including the cost to
remedy, replace or obtain same) taken as a whole, in excess of $2,250,000 or (b) would result in
the prohibition or material delay in the consummation of the transactions contemplated by this
Agreement, excluding (in each case) matters that are generally industry-wide developments or
changes or effects resulting from changes in Law or general economic, regulatory or political
conditions.
8
“Material Casualty Loss” shall have the meaning given such term in Section
6.2.
“Materiality Condition” shall have the meaning given such term in Section
10.5.
“MIDSTREAM” shall have the meaning given such term in the introductory paragraph.
“MLP” shall have the meaning given such term in the introductory paragraph.
“MLP Indemnitees” shall have the meaning given such term in Section 10.2.
“MLP’s Knowledge” or the “Knowledge of MLP” or any similar term, shall mean
the actual knowledge of any officer of MLP having a title of vice president or higher.
“MLP Required Consents” shall have the meaning given such term in Section 5.4.
“Net Working Capital” means, as to the JV, and determined as of the Effective Time, an
amount (which may be positive or negative) equal to (i) the total current assets of the JV and its
Subsidiaries minus (ii) the total current liabilities of the JV and its Subsidiaries, in
each case determined in accordance with GAAP.
“New Capital Projects” shall have the meaning given such term in Section
6.9(b).
“Notice Period” shall have the meaning given such term in Section 10.4(c).
“Ordinary Course of Business” shall mean the ordinary course of business consistent
with past practices.
“Permits” shall have the meaning given such term in the definition of Assets.
“Permitted Encumbrances” shall mean the following:
(a) the terms, conditions, restrictions, exceptions, reservations, limitations, and other
matters contained in any document creating the Real Property Interests, or in any Permit or
Contract;
(b) Liens for property Taxes and assessments that are not yet due and payable (or that are
being contested in good faith by appropriate Proceedings for which adequate reserves in accordance
with GAAP have been established on the books of account of the applicable Entity);
(c) mechanic’s, materialmen’s, repairmen’s and other statutory Liens arising in the Ordinary
Course of Business and securing obligations incurred prior to the Effective Time and (i) for which
adequate reserves in accordance with GAAP have been established on the books of account of the
applicable Entity, or (ii) that are not delinquent and that will be paid and discharged in the
Ordinary Course of Business or, if delinquent, that are being contested in good faith with any
action to foreclose on or attach any Assets on account thereof properly stayed and for which
adequate reserves in accordance with GAAP have been established on the books of account of the
applicable Entity;
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(d) utility easements, restrictive covenants, defects and irregularities in title,
encumbrances, exceptions and other matters that are of record that, singularly or in the aggregate,
will not materially interfere with the ownership, use or operation of the Assets to which they
pertain;
(e) required Third Person consents to assignment, preferential purchase rights and other
similar agreements with respect to which consents or waivers are obtained from the appropriate
Person for the transaction contemplated hereby prior to Closing or, as to which the appropriate
time for asserting such rights has expired as of the Closing without an exercise of such rights;
(f) any Post-Closing Consent;
(g) Liens created by MLP or its successors or assigns; and
(h) the Liens listed on Schedule 1.1(e).
“Person” shall mean any natural person, corporation, company, partnership (general or
limited), limited liability company, trust, joint venture, joint stock company, unincorporated
organization, or other entity or association.
“Personal Property” shall have the meaning given such term in the definition of
Assets.
“Post-Closing Consents” shall mean consents or approvals from, or filings with
Governmental Authorities or consents from railroads customarily obtained following the closing of
transactions involving the transfer of assets similar to those owned by the Entities, as listed on
Schedule 4.3.
“Pre-Closing Tax Period” shall mean, with respect to the Entities, any taxable period
ending on or prior to the Closing Date.
“Preliminary Settlement Statement” shall have the meaning given such term in
Section 3.2.
“Prior Contribution Agreement” shall mean that certain Contribution Agreement dated
May 23, 2007 among HOLDINGS, MIDSTREAM, GP and MLP.
“Prior Contribution Agreement Closing Date” shall mean July 1, 2007.
“Proceeding” shall mean any action, suit, claim, investigation, review or other
judicial or administrative proceeding, at Law or in equity, before or by any Governmental Authority
or arbitration or other dispute resolution proceeding.
“Qualified Claims” shall have the meaning given such term in Section
10.3(b)(iii).
“Real Property Interests” shall have the meaning given such term in the definition of
Assets.
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“Records” shall have the meaning given such term in the definition of Assets.
“Reserved Liabilities” shall mean Losses (but only to the extent not reflected in Net
Working Capital) with respect to:
(i) except for sales, transfer, use or similar Taxes that are due or should hereafter become
due (including penalty and interest thereon) by reason of creation of the JV and the conveyances
and transactions contemplated by this Agreement, 75% of the amount of Taxes with respect to the
Entities or the Assets to the extent related to periods prior to and including the Closing Date;
(ii) disposal of Hazardous Materials at offsite locations (a) which were delivered from the
East Texas System (excluding the Former Gulf South Properties) between April 1, 1999 and the
Closing Date and (b) which were delivered from the Former Gulf South Properties between March 31,
2005 and the Closing Date; provided, however, that the Reserved Liabilities shall only include 75%
of this form of Loss to the extent disposal occurred after the Prior Contribution Agreement Closing
Date; and
(iii) the Excluded Assets and Taxes related thereto; and
(iv) those matters, if any, described on Schedule 1.1(f).
“Schedules” shall mean any and/or all of the schedules attached to and made a part of
this Agreement.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“SEC Financial Statements” shall mean collectively the Annual Financial Statements.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Settlement Notice” shall have the meaning given such term in Section 3.4.
“Subject Interests” shall have the meaning given such term in the Recitals.
“Subject Interests Assignment Agreement” shall mean the Assignment Agreement in
substantially the form of Exhibit B covering the conveyance of the Subject Interests by
HOLDINGS and GP to MLP.
“Subsidiary” means, with respect to any Person, (a) any corporation, of which a
majority of the total voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote generally in the election of directors thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof or (b) any limited liability company, partnership, association or
other business entity, of which a majority of the partnership or other similar ownership interests
thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.
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“System Map” shall collectively mean the maps depicting the East Texas System, which
maps are attached as Schedules 1.1(g).
“Tax” or “Taxes” shall mean any federal, state, local or foreign income tax,
ad valorem tax, excise tax, sales tax, use tax, franchise tax, real or personal property tax,
transfer tax, gross receipts tax or other tax, assessment, duty, fee, levy or other governmental
charge, together with and including, any and all interest, fines, penalties, assessments, and
additions to Tax resulting from, relating to, or incurred in connection with any of those or any
contest or dispute thereof.
“Tax Authority” shall mean any Governmental Authority having jurisdiction over the
payment or reporting of any Tax.
“Tax Benefits” means the amount by which the Tax liability of the Indemnified Party or
any of its Affiliates for a taxable period is actually reduced (including by deduction, reduction
in income upon a sale, disposition or other similar transaction as a result of increased tax basis,
receipt of a refund of Taxes or use of a credit of Taxes) plus any related interest (net of Taxes
payable thereon) received from the relevant Tax Authority, as a result of the incurrence, accrual
or payment of any Loss or Tax with respect to which the indemnification payment is being made.
“Tax Return” shall mean any report, statement, form, return or other document or
information required to be supplied to a Tax Authority in connection with Taxes.
“Third Person” shall mean (i) any Person other than a Party or its Affiliates, and
(ii) any Governmental Authority.
“Third Person Awards” shall mean any actual recoveries from Third Persons by the
Indemnified Party (including from insurance and third-party indemnification) in connection with the
claim for which such party is also potentially liable.
“Total Net Working Capital” means the amount (which may be positive or negative) equal
to the product of the Net Working Capital multiplied by 25.1%.
“Transaction Documents” shall mean the JV LLC Agreement, Amendment No. 2, the Subject
Interests Assignment Agreement, such certificate or other documents as are necessary to transfer
the Units to HOLDINGS and GP pursuant to Section 2.2, the Hedge Confirmation, and any other
document related to the sale, transfer, assignment or conveyance of the Subject Interests to be
delivered at Closing.
“Treasury Regulations” shall mean regulations promulgated under the Code.
“Units” shall mean the Class D limited partnership interests issuable by MLP upon
execution of Amendment No. 2.
1.2 Other Definitional Provisions. As used in this Agreement, unless expressly stated
otherwise or the context requires otherwise, (a) all references to an “Article,” “Section,” or
“subsection” shall be to an Article, Section, or subsection of this Agreement, (b) the words “this
Agreement,” “hereof,” “hereunder,” “herein,” “hereby,” or words of similar import shall refer to
this Agreement as a whole and not to a particular Article, Section, subsection, clause or other
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subdivision hereof, (c) the words used herein shall include the masculine, feminine and neuter
gender, and the singular and the plural, (d) the word “including” means “including, without
limitation” and (e) the word “day” or “days” means a calendar day or days, unless otherwise denoted
as a Business Day.
1.3 Headings. The headings of the Articles and Sections of this Agreement and of the
Schedules and Exhibits are included for convenience only and shall not be deemed to constitute part
of this Agreement or to affect the construction or interpretation hereof or thereof.
1.4 Other Terms. Other terms may be defined elsewhere in the text of this Agreement
and shall have the meaning indicated throughout this Agreement.
ARTICLE II
CONTRIBUTION OF THE SUBJECT INTERESTS,
ISSUANCE OF THE UNITS AND CONSIDERATION
CONTRIBUTION OF THE SUBJECT INTERESTS,
ISSUANCE OF THE UNITS AND CONSIDERATION
2.1 The Transaction. Upon the terms and subject to the conditions of this Agreement,
at the Closing, but effective for all purposes as of the Effective Time, HOLDINGS and GP shall
contribute to MLP the Subject Interests and the Hedge in exchange for the issuance of the
Consideration to HOLDINGS and GP pursuant to Section 2.2, and MLP shall assume and thereafter
timely perform and discharge in accordance with their respective terms, all Assumed Obligations.
2.2 Consideration. In consideration of HOLDINGS’ and GP’s contribution of the Subject
Interests and the Hedge, MLP shall (i) issue and deliver to HOLDINGS and GP at the Closing one or
more certificates duly registered in the names of HOLDINGS and GP and representing in the case of
HOLDINGS, three million, two hundred thirty-one thousand, seven hundred fifty (3,231,750) Units and
in the case of GP, two hundred sixty-eight thousand, two hundred fifty (268,250) Units (such
3,500,000 Units being referred to herein collectively as, the “Consideration”) and (ii)
distribute an amount of cash to HOLDINGS and GP, in the aggregate, equal to (A) the Total Net
Working Capital and (B) 25.1% of amounts paid or accrued between the Execution Date and the Closing
by HOLDINGS or GP for New Capital Projects; provided, however, if the sum set forth in Section
2.2(ii) is a negative number, such value shall be paid by HOLDINGS and GP to MLP at the
Closing, and provided, further, that to the extent cash is distributed pursuant to Section 2.2(ii),
such amounts shall be allocated between and paid to HOLDINGS and GP in proportion to the number of
Units issued to each of them.
ARTICLE III
ADJUSTMENTS AND SETTLEMENT
ADJUSTMENTS AND SETTLEMENT
3.1 Adjustments.
(a) The value of the Total Net Working Capital shall be subject to cash adjustments
pursuant to this Article III.
(b) The Parties shall use all Commercially Reasonable Efforts to agree upon the
adjustments set forth in this Article III, and to resolve any differences with
respect
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thereto. Except as provided herein, no adjustments shall be made after delivery of the
Final Settlement Statement.
3.2 Preliminary Settlement Statement. Not later than five (5) business days before
the Closing Date, and after consultation with MLP, HOLDINGS shall deliver to MLP a written
statement (the “Preliminary Settlement Statement”) setting forth the Total Net Working
Capital and each component therein, as determined in good faith by HOLDINGS that are described in
the definition thereof, with HOLDINGS’ calculation of such items in reasonable detail, based on
information then available to HOLDINGS. The Preliminary Settlement Statement shall also set forth
wire transfer instructions for the Closing payments. Payment of the Total Net Working Capital at
the Closing shall be based on the Preliminary Settlement Statement.
3.3 Final Settlement Statement. No later than ninety (90) days after the Closing Date
and after consultation with MLP, HOLDINGS shall deliver to MLP a revised settlement statement
showing in reasonable detail its calculation of the items described in the definition of Total Net
Working Capital along with other adjustments or payments contemplated in this Agreement (said
revised statement and the calculation thereof shall be referred to as the “Final Settlement
Statement”).
3.4 Dispute Procedures. The Final Settlement Statement shall become final and binding
on the Parties on the 45th day following the date the Final Settlement Statement is received by
MLP, unless prior to such date MLP delivers written notice to HOLDINGS of its disagreement with the
Final Settlement Statement (a “Settlement Notice”). Any Settlement Notice shall set forth
MLP’s proposed changes to the Final Settlement Statement, including an explanation in reasonable
detail of the basis on which MLP proposes such changes. If MLP has timely delivered a Settlement
Notice, MLP and HOLDINGS shall use good faith efforts to reach written agreement on the disputed
items. If the disputed items have not been resolved by MLP and HOLDINGS by the 30th day following
HOLDINGS’ receipt of a Settlement Notice, any remaining disputed items shall be submitted to the
Independent Accountants for resolution within ten (10) Business Days after the end of the foregoing
30-day period. The fees and expenses of the Independent Accountants shall be borne fifty percent
(50%) by HOLDINGS and fifty percent (50%) by MLP. The Independent Accountants’ determination of
the disputed items shall be final and binding upon the Parties, and the Parties hereby waive any
and all rights to dispute such resolution in any manner, including in court, before an arbiter or
appeal.
3.5 Payments. If the final calculated amount as set forth in the Final Settlement
Statement exceeds the estimated calculated amount as set forth in the Preliminary Settlement
Statement, then MLP shall pay to HOLDINGS the amount of such excess, with interest at the Interest
Rate (calculated from the Closing Date). If the final calculated amount as set forth in the Final
Settlement Statement is less than the estimated calculated amount as set forth in the Preliminary
Settlement Statement, then HOLDINGS shall pay to MLP the amount of such excess, with interest at
the Interest Rate (calculated from the Closing Date). Any payment shall be made within three (3)
Business Days of the date the Final Settlement Statement becomes final pursuant to Section
3.4.
3.6 Access to Records. The Parties shall grant to each other full access to the
Records and relevant personnel to allow each of them to make evaluations under this Article
III.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
HOLDINGS represents and warrants to MLP as follows:
4.1 Organization, Good Standing, and Authority.
(a) GP is a limited partnership duly formed, validly existing and in good standing
under the Laws of the State of Delaware. The execution and delivery of this Agreement and
the other Transaction Documents to which GP is a party and the consummation by GP of the
transactions contemplated herein and therein have been duly and validly authorized by all
necessary limited partnership action by GP. This Agreement has been duly executed and
delivered by GP. GP has all requisite limited partnership power and authority to enter into
and perform this Agreement and the other Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to carry out the transactions
contemplated herein and therein.
(b) Each of HOLDINGS and MIDSTREAM is a limited liability company duly formed, validly
existing and in good standing under the Laws of the State of Delaware. The execution and
delivery of this Agreement and the other Transaction Documents to which HOLDINGS and
MIDSTREAM is a party and the consummation by HOLDINGS and MIDSTREAM of the transactions
contemplated herein and therein have been duly and validly authorized by all necessary
limited liability company action by HOLDINGS and MIDSTREAM, respectively. This Agreement
has been duly executed and delivered by HOLDINGS and MIDSTREAM. Each of HOLDINGS and
MIDSTREAM has all requisite limited liability company power and authority to enter into and
perform this Agreement and the other Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to carry out the transactions
contemplated herein and therein.
(c) The JV, ET, FCV and DETG are limited liability companies duly formed, validly
existing and in good standing under the Laws of the State of Delaware and have all requisite
limited liability company power and authority to own or otherwise hold and operate its
assets. The execution and delivery of any Transaction Documents to which the JV is a party
and the consummation by the JV of the transactions contemplated herein and therein to which
it is a party have been duly and validly authorized by all necessary limited liability
company action by the JV, ET, FCV and/or DETG (as the case may be).
4.2 Enforceability. This Agreement constitutes and, upon execution of and delivery by
HOLDINGS, GP and MIDSTREAM of the other Transaction Documents to which it is a party, such
Transaction Documents will constitute, valid and binding obligations of HOLDINGS, GP and MIDSTREAM,
enforceable against such Parties in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar Laws affecting creditor’s rights generally
and general principles of equity.
4.3 No Conflicts. The execution, delivery and performance by HOLDINGS, GP and
MIDSTREAM of this Agreement, and the execution, delivery and performance by HOLDINGS,
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GP and MIDSTREAM of the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby or thereby, will not:
(a) Provided all of HOLDINGS’ Required Consents and Post Closing Consents have been
obtained, conflict with, constitute a breach, violation or termination of, give rise to any
right of termination, cancellation or acceleration of or result in the loss of any right or
benefit under, any agreements to which HOLDINGS, GP, MIDSTREAM or the Entities is a party or
by which any of them, the Subject Interests or the Assets are bound;
(b) Conflict with or violate the limited liability company agreements of MIDSTREAM, JV,
DETG, FCV, HOLDINGS, GP or ET; and
(c) Provided that all of HOLDINGS’ Required Consents and Post Closing Consents have
been obtained, violate any Law applicable to HOLDINGS, GP, MIDSTREAM or the Entities or the
Assets.
4.4 Consents, Approvals, Authorizations and Governmental Regulations.
(a) Except (i) for Post-Closing Consents, (ii) as set forth in Schedule 4.4 and
(iii) as may be required under the HSR Act (the items described in clauses (ii) and (iii)
being collectively referred to as the “HOLDINGS’ Required Consents”; no order,
consent, waiver, permission, authorization or approval of, or exemption by, or the giving of
notice to or the registration or filing with any Third Person, is necessary for HOLDINGS, GP
or MIDSTREAM to execute, deliver and perform this Agreement or for HOLDINGS, GP or MIDSTREAM
to execute, deliver and perform the other Transaction Documents to which it is a party.
(b) Except as set forth in Schedule 4.4, (i), all material permits, licenses,
certificates, orders, approvals, authorizations, grants, consents, concessions, warrants,
franchises and similar rights and privileges, of all Governmental Authorities required or
necessary for the Entities to own and operate its Assets in the places and in the manner
currently owned or operated, have been obtained, and are in full force and effect, (ii)
HOLDINGS and its Affiliates have received no written notification concerning, and there are
no violations that are in existence with respect to the permits and (iii) no Proceeding is
pending or threatened with respect to the revocation or limitation of any of the permits.
Notwithstanding anything herein to the contrary, the provisions of this Section
4.4(b) shall not relate to or cover any matter relating to or arising out of any
Environmental Laws (an “Environmental Matter”), which shall be governed by
Section 4.12.
4.5 Taxes. Except as set forth in Schedule 4.5:
(a) JV has not and will not on or prior to the Closing Date, file an election under
Treasury Regulation §301.7701-3 to be classified as a corporation for U.S. federal income
tax purposes. Since the date of their formation until Closing, DETG, FCV and ET have been
and will be business entities that will be disregarded for federal Tax purposes under
Treasury Regulation §§301.7701-2 and -3;
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(b) Except with respect to ad valorem Taxes for the year in which Closing occurs, all
Taxes due and owing or claimed to be due and owing (whether such claim is asserted before or
after the Effective Time) from or against any Entity relating to the Assets, or the
operation thereof, prior to the Effective Time have been or will be timely paid in full by,
for or on behalf or with respect to the Entity owing such Tax;
(c) All withholding Tax and Tax deposit requirements imposed on HOLDINGS, the Entities,
and applicable to the Assets, or the operation thereof, for any and all periods or portions
thereof ending prior to the Effective Time have been or will be timely satisfied in full by
for or on behalf or with respect to the Entity owing such Tax;
(d) All Tax Returns that are required to be timely filed for, by, on behalf of or with
respect to the Entities, before the Effective Time have been or will be filed with the
appropriate Governmental Authority; all Taxes shown to be due and payable on such Tax
Returns have been or will be paid in full by, for or on behalf or with respect to the Entity
owing such Tax;
(e) None of the Entities is under Tax audit or Tax examination by any Governmental
Authority. There are no Claims now pending or, to the Knowledge of HOLDINGS, threatened
against the Entities with respect to any Tax or any matters under discussion with any
Governmental Authority relating to any Tax;
(f) None of the Entities (i) has agreed to make, nor is required to make, any
adjustment under Section 481 of the Code or any comparable provision of state, local or
foreign Law by reason of a change in accounting method or otherwise, and (ii) is a party to
or bound by (or will become a party to or bound by) any Tax sharing, Tax indemnity or Tax
allocation agreement; and
(g) The JV has made an election under Section 754 of the Code.
4.6 Litigation; Compliance with Laws.
(a) There is no injunction, restraining order or Proceeding pending against HOLDINGS,
GP, MIDSTREAM or the Entities that restrains or prohibits the consummation of the
transactions contemplated by this Agreement.
(b) Except for the litigation and Claims identified on Schedule 4.6, there is
no written Claim, investigation or examination pending, or to the Knowledge of HOLDINGS and
GP, threatened, against or affecting the Entities (or their respective assets) before or by
any Third Person.
(c) To HOLDINGS’ Knowledge, the Assets have been owned and operated in compliance with
applicable Laws, except for any non-compliance which has been timely brought into compliance
therewith. Notwithstanding anything herein to the contrary, the provisions of this
Section 4.6(c) shall not relate to or cover any Environmental Matters, which shall
be governed by Section 4.12.
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4.7 Contracts. All of the Contracts that are material to the business of the
Entities, taken as a whole, are listed on Schedule 1.1(d), with the exception of interests
in real property. The Entities are not in default and there is no event or circumstance that with
notice, or lapse of time or both, would constitute an event of default by the applicable Entity
under the terms of the Contracts. All of the Contracts of the Entities are in full force and
effect and to HOLDINGS’ Knowledge, no counter-party to any of the Contracts is in default under the
terms of such Contracts. Schedule 1.1(d) lists each Contract that:
(a) expressly obligates an Entity to pay an amount of $500,000 (to the 100% interest)
or more and has not been fully performed as of the date hereof;
(b) expressly restricts the ability of an Entity to compete or otherwise to conduct its
business in any manner or place;
(c) provides for the sale of products or the provision of services (for a term greater
than a year) for amounts in excess of $500,000 (to the 100% interest and including
outstanding offers or quotes which by acceptance would create such a Contract) and which
have not been fully performed as of the date hereof;
(d) provides a right of first refusal or other restrictive right that limits the
ability to transfer, sell or assign an interest in an asset or an equity interest in a
Person;
(e) is a master agreement, swap, derivative, option, future or similar type Contract or
any open agreement or position thereunder;
(f) is with any current or former employee, officer, director or consultant of HOLDINGS
or an Entity or their respective Affiliates;
(g) is an inter-company agreement;
(h) is with any labor union or association;
(i) is a partnership or joint venture agreement with a Third Person in which one of
HOLDINGS or an Entity or their respective Affiliates is a party or by which any of them are
bound;
(j) is an agreement with a consideration in excess of $500,000 (to the 100% interest)
by an Entity to purchase or sell any assets (other than inventory in the Ordinary Course of
Business), businesses, capital stock or other debt or equity securities of any Person; or
(k) is an agreement with a consideration in excess of $500,000 (to the 100% interest)
involving the merger, consolidation, purchase, sale, transfer or other disposition of
interests in real property, capital stock or other debt or equity securities of any Person
prior to Closing.
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4.8 Title to Assets; Intellectual Property. Except for the Permitted Encumbrances,
each of the Entities has Defensible Title to those of the Assets that it operates, free and clear
of all Liens, and:
(a) none of HOLDINGS or the Entities has received any written notice of infringement,
misappropriation or conflict with respect to Intellectual Property from any Person with
respect to the ownership, use or operation of the Assets; and
(b) the ownership, use and operation of the Assets have not infringed, misappropriated
or otherwise conflicted with any patents, patent applications, patent rights, trademarks,
trademark applications, service marks, service xxxx applications, copyrights, trade names,
unregistered copyrights or trade secrets of any other Person.
4.9 Preferential Rights to Purchase. Except as listed in Schedule 4.9, there
are no preferential or similar rights to purchase any portion of the Entities or Assets that will
be triggered by this Agreement or the transactions contemplated herein.
4.10 Broker’s or Finder’s Fees. No investment banker, broker, finder or other Person
is entitled to any brokerage or finder’s fee or similar commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of HOLDINGS or any of its
Affiliates.
4.11 Compliance with Property Instruments. To HOLDINGS’ Knowledge and except as set
forth in Schedule 4.11, (a) all of the instruments creating the Real Property Interests are
presently valid, subsisting and in full force and effect; (b) there are no violations, defaults or
breaches thereunder, or existing facts or circumstances which upon notice or the passage of time or
both will constitute a violation, default or breach thereunder; and (c) the Assets are currently
being operated and maintained in compliance with all terms and provisions of the instruments
creating the Real Property Interests. None of HOLDINGS or its Affiliates has received or given any
written notice of default or claimed default under any such instruments and is not participating in
any negotiations regarding any material modifications thereof.
4.12 Environmental Matters. Except as set forth in Schedule 4.12:
(a) to HOLDINGS’ Knowledge, HOLDINGS and its Affiliates have not caused or allowed the
generation, use, treatment, manufacture, storage, or disposal of Hazardous Materials at, on
or from the Assets, except in accordance with all applicable Environmental Laws;
(b) to HOLDINGS’ Knowledge, there has been no release of any Hazardous Materials at,
on, from or underlying any of the Assets other than such releases that (i) are not required
to be reported to a Governmental Authority, (ii) have been reported to the appropriate
Governmental Authority or (iii) were in compliance with applicable Environmental Laws;
(c) to HOLDINGS’ Knowledge, the Entities have secured all permits required under
Environmental Laws for the ownership, use and operation of the Assets and the Entities are
in compliance with such permits;
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(d) HOLDINGS and its Affiliates have not received written inquiry or notice of any
actual or threatened Claim related to or arising under any Environmental Law relating to the
Assets;
(e) none of HOLDINGS or the Entities is currently operating or required to be operating
any of the Assets under any compliance order, a decree or agreement, any consent decree or
order, or corrective action decree or order issued by or entered into with any Governmental
Authority under any Environmental Law or any Law regarding health or safety in the work
place;
(f) to HOLDINGS’ Knowledge, the Entities have owned, used and operated the Assets in
compliance with Environmental Laws, except for any non-compliance which has been remediated
and brought into compliance with Environmental Laws; and
(g) to HOLDINGS’ Knowledge, none of the off-site locations where Hazardous Materials
from any of the Assets have been transported, stored, treated, recycled, disposed of or
released has been designated as a facility that is subject to a Claim under any
Environmental Laws.
4.13 Employee Matters. At no time prior to the Effective Time will the Entities have
had any employees.
4.14 Benefit Plan Liabilities. At no time prior to the Effective Time will the
Entities have maintained any Benefit Plans. At the Effective Time, the Entities shall have no
liability with respect to any Benefit Plans.
4.15 No Foreign Person. HOLDINGS is not a “foreign person” as defined in Section 1445
of the Code and in any regulations promulgated thereunder.
4.16 Capitalization of the Subject Interests.
(a) The Subject Interests (i) constitute 25.1% of the outstanding ownership interests
in the JV, (ii) were duly authorized, validly issued, fully paid and non-assessable and
(iii) were not issued in violation of any pre-emptive rights.
(b) HOLDINGS and GP, as applicable, has good and valid title to the Subject Interests
conveyed by each of them and, except as provided or created by its limited liability company
agreement or other organizational or governance documents, the Securities Act or applicable
securities Laws, the Subject Interests are free and clear of any (i) restrictions on
transfer, Taxes, Liens, Claims, or Proceedings or (ii) encumbrances, options, warrants,
purchase rights, contracts, commitments, equities or demands to the extent any of the same
contain or create any right to acquire all or any right in or to the Subject Interests.
(c) There are no existing rights, agreements or commitments of any character obligating
the Entities to issue, transfer or sell any additional ownership rights or interests or any
other securities (debt, equity or otherwise) convertible into or exchangeable for
20
such ownership rights or interests or repurchase, redeem or otherwise acquire any such
interest.
4.17 Subsidiaries and Other Equity Interests. As of Closing, the JV will not have any
Subsidiaries or own, directly or indirectly, any equity interest in any other Person except the
limited liability company interests listed on Schedule 4.17.
4.18 Bank Accounts. Except as set forth on Schedule 4.18, FCV, DETG and ET
(and as of Closing, the JV), have no accounts or safe-deposit boxes with banks, trust companies,
savings and loan associations, or other financial institutions.
4.19 [Reserved].
4.20 Investment Intent. HOLDINGS and GP is acquiring the Units for its own account,
and not with a view to, or for sale in connection with, the distribution thereof in violation of
state or federal Law. HOLDINGS and GP acknowledges that the Units have not been registered under
the Securities Act or the securities Laws of any state and neither HOLDINGS nor GP has any
obligation or right to register the Units except as set forth in the Limited Partnership Agreement.
Without such registration, the Units may not be sold, pledged, hypothecated or otherwise
transferred unless it is determined that registration is not required. HOLDINGS, itself or through
its officers, employees or agents, has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an investment such as an
investment in the Units, and HOLDINGS, either alone or through its officers, employees or agents,
has evaluated the merits and risks of the investment in the Units.
4.21 Financial Statements; Internal Controls; Undisclosed Liabilities. To HOLDINGS’
Knowledge:
(a) Schedule 4.21 sets forth a true and complete copy of the [unaudited]
consolidated balance sheet as of December 31, 2008, and the unaudited consolidated statement
of changes in MLP’s equity, the unaudited consolidated statement of operations, and
unaudited consolidated statement of cash flow for the twelve months ended December 31, 2008;
and the audited consolidated balance sheet as of December 31, 2007, and the audited
consolidated statement of changes in MLP’s equity, the audited consolidated statement of
operations, and audited consolidated statement of cash flow for the twelve months ended
December 31, 2007 for the business of the JV (the “Annual Financial Statements”).
The Annual Financial Statements have been prepared in accordance with the requirements of
Regulation S-X adopted by the SEC.
(b) There are no liabilities or obligations of the JV (whether known or unknown and
whether accrued, absolute, contingent or otherwise) and there are no facts or circumstances
that would reasonably be expected to result in any such liabilities or obligations, other
than (i) liabilities or obligations disclosed, reflected or reserved against in the Annual
Financial Statements, and (ii) current liabilities incurred in the Ordinary Course of
Business since December 31, 2008.
4.22 No Other Representations or Warranties; Schedules. HOLDINGS makes no other
express or implied representation or warranty with respect to the Entities or any of their
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respective Affiliates, the Assets or the transactions contemplated by this Agreement, and
disclaims any other representations or warranties. The disclosure of any matter or item in any
schedule to this Agreement shall not be deemed to constitute an acknowledgment that any such matter
is required to be disclosed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MLP
REPRESENTATIONS AND WARRANTIES OF MLP
MLP hereby represents and warrants to HOLDINGS:
5.1 Organization, Good Standing, and Authorization. MLP is a limited partnership duly
formed, validly existing and in good standing under the Laws of the State of Delaware. MLP has all
requisite limited partnership power and authority to enter into and perform this Agreement and the
Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder
and to carry out the transactions contemplated herein and therein. The execution and delivery of
this Agreement and the Transaction Documents to which it is a party and the consummation by MLP of
the transactions contemplated herein have been duly and validly authorized by all necessary limited
partnership action by MLP. This Agreement has been duly executed and delivered by MLP.
5.2 Enforceability. This Agreement constitutes, and upon execution and delivery of
the Transaction Documents to which MLP is a party, such Transaction Documents will constitute,
valid and binding obligations of MLP, enforceable against MLP in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting creditor’s rights generally and general principles of equity.
5.3 No Conflicts. The execution, delivery and performance by MLP of this Agreement
and the Transaction Documents and the consummation of the transactions contemplated hereby or
thereby, will not:
(a) provided that any MLP Required Consents and Post-Closing Consents have been
obtained, conflict with, constitute a breach, violation or termination of, give rise to any
right of termination, cancellation or acceleration of or result in the loss of any right or
benefit under, any agreement to which MLP is a party;
(b) conflict with or violate the Limited Partnership Agreement or result in the
creation of a Lien on the Units; or
(c) provided that all of the MLP Required Consents and Post Closing Consents have been
obtained, violate any Law applicable to MLP.
5.4 Consents, Approvals, Authorizations and Governmental Regulations. Except (i) for
Post-Closing Consents, and (ii) as set forth in Schedule 5.4 and (iii) as may be required
under the HSR Act (the items described in clauses (ii) and (iii) being collectively referred to as
the “MLP Required Consents”), no order, consent, waiver, permission, authorization or
approval of, or exemption by, or the giving of notice to or registration or filing with, any Third
Person, is necessary for MLP to execute, deliver and perform this Agreement or the Transaction
Documents to which it will be a party.
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5.5 Litigation. There is no injunction, restraining order or Proceeding pending
against MLP that restrains or prohibits the consummation of the transactions contemplated by this
Agreement.
5.6 Independent Investigation. MLP is knowledgeable in the business of owning and
operating natural gas and natural gas liquids facilities and has had access to the Assets, the
representatives of HOLDINGS and its Affiliates, and to the records of HOLDINGS and its Affiliates
with respect to the Assets. MLP ACKNOWLEDGES THAT THE ASSETS ARE IN THEIR “AS IS, WHERE IS”
CONDITION AND STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, AND THAT, EXCEPT AS EXPRESSLY SET
OUT IN THIS AGREEMENT, HOLDINGS HAS MADE NO REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY,
CONDITION, CONFORMITY TO SAMPLES, MERCHANTABILITY, AND/OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF
WHICH ARE EXPRESSLY DISCLAIMED BY HOLDINGS AND EXCEPT AS SET FORTH IN THIS AGREEMENT, WAIVED BY
MLP. MLP FURTHER ACKNOWLEDGES THAT: (I) THE ASSETS HAVE BEEN USED FOR NATURAL GAS AND NATURAL GAS
LIQUIDS OPERATIONS AND PHYSICAL CHANGES IN THE ASSETS AND IN THE LANDS BURDENED THEREBY MAY HAVE
OCCURRED AS A RESULT OF SUCH USES; (II) THE ASSETS MAY INCLUDE BURIED PIPELINES AND OTHER
EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT BE KNOWN BY HOLDINGS OR READILY APPARENT BY A PHYSICAL
INSPECTION OF THE ASSETS OR THE LANDS BURDENED THEREBY; (III) MLP SHALL HAVE INSPECTED PRIOR TO
CLOSING, OR SHALL BE DEEMED TO HAVE WAIVED ITS RIGHTS TO INSPECT, THE ASSETS AND THE ASSOCIATED
PREMISES, AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, AND THAT MLP
SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, ACCEPT ALL OF THE SAME IN THEIR “AS IS,
WHERE IS” CONDITION AND STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT
LIMITED TO, THE PRESENCE OF MAN-MADE MATERIAL FIBERS AND THE PRESENCE, RELEASE OR DISPOSAL OF
HAZARDOUS MATERIALS. EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, HOLDINGS MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO (A) THE ACCURACY OR COMPLETENESS
OF ANY DATA OR RECORDS DELIVERED TO MLP WITH RESPECT TO THE INTERESTS, INCLUDING, WITHOUT
LIMITATION, ANY DESCRIPTION OF THE INTERESTS, PRICING ASSUMPTIONS, QUALITY OR QUANTITY OF THE
INTERESTS, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR (B) FUTURE VOLUMES OF HYDROCARBONS OR
OTHER PRODUCTS TRANSPORTED, TREATED, STORED OR PROCESSED THROUGH OR AT THE ASSETS. With respect to
any projection or forecast delivered by or on behalf of HOLDINGS or its Affiliates to MLP, MLP
acknowledges that (i) there are uncertainties inherent in attempting to make such projections and
forecasts, (ii) MLP is familiar with such uncertainties, (iii) MLP is taking full responsibility
for making its own evaluation of the adequacy and accuracy of all such projections and forecasts
furnished to MLP and (iv) MLP will not have a claim against HOLDINGS or any of its advisors or
Affiliates with respect to such projections or forecasts.
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5.7 Broker’s or Finder’s Fees. No investment banker, broker, finder or other Person
is entitled to any brokerage or finder’s fee or similar commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of MLP or any of its
Affiliates which is, or following the Closing would be, an obligation of HOLDINGS or any of its
Affiliates.
5.8 Investment Intent. MLP is acquiring the Subject Interests for its own account,
and not with a view to, or for sale in connection with, the distribution thereof in violation of
state or federal Law. MLP acknowledges that the Subject Interests have not been registered under
the Securities Act or the securities Laws of any state and neither HOLDINGS nor any of its
Affiliates has any obligation to register the Subject Interests. Without such registration, the
Subject Interests may not be sold, pledged, hypothecated or otherwise transferred unless it is
determined that registration is not required. MLP, itself or through its officers, employees or
agents, has sufficient knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of an investment such as an investment in the Subject Interests,
and MLP, either alone or through its officers, employees or agents, has evaluated the merits and
risks of the investment in the Subject Interests.
5.9 Available Funds. MLP will have at Closing, sufficient cash to enable it to make
payment in immediately available funds of the cash amount specified in Section 2.2(ii) when due and
any other amounts to be paid by it hereunder.
ARTICLE VI
COVENANTS AND ACCESS
COVENANTS AND ACCESS
6.1 Conduct of Business. HOLDINGS and MIDSTREAM each covenants and agrees that from
and after the execution of this Agreement and until the Closing:
(a) Without the prior written consent of MLP, (i) HOLDINGS will not, and will not
permit the Entities to sell, transfer, assign, convey or otherwise dispose of any Assets
other than (A) the transfer of the Excluded Assets; (B) the sale of inventory in the
Ordinary Course of Business or (C) the sale or other disposition of equipment or other
Personal Property which is replaced with equipment or other Personal Property of
comparable or better value and utility; (ii) except for the existing Capital Projects,
modify in any respect the East Texas System that will require a capital expenditure in
excess of $1,000,000 (as to the 100% interest); (iii) make any adverse change in its
sales, credit or collection terms and conditions relating to the Assets; (iv) do any act
or omit to do any act which will cause a material breach in any Contract; or (v) unless
disputed in good faith, fail to pay when due all amounts owed under the Contracts;
(b) HOLDINGS will not allow the Entities to create or permit the creation of any
Lien on any Asset other than Permitted Encumbrances;
(c) If HOLDINGS becomes aware of any event or development that it reasonably
believes is likely to cause a material breach or default hereunder or to have a Material
Adverse Effect, it will give prompt written notice to MLP; and
(d) HOLDINGS will and will cause the Entities to:
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(i) maintain and operate the Assets in the Ordinary Course of Business,
including regular scheduled maintenance plans and capital expenditures, and pay or
cause to be paid all costs and expenses in connection therewith when due;
(ii) carry on its business in respect of the Assets in substantially the same
manner as it has heretofore;
(iii) use reasonable efforts to preserve its business in respect of the Assets
intact, to keep available the services of the employees involved in the conduct of
such business and to preserve the goodwill of customers having business relations
with the applicable Entities in respect of the Assets, in each case, in all material
respects;
(iv) not abandon any of the Assets or liquidate, dissolve, recapitalize or
otherwise wind up its business;
(v) comply in all material respects with all of the rules, regulations and
orders of any Governmental Authority applicable to the Assets;
(vi) timely file, properly and accurately make in all material respects all
reports and filings required to be filed with the appropriate Governmental
Authority; and
(vii) pay all Taxes with respect to the Assets which come due and payable prior
to the Closing Date;
(viii) not make, amend or revoke any material election with respect to Taxes;
(ix) not amend its organizational documents;
(x) not make any material change in any method of accounting or accounting
principles, practices or policies, other than those required by GAAP;
(xi) not issue or sell any equity interests, notes, bonds or other securities
or incur, assume or guarantee any indebtedness for borrowed money, or any option,
warrant or right to acquire same;
(xii) not (A) merge or consolidate with any Person; or (B) make any loan to any
Person (other than extensions of credit to customers in the Ordinary Course of
Business and inter-company loans under DCP Midstream, LLC’s cash management system);
and
(xiii) maintain in full force and effect insurance policies covering the
Assets.
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(xiv) with respect to the Contracts, not enter into any financial derivatives
that would be Assumed Obligations unless the same are in compliance with MIDSTREAM’s
risk management guidelines.
6.2 Casualty Loss.
(a) HOLDINGS shall promptly notify MLP of any Casualty Loss of which HOLDINGS becomes
aware prior to the Closing. If a Casualty Loss, other than the East Texas Casualty Incident
(addressed in (c) below), occurs and such Casualty Loss would reasonably be expected to have
a Material Adverse Effect (a “Material Casualty Loss”), HOLDINGS shall have the
right to extend the Closing Date for up to forty-five (45) days for the purpose of repairing
or replacing the Assets destroyed or damaged by the Material Casualty Loss to the reasonable
satisfaction of MLP. If HOLDINGS does not repair or replace the Assets destroyed or damaged
by the Material Casualty Loss prior to the Closing to the reasonable satisfaction of MLP and
the Parties are unable to agree on a value to compensate MLP for the Material Casualty Loss,
MLP may terminate this Agreement upon fifteen (15) days written notice to HOLDINGS.
(b) If this Agreement is not terminated by MLP as provided in subsection (a), MLP’s
sole remedy with respect to any Casualty Loss in respect of Assets which are not repaired or
replaced prior to the Closing to the reasonable satisfaction of MLP (but only to the extent
not reflected in Net Working Capital) is to accept a value estimated by HOLDINGS and agreed
to by MLP to be equal to 25.1% of the cost to repair or replace the Assets of any Entity
affected by the Casualty Loss, as applicable; provided that (A) if the Parties
cannot agree, then the Closing shall occur and either Party may submit the determination of
the costs of the Casualty Loss for resolution pursuant to Section 11.8; and (B) with
respect to any Casualty Loss, any insurance, condemnation or taking proceeds shall become
25.1% the sole property of HOLDINGS and GP, and 74.9% the sole property of the JV, to be
managed pursuant to the terms of the JV LLC Agreement, and each Party shall execute such
assignments, releases, resolutions or other documents as may be necessary to vest such
proceeds in the persons and percentages set forth above.
(c) As to the East Texas Casualty Incident, HOLDINGS shall pay the costs and expenses
attributable to the Subject Interests as necessary to repair and replace the damaged
Facilities caused by the East Texas Casualty Incident prior to the Closing, to the
reasonable satisfaction of MLP. In consideration of HOLDINGS’ obligation to pay the costs
and expenses attributable to the Subject Interests to repair and replace the Facilities
damaged by the East Texas Casualty Incident, any and all insurance proceeds attributable to
the Subject Interests that may be payable to the JV, MLP or any of their Affiliates in
respect of any claims made regarding the East Texas Casualty Incident (including without
limitation, property loss policy proceeds and business interruption policy proceeds) shall
be the sole property of HOLDINGS, and each Party shall execute such assignments, releases,
resolutions or other documents as may be necessary to vest such proceeds in the persons and
percentages set forth above. HOLDINGS shall have the right to extend the Closing Date for
up to forty-five (45) days for the purpose of repairing or replacing the Facilities
destroyed or damaged by the East Texas Casualty Incident. If HOLDINGS does not repair or
replace the Assets destroyed or damaged by the East Texas Casualty
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Incident prior to the Closing to the reasonable satisfaction of MLP, and the Parties are
unable to agree on a value to compensate MLP for the East Texas Casualty Incident’s effect
on the Subject Interests, then MLP may terminate this Agreement upon fifteen (15) days
written notice to HOLDINGS.
6.3 Access, Information and Access Indemnity.
(a) Prior to Closing, HOLDINGS will make available at HOLDINGS’ offices to MLP and
MLP’s authorized representatives for examination as MLP may reasonably request, all Records;
provided, however, such material shall not include (i) any proprietary data which relates to
another business of HOLDINGS or its Affiliates and is not primarily used in connection with
the continued ownership, use or operation of the Assets, (ii) any information subject to
Third Person confidentiality agreements for which a consent or waiver cannot be secured by
HOLDINGS or its Affiliates after reasonable efforts, or (iii) any information which, if
disclosed, would violate an attorney-client privilege or would constitute a waiver of rights
as to attorney work product or attorney-client privileged communications.
(b) Subject to subsection (a) above, HOLDINGS shall permit MLP and MLP’s
authorized representatives to consult with employees of HOLDINGS and its Affiliates during
the business hours of 8:00 a.m. to 5:00 p.m. (local time), Monday through Friday and to
conduct, at MLP’s sole risk and expense, inspections and inventories of the Assets and to
examine all Records over which HOLDINGS and its Affiliates have control. HOLDINGS shall
also coordinate, in advance, with MLP to allow site visits and inspections at the field
sites on Saturdays unless operational conditions would reasonably prohibit such access.
(c) MLP SHALL PROTECT, DEFEND, INDEMNIFY AND HOLD THE HOLDINGS’ INDEMNITEES HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS AND LOSSES OCCURRING ON OR TO THE ASSETS CAUSED BY THE
ACTS OR OMISSIONS OF MLP, MLP’S AFFILIATES OR ANY PERSON ACTING ON MLP’S OR ITS AFFILIATES’
BEHALF IN CONNECTION WITH ANY DUE DILIGENCE CONDUCTED PURSUANT TO OR IN CONNECTION WITH THIS
AGREEMENT PRIOR TO CLOSING, INCLUDING ANY SITE VISITS AND ENVIRONMENTAL SAMPLING; PROVIDED,
HOWEVER, THE FOREGOING OBLIGATION OF MLP SHALL NOT APPLY WITH RESPECT TO ANY ENVIRONMENTAL
CONDITIONS TO THE EXTENT EXISTING PRIOR TO THE CONDUCT OF SUCH DUE DILIGENCE WHICH ARE
DISCOVERED DURING SUCH DUE DILIGENCE. MLP shall comply in all material respects with all
rules, regulations, policies and instructions issued by HOLDINGS, GP or any Third Person
operator regarding MLP’s actions prior to Closing while upon, entering or leaving any
property included in the Assets, including any insurance requirements that HOLDINGS may
impose on contractors authorized to perform work on any property owned or operated by
HOLDINGS.
6.4 Regulatory Filings; Xxxx-Xxxxx-Xxxxxx Filing.
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(a) MLP and HOLDINGS will take all commercially reasonable actions necessary or
desirable, and proceed diligently and in good faith and use all commercially reasonable
efforts, as promptly as practicable to obtain all consents, approvals or actions of, to make
all filings with, and to give all notices to, Governmental Authorities required to
accomplish the transactions contemplated by this Agreement; provided, however, that the cost
to obtain Post-Closing Consents shall be borne by MLP.
(b) The Parties shall make any filings required under the HSR Act on or prior to five
(5) days after the date of this Agreement and provide such information to the FTC as is
required in connection with the HSR Act as soon as practicable after a request therefore.
(c) Notwithstanding any provision herein to the contrary, each of the Parties will (i)
use reasonable efforts to comply as expeditiously as possible with all lawful requests of
Governmental Authorities for additional information and documents pursuant to the HSR Act,
(ii) not (A) extend any waiting period under the HSR Act or (B) enter into any voluntary
agreement with any Governmental Authority not to consummate the transactions contemplated by
this Agreement, except with the prior consent of the other Party, and (iii) cooperate with
each other and use reasonable efforts to obtain the requisite approval of the FTC and DOJ;
provided, however, that the Parties are not obligated to accept any conditional approval or
divest any of the Assets or any of their properties.
(d) MLP will be responsible for paying the filing fees required with respect to any
filing under the HSR Act.
6.5 Limitation on Casualty Losses and Other Matters. Notwithstanding any provision
herein to the contrary, if either HOLDINGS or MLP reasonably determines that the anticipated
aggregate value of any Casualty Losses and a good faith estimate of HOLDINGS’ liability with
respect to breaches of representations and warranties of which either HOLDINGS or MLP has provided
notice to the other prior to Closing, exceeds $2,500,000, then such Party shall provide written
notice to the other of such determination together with the notifying Party’s calculations of the
estimated costs, payments, reductions and liabilities supporting such determination.
Notwithstanding Section 9.1(c), upon the other Party’s receipt of such notice, the Party
receiving the notice shall have the right to terminate this Agreement at any time prior to Closing
upon ten (10) days written notice to the other Party.
6.6 Supplements to Exhibits and Schedules. HOLDINGS may, from time to time, by
written notice to MLP at any time prior to the Closing Date, supplement or amend the Exhibits and
Schedules to correct any matter that would constitute a breach of any representation or warranty of
HOLDINGS herein contained. MLP shall have a minimum of five (5) Business Days to review such
supplement or amendment and the Closing shall be extended as required to allow MLP to do so;
provided, however, if MLP reasonably determines that any individual new disclosure item set forth
in any such supplement or amendment would increase the amount of the Assumed Obligations by more
than $50,000, then MLP shall notify HOLDINGS of such determination together with MLP’s calculations
of such increase in the amount of the Assumed Obligations. Promptly upon HOLDINGS’ receipt of such
written notice, the Parties shall endeavor in good faith to agree to a value to be paid by HOLDINGS
to MLP therefor or other
28
mutually agreeable remedy to address the matters which are the subject of such supplement(s)
and amendment(s) to the Exhibits and Schedules. If within fifteen (15) days of HOLDINGS’ receipt
of such written notice, the Parties have not agreed to a value to be paid by HOLDINGS to MLP
therefore or another mutually agreeable remedy, MLP shall have the right to terminate this
Agreement at any time during the five (5) Business Days following the expiration of such fifteen
(15) day period by provision of written notice to HOLDINGS. Notwithstanding any other provision
hereof, if the Closing occurs, any such supplement or amendment will be effective to cure and
correct for all purposes any breach of any representation or warranty that would have existed if
such supplement or amendment had not been made.
6.7 Preservation of Records. For a period of seven (7) years after the Closing Date,
the Party in possession of the originals of the Records will retain such Records at its sole cost
and expense and will make such Records available to the other Party to the extent pertaining to
such other Parties’ obligations hereunder upon reasonable notice for inspection and/or copying, at
the expense of the requesting Party, at the headquarters of the Party in possession (or at such
other location in the United States as the Party in possession may designate in writing to the
other Party) at reasonable times and during regular office hours. MLP agrees that HOLDINGS may
retain a copy of the Records to the extent such Records pertain to its obligations hereunder.
6.8 [Reserved]
6.9 Capital Projects.
(a) One or more of the Entities is undertaking the ongoing construction of the
natural gas gathering systems, inlet liquid handling facilities, and flare systems
described by open AFE on Schedule 6.9 (the “Capital Projects”). HOLDINGS
or its Affiliates shall continue to pursue the construction, on the JV’s behalf, of the
Capital Projects through the Effective Time, and, from and after the Effective Time until
the third anniversary thereof, HOLDINGS will reimburse the JV on a monthly basis solely
for those costs and expenses incurred by the JV to complete the Capital Projects that are
attributable to the Subject Interests.
(b) Notwithstanding anything to the contrary set forth in this Agreement, any other
capital expenditures for projects or maintenance capital (but excluding capital
expenditures related to the Capital Projects or Casualty Losses (collectively, the
“New Capital Projects”) incurred between the Execution Date and Closing and
attributable to the Subject Interests shall be reimbursed by MLP to HOLDINGS as provided
in Section 2.2.
(c) Upon Closing, HOLDINGS’ and its Affiliates’ obligations for the payment or
reimbursement of costs and expenses with respect to the East Texas Inlet Liquid Handling
Facilities (as such obligations are outlined in Section 6.9 of the Prior Contribution
Agreement) shall terminate and be deemed fully satisfied, completed, and superseded, and
neither HOLDINGS nor the MLP shall have any further obligation, duty or responsibility to
make any payment or perform any duty, obligation or action under Section 6.9(c) of the
Prior Contribution Agreement from and after the Closing.
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6.10 [Reserved]
6.11 Tax Covenants; Preparation of Tax Returns. The MLP shall cause the JV to
prepare and file, or cause to be prepared and filed, all Tax Returns required to be filed by the
Entities and also shall cause the JV to cause the Entities to pay the Taxes shown to be due
thereon; provided, however, that MIDSTREAM shall promptly reimburse the MLP for the portion of such
Tax attributable to the Subject Interests that relates to a Pre-Closing Tax Period, to the extent
not accrued in the Final Settlement Statement. MIDSTREAM shall furnish to the MLP all information
and records reasonably requested by the MLP for use in preparation of any Tax Returns. The Parties
shall cause the MLP to allow MIDSTREAM to review, comment upon and reasonably approve without undue
delay any Tax Return at any time during the twenty (20) day period immediately preceding the filing
of such Tax Return.
6.12 Financial Statements and Financial Records. HOLDINGS shall consent to the
inclusion or incorporation by reference of the Annual Financial Statements in any registration
statement, report or other document of MLP or any of its Affiliates to be filed with the SEC in
which MLP or such Affiliate reasonably determines that the SEC Financial Statements are required to
be included or incorporated by reference to satisfy any rule or regulation of the SEC or to satisfy
relevant disclosure obligations under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended. HOLDINGS shall cause its auditors to consent to the inclusion or
incorporation by reference of its audit opinion with respect to the Annual Financial Statements in
any such registration statement, report or other document and, in connection therewith, HOLDINGS
shall execute and deliver to its auditors such representation letters, in form and substance
customary for representation letters provided to external audit firms by management of the company
whose financial statements are the subject of an audit, as may be reasonably requested by its
auditors.
ARTICLE VII
CONDITIONS TO CLOSING
CONDITIONS TO CLOSING
7.1 HOLDINGS’/GP’s Conditions. The obligation of HOLDINGS and GP to close is subject
to the satisfaction of the following conditions, any of which may be waived in HOLDINGS’ sole
discretion:
(a) The representations of MLP contained in Article V shall be true, in all
material respects (or, in the case of representations or warranties that are already
qualified by a materiality standard, shall be true in all respects) on and as of Closing.
(b) MLP shall have performed in all material respects the obligations, covenants and
agreements of MLP contained herein.
(c) There is no injunction, restraining order or Proceeding pending against HOLDINGS or
the Entities that restrains or prohibits the consummation of the transactions contemplated
by this Agreement.
(d) All of HOLDINGS’ Required Consents, MLP’s Required Consents, consents under the
Real Property Interests, Contracts and Permits and consents or
30
approvals under the HSR Act (or expiration of the waiting period) shall have been
obtained.
(e) MLP shall have made all deliveries in accordance with Section 8.2(b).
7.2 MLP’s Conditions. The obligation of MLP to close is subject to the satisfaction
of the following conditions, any of which may be waived in its sole discretion:
(a) The representations of HOLDINGS contained in Article IV shall be true, in
all material respects (or in the case of representations or warranties that are already
qualified by a materiality standard, shall be true in all respects) on and as of the
Closing.
(b) HOLDINGS shall have performed, in all material respects, the obligations, covenants
and agreements of HOLDINGS contained herein.
(c) There is no injunction, restraining order or Proceeding pending against HOLDINGS or
the Entities that restrains or prohibits the consummation of the transactions contemplated
by this Agreement.
(d) All of HOLDINGS’ Required Consents, MLP’s Required Consents, consents under the
Real Property Interests, Contracts and Permits and consents or approvals under the HSR Act
(or expiration of the waiting period) shall have been obtained.
(e) There shall have been no events or occurrences that could reasonably be expected to
have a Material Adverse Effect.
(f) HOLDINGS shall have delivered all documents in accordance with Section
8.2(a).
(g) MLP shall have received audited financial statements for the JV for the year ended
December 31, 2008, that are satisfactory to MLP in its sole discretion.
7.3 Exceptions. Notwithstanding the provisions of Sections 7.1(a) and
(b) and 7.2(a) and (b), no Party shall have the right to refuse to close
the transaction contemplated hereby by reason of this Article VII unless (a) in the case of
HOLDINGS and GP , the sum of all representations of MLP contained in Article V which are
not true and all obligations, covenants and agreements which MLP has failed to perform, would
reasonably be expected to have a Material Adverse Effect, and (b) in the case of MLP, the sum of
all representations of HOLDINGS and GP contained in Article IV which are not true and all
obligations, covenants and agreements which HOLDINGS and GP has failed to perform, would reasonably
be expected to have a Material Adverse Effect.
ARTICLE VIII
CLOSING
CLOSING
8.1 Time and Place of Closing. The consummation of the transactions contemplated by
this Agreement (the “Closing”) shall take place in the offices of MIDSTREAM in Denver,
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Colorado at (a) a pre-closing at 9:00 a.m. on March 31, 2009 (at which the Transaction
Documents and Officer’s Certificates will be executed) and (b) a final closing at 9:00 a.m. Denver
time on April 1, 2009 (unless such date is otherwise extended by either HOLDINGS or MLP as
permitted hereunder); or on the last day of the month following the receipt of the consents
required by Sections 7.1(d) and 7.2(d) (if later than the foregoing specified date
of Closing), or such other time and place as the Parties agree to in writing (the “Closing
Date”), and shall be effective as of the Effective Time.
8.2 Deliveries at Closing. At the Closing,
(a) HOLDINGS and GP, as applicable, will execute and deliver or cause to be executed
and delivered to MLP:
(i) Each of the Transaction Documents to which HOLDINGS, GP or Affiliates are a
party;
(ii) Certificates of a corporate officer or other authorized person dated the
Closing Date, certifying on behalf of HOLDINGS and GP that the conditions in
Sections 7.2(a) and (b) have been fulfilled.
(b) MLP will execute and deliver or cause to be executed and delivered to HOLDINGS and
GP:
(i) Each of the Transaction Documents to which MLP or MLP’s Affiliates are a
party;
(ii) A certificate of a corporate officer or other authorized person dated the
Closing Date certifying on behalf of MLP that the conditions in Sections
7.1(a) and (b) have been fulfilled;
(iii) Certificates for Class D Units, determined in accordance with
Sections 2.2 and 2.3;
(iv) A wire transfer to HOLDINGS and GP of the amounts due with respect to the
Total Net Working Capital and New Capital Projects (as set forth in the Preliminary
Settlement Statement).
ARTICLE IX
TERMINATION
TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions contemplated
hereby abandoned as follows:
(a) HOLDINGS and MLP may elect to terminate this Agreement at any time prior to the
Closing by mutual written consent thereof;
(b) Either HOLDINGS or MLP by written notice to the other may terminate this Agreement
if the Closing shall not have occurred on or before June 1, 2009;
32
provided, however, that neither Party may terminate this Agreement if such Party is at
such time in material breach of any provision of this Agreement;
(c) HOLDINGS and MLP may each terminate this Agreement at any time on or prior to the
Closing if either MLP, on the one hand, or HOLDINGS, on the other hand, shall have
materially breached any representations, warranties or covenants thereof herein contained
with the sum of such breach or breaches reasonably expected to have a Material Adverse
Effect and the same is not cured within thirty (30) days after receipt of written notice
thereof from the applicable non-breaching Party; provided, however, that neither Party may
terminate this Agreement if such Party is at such time in material breach of any
representations, warranties or covenants of such Party; and
(d) In addition to the foregoing, any Party may terminate this Agreement to the extent
such termination is expressly authorized by another provision of this Agreement.
9.2 Effect of Termination Prior to Closing. If Closing does not occur as a result of
any Party exercising its right to terminate pursuant to Section 9.1, then no Party shall
have any further rights or obligations under this Agreement, except that (i) nothing herein shall
relieve any Party from any liability for any willful breach of this Agreement, and (ii) the
provisions of Section 6.3(c) and Article XI shall survive any termination of this
Agreement.
ARTICLE X
INDEMNIFICATION
INDEMNIFICATION
10.1 Indemnification by MLP. Effective upon Closing, MLP shall defend, indemnify and
hold harmless HOLDINGS and its Affiliates, and all of its and their directors, officers, employees,
partners, members, contractors, agents, and representatives (collectively, the “HOLDINGS
Indemnitees”) from and against any and all Losses asserted against, resulting from, imposed
upon or incurred by any of the HOLDINGS Indemnitees as a result of or arising out of:
(a) the breach of any of the representations or warranties under Article V;
(b) the breach of any covenants or agreements of MLP contained in this Agreement; and
(c) to the extent that HOLDINGS is not required to indemnify any of the MLP Indemnitees
pursuant to Section 10.2, the Assumed Obligations.
10.2 Indemnification by HOLDINGS. Effective upon Closing, HOLDINGS shall defend,
indemnify and hold harmless MLP and its Affiliates, and all of its and their directors, officers,
employees, partners, members, contractors, agents, and representatives (collectively, the “MLP
Indemnitees”) from and against any and all Losses asserted against, resulting from, imposed
upon or incurred by any of the MLP Indemnitees as a result of or arising out of:
(a) the breach of any of the representations or warranties under Article IV
(other than Sections 4.1, 4.2, 4.16 and 4.17),
33
(b) subject to Section 6.9, to the extent not accounted for in the Final
Settlement Statement, Claims asserted within one (1) year after Closing to the extent
related to underpayment of trade payables for periods prior to the Effective Time;
(c) with respect to the Former UP Fuels Properties, Claims by Governmental Authorities
asserted within two (2) years after Closing to the extent related to fines and penalties for
periods between April 1, 1999 and Closing;
(d) with respect to the Former Gulf South Properties, Claims by Governmental
Authorities asserted within two (2) years after Closing to the extent related to fines and
penalties for periods between March 31, 2005 and Closing;
(e) to the extent and subject to any limitations provided therein, any matters set
forth on Schedule 10.2(e);
(f) the breach of any of the representations or warranties under Sections 4.1,
4.2, 4.16 and 4.17 or the covenants or agreements of HOLDINGS
contained in this Agreement; and
(g) any Reserved Liabilities.
10.3 Deductibles, Caps, Survival and Certain Limitations.
(a) Subject to this Section 10.3, all representations, warranties, covenants
and indemnities made by the Parties in this Agreement or pursuant hereto shall survive the
Closing as hereinafter provided, and shall not be merged into any instruments or agreements
delivered at Closing.
(b) With respect to the obligations of HOLDINGS:
(i) under Sections 10.2(a) or (b), none of the MLP Indemnitees
shall be entitled to assert any right to indemnification after one (1) year from the
Closing;
(ii) under Section 10.2(c) or (d), none of the MLP Indemnitees
shall be entitled to assert any right to indemnification after two (2) years from
the Closing;
(iii) under Section 10.2(a), none of the MLP Indemnitees shall be
entitled to assert any right to indemnification unless the individual claim or
series of related claims which arise out of substantially the same facts and
circumstances exceeds $50,000 (“Qualified Claims”);
(iv) under Section 10.2(a), none of the MLP Indemnitees shall be
entitled to assert any right to indemnification unless Qualified Claims for which
indemnity is only provided under Section 10.2(a) shall in the aggregate
exceed $450,000 and then only to the extent that all such Qualified Claims exceed
said amount;
34
(v) under Section 10.2(a), none of the MLP Indemnitees shall be
entitled to indemnification for any amount in excess of $4,500,000; and
(vi) Any indemnification or payment obligations of HOLDINGS under
Section 10.2 resulting from HOLDINGS’ breach of its representations,
warranties, covenants or agreements, shall be limited to Losses that are
attributable to the Subject Interests or to the transactions pursuant to which MLP
acquires the Subject Interests under this Agreement, and MLP shall have no right to
assert any claim under this Agreement related to the 25% member interest in the JV
that was acquired under the Prior Contribution Agreement. Notwithstanding the
foregoing, the indemnification rights of MLP and any MLP Indemnitee under the Prior
Contribution Agreement shall not be terminated or impaired by any provision this
Agreement, including, without limitation, MLP’s or any MLP Indemnitee’s right to be
indemnified for HOLDINGS’ breach of any representation, warranty, covenant or
agreement under the Prior Contribution Agreement.
(c) Any claim for indemnity under this Agreement made by a Party Indemnitee shall be in
writing, be delivered in good faith prior to the expiration of the respective survival
period under Section 10.3(b) (to the extent applicable), and specify in reasonable
detail the specific nature of the claim for indemnification hereunder (“Claim
Notice”). Any such claim that is described in a timely (if applicable) delivered Claim
Notice shall survive with respect to the specific matter described therein.
(d) Notwithstanding anything contained herein to the contrary, in no event shall
HOLDINGS be obligated under this Agreement to indemnify (or be otherwise liable hereunder in
any way whatsoever to) any of the MLP Indemnitees with respect to a breach of any
representation or warranty, if MLP had Knowledge thereof at Closing and failed to notify
HOLDINGS of such breach prior to Closing. Unless HOLDINGS or a Third Person shall have made
a claim or demand or it appears reasonably likely that such a claim or demand appears
reasonably likely, MLP shall not take any voluntary action that is intended by MLP to cause
a Claim to be initiated that would be subject to indemnification by HOLDINGS.
(e) All Losses indemnified hereunder shall be determined net of any (i) Third Person
Awards, (ii) Tax Benefits; and (iii) amount which specifically pertains to such Loss and is
reflected in the calculations of the amounts set forth on the Final Settlement Statement.
10.4 Notice of Asserted Liability; Opportunity to Defend.
(a) All claims for indemnification hereunder shall be subject to the provisions of this
Section 10.4. Any person claiming indemnification hereunder is referred to herein
as the “Indemnified Party” or “Indemnitee” and any person against whom such claims are
asserted hereunder is referred to herein as the “Indemnifying Party” or “Indemnitor.”
35
(b) If any Claim is asserted against or any Loss is sought to be collected from an
Indemnified Party, the Indemnified Party shall with reasonable promptness provide to the
Indemnifying Party a Claim Notice. The failure to give any such Claim Notice shall not
otherwise affect the rights of the Indemnified Party to indemnification hereunder unless the
Indemnified Party has proceeded to contest, defend or settle such Claim or remedy such a
Loss with respect to which it has failed to give a Claim Notice to the Indemnifying Party,
but only to the extent the Indemnifying Party is prejudiced thereby. Additionally, to the
extent the Indemnifying Party is prejudiced thereby, the failure to provide a Claim Notice
to the Indemnifying Party shall relieve the Indemnifying Party from liability for such
Claims and Losses that it may have to the Indemnified Party, but only to the extent the
liability for such Claims or Losses is directly attributable to such failure to provide the
Claim Notice.
(c) The Indemnifying Party shall have thirty (30) days from the personal delivery or
receipt of the Claim Notice (the “Notice Period”) to notify the Indemnified Party
(i) whether or not it disputes the liability to the Indemnified Party hereunder with respect
to the Claim or Loss, and in the event of a dispute, such dispute shall be resolved in the
manner set forth in Section 11.8 hereof, (ii) in the case where Losses are asserted
against or sought to be collected from an Indemnifying Party by the Indemnified Party,
whether or not the Indemnifying Party shall at its own sole cost and expense remedy such
Losses or (iii) in the case where Claims are asserted against or sought to be collected from
an Indemnified Party, whether or not the Indemnifying Party shall at its own sole cost and
expense defend the Indemnified Party against such Claim; provided however, that any
Indemnified Party is hereby authorized prior to and during the Notice Period to file any
motion, answer or other pleading that it shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party (and of which it shall have given notice and
opportunity to comment to the Indemnifying Party) and not prejudicial to the Indemnifying
Party.
(d) If the Indemnifying Party does not give notice to the Indemnified Party of its
election to contest and defend any such Claim described in Section 10.4(c)(iii)
within the Notice Period, then the Indemnifying Party shall be bound by the result obtained
with respect thereto by the Indemnified Party and shall be responsible for all costs
incurred in connection therewith.
(e) If the Indemnifying Party is obligated to defend and indemnify the Indemnified
Party, and the Parties have a conflict of interest with respect to any such Claim, then the
Indemnified Party may, in its sole discretion, separately and independently contest and
defend such Claim, and the Indemnifying Party shall be bound by the result obtained with
respect thereto by the Indemnified Party and shall be responsible for all costs incurred in
connection therewith.
(f) If the Indemnifying Party notifies the Indemnified Party within the Notice Period
that it shall defend the Indemnified Party against a Claim, the Indemnifying Party shall
have the right to defend all appropriate Proceedings, and with counsel of its own choosing
(but reasonably satisfactory to the Indemnified Party) and such Proceedings shall be
promptly settled (subject to obtaining a full and complete release of all
36
Indemnified Parties) or prosecuted by it to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or settlement it may do
so at its sole cost and expense. If the Indemnified Party joins in any such Claim, the
Indemnifying Party shall have full authority to determine all action to be taken with
respect thereto, as long as such action could not create a liability to any of the
Indemnified Parties, in which case, such action would require the prior written consent of
any Indemnified Party so affected.
(g) If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Claim and in making any
counterclaim against the Third Person asserting the Claim, or any cross-complaint against
any person as long as such cooperation, counterclaim or cross-complaint could not create a
liability to any of the Indemnified Parties.
(h) At any time after the commencement of defense by Indemnifying Party under
Section 10.4(f) above of any Claim, the Indemnifying Party may request the
Indemnified Party to agree in writing to the abandonment of such contest or to the payment
or compromise by the Indemnifying Party of the asserted Claim, but only if the Indemnifying
Party agrees in writing to be solely liable for such Claim; whereupon such action shall be
taken unless the Indemnified Party determines that the contest should be continued and
notifies the Indemnifying Party in writing within fifteen (15) days of such request from the
Indemnifying Party. If the Indemnified Party determines that the contest should be
continued, the amount for which the Indemnifying Party would otherwise be liable hereunder
shall not exceed the amount which the Indemnifying Party had agreed to pay to compromise
such Claim; provided that, the other Person to the contested Claim had agreed in writing to
accept such amount in payment or compromise of the Claim as of the time the Indemnifying
Party made its request therefor to the Indemnified Party, and further provided that, under
such proposed compromise, the Indemnified Party would be fully and completely released from
any further liability or obligation with respect to the matters which are the subject of
such contested Claim.
10.5 Materiality Conditions. For purposes of determining whether an event described
in this Article X has occurred for which indemnification under this Article X can
be sought, any requirement in any representation, warranty, covenant or agreement by HOLDINGS or
MLP, as applicable, contained in this Agreement that an event or fact be “material,” “Material,”
meet a certain minimum dollar threshold or have a “Material Adverse Effect” or a material adverse
effect (each a “Materiality Condition”) in order for such event or fact to constitute a
misrepresentation or breach of such representation, warranty, covenant or agreement under this
Agreement, such Materiality Condition shall be disregarded and such representations, warranties,
covenants or agreements shall be construed solely for purposes of this Article X as if they
did not contain such Materiality Conditions. Notwithstanding anything in this Section
10.5, any claim for indemnification under this Article X will be subject to Section
10.3.
10.6 Exclusive Remedy. AS BETWEEN THE MLP INDEMNITEES AND THE HOLDINGS INDEMNITEES,
AFTER CLOSING (A) THE EXPRESS INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT, WILL BE THE
SOLE AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH
37
RESPECT TO SAID AGREEMENT AND THE EVENTS GIVING RISE THERETO, AND THE TRANSACTIONS PROVIDED
FOR THEREIN OR CONTEMPLATED THEREBY (OTHER THAN THE OTHER TRANSACTION DOCUMENTS) AND (B) NO PARTY
HERETO NOR ANY OF ITS RESPECTIVE SUCCESSORS OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST ANY OTHER
PARTY OR ITS AFFILIATES WITH RESPECT TO THE TRANSACTIONS PROVIDED FOR HEREIN OTHER THAN AS IS
EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.
10.7 Negligence and Strict Liability Waiver. WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT, AN INDEMNIFIED PARTY SHALL BE
ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OR VIOLATION OF ANY LAW OF OR BY SUCH
INDEMNIFIED PARTY.
10.8 Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, IN NO EVENT SHALL ANY OF HOLDINGS, GP OR MLP BE LIABLE TO THE OTHER, OR TO THE OTHERS’
INDEMNITEES, UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE, CONSEQUENTIAL,
SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS; PROVIDED THAT, IF ANY OF THE HOLDINGS INDEMNITEES
OR MLP INDEMNITEES IS HELD LIABLE TO A THIRD PERSON FOR ANY SUCH DAMAGES AND THE INDEMNITOR IS
OBLIGATED TO INDEMNIFY SUCH HOLDINGS INDEMNITEES OR MLP INDEMNITEES FOR THE MATTER THAT GAVE RISE
TO SUCH DAMAGES, THE INDEMNITOR SHALL BE LIABLE FOR, AND OBLIGATED TO REIMBURSE SUCH INDEMNITEES
FOR SUCH DAMAGES.
10.9 Bold and/or Capitalized Letters. THE PARTIES AGREE THAT THE BOLD AND/OR
CAPITALIZED LETTERS IN THIS AGREEMENT CONSTITUTE CONSPICUOUS LEGENDS.
ARTICLE XI
MISCELLANEOUS PROVISIONS
MISCELLANEOUS PROVISIONS
11.1 Expenses. Unless otherwise specifically provided for herein, each Party will
bear its own costs and expenses (including legal fees and expenses) incurred in connection with the
negotiation of this Agreement and the transactions contemplated hereby; provided that HOLDINGS will
bear the cost of all Post-Closing Consents which must be obtained from any railroad.
11.2 Further Assurances. From time to time, and without further consideration, each
Party will execute and deliver to the other Party such documents and take such actions as the other
Party may reasonably request in order to more effectively implement and carry into effect the
transactions contemplated by this Agreement.
38
11.3 Transfer Taxes. The Parties believe that the contribution of the Subject
Interests as provided for herein is exempt from or is otherwise not subject to any and all sales,
use, transfer, or similar Taxes. If any such sales, transfer, use or similar Taxes are due or
should hereafter become due (including penalty and interest thereon) by reason of this transaction,
MLP shall timely pay and solely bear all such type of Taxes.
11.4 Assignment. Neither Party may assign this Agreement or any of its rights or
obligations arising hereunder without the prior written consent of the other Party; provided,
however, MLP shall be permitted to assign this Agreement to an Affiliate prior to Closing,
provided, that, notwithstanding such assignment, MLP shall continue to remain responsible for all
obligations of MLP hereunder following such assignment.
11.5 Entire Agreement, No Amendment of Prior Transaction Agreement, Amendments and
Waiver. This Agreement, together with the Transaction Documents and all certificates,
documents, instruments and writings that are delivered pursuant hereto and thereto contain the
entire understanding of the Parties with respect to the transactions contemplated hereby and
supersede all prior agreements, arrangements and understandings relating to the subject matter
hereof. Except as specified in Section 6.9, no term, provision or aspect of this Agreement
or of any other Transaction Document shall have the effect of terminating, amending, extending, or
enlarging or limiting the scope or intent, or of in any manner superseding the Prior Contribution
Agreement or the transactions documents executed in connection therewith. This Agreement may be
amended, superseded or canceled only by a written instrument duly executed by the Parties
specifically stating that it amends, supersedes or cancels this Agreement. Any of the terms of
this Agreement and any condition to a Party’s obligations hereunder may be waived only in writing
by that Party specifically stating that it waives a term or condition hereof. No waiver by either
Party of any one or more conditions or defaults by the other in performance of any of the
provisions of this Agreement shall operate or be construed as a waiver of any future conditions or
defaults, whether of a like or different character, nor shall the waiver constitute a continuing
waiver unless otherwise expressly provided.
11.6 Severability. Each portion of this Agreement is intended to be severable. If
any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity of the remainder of this Agreement.
11.7 Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.8 Governing Law, Dispute Resolution and Arbitration.
(a) Governing Law. This Agreement shall be governed by, enforced in accordance
with, and interpreted under, the Laws of the State of Colorado, without reference to
conflicts of Laws principles.
(b) Negotiation. In the event of any Arbitral Dispute, the Parties shall
promptly seek to resolve any such Arbitral Dispute by negotiations between senior executives
of the Parties who have authority to settle the Arbitral Dispute. When a Party
39
believes there is an Arbitral Dispute under this Agreement that Party will give the
other Party written notice of the Arbitral Dispute. Within thirty (30) days after receipt
of such notice, the receiving Party shall submit to the other a written response. Both the
notice and response shall include (i) a statement of each Party’s position and a summary of
the evidence and arguments supporting such position, and (ii) the name, title, fax number,
and telephone number of the executive or executives who will represent that Party. If the
Arbitral Dispute involves a claim arising out of the actions of any Person not a signatory
to this Agreement, the receiving Party shall have such additional time as necessary, not to
exceed an additional thirty (30) days, to investigate the Arbitral Dispute before submitting
a written response. The executives shall meet at a mutually acceptable time and place
within fifteen (15) days after the date of the response and thereafter as often as they
reasonably deem necessary to exchange relevant information and to attempt to resolve the
Arbitral Dispute. If one of the executives intends to be accompanied at a meeting by an
attorney, the other executive shall be given at least five (5) Business Days’ notice of such
intention and may also be accompanied by an attorney.
(c) Failure to Resolve. If the Arbitral Dispute has not been resolved within
sixty (60) days after the date of the response given pursuant to Section 11.8(b)
above, or such additional time, if any, that the Parties mutually agree to in writing, or if
the Party receiving such notice denies the applicability of the provisions of Section
11.8(b) or otherwise refuses to participate under the provisions of Section
11.8(b), either Party may initiate binding arbitration pursuant to the provisions of
Section 11.8(d) below.
(d) Arbitration. Any Arbitral Disputes not settled pursuant to the foregoing
provisions shall be resolved through the use of binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“Arbitration
Rules”), as supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code) and in
accordance with the following provisions:
(i) If there is any inconsistency between this Section 11.8(d) and the
Arbitration Rules or the Federal Arbitration Act, the terms of this Section
11.8(d) will control the rights and obligations of the Parties.
(ii) Arbitration shall be initiated by a Party serving written notice, via
certified mail, on the other Party that the first Party elects to refer the Arbitral
Dispute to binding arbitration, along with the name of the arbitrator appointed by
the Party demanding arbitration and a statement of the matter in controversy.
Within thirty (30) days after receipt of such demand for arbitration, the receiving
Party shall name its arbitrator. If the receiving Party fails or refuses to name
its arbitrator within such thirty (30) day period, the second arbitrator shall be
appointed, upon request of the Party demanding arbitration, by the Chief U.S.
District Court Judge for the District of Colorado, or such other person designated
by such judge. The two arbitrators so selected shall within thirty (30) days after
their designation select a third arbitrator; provided, however, that if the two
arbitrators are not able to agree on a third arbitrator within such thirty (30) day
period, either Party may request the Chief U.S. District Court Judge for the
40
District of Colorado, or such other person designated by such judge to select
the third arbitrator as soon as possible. If the Judge declines to appoint an
arbitrator, appointment shall be made, upon application of either Party, pursuant to
the Commercial Arbitration Rules of the American Arbitration Association. If any
arbitrator refuses or fails to fulfill his or her duties hereunder, such arbitrator
shall be replaced by the Party which selected such arbitrator (or if such arbitrator
was selected by another Person, through the procedure which such arbitrator was
selected) pursuant to the foregoing provisions.
(iii) The hearing will be conducted in Denver, Colorado, no later than sixty
(60) days following the selection of the arbitrators or thirty (30) days after all
prehearing discovery has been completed, whichever is later, at which the Parties
shall present such evidence and witnesses as they may choose, with or without
counsel. The Parties and the arbitrators should proceed diligently and in good
faith in order that the award may be made as promptly as possible.
(iv) Except as provided in the Federal Arbitration Act, the decision of the
arbitrators will be binding on and non-appealable by the Parties. Any such decision
may be filed in any court of competent jurisdiction and may be enforced by any Party
as a final judgment in such court.
(v) The arbitrators shall have no right or authority to grant or award
exemplary, punitive, remote, speculative, consequential, special or incidental
damages.
(vi) The Federal Rules of Civil Procedure, as modified or supplemented by the
local rules of civil procedure for the U.S. District Court of Colorado, shall apply
in the arbitration. The Parties shall make their witnesses available in a timely
manner for discovery pursuant to such rules. If a Party fails to comply with this
discovery agreement within the time established by the arbitrators, after resolving
any discovery disputes, the arbitrators may take such failure to comply into
consideration in reaching their decision. All discovery disputes shall be resolved
by the arbitrators pursuant to the procedures set forth in the Federal Rules of
Civil Procedure.
(vii) Adherence to formal rules of evidence shall not be required. The
arbitrators shall consider any evidence and testimony that they determine to be
relevant.
(viii) The Parties hereby request that the arbitrators render their decision
within thirty (30) days following conclusion of the hearing.
(ix) The defenses of statute of limitations and laches shall be tolled from and
after the date a Party gives the other Party written notice of an Arbitral Dispute
as provided in Section 11.8(b) above until such time as the Arbitral Dispute
has been resolved pursuant to Section 11.8(b), or an arbitration award has
been entered pursuant to this Section 11.8(d).
41
(e) Recovery of Costs and Attorneys’ Fees. If arbitration arising out of this
Agreement is initiated by either Party, the decision of the arbitrators may include the
award of court costs, fees and expenses of such arbitration (including reasonable attorneys’
fees).
(f) Choice of Forum. If, despite the Parties’ agreement to submit any Arbitral
Disputes to binding arbitration, there are any court proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby, such proceedings shall be brought
and tried in, and the Parties hereby consent to the jurisdiction of, the federal or state
courts situated in the City and County of Denver, State of Colorado.
(g) Jury Waivers. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO DEMAND A
TRIAL BY JURY.
(h) Settlement Proceedings. All aspects of any settlement proceedings,
including discovery, testimony and other evidence, negotiations and communications pursuant
to this Section 11.8, briefs and the award shall be held confidential by each Party
and the arbitrators, and shall be treated as compromise and settlement negotiations for the
purposes of the Federal and State Rules of Evidence.
11.9 Notices and Addresses. Any notice, request, instruction, waiver or other
communication to be given hereunder by either Party shall be in writing and shall be considered
duly delivered if personally delivered, mailed by certified mail with the postage prepaid (return
receipt requested), sent by messenger or overnight delivery service, or sent by facsimile to the
addresses of the Parties as follows:
MLP:
|
DCP Midstream Partners, LP | ||
370 — 17th Street, Suite 2775 | |||
Xxxxxx, Xxxxxxxx 00000 | |||
Telephone: (000) 000-0000 | |||
Facsimile: (000) 000-0000 | |||
Attn: President | |||
with a copy to:
|
DCP Midstream Partners, LP | ||
370 — 17th Street, Suite 2775 | |||
Xxxxxx, Xxxxxxxx 00000 | |||
Telephone: (000) 000-0000 | |||
Facsimile: (000) 000-0000 | |||
Attn: General Counsel | |||
MIDSTREAM, GP or HOLDINGS:
|
DCP Midstream, LLC | ||
370 — 17th Street, Suite 2500 | |||
Xxxxxx, Xxxxxxxx 00000 | |||
Telephone: (000) 000-0000 | |||
Facsimile: (000) 000-0000 | |||
Attn: President |
42
with a copy to:
|
DCP Midstream, LLC | |
370 — 17th Street, Suite 2500 | ||
Xxxxxx, Xxxxxxxx 00000 | ||
Telephone: (000) 000-0000 | ||
Facsimile: (000) 000-0000 | ||
Attn: General Counsel |
or at such other address as either Party may designate by written notice to the other Party in the
manner provided in this Section 11.9. Notice by mail shall be deemed to have been given
and received on the third (3rd) day after posting. Notice by messenger, overnight delivery
service, facsimile transmission (with answer-back confirmation) or personal delivery shall be
deemed given on the date of actual delivery.
11.10 Press Releases. Except as may otherwise be required by securities Laws and
public announcements or disclosures that are, in the reasonable opinion of the Party proposing to
make the announcement or disclosure, legally required to be made, there shall be no press release
or public communication concerning the transactions contemplated by this Agreement by either Party
except with the prior written consent of the Party not originating such press release or
communication, which consent shall not be unreasonably withheld or delayed. MLP, GP and HOLDINGS
will consult in advance on the necessity for, and the timing and content of, any communications to
be made to the public and, subject to legal constraints, to the form and content of any application
or report to be made to any Governmental Authority that relates to the transactions contemplated by
this Agreement.
11.11 Offset. Nothing contained herein or in any Transaction Document shall create a
right of offset or setoff for any Party under this Agreement and each Party hereby waives and
disclaims any such right of offset or setoff under all applicable Law (including common Law).
11.12 No Partnership; Third Party Beneficiaries. Nothing in this Agreement shall be
deemed to create a joint venture, partnership, tax partnership, or agency relationship between the
Parties. Nothing in this Agreement shall provide any benefit to any Third Person or entitle any
Third Person to any claim, cause of action, remedy or right of any kind, it being the intent of the
Parties that this Agreement shall not be construed as a third-party beneficiary contract; provided,
however, that the indemnification provisions of Article X shall inure to the benefit of the
MLP Indemnitees and the HOLDINGS Indemnitees as provided therein.
11.13 Negotiated Transaction. The provisions of this Agreement were negotiated by the
Parties, and this Agreement shall be deemed to have been drafted by both Parties.
THE PARTIES HAVE signed this Agreement by their duly authorized officials as of the date first
set forth above.
[Signatures begin on next page]
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DCP LP HOLDINGS, LLC | ||||||
By: | /s/ D. Xxxxxx Xxxxxx | |||||
Name: | D. Xxxxxx Xxxxxx | |||||
Title: | Vice President, Strategic Planning | |||||
DCP MIDSTREAM, LLC | ||||||
By: | /s/ D. Xxxxxx Xxxxxx | |||||
Name: | D. Xxxxxx Xxxxxx | |||||
Title: | Vice President, Strategic Planning | |||||
DCP MIDSTREAM GP, LP | ||||||
By: DCP MIDSTREAM GP, LLC, Its General Partner |
||||||
By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
Name: | Xxxxxx X. Xxxxxxxxx | |||||
Title: | Vice President, Business Development | |||||
DCP MIDSTREAM PARTNERS, LP | ||||||
By: DCP MIDSTREAM GP, LP, | ||||||
Its General Partner |
By: DCP MIDSTREAM GP, LLC, | ||||||
Its General Partner | ||||||
By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
Name: | Xxxxxx X. Xxxxxxxxx | |||||
Title: | Vice President, Business Development |
Signature page to Contribution Agreement