0000764044-95-000024.txt : 19950914
0000764044-95-000024.hdr.sgml : 19950914
ACCESSION NUMBER: 0000764044-95-000024
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 19950908
ITEM INFORMATION: Acquisition or disposition of assets
FILED AS OF DATE: 19950911
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: QUESTAR PIPELINE CO
CENTRAL INDEX KEY: 0000764044
STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924]
IRS NUMBER: 870307414
STATE OF INCORPORATION: UT
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-14147
FILM NUMBER: 95572385
BUSINESS ADDRESS:
STREET 1: 79 S STATE ST
STREET 2: P O BOX 11450
CITY: SALT LAKE CITY
STATE: UT
ZIP: 84147
BUSINESS PHONE: 8015302400
MAIL ADDRESS:
STREET 1: 79 SOUTH STATE STREET
STREET 2: P O BOX 11150
CITY: SALT LAKE CITY
STATE: UT
ZIP: 84147
FORMER COMPANY:
FORMER CONFORMED NAME: MOUNTAIN FUEL RESOURCES INC
DATE OF NAME CHANGE: 19880331
8-K
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report - September 8, 1995
(Date of earliest event reported)
Questar Pipeline Company
(Exact name of registrant as specified in charter)
STATE OF UTAH 0-14147 87-0307414
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation File No.) Identification No.)
or organization)
79 South State Street, Salt Lake City, Utah 84147
(Address of principal executive offices)
Registrant's telephone number, including area code (801) 530-2400
Not Applicable
(Former name or former address, if changed since last report.)
FORM 8-K
CURRENT REPORT
Item 5. Other Events.
On September 8, 1995, Questar Pipeline Company (Questar Pipeline),
a wholly owned subsidiary of Questar Corporation, signed a Stock
Purchase Agreement to purchase Kern River Corporation, which is a wholly
owned subsidiary of Tennessee Gas Pipeline Company and which is one of
two equal partners in the Kern River Gas Transmission Company (Kern
River).
Under the terms of the Stock Purchase Agreement, Questar Pipeline
is obligated to pay $226.2 million. Williams Western Pipeline Company,
the entity within The Williams Companies, Inc., that is the second
partner in Kern River, has 30 days from September 8, 1995, in which to
match the bid offered by Questar Pipeline. The closing of the
transaction is also dependent on obtaining the necessary clearance under
the Hart-Scott-Rodino Antitrust Improvements Act.
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
Exhibit No.Exhibit
10.10 Stock Purchase Agreement dated September 8, 1995,
between Questar Pipeline Company and Tennessee Gas
Pipeline Company. (The exhibits to the Agreement are
not attached, but are available upon request.)
99. Press release issued on September 8, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
QUESTAR PIPELINE COMPANY
(Registrant)
September 8, 1995 By /s/A. J. Marushack
(Date) A. J. Marushack
President and
Chief Executive Officer
EX-10.10
2
Exhibit 10.10
STOCK PURCHASE AGREEMENT
Dated as of September 8, 1995
Between
TENNESSEE GAS PIPELINE COMPANY
and
QUESTAR PIPELINE COMPANY
SALE OF KERN RIVER CORPORATION
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II PURCHASE AND SALE
2.01 Sale of Shares
2.02 Purchase Price
2.03 Purchase Price Adjustment
ARTICLE III THE CLOSING
3.01 Time and Place of Closing
3.02 Deliveries by Seller
3.03 Deliveries by the Buyer
3.04 Conditions to the Obligations of Buyer
3.05 Conditions to the Obligations of Seller
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
SELLER
4.01 Organization; Charter and Bylaws
4.02 Capitalization; Ownership of Shares
4.03 Authority Relative to this Agreement
4.04 Consents and Approvals
4.05 No Violation
4.06 Litigation
4.07 Company Financial Statements
4.08 Partnership Financial Statements
4.09 Compliance with Licenses and Laws
4.10 Conduct of Business; No Dividends
4.11 The Partnership
4.12 No Subsidiaries
4.13 Contracts
4.14 Environmental Claims
4.15 Liens
4.16 Basic Documents
4.17 ERISA
4.18 Brokers
4.19 Property
4.20 No Undisclosed Liabilities
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
BUYER
5.01 Organization
5.02 Authority Relative to this Agreement
5.03 Consents and Approvals
5.04 No Violation
5.05 Litigation
5.06 Acquisition of Stock for Investment
5.07 Financing
5.08 Brokers
ARTICLE VI ADDITIONAL AGREEMENTS
6.01 Access
6.02 Antitrust Notification
6.03 Reasonable Efforts
6.04 Trademark Matters
6.05 Taxes
6.06 Public Announcements
6.07 Further Assurances
6.08 Release of Guarantees and Indemnities
6.09 Employees
6.10 Transition Agreement
6.11 Delivery of Records
6.12 Insurance Matters
6.13 Conduct of Business
6.14 Settlement of Intercompany Indebtedness
6.15 Preservation of Records
6.16 Environmental Audit
6.17 Financial Information for Securities Filings
6.18 Delivery of Financial Statements
ARTICLE VII INDEMNIFICATION AND LIMITATION ON
LIABILITY
7.01 Definitions
7.02 INDEMNITY BY SELLER
7.03 INDEMNITY BY BUYER
7.04 Notification of Third-Party Claims
7.05 Defense of Claims
7.06 Notice of Other Claims
7.07 Access and Cooperation
7.08 Subrogation
7.09 Indemnification Matters Related to Taxes
7.10 Limitation on Liability
7.11 DTPA Waiver
ARTICLE VIII TERMINATION
8.01 Grounds for Termination
8.02 Effect of Termination
8.03 Incentive Fee
ARTICLE IX EXTENT AND SURVIVAL OF REPRESENTATIONS,WARRANTIES,
COVENANTS AND AGREEMENTS
9.01 Scope of Representations of Seller
9.02 Survival
ARTICLE X MISCELLANEOUS
10.01 Expenses
10.02 Notices
10.03 Entire Agreement
10.04 Governing Law
10.05 Headings
10.06 Assignability
10.07 No Third Party Beneficiaries
10.08 Severability
10.09 Equitable Relief
10.10 Counterparts
10.11 Interpretation
Exhibits and Schedules
Exhibit A Net Worth Calculation
Exhibit B Required Consents
Exhibit C Opinion of Seller's Counsel
Exhibit D Opinion of Buyer's Counsel
Exhibit E Tax Agreement
Exhibit F Environmental Assessment Guidelines
Schedule 4.06 Litigation
Schedule 4.13 Contracts
Schedule 4.14 Environmental Claims
Schedule 5.03 Consents and Approvals
Schedule 6.08 Guarantees and Indemnities
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of September
8, 1995, is between TENNESSEE GAS PIPELINE COMPANY, a Delaware
corporation ("Seller"), and QUESTAR PIPELINE COMPANY, a Utah corporation
("Buyer").
R E C I T A L S
WHEREAS, Kern River Corporation, a Delaware corporation (the
"Company"), owns a 50% interest as general partner in Kern River Gas
Transmission Company, a Texas general partnership (the "Partnership");
and
WHEREAS, the Partnership owns and operates a natural gas pipeline
extending from Opal, Wyoming, to Bakersfield, California, together with
related compression facilities; and
WHEREAS, all of the issued and outstanding shares of capital stock
of the Company (the "Shares") are owned by Seller; and
WHEREAS, Buyer desires to purchase, and Seller desires to sell, all
of the Shares upon and subject to the terms and conditions and for the
consideration set forth herein.
NOW, THEREFORE, in consideration of the premises, the covenants set
forth herein and the benefits to be derived herefrom, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
"Affiliate" means any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with the Person specified; provided, however, that the
Partnership shall not be an Affiliate of Seller and its Subsidiaries.
"Agreement" means this Stock Purchase Agreement, including the
exhibits attached hereto.
"Arbitrator" means such accounting firm of national reputation as
Buyer and Seller shall agree.
"Closing" means the closing of the transactions contemplated by
this Agreement as provided in Article III hereof.
"Closing Balance Sheet" has the meaning set forth in Section
2.03(c).
"Closing Date" has the meaning set forth in Section 3.01.
"Closing Date Net Worth" has the meaning set forth in Section
2.03(c).
"Commercial Interest Rate" with respect to any period means the
interest rate published on the first business day of such period by The
Wall Street Journal in the "MONEY RATES" box for commercial paper,
"High-grade unsecured notes sold through dealers by major corporations",
having a maturity of 30 days.
"Confidentiality Agreement" means the confidentiality agreement
between Seller and Buyer relating to the sale of the Company.
"Data Room" has the meaning set forth in Section 6.11.
"Effective Date" means the close of business on September 30, 1995.
"Environmental Laws" means any and all laws, regulations, rules,
orders, ordinances, decrees, official policy statements or
determinations (but excluding guidance documents, internal policies or
proposed regulations or other non-binding pronouncements) of any
Governmental Authority pertaining to the protection of the environment
in effect on the Closing Date, except to the extent relating to Taxes,
in any and all jurisdictions in which property of the Company or the
Partnership is located or in which the Company or the Partnership
conducts operations and applicable to such property or operations, as
the case may be, including but not limited to the Clean Air Act, the
Federal Water Pollution Control Act (The Clean Water Act), the Safe
Drinking Water Act, the Rivers and Harbors Act, the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act ("RCRA"), the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, all as they have been
amended, and other federal, state, foreign and local laws whose purpose
is to regulate matters pertaining to the environment, as such are in
effect on the Closing Date. The terms "hazardous substance" and
"release" have the meanings specified in CERCLA, and the terms "solid
waste", "hazardous waste" and "dispose" have the meanings specified in
RCRA; provided, however, that to the extent the laws of any jurisdiction
in which the Company or the Partnership owns property or conducts
operations have established a meaning for any of these terms which is
broader than that specified in CERCLA or RCRA, such broader meaning
shall apply to such property or operations.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Estimated Purchase Price" has the meaning set forth in Section
2.03(a).
"FERC" means the Federal Energy Regulatory Commission.
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Authority" means any Federal, state, local or foreign
government (or any political subdivision of any thereof), governmental
or quasi-governmental agency, court, commission, board, bureau,
department, authority or instrumentality.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" or "knowledge", when used with reference to Seller in
any formulation, means the actual knowledge of any Specified Officer of
Seller or the Company or any Person who reports directly to any such
Specified Officer.
"Lien" means any mortgage, pledge, security interest, charge,
adverse interest in property, judgment, lease, lien or other encumbrance
of any kind, including any property interest or title of any vendor,
lessor, lender or other secured party under any conditional sale
contract or title retention contract, that secures or is intended to
secure an obligation of any Person.
"Liability" means any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, fine, royalty, judgment, Lien,
obligation or responsibility, whether known or unknown, fixed or
unfixed, conditional or unconditional, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or
otherwise (including, without limitation, reasonable fees and expenses
of counsel).
"Loan Agreement" means the Credit Agreement dated as of June 25,
1991, among the Partnership, the banks named therein, Barclays Bank PLC,
as Documentation Agent, Canadian Imperial Bank of Commerce, New York
Agency, as Administrative Agent, Credit Lyonnais, Cayman Islands Branch,
as Technical Agent, and The Fuji Bank, Limited, Houston Agency, as
Disclosure Agent, as amended, modified or supplemented from time to
time.
"Net Worth" means the amount equal to (i) the total assets of the
Company, other than (a) refunds, credits or offsets for taxes measured
by income, (b) investments in or advances to the Partnership subsequent
to June 30, 1995, and (c) recorded equity in Partnership earnings
subsequent to September 30, 1995, minus (ii) the total liabilities of
the Company, other than liabilities for taxes measured by income
including deferred taxes, plus (iii) an amount, either positive or
negative, as the case may be, for current income Taxes or current income
Tax savings, respectively, accrued on a GAAP basis for the taxable
income of the Company on and from the Effective Date through the Closing
Date.
"Partnership Agreement" means the Partnership Agreement dated as of
May 29, 1985, between the Company and Williams Western as amended,
modified or supplemented from time to time.
"Permitted Encumbrances" means
(i) Liens for taxes not yet due and payable or being
contested in good faith;
(ii) Materialmen's, mechanics', workers', repairman's, or
other similar Liens arising in the ordinary course of the
conduct of the Company's operations which, individually or in
the aggregate, will not have a material adverse effect on the
business, financial condition or results of operations of the
Company;
(iii) all rights to consent by, required notices to,
filings with, or other actions by Governmental Authorities if
the same are of a ministerial nature or are customarily
obtained subsequent to sale or conveyance;
(iv) rights reserved to or vested in any Governmental
Authorities to control or regulate any of the assets of the
Company in any manner, and all laws, rules, regulations,
ordinances and orders of any such Governmental Authorities; and
(v) any other Liens (excluding liens securing
indebtedness for borrowed money) which, individually or in the
aggregate, could not reasonably be expected to be material to
the Company.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company, group,
union, association, trust, court, agency, government, tribunal,
instrumentality, commission, arbitrator, board, bureau, or other entity
or authority.
"Pipeline" means the Partnership's natural gas pipeline extending
from Opal, Wyoming, to Bakersfield, California, including a 7/11
undivided interest in pipeline facilities extending from Daggett,
California, to Bakersfield.
"Preferential Purchase Right" means any right granted to Williams
Western to purchase the Shares for a purchase price not less than the
Purchase Price.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to
time as its Prime Rate calculated on the basis of a 365-day year.
"Purchase Price" has the meaning set forth in Section 2.02.
"RAP" means GAAP at the time prevailing for companies engaged in a
business similar to that of the Partnership and the accounting rules and
regulations, if any, at the time prescribed by the regulatory body or
bodies under the jurisdiction of which the Partnership is at the time
operating to the extent of any deviations from GAAP required by such
rules and regulations.
"Records" means and include all original agreements, documents,
logs, tapes, maps, books, records and files in the possession of Seller
or any of its Affiliates relating to the business and operations of the
Company or the Partnership.
"Specified Officer", as applied to any corporation, shall mean the
chairman, president, general counsel, any vice president or secretary of
such corporation.
"Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, directly or indirectly through one or more intermediaries,
or both, by such Person.
"Taxes" has the meaning set forth in Exhibit E.
"Williams Western" means Williams Western Pipeline Company, a
Delaware corporation.
ARTICLE II
PURCHASE AND SALE
2.01 Sale of Shares. At the Closing, Buyer shall purchase the
Shares from Seller and Seller shall sell, assign and deliver the Shares
to Buyer upon the terms and conditions set forth in this Agreement.
2.02 Purchase Price. Subject to adjustment as provided in
Section 2.03, the purchase price for the Shares shall be equal to
$226,222,000 (the "Purchase Price"). At the Closing, Buyer will pay or
cause to be paid the Estimated Purchase Price in the manner set forth in
Section 3.03(i). If the Closing occurs after December 31, 1995, Buyer
shall pay to Seller, in addition to the Purchase Price, interest on the
Estimated Purchase Price at a rate per annum equal to the Commercial
Interest Rate for the time period elapsed between December 31, 1995 and
the Closing Date.
2.03 Purchase Price Adjustment.
(a) Within ten days, but not less than three business days,
prior to the Closing Date, Seller shall prepare and submit to Buyer
a schedule setting forth, in reasonable detail, Seller's good faith
estimate of the Net Worth of the Company as of the Closing Date
(the "Estimated Closing Date Net Worth") and its estimate of the
Purchase Price (the "Estimated Purchase Price"), as calculated in
accordance with Exhibit A. If Seller's estimate of the adjustment
to the Purchase Price (calculated in accordance with Exhibit A)
exceeds $15 million, Buyer may terminate this transaction at any
time prior to the Closing with no liability.
(b) The Purchase Price shall be reduced or increased, as the
case may be, by the amount by which the Closing Date Net Worth,
calculated in accordance with Exhibit A, is less than or is greater
than $161,169,000.
(c) As soon as practicable (but not more than 45 days) after
the Closing Date, Seller shall deliver to Buyer (i) a balance sheet
as of the Closing Date (the "Closing Balance Sheet") prepared in
accordance with the accounting principles used to prepare the
Company Financial Statements described in Section 4.07, except for
footnote disclosure which shall be omitted, and presenting fairly,
in all material respects, the financial position of the Company on
the Closing Date and (ii) a calculation of the Net Worth of the
Company as of the Closing Date (the "Closing Date Net Worth")
calculated in accordance with Exhibit A. Buyer shall provide to
Seller full and complete access at all reasonable times to the work
papers, books, records and personnel of the Company knowledgeable
with respect thereto to enable Seller to prepare the Closing
Balance Sheet and to calculate the Closing Date Net Worth.
(d) Within 45 days following delivery of the Closing Balance
Sheet, Buyer shall notify Seller of its acceptance of the Closing
Balance Sheet and the Closing Date Net Worth or that it disputes
the Closing Balance Sheet and the Closing Date Net Worth. Buyer
and Seller shall negotiate in good faith to settle any such
dispute. If, notwithstanding such good faith negotiation, Buyer
and Seller shall fail to settle such dispute within 30 days of the
receipt by Seller of Buyer's notice of such dispute, Buyer and
Seller shall refer any dispute to the Arbitrator, whose fees and
expenses shall be paid equally by Buyer and Seller, which shall
review the Closing Balance Sheet and calculation of the Closing
Date Net Worth and shall determine the Closing Date Net Worth in
accordance with this Section 2.03, which determination shall be
made and certified to Buyer and Seller as promptly as practicable,
but not later than 60 days following its engagement. The parties
shall make any submissions to the Arbitrator within 15 days of its
engagement. The Arbitrator shall be given full access to the work
papers, books, records and personnel of the Company to enable it to
make such determinations. Such determinations (whether by
acceptance by Buyer, negotiation or determination of the
Arbitrator) shall be final and binding upon Seller and Buyer.
(e) If the Purchase Price is greater than the Estimated
Purchase Price, then Buyer shall pay to Seller the difference plus
interest thereon at the Commercial Interest Rate from the Effective
Date to the date of such payment. If the Purchase Price is less
than the Estimated Purchase Price, Seller shall pay to Buyer the
difference plus interest thereon at the Commercial Interest Rate
from the Effective Date to the date of such payment. Any such
payment shall be made in immediately available funds, not later
than ten business days after final determination of the Closing
Date Net Worth, by wire transfer to a bank account designated by
the party entitled to receive the payment.
ARTICLE III
THE CLOSING
3.01 Time and Place of Closing. The Closing will take place at
the offices of Tenneco Inc., Tenneco Building, 1010 Milam Street,
Houston, Texas 77002, or at such other place as the parties may agree.
The Closing will be held at 9:00 a.m. (Houston Time) on the later of (i)
October 1, 1995 and (ii) the second business day after satisfaction or
waiver of the conditions set forth in Sections 3.04 and 3.05 or such
other date as the parties may agree (the "Closing Date").
3.02 Deliveries by Seller. At the Closing, Seller will deliver
or cause to be delivered to Buyer the following:
(i) Stock certificates representing the Shares, accompanied
by stock powers duly executed in blank or duly executed instruments
of transfer, and any other documents necessary to transfer to Buyer
good title to the Shares free and clear of any Liens;
(ii) The resignations of the members of the Board of
Directors and all officers of the Company and the representatives
of the Company on the Executive Committee of the Partnership; and
(iii) The documents, instruments and writings required to be
delivered by Seller at the Closing pursuant to this Agreement.
3.03 Deliveries by the Buyer. At the Closing, Buyer will
deliver to Seller the following:
(i) By confirmed wire transfer in immediately available
funds to a bank account designated by Seller, or such other means
as agreed by Seller and Buyer, an amount equal to the Estimated
Purchase Price; and
(ii) The documents, instruments and writings required to be
delivered by Buyer on the Closing Date pursuant to this Agreement.
3.04 Conditions to the Obligations of Buyer. The obligations of
Buyer to proceed with the Closing are subject to the fulfillment (or
waiver in writing by Buyer), at the time of Closing, of each of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties of Seller contained herein shall be
true and correct in all material respects on the date of this
Agreement and on the Closing Date as though such representations
and warranties were made on such date, except for changes permitted
or contemplated by this Agreement.
(b) Performance. Seller shall have performed and complied
in all material respects with all covenants under this Agreement
required to be performed or complied with by it on or prior to the
Closing Date.
(c) Consents. Seller shall have obtained all consents and
approvals listed in Exhibit B and such other consents and approvals
required to enable the parties to consummate the transactions
contemplated to occur on the Closing Date (other than consents and
approvals the failure to obtain which, individually or in the
aggregate, could not have a material adverse effect on the
business, results of operations or financial condition of the
Company).
(d) HSR Act. All necessary filings and notifications under
the HSR Act shall have been made, including any required additional
information or documents, and the waiting period referred to in
such Act applicable to the transactions contemplated hereby shall
have expired or been terminated.
(e) Opinion of Counsel. Buyer shall have received an
opinion, dated the Closing Date, of M. W. Meyer, Vice President and
Deputy General Counsel of Tenneco Inc., substantially in the form
attached hereto as Exhibit C.
(f) No Governmental Proceeding. There shall not have been
instituted or threatened any legal action or proceeding by the
United States Department of Justice or the Federal Trade Commission
challenging the purchase and sale of the Shares as contemplated
hereby; provided, however, that a legal action or proceeding
threatened by the United States Department of Justice or the
Federal Trade Commission after the termination of the waiting
period under the HSR Act shall not constitute failure of a
condition precedent to Buyer's obligations hereunder unless counsel
to Seller and Buyer shall have discussed such matter personally
with a senior or other high level representative of the United
States Department of Justice or the Federal Trade Commission, as
the case may be, and counsel for Buyer shall have advised the Board
of Directors of Buyer in writing that, in the opinion of such
counsel, such threatened action or proceeding raises serious
substantive issues of law and/or fact the determination of which is
likely to result in a judgment or restraining order against Buyer.
(g) No Injunction. There shall not be outstanding any order
(including a temporary restraining order) of any Governmental
Authority having jurisdiction over either of the parties hereto
enjoining or otherwise preventing consummation of the purchase and
sale of the Shares; provided, however, that if such outstanding
order is a temporary restraining order or other ex parte order and
all other conditions precedent to Closing have been satisfied or
waived, the Closing Date shall be extended to a date three business
days subsequent to the date on which such temporary restraining
order or other ex parte order ceases to be in effect.
(h) Termination of Right of First Refusal. Williams Western
shall have either (i) waived the Preferential Purchase Right or
(ii) failed to execute a definitive agreement to purchase the
Shares at a cash price equal to or in excess of the Purchase Price
within the period during which the Preferential Purchase Right may
be exercised.
(i) Certificates. Seller shall have furnished such
certificates to evidence compliance with the conditions set forth
in this Section 3.04 as may be reasonably requested by Buyer.
(j) Lender Acceptance. The lenders under the Loan Agreement
shall have accepted Buyer as successor to Seller's interest in the
Company.
(k) Environmental Audit. The environmental audit referenced
in Section 6.16(a) shall have been completed and the time period
within which either Seller or Buyer may terminate this transaction
based upon the results of the environmental audit shall have
expired.
3.05 Conditions to the Obligations of Seller. The obligations
of Seller to proceed with the Closing are subject to the fulfillment (or
waiver in writing by Seller), at the time of Closing, of each of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties of Buyer contained herein shall be
true and correct in all material respects on the date of this
Agreement and on the Closing Date as though such representations
and warranties were made on such date, except for changes permitted
or contemplated by this Agreement.
(b) Performance. Buyer shall have performed and complied in
all material respects with all covenants under this Agreement
required to be performed or complied with by it on or prior to the
Closing Date.
(c) Consents. Buyer shall have obtained all consents and
approvals required to enable Buyer to consummate the transactions
contemplated hereby in form and substance satisfactory to Seller.
(d) HSR Act. All necessary filings and notifications under
the HSR Act shall have been made, including any required additional
information or documents, and the waiting period referred to in
such Act applicable to the transactions contemplated hereby shall
have expired or been terminated.
(e) Opinion of Counsel. Seller shall have received an
opinion, dated the Closing Date, of Gary Sackett, counsel for
Buyer, substantially in the form attached hereto as Exhibit D.
(f) No Government Proceeding. There shall not have been
instituted or threatened any legal action or proceeding by the
United States Department of Justice or the Federal Trade Commission
challenging the purchase and sale of the Shares as contemplated
hereby; provided, however, that a legal action or proceeding
threatened by the United States Department of Justice or the
Federal Trade Commission after the termination of the waiting
period under the HSR Act shall not constitute failure of a
condition precedent to Seller's obligations hereunder unless
counsel to Seller and Buyer shall have discussed such matter
personally with a senior or other high level representative of the
United States Department of Justice or the Federal Trade
Commission, as the case may be, and the General Counsel for Seller
shall have advised the Board of Directors of Seller in writing
that, in the opinion of such counsel, such threatened action or
proceeding raises serious substantive issues of law and/or fact the
determination of which is likely to result in a judgment or
restraining order against Seller.
(g) No Injunction. There shall not be outstanding any order
(including a temporary restraining order) of any Governmental
Authority having jurisdiction over either of the parties hereto
enjoining or otherwise preventing consummation of the purchase and
sale of the Shares; provided, however, that if such outstanding
order is a temporary restraining order or other ex parte order and
all other conditions precedent to Closing have been satisfied or
waived, the Closing Date shall be extended to a date three business
days subsequent to the date on which such temporary restraining
order or other ex parte order ceases to be in effect.
(h) Termination of Right of First Refusal. Williams Western
shall have either (i) waived the Preferential Purchase Right or
(ii) failed to execute a definitive agreement to purchase the
Shares at a cash price equal to or in excess of the Purchase Price
within the period during which the Preferential Purchase Right may
be exercised.
(i) Release from Support Obligations. Seller shall have
been released from its obligations under the TGPC Performance
Agreement dated as of June 25, 1991, among Seller, the Partnership,
Canadian Imperial Bank of Commerce, New York Agency, as
Administrative Agent, and The Fuji Bank and Trust Company, as
Collateral Agent.
(j) Certificates. Buyer shall have furnished such
certificates of its officers to evidence compliance with the
conditions set forth in this Section 3.05 as may be reasonably
requested by Seller.
(k) Environmental Audit. The environmental audit referenced
in Section 6.16(a) shall have been completed and the time period
within which either Seller or Buyer may terminate this transaction
based upon the results of the environmental audit shall have
expired.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as set forth below:
4.01 Organization; Charter and Bylaws. Each of Seller and the
Company is a corporation validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to
own, lease and operate its properties and to carry on its business as
now being conducted. Buyer has been provided true, correct and complete
copies of the Certificate of Incorporation and bylaws of the Company as
now in effect.
4.02 Capitalization; Ownership of Shares. The authorized
capital stock of the Company consists of 200 shares of capital stock,
par value $5 per share, all of which are duly authorized, validly
issued, fully paid and nonassessable and are owned beneficially and of
record by Seller, free and clear of all Liens. Except for the
Preferential Purchase Right and as provided in this Agreement, there are
no outstanding subscriptions, pre-emptive rights, options, warrants,
calls or rights of any kind relating to or providing for the issuance,
sale, delivery or transfer of securities of any class of the Company
issued or granted by, or binding upon, Seller or the Company (including
any right of conversion or exchange under any outstanding security or
other instrument).
4.03 Authority Relative to this Agreement. Seller has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes a legal,
valid and binding obligation of Seller and is enforceable against Seller
in accordance with its terms except (i) that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights and remedies and (ii) that the remedy
of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
4.04 Consents and Approvals. The execution and delivery by
Seller of this Agreement do not, and compliance by Seller with the terms
hereof and consummation of the transactions contem-plated hereby will
not, require Seller, the Company, the Partnership or the Pipeline to
obtain any consent, waiver, approval, exemption, authorization or other
action of, or make any filing with or give any notice to, any
Governmental Authority or any other Person that have not been obtained,
made or given, except (i) as disclosed in Exhibit B, (ii) pursuant to
the applicable requirements of the HSR Act, and (iii) where failure to
obtain such consents, waivers, approvals, exemptions, authorizations or
actions, make such filings or give such notices (in each case from, with
or to a Person other than a Governmental Authority) would not have a
material adverse effect on the business, financial condition or results
of operations of the Company, the Partnership or the Pipeline or
adversely affect the ability of Seller to perform any of its material
obligations under this Agreement.
4.05 No Violation. Except as set forth in Exhibit B, the
execution and delivery of this Agreement by Seller do not, and the
performance by Seller of its obligations hereunder will not, (i)
conflict with or result in a breach of the Certificate of Incorporation
or bylaws of either Seller or the Company or of the Partnership
Agreement, (ii) violate, or conflict with, or constitute a default
under, or result in the creation or imposition of any Lien upon any
property or assets of the Company, the Partnership or the Pipeline
under, any mortgage, indenture or agreement to which Seller or the
Company, the Partnership or the Pipeline is a party or by which the
properties or assets of the Company, the Partnership or the Pipeline are
bound, the effect of which violation, conflict or default would be
material and adverse to the business, financial condition or results of
operations of the Company, the Partnership or the Pipeline, or (iii)
subject to compliance with the HSR Act as provided in Section 6.02,
violate any statute or law or any judgment, decree, order, writ,
injunction, regulation or rule of any Governmental Authority, the effect
of which violation could reasonably be expected to be material and
adverse to the business, financial condition or results of operations of
the Company, the Partnership or the Pipeline.
4.06 Litigation. Except as set forth on Schedule 4.06(a), at
the date of this Agreement, (i) there are no actions, suits or
arbitration proceedings pending or, to the Knowledge of Seller,
threatened against Seller, any of its Affiliates, including the Company,
or the Partnership or their respective properties, assets, operations or
businesses (with respect to Seller, only insofar as such actions, suits
or proceeding relates to the Company, the Partnership or the Pipeline)
and (ii) none of Seller, the Company or the Partnership has received any
written notice that any governmental investigation or inquiry concerning
the Company or the Partnership is pending or threatened which, in either
case, (A) seek to prevent the consummation of the transactions
contemplated hereby or (B) could, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of the Company,
the Partnership or the Pipeline. To the Knowledge of Seller, except as
provided in Schedule 4.06(b), neither the Company, the Partnership nor
the Pipeline are subject to or in default under any order, judgment,
writ, injunction or decree of any Governmental Authority that would have
a material adverse effect on the business, financial condition or
results of operations of the Company, the Partnership or the Pipeline,
and the Seller and its Affiliates are not subject to or in default under
any such order, judgment, writ, injunction or decree relating to the
Company, the Partnership or the Pipeline.
4.07 Company Financial Statements. Copies of the following
financial statements (the "Company Financial Statements") were included
in the Data Room:
(i) the balance sheets of the Company as of December 31,
1994 and 1993, and the related statements of income and cash flows
for the years then ended; and
(ii) the balance sheets of the Company as of June 30, 1995
and 1994, and the related statements of income and cash flows for
the six-month periods then ended.
The Company Financial Statements reflect an equity pick-up of 50% of the
Partnership's depreciation expense which results in the Company
Financial Statements being prepared in accordance with RAP; if an
appropriate GAAP depreciation method and life were used, the Company
believes the Company Financial Statements would be in compliance with
GAAP consistently applied throughout the periods involved (other than
the requirement of footnote disclosure). Moreover, the Company has not
established a regulatory asset, but reflects the levelized depreciation
through the investment account as equity in undistributed earnings.
Subject to the foregoing, the balance sheets included in the Company
Financial Statements fairly present the financial condition of the
Company as of the respective dates thereof, and the income statements
included in the Company Financial Statements fairly present the results
of operations of the Company during the periods covered thereby.
4.08 Partnership Financial Statements. The following financial
statements (the "Partnership Financial Statements") were included in the
Data Room:
(i) the balance sheets of the Partnership as of December 31,
1994 and 1993, and the related statements of income and cash flows
for the years then ended (each in the format required by the FERC),
together with the related notes thereto and the audit report of
Arthur Andersen LLP thereon (which were set forth in the
Partnership's Form 2 for 1994 as filed with the FERC); and
(ii) the balance sheets of the Partnership as of June 30,
1995 and 1994, and the related statements of income and cash flows
for the six-month periods then ended.
The Partnership Financial Statements were prepared in accordance with
RAP consistently applied throughout the periods involved (other than, in
the case of the Partnership Financial Statements described in clause
(ii) above, the requirement of footnote disclosure). The balance sheets
included in the Partnership Financial Statements fairly present the
financial condition of the Partnership as of the respective dates
thereof, and the income statements included in the Partnership Financial
Statements fairly present the results of operations of the Partnership
during the periods covered thereby.
4.09 Compliance with Licenses and Laws. Except as disclosed in
the Data Room, each of the Company and, to the Knowledge of Seller, the
Partnership and the Pipeline possess all governmental licenses, permits,
certificates, orders, approvals and authorizations necessary for the
conduct of its business (other than permits required by Environmental
Laws) (collectively, the "Permits") and is in compliance with the
Permits, all laws, ordinances, regulations and orders applicable to its
business (other than Environmental Laws) except where the failure to
possess any Permit or the failure to be in such compliance, individually
or in the aggregate, could not reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of the Company, the Partnership or the Pipeline.
4.10 Conduct of Business; No Dividends. Since June 30, 1995,
except as contemplated by this Agreement, (i) the business of the
Company has been conducted only in the ordinary course and (ii) the
Company has not declared or paid any dividend on its outstanding capital
stock.
4.11 The Partnership. The Partnership (i) is a general
partnership duly organized and validly existing under the provisions of
the Texas Uniform Partnership Act and (ii) has the partnership power
and authority to own its property and assets and to transact the
business in which it is engaged. The Company is a general partner of
the Partnership and the direct, legal and beneficial owner of 50% of the
equity of the Partnership, free and clear of all Liens other than any
arising under the Partnership Agreement. Buyer has been provided a
true, correct and complete copy of the Partnership Agreement as now in
effect.
4.12 No Subsidiaries. Neither the Company nor the Partnership
has any Subsidiaries.
4.13 Contracts. Schedule 4.13(a) sets forth a list, as of the
date hereof, of each written contract to which the Company or the
Partnership is a party (other than (i) purchase orders in the ordinary
and usual course of business, (ii) any contract (except firm
transportation contracts) involving the payment of less than $250,000 in
the aggregate or with a term of less than one year and (iii)
confidentiality agreements entered into in the usual course of business
and (iv) contracts or agreements referred to in this Agreement) and such
Schedule does not omit any contract that is material to the Company, the
Partnership or the Pipeline. Except as set forth in Schedule 4.13(b),
each material contract is a valid and binding agreement of the Company
or the Partnership, as the case may be, and, to the Knowledge of Seller,
is in full force and effect. To the Knowledge of Seller, (i) neither
the Company nor the Partnership is in default under or with respect to
any material agreement to which it is a party or by which it or any of
its property or assets is bound in any respect which default Seller
reasonably believes would result in a material adverse effect on the
business, financial condition or results of operation of the Company or
the Partnership, and (ii) no other party to any such material agreement
is in any such default.
4.14 Environmental Claims. Except as set forth in Schedule
4.14, to the Knowledge of Seller, there are no environmental claims,
actions or proceedings pending or threatened relating to the Company,
the Partnership or the Pipeline, that, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of the Company.
Further, during the period between the completion of the environmental
audit described in Section 6.16(a) and the Closing Date, the Company and
the Partnership will have complied with all federal, state, or local
Environmental Laws, judgments, writs and injunctions applicable to them,
and no facts, events or conditions occurring during that period and
relating to past or present facilities, properties or operations of the
Company, the Partnership or the Pipeline, will prevent, hinder, or limit
continued compliance with Environmental Laws, regulations, statutes,
judgments, orders, writs, injunctions and decrees that, in either case,
would have a material adverse effect on the business, financial
condition or results of operations of the Company, the Partnership or
the Pipeline.
4.15 Liens. There is no Lien upon any of the material
properties or income of the Partnership which secures indebted-ness of
any Person, except as permitted by Section 8.12 of the Loan Agreement.
There is no Lien on the Company's interest in the Partnership except as
arising under the Partnership Agreement.
4.16 Basic Documents. The minute books of the stockholders and
directors (and any committees thereof) of the Company that have been
made available to Purchaser for review constitute all of the minute
books of the Company and contain a complete and accurate record of all
meetings and consents in lieu of meetings of the stockholders and
directors (and any committees thereof) of the Company.
4.17 ERISA. Neither the Company nor the Partnership maintains
or contributes to any "employee benefit plan" (as such term is defined
in ERISA).
4.18 Brokers. Seller has not, directly or indirectly, employed
any broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to a fee or commission upon
the execution of this Agreement or consummation of the transactions
contemplated hereby other than Merrill Lynch & Co., whose fee is the
responsibility of Seller.
4.19 Property. The Partnership has good title to, or the rights
to use, all property necessary to operate the Pipeline, as currently
operated, including but not limited to real property, leases, grants,
rights-of-way, easements and all personal and intellectual property
except for the Permitted Encumbrances.
4.20 No Undisclosed Liabilities. To the knowledge of Seller,
none of the Company, the Partnership or the Pipeline has any material
Liabilities arising out of or relating to the business of the Pipeline
except (i) Liabilities described in any schedule to this Agreement, (ii)
Liabilities disclosed or reserved for in accordance with GAAP and RAP in
the balance sheets of the Company and the Partnership provided to Buyer
(excluding the notes thereto) and (iii) Liabilities incurred since June
30, 1995, in the ordinary course of business, consistent with past
practice, and which do not and will not have a material adverse effect
on the business, financial condition or results of operations of the
Company, the Partnership or the business of the Pipeline, as the case
may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as set forth below:
5.01 Organization. Buyer is a corporation validly existing and
in good standing under the laws of the jurisdiction of its incorporation
and has all requisite corporate power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
5.02 Authority Relative to this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been authorized by all necessary corporate
action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation
of Buyer and is enforceable against Buyer in accordance with its terms
except (i) that such enforcement may be subject to bankruptcy,
insolvency, reorgani-zation, moratorium or similar laws affecting
creditors' rights and remedies and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
5.03 Consents and Approvals. Except as disclosed in Schedule
5.03, the execution and delivery by Buyer of this Agreement do not, and
compliance by Buyer with the terms hereof and consummation of the
transactions contemplated hereby will not, require Buyer to obtain any
consent, waiver, approval, exemption, authorization or other action of,
or make any filing with or give any notice to, any Governmental
Authority or any other Person which have not been obtained, made or
given, except (i) as disclosed in Schedule 5.03, (ii) pursuant to the
applicable requirements of the HSR Act, and (iii) where failure to
obtain such consents, waivers, approvals, exemptions, authorizations or
actions, make such filings or give such notices (in each case from, with
or to a Person other than a Governmental Authority) would not have a
material adverse effect on the ability of Buyer to perform any of its
material obligations under this Agreement.
5.04 No Violation. Except as disclosed in Schedule 5.03, the
execution and delivery of this Agreement by Buyer does not, and the
performance of this Agreement by Buyer will not, (i) conflict with or
result in a breach of Buyer's charter or bylaws or equivalent governing
instruments, (ii) violate, or conflict with, or constitute a default
under, or result in the creation or imposition of any Lien upon any
property or assets of Buyer under, any mortgage, indenture or agreement
to which it is a party or by which the properties or assets of Buyer are
bound, which violation, conflict or default might adversely affect the
ability of the Buyer to perform its obligations under this Agreement, or
(iii) subject to compliance with the HSR Act as provided in Section
6.02, violate any statute or law or any judgment, decree, order, writ,
injunction, regulation or rule of any Governmental Authority, which
violation might adversely affect the ability of Buyer to perform its
obligations under this Agreement.
5.05 Litigation. At the date of this Agreement, (i) there are
no actions, suits or arbitration proceedings pending or, to the
knowledge of Buyer, threatened against Buyer or any of its Affiliates or
their respective properties, assets, operations or businesses and (ii)
Buyer has not received any written notice that any governmental
investigation or inquiry is pending or threatened which, in either case,
seeks to prevent the consummation of the transactions contemplated
hereby.
5.06 Acquisition of Stock for Investment. Buyer is acquiring
the Shares for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present
intention of distributing or selling such Shares. Buyer undertakes that
the Shares will not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of in violation of any applicable
securities laws or regulations.
5.07 Financing. Buyer has sufficient funds or committed lines
of credit to consummate the transactions contemplated by this Agreement.
5.08 Brokers. Buyer has not, directly or indirectly, employed
any broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to a fee or commission upon
the execution of this Agreement or consummation of the transactions
contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
Buyer and Seller further covenant and agree as follows:
6.01 Access. Seller shall cause the Company and the Partnership
to afford to Buyer and its authorized representatives reasonable access,
during normal business hours, to the properties, books and records of
the Company and the Partnership and shall cause the Company and the
Partnership to furnish to Buyer such additional financial and operating
data and other information as it may reasonably request to the extent
that such access and disclosure would not (i) violate the terms of any
agreement to which Seller or any of its Affiliates is bound or any
applicable law or regulation or (ii) impair any attorney-client
privilege of Seller, the Company or the Partnership; provided, however,
that the confidentiality of any data or information so acquired shall be
maintained by Buyer and its representatives in accordance with the
Confidentiality Agreement.
6.02 Antitrust Notification. Each of Buyer and Seller shall use
its best efforts to file with the United States Federal Trade Commission
and the United States Department of Justice the notification and report
form required for the transactions contemplated hereby within three days
of the date hereof and shall promptly file any supplemental or
additional information which may reasonably be requested in connection
therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act.
6.03 Reasonable Efforts. Each of Buyer and Seller will use all
reasonable efforts to obtain the satisfaction of the respective
conditions to Closing set forth in Section 3.04 and Section 3.05 hereof
within 30 days of the date of this Agreement.
6.04 Trademark Matters. The Trademark and License Agree-ments
between the Company and Seller or any of its Affiliates under which the
Company has the right to use trademarks, trade names and logos that
include the word "Tenneco" shall be terminated on the Closing Date.
Within 60 days after the Closing Date, Buyer shall cause the Company to
eliminate the word "Tenneco" or any word or expression similar thereto
from any name under which it does business, and as promptly as
practicable after the Closing Date, but in any event within 60 days
after the Closing Date, all of the foregoing names shall be removed from
its property, stationery and literature, and thereafter neither Buyer,
the Company nor any Affiliate thereof shall use any logos, trademarks or
tradenames belonging to Seller or any of its Affiliates.
6.05 Taxes. The agreement of the parties with respect to tax
matters is set forth in Exhibit E.
6.06 Public Announcements. Seller and Buyer shall consult with
each other before they or any of their respective Affiliates issue any
press releases or otherwise make any public statements with respect to
this Agreement and the transactions contemplated hereby, and neither of
them nor any such Affiliate shall issue any such press release or make
any such public statement prior to such consultation except, in each
case, as may be required by law or by obligations pursuant to any
listing agreement with any securities exchange on which any of its or
their securities may be listed.
6.07 Further Assurances. Seller and Buyer will use all
reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable to carry
out all of their respective obligations under this Agreement and to
consummate and make effective the purchase and sale of the Shares
pursuant to this Agreement.
6.08 Release of Guarantees and Indemnities. Buyer acknowledges
that Seller and its Affiliates may have guaranteed certain obligations
(whether of performance or payment) of, and obtained letters of credit,
surety bonds, and similar instruments for the benefit of, the Company or
the Partnership. After the Closing, Buyer shall cause the release of
Seller and its Affiliates from all guarantees and obligations as are
listed in Schedule 6.08 relating to letters of credit, surety bonds and
similar instruments and all Liabilities related thereto. Buyer, from
and after the Closing Date, shall indemnify, defend and hold harmless
Seller and its Affiliates from any and all Liabilities of any nature
whatsoever arising or alleged to arise after the Closing Date) from any
such guaranty by, or letter of credit, surety bond or similar instrument
obtained by, Seller and its Affiliates listed in Schedule 6.08 to this
Agreement.
6.09 Employees. Seller will make available to Buyer appropriate
information, including but not limited to job and salary history,
regarding such employees of Seller and its Affiliates who have been
engaged primarily in the business of the Partnership and will provide
Buyer with an opportunity to meet with appropriate supervisory personnel
to discuss the qualifications of such employees and with such employees
themselves to discuss their potential employment with Buyer or the
Company after the Closing Date.
6.10 Transition Agreement. At the Closing, Seller and the Buyer
shall execute and deliver an agreement mutually acceptable to Buyer and
Seller pursuant to which Seller shall agree to provide to Buyer services
necessary for the administration of Buyer's investment in the Company as
Buyer may reasonably request for a period of up to six months following
the Closing. Buyer shall reimburse Seller for the costs incurred by
Seller in providing such services.
6.11 Delivery of Records. On the Closing Date or as soon
thereafter as practicable, but in no event later than 60 days after the
Closing Date, Seller shall deliver or cause to be delivered to the
Company at the offices of Seller, 1010 Milam Street, Houston, Texas, all
Records to the extent not then in the possession of the Company, subject
to the following exceptions:
(i) Buyer recognizes that certain Records of Seller and its
Affiliates may contain only incidental information relating to the
Company and that Seller and its Affiliates may retain these
Records;
(ii) Seller may retain (A) one set of the materials included
in the data room prepared by Seller to which Buyer has been
provided access in connection with the purchase and sale
contemplated hereby (the "Data Room"), together with a copy of all
documents referred to in such materials, and (B) all Records
prepared in connection with the sale of the Shares, including
without limitation bids received from others and information
relating to such bids;
(iii) Seller may retain all consolidating and consolidated
financial information and all other accounting Records prepared or
used in connection with the preparation of financial statements of
Seller or any parent of the Company; and
(iv) Seller may retain Records related to Taxes as provided
by Exhibit E.
6.12 Insurance Matters. To the extent that any insurance policy
of, or any risk retention program provided or guaranteed by, Seller or
any of its Affiliates (other than the Company) provides coverage for any
property or assets of the Company, such policy, program or coverage may
be terminated at any time after the Closing Date. Except for actions
reasonably necessary to assist Seller and its Affiliates in recovering
proceeds of insurance relating to claims for which Seller is obligated
to indemnify Buyer under Section 7.02, Buyer waives and agrees not to
pursue from and after the Closing Date, and shall cause the Company and
its insurers to waive and not assert or otherwise pursue from and after
the Closing Date, any claims or rights of recovery (whether in contract,
indemnity, negligence, strict liability or otherwise) against any of the
following insurance policies and programs maintained by Tenneco Inc. or
its Affiliates:
(a) Direct and indirect self-assured insurance programs or
policies of, or maintained by, Tenneco Inc. or any of its
Affiliates, including arrangements with carriers for claims
administration service under cost-plus reimbursement agreements,
assumed retention, deductible or retrospective rating plans or
other plans or arrangements pursuant to which risk of loss is
ultimately assumed or paid by Tenneco Inc. or its Affiliates,
including, without limitation:
(i) primary general liability insurance policies
(including, without limitation, watercraft, contractual and
products liability coverages);
(ii) automobile and aviation liability insurance policies;
(iii) policies of insurance required by state or federal
laws relating to workers' compensation; and
(iv) policies of insurance covering employers' liability
for injury, disease or death, including claims of employees
under the Jones Act, the Death on the High Seas Act or other
similar laws;
(b) Policies issued to Tenneco Inc. or any of its Affiliates
by Eastern Insurance Company Limited, a wholly-owned subsidiary of
Tenneco Inc., or by such other insurers under policies reinsured by
Eastern Insurance Company Limited; and
(c) Policies issued by OIL Insurance Limited.
6.13 Conduct of Business. Except as otherwise provided by this
Agreement, including but not limited to Section 6.14, or as agreed to by
Buyer in writing, from the date hereof until the Closing Date,
(a) Seller will cause the Company to:
(i) conduct its business only in the ordinary course;
(ii) exercise its management rights in the Partnership to
cause, if possible, the Partnership to (A) operate in the ordinary
course, (B) not make any capital expenditures except as set forth
in Section 6.13(b)(iv) below, in the Partnership's current capital
budget or in connection with emergencies, and (C) comply with its
covenants set forth in the Loan Agreement;
(iii) not amend its charter or by-laws or issue any of its
capital stock; make any changes in its issued and outstanding
capital stock; issue any warrant, option or other rights to
purchase shares of the capital stock or any security convertible
into its capital stock other than the Preferential Purchase Right;
or redeem, purchase or otherwise acquire any shares of its capital
stock;
(iv) not declare or pay any dividend or make any distribution
with respect to its capital stock except that the Company may
declare and pay a dividend of any funds distributed to it with
respect to the operations of the Partnership for periods on or
prior to September 30, 1995; or
(v) not declare or pay any dividend or make any distribution
with respect to its capital stock with respect to operations of the
Partnership for periods that begin on or after the Effective Date;
(b) To the extent that it has the ability and the authority to do
so, either by taking action or failing to act, Seller will cause the
Company and the Partnership to:
(i) not (A) create, incur, assume or guarantee any
indebtedness for monies borrowed (other than advances from the
Partnership or Seller), (B) enter into, terminate, amend or extend
any lease of real estate, (C) create any Subsidiary, or (D) create
any Liens other than Liens for Permitted Encumbrances;
(ii) not make any sale, assignment, transfer or other
conveyance or otherwise dispose of any of its assets except in the
ordinary course of business;
(iii) not amend in any material respect, waive any material
right under, or terminate any material contract;
(iv) not make any capital expenditure or capital expenditure
commitment in excess of $1,000,000 in the aggregate;
(v) not merge into or with or consolidate with any
corporation or other Person or acquire all or substantially all of
the business or assets of any corporation or other Person;
(vi) not file any motions, orders, briefs, settlement
agreements or other papers in any proceeding before any
Governmental Authority or any arbitrator except filings (A) with
respect to pending proceedings where positions advanced are
substantially consistent with previous positions, or (B) that would
not have a material adverse effect on the business, financial
condition or results of operations of the Company, or (C) for tax
matters;
(vii) not amend the Partnership Agreement;
(viii) not incur any obligation or liability, absolute,
accrued, contingent or otherwise, except liabilities for Taxes and
current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary
course of business consistent with prior practice, none of which
liabilities, in any case or in the aggregate, could have a material
adverse effect on the business of the Pipeline;
(ix) not institute, settle or agree to settle any litigation,
action or proceeding (other than litigation, actions or proceedings
related to Taxes) before any court or governmental body relating to
the business of the Pipeline or its assets other than in the
ordinary course of business consistent with past practices but not
in any case involving amounts in excess of $1 million;
(x) not enter into any transaction, contract or commitment
other than in the ordinary course of business, pay or agree to pay
any legal, accounting, finder's fee or other expenses (other than
Taxes) in connection with, or incur any severance pay obligations
by reason of, this Agreement or the transactions contemplated by
this Agreement;
(xi) not change the current divisions of responsibility shown
in the Descriptive Memorandum, including but not limited to not
changing a Company designee as president of the Partnership, not
changing the current line of administrative authority resulting
from the Company designee serving as president of the Partnership
and not changing the Partnership's principal offices at the office
of the Partnership's president; or
(xii) replenish the Partnership's or Pipeline's inventories
and supplies in the normal and customary manner consistent with its
prior practice and prudent business practices prevailing in the
industry; not make any purchase commitments in excess of the
normal, ordinary and usual requirement of the business of the
Pipeline or at any price in excess of the then current market price
or upon terms and conditions more onerous than those usual and
customary in the industry; not make any change in its selling,
pricing or advertising practices inconsistent with its prior
practice and prudent business practices prevailing in the industry.
6.14 Settlement of Intercompany Indebtedness. Prior to the
Closing, Seller shall cause all intercompany indebtedness between the
Company, on one hand, and Seller and its Affiliates, on the other hand,
to be settled, in such manner as Seller shall determine, including by
payment, dividend or contribution or otherwise.
6.15 Preservation of Records. Except for tax Records, Buyer
shall preserve and keep (or cause to be preserved and kept) the Records,
and Seller shall preserve and keep (or cause to be preserved and kept)
such Records, as they or any of their Affiliates shall be entitled to
retain under this Agreement, for a period of seven years after the
Closing Date, and Buyer, the Company and Seller shall each grant to the
other reasonable access to such Records retained by them during such
period upon reasonable notice and during normal business hours. In the
event Buyer or Seller wishes to destroy Records after that time, it
shall first give written notice to the other party and the other party
shall have the right at its option, upon prior written notice given to
the party providing the initial notice, to take possession of said
Records as promptly as practicable, but in any event within 90 days
after the date of its notice requesting the same. The agreement of
Buyer and Seller with respect to tax Records is set forth in Exhibit E.
6.16 Environmental Audit. (a) Promptly after the date of this
Agreement, Seller shall cause the Company to retain CH2M Hill and such
other consultants as Seller and Buyer deem necessary (the "Environmental
Auditor") to perform an environ-mental assessment of such properties of
the Partnership in accordance with the instructions set forth in Exhibit
F. Each of Buyer and Seller shall be responsible for one-half of the
fees and expenses of the Environmental Auditor. The Environmental
Auditor shall be directed to prepare a report of its findings which
shall include (i) recommendations of any actions necessary to bring the
Partnership's properties into compliance with Environmental Laws,
including specific reference to the Environmental Laws applicable to
each such recommendation (the "Remediation"), and (ii) an estimate of
the Partnership's costs necessary to take the action described in the
recommendations described in clause (i) (the "Estimated Remediation
Costs").
(b) If the Estimated Remediation Costs exceed $10,000,000, then
Seller may terminate this Agreement by providing notice of such
termination to Buyer within 10 days after the receipt by the parties of
the report of the Environmental Auditor. In such event, Seller shall be
responsible for all fees and expenses of the Environmental Auditor.
(c) If the Estimated Remediation Costs exceed $20,000,000, then
Buyer may terminate this Agreement by providing notice of such
termination to Seller within 10 days after the receipt by the parties of
the report of the Environmental Auditor. In such event, Buyer shall be
responsible for all fees and expenses of the Environmental Auditor.
(d) If neither Seller nor Buyer terminates this Agreement pursuant
to Section 6.16(b) or 6.16(c), then Seller shall pay to Buyer one-half
of the Remediation Costs as they are incurred by the Partnership. Buyer
shall provide to Seller from time to time, but not more than once per
month, invoices for the amounts owed by Seller under this Section
6.16(d), accompanied by such materials as Seller may reasonably request
in support of such invoices. Subject to Section 6.16(f), Seller shall
pay the amount reflected on such invoice within 30 days of its receipt.
Buyer shall provide to Seller access to the books and records of the
Company and the Partnership during normal business hours for the purpose
of allowing Seller to audit the amounts invoiced to it.
(e) If the good faith efforts of Buyer have not resulted in
completion of the Remediation by the fifth anniversary of the Closing
Date, the Environmental Auditor (or other mutually agreeable
consultants) shall (i) assess the further actions necessary to complete
the Remediation and (ii) submit a report that includes the timetable for
the actions yet to be taken and the timetable of the corresponding
incurrence of the costs for completing those actions. Within 60 days of
receipt of the Environmental Auditor's report of future Remediation, but
subject to Section 6.16(f), Seller will pay Buyer the net present value
of such costs, discounted at the Prime Rate. After such a payment (if
any), Seller shall have no further obligation to pay any portion of
costs of the Remediation. The costs of obtaining the Environmental
Auditor's report under this Section 6.16(e) shall be borne equally by
Buyer and Seller.
(f) The maximum amount that Seller shall be obligated to pay to
Buyer under Section 6.16(d) and (e) shall be $10,000,000.
(g) If Buyer recovers any costs of Remediation paid by Seller
hereunder, through the rates paid by customers of the Partnership, Buyer
shall pay to Seller any such recovery on a quarterly basis.
6.17 Financial Information for Securities Filings. Seller
acknowledges that Buyer will be making filings under the Securities
Exchange Act of 1934, as amended (the "1934 Act") with respect to the
transactions contemplated hereby. Seller shall provide, or cause to be
provided, to Buyer, prior to the Closing if practicable, but in any
event prior to the expiration of 45 days after the Closing Date, audited
and unaudited financial statements and other financial information for
the Company which are required to be included in Buyer's filings under
the 1934 Act including the reports thereon by Arthur Andersen LLP,
independent public accountants, and all required schedules and consents
with respect thereto, all in such form and containing such information
as is required under the 1934 Act, and a copy of Seller's management
letter(s) to Arthur Andersen LLP in form customarily required, with an
executed certificate of Seller to the effect that Buyer may rely on such
management representation letter(s). Buyer shall reimburse Seller for
up to U.S. $20,000 for the reasonable fees and expenses of such auditors
with respect to such financial statements and reports (provided that
Buyer shall not be obligated to reimburse Seller for any of such fees
attributable to the restatement of the Company's financial statements to
a GAAP basis), and Seller shall pay any excess fees and expenses of such
auditors.
6.18 Delivery of Financial Statements. At the Closing, Seller
shall deliver to Buyer the following financial statements (the "Revised
Financial Statements"):
(i) the balance sheets of the Company as of December 31,
1994 and 1993, and the related statements of income and cash
flows for the years then ended; and
(ii) the balance sheets of the Company as of the end of
the Company's most recent quarter and the comparable date of
the previous year and the related statements of income and cash
flows for the periods beginning on the first day of each such
year and ending on the date of each such balance sheet.
The Revised Financial Statements shall be prepared in accordance with
GAAP consistently applied throughout the periods involved (other than
the requirement of footnote disclosure). The balance sheets included in
the Revised Financial Statements shall fairly present the financial
condition of the Company as of the respective dates thereof and the
income statements included in the Revised Financial Statements shall
fairly present the results of operations of the Company during the
periods covered thereby.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.01 Definitions. As used in this Article VII, the following
terms have the meanings set forth below:
(a) "Losses" means any and all direct or indirect demands,
claims, payments, obligations, actions or causes of action,
assessments, losses, Liabilities, costs and expenses paid or
incurred or diminutions in value of any kind or character (whether
or not known or asserted prior to the date hereof, fixed or
unfixed, conditional or unconditional, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise), including without limitation
penalties, interest on any amount payable to a third party as a
result of the foregoing and, subject to Section 7.05 hereof, any
legal or other expenses reasonably incurred in connection with
investigating or defending any claims or actions, whether or not
resulting in any liability, and all amounts paid in settlement of
claims or actions in accordance with Section 7.05 hereof; provided,
however, that (i) Losses shall not include consequential,
exemplary, special, punitive, and similar damages, (ii) Losses
shall be net of any insurance proceeds received by an Indemnitee
from a nonaffiliated insurance company on account of such Losses
(after taking into account any costs incurred in obtaining such
proceeds and any increase in insurance premiums as a result of a
claim with respect to such proceeds) and (iii) nothing in this
Article VII shall require an Indemnitee to proceed against its
insurance carrier.
(b) "Third-Party Claims" means any and all Losses (other
than consequential, exemplary, special, punitive and similar
damages) which arise out of or result from (i) any claims or
actions asserted against an Indemnitee by a third party, (ii) any
rights of a third party asserted against an Indemnitee, or (iii)
any Liabilities of, or amounts payable by an Indemnitee to a third
party arising in respect of claims, actions and rights referred to
in subparagraphs (i) or (ii).
(c) "Indemnitee" means any Person who may be entitled to
seek indemnification pursuant to the provisions of Section 7.02 or
7.03 hereof.
(d) "Indemnitor" means any person who may be obligated to
provide indemnification pursuant to Section 7.02 or 7.03 hereof.
(e) "Notice Period", as applied to any Third-Party Claim for
which an Indemnitee seeks to be indemnified pursuant to this
Article VII, means the period ending on the earlier of the
following:
(i) Three months after the time at which any Specified
Officer of the Indemnitee (or the Indemnitee, if the Indemnitee
is an individual) has either (x) received actual notice of the
facts giving rise to such Third-Party Claim or (y) commenced an
active investigation of circumstances likely to give rise to
such Third-Party Claim and, in each case, where such Specified
Officer (or Indemnitee, if an individual) believes or should
reasonably believe that such facts or circumstances could
reasonably be expected to give rise to such Third-Party Claim
for which such Indemnitee would be entitled to indemnification
pursuant to this Article VII;
(ii) With respect to any Third-Party Claim that has become
the subject of proceedings before any court or tribunal, such
time as would allow the Indemnitor sufficient time to contest,
on the assumption that there is an arguable defense to such
Third-Party Claim, such proceeding prior to any judgment or
decision thereon; or
(iii) With respect to any Third-Party Claim that has become
the subject of settlement proceedings, such time as would
provide the Indemnitor sufficient time prior to such settlement
to determine whether to contest such claim and assume the
defense pursuant to Section 7.05.
(f) "Claim Notice" has the meaning set forth in Section
7.04(a).
7.02 INDEMNITY BY SELLER. SELLER SHALL, TO THE FULLEST EXTENT
PERMITTED BY LAW, INDEMNIFY, DEFEND, REIMBURSE AND HOLD HARMLESS BUYER
AND ITS AFFILIATES, ITS SUCCESSORS AND ASSIGNS, INCLUDING THE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ADVISORS AND REPRESENTATIVES OF EACH OF
THEM (EACH OF WHOM MAY BE AN INDEMNITEE PURSUANT TO THIS SECTION 7.02)
FROM AND AGAINST THE FOLLOWING:
(A) BREACH. ALL LOSSES ARISING FROM THE BREACH BY SELLER IN
ANY MATERIAL RESPECT OF ITS COVENANTS, WARRANTIES AND
REPRESENTATIONS AS SET FORTH IN THIS AGREEMENT, BY REASON OF ANY
UNTRUE REPRESENTATION, BREACH OF WARRANTY OR NONFULFILLMENT OF ANY
COVENANT BY SELLER EXCEPT FOR LOSSES ARISING FROM COVENANTS,
WARRANTIES AND REPRESENTATIONS SET FORTH IN EXHIBIT E;
(B) THIRD-PARTY CLAIMS. ANY AND ALL THIRD-PARTY CLAIMS TO
THE EXTENT THAT SUCH THIRD-PARTY CLAIMS SOLELY ARISE OUT OF, RESULT
FROM, OR RELATE TO THE OWNERSHIP OF THE SHARES OR THE CONDUCT OF
THE BUSINESS OF THE PARTNERSHIP PRIOR TO THE CLOSING OTHER THAN (i)
LIABILITIES FOR TAXES (WHICH ARE ADDRESSED IN EXHIBIT E), (ii)
LIABILITIES REFLECTED ON THE CLOSING BALANCE SHEET, (iii)
LIABILITIES REFLECTED IN ANY SCHEDULE TO THIS AGREEMENT AND (iv)
LIABILITIES FOR ENVIRONMENTAL MATTERS (FOR WHICH THE EXCLUSIVE
REMEDIES ARE SET FORTH IN SECTIONS 6.16 AND 7.02(a) (with respect
to breaches of Section 4.14)).
(C) TITLE TO SHARES. ANY AND ALL LOSSES ARISING FROM THE
FAILURE BY SELLER TO HAVE CONVEYED TO BUYER ON THE CLOSING DATE THE
SHARES, FREE AND CLEAR OF ANY LIENS; AND
(D) CLAWBACK. PAYMENTS REQUIRED UNDER SECTION 7.22 OF THE
LOAN AGREEMENT, TO THE EXTENT SUCH PAYMENTS ARE TRIGGERED BY
ADVANCES OR DEBT SERVICE SHORTFALLS OCCURRING DURING THE TIME, OR
ATTRIBUTABLE TO THE TIME, SELLER WAS THE OWNER OF THE SHARES.
7.03 INDEMNITY BY BUYER. BUYER SHALL, TO THE FULLEST EXTENT
PERMITTED BY LAW, INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER AND ITS
AFFILIATES, INCLUDING THE CURRENT AND FORMER DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS AND REPRESENTATIVES OF EACH OF THEM, INCLUDING WITHOUT
LIMITATION, INDIVIDUALS WHO WERE DIRECTORS, OFFICERS OR EMPLOYEES OF THE
COMPANY AT OR PRIOR TO CLOSING (EACH OF WHOM MAY BE AN INDEMNITEE
PURSUANT TO THIS SECTION 7.03) FROM AND AGAINST THE FOLLOWING:
(A) LIABILITIES. EXCEPT FOR LOSSES WITH RESPECT TO TAXES
AND TAX MATTERS AS PROVIDED BY EXHIBIT E, ANY AND ALL LOSSES
ARISING FROM SELLER'S OWNERSHIP OF THE COMPANY EXCEPT LOSSES
ARISING FROM THE OPERATIONS OF THE COMPANY OR THE PARTNERSHIP PRIOR
TO THE CLOSING.
(B) BREACH. EXCEPT FOR LOSSES WITH RESPECT TO COVENANTS,
REPRESENTATIONS AND WARRANTIES SET FORTH IN EXHIBIT E, ANY AND ALL
LOSSES ARISING FROM THE BREACH BY BUYER IN ANY MATERIAL RESPECT OF
(I) ANY OF ITS COVENANTS SET FORTH IN THIS AGREEMENT AND (II) THE
REPRESENTATIONS AND WARRANTIES OF BUYER SET FORTH HEREIN.
7.04 Notification of Third-Party Claims. In no case shall any
Indemnitor under this Agreement be liable with respect to any
Third-Party Claim against any Indemnitee unless the Indemnitee shall
have delivered to the Indemnitor a Claim Notice and the following
conditions are satisfied:
(a) Timely Delivery of Claim Notice. Except as provided in
Section 7.04(b) or 7.04(c), no right to indemnification under this
Article VII shall be available to the Indemnitee with respect to a
Third-Party Claim unless the Indemnitee shall have delivered to the
Indemnitor within the Notice Period a notice ("Claim Notice")
describing in reasonable detail the facts giving rise to such
Third-Party Claim and stating that the Indemnitee intends to seek
indemnification for such Third-Party Claim from the Indemnitor
pursuant to this Article VII.
(b) Late Delivery of Claim Notice. If, in the case of a
Third-Party Claim, a Claim Notice is not given by the Indemnitee
within the Notice Period set forth in Section 7.01(e), the
Indemnitee shall nevertheless be entitled to be indemnified under
this Article VII:
(i) If the Indemnitee can establish that the time elapsed
between the end of the Notice Period and the giving of the
Claim Notice is reasonable in all the circumstances; or
(ii) To the extent (but only to the extent) that the
Indemnitee can establish that the Indemnitor has not been
prejudiced by such time elapsed.
(c) Paid or Settled Claims. If a Claim Notice is not given
by the Indemnitee prior to the payment or settlement by the
Indemnitee of a Third-Party Claim, the Indemnitee shall only be
entitled to be indemnified under this Article VII to the extent
(and only to the extent) that the Indemnitee can establish that the
Indemnitor has not been prejudiced by such payment or settlement.
7.05 Defense of Claims. Upon receipt of a Claim Notice from an
Indemnitee with respect to any Third-Party Claim, the Indemnitor may
assume the defense thereof with counsel reasonably satisfactory to such
Indemnitee and the Indemnitee shall cooperate in all reasonable respects
in such defense. The Indemnitee shall have the right to employ separate
counsel in any action or claim and to participate in the defense
thereof, provided that the fees and expenses of counsel employed by the
Indemnitee shall be at the expense of the Indemnitor only if such
counsel is retained pursuant to the following sentence or if the
employment of such counsel has been specifically authorized by the
Indemnitor.
If the Indemnitor does not notify the Indemnitee within 60 days
after receipt of the Claim Notice that it elects to undertake the
defense thereof, the Indemnitee shall have the right to defend at the
expense of the Indemnitor the claim with counsel of its choosing
reasonably satisfactory to the Indemnitor, subject to the right of the
Indemnitor to assume the defense of any claim at any time prior to
settlement or final determination thereof. In such event, the
Indemnitee shall send a written notice to the Indemnitor of any proposed
settlement of any claim, which settlement the Indemnitor may reject, in
its reasonable judgment, within 30 days of receipt of such notice.
Failure to reject such notice within such 30-day period shall be deemed
an acceptance of such notice. If the Indemnitor has assumed the defense
of a claim from the Indemnitee, the Indemnitee shall have the right to
settle any such claim over the objection of the Indemnitor only if the
Indemnitee waives any right to indemnity therefor.
7.06 Notice of Other Claims. In the event any Indemnitee should
have a claim against any Indemnitor hereunder that does not involve a
Third-Party Claim being asserted against or sought to be collected from
the Indemnitee, the Indemnitee shall notify the Indemnitor with
reasonable promptness of such claim by the Indemnitee, specifying the
nature of and specific basis for such claim and the amount or the
estimated amount of such claim. The Indemnitor shall remit payment for
the amount of such claim upon receipt of an invoice therefor, or in the
event of a dispute, the Indemnitee and the Indemnitor shall proceed in
good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations, such dispute will be resolved by
litigation in an appropriate court of competent jurisdiction.
7.07 Access and Cooperation. After the Closing Date, Seller and
Buyer shall each cooperate fully with the other as to all claims for
indemnification hereunder, shall make available to the other as
reasonably requested all information, records and documents relating to
all claims and shall preserve all such information, records and
documents until the termination of any claim. Seller and Buyer shall
each also make available to the other, as reasonably requested, its
personnel (including technical and scientific), agents and other
representatives who are responsible for preparing or maintaining
information, records or other documents, or who may have particular
knowledge with respect to any claim.
7.08 Subrogation. Seller and Buyer hereby waive for themselves,
their Affiliates, successors and permitted assigns, including without
limitation any insurers, any rights to subrogation for Losses arising
from Third-Party Claims for which each of them is respectively liable or
against which each respectively indemnifies the other, and, if
necessary, Seller and Buyer shall obtain waiver of such subrogation from
their respective insurers.
7.09 Indemnification Matters Related to Taxes. Notwithstanding
the other provisions of Article VII to the contrary, the agreement of
the parties with respect to tax matters, the representations and
warranties of the parties with respect to tax matters and
indemnification obligations, limitations and procedures related to Taxes
shall be governed by and are set forth in Exhibit E.
7.10 Limitation on Liability.
(a) No claim for indemnification under Section 7.02 (the
"Indemnifiable Claims") shall be made by Buyer for individual Losses of
$25,000 or less (an Indemnifiable Claim in excess of such amount is
referred to as an "Indemnifiable Loss").
(b) No Indemnifiable Claim shall be made by Buyer unless and
until the Indemnifiable Losses for which Buyer is entitled to
indemnification thereunder for Indemnifiable Claims exceed $200,000 in
the aggregate.
(c) Seller shall not have any liability for Indemnifiable
Losses unless a Claim Notice or other notice has been delivered to
Seller as required by Section 7.04 or Section 7.06 within the period
that the representation giving rise to such Indemnifiable Losses
survives as set forth in Section 9.02 or for breaches of covenants
within one year after performance thereof is required under this
Agreement.
(d) Neither Buyer nor Seller shall be entitled to recover
from the other for any Losses in any amount in excess of the actual
damages suffered by such party. Each of Buyer and Seller waives any
right to recover punitive, special, exemplary and consequential damages.
(e) Neither Seller nor any of its Affiliates shall be liable
for aggregate Losses in excess of $75,000,000.
(f) Each of Seller and Buyer hereby acknowledges and agrees
that its sole and exclusive remedy with respect to any and all claims
relating to the representations, warranties, covenants and agreements
contained in this Agreement or other claims pursuant to or in connection
with this Agreement shall be pursuant to the indemnification provisions
set forth in this Article VII or, with respect to tax matters set forth
in Exhibit E, pursuant to Exhibit E, and, in furtherance of the
foregoing, each of Seller and Buyer hereby waives, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of
action it may have against the other arising under or based upon any
federal, state or local statute, law, ordinance, rule or regulation
(including, without limitation, any such rights, claims or causes of
action arising under or based upon common law or otherwise); provided,
however, that this Section 7.10(f) shall not apply to claims based upon
the fraudulent conduct of Seller.
(g) Anything herein to the contrary notwithstanding, no
breach of any representation, warranty, covenant or agreement contained
herein shall give rise to any right on the part of Buyer or Seller, as
the case may be, after the consummation of the purchase and sale of the
Shares contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
(h) Buyer and Seller shall take all reasonable steps to
mitigate all Losses upon and after becoming aware of any event that
could reasonably be expected to give rise to any Losses that are
indemnifiable hereunder.
(i) Buyer shall not be entitled to indemnity from Seller
under Section 7.02(a) with respect to a breach by Seller of any of its
representations or covenants if Buyer has actual knowledge of such
breach and nevertheless proceeds with the Closing.
7.11 DTPA Waiver. Buyer hereby waives the provisions of the
Texas Deceptive Trade Practices Act, Chapter 17, Subchapter E, Section
17.41 through 17.63, inclusive (other than Section 17.55, which is not
waived), of the Texas Business and Commerce Code. To evidence its
ability to grant such waiver, Buyer hereby represents and warrants to
Seller that it (i) is in the business of seeking or acquiring, by
purchase or lease, goods or services for commercial or business use,
(ii) has assets of $5 million or more according to its most recent
financial statement prepared in accordance with generally accepted
accounting principles, (iii) has knowledge and experience in financial
and business matters that enable it to evaluate the merits and risks of
the transaction contemplated hereby, and (iv) is not in a significantly
disparate bargaining position from the position of Seller.
ARTICLE VIII
TERMINATION
8.01 Grounds for Termination. This Agreement may be terminated
at any time prior to the Closing Date:
(i) by the mutual written agreement of Seller and Buyer; or
(ii) by Seller or by Buyer if (A) the purchase and sale of
the Shares contemplated hereby shall not have been consummated by
December 29, 1995 (or such other date, if any, as Seller and Buyer
shall have agreed in writing) and (B) the condition set forth in
Sections 3.04(h) and 3.05(h) has been satisfied if the failure to
consummate such purchase and sale on or before such date is not
caused by any breach of this Agreement by the party electing to
terminate pursuant to this Section 8.01(ii); or
(iii) by either party if the condition set forth in Sections
3.04(h) and 3.05(h) has not been satisfied by January 19; or
(iv) by Seller or Buyer if the consummation of such
transactions would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent
jurisdiction; or
(v) by either Buyer or Seller if it learns subsequently that
the other party is in breach of any representation, warranty,
condition, covenant or agreement contained in this Agreement in any
material respect; or
(vi) by Seller pursuant to Section 6.16(b); or
(vii) by Buyer pursuant to Section 6.16(c).
8.02 Effect of Termination. If this Agreement is terminated by
Seller or by Buyer as permitted under Section 8.01 hereof, such
termination shall be without liability of either party to the other
party to this Agreement, or to any of their shareholders, directors,
officers, employees, agents, consultants or representatives; provided,
however, that the provisions of the Confidentiality Agreement and
Section 8.03 shall remain in full force and effect; and provided,
further that if such termination shall result from the willful failure
of a party to fulfill a condition to the performance of the other party
or to perform a covenant of this Agreement or from a willful breach by a
party to this Agreement, such party shall be fully liable for any and
all damages, costs and expenses (including, but not limited to,
reasonable counsel fees and disbursements) sustained or incurred by the
other party.
8.03 Incentive Fee. If Seller or Buyer terminates this
Agreement pursuant to Section 8.01(iii) above, then Seller shall pay to
Buyer an amount equal to the sum of (i) $1,000,000 plus (ii) the
reasonable out-of-pocket expenses (not to exceed $200,000) incurred by
Buyer in evaluating the Company. If Williams Western does not exercise
its right of first refusal and Closing does not take place within 90
days of Williams Western's refusal of its rights but Williams Western
subsequently is given a second opportunity to exercise its right of
first refusal, the reasonable out-of-pocket expenses of Buyer for
purposes of this provision will be increased to an amount not to exceed
$400,000. Payment of the amount described in clause (i) shall be made
within five business days after delivery by Seller or Buyer of the
notice terminating this Agreement by wire transfer of immediately
available funds to an account designated by Buyer, and payment of the
amount described in clause (ii) shall be made promptly after Buyer has
provided to Seller a statement setting forth such expenses together with
such supporting documentation as Seller reasonably requests. If this
Agreement is terminated pursuant to Section 8.01(iii), Buyer shall not
be entitled to any claim, damages or other relief except the payments
described in this Section 8.03.
ARTICLE IX
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
9.01 Scope of Representations of Seller. Except as and to the
extent set forth in Article IV hereof, Seller makes no representations
or warranties whatsoever and disclaims all liability and responsibility
for any other representation, warranty, statement or information made or
communicated (orally or in writing) to Buyer (including but not limited
to information or advice that may have been provided to Buyer by any
officer, stockholder, director, employee, agent, consultant or
representative of Seller or any of its Affiliates, including the
Company, any engineer or engineering firm, or any other agent,
consultant or representative). Buyer acknowledges and affirms that it
has had full access to the Data Room and the information contained in,
or made available or provided with respect to materials contained in,
the Data Room and that Buyer has made its own independent investigation,
analysis, evaluation and verification of the Company and its properties,
assets, businesses, financial condition, operations and prospects.
9.02 Survival. The representations, warranties, covenants and
agreements set forth in this Agreement and in any certificate or
instrument delivered in connection herewith shall survive until the
Closing Date and shall terminate and expire 18 months after the Closing
Date and shall be of no force or effect thereafter, except for (i) the
representations set forth in Section 4.02 which shall survive without
limitation as to time, (ii) the representations, warranties, covenants
and agreements set forth in Exhibit E which shall survive as set forth
therein and (iii) the environmental claims in Sections 6.16, which shall
survive for five years.
ARTICLE X
MISCELLANEOUS
10.01 Expenses. Except as specifically provided herein, all
legal and other costs and expenses in connection with this Agreement and
the transactions contemplated hereby shall be paid by Seller or the
Buyer, as the case may be, depending upon which party incurred such
costs and expenses.
10.02 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or
by facsimile transmission or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
(i) To Seller, as follows:
By Mail By Hand Delivery
Tennessee Gas Pipeline Tennessee Gas Pipeline
Company Company
P. O. Box 2511 1010 Milam Street
Houston, Texas 77252-2511 Houston, Texas 77002
Attn: Corporate Secretary Attn: Corporate Secretary
Facsimile: 713-757-3581 Facsimile: 713-757-3581
(ii) To Buyer:
By Mail By Hand Delivery
Questar Pipeline Company Questar Pipeline Company
79 South State 79 South State
P. O. Box 11450 P. O. Box 11450
Salt Lake City, Utah 84147 Salt Lake City, Utah 84147
Attn: President Attn: President
Facsimile: 801-530-2570 Facsimile: 801-530-2570
10.03 Entire Agreement. This Agreement supersedes all prior
agreements between the parties (written or oral) other than the
Confidentiality Agreement and, except as aforesaid, is intended as a
complete and exclusive statement of the terms of the agreement between
the parties. This Agreement may be amended only by a written instrument
duly executed by the parties.
10.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
regard to its principles of conflicts of laws.
10.05 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.06 Assignability. No party hereto shall assign this Agreement
or any part hereof without the prior written consent of the other party.
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
10.07 No Third Party Beneficiaries. Except as expressly provided
herein, nothing in this Agreement shall entitle any person other than
Seller or Buyer or their respective successors and assigns permitted
hereby to any claim, cause of action, remedy or right of any kind.
10.08 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad
as is enforceable.
10.09 Equitable Relief. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. Accordingly, it is agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.10 Counterparts. This Agreement may be executed in any number
of counterparts, no one of which needs to be executed by both parties,
and this Agreement shall be binding upon both parties with the same
force and effect as if both parties had signed the same document, and
each such signed counterpart shall constitute an original of this
Agreement.
10.11 Interpretation. It is acknowledged by the parties that
this Agreement includes the negotiated suggestions of both parties and,
therefore, no presumptions shall arise favoring any party by virtue of
the authorship of any of its provisions.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Byron R. Kelley
Title: Senior Vice President
QUESTAR PIPELINE COMPANY
By: /s/ A. J. Marushack
Title: President and CEO
EX-99
3
Exhibit 99
QUESTAR PIPELINE AGREES TO PURCHASE
KERN RIVER INTEREST FOR $225 MILLION
September 8, 1995
HOUSTON -- Tenneco Gas, an operating division of Houston-based
Tenneco, announced today that it has entered into an agreement to
sell its 50 percent interest in the Kern River gas pipeline for
approximately $225 million in cash to Questar Pipeline Co.
(subject to Hart-Scott-Rodino filings). Questar Pipeline is a
subsidiary of Questar Corp. (NYSE: STR).
The transaction is subject to a right to match by The
Williams Cos., which owns 50 percent of Kern River.
Under the agreement, Questar Pipeline will purchase from
Tenneco Gas 100 percent of the stock of Kern River Corp., which
owns a 50 percent interest in the Kern River Gas Transmission Co.
Tenneco Gas originally announced its intention to sell its
Kern River interest in April. "The sale of our interest in Kern
River is an excellent example of our ability to create value in
our assets," explained Steve Chesebro', Tenneco Gas president and
chief executive officer.
"Other companies recognize that value, which is key to our
success in redeploying assets into domestic and international
development opportunities. Kern River is an efficient, well-run
pipeline system that is a much better strategic fit for Questar
than it is for us."
Kern River consists of a 685-mile pipeline that extends from
a point near Opal, Wyo., to Daggett in San Bernardino, Calif.,
and 219 miles of pipe owned jointly with Mojave Pipeline,
which runs from Daggett to Bakersfield, Calif. The pipeline
serves a variety of customers, including local distribution
companies, direct end users, electricity cogeneration markets and
enhanced oil-recovery systems.
"Kern River provides direct access to major markets in
California and Nevada and uniquely complements our group of
integrated, gas-related businesses, including exploration,
production and marketing, interstate transmission and storage,
and retail gas distribution," said R.D. Cash, Questar Corp.
chairman, president and chief executive officer.
Cash noted that Kern River ties into the Western Market
Center, a gas-marketing hub in southwestern Wyoming in which a
Questar affiliate owns a one-fourth interest. In addition,
Questar Pipeline transports gas to Kern River, including supplies
produced by Questar exploration and production units. Kern River
also transports gas for various gas-distribution systems in Utah
operated by Questar's retail gas-distribution utility, Mountain
Fuel Supply Co.
Cash said the purchase is expected to produce positive cash
flow and earnings in the first year and to increase Questar's
earnings per share.
The action by Tenneco Gas is the latest step in parent
company Tenneco's ongoing plan to redeploy assets into its
primary growth platforms in automotive parts, packaging and
nonregulated natural gas operations.
Since June 1994, excluding this transaction, Tenneco has
raised approximately $2 billion from public offerings of Case
Corporation stock and from the sale of its chemicals division,
Albright & Wilson. During that time, Tenneco has invested or
committed more than $1 billion for acquisitions, joint ventures
and internal capital projects, and has completed stock
repurchases of $500 million.
A leader in natural gas transportation and marketing,
Tenneco Gas handles 16 percent of the gas consumed annually in
the United States. The company also is active in international
and power-generation markets, and provides financing for oil and
gas exploration and development.
Tenneco Gas is one of four operating divisions of Tenneco
(NYSE: TEN), one of the nation's largest diversified industrial
companies, with 1994 sales of $12.2 billion. Other major
business interests of the Houston-based company include packaging
(Packaging Corporation of America), automotive parts (Tenneco
Automotive), and ship design, construction and repair
(Newport News Shipbuilding). Tenneco also owns 21 percent of Case
Corporation, a major manufacturer of agricultural and
construction equipment.
Headquartered in Salt Lake City, Utah, Questar has
approximately $1.6 billion in assets distributed among its three
principal businesses. Questar Pipeline operates gas-gathering and
transportation pipeline systems in Wyoming, Colorado and Utah, as
well as a large underground storage reservoir in northeastern
Utah.