OMNIBUS PROJECT AGREEMENT
by and among
SOUTHWESTERN ENERGY PIPELINE COMPANY
SOUTHWESTERN ENERGY COMPANY
ENOGEX ARKANSAS PIPELINE CORPORATION
ENOGEX INC.
TABLE OF CONTENTS
Page No.
1. Definitions.....................................................................................1
2. Acquisition and Maintenance of Interests in NOARK...............................................6
3. Acquisition of Ozark............................................................................6
4. Acquisition of Searcy Gathering Assets .........................................................7
5. NGSC ...........................................................................................7
6. Acquisition and Merger of AWP...................................................................7
7. Closing.........................................................................................8
8. Ownership in NOARK, and Status of Capital Accounts..............................................8
9. NOARK Debt ....................................................................................9
10. FERC and HSR Applications......................................................................10
11. Representations and Warranties of Enogex and EAPC..............................................11
12. Representations and Warranties of SWN and SWPL.................................................20
13. Expenses.......................................................................................29
14. Conditions to Closing..........................................................................29
15. Indemnification................................................................................32
16. Brokers........................................................................................35
17. Notices........................................................................................35
18. Public Announcements...........................................................................37
19. Dispute Resolution ............................................................................37
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20. Governing Law..................................................................................41
21. Amendments and Waivers.........................................................................41
22. Binding Effect; Non-Assignability and Alienation
of Benefits...................................................................................41
23. Severability...................................................................................42
24. Headings and Exhibits..........................................................................41
25. Construction...................................................................................42
26. Multiple Counterparts..........................................................................42
EXHIBITS
Exhibit A Form of Asset Purchase and Sale Agreement for the Acquisition of the Ozark
Pipeline Assets
Exhibit A-1 Ozark Pipeline Description
Exhibit B The Searcy Gathering Assets
Exhibit C Form of Asset Purchase and Sale Agreement for the Acquisition of the Searcy
Gathering Assets
Exhibit D Mutual Release and Settlement Agreement between SWN, SWPL, SEMCO Energy,
Inc. and their Respective Affiliates
Exhibit E Assets of AWP
Exhibit F Amended and Restated Partnership Agreement of NOARK
Exhibit G Assets of NGSC
Exhibit H Operating Agreement for NES L.L.C.
Exhibit I Operating Agreement for OGG L.L.C.
Exhibit J Description of Interconnection, Integration and Expansion of Pipeline Facilities of
NOARK and Ozark
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Exhibit K Election to Convert
Exhibit L NOARK Debt Structure
Exhibit M Enogex and EAPC Officers' Certificates
Exhibit N SWN and SWPL Officers' Certificates
SCHEDULES
Schedule 7(b) Pipeline Extension Project
Schedule 11(g) Ozark Disclosure Schedule
Schedule 11(h) Searcy Disclosure Schedule
Schedule 12(g)(iii) NOARK Pipeline System and the AWP Pipeline System
Schedule 12(g)(iv) List of all contracts, agreements and commitments to which NOARK or
AWP, or any of their assets, are bound
Schedule 12(g)(v) Material Claims
Schedule 12(g)(ix) Liens
Schedule 12(g)(xiii) Material Adverse Changes
Schedule 12(g)(xv) Tax Examinations
Schedule 12(g)(xix) Intellectual Property
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OMNIBUS PROJECT AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the 12th day of
January 1998, by and among Southwestern Energy Pipeline Company, an Arkansas
corporation ("SWPL"), Southwestern Energy Company, an Arkansas corporation
("SWN"), Enogex Arkansas Pipeline Corporation, an Oklahoma corporation ("EAPC")
and Enogex Inc., an Oklahoma corporation ("Enogex").
R E C I T A L S:
EAPC is currently negotiating to acquire (i) all of the partnership
interests owned by Prudential in NOARK and (ii) all of the partnership interests
owned by SEMCO in NOARK. EAPC is also currently negotiating to enter into
definitive agreements to acquire (i) all of the pipeline assets of Ozark and
(ii) the Searcy Gathering Assets owned by Warren Petroleum Company, L.P. EAPC
intends to form EIT which shall be the entity which enters into the definitive
agreement to acquire all of the pipeline assets of Ozark.
SWPL owns all of the partnership interests of NOARK, other than the
partnership interests owned by SEMCO and Prudential. SWN owns all of the
outstanding capital stock of AWP, and intends to convey such stock to SWPL.
Following such conveyance, SWPL intends to merge AWP into AWP L.L.C., subject to
the receipt of all necessary FERC approvals.
In the event EAPC successfully completes the acquisition of the NOARK
partnership interests owned by Prudential and SEMCO, and EIT executes a
definitive agreement for the acquisition of the pipeline assets of Ozark, EAPC
and SWPL propose to (i) amend and restate the existing limited partnership
agreement of NOARK, (ii) contribute additional assets into NOARK, including
without limitation, all ownership interests of AWP, all ownership interests of
EIT, the assets of NGSC and the Searcy Gathering Assets and (iii) create limited
liability companies involving gas marketing activities and gas gathering
activities, all to be wholly owned by NOARK.
The parties propose to participate in the ownership of NOARK, to
contribute additional assets to NOARK, and to participate in various actions to
be taken by, and with respect to, NOARK, all to the extent set forth in this
Agreement and in accordance with and in the manner contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Parties agree as follows:
1. Definitions. For purposes of this Agreement
"Affiliate" or "Affiliates" means with respect to any Person, except as
otherwise provided herein: (i) any person or entity directly or
indirectly controlling, controlled or under common control with such
Person; (ii) any person or entity directly or indirectly owning or
controlling ten percent (10%) or more of the outstanding voting
securities or ownership interests of such Person; (iii) any person or
entity ten percent (10%) or more of whose outstanding voting
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securities or ownership interests are directly or indirectly owned or
controlled by such Person; (iv) any officer, director, partner, manager
or member of a Person; and (v) any company for which a Person acts as
an officer, director, partner, manager or member.
"AWG" means Arkansas Western Gas Company, an Arkansas corporation, all
of the outstanding capital stock of which is owned by SWN.
"AWP" means Arkansas Western Pipeline Company, an Arkansas corporation,
all of the outstanding capital stock of which is owned by SWN.
"AWP L.L.C." means Arkansas Western Pipeline Company, L.L.C., an
Arkansas limited liability company, into which AWP is proposed to be
merged upon FERC approval thereof.
"AWP Contribution Time" shall have the meaning set forth in Section 12
(g)(xv).
"Closing" means the date and time for the execution of the amended and
restated partnership agreement of NOARK by SWPL and EAPC, and for the
contribution of various assets into NOARK as contemplated by this
Agreement, and "Closing Date" means the date of the Closing.
"Contribution Time" shall have the meaning set forth in Section 11(g).
"EAPC" means Enogex Arkansas Pipeline Corporation, an Oklahoma
corporation, all of the capital stock of which is owned by Enogex Inc.
"EAPC Permitted Liens" means (i) the terms, conditions, restrictions,
exceptions, reservations, limitations and other matters contained in
any of the rights-of-way, permits, or documents under which the Ozark
Pipeline and/or the Searcy Gathering Assets are located, and other
easements, leases, permits or other conveyance instruments provided to
SWPL by EAPC or which do not, and will not, individually and in the
aggregate, interfere materially with the continued ownership, use and
operation of the Ozark Pipeline and the Searcy Gathering Assets, taken
as a whole, in substantially the same manner as the same have been used
by Ozark and Warren Petroleum Company, L.P.; (ii) the contracts
acquired under the Asset Purchase and Sale Agreements attached as
Exhibits "A" and "C"; (iii) liens for property taxes and assessments
that are not yet due and payable (or if delinquent, that are being
contested in good faith by EIT, Ozark or Warren Petroleum Company,
L.P., as applicable, by appropriate legal proceedings); (iv)
mechanics', materialmen's, repairmen's and other statutory liens
arising in the ordinary course and which are not yet due and payable;
(v) any obligations or duties affecting the Ozark Pipeline and/or the
Searcy Gathering Assets as to any governmental authority under any
permit and all applicable laws, rules and regulations of any
governmental authorities, and all rights reserved to or vested in any
governmental authorities, and all rights reserved to or vested in any
governmental authority to control or regulate the Ozark Pipeline and/or
the Searcy Gathering Assets or the
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operation thereof in any manner (other than in connection with EIT's,
Ozark's or Warren Petroleum Company, L.P.'s non-compliance with or
default under any such permit, applicable laws, rules or regulations);
(vi) utility easements, restrictive covenants, defects in title and
irregularities, and other matters that (A) are of record (to the extent
the same was indicated in the documents provided or made available by
EAPC to SWPL) or (B) do not and will not, individually or in the
aggregate, interfere materially with the continued ownership, use and
operation of the Ozark Pipeline and the Searcy Gathering Assets taken
as a whole, in substantially the same manner as same have been used by
Ozark and Warren Petroleum Company, L.P. in the past; (vii) rights of
priority which may have been acquired by any third party due to the
fact that any of the rights-of-way or documents conveying any of the
property rights to locate the Ozark Pipeline and the Searcy Gathering
Assets may not have been obtained or recorded in the appropriate county
real estate records, and (viii) matters with respect to which SWPL had
actual knowledge prior to the execution hereof.
"EIT" means Enogex Interstate Transmission, L.L.C., an Oklahoma limited
liability company formed by EAPC to acquire the pipeline assets of
Ozark.
"FERC" means the Federal Energy Regulatory Commission.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Lien" means any lien, mortgage, pledge, security interest, charge,
encroachment or encumbrance.
"Material" shall mean for purposes of Sections 11 and 12 of this
Agreement, unless the context requires another meaning, with respect to
i) a material contract, agreement or commitment, a contract, agreement
or commitment involving, or which may reasonably be expected to
involve, the payment or receipt of more than $25,000 in any one year,
or $50,000 over its term, or which is not cancelable upon one month's
notice without penalty, ii) a material claim, breach, demand or other
action, a claim, breach, demand or other action in which the amount in
controversy (or which may reasonably be expected to be in controversy)
exceeds $25,000 or in which, if adversely determined, the applicable
Person's business activities (or any part thereof) could be enjoined or
restricted, iii) material property or assets, any property or assets
having a value in excess of $25,000 and iv) a material breach, default,
or violation of any applicable laws, rules or regulation, a breach,
default or violation in which civil or criminal penalties could
reasonably be expected to be imposed or in which, if found to exist,
the applicable Person's business activities (or any part thereof) could
be enjoined or restricted.
"NES L.L.C." means NOARK Energy Services, L.L.C., the gas marketing
limited liability company to be formed by NOARK as an Oklahoma limited
liability company.
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"NGSC" means NOARK Gas Services Company, an Arkansas general
partnership formed on January 1, 1993 to i) acquire all of the assets,
and to assume all the obligations and liabilities, of NGMC, and which
did acquire and assume such assets, liabilities and obligations, and
ii) provide market development, marketing and other business
development services to NOARK.
"NGMC" means NOARK Gas Marketing Company, a Texas general partnership
formed on March 1, 1990, to provide market development, marketing and
business administration services, to NOARK, primarily during the
construction of NOARK's pipeline system, all of the assets, obligations
and liabilities of which have been conveyed to NGSC.
"NOARK" means NOARK Pipeline System, Limited Partnership, an Arkansas
limited partnership, all of the outstanding general partnership
interests of which are owned by SWPL and SEMCO, and all of the limited
partnership interests of which are owned by Prudential.
"NOARK Debt" means (a) the debt incurred by NOARK pursuant to the terms
of that certain Credit Agreement and related documents dated as of
February 26, 1993 among NOARK, the Lenders and The First National Bank
of Chicago, as Agent, as amended by the First Amendment to NOARK
Pipeline System, Limited Partnership Credit Agreement dated February 1,
1994 and (b) the debt incurred by NOARK pursuant to the terms of that
certain Construction Loan and Note Purchase Agreement and related
documents dated as of October 10, 1991 and as amended by Amendments No.
1 and No. 2 to the Construction Loan and Note Purchase Agreement dated
as of January 29, 1993, and February 24, 1993, respectively, between
NOARK and The Prudential Insurance Company of America.
"NOARK Related Entity" means any Person which is wholly owned by NOARK.
"Ozark" means Ozark Pipeline, Inc., a Delaware corporation, which owns
the Ozark pipeline system, located in Oklahoma and Arkansas.
"Ozark Disclosure Schedule" means the schedule attached hereto as
Schedule 11(g).
"OGG L.L.C." means Ozark Gas Gathering, L.L.C., the gas gathering
limited liability company to be formed by NOARK as an Oklahoma limited
liability company.
"Parties" means the parties to this Agreement.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint stock
company, trust, unincorporated organization, governmental agency (or
any department, agency or political subdivision thereof) or any other
entity.
"Pipeline" has the meaning set forth in Section 12(g)(iii).
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"Prudential" means The Prudential Insurance Company of America, a New
Jersey corporation.
"Prudential Interest" means all of the limited partnership interests in
NOARK, which interests are owned by Prudential.
"Searcy Contribution Time" has the meaning in Section 11(h).
"Searcy Disclosure Schedule" means the schedule attached hereto as
Schedule 11(h).
"Searcy Gathering Assets" means those gas gathering facilities owned by
Warren Petroleum Company, L.P. which EAPC is negotiating to acquire as
contemplated in Section 4 below.
"SEMCO" means SEMCO Arkansas Pipeline Company, a Michigan corporation,
all of the outstanding capital stock of which is owned by SEMCO Energy
Ventures, Inc.
"SEMCO Interest" means all of the general partnership interests in
NOARK owned by SEMCO.
"SWN" means Southwestern Energy Company, an Arkansas corporation.
"SWPL" means Southwestern Energy Pipeline Company, an Arkansas
corporation, all of the outstanding capital stock of which is owned by
SWN.
"SWPL Interest" means all of the partnership interests in NOARK other
than the Prudential Interest and the SEMCO Interest.
"SWPL Permitted Liens" means (i) the terms, conditions, restrictions,
exceptions, reservations, limitations and other matters contained in
any of the rights-of-way, permits, or documents under which the
Pipeline is located, and other easements, leases, permits or other
conveyance instruments provided to EAPC by SWPL or which do not, and
will not, individually and in the aggregate, interfere materially with
the continued ownership, use and operation of the Pipeline, taken as a
whole, in substantially the same manner as the same have been used by
NOARK or AWP, as applicable, in the past; (ii) the contracts described
on Schedule 12(g)(iv); (iii) liens for property taxes and assessments
that are not yet due and payable (or if delinquent, that are being
contested in good faith by NOARK or AWP, as applicable, by appropriate
legal proceedings); (iv) mechanics', materialmen's, repairmen's and
other statutory liens arising in the ordinary course and which are not
yet due and payable; (v) any obligations or duties affecting the
Pipeline as to any governmental authority under any permit and all
applicable laws, rules and regulations of any governmental authorities,
and all rights reserved to or vested in any governmental authorities,
and all rights reserved to or vested in any governmental authority to
control or regulate the Pipeline or the operation thereof in any manner
(other than in connection with NOARK or AWP non-
5
compliance with or default under any such permit, applicable laws,
rules or regulations); (vi) utility easements, restrictive covenants,
defects in title and irregularities, and other matters that (A) are of
record (to the extent the same was indicated in the documents provided
by SWPL to EAPC) or (B) do not and will not, individually or in the
aggregate, interfere materially with the continued ownership, use and
operation of the Pipeline, taken as a whole, in substantially the same
manner as same have been used by NOARK or AWP, as applicable, in the
past; (vii) rights of priority which may have been acquired by any
third party due to the fact that any of the rights-of-way or documents
conveying any of the property rights to locate the Pipeline may not
have been obtained or recorded in the appropriate county real estate
records; (viii) matters with respect to which EAPC had actual
knowledge prior to the execution hereof, and (ix) Liens securing the
NOARK Debt.
"Third Person" means any Person other than SWN, SWPL, Enogex, EAPC and
NOARK and their respective Affiliates.
2. Acquisition and Maintenance of Interests in NOARK.
(a) EAPC shall use its best reasonable efforts to acquire all
of the Prudential Interest.
(b) EAPC shall use its best reasonable efforts to acquire all
of the SEMCO Interest.
(c) SWPL shall continue to own, and shall not dispose of or
otherwise encumber, except as otherwise contemplated hereunder, the
SWPL Interest prior to Closing.
(d) SWPL hereby waives all rights of first refusal,
preferential purchase rights and all other rights it may have under the
Limited Partnership Agreement, dated as of October 10, 1991, and as
amended by Amendment No. 1 dated February 24, 1993 (the "Existing
Agreement"), of the NOARK Pipeline System, Limited Partnership
regarding the acquisitions contemplated by Sections 2(a) and (b) above.
(e) The Parties agree that the events and transactions
contemplated hereunder will not result in a termination of NOARK for
federal income tax purposes or otherwise. However, in the event any
such termination is deemed to have occurred under the Existing
Agreement by reason of the events and transactions contemplated
hereunder, SWPL hereby waives the provisions of Section 15.4 of the
Existing Agreement.
3. Acquisition of Ozark. EAPC shall cause EIT to use its best
reasonable efforts to enter into a definitive agreement with Ozark for the
acquisition of all of the pipeline assets of Ozark and/or the purchase of all of
the outstanding capital stock of Ozark. In the event of the execution of such an
agreement, EAPC will also cause EIT, to use its best reasonable efforts to close
such acquisition. The Parties recognize, however, that certain regulatory
authorizations as contemplated
6
by Section 10 below will need to be obtained in order to close such acquisition.
Upon the closing of such acquisition, EAPC shall contribute and assign to NOARK
all of the ownership interest in EIT, and EAPC's capital account in NOARK shall
be credited with an amount equal to all amounts paid by EIT for the purchase of
the Ozark pipeline system, or the stock of Ozark, as applicable, plus the costs
incurred in obtaining the regulatory authorizations contemplated by Section 10
below. Nothing in this Agreement shall be construed to confer upon SWPL, SWN, or
NOARK or their respective successors and assigns, any right, benefit or
obligation under such definitive agreement. Such definitive agreement is in the
form of the Asset Purchase and Sale Agreement attached hereto as Exhibit "A."
Upon the acquisition of such assets and the contribution of EIT to NOARK, the
Parties agree that NOARK promptly will commence the interconnection of the NOARK
pipeline system with the Ozark pipeline system and the expansion of the NOARK
and Ozark pipeline systems as specified in Exhibit J.
4. Acquisition of Searcy Gathering Assets . EAPC shall use its best
reasonable efforts to enter into a definitive agreement with Warren Petroleum
Company, L.P. for the acquisition of the Searcy Gathering Assets described on
Exhibit "B," attached hereto and made a part hereof. In the event of the
execution of such agreement, EAPC will use its best reasonable efforts to close
such acquisition. Upon the closing of such acquisition, EAPC will, upon approval
by SWPL, which approval shall not be unreasonably withheld, contribute such
Searcy Gathering Assets to OGG L.L.C. and EAPC's capital account in NOARK shall
be credited with an amount equal to all amounts paid by EAPC for the purchase of
the Searcy Gathering Assets. Nothing in this Agreement shall be construed to
confer upon SWPL, SWN or NOARK, or their respective successors and assigns, any
right, benefit or obligation under such definitive agreement. Such definitive
agreement shall be in a form substantially similar to the Asset Purchase and
Sale Agreement attached hereto as Exhibit "C." Further, nothing in this
Agreement will be construed to obligate NOARK, SWPL or SWN to accept or agree to
the contribution of the Searcy Gathering Assets unless and until SWPL has
approved such contribution, which approval shall not be unreasonably withheld.
5. NGSC. There currently exists various disputes between SWN and its
Affiliates and SEMCO and its Affiliates regarding, among other matters, NGSC. On
or before the acquisition by EAPC of all of the SEMCO Interests, SWN, SWPL and
any of their appropriate Affiliates shall execute a Mutual Release and
Settlement Agreement between SWN, SWPL and any of their appropriate Affiliates
and SEMCO Energy, Inc. and any of its appropriate Affiliates, in the form
attached hereto as Exhibit "D."
6. Acquisition and Merger of AWP. SWN shall convey to SWPL all of the
capital stock of AWP, and SWPL shall cause AWP to be merged into AWP L.L.C. The
Parties recognize, however, that FERC authorization may be required prior to
consummating such merger. Upon the Closing, SWPL agrees to file with FERC for
such authorization and to use its best reasonable efforts to diligently pursue
and obtain such authorization. Such filing may be made in conjunction with the
filings contemplated under Section 10, and the fees and expenses of such filing
shall be borne by EAPC. Upon receipt of such authorization from FERC, SWPL
agrees to cause AWP to be merged into AWP L.L.C., and immediately thereafter to
contribute and assign all of the ownership interests in AWP L.L.C. to NOARK. In
the event such FERC authorization is not received by the closing of the Ozark
acquisition contemplated in Section 3 above, then SWPL shall convey to EAPC
seventy-
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five percent (75%) of all outstanding capital stock of AWP, free and
clear of all Liens. Following such contribution or sale of stock, as applicable,
all of the assets of AWP L.L.C., or AWP, as applicable, shall be those assets
described on Exhibit "E." In the event of such purchase of seventy-five percent
(75%) of AWP's stock, EAPC and SWPL shall contribute all of AWP's stock to
NOARK. In addition, within ten (10) days following such contribution of the
ownership interests of AWP L.L.C. into NOARK, or the contribution of all of
AWP's stock into NOARK, as applicable, EAPC shall pay to SWPL $1,575,000.00.
Upon such contribution and payment, SWPL's capital account in NOARK shall be
credited with $525,000.00 and EAPC's capital account in NOARK shall be credited
with $1,575,000.00, as a result of the contribution of AWP L.L.C. or AWP, as
applicable, into NOARK.
7. Closing. The Closing of the transaction contemplated by this
Agreement shall take place at the offices of Hall, Estill, Hardwick, Gable,
Golden & Nelson, 320 S. Boston Ave., Suite 400, Tulsa, Oklahoma or at such other
place as may be agreed to by the Parties. Subject to the terms and conditions
hereof, the following events will take place at the Closing:
(a) SWPL and EAPC shall execute the Amended and Restated
Partnership Agreement of NOARK in the form attached hereto as Exhibit
"F".
(b) SWPL shall contribute and assign to (i) OGG L.L.C. all of
the assets of NGSC, which assets are described on Exhibit "G," attached
hereto and made a part hereof and (ii) NOARK all technical information
and materials obtained or produced in conjunction with a project to
extend the pipeline system of NOARK into Oklahoma as more fully
described on Schedule 7(b).
(c) SWPL and EAPC shall cause NOARK to form NES L.L.C.
and OGG L.L.C. by filing articles of organization and executing the
operating agreements in the forms attached hereto as Exhibits "H" and
"I". NES L.L.C. shall engage in marketing activities and OGG L.L.C.
shall engage in gathering activities.
(d) EAPC shall pay to SWPL $1,172,000.00.
(e) Each of the Parties will execute and deliver such other
documents as may be required to accomplish the items set forth in (a)
through (c) above, to confirm the ownership under (b) above, and to
confirm the ownership in NOARK immediately prior to the execution of
the Amended and Restated Partnership Agreement referenced in (a) above.
8. Ownership in NOARK, and Status of Capital Accounts.
(a) Upon the Closing referenced in Section 7 above, EAPC will
elect to convert all of the Prudential Interest to general partnership
interests in NOARK except for a one percent (1%) limited partnership
interest in NOARK, and the ownership interests in NOARK shall then be
as set forth in the Amended and Restated Partnership Agreement of
NOARK, the form of which is attached as Exhibit "F." Such conversion
will be made by EAPC executing the Election to Convert in the form
attached hereto as Exhibit "K".
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(b) Upon the closing, and following the contribution to NOARK
of the assets described in Section 7(b) above, the balances of the
Capital Accounts of SWPL and EAPC in NOARK shall be as set forth in
Schedule 4.1 to the Amended and Restated Partnership Agreement of
NOARK, the form of which is attached hereto as Exhibit "F". Further,
these balances are also inclusive of the yield maintenance amounts paid
by NOARK and funded by SEMCO and SWPL discussed in Section 9(c) below.
(c) Allocations of NOARK partnership income or loss to SEMCO
will be based upon the actual closing of books on the day its interest
is sold to EAPC.
9. NOARK Debt.
(a) The Parties acknowledge that the execution of the Amended
and Restated Partnership Agreement of NOARK in the form attached as
Exhibit "F", and certain of the other actions contemplated under this
Agreement, require the consent of the lenders under the loan documents
pursuant to which the NOARK Debt described under item (a) of the
definition of NOARK Debt was incurred. Accordingly, the Parties agree
that the Closing shall not occur unless all such consents required to
be obtained from such lenders are in fact obtained.
(b) The Parties acknowledge that all loans from SEMCO and SWPL
to NOARK have been converted to capital contributions to NOARK. As
such, those loans are no longer in force or effect, and NOARK no longer
has any obligation to repay such loans. Further, the Parties also
acknowledge that the capital account balances set forth on Schedule 4.1
to the Amended and Restated Partnership Agreement of NOARK, the form of
which is attached hereto as Exhibit "F", reflect the inclusion of the
conversion of such loans to capital contributions.
(c) The Parties acknowledge that concurrent with the Closing,
Enogex is making a loan to NOARK in an amount necessary to pay off that
portion of the NOARK Debt described in item (b) of the definition of
NOARK Debt. The general terms of such loan from Enogex are described on
Exhibit "L." The Parties further acknowledge that (i) in connection
with the pay off of such portion of the NOARK Debt, NOARK is making the
yield maintenance payments to Prudential to enable the payment of such
portion of the NOARK Debt and SEMCO and SWPL shall have contributed to
NOARK amounts equal to such yield maintenance payments, and ii) SEMCO
and SWPL shall be entitled to any tax deductions or other benefits that
may arise from the respective amounts each contributed to NOARK for
such yield maintenance payments made by NOARK.
(d) Concurrent with the Closing, EAPC shall assume all
obligations of SEMCO under that portion of the NOARK Debt described
under item (a) of the definition of NOARK Debt.
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10. FERC and HSR Applications.
(a) The Parties recognize and agree that as soon as possible
following Closing, certain regulatory filings will be required in
connection with (i) EIT's contemplated acquisition of the pipeline
assets of Ozark, and (ii) the subsequent integration of those
facilities with NOARK's pipeline facilities into a single interstate
natural gas transmission system. Those filings include, but are not
limited to:
1. An Application with the FERC under Section 7(b) of
the Natural Gas Act for permission and approval to
abandon the pipeline assets of Ozark by sale to EIT
(to be made by Ozark);
2. An Application with the FERC under Section 7(c) of
the Natural Gas Act for a Certificate of Public
Convenience and Necessity authorizing EIT to acquire,
own and operate jurisdictional facilities and for
certain Blanket Authorizations (to be made by EIT);
and
3. An Application with the FERC under Section 7(c) of
the Natural Gas Act for a Certificate of Public
Convenience and Necessity authorizing EIT to
interconnect with and to acquire, own and integrate
into an existing jurisdictional pipeline system, the
intrastate pipeline facilities owned and operated by
NOARK (to be made by EIT possibly as part of its
application for certificate authorization to acquire
the Ozark system);
The Parties and their Affiliates shall provide such support and
assistance as EIT and NOARK may reasonably request with respect to the
above filings.
(b) The Parties recognize that certain filings under the HSR
Act and the rules of the Federal Trade Commission will be required in
connection with the acquisition by EIT of the pipeline assets of Ozark.
The Parties and their Affiliates shall provide such support and
assistance as EIT and NOARK may reasonably request in conjunction with
such filings and in responding to any requests for information from the
Federal Trade Commission or the United States Department of Justice.
(c) EAPC agrees to make capital contributions to NOARK equal
to all amounts paid or required to be paid by NOARK (including any
NOARK Related Entity) for the interconnection of the NOARK pipeline
system with the Ozark pipeline system, and the expansion of the NOARK
and Ozark pipeline systems as specified in Exhibit J attached hereto
which interconnection and expansion will not occur until after EAPC's
contribution of the ownership interests in EIT to NOARK contemplated by
Section 3 above. Such contributions shall be made by EAPC immediately
prior to the time the amounts under this subparagraph (c) are required
to be paid by NOARK, and shall be used by NOARK to make such payments.
EAPC's Capital Account under the Amended and Restated Partnership
Agreement of NOARK (the form of which is attached hereto) shall be
increased by the amount of such contributions at the time of such
contributions.
10
11. Representations and Warranties of Enogex and EAPC. Enogex and EAPC,
jointly and severally, hereby represent and warrant as follows:
(a) Organization. Enogex is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Oklahoma with full corporate power to carry on its business as now
being conducted. EAPC is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Oklahoma
with full corporate power to carry on its business as now being
conducted.
(b) Power and Authority; Enforceability. Each has all
requisite corporate power and authority to enter into this Agreement
and the other documents to be entered into by it at the Closing as
provided for under this Agreement and to perform its obligations
hereunder and thereunder. This Agreement has been and such other
documents will have been at the Closing duly authorized, executed and
delivered by Enogex and EAPC, and, assuming due authorization,
execution and delivery of the other Parties thereto, constitute legal,
valid and binding obligations enforceable in accordance with their
terms, except that (i) such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(c) No Conflict with Other Instruments or Consents. Neither
the execution and delivery of this Agreement or the other documents to
be entered into by Enogex or EAPC at the Closing as provided for in
this Agreement, nor the consummation of the transactions contemplated
hereby or thereby (i) will conflict with or result in (or with giving
of notice or passage of time or both would result in) a material
breach, default or violation of (A) any of the terms, provisions or
conditions of their charters, as amended, or bylaws, as amended or (B)
any material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which either of them is
a party or to which either of them is subject or by which their
material property is bound, (ii) will result in the creation of any
lien, charge or other encumbrance on any of their material property or
assets or (iii) will require them to obtain the consent of any private
nongovernmental Third Person, except for the consent of The First
National Bank of Chicago required under the loan documents referred to
in item (a) of the definition of "NOARK Debt" in Section 1. No consent,
action, approval or authorization of, or registration, declaration or
filing with, any governmental department, commission, agency or other
instrumentality having jurisdiction over either of them is required by
them to authorize the execution and delivery by them of this Agreement
or the other documents to be entered into by them at the Closing as
provided for in this Agreement or, except for the authorizations
contemplated in Section 10 above, the consummation of the transactions
contemplated hereby and thereby.
(d) Accuracy of Representations and Warranties. All of their
representations and warranties contained in this Agreement shall be
true in all material respects at and as of the Closing, and such other
times as specifically set forth herein, as if such representations and
11
warranties were made at and as of the Closing and such other times, and
they shall perform, at or prior to the relevant Closing and such other
times as specifically set forth herein, all agreements and covenants
required by this Agreement to be performed by them at or prior to the
relevant Closing and such other times.
(e) Litigation. There are no suits, actions, claims,
proceedings or investigations pending or to their knowledge,
threatened, seeking to prevent or challenge the transactions
contemplated by this Agreement.
(f) NOARK Interests. At the Closing, EAPC shall, subject to
having acquired same as contemplated by Sections 2(a) and (b), have
good title to the Prudential Interest and the SEMCO Interest, free and
clear of all Liens, except for Liens securing the NOARK Debt and the
Enogex loan referenced in Section 9(c) above.
(g) EIT Interests. At the time of the contribution of the
ownership interests in EIT to NOARK (the "Contribution Time"):
(i) The principal asset of EIT will be the Ozark
pipeline system which is more fully described in Exhibit A-1
and is referred to hereinafter sometimes as the "Ozark
Pipeline."
(ii) Except as set forth on the Ozark Disclosure
Schedule, no material claim, demand, filing, hearing, notice
of violation, proceeding, notice or demand letter,
investigation, administrative proceeding, civil, criminal or
other action, suit or other legal proceeding will be pending
or threatened, against EIT or EAPC relating to, resulting from
or affecting the ownership or operation of the Ozark Pipeline,
the consequences of which, individually or in the aggregate,
could have a material adverse effect on NOARK or any of the
NOARK Related Entities. Except as set forth on the Ozark
Disclosure Schedule, no notice from any governmental authority
or any other person (including employees) will have been
received by Enogex, EAPC or EIT or to their knowledge, the
prior owner of the Ozark Pipeline (or any affiliate thereof)
as to any material claim, demand, filing, hearing, notice of
violation, proceeding, notice or demand letter, administrative
proceeding, action, civil, criminal or other suit or other
legal proceeding relating to, resulting from or affecting the
ownership or operation of EIT or the Ozark Pipeline, claiming
any material violation of any law, statute, rule, regulation,
ordinance, order decision or decree of any governmental
authority (including, without limitation, any such law, rule,
regulation, ordinance, order, decision or decree concerning
the conservation of natural resources) or claiming any
material breach of any contract or agreement with any
third-party.
(iii) Except as set forth on the Ozark Disclosure
Schedule, the Ozark Pipeline will have been and shall at such
time continue to be operated in material compliance with the
provisions and requirements of all laws, rules, regulations,
ordinances, orders, decisions and decrees of all governmental
authorities having jurisdiction with respect to the Ozark
Pipeline or the ownership or operation thereof.
12
All necessary material governmental permits, licenses and
other authorizations with regard to the ownership or operation
of the Ozark Pipeline by EIT will have been obtained and
maintained in effect; and no material violations or notices of
violations, written or otherwise, will exist in respect to
such permits, licenses or other authorizations.
(iv) Except as set forth on the Ozark Disclosure
Schedule, (i) all of the material contracts, agreements and
commitments relating to the ownership and operation of the
Ozark Pipeline shall be in full force and effect and
enforceable in accordance with their terms, and (ii) EIT shall
not be in material breach of, or with the lapse of time or the
giving of notice, or both, would be in material breach of, any
of its material obligations thereunder.
(v) All material ad valorem, property and other taxes
based on the ownership of the Ozark Pipeline that are then due
and payable will have been properly and timely paid. Except as
set forth on the Ozark Disclosure Schedule, all material
amounts payable by EIT under the terms of the contracts
described in (d) above will have been properly and timely paid
except for such amounts as are then being currently paid prior
to delinquency in the ordinary course of business. Except as
set forth on the Ozark Disclosure Schedule, all material
amounts then payable by third-parties under the terms of the
agreements described in (iv) above will be properly and timely
paid to EIT.
(vi) At the Contribution Time, EIT shall have good
title to all of the Ozark Pipeline and the other properties,
contracts and assets, real and personal of EIT, all of which
will then be free of all Liens, except for (i) liens for
current taxes and assessments that are not yet due and
payable; (ii) mechanics', warehousemen's, landlords' and other
similar statutory liens securing the payment of amounts that
are not yet due and payable and (iii) other EAPC Permitted
Liens.
(vii) To the best of EAPC's knowledge after due
inquiry, the equipment related to the Ozark Pipeline will have
been maintained in satisfactory operating condition and will
be capable of being used in the operation of the Ozark
Pipeline in the manner in which it has been historically
operated without present need for repair or replacement except
in the ordinary course of business.
(viii) Accurate and complete copies of all material
leases, instruments, contracts, agreements, permits, licenses,
rights-of-ways, certificates and other documents in connection
with the transactions contemplated by this Agreement will have
been delivered or otherwise made available to NOARK and SWPL.
(ix) Environmental Compliance. Except as set forth on
the Ozark Disclosure Schedule:
13
(a) EIT will have obtained all material permits,
licenses and other authorizations ("Environmental Permits")
relating to the Ozark Pipeline, which are then required under
applicable laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants,
or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants,
contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or
wastes (collectively, the "Environmental Laws").
(b) EIT and the Ozark Pipeline will be in material
compliance with all terms and conditions of such Environmental
Permits and with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such
Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment or notice or demand letter from a
governmental entity issued, entered, promulgated or approved
thereunder as they will then apply to EIT or the Ozark
Pipeline.
(c) Enogex, EAPC or EIT will not have received any
notification from any governmental authority or any other
person that any of the current or former properties, assets or
operations of EIT or the Ozark Pipeline will then be in or
claimed to be in material violation of any applicable
Environmental Laws.
(d) There will be no material civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter
from a governmental entity pending or threatened against
Enogex, EAPC or EIT with respect to the Ozark Pipeline
claiming a violation of, or any probable or potential
violation of, any applicable Environmental Laws.
(e) To the best of their knowledge after due inquiry,
there will be no past or present events, conditions,
circumstances, activities, practices, incidents, actions or
plans, which will interfere with, or prevent material
compliance or continued material compliance with, the
Environmental Laws or with any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter from any
governmental entity issued, entered, promulgated or approved
thereunder, or which will give rise to any legal liability,
including, without limitation, liability under the
Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or similar state or local laws, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, or investigation
which would be materially adverse, individually or in the
aggregate, to EITbased on or
14
resulting from the conduct of the business of EIT, including
the ownership and operation of the Ozark Pipeline,
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment,
of any pollutant, contaminant, chemical, or industrial toxic
or hazardous material, substance or waste. To the best of
their knowledge after due inquiry, no release, emission or
discharge into the environment of any hazardous substance (as
that term is currently defined under CERCLA or any applicable
analogous state law) will have occurred or will then be
occurring in connection with the conduct of the business of
EIT, including the ownership and operation of the Ozark
Pipeline, as a result of which release, emission or discharge,
individually or in the aggregate, there would be a material
adverse affect on EIT. To the best of their knowledge after
due inquiry, the real property then owned or leased by EIT or
upon which EIT will then have a right-of-way will contain no
spill, deposit or discharge of any hazardous substance (as
that term is then defined under CERCLA or any applicable
analogous state law), as a result of which spill, deposit or
discharge, individually or in the aggregate, there would be a
material adverse effect on EIT or the Ozark Pipeline.
(x) All material taxes based upon, measured by or
imposed with respect to EIT or the prior owner of the Ozark
Pipeline (if EIT acquires the assets of the Ozark Pipeline
System) which are attributable to the period on or before the
Contribution Time will have been paid or deposited to the
extent required to be so paid or deposited.
(xi) To the best of their knowledge, except as set
forth on the Ozark Disclosure Schedule or in the Asset
Purchase and Sale Agreement attached as Exhibit "A," EIT will
not have any material liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including without
limitation, any liability for taxes and interest, penalty or
other charges payable with respect to any such liability or
obligation).
(xii) At the Contribution Time, (i) EAPC shall have
good title to all of the ownership interests in EIT, free and
clear of all Liens, and all of those ownership interests shall
be owned by EAPC free and clear of any security interests,
voting trusts, agreements, proxies, options or other
restrictions; (ii) EIT will have no subsidiaries, no interest
in any partnership or joint venture and will not hold shares
of stock or other ownership interest in any corporation, trust
or other Person; and (iii) there will be: (a) no existing
subscriptions, options, warrants, calls, commitments or rights
of any character to purchase or otherwise acquire any shares
of capital stock or other securities or interests of EIT; and
(b) no contracts, subscriptions, options, warrants, calls,
commitments or rights to purchase or otherwise acquire, any
securities or other interests that are convertible into or
exchangeable for shares of capital stock or other securities
or interests of EIT.
15
(xiii) With respect to the Asset Purchase and Sale
Agreement attached hereto as Exhibit A (the "Ozark
Agreement"):
(a) the employees of Ozark which are to
become employees of EIT under the terms of the Ozark
Agreement shall, prior to or at the time of the
contribution of EIT to NOARK, become employees of
EAPC (or one of its Affiliates) and EAPC (or one of
its Affiliates) shall bear, without reimbursement
from NOARK, all of the cost and expense of such
employees, including the obligation to make any
severance, termination or other such payments to any
of such employees; provided, however, if EAPC (or any
of its Affiliates) utilizes any of such employees in
providing services to NOARK (including any NOARK
Related Entity) under The Amended and Restated
Partnership Agreement of NOARK, then the costs of
such employees in providing such services shall be
reimbursed by NOARK in accordance with the Accounting
Procedures attached to such Amended and Restated
Partnership Agreement.
(b) EIT will not agree to any allocation of
the purchase price payable under the terms of the
Ozark Agreement without first obtaining SWPL's
agreement with or approval of the proposed
allocation, which agreement or approval will not be
unreasonably withheld;
(c) Enogex shall be responsible for ensuring
that Natural Gas Clearinghouse ("NGC") fulfills its
obligations under that certain Imbalance Makeup
Agreement, dated December 15, 1997;
(d) at the Contribution Time, Ozark will
have fully and completely complied with the
compressor overhaul schedule and planned maintenance
set forth on Exhibit D of the Ozark Agreement and
NOARK will not, from and after the Contribution Time,
bear or incur any cost or expense to perform any of
the actions with respect to the Ozark Pipeline
required to be performed by or at the expense of
Ozark on such schedule prior to the closing of the
transactions contemplated by the Ozark Agreement.
(h) Searcy Gathering Assets. At the time that the Searcy
Gathering Assets are contributed to NOARK (the "Searcy Contribution
Time"):
(i) Except as set forth on the Searcy Disclosure
Schedule, no material claim, demand, filing, hearing, notice
of violation, proceeding, notice or demand letter,
investigation, administrative proceeding, civil, criminal or
other action, suit or other legal proceeding will be pending
or threatened, against EAPC relating to, resulting from or
affecting the ownership or operation of the Searcy Gathering
Assets, the consequences of which, individually or in the
aggregate, could have a
16
materially adverse effect on NOARK or any of the NOARK Related
Entities. No notice from any governmental authority or any
other person (including employees) will have been received by
Enogex, EAPC or to its knowledge, the prior owner of the
Searcy Gathering Assets (or any affiliate thereof) as to any
material claim, demand, filing, hearing, notice of violation,
proceeding, notice or demand letter, administrative
proceeding, action, civil, criminal or other suit or other
legal proceeding relating to, resulting from or affecting the
ownership or operation of EAPC pertaining to the Searcy
Gathering Assets, claiming any material violation of any law,
statute, rule, regulation, ordinance, order decision or decree
of any governmental authority (including, without limitation,
any such law, rule, regulation, ordinance, order, decision or
decree concerning the conservation of natural resources)
pertaining to the Searcy Gathering Assets or claiming any
material breach of any contract or agreement with any
third-party pertaining to the Searcy Gathering Assets.
(ii) Except as set forth on the Searcy Disclosure
Schedule, the Searcy Gathering Assets will have been and shall
be continuing to be operated, in material compliance with the
provisions and requirements of all laws, rules, regulations,
ordinances, orders, decisions and decrees of all governmental
authorities having jurisdiction with respect to the Searcy
Gathering Assets or the ownership or operation thereof. All
necessary material governmental permits, licenses and other
authorizations with regard to the ownership or operation of
the Searcy Gathering Assets by EAPC will have been obtained
and maintained in effect; and no material violations or
notices of violations, written or otherwise, will exist in
respect to such permits, licenses or other authorizations.
(iii) Except as set forth on the Searcy Disclosure
Schedule, (i) all of the material contracts, agreements and
commitments relating to the ownership and operation of the
Searcy Gathering Assets shall be in full force and effect and
enforceable in accordance with their terms, and (ii) EAPC
shall not be in material breach of, or with the lapse of time
or the giving of notice, or both, would be in material breach
of, any of its material obligations thereunder.
(iv) All material ad valorem, property and other
taxes based on the ownership of the Searcy Gathering Assets
that are then due and payable will have been properly and
timely paid. Except as set forth on the Searcy Disclosure
Schedule, all material amounts payable by EAPC under the terms
of the contracts described in (c) above will have been
properly and timely paid except for such amounts as are then
being currently paid prior to delinquency in the ordinary
course of business. Except as set forth on the Searcy
Disclosure Schedule, all material amounts then payable by
third parties under the terms of the agreements described in
(iii) above will be properly and timely paid to EAPC.
17
(v) At the Searcy Contribution Time, EAPC shall have
good title to all of the Searcy Gathering Assets free of all
Liens, except for (i) liens for current taxes and assessments
that are not yet due and payable; (ii) mechanics',
warehousemen's, landlords' and other similar statutory liens
securing the payment of amounts that are not yet due and
payable and (iii) other EAPC Permitted Liens.
(vi) To the best of EAPC's knowledge after due
inquiry, the equipment related to the Searcy Gathering Assets
will have been maintained in satisfactory operating condition
and will be capable of being used in the operation of the
Searcy Gathering Assets in the manner in which it has been
historically operated without present need for repair or
replacement except in the ordinary course of business.
(vii) Accurate and complete copies of all material
leases, instruments, contracts, agreements, permits, licenses,
rights-of-ways, certificates and other documents in connection
with the transactions contemplated by this Agreement will have
been delivered or otherwise made available to NOARK and SWPL.
(viii) Environmental Compliance. Except as set forth
on the Searcy Disclosure Schedule:
(a) EAPC will have obtained all Environmental Permits
relating to the Searcy Gathering Assets, which are then
required under any applicable Environmental Laws.
(b) EAPC and the Searcy Gathering Assets will be in
material compliance with all terms and conditions of such
Environmental Permits and with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained
in such Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment or notice or demand letter
from a governmental entity issued, entered, promulgated or
approved thereunder as they will then apply to EAPC and the
Searcy Gathering Assets.
(c) Enogex or EAPC will not have received any
notification from any governmental authority or any other
person that any of the current or former properties, assets or
operations of EAPC pertaining to the Searcy Gathering Assets
or the Searcy Gathering Assets will then be in or claimed to
be in material violation of any applicable Environmental Laws.
(d) There will be no material civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter
from a governmental entity pending or threatened against EAPC
with respect to the Searcy Gathering Assets claiming a
violation of, or any probable or potential violation of, any
applicable Environmental Laws.
18
(e) To the best of their knowledge after due inquiry,
there will be no past or present events, conditions,
circumstances, activities, practices, incidents, actions or
plans, which will interfere with, or prevent material
compliance or continued material compliance with, the
Environmental Laws or with any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter from any
governmental entity issued, entered, promulgated or approved
thereunder, or which will give rise to any legal liability,
including, without limitation, liability under CERCLA or
similar state or local laws, or otherwise form the basis of
any claim, action, demand, suit, proceeding, hearing, notice
of violation, or investigation which would be materially
adverse, individually or in the aggregate, to EAPC or the
Searcy Gathering Assets based on or resulting from the conduct
of the business of EAPC as it pertains to the ownership and
operation of the Searcy Gathering Assets or the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial toxic or hazardous
material, substance or waste from the Searcy Gathering Assets.
To the best of their knowledge after due inquiry, no release,
emission or discharge into the environment of any hazardous
substance (as that term is currently defined under CERCLA or
any applicable analogous state law) will have occurred or will
then be occurring in connection with the conduct of the
business of EAPC as it pertains to the ownership and operation
of the Searcy Gathering Assets, as a result of which release,
emission or discharge, individually or in the aggregate, there
would be a material adverse affect on EAPC. To the best of
their knowledge after due inquiry, the real property then
owned or leased by EAPC pertaining to the Searcy Gathering
Assets or upon which EAPC will then have a right-of-way
pertaining to the Searcy Gathering Assets will contain no
spill, deposit or discharge of any hazardous substance (as
that term is then defined under CERCLA or any applicable
analogous state law), as a result of which spill, deposit or
discharge, individually or in the aggregate, there would be a
material adverse effect on EAPC or the Searcy Gathering
Assets.
(ix) All material taxes based upon, measured by or
imposed with respect to EAPC pertaining to the Searcy
Gathering Assets or the prior owner of the Searcy Gathering
Assets which are attributable to the period on or before the
Searcy Contribution Time will have been paid or deposited to
the extent required to be so paid or deposited.
(x) To the best of their knowledge, except as set
forth on the Searcy Disclosure Schedule, or in the Asset
Purchase and Sale Agreement attached as Exhibit "C," EAPC will
not have any material liabilities or obligations pertaining to
the Searcy Gathering Assets of any nature, whether absolute,
accrued, contingent or otherwise, and whether due or to become
due (including without limitation, any liability for taxes and
interest, penalty or other charges payable with respect to any
19
such liability or obligation).
(i) Brokers. They have not employed, directly or indirectly
for their benefit, any broker or finder or incurred any liability for
any financial advisory fees, brokerage fees, commissions or finders'
fees, and no broker or finder has acted directly or indirectly for them
in connection with this Agreement or the transactions contemplated
hereby.
(j) Material Fact. To the best of their knowledge, no
representation or warranty in this Section 11, contains any untrue
statement of a material fact or omits to state any material fact which
is necessary to make any of the representations and warranties made
herein, in light of the circumstances in which they are made, not
misleading.
(k) No Reliance. Except as to the representations of SWN or
SWPL expressly set forth in Section 12 of this Agreement, Enogex and
EAPC have not relied upon any oral or written statements,
representations, or warranties which may have been made by or on behalf
of SWN or SWPL or upon any written reports, financial or production
data, business plans, projections, forecasts, projections of feedstock
availability or evaluations, or any environmental reports, audits,
studies or assessments, or any other written materials, copies of which
may have been furnished to Enogex or EAPC or as to which Enogex or EAPC
may have been provided access in connection with the transactions
contemplated by this Agreement. TO THE EXTENT THAT ENOGEX OR EAPC HAVE
BEEN FURNISHED COPIES OF OR BEEN PROVIDED ACCESS TO ANY OF THE
FOREGOING, ENOGEX AND EAPC ACKNOWLEDGE THAT NEITHER SWN, SWPL NOR ANY
OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES AND AGENTS, HAS MADE, AND HEREBY EXPRESSLY
DISCLAIM, ANY REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION, DATA OR MATERIALS (WHETHER WRITTEN OR
ORAL) WHICH MAY HAVE BEEN FURNISHED TO ENOGEX OR EAPC OR THEIR
REPRESENTATIVES OR AGENTS BY OR ON BEHALF OF SWN OR SWPL IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY.
12. Representations and Warranties of SWN and SWPL. SWN and SWPL,
jointly and severally, hereby represent and warrant as follows:
(a) Organization. SWN is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Arkansas with full corporate power to carry on its business as now
being conducted. SWPL is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Arkansas
with full corporate power to carry on its business as now being
conducted.
(b) Power and Authority; Enforceability. Each has all
requisite corporate power and authority to enter into this Agreement
and the other documents to be entered into by it
20
at the Closing as provided for under this Agreement and to perform its
obligations hereunder and thereunder. This Agreement has been and such
other documents will have been at the Closing duly authorized, executed
and delivered by SWN and SWPL, and, assuming due authorization,
execution and delivery of the other Parties thereto, constitute legal,
valid and binding obligations enforceable in accordance with their
terms, except that (i) such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(c) No Conflict with Other Instruments or Consents. Neither
the execution and delivery of this Agreement or the other documents to
be entered into by SWN or SWPL at the Closing as provided for in this
Agreement, nor the consummation of the transactions contemplated hereby
or thereby (i) will conflict with or result in (or with giving of
notice or passage of time or both would result in) a material breach,
default or violation of (A) any of the terms, provisions or conditions
of their charters, as amended, or bylaws, as amended or (B) any
material agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which either of them,
NOARK or AWP is a party or to which either of them, NOARK or AWP is
subject or by which their NOARK's or AWP's material property is bound,
(ii) will result in the creation of any lien, charge or other
encumbrance on any of their material property or assets or (iii) will
require them, NOARK or AWP to obtain the consent of any private
nongovernmental Third Person, except for the consent of The First
National Bank of Chicago required under the loan documents referred to
in item (a) of the definition of "NOARK Debt" in Section 1. No consent,
action, approval or authorization of, or registration, declaration or
filing with, any governmental department, commission, agency or other
instrumentality having jurisdiction over either of them, NOARK or AWP
is required by them, NOARK or AWP to authorize the execution and
delivery by them of this Agreement or the other documents to be entered
into by them at the Closing as provided for in this Agreement or,
except for the authorizations contemplated in Section 6 and 10 above,
the consummation of the transactions contemplated hereby and thereby.
(d) Accuracy of Representations and Warranties. All of their
representations and warranties contained in this Agreement shall be
true in all material respects at and as of the Closing and such other
times as specifically set forth herein as if such representations and
warranties were made at and as of the Closing and such other times, and
they shall perform, at or prior to the relevant Closing and such other
times as specifically set forth herein, all agreements and covenants
required by this Agreement to be performed by them at or prior to the
relevant Closing and such other times.
(e) Litigation. There are no suits, actions, claims,
proceedings or investigations pending or to their knowledge,
threatened, seeking to prevent or challenge the transactions
contemplated by this Agreement.
21
(f) NOARK Interests. At the Closing, SWPL shall have good
title to the SWPL Interest, free and clear of all Liens, except for
Liens securing the NOARK Debt and the Enogex loan referenced in Section
9(c) above.
(g) NOARK and AWP Operations. With respect to the activities
and operations of NOARK and AWP:
(i) SWPL has been the managing partner and the
operator of NOARK since its in-service date and SWN was the
managing partner of NOARK Pipeline System, an Arkansas general
partnership, from its creation until its termination. AWG has
been the operator of AWP since its creation and was and will
be the operator of AWP, and its related assets, from its
creation until it is merged into AWP L.L.C.
(ii) There are not now, and never have been, any
employees of NOARK or AWP and there are no "employee benefit
plans" (as such term is defined in Section 3(3) of the
Employment Retirement Income Security Act of 1974) sponsored
by, maintained by or to which NOARK or AWP have contributed).
(iii) The principal asset of NOARK is the NOARK
Pipeline System which is more fully described on Schedule
12(g)(iii), and the principal asset of AWP is the AWP Pipeline
System which is more fully described on Schedule 12(g)(iii) as
well. The NOARK Pipeline System and the AWP Pipeline System
are herein referred to as the "Pipeline."
(iv) Schedule 12(g)(iv) attached hereto contains a
complete and accurate list of all material contracts,
agreements and commitments to which NOARK or AWP, or any of
their assets, are bound, including, but not limited to: (a)
any agreement with SWPL or any of its Affiliates; (b) any
material gas transportation agreements; (c) any material
agreement currently in effect with a general contractor for
the construction of any of the Pipeline; (d) any agreement
with any lender; (e) any material agreement to sell, lease or
otherwise dispose of any interest in any of NOARK's or AWP's
assets; (f) any material operating agreement or operating and
maintenance agreement of NOARK or AWP; and (g) any contract
that has a significant impact on the Pipeline, NOARK, AWP or
any of their assets.
(v) Except as described on Schedule 12(g)(v), no
material claim, demand, filing, hearing, notice of violation,
proceeding, notice or demand letter, investigation,
administrative proceeding, civil, criminal or other action,
suit or other legal proceeding is pending or threatened,
against NOARK, AWP or SWPL relating to, resulting from or
affecting the ownership or operation of the Pipeline, NOARK or
AWP, no notice from any governmental authority or any other
person (including
22
employees) has been received by SWPL, NOARK or AWP as to any
material claim, demand, filing, hearing, notice of violation,
proceeding, notice or demand letter, administrative
proceeding, action, civil, criminal or other suit or other
legal proceeding relating to, resulting from or affecting the
ownership or operation of NOARK, AWP or the Pipeline, claiming
any material violation of any law, statute, rule, regulation,
ordinance, order decision or decree of any governmental
authority (including, without limitation, any such law, rule,
regulation, ordinance, order, decision or decree concerning
the conservation of natural resources) or claiming any
material breach of any contract or agreement with any third
party.
(vi) NOARK, AWP and the Pipeline have been and
currently are operated, and NOARK and AWP and the Pipeline
are, in material compliance with the provisions and
requirements of all laws, rules, regulations, ordinances,
orders, decisions and decrees of all governmental authorities
having jurisdiction with respect to the Pipeline, NOARK or AWP
or the ownership or operation thereof. All necessary material
governmental permits, licenses and other authorizations with
regard to the ownership or operation of the Pipeline by NOARK
or AWP have been obtained and maintained in effect; and no
material violations or notices of violations, written or
otherwise, exist in respect to such permits, licenses or other
authorizations.
(vii) All of the contracts described in Schedule
12(g)(iv) attached hereto are in full force and effect and
enforceable in accordance with their terms, and neither SWPL ,
NOARK nor AWP is in material breach of, or with the lapse of
time or the giving of notice, or both, would be in material
breach of, any of its obligations thereunder.
(viii) All material ad valorem, property and other
taxes based on the ownership of the assets of NOARK or AWP and
the Pipeline that are due and payable have been properly and
timely paid. All material amounts payable by either NOARK,
AWP, or SWPL under the terms of the contracts described in
Schedule 12(g)(iv) attached hereto have been properly and
timely paid except for such expenses as are being currently
paid prior to delinquency in the ordinary course of business.
All material amounts payable by third parties under the terms
of the agreements described on Schedule 12(g)(iv) of this
Agreement are being properly and timely paid to SWPL, NOARK or
AWP, as the case may be.
(ix) NOARK shall have good title to the NOARK
Pipeline System at the Closing and AWP L.L.C. or AWP, as
applicable, shall have good title to the AWP Pipeline System
at the AWP Contribution Time and their other respective
properties, contracts and assets, real and personal, all of
which are, or shall be, as applicable, free of all Liens,
except for (a) Liens listed on Schedule 12(g)(ix) attached
hereto; (b) liens for current taxes and assessments that are
not yet due and payable; and (c) mechanics', warehousemen's,
landlords' and other similar statutory liens securing
23
the payment of amounts that are not yet due and payable and
(d) other Permitted Liens.
(x) To the best of SWPL's knowledge after due
inquiry, the equipment related to the Pipeline has been
maintained in satisfactory operating condition and is capable
of being used in the operation of the Pipeline in the manner
in which it has been historically operated without present
need for repair or replacement except in the ordinary course
of business.
(xi) Accurate and complete copies of all material
leases, instruments, contracts, agreements, permits, licenses,
rights-of-ways, certificates and other documents in connection
with the transactions contemplated by this Agreement have been
delivered or otherwise made available to Enogex and EAPC.
(xii) SWPL has delivered to Enogex and EAPC copies of
the following financial statements of NOARK and AWP
(collectively referred to herein as the "Financial
Statements");
(a) The audited (as to NOARK) and
unaudited (as to AWP) Balance Sheets
dated as of December 31, 1996.
(b) The audited (as to NOARK) and
unaudited (as to AWP) Income
Statements for the fiscal year ended
December 31, 1996.
(c) The unaudited Statements of cash
flow for the fiscal years ended
December 31, 1996, December 31, 1995
and December
31, 1994.
(d) The audited (as to NOARK) and
unaudited (as to AWP) Balance Sheets
as of December 31, 1995 and December
31, 1994, and the audited (as to
NOARK) and the unaudited (as to AWP)
Income Statements for the fiscal
years ended December 31, 1995 and
December 31, 1994.
The books and records of NOARK and AWP have been kept and
maintained in accordance with the FERC uniform system of
accounts. The Financial Statements have been prepared in
accordance with generally accepted accounting principles
consistently applied and the FERC uniform system of accounts,
as applicable, except as noted therein, and fairly present in
all material respects (i) the financial position of NOARK and
AWP, as applicable, as of the respective dates set forth
therein and (ii) the results of the operations and cash flows
of NOARK and AWP, as applicable, for the fiscal periods set
forth therein.
24
(xiii) Except as described on Schedule 12(g)(xiii),
since December 31, 1996, in the aggregate, there have been no
material adverse changes in (a) the assets, liabilities or
financial condition of NOARK or AWP or (b) the business,
financial conditions or results of operations of NOARK or AWP.
(xiv) Environmental Compliance.
(a) NOARK and AWP have obtained all material permits,
licenses and other authorizations ("Environmental Permits")
relating to NOARK, AWP and the Pipeline, which are required
under applicable laws relating to pollution or protection of
the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous
or toxic materials or wastes (collectively, the "Environmental
Laws").
(b) NOARK, AWP and the Pipeline are in material
compliance with all terms and conditions of such Environmental
Permits and with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such
Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment or notice or demand letter from a
governmental entity issued, entered, promulgated or approved
thereunder as they apply to NOARK, AWP or the Pipeline.
(c) SWPL, NOARK or AWP has not received any
notification from any governmental authority or any other
person, nor does SWPL have knowledge that any of the current
or former properties, assets or operations of NOARK or AWP are
in or claimed to be in material violation of any applicable
Environmental Laws.
(d) There is no material civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter
from a governmental entity pending or, to SWPL's knowledge,
threatened against NOARK, AWP or SWPL, with respect to NOARK,
AWP or the Pipeline claiming a violation of, or any probable
or potential violation of, any applicable Environmental Laws.
(e) To the best of their knowledge, after due
inquiry, there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or
plans, which will interfere with, or prevent material
compliance or continued material
25
compliance with, the Environmental Laws or with any
regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter from any governmental entity issued,
entered, promulgated or approved thereunder, or which will
give rise to any legal liability, including, without
limitation, liability under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or similar
state or local laws, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing, notice of
violation, or investigation which would be materially adverse
to SWPL, NOARK, AWP or the Pipeline, based on or resulting
from the conduct of the business of NOARK or AWP, including
the ownership and operation of the Pipeline, manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial toxic or hazardous
material, substance or waste. To the best of their knowledge,
after due inquiry, no release, emission or discharge into the
environment of any hazardous substance (as that term is
currently defined under CERCLA or any applicable analogous
state law) has occurred or is currently occurring in
connection with the conduct of the business of NOARK or AWP,
including the ownership and operation of the Pipeline, as a
result of which release, emission, or discharge, there would
be a material adverse effect on SWPL, NOARK or AWP. To the
best of SWPL's knowledge, the real property currently owned or
leased by NOARK and AWP or upon which NOARK or AWP has a
right-of-way contains no spill, deposit or discharge of any
hazardous substance (as that term is currently defined under
CERCLA or any applicable analogous state law), as a result of
which spill, deposit or discharge, there would be a material
adverse effect on SWPL, NOARK, AWP or the Pipeline.
(xv) All material taxes based upon, measured by or
imposed with respect to NOARK or AWP which are attributable to
the period on or before the Closing Date, or with respect to
AWP or AWP L.L.C., as applicable, which are attributable to
the period on or before the date AWP is contributed to NOARK
or AWP is merged into AWP L.L.C. and contributed to NOARK, as
applicable, (in either case the "AWP Contribution Time"),
respectively, have been or will be paid or deposited, to the
extent required to be so paid or deposited, or accruals (for
taxes not yet due and owing based on a good faith estimate of
the taxes anticipated to be owed) will have been made on the
books of NOARK, AWP and/or AWP L.L.C., as applicable and all
returns, statements and reports with respect to such taxes
which are required to be filed on or before the Closing Date
or in the case of AWP or AWP L.L.C., as applicable, the AWP
Contribution Time have been (or will have been by the Closing
Date or in the case of AWP or AWP L.L.C., as applicable, by
the AWP Contribution Time) filed. All tax returns filed by
NOARK or AWP on or before the Closing, and also in the case of
AWP that will have been filed prior to the AWP Contribution
Time, constitute, or will constitute, complete and accurate
representations of their tax liabilities for such years and
accurately set forth or will set forth all material items
26
(to the extent required to be included or reflected in such
returns) relevant to their future tax liabilities, including
the tax basis of their material properties and assets. Except
as set forth on Schedule 12(g)(xv), none of SWPL, NOARK, nor
AWP has waived or extended, or in the case of AWP will have
waived or extended at the AWP Contribution Time, any
applicable statute of limitations relating to the assessment
of federal, state, local or foreign taxes. Except as provided
in Schedule 12(g)(xv) no examinations of the federal, state,
local or foreign tax returns of NOARK or AWP are currently in
progress nor, in the case of AWP or AWP L.L.C. will be in
progress at the AWP Contribution Time nor, to the best of
SWPL's knowledge, is or will be any such examination noticed
or threatened. No material issue or issues have been raised in
connection with any prior or pending review or audit of said
federal, state, local or foreign tax returns which may be
expected to be raised in the future by such taxing authorities
in connection with the audit or review of the tax returns of
NOARK, AWP or AWP L.L.C. AWP or AWP L.L.C. is not a party to
any tax sharing or similar agreement, and it has no liability
for taxes of any other corporation.
(xvi) An election under Section 754 of the Internal
Revenue Code, as amended, has not been made by NOARK, AWP nor
AWP L.L.C.
(xvii) NOARK is an Arkansas limited partnership, duly
formed, validly existing and in good standing under the laws
of the State of Arkansas with full power to carry on its
business as now being conducted.
(xviii) NOARK is, and has been since its creation,
treated as a limited partnership for all purposes under state
and federal tax laws, rules and regulations.
(xix) Except as set forth in Schedule 12(g)(xix),
there are no patents, franchises, trademarks, service marks,
licenses, copyrights, trade secrets (as defined in 78 Okla.
Stat. ss. 86) or other assets of the same types as those
enumerated above which are used in the operation of the
businesses of NOARK or AWP. NOARK and AWP are in material
compliance with all such items set forth in Schedule
12(g)(xix). To the best of their knowledge, after due inquiry,
the conduct of the businesses of NOARK and AWP does not
conflict with, infringe upon or violate the patents,
franchises, trademarks, service marks, processes, process
technology or copyrights or other intangible assets of any
other person or entity.
(xx) To the best of their knowledge, after due
inquiry, all material receivables of NOARK, AWP and AWP L.L.C.
are fully collectible.
(xxi) To the best of their knowledge, neither NOARK
nor AWP has nor will AWP L.L.C. or AWP, as applicable, at the
AWP Contribution Time have, any material liabilities or
obligations of any nature, whether absolute, accrued,
contingent or otherwise, and whether due or to become due
(including without limitation, any
27
liability for taxes and interest, penalty or other charges
payable with respect to any such liability or obligation)
which are not disclosed in the Financial Statements, or
elsewhere in this Agreement or the Schedules to this
Agreement.
For purposes of this Section 12(g), all representations regarding AWP
shall be deemed made at the Closing and all such representations shall
be deemed to be applicable to AWP L.L.C. and made with respect to AWP
L.L.C. at the AWP Contribution Time.
(h) At the Closing SWN shall have good title to all of the
stock of AWP free and clear of all Liens, and at the AWP Contribution
Time, SWPL shall have good title to all of the ownership interests in
AWP L.L.C., or twenty-five percent (25%) of the stock of AWP, as
applicable, free and clear of all Liens. At the Closing with respect to
AWP, and at the AWP Contribution Time with respect to AWP L.L.C. or
AWP, as applicable, all of these ownership interests shall be owned by
SWN or SWPL, as applicable, free and clear of any security interests,
voting trusts, agreements, proxies, options or other restrictions. At
the Closing AWP will have and at the AWP Contribution Time, AWP or AWP
L.L.C., as applicable, will have, no subsidiaries, no interest in any
partnership or joint venture and does not hold shares of stock or other
ownership interest in any corporation, trust or other Person. At the
Closing with respect to AWP, and at the AWP Contribution Time with
respect to AWP L.L.C. or AWP, as applicable, there will be: (a) no
existing subscriptions, options, warrants, calls, commitments or rights
of any character to purchase or otherwise acquire any shares of capital
stock or other securities or interests of AWP and/or AWP L.L.C., as
applicable; and (b) no contracts, subscriptions, options, warrants,
calls, commitments or rights to purchase or otherwise acquire, any
securities or other interests that are convertible into or exchangeable
for shares of capital stock or other securities or interests of AWP
and/or AWP L.L.C., as applicable.
(i) At the Closing, SWPL shall have good title to all of the
assets to be contributed to OGG L.L.C. under Section 7(b)(i) and to
NOARK under Section 7(b)(ii) above, free and clear of all Liens.
(j) NGMC. NGMC has been terminated and all of the assets of
NGMC are now owned by NGSC.
(k) Brokers. They have not employed, directly or indirectly
for their benefit, any broker or finder or incurred any liability for
any financial advisory fees, brokerage fees, commissions or finders'
fees, and no broker or finder has acted directly or indirectly for them
in connection with this Agreement or the transactions contemplated
hereby.
(l) Full Disclosure. To the best of their knowledge, no
representation or warranty in this Section 12 (including the
information in the Schedules attached to this Agreement), contains any
untrue statement of a material fact or omits to state any material fact
which is
28
necessary to make any of the representations and warranties made
herein, in light of the circumstances in which they are made, not
misleading.
(m) No Reliance. Except as to the representations of Enogex
and EAPC expressly set forth in Section 11 of this Agreement, SWN and
SWPL have not relied upon any oral or written statements,
representations, warranties which may have been made by or on behalf of
ENOGEX or EAPC or upon any written reports, financial or production
data, business plans, projections, forecasts, projections of feedstock
availability or evaluations, or any environmental reports, audits,
studies or assessments, or any other written materials, copies of which
may have been furnished to SWN or SWPL or as to which SWN or SWPL may
have been provided access in connection with the transactions
contemplated by this Agreement. TO THE EXTENT THAT SWN OR SWPL HAVE
BEEN FURNISHED COPIES OF OR BEEN PROVIDED ACCESS TO ANY OF THE
FOREGOING, SWN AND SWPL ACKNOWLEDGE THAT NEITHER ENOGEX NOR EAPC NOR
ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, REPRESENTATIVES AND AGENTS, HAS MADE, AND SWN AND
SWPL HEREBY EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES AS TO
THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION, DATA OR MATERIALS
(WHETHER WRITTEN OR ORAL) WHICH MAY HAVE BEEN FURNISHED TO SWN AND SWPL
OR THEIR REPRESENTATIVES OR AGENTS BY OR ON BEHALF OF ENOGEX OR EAPC IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.
13. Expenses.
(a) Expenses of the Transaction. Except as otherwise provided
herein, each of the Parties shall bear their respective expenses, costs
and fees (including attorneys' and accountants' fees) in connection
with the transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith,
whether or not the transactions contemplated hereby shall be
consummated.
(b) Partnership Expenses. After the Closing, all of the costs
and expenses of NOARK, and the entities owned by NOARK, shall be
handled in accordance with the Amended and Restated Partnership
Agreement of NOARK attached as Exhibit "F," or as otherwise provided in
this Agreement.
14. Conditions to Closing.
(a) Each Party. The obligations of the Parties to consummate
the transactions contemplated hereby at the Closing shall be subject to
the fulfillment on or prior to the Closing Date of the condition that
the consummation of such transactions shall not have been restrained,
enjoined or otherwise prohibited by any order of any governmental
authority whether judicial or administrative.
29
(b) SWN and SWPL. The obligations of SWN and SWPL to
consummate the actions contemplated hereby at the Closing shall be
subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(i) The representations and warranties of Enogex and
EAPC contained herein will be accurate in all material
respects at and as of the Closing as though such
representations and warranties had been made at and as of such
Closing; all terms, covenants and conditions of this Agreement
to be complied with and performed by Enogex and EAPC at or
before the relevant Closing will have been duly complied with
and performed; and Enogex and EAPC will have delivered to SWN
and SWPL certificates in the form attached as Exhibit "M"
dated as of the Closing and signed by the President or any
Vice President thereof to the foregoing effect.
(ii) EAPC shall have acquired all of the Prudential
Interest as contemplated by Section 2(a) above.
(iii) EAPC shall have acquired all of the SEMCO
Interest as contemplated by Section 2(b) above.
(iv) EIT shall have entered into a definitive
agreement to acquire the pipeline assets of Ozark as
contemplated by Section 3 above.
(v) SEMCO Energy, Inc. and any of its appropriate
Affiliates shall have executed the Mutual Release and
Settlement Agreement between SWN, SWPL any of their
appropriate Affiliates and SEMCO Energy, Inc. and any of its
appropriate Affiliates in the form attached hereto as Exhibit
"D."
(vi) EAPC shall have executed the Amended and
Restated Partnership Agreement of NOARK in the form attached
hereto as Exhibit "F."
(vii) NOARK shall have entered into a new loan
agreement with Enogex and shall have used the proceeds of such
loan to pay a portion of the NOARK Debt as contemplated by
Section 9(c).
(viii) The consents required to be obtained from the
lenders of the NOARK Debt as contemplated by Section 9 shall
have been obtained.
SWN and SWPL may waive any condition specified in this Section 14(b) if
they execute a writing so stating at or prior to the Closing.
(c) Enogex and EAPC. The obligations of Enogex and EAPC to
consummate the actions contemplated hereby at the Closing shall be
subject to the fulfillment on or prior to the Closing Date of the
following conditions:
30
(i) The representations and warranties of SWN and
SWPL contained herein will be accurate in all material
respects at and as of the Closing as though such
representations and warranties had been made at and as of such
Closing; all terms, covenants and conditions of this Agreement
to be complied with and performed by SWN and SWPL at or before
the relevant Closing will have been duly complied with and
performed; and SWN and SWPL will have delivered to Enogex and
EAPC certificates in the form attached as Exhibit "N" dated as
of the Closing and signed by the President or any Vice
President thereof to the foregoing effect.
(ii) EAPC shall have acquired all of the Prudential
Interest as contemplated by Section 2(a) above.
(iii) EAPC shall have acquired all of the SEMCO
Interest as contemplated by Section 2(b) above.
(iv) EIT shall have entered into a definitive
agreement to acquire the pipeline assets of Ozark as
contemplated by Section 3 above.
(v) SWPL shall have contributed all of the assets of
NGSC specified on Exhibit "G", free and clear of all Liens,
except for SWPL Permitted Liens.
(vi) The Mutual Release and Settlement Agreement
between SWN, SWPL, and any of their appropriate Affiliates and
SEMCO Energy, Inc. and any of its appropriate Affiliates in
the form attached as Exhibit "D" shall have been fully
executed.
(vii) SWPL shall have contributed to NOARK all of the
items described in Section 7(b)(ii) above free and clear of
all Liens.
(viii) SWPL shall have executed the Amended and
Restated Partnership Agreement of NOARK in the form attached
hereto as Exhibit "F."
(ix) NOARK shall have entered into a new loan
agreement with Enogex and shall have used the proceeds of such
loan to pay a portion of the NOARK Debt as contemplated by
Section 9(c).
(x) The consents required to be obtained from the
lenders of the NOARK Debt as contemplated by Section 9 shall
have been obtained.
(xi) SWPL shall continue to own all of the SWPL
Interest as contemplated by Section 2(c) above.
31
Enogex and EAPC may waive any condition specified in this Section 14(c)
if it executes a writing so stating at or prior to the Closing.
15. Indemnification.
15.1 SWN and SWPL Indemnity.
(a) SWN and SWPL, from and after the Closing Date, shall
jointly and severally indemnify and hold Enogex and EAPC and their
Affiliates (other than NOARK and any NOARK Related Entity), and their
respective officers, directors, shareholders, employees, agents,
representatives, successors and assigns (collectively the "Enogex
Indemnified Parties") harmless from and against and in respect of, and
will reimburse the Enogex Indemnified Persons for any and all damage,
loss, cost, claims, demands, assessments, judgments, deficiencies or
liability (whether based on contract, tort, product liability, strict
liability or otherwise), including without limitation all reasonable
expenses (including interest, penalties, attorneys' and accountants'
fees and costs of investigation) net of any insurance proceeds received
by reason of such damage, loss, cost, claims, demands, assessments,
judgments, deficiencies as provided in Section 15.3 (collectively,
"Damages") incurred by any of the Enogex Indemnified Parties, directly
or indirectly, resulting from or in connection with any
misrepresentation, breach of warranty or nonfulfillment of any covenant
or agreement by or on the part of SWN and/or SWPL hereunder whether
prior to or subsequent to the Closing. Notwithstanding anything herein
to the contrary, for purposes of Section 15.1, the representations and
warranties in Section 12(g) shall be read, construed and enforced as if
there were no qualifications or exceptions therein as to knowledge or
matters disclosed in the schedules to the Agreement referenced therein.
(b) SWN and SWPL, from and after the Closing Date shall
jointly and severally indemnify and hold NOARK and any NOARK Related
Entity harmless from and against and in respect of and will reimburse
NOARK and any NOARK Related Entity for (i) 60% of any and all Damages
incurred by NOARK and/or any of the NOARK Related Entities resulting
from claims of Third Persons incurred by NOARK and/or any of the NOARK
Related Entities directly or indirectly resulting from or in connection
with the ownership, the assets or operations of NOARK which are
attributable to the period prior to the Closing, regardless of the date
actually incurred and (ii) any and all Damages resulting from claims of
Third Persons, SWN, SWPL, or their Affiliates (other than NOARK or any
NOARK Related Entity) incurred by NOARK and/or any of the NOARK Related
Entities directly or indirectly resulting from or in connection with
(x) AWP, AWP L.L.C. and/or their respective assets and operations which
are attributable to the period prior to the AWP Contribution Time
regardless of the date actually incurred and (y) the assets of NGSC
which are contributed to NOARK pursuant to Section 7(b), and the
operation thereof, which are attributable to the period prior to the
Closing, regardless of the date actually incurred.
(c) The Parties acknowledge and agree that the Enogex
Indemnified Parties shall
32
not receive any double recovery of Damages under Section 15.1(a)and(b).
15.2 Enogex and EAPC Indemnity.
(a) Enogex and EAPC, from and after the Closing Date, shall
jointly and severally indemnify and hold SWN and SWPL and their
Affiliates (other than NOARK and any NOARK Related Entity), and their
respective officers, directors, shareholders, employees, agents,
representatives, successors and assigns (collectively the "SWN
Indemnified Parties") harmless from and against and in respect of, and
will reimburse the SWN Indemnified Parties for (a) any and all Damages
incurred by any of the SWN Indemnified Parties, directly or indirectly,
resulting from or in connection with any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement by or on the
part of Enogex and/or EAPC hereunder whether prior to or subsequent to
the Closing. Notwithstanding anything herein to the contrary, for
purposes of Section 15.2, the representations and warranties in Section
11(g) and (h) shall be read, construed and enforced as if there were no
qualifications or exceptions therein as to knowledge or matters
disclosed in the Ozark Disclosure Schedule or Searcy Disclosure
Schedule.
(b) Enogex and EAPC, from and after the Closing Date shall
jointly and severally indemnify and hold NOARK and any NOARK Related
Entity harmless from and against and in respect of, and will reimburse
NOARK and any NOARK Related Entity for (i) 40% of any and all Damages
resulting from claims of Third Persons incurred by NOARK and/or any of
the NOARK Related Entities directly or indirectly resulting from or in
connection with the ownership, the assets or operations of NOARK which
are attributable to the period prior to the Closing, regardless of the
date actually incurred and (ii) any and all Damages resulting from
claims of Third Persons, Enogex, EAPC or their Affiliates (other than
NOARK or any NOARK Related Entity) incurred by NOARK and/or any of the
NOARK Related Entities directly or indirectly resulting from or in
connection with (y) the Searcy Gathering Assets which are to be
contributed to NOARK pursuant to Section 4 above, and the operation
thereof, which are attributable to the period prior to the Searcy
Contribution Time regardless of the date actually incurred and (z) the
pipeline assets of Ozark which are contributed to NOARK (as a result of
the contribution of EIT to NOARK as contemplated in Section 3), and the
operation thereof, which are attributable to the period prior to the
Contribution Time, regardless of the date actually incurred.
(c) The Parties acknowledge and agree that the SWN Indemnified
Parties shall not receive any double recovery of Damages under Section
15.2(a) and (b).
15.3 Reimbursement for Recoveries by Indemnified Party.
(a) In any case where an indemnified party recovers from third
parties all or any part of any amount paid to it by an indemnifying
party pursuant to this Section 15, such indemnified party shall
promptly pay over to the indemnifying party the amount so recovered
33
(after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery and any additional amounts owed to the
indemnified party by the indemnifying party under this Agreement), but
not in excess of any amount previously so paid by the indemnifying
party.
(b) The indemnified party shall be obligated to file
diligently and in good faith any claim for Damages with any applicable
insurer prior to collecting an indemnification payment under this
Section 15. However, an indemnified party shall be entitled to collect
an indemnification payment under this Section 15 if such indemnified
party has not received reimbursement from an applicable insurer within
six months after it has given such insurer written notice of its claim.
In such event, the indemnified party shall assign to the indemnifying
party any and all rights against its insurers.
15.4 Third Person Claim. If a claim by a Person other than the
Parties is made against one or more of the Enogex Indemnified Parties
or the SWN Indemnified Parties (the "Indemnified Party"), and if the
Indemnified Party intends to seek indemnity with respect thereto under
this Section 15, the Indemnified Party shall promptly notify the Party
or Parties having an indemnification obligation with respect to such
claim (the "Indemnifying Party") of such claim. The Indemnifying Party
shall have 15 days after receipt of such notice to notify the
Indemnified Party of its agreement to undertake, conduct and control,
through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and the Indemnified Party shall
cooperate with the Indemnifying Party in connection therewith;
provided, however, that (a) the Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through
counsel chosen by the Indemnified Party, provided that the fees and
expenses of such counsel shall be borne by the Indemnified Party, and
(b) the Indemnifying Party shall promptly assume and hold the
Indemnified Party harmless from and against the full amount of any
loss, damage or expense resulting therefrom. So long as the
Indemnifying Party is reasonably contesting any such claim in good
faith, the Indemnified Party shall not pay or settle any such claim, to
the extent such claim is subject to the indemnity provisions of this
Section 15. If the Indemnifying Party does not notify the Indemnified
Party within 15 days after the receipt of the Indemnified Party's
notice of a claim of indemnity hereunder that it elects to undertake
the defense thereof, the Indemnified Party shall have the right to take
over the defense of such claim and to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement, including without limitation the right to
reimbursement for all fees, costs and expenses incurred by the
Indemnified Party (including attorneys' fees and costs of
investigation) in such defense and in contesting, settling or
compromising such claim. The Indemnifying Party shall not, except with
the consent of the Indemnified Party, enter into any settlement that
does not include as an unconditional term thereof the giving by the
Person or Persons asserting such claim an unconditional release to all
Indemnified Parties from all liability with respect to such claim or
consent to entry of any judgment.
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15.5 Survival. All representations, covenants, agreements and
warranties of the Parties or any authorized representative thereof
contained in this Agreement or in any certificate delivered in
connection herewith shall be and remain in full force and effect
notwithstanding any investigation made by or disclosure made to any
party hereto, whether before or after the date hereof and shall survive
the execution and delivery of this Agreement and the Closing; provided,
however, the representations and warranties contained in Sections 11
and 12 shall only survive for a period of three (3) years from the
Closing Date and any claim for breach of such representations and
warranties contained in Sections 11 and 12 must be asserted in writing
during such three (3) year survival period or shall be deemed waived,
except that the representations and warranties contained in Section
12(g)(xv) shall survive for the applicable statute of limitations for
the assessment or collection of any taxes.
15.6 Limitation on Liability for Breach of Representations and
Warranties Contained in Sections 11 and 12. Enogex and EAPC's maximum
aggregate liability to SWN and SWPL for breaches of representations and
warranties contained in Section 11 shall not exceed five million
dollars ($5,000,000). Similarly, SWN and SWPL's maximum aggregate
liability to Enogex and EAPC for breaches of representations and
warranties contained in Section 12 shall not exceed five million
dollars ($5,000,000).
16. Brokers. Regardless of whether any Closing shall occur, each Party
shall indemnify and hold harmless the other Parties from and against any and all
liability for any brokers' or finders' fees arising with respect to brokers or
finders retained or engaged by such Party in respect of the transactions
contemplated by this Agreement.
17. Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by any Party to the others (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to SWN, addressed to:
Southwestern Energy Company
1083 Sain Street
P.O. Box 1408
Fayetteville, Arkansas 72702-1408
Attention: Executive Vice President - Finance & Corporate
Development
Facsimile No.: (501) 521-1147
If to SWPL, addressed to:
Southwestern Energy Pipeline Company
c/o Southwestern Energy Services Company
2200 MidContinent Tower
401 S. Boston Ave.
35
Tulsa, Oklahoma 74103
Attention: Senior Vice President
Facsimile No.: (918) 584-4222
with a copy to SWN if notice is to SWPL only
If to Enogex, addressed to:
Enogex Inc.
600 Central Park Two
515 Central Park Drive
Oklahoma City, OK 73105
Attention: Roger Farrell
Facsimile No.: (405) 557-5205
with a copy to:
Enogex Inc.
600 Central Park Two
515 Central Park Drive
Oklahoma City, OK 73105
Attention: General Counsel
Facsimile No.: (405) 557-5205
If to EAPC, addressed to:
Enogex Arkansas Pipeline Corporation
600 Central Park Two
515 Central Park Drive
Oklahoma City, OK 73105
Attention: President
Facsimile No.: (405) 557-5205
with a copy to Enogex if notice is to EAPC only
Notice given by personal delivery or courier service shall be effective upon
actual receipt. Notice given by mail shall be effective five days after deposit
with the United States postal service when sent by first class mail, postage
prepaid. Notice given by telecopier shall be confirmed by appropriate answer
back and shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the recipient's next
business day after receipt if not received during the recipient's normal
business hours. All Notices by telecopier shall be confirmed promptly after
transmission in writing by certified mail or personal delivery. Any Party may
change any address to which Notice is to be given to it by giving Notice as
provided above of such change of address.
36
18. Public Announcements. The parties agree that prior to making any
public announcement or statement with respect to the transaction contemplated by
this Agreement, the party desiring to make such public announcement or statement
shall consult with the other parties hereto and obtain prior written approval of
the other parties hereto of the text of a public announcement or statement to be
made solely by the party proposing to make such announcement. Nothing contained
in this Section shall be construed to require any party to obtain approval of
the other parties hereto to disclose information with respect to the transaction
contemplated by this Agreement to any state or federal governmental authority or
agency to the extent required by applicable law or by any applicable rules,
regulations or orders of any governmental authority or agency having
jurisdiction or necessary to comply with disclosure requirements of the New York
Stock Exchange, NASDAQ or any applicable securities laws.
19. Dispute Resolution
19.1 Invoking Procedure. In the event of a dispute between the Parties
arising out of or related to this Agreement , any Party may invoke the
procedures specified in this Section by giving written notice to the other
Parties. Such written notice will describe briefly the nature of the dispute and
shall identify an individual with authority to settle the dispute on behalf of
that Party. The Party receiving such notice shall have ten (10) days within
which to designate an individual with authority to settle the dispute on its
behalf and to give written notice to the other Parties of its designation (the
individuals so designated shall be referred to as the "Authorized Individuals").
In this regard, there shall be only one Authorized Individual for SWN and SWPL,
and only one Authorized Individual for Enogex and EAPC. Unless otherwise
notified, i) the Authorized Individual of SWN and SWPL shall be the President of
SWN, and ii) the Authorized Individual of Enogex and EAPC shall be the President
of Enogex.
19.2 Investigation. The Authorized Individuals shall make whatever
investigation each deems appropriate and promptly thereafter, but no later than
thirty (30) days from the date of the original notice invoking these procedures,
shall commence discussions concerning resolution of the dispute. If the dispute
has not been resolved within sixty (60) days from the date of the original
notice invoking these procedures, the Parties shall submit the matter to
Alternate Dispute Resolution (ADR) in accordance with the following procedure.
19.3 Neutral. The Parties shall have ten (10) days from the expiration
of the sixty (60) day period referred to in Section 19.2, or the agreement of
the Parties, to submit the matter to ADR, whichever occurs first, within which
to agree upon a mutually acceptable person not affiliated with any Party
("Neutral"). If no Neutral has been selected within that time period, the
Parties agree jointly to request the American Arbitration Association, or other
mutually agreed-upon organization, to supply within ten (10) days a list of at
least three (3) potential Neutrals with qualifications as specified by the
Parties in the joint request. Within seven (7) days of receipt of the list, the
Parties shall rank the proposed candidates independently, exchange rankings and
select as the Neutral the individual who received the highest combined ranking
who is available to serve.
37
19.4 Schedule. In consultation with the Neutral, the Parties shall
designate a mutually convenient time and place for the ADR, and unless
circumstances require otherwise, such time shall be not later than forty-five
(45) days after the selection of the Neutral.
19.5 Discovery. In the event any of the Parties have substantial need
for information in the possession of any other Party or a need to take certain
limited depositions and/or production of principal documents in order to prepare
for the ADR, the Parties shall attempt in good faith to agree on a plan for the
expeditious exchange of such information. Should they fail to reach agreement,
any Party may request a meeting with the Neutral who shall assist them in
reaching an accommodation.
19.6 Written Submission. One week prior to the first scheduled session
of the ADR, each Party shall deliver to the Neutral and to the other Parties a
written summary of its views on the matter in dispute. The summary shall be no
longer than twenty (20) double-spaced pages unless the Parties agree otherwise.
19.7 Representatives. In the ADR, each Party shall be represented by
the Authorized Individual and by counsel. In addition, each Party may bring
additional persons as necessary to respond to questions or contribute
information as needed. The number of such additional persons to be allowed shall
be mutually agreed by the Parties with the assistance of the Neutral, if
necessary.
19.8 Structure. The Neutral is authorized to conduct joint and separate
meetings with the Parties and to help the Parties structure whatever form of
presentation of the matter in dispute is most likely to facilitate resolution.
Notwithstanding the form of the presentation, it is the intent of the Parties to
provide an opportunity for their Authorized Individuals, with or without the
assistance of counsel, and with the assistance of the Neutral, to negotiate a
resolution of the matters in dispute. In the event the Neutral holds separate
private caucuses with a Party, he or she shall keep confidential all information
learned in such private caucuses unless specifically authorized to make
disclosure of the information to the other Parties. There shall be no
stenographic, visual, or audio record made of the ADR.
19.9 Mandatory. The Parties agree to participate in the ADR to its
conclusion as designated by the Neutral and not to terminate negotiations
concerning resolution of the matters in dispute until at least two (2) weeks
thereafter. Each Party agrees not to commence arbitration or seek other remedies
prior to the conclusion of the two-week post-ADR negotiation period, provided
that any Party may commence arbitration on any date after which the commencement
of litigation could be barred by an applicable statute of limitations or in
order to request an injunction to prevent irreparable harm. In such event, the
Parties agree (except as prohibited by court order) to continue to participate
in the ADR to its conclusion.
19.10 Fees. The fees of, and authorized costs incurred by, the Neutral
shall be shared equally by the Parties. The Neutral shall be disqualified as a
witness, consultant, expert, or counsel for any Party with respect to the
matters in dispute and any related matters.
19.11 Later Proceedings. The ADR is a compromise negotiation for
purposes of the Federal Rules of Evidence and the Rules of Evidence of the State
of Oklahoma. The entire procedure is
38
confidential. All conduct, statements, promises, offers, views, and opinions,
whether oral or written, made in the course of the ADR by any of the Parties,
their agents, employees, representatives, or other invitees to the ADR and by
the Neutral, who is the parties' joint agent for the purposes of these
compromise negotiations, are confidential and shall, in addition and where
appropriate, be deemed to be work product and privileged. Such conduct,
statements, promises, offers, views, and opinions shall not be discoverable or
admissible for any purposes, including impeachment, in any litigation or other
proceeding involving the Parties and shall not be disclosed to anyone not an
agent, employee, expert, witness, or representative for any of the Parties.
Evidence otherwise discoverable or admissible is not excluded from discovery or
admission as a result of its use in the ADR.
19.12 Arbitration.
(a) In the event the Parties are unable to resolve their
dispute in accordance with the foregoing provisions of this Section 19,
the dispute shall be submitted to final and binding arbitration. The
arbitration shall be administered by the American Arbitration
Association ("AAA") in accordance with, and in the following order of
priority: (i) the terms of these arbitration provisions; (ii) the
Commercial Arbitration Rules of the AAA; (iii) the Federal Arbitration
Act (Title 9 of the United States Code); (iv) the Oklahoma Uniform
Arbitration Act (15 O.S. ss. 801, et seq.); and (v) to the extent the
foregoing are inapplicable, unenforceable or invalid, the laws of the
State of Oklahoma. The validity and enforceability of these arbitration
provisions shall be determined in accordance with the same order of
priority. In the event of any inconsistency between these arbitration
provisions and such rules and statutes, these arbitration provisions
shall control. Judgment upon any award rendered hereunder shall be
entered in any court having jurisdiction thereof, and the parties
consent to the jurisdiction of any state or federal court in Oklahoma.
Commencement of and demand for arbitration shall be made by written
notice by the initiating party (claimant) to the other party
(respondent) which contains a statement of the nature of the dispute,
the amount involved and the relief or remedy sought ("Notice").
(b) The arbitration shall be conducted by a panel of three (3)
arbitrators (the "Arbitration Panel"). Enogex and EAPC on the one hand
and SWN and SWPL on the other, will each nominate one (1) arbitrator,
who is experienced and knowledgeable in the areas involved in the
dispute, within ten (10) working days of their receipt of the Notice
that arbitration has been demanded and commenced, and each will notify
the other party of the name of its selected arbitrator within that same
time period. If either side refuses to name an arbitrator, application
will be made to the Chief Judge of the United States District Court for
the Northern District of Oklahoma requesting that the Chief Judge
appoint an arbitrator. If the Chief Judge declines to name an
arbitrator, application will be made to the AAA. The two arbitrators
thus selected will confer within ten (10) working days of their final
selection and agree upon a third arbitrator. If the two arbitrators are
unable to agree on a third arbitrator within sixty (60) working days of
their first contact, the nomination of the third arbitrator will follow
the same procedure as the nomination of a party arbitrator for a party
refusing to make a selection. AAA Rules regarding the selection,
qualification, and challenge of arbitrator shall only apply to the
second or third arbitrators if those arbitrators
39
are selected by the AAA. No member of the Arbitration Panel may be
involved in the controversy, be or have been an officer, director,
representative, employee or agent of or for either party. The third
arbitrator shall act as Chairman of the Arbitration Panel.
(c) The costs and fees of the arbitrators selected by the
parties shall be borne by the party selecting such arbitrator, unless
otherwise awarded by the Arbitration Panel. The costs and fees
attributable to the third arbitrator shall be shared equally by the
parties, unless otherwise awarded by the Arbitration Panel.
(d) The Arbitration Panel may engage engineers, accountants or
other consultants that the Arbitration Panel deems necessary to render
a decision in the Arbitration Proceeding. All fees of any such
consultants shall be borne equally by the parties, unless otherwise
awarded by the Arbitration Panel.
(e) The arbitration will be governed by the Federal
Arbitration Act, 9 U.S.C. ss.ss. 9 et seq. and the Oklahoma Uniform
Arbitration Act, 15 Okla. Stat. ss.ss. 801 et seq. The arbitrators will
establish a schedule that will result in a final arbitration award to
be rendered in written form not later than 180 days following the
appointment of the third arbitrator. The place of the arbitration shall
be Tulsa, Oklahoma.
(f) The parties agree that pre-arbitration hearing discovery
is necessary. Within twenty (20) working days after the appointment of
the third arbitrator, the parties agree to exchange lists of the
witnesses and exhibits each then plans to call and use in the
Arbitration Hearing. Within twenty (20) working days after the exchange
of the witness and exhibit lists, the parties may request additional
discovery, if any is necessary, from the other party. The parties agree
to respond to any such additional request for documents from the other
party within thirty (30) days after receiving such request, and each
agrees to attempt in good faith to schedule the depositions of
witnesses requested by the other side by agreement. If the parties are
unable to agree on any aspect of discovery requested, such discovery
issue shall be presented to and resolved by the Arbitration Panel.
(g) Any dispute relating to or arising under this arbitration
provision, including interpretation thereof, shall be solely and
finally resolved by submission to the Arbitration Panel.
(h) A written decision by two (2) of the arbitrators will be
final and binding on the parties. An arbitration award entered herein
can be confirmed by any party in the United States District Courts for
the Northern or Western Districts of Oklahoma or the Western District
of Arkansas or any state district courts for the States of Oklahoma and
Arkansas, and a judgment may be entered on the arbitration award by the
same court.
(i) Punitive damages may not be awarded by the Arbitration
Panel. The Arbitration Panel shall have the power to award recovery to
the prevailing party of all or part of its costs, expenses and
attorneys' fees incurred in conjunction with such Arbitration
40
Proceeding.
(j) The parties, their Affiliates, employees, contractors,
attorneys and auditors shall keep the substance of these final and
binding arbitration proceedings confidential to the extent the same is
permissible, consistent with the responsibilities of the attorneys
under the pertinent Codes of Professional Responsibility or obligations
which may reasonably require disclosure to financial institutions,
consultants for evaluation purposes or as may be ordered by the federal
or state government or a court of competent jurisdiction. Under no
circumstances shall any documents memorializing the substance of any
aspect of these proceedings be disclosed or released to the newspaper
or other media absent the mutual agreement of the parties. The parties
will use all reasonable efforts to obtain protective orders before
disclosing any terms of these proceedings to any federal or state
government or a court of competent jurisdiction.
(k) Except for the internal costs of each party, all costs,
fees and expenses of any portion of this dispute resolution process
shall be shared equally by the parties, unless otherwise specified
herein.
20. Governing Law. The provisions of this Agreement and, unless
specifically otherwise provided in the document delivered pursuant hereto, the
documents delivered pursuant hereto shall be governed by and construed and
enforced in accordance with the laws of the State of Oklahoma, excluding any
conflicts-of-law rule or principle that might refer same to the laws of another
jurisdiction.
21. Amendments and Waivers. No supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the Party to be
bound thereby. The failure of a Party to exercise any right or remedy shall not
be deemed or constitute a waiver of such right or remedy in the future. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof, nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
22. Binding Effect; Non-Assignability and Alienation of Benefits. This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective permitted successors and assigns; but neither this Agreement
nor any of the rights, benefits or obligations hereunder shall be assigned, by
operation of law or otherwise, by any Party without the prior written consent of
the others. Nothing in this Agreement, express or implied, is intended to confer
upon any Person other than the Parties and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
23. Severability. If one or more of the provisions contained in this
Agreement or in any other document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement or any other such document.
41
24. Headings and Exhibits. The headings of the several Sections herein
are inserted for convenience of reference only and are not intended to be a part
or to affect the meaning or interpretation of this Agreement. The Exhibits and
Schedules referred to herein are attached hereto and incorporated herein by this
reference.
25. Construction. This Agreement was drafted jointly by the Parties,
and no presumption shall operate in favor of or against any Party as a result of
any responsibility that any Party may have had for drafting this Agreement or
any part thereof.
26. Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, SWPL, SWN, EAPC and Enogex have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
Southwestern Energy Pipeline Company
By: /s/ DEBBIE J. BRANCH
------------------------------
Name: Debbie J. Branch
Title: Senior Vice President
Southwestern Energy Company
By: /s/ STANLEY D. GREEN
------------------------------
Name: Stanley D. Green
Title: Executive Vice President -
Finance & Corporate Development
Enogex Arkansas Pipeline Corporation
By: /s/ ROGER A FARRELL
------------------------------
Name: Roger A. Farrell
Title: Vice President
42
Enogex Inc.
By: /s/ ROGER A. FARRELL
-----------------------------
Name: Roger A. Farrell
Title: Executive Vice President
43