EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
dated December 18, 1997
by and between
Occidental Petroleum Corporation,
as Seller
and
KN Energy, Inc.
as Buyer
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES.........................2
1.1 Sale and Purchase of Shares.........................2
1.2 Purchase Price......................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER........2
2.1 Organization and Qualification......................2
2.2 Authority...........................................3
2.3 Noncontravention....................................3
2.4 MidCon's Capitalization.............................5
2.5 Utility Status......................................5
2.6 Waiver by the MidCon ESOP Trust.....................5
2.7 Finders and Brokers.................................6
2.8 Investment Purpose..................................6
2.9 MidCon Significant Subsidiaries.....................6
2.10 Financial Statements................................7
2.11 Seller's SEC Reports................................8
2.12 Absence of Certain Changes or Events................8
2.13 Litigation..........................................8
2.14 Compliance with Law.................................9
2.15 Employees and Employee Benefit Matters..............9
2.16 Contracts...........................................9
2.17 No Undisclosed Liabilities.........................11
2.18 Tax Matters........................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER........12
3.1 Organization and Qualification.....................12
3.2 Authority..........................................12
3.3 Noncontravention...................................13
3.4 Utility Status.....................................14
3.5 Finders and Brokers................................14
3.6 Investment Purpose.................................15
ARTICLE IV THE CLOSING........................................15
4.1 Time and Place of the Closing......................15
4.2 Conditions Precedent to the Obligations of the
Buyer..............................................15
4.3 Conditions Precedent to the Obligation of the
Seller.............................................18
4.4 Conditions of Both Parties.........................19
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ARTICLE V COVENANTS..........................................20
5.1 Covenants by the Seller............................20
5.2 Covenants by the Buyer.............................27
5.3 Covenants of Both Parties..........................35
ARTICLE VI TAXES..............................................43
6.1 Section 338(h)(10) Election........................43
6.2 Tax Sharing Agreement..............................43
6.3 Federal Income Tax Returns and Combined State
Income Tax Returns for Periods Through the
Closing Date.......................................43
6.4 No Adjustment of MidCon Tax Liability for the
Taxable Year Ending December 31, 1997..............44
6.5 Liability of MidCon and its Subsidiaries for
Federal and Combined State Income Tax..............45
6.6 Separate State, Local, Foreign Income Tax
Returns............................................45
6.7 Sales and Property Taxes...........................46
6.8 State Franchise Taxes..............................46
6.9 Adjustment Upon Leaving Consolidation..............47
6.10 Sales and Transfer Taxes with Respect to this
Transaction........................................47
6.11 Cooperation........................................47
6.12 Tax Proceedings....................................48
6.13 Carrybacks.........................................48
6.14 Prior Year Tax Returns.............................49
6.15 Retention of Carryovers............................49
6.16 Indemnification for Post-Closing Transactions......49
ARTICLE VII TERMINATION........................................50
7.1 Termination........................................50
7.2 Effects of Termination.............................50
ARTICLE VIII SURVIVAL & INDEMNITY.............................. 51
8.1 Survival of Representations and Warranties;
Limitations on Liability...........................51
8.2 Indemnification by the Buyer.......................52
8.3 Indemnification by the Seller......................53
8.4 Interpretation.....................................55
8.5 Exclusive Remedy...................................58
ARTICLE IX DEFINITIONS........................................58
9.1 Affiliate..........................................58
9.2 Affiliated Group...................................59
9.3 Agreement..........................................59
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9.4 B Facility Loan....................................59
9.5 Business...........................................59
9.6 Business Day.......................................59
9.7 Buyer..............................................59
9.8 Buyer Benefit Plans................................59
9.9 Buyer Indemnitees..................................59
9.10 Buyer's Pipeline Lease Guaranty....................59
9.11 C Facility Loan....................................59
9.12 Cash Management Agreement..........................60
9.13 Certificate of Designations........................60
9.14 Claim Notice.......................................60
9.15 Closing............................................60
9.16 Closing Date.......................................60
9.17 CMIC Preferred Stock...............................60
9.18 Code...............................................60
9.19 Commitments........................................60
9.20 Common Stock.......................................60
9.21 Consents...........................................60
9.22 Control............................................60
9.23 Current Assets.....................................61
9.24 Current Liabilities................................61
9.25 Damages............................................61
9.26 Dividend Note......................................61
9.27 Employee Plans and Agreements......................61
9.28 Employees..........................................62
9.29 Employee Welfare Benefit Plan......................62
9.30 Encumbrance........................................62
9.31 ERISA..............................................62
9.32 ESOP Note..........................................62
9.33 Facilities.........................................62
9.34 FERC...............................................62
9.35 Financial Statements...............................62
9.36 Former Salaried Employees..........................63
9.37 Former Union Employees.............................63
9.38 GAAP...............................................63
9.39 Governmental Entity................................63
9.40 Government Securities..............................63
9.41 HSR Act............................................63
9.42 Indemnified Person.................................64
9.43 Insurance Novation Agreement.......................64
9.44 Insurance Release Agreement........................64
9.45 Intercompany Agreements............................64
9.46 Knowledge..........................................64
9.47 LIBO Business Day..................................64
9.48 LIBO Rate..........................................64
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9.49 Material Adverse Effect............................65
9.50 MidCon.............................................65
9.51 MidCon ESOP........................................65
9.52 MidCon ESOP Agreements.............................65
9.53 MidCon ESOP Trustee................................66
9.54 MidCon Indemnitees.................................66
9.55 MidCon Loans.......................................66
9.56 MidCon Restructuring Agreements....................66
9.57 1997 Financial Statements..........................66
9.58 Notified Party.....................................66
9.59 Notifying Party....................................66
9.60 OPC Loans..........................................66
9.61 Originator Receivables Sale Agreement..............66
9.62 Party..............................................67
9.63 Person.............................................67
9.64 Pipeline Lease.....................................67
9.65 Pipeline Lease Guaranty............................67
9.66 Pipeline Lessee....................................67
9.67 Pipeline Lessor....................................67
9.68 PUHCA..............................................67
9.69 Purchase Price.....................................67
9.70 Reference Rate.....................................68
9.71 Related Agreements.................................68
9.72 Salaried Employees.................................68
9.73 SEC................................................68
9.74 SEC Reports........................................68
9.75 Securities Act.....................................68
9.76 Securities Exchange Act............................68
9.77 Seller.............................................68
9.78 Seller Indemnitees.................................69
9.79 Services Agreement.................................69
9.80 Shares.............................................69
9.81 Significant Subsidiary.............................69
9.82 Subsidiary.........................................69
9.83 Substitute Note....................................69
9.84 Tax................................................70
9.85 Tax Return.........................................70
9.86 Tax Sharing Agreement..............................70
9.87 Term Loan Agreement................................70
9.88 Term Loan Assignment Agreement.....................71
9.89 Termination Allowance Plan.........................71
9.90 Termination Date...................................71
9.91 Union..............................................71
9.92 Union Contract.....................................71
9.93 Union Employees....................................71
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ARTICLE X MISCELLANEOUS......................................72
10.1 Further Assurances.................................72
10.2 Preservation of Books and Records..................72
10.3 Confidentiality....................................73
10.4 Notices............................................73
10.5 Public Announcements...............................74
10.6 Successors and Assigns.............................74
10.7 Expenses...........................................75
10.8 Severability.......................................75
10.9 Construction; Interpretation.......................76
10.10 Entire Agreement; Third Party Beneficiaries........77
10.11 Amendment and Modification.........................77
10.12 Governing Law......................................77
10.13 Waiver of Jury Trial...............................77
10.14 Consent to Jurisdiction and Forum Selection........78
10.15 Counterparts.......................................78
SCHEDULES AND EXHIBITS
NUMBER TITLE
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Schedule 2.3 Non-Contravention of the Seller and MidCon
and Encumbrances on the Shares
Schedule 2.9 MidCon Significant Subsidiaries
(i) Name And Jurisdiction Of Organization
(ii) Number Of Shares Of Authorized Capital
Stock
(iii) Number Of Issued And Outstanding
Shares
(iv) Name Of Holders Of Shares Of Each
Class
(v) Number Of Shares Held In Treasury
Schedule 2.10 Financial Statements of MidCon
Schedule 2.12 Absence of Certain Changes or Events to
MidCon
Schedule 2.13 Litigation of MidCon
Schedule 2.14 Compliance with Law by MidCon
Schedule 2.16 Contracts of MidCon
2.16.1 Agreements related to Indebtedness
for Borrowed Money in excess of
$10,000,000
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2.16.2 Agreements relating to Future
Acquisitions or Dispositions in
Excess of $10,000,000
2.16.3 Affiliate Contracts
2.16.4 Contracts Relating to Ownership of
Joint Ventures, Etc.
2.16.5 Any Contract Involving Payments to or
from in Excess of $50,000,000
Schedule 2.17 Undisclosed Liabilities
Schedule 2.18 Tax Matters
Schedule 3.3 Non-Contravention of the Buyer
Schedule 5.1.1 Exceptions to the Seller's Operations
Covenant
Schedule 5.2.3 Seller Employee Obligations
Schedule 5.2.5 Commitments of MidCon
Exhibit 4.2.3 Opinion of Counsel to the Seller
Exhibit 4.3.4 Opinion of Counsel to the Buyer
Exhibit 5.1.5(a) Insurance Release Agreement
Exhibit 5.1.5(b) Insurance Novation Agreement
Exhibit 9.83 Form of Substitute Promissory Note
Exhibit 9.88 Form of Term Loan Assignment Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 18, 1997, by
and between Occidental Petroleum Corporation, a Delaware
corporation (the "Seller"), and KN Energy, Inc., a Kansas
corporation (the "Buyer"). Capitalized terms used but not
otherwise defined herein shall have the respective meanings
ascribed thereto in Article IX of this Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller owns all of the issued and outstanding
Common Stock of MidCon; and
WHEREAS, the Seller desires to sell and the Buyer desires to
purchase the Shares upon the terms and subject to the conditions
set forth in this Agreement; and
WHEREAS, the Boards of Directors of the Seller and the Buyer
have approved the acquisition of MidCon by the Buyer; and
NOW, THEREFORE, in consideration of, and subject to, the
mutual covenants, agreements, terms and conditions herein
contained, the Parties agree as follows:
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ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of Shares. Subject to and upon the
---------------------------
terms and conditions set forth in this Agreement, including the
Buyer's delivery of the Substitute Note, at the Closing, the
Seller shall sell, assign, transfer and convey to the Buyer, and
the Buyer shall purchase and acquire from the Seller, all of the
Shares.
1.2 Purchase Price. The purchase price for the Shares (the
--------------
"Purchase Price") shall be $2,103,974,390 to be paid by the Buyer
to the Seller at the Closing by wire transfer of immediately
available funds to the bank account of the Seller which shall be
designated by the Seller to the Buyer in writing not later than
three (3) Business Days prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as
follows:
2.1 Organization and Qualification.
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2.1.1 The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
2.1.2 MidCon is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. MidCon has all requisite corporate power to own,
use or lease its properties and to carry on its business as it is
now being conducted.
2
MidCon is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction where both (a) the
character of its properties owned or held under lease or the
nature of its activities makes such qualification necessary and
(b) the failure to qualify would have a Material Adverse Effect
on MidCon and its Subsidiaries, taken as a whole. The Seller has
delivered to the Buyer a complete and correct copy of the
Certificate of Incorporation and By-laws of MidCon, each as in
effect on the date hereof.
2.2 Authority. The Seller has full corporate power to
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execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby on the part of the Seller have been duly and
validly authorized by the Seller's Board of Directors, and no
other corporate proceedings on the part of the Seller are
necessary, as a matter of law or otherwise, for the consummation
of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Seller and is a
valid and binding agreement of the Seller, enforceable against it
in accordance with its terms.
2.3 Noncontravention. Except as provided on Schedule 2.3,
---------------- ------------
the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the performance by the
Seller of its obligations hereunder will not:
(a) conflict with or result in any breach of any provision
of the Certificate of Incorporation or By-laws of the Seller,
MidCon or any Significant Subsidiary;
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(b) require any consent, approval, order, authorization or
permit of, or registration, filing with or notification to, any
Governmental Entity or any private third party, except for
filings, consents, approvals, orders, authorizations or permits
which (i) are required under the HSR Act; (ii) are required by
the FERC; (iii) are required by the Texas Railroad Commission;
(iv) are required by the Kansas Corporation Commission; (v) will
not result in a Material Adverse Effect on MidCon and its
Subsidiaries, taken as a whole; or (vi) will not prevent the
consummation of the transactions contemplated hereby, if not made
or acquired;
(c) result in any violation or breach of, or constitute a
default under (or give rise to any right of termination,
cancellation or acceleration or guaranteed payments under or to a
loss of a material benefit or result in the creation or
imposition of a lien under), any of the terms, conditions or
provisions of any note, lease, mortgage, indenture, license,
agreement or other instrument or obligation to which the Seller
is a party or by which the properties or assets of the Seller may
be bound, or, to the Seller's Knowledge, to which MidCon or any
of its Significant Subsidiaries is a party or by which the
properties or assets of MidCon or its Significant Subsidiaries
may be bound, except for such violations, breaches, defaults, or
rights of termination, cancellation or acceleration, or losses
which would not result in a Material Adverse Effect on MidCon and
its Subsidiaries, taken as a whole;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to the
Seller, or to the Seller's Knowledge, to MidCon or any of its
Significant Subsidiaries, that would result in a Material Adverse
Effect on MidCon and its Subsidiaries, taken as a whole; or
4
(e) result in the creation of any Encumbrance upon the
Shares under any agreement or instrument to which the Seller is a
party or by which the Seller is bound, or, to Seller's Knowledge,
upon any of the properties or assets of MidCon or any of its
Significant Subsidiaries under any agreement or instrument to
which MidCon or its Significant Subsidiaries is a party or by
which MidCon or its Significant Subsidiaries is bound.
2.4 MidCon's Capitalization. MidCon has an authorized
------------------------
capitalization consisting solely of 1,400,000 shares of common
stock, par value $.01 per share ("Common Stock"). There are
1,400,000 shares of Common Stock issued and outstanding, all of
which are owned, beneficially and of record, by the Seller (the
"Shares") free and clear of all Encumbrances except as set forth
on Schedule 2.3. The Shares have been validly issued, are fully
------------
paid and nonassessable. No agreement or other document grants or
imposes on any Shares any right, preference, privilege or
restriction with respect to the transaction contemplated hereby
(including, without limitation, any right of first refusal).
2.5 Utility Status. Neither the Seller, MidCon nor any of
--------------
its Significant Subsidiaries is a "Holding Company" or a "Public
Utility Company" or a "Gas Utility Company" as those terms are
defined in the PUHCA.
2.6 Waiver by the MidCon ESOP Trust. The Seller has
----------------------------------
obtained a written waiver by the MidCon ESOP Trust of all its
rights to exchange the CMIC Preferred Stock for, or to cause a
third party to acquire, the Shares pursuant to the MidCon ESOP
Agreements.
5
2.7 Finders and Brokers. No broker, finder or investment
-------------------
banker is entitled to any brokerage, finder's or other similar
fee or commission in connection with the transactions
contemplated by this Agreement as a result of arrangements made
by or on behalf of the Seller or MidCon other than (a) Merrill
Lynch & Co. and Credit Suisse First Boston Corporation, the fees
of whom will be paid by the Seller and (b) the agreements with
the MidCon ESOP Trustee and its advisors, which fees and expenses
will be paid by MidCon.
2.8 Investment Purpose. The Seller is acquiring the
-------------------
Substitute Note for its own account and not with a view to any
sale or distribution thereof in violation of any securities laws.
The Seller has no present intention of selling, distributing or
otherwise disposing of any portion of the Substitute Note in
violation of any such laws. The Seller acknowledges that the
Substitute Note has not been registered or qualified under the
Securities Act or any state securities laws and may not be sold,
assigned, pledged or otherwise disposed of in the absence of such
registration unless an exemption from such registration is
available.
2.9 MidCon Significant Subsidiaries. Schedule 2.9 sets
-------------------------------- ------------
forth for each Significant Subsidiary (i) its name and
jurisdiction of organization, (ii) the number of shares of
authorized capital stock of each class of its capital stock,
(iii) the number of issued and outstanding shares of each class
of its capital stock, (iv) the names of the holders of shares of
each class of stock and the number of shares held by such holder,
and (v) the number of shares of its capital stock held in
treasury. Each of the Significant Subsidiaries is a corporation,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
in which the character of such
6
Subsidiary's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where
the failure to be so qualified would not result in a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole.
Each of the Significant Subsidiaries has the requisite corporate
power to own, use or lease its properties and to carry on its
business as it is now being conducted. All the issued and
outstanding shares of capital stock of each Significant
Subsidiary have been duly authorized and are validly issued,
fully paid and nonassessable; and except as set forth on
Schedule 2.9, there are no outstanding or authorized rights of
- -------------
any Person that could require any Significant Subsidiary to
issue, sell or otherwise cause to become outstanding any of its
capital stock.
2.10 Financial Statements. Schedule 2.10 sets forth the
-------------------- -------------
audited consolidated financial statements of MidCon and its
consolidated Subsidiaries (including any related notes and
schedules) for each of the three years ended December 31, 1994,
1995 and 1996 and for the ten months ended October 31, 1997
(collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP applied on
a consistent basis and present fairly in all material respects
the consolidated financial position of MidCon and its
consolidated Subsidiaries as of the date thereof, and the
consolidated results of operations and cash flows of MidCon and
its consolidated Subsidiaries for the periods presented therein
(except as may be indicated in the notes thereto and subject, in
the case of financial statements for the ten-month period ended
October 31, 1997, to normal and recurring year-end adjustments
and the absence of amounts for the comparable period in 1996).
7
2.11 Seller's SEC Reports. The Seller files reports,
----------------------
statements and schedules with the SEC pursuant to the Securities
Exchange Act (collectively, the "SEC Reports"). None of the SEC
Reports, to the extent they refer to MidCon and its Subsidiaries,
contain, as of their respective dates, any untrue statement of a
material fact, or omit, as of their respective dates, to state a
fact required to be stated therein or necessary in order to make
the statements made therein, in each case, as it relates to
MidCon and its Subsidiaries, in light of the circumstances under
which they were made, not misleading.
2.12 Absence of Certain Changes or Events. Except as
----------------------------------------
contemplated by this Agreement, or as disclosed in the Financial
Statements or Schedule 2.12, to the Seller's Knowledge, since
-------------
October 31, 1997, (a) MidCon and its Significant Subsidiaries
have conducted their respective businesses only in the ordinary
course, consistent with past practice during the immediately
preceding twelve month period, and (b) as of the date hereof
there has not occurred or arisen any event that has had or,
insofar as reasonably can be foreseen, is likely in the future to
have, a Material Adverse Effect on MidCon and its Subsidiaries,
taken as a whole, other than events or developments generally
affecting the industry in which MidCon and its Subsidiaries
operate.
2.13 Litigation. Except as recorded or disclosed in the
----------
Financial Statements or Schedule 2.13, to the Seller's Knowledge,
-------------
as of the date hereof, no actions, suits, arbitration proceedings
or governmental proceedings are pending or threatened against
MidCon or any of its Significant Subsidiaries which would have a
Material Adverse Effect on MidCon and its Subsidiaries, taken as
a whole.
8
2.14 Compliance with Law. Except as recorded or disclosed in
-------------------
the Financial Statements or Schedule 2.14, to the Seller's
--------------
Knowledge, neither MidCon nor any of its Significant Subsidiaries
is in violation of any federal, state, local or foreign law,
ordinance, regulation, judgment, order or decree, the violation
of which would have a Material Adverse Effect on MidCon and its
Subsidiaries, taken as a whole.
2.15 Employees and Employee Benefit Matters. To the Seller's
--------------------------------------
Knowledge, (i) each "employee benefit plan", as defined in
Section 3(3) of ERISA, maintained by MidCon or its Significant
Subsidiaries complies in all material respects with all
applicable requirements of ERISA and of the Code, and other
applicable laws; and (ii) neither MidCon nor any of its
Significant Subsidiaries, nor any of their respective directors,
officers, employees or agents has, with respect to any employee
benefit plan maintained by MidCon or its Significant
Subsidiaries, engaged in any "prohibited transaction," as such
term is defined in Section 4975 of the Code or Section 406 of
ERISA, which would result in any taxes or penalties on prohibited
transactions under Section 4975 of the Code or under
Section 502(i) of ERISA, which would have a Material Adverse
Effect on MidCon and its Subsidiaries, taken as a whole.
2.16 Contracts. Schedule 2.16 sets forth a true and complete
--------- -------------
list of each of the following contracts that are currently in
effect and to which MidCon or any of its Significant Subsidiaries
is a party, or by which any of their assets or properties is
bound:
2.16.1 each contract which provides for (i) the
borrowing of money by MidCon or any of the Significant
Subsidiaries or (ii) the direct or indirect guarantee by MidCon
or any
9
of the Significant Subsidiaries of any obligation of any other
Person for borrowed money that, in either case, exceeds
$10,000,000.
2.16.2 each contract which provides for the future
disposition or acquisition by MidCon or any of the Significant
Subsidiaries of any assets or properties of any Person or of any
interest in any business enterprise (other than the disposition
or acquisition of investments in the ordinary course of business
and consistent with past practice) that involves consideration in
excess of $10,000,000.
2.16.3 each contract to which the Seller or any
Affiliate of the Seller (other than MidCon and its Subsidiaries)
is a party (including those relating to allocations of expenses,
personnel, services, or facilities);
2.16.4 each contract to which MidCon or any of the
Significant Subsidiaries is a party relating to its ownership in
a joint venture or similar arrangement involving an investment by
MidCon of $5 million or more;
2.16.5 each contract not disclosed pursuant to the
foregoing clauses 2.16.1 through 2.16.4 that involves a
contractual commitment for the payment, pursuant to the terms of
such contract, by or to MidCon or any of the Significant
Subsidiaries of more than $50,000,000.
To the Knowledge of the Seller, neither MidCon nor any of the
Significant Subsidiaries nor any other Party to any such contract
is currently in violation, breach or default under any such
contract or, with or without notice or lapse of time or both,
would be in violation or breach of
10
or default under any such contract, except such as would not have
a Material Adverse Effect on MidCon and its Subsidiaries, taken
as a whole.
2.17 No Undisclosed Liabilities. Except as set forth in
---------------------------
Schedule 2.17, to the Seller's Knowledge, MidCon and its
- --------------
consolidated Subsidiaries have no liabilities or obligations that
would be required to be recorded or disclosed in a consolidated
balance sheet of MidCon and its consolidated Subsidiaries, or
footnotes thereto, prepared as of the date that this
representation is made, in accordance with GAAP, other than
liabilities and obligations recorded or disclosed in the balance
sheet included in or in footnotes to the Financial Statements, or
incurred in the ordinary course of business since October 31,
1997.
2.18 Tax Matters. Except as provided on Schedule 2.18:
------------ --------------
(i) the Seller has filed, or has caused MidCon and its
Subsidiaries to have timely filed, all Tax Returns the due date
of which is on or prior to the Closing Date; (ii) MidCon and its
Subsidiaries, or the Seller on their behalf, have timely paid all
Taxes shown as due and payable on such Tax Returns;
(iii) adequate accruals or provisions including current Tax
liabilities, all in accordance with GAAP applied on a consistent
basis for all Taxes due with respect to any period ending on or
prior to December 31, 1997 will have been made in the 1997
Financial Statements; (iv) no assessment of Tax has been proposed
in writing against MidCon or its Subsidiaries or any of their
assets or properties; (v) neither MidCon nor any of its
Subsidiaries has an outstanding agreement, waiver or arrangement
extending any statute of limitations in respect of Taxes or has
agreed to any extension of time with respect to a Tax assessment
or deficiency except in all cases which would not have a Material
Adverse Effect on MidCon and its Subsidiaries, taken
11
as a whole. The statute of limitations in respect of federal
Taxes has expired through the period set forth on Schedule 2.18.
-------------
Schedule 2.18 lists all federal Tax Returns that are currently
- --------------
the subject of audit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as
follows:
3.1 Organization and Qualification. The Buyer is a
--------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the state of Kansas. The Buyer has all
requisite corporate power to own, use or lease its properties and
to carry on its business as it is now being conducted. The Buyer
is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where both the character
of its properties owned or held under lease or the nature of its
activities makes such qualification necessary and the failure to
qualify would have a Material Adverse Effect on the Buyer and its
Subsidiaries taken as a whole.
3.2 Authority. The Buyer has full corporate power to
---------
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby on the part of the Buyer have been duly and
validly authorized by the Buyer's Board of Directors, and no
other corporate proceedings on the part of the Buyer are
necessary, as a matter of law or otherwise, for the consummation
of the transactions contemplated hereby. This Agreement
12
has been duly and validly executed and delivered by the Buyer and
is a valid and binding agreement of the Buyer, enforceable
against it in accordance with its terms.
3.3 Noncontravention. Except as provided on Schedule 3.3,
---------------- ------------
the execution and delivery of this Agreement, the consummation of
the transactions contemplated by this Agreement and the
performance by the Buyer of its obligations hereunder will not:
(a) conflict with or result in any breach of any provision
of the Buyer's Articles of Incorporation or By-laws;
(b) require any consent, approval, order, authorization or
permit of, or registration, filing with or notification to, any
Governmental Entity or any private third party, except for
filings, consents, approvals, orders, authorizations or permits
which (i) are required under the HSR Act; (ii) are required by
the FERC; (iii) are required by the Texas Railroad Commission;
(iv) are required by the Kansas Corporation Commission; (v) will
not result in a Material Adverse Effect on the Buyer and its
Subsidiaries, taken as a whole; or (vi) will not prevent the
consummation of the transactions contemplated hereby, if not made
or acquired.
(c) result in any violation of or the breach of or
constitute a default under (or give rise to any right of
termination, cancellation or acceleration or guaranteed payments
under or to a loss of a material benefit or result in the
creation or imposition of a lien under) any of the terms,
conditions or provisions of any note, lease, mortgage, indenture,
license, agreement or other instrument or obligation to which the
Buyer or one of the Buyer's Subsidiaries is a party or by which
the Buyer, any of the Buyer's Subsidiaries or any of their
respective properties or
13
assets may be bound, except for such violations, breaches,
defaults, or rights of termination, cancellation or acceleration,
or losses which requisite waivers or consents have been obtained
or which would not result in a Material Adverse Effect on the
Buyer and its Subsidiaries taken as a whole;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to the
Buyer, that would result in a Material Adverse Effect on the
Buyer and its Subsidiaries taken as a whole; or
(e) result in the creation of any Encumbrance upon any
shares of capital stock, properties or assets of the Buyer or the
Buyer's Subsidiaries under any agreement or instrument to which
the Buyer or the Buyer's Subsidiaries is a party or by which the
Buyer or the Buyer's Subsidiaries is bound.
3.4 Utility Status. Neither the Buyer nor any of its
---------------
Subsidiaries is a "Holding Company" or a "Public Utility Company"
or a "Gas Utility Company" as those terms are defined in the
PUHCA.
3.5 Finders and Brokers. No broker, finder or investment
-------------------
banker is entitled to any brokerage, finder's or other similar
fee or commission in connection with the transactions
contemplated by this Agreement as a result of arrangements made
by or on behalf of the Buyer other than Morgan Stanley & Co.
Incorporated, Petrie Parkman & Co., Inc. and Salomon Brothers
Inc, the fees of whom will be paid by the Buyer.
14
3.6 Investment Purpose. The Buyer is acquiring the Shares
------------------
and the ESOP Note for its own account and not with a view to any
sale or distribution thereof in violation of any securities laws.
The Buyer has no present intention of selling, distributing or
otherwise disposing of any portion of the Shares or the ESOP Note
in violation of any such laws. The Buyer acknowledges that the
Shares and the ESOP Note have not been registered or qualified
under the Securities Act or any state securities laws and may be
sold, assigned, pledged or otherwise disposed of in the absence
of such registration only pursuant to an exemption from such
registration and in accordance with this Agreement.
ARTICLE IV
THE CLOSING
4.1 Time and Place of the Closing. Subject to the
----------------------------------
satisfaction or waiver of the conditions precedent set forth
herein, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the
Seller, 10889 Wilshire Boulevard, Los Angeles, California, at
10:00 a.m. Los Angeles time on February 27, 1998, or at such
later Business Day, place and time as the Seller shall specify,
but no later than June 30, 1998.
4.2 Conditions Precedent to the Obligations of the Buyer.
----------------------------------------------------
The obligation of the Buyer to consummate the transactions
contemplated hereby shall be subject to satisfaction or waiver,
at or prior to the Closing, of the conditions set forth in this
Section 4.2.
15
4.2.1 Resolutions of the Board of Directors. The
-------------------------------------
Seller shall have furnished the Buyer at the Closing with
certified copies of resolutions duly adopted by the Board of
Directors of the Seller, or a committee thereof, which
resolutions shall authorize the execution, delivery and
performance of this Agreement by the Seller.
4.2.2 Representations and Warranties to be True and
---------------------------------------------
Correct. The representations and warranties of the Seller
- -------
contained in Article II (as amended or updated pursuant to
Section 5.3.3) shall be true and accurate in all material
respects (if not qualified as to materiality) and true and
accurate (if so qualified) as of the Closing Date with the same
force and effect as though made at and as of the Closing Date
(except to the extent a representation or warranty speaks
specifically as of an earlier date or except as contemplated by
this Agreement). The Seller shall have furnished the Buyer at
the Closing with certificates dated as of the Closing Date of two
officers of the Seller, to the effect set forth above, and of two
officers of MidCon, to the effect set forth above but only to the
extent that the representations and warranties relate to MidCon
or its Subsidiaries.
4.2.3 Opinion of Counsel to the Seller. The Buyer
--------------------------------
shall have received an opinion from counsel employed by the
Seller, dated as of the Closing Date, to the effect set forth on
Exhibit 4.2.3, subject only to customary qualifications and
- --------------
exceptions reasonably acceptable to the Buyer.
4.2.4 Obligations of the Seller to be Fulfilled.
------------------------------------------
The Seller shall have performed and complied in all material
respects with the covenants required by this Agreement to be
performed and complied with by the Seller at or prior to the
Closing. The Seller shall have
16
furnished the Buyer at the Closing with a certificate dated as of
the Closing Date of two officers of the Seller to the effect set
forth above.
4.2.5 Resignation of the Directors. All directors
----------------------------
of MidCon and its Subsidiaries shall have tendered their written
resignations, effective as of the Closing Date, or their term
shall have expired prior thereto.
4.2.6 Transfer of Shares. The Seller shall have
------------------
delivered to the Buyer the certificates which represent all the
Shares, together with stock powers or other transfer documents
duly endorsed in the name of the Buyer or its permitted assigns.
4.2.7 Intercompany Agreements. The Seller shall
-----------------------
have taken or shall have caused its Subsidiaries to have taken
the following actions with regard to the Intercompany Agreements:
(a) Contribution of Net Balance. The assignment,
----------------------------
immediately prior to the Closing, of the right to receive all
payments of principal of and interest on the Dividend Note other
than the amount of interest accruing from December 31, 1997
through the Closing Date pursuant to the Dividend Note as a
contribution to the capital of MidCon, which assignment shall
occur before any distribution occurs pursuant to
Section 5.1.2(a)(i);
(b) Services Agreement. The Services Agreement shall
------------------
have been terminated as provided more fully in Section 5.3.5;
(c) Tax Sharing Agreement. The Tax Sharing Agreement
---------------------
shall have been terminated as provided more fully in Section 6.2.
17
4.3 Conditions Precedent to the Obligation of the Seller.
----------------------------------------------------
The obligation of the Seller to consummate the transactions
contemplated hereby shall be subject to satisfaction or waiver,
at or prior to the Closing of the conditions set forth in this
Section 4.3.
4.3.1 Resolutions of the Board of Directors. The
-------------------------------------
Buyer shall have furnished the Seller at the Closing with
certified copies of resolutions duly adopted by the Board of
Directors of the Buyer, which resolutions shall authorize the
execution, delivery and performance by the Buyer of this
Agreement, the Substitute Note, and the Term Loan Assignment
Agreement, the Buyer's Pipeline Lease Guaranty and related
commitments to be provided pursuant to Section 5.3.6 and the
Insurance Novation Agreement.
4.3.2 Representations and Warranties to be True and
---------------------------------------------
Correct. The representations and warranties of the Buyer
- -------
contained in Article III (as amended or updated pursuant to
Section 5.3.3) shall be true and accurate in all material
respects (if not qualified as to materiality) and true and
accurate (if so qualified) as of the Closing Date with the same
force and effect as though made at and as of the Closing Date
(except to the extent a representation or warranty speaks
specifically as of an earlier date or except as contemplated by
this Agreement). The Buyer shall have furnished the Seller at
the Closing with a certificate of two of its officers to the
effect set forth in this Section 4.3.2.
4.3.3 Obligations of the Buyer to be Fulfilled.
------------------------------------------
The Buyer shall have performed and complied in all material
respects with the covenants required by this Agreement to be
performed and complied with by the Buyer at or prior to the
Closing. The Buyer shall
18
have furnished the Seller at the Closing with a certificate of
two of its officers to the effect set forth in this
Section 4.3.3.
4.3.4 Opinion of Counsel to the Buyer. The Seller
-------------------------------
shall have received from counsel employed by the Buyer, an
opinion, dated as of the Closing Date, to the effect set forth on
Exhibit 4.3.4, subject only to customary qualifications and
- --------------
exceptions reasonably acceptable to the Seller.
4.3.5 Delivery of the Purchase Price. The Buyer
------------------------------
shall have delivered the Purchase Price to the Seller at the
Closing.
4.4 Conditions of Both Parties. The obligations of both
--------------------------
Parties to consummate the transactions contemplated hereby shall
be subject to satisfaction or waiver, at or prior to the Closing
of the conditions set forth in this Section 4.4.
4.4.1 Consents. All Consents shall have been
--------
filed, occurred or been obtained and shall be in effect
immediately prior to and as of the Closing, except where the
failure to obtain such Consents will not result in a Material
Adverse Effect on MidCon and its Subsidiaries, taken as a whole,
will not materially impair the ability of either Party to perform
its obligations under this Agreement and will not prevent the
consummation of any of the transactions contemplated by this
Agreement. Any applicable waiting period imposed by a
Governmental Entity, including that imposed under the HSR Act,
shall have expired or been terminated.
19
4.4.2 Litigation. No temporary restraining order,
----------
preliminary injunction or permanent injunction or other order
precluding, restraining, enjoining, preventing or prohibiting the
consummation of the Agreement and the transactions contemplated
by this Agreement shall have been issued by any federal, state or
foreign court or other Governmental Entity and remain in effect.
4.4.3 Statutory Requirements. No federal, state,
----------------------
local or foreign statute, rule or regulation shall have been
enacted which prohibits the consummation of the transactions
contemplated by this Agreement or would make the consummation of
such transactions illegal.
ARTICLE V
COVENANTS
5.1 Covenants by the Seller.
-----------------------
5.1.1 Operation of Business. During the period
---------------------
from the date of this Agreement to the Closing Date, except as
otherwise contemplated by this Agreement, after consultation with
the Buyer if so provided below or consented to by the Buyer
(which consent shall not be unreasonably withheld), the Seller
will cause each of MidCon and its Significant Subsidiaries to:
(a) carry on its business only in the ordinary
course consistent with past practice during the immediately
preceding twelve-month period;
(b) not amend its Certificate of Incorporation or
By-laws;
20
(c) not acquire by merging or consolidating with,
or purchasing substantially all the assets of, or otherwise
acquiring any business or any corporation, partnership,
association or other business organization or division thereof
which would be material, individually or in the aggregate, to the
business, financial condition or results of operations of MidCon
and its Subsidiaries taken as a whole;
(d) not, except in the ordinary course of
business, sell, lease, or otherwise dispose of, nor voluntarily
encumber, any of its assets (except as listed on Schedule 5.1.1)
---------------
which are material, individually or in the aggregate, to the
business or financial condition or results of operations of
MidCon and its Subsidiaries taken as a whole;
(e) not declare, set aside, make or pay any
dividend or other distribution (except as listed on
Schedule 5.1.1), in respect of its capital stock (other than
- ---------------
dividends and distributions payable to MidCon or its
Subsidiaries) or purchase or redeem, directly or indirectly, any
shares of its capital stock (other than for cash);
(f) not issue or sell any shares of its capital
stock of any class (other than to MidCon or its Subsidiaries);
(g) not incur any indebtedness for borrowed money
(other than from the Seller), or issue or sell any debt
securities, other than in the ordinary course of business
consistent with past practice during the immediately preceding
twelve-month period or as described on Schedule 5.1.1;
--------------
21
(h) not (i) grant to any officer or director any
increase in any compensation in any form, other than as is
consistent with prior practice, or in any severance or
termination pay, or (ii) enter into or amend any employment
agreement with an officer, or (iii) amend the terms of any
Employee Benefit Plans and Agreements (other than as may be
required by applicable law or Governmental Entity) or (iv) adopt
any new employee benefit plan or arrangement in each case for
which MidCon or its Subsidiaries will be obligated after the
Closing unless listed on Schedule 5.1.1;
--------------
(i) not, except for the transactions contemplated
by this Agreement, directly or indirectly solicit proposals or
offers from any person or initiate or participate in any
discussions with any person relating to any acquisition or
purchase of all or a material amount of the assets of, or any
securities of, MidCon or any of its Significant Subsidiaries
unless listed on Schedule 5.1.1;
--------------
(j) without prior consultation with the Buyer,
not enter into any other contract or commitment having a value in
excess of $50 million;
(k) without prior consultation with the Buyer,
(i) not enter into any fixed price purchases or sales of natural
gas unless they are hedged nor (ii) enter into any commodity
futures contracts, options or swaps unless the transactions are a
hedge as defined in the Financial Accounting Standard Board
Statement of Financial Accounting Standards No. 80 or unless the
volume in aggregate at any time does not exceed two billion cubic
feet.
22
(l) without prior consultation with the Buyer,
(i) not enter into any fixed price purchases or sales of
electricity unless they are hedged nor (ii) enter into any
commodity futures contract, options or swaps unless the
transactions are a hedge as defined in the Financial Accounting
Standard Board Statement of Financial Accounting Standards No. 80
or unless the volume in aggregate at any time does not exceed
16,800 MWhs.
Notwithstanding the foregoing or any other provisions of
this Agreement, the Seller and MidCon may amend, modify,
terminate or release any of the MidCon ESOP Agreements or
obligations thereunder; provided, however, that the amount of
outstanding principal of, and interest on, the ESOP Note will not
be modified.
5.1.2 The Cash Management Agreement.
-----------------------------
(a) Pre-closing Adjustment. The Seller shall,
----------------------
and shall cause MidCon to, adjust the MidCon Loan and the OPC
Loan balances immediately prior to the Closing as follows:
(i) An amount equal to the net amount, if
any, by which the Current Assets of MidCon exceed the sum of
(A) the Current Liabilities of MidCon plus (B) twenty million
dollars ($20 million) each as of December 31, 1997 as shown on
the 1997 Financial Statements, shall be added to the balance of
the C Facility Loans under the Cash Management Agreement thereby
constituting a distribution by MidCon to the Seller evidenced as
a payable by MidCon.
23
(ii) An amount equal to the net amount, if
any, by which the sum of (A) the Current Liabilities of MidCon
plus (B) twenty million dollars ($20 million) exceed the Current
Assets of MidCon each as at December 31, 1997 as shown on the
1997 Financial Statements, shall be added to the balance of the B
Facility Loans under the Cash Management Agreement, thereby
constituting a contribution to MidCon by the Seller evidenced as
a receivable of MidCon.
In connection with determining Current Assets and Current
Liabilities as of December 31, 1997, any and all adjustments in
accordance with GAAP to reflect the consequences of the
transactions pursuant to this Agreement shall be excluded;
provided, however, the Current Liabilities at December 31, 1997
shall include all amounts payable by MidCon to the MidCon ESOP
Trustee arising from the sale of the Shares and shall exclude the
principal on the ESOP Note payable after December 31, 1997.
(b) Loan Balances at Closing. The balance of
-------------------------
each of the OPC Loans and the MidCon Loans as at Closing shall be
calculated by including all amounts accrued but not yet payable
for the period elapsed up to the Closing Date, which amounts will
include (i) the accrued interest on the Dividend Note although
due after the Closing, (ii) the payment by, or on behalf of,
MidCon to the MidCon ESOP Trustee and its advisors, and (iii) the
amount of Taxes of all sorts accrued pursuant to Article VI.
(c) Payment for Loan Balances. Within 30 days
-------------------------
after the Closing, the Seller shall pay the amount, if any, by
which the OPC Loans outstanding as of the Closing exceed the
MidCon Loans outstanding at such date (each determined in
accordance with
24
Section 5.1.2(b)), plus accrued interest in accordance with the
provisions of the Cash Management Agreement (subject to the
modifications pursuant to the following) to the date of payment,
as if a "Mandatory Prepayment" existed pursuant to Section 5.6 of
the Cash Management Agreement. The Seller shall, and shall cause
MidCon to, enter into an agreement that, except as provided in
the preceding sentence, (i) shall, at the Closing, terminate each
of the respective Facilities, all management of cash pursuant
thereto and the covenants thereunder, and (ii) shall terminate
the Cash Management Agreement fully upon completion of the
foregoing payment so that it no longer governs the payment of any
amounts payable after the Closing pursuant to the contracts,
agreements or arrangements outstanding after the Closing Date by
and between MidCon and its Subsidiaries on the one hand and the
Seller and its Subsidiaries (other than MidCon and its
Subsidiary) on the other hand and such amounts shall be payable
as provided in the contract, agreement or arrangement governing
such payment.
5.1.3 Intercompany Agreements. The Seller shall,
-----------------------
and shall cause its Subsidiaries to, perform the Intercompany
Agreements, as amended, which continue in effect after the
Closing.
5.1.4 Originator Receivables Sales Agreement.
-----------------------------------------
Immediately prior to the Closing, the Seller shall cause its
Subsidiaries to terminate the Originator Receivables Sales
Agreement as to MidCon and its Subsidiaries and shall cause
MidCon and its Subsidiaries to repurchase all of the receivables
previously sold by MidCon and its Subsidiaries to Occidental
Receivables, Inc. that have not been collected prior to the date
of such repurchase.
25
5.1.5 Insurance. The Seller, at the Closing,
---------
shall cause MidCon and its Subsidiaries to enter into a release
substantially in the form of Exhibit 5.1.5(a) (the "Insurance
----------------
Release Agreement") with the Seller and its Subsidiary, OPCAL
Insurance, Inc. ("OPCAL"), for the release of the Seller and
OPCAL from any and all liability under policies underwritten by
OPCAL and its predecessor, Piper Indemnity, as more fully
described in the Insurance Release Agreement. At the Closing,
the Seller, OPCAL and the insurance companies to be parties
thereto shall enter into a novation agreement substantially in
the form of Exhibit 5.1.5(b) (the "Insurance Novation Agreement")
----------------
substituting the Buyer for the Seller as indemnitor of the
insurance companies with regard to the specified fronting
policies previously issued for MidCon and its Subsidiaries.
Except as provided in the preceding two sentences, the Seller
shall cause each of MidCon and its Subsidiaries to continue to
have rights as an insured under the Seller's insurance policies,
subject, however, to the terms and conditions set forth in each
applicable insurance policy. MidCon and its Subsidiaries shall
no longer be an insured under the Seller's insurance for any
occurrence after the Closing.
5.1.6 1997 Financial Statements. The Seller shall
-------------------------
cause MidCon to provide the Buyer with the audited consolidated
financial statements of MidCon and its consolidated Subsidiaries
(including any related notes and schedules) for the year ended
December 31, 1997 (the "1997 Financial Statements") on or before
February 15, 1998. The 1997 Financial Statements shall be
prepared in accordance with GAAP applied on a consistent basis
and present fairly in all material respects the consolidated
financial position of MidCon and its consolidated Subsidiaries as
at December 31, 1997, and the consolidated results of operations
26
and cash flow of MidCon and its consolidated Subsidiaries for the
periods presented therein (except as may be indicated in the
notes thereto).
5.2 Covenants by the Buyer.
----------------------
5.2.1 Payment of the Loan Balance. Within 30 days
---------------------------
after the Closing, the Buyer shall cause MidCon to pay the
amount, if any, by which the MidCon Loans outstanding as of the
Closing exceed the OPC Loans outstanding at such date (each
determined in accordance with Section 5.1.2(b)), plus accrued
interest in accordance with the provisions of the Cash Management
Agreement (subject to the modification described in
Section 5.1.2(c)) to the date of payment to be prepaid as if a
"Mandatory Prepayment" existed pursuant to Section 5.6 of the
Cash Management Agreement.
5.2.2 ESOP Note and MidCon ESOP Plan.
------------------------------
The Buyer agrees that it shall not demand
repayment of, otherwise discharge, or permit any payment in
respect of, the ESOP Note until a date after the Closing Date and
thereafter shall cooperate with the Seller in the resolution of
the MidCon ESOP Plan, including furnishing records necessary in
its administration.
5.2.3 Employees and Employee Benefit Plans.
------------------------------------
(a) Effective as of the Closing Date, the Buyer shall
cause MidCon or its Subsidiaries to continue to compensate each
Salaried Employee who remains an employee of the Buyer or its
Subsidiaries at salaries or hourly rates, as the case may be, no
lower than the lesser of (i) the salaries or hourly rates of
MidCon or its Subsidiaries in effect immediately
27
prior to the Closing Date or (ii) the salaries or hourly rates
payable to the Buyer's employees in either case in similar jobs
and locations.
(b) Notwithstanding subpart (a), if the Buyer or any
of its Subsidiaries terminates any Salaried Employee within three
months of the Closing, the Buyer or its Subsidiaries shall pay
the terminated Salaried Employee severance benefits no less than
those provided under the Termination Allowance Plan in effect on
the date of this Agreement, provided, however, that such
severance benefits shall only be payable to the extent that such
benefits would have been payable under such Termination Allowance
Plan. After a three month period subsequent to the Closing, a
Salaried Employee who is terminated shall be entitled to
severance benefits not less than those provided to employees of
the Buyer or its Subsidiaries with like job status and service.
(c) Except as provided in subsection (b) to this
Section 5.2.3, as of the Closing Date, the Buyer shall provide to
each Salaried Employee and each Former Salaried Employee with
"Buyer Benefit Plans", which shall mean the benefit plans and
programs under (i) Employee Plans and Agreements effective
immediately prior to the Closing Date, (ii) the Buyer's benefit
plans and programs applicable to employees of the Buyer in
similar jobs, or (iii) a combination of Employee Plans and
Agreements and the Buyer's plans and programs, the determination
of which shall be at the sole discretion of the Buyer, provided
however, that such combination of Employee Plans and Agreements
and the Buyer's plans and programs shall be, at a minimum,
comparable in type and aggregate value to those plans and
programs provided by the Buyer's benefit plans and programs
applicable to employees of the Buyer in
28
similar jobs. In addition, the Buyer shall cause such Buyer
Benefit Plans to comply in form and operation in all material
respects with the requirements of ERISA and the Code.
(d) From and after the Closing, each Salaried Employee
and each Former Salaried Employee shall be eligible to
participate in the Buyer Benefit Plans in accordance with the
terms and conditions thereof. Under such Buyer Benefit Plans,
which are Employee Welfare Benefit Plans, Salaried Employees and
Former Salaried Employees and their eligible dependents, if a
participant in any health, long term disability or life insurance
plans, as applicable, of the Seller or its Subsidiaries
immediately prior to the Closing (i) shall participate in such
Buyer Benefit Plans as of the Closing Date, and (ii) shall be
deemed to satisfy any pre-existing condition limitations under
group medical, dental, life insurance or disability plans that
shall be provided after the Closing Date. In addition, amounts
paid by such Salaried Employees and Former Salaried Employees
towards deductibles and copayment limitations under the health
plans of the Seller or its Subsidiaries shall be counted toward
meeting any similar deductible and copayment limitations under
the health plans that shall be provided under the Buyer Benefit
Plans.
(e) The Buyer and its Subsidiaries shall recognize all
service credited for each of the Salaried Employees and Former
Salaried Employees on the records of the Seller or its
Subsidiaries for purposes of eligibility for benefits and vesting
under the Buyer Benefit Plans and the level of benefits under the
Buyer Benefit Plans, but specifically excluding any benefit
accrual under any Buyer Benefit Plan that is a defined benefit
pension plan.
29
(f) From and after the Closing, Salaried Employees
shall be entitled to retain and take any vacation time accrued on
MidCon's records as payable to any Salaried Employee for which
vacation time has not been taken prior to the Closing Date.
(g) From and after the Closing, the Buyer shall, or
shall cause MidCon or its Subsidiaries, as applicable, to, comply
with all the terms, conditions, obligations, and benefits set
forth in the Union Contract.
(h) From and after the Closing Date, MidCon and its
Subsidiaries shall cease participation in any and all Employee
Plans and Agreements sponsored or maintained by the Seller or its
Subsidiaries. Except as set forth on Schedule 5.2.3, the Buyer
--------------
agrees that it shall cause MidCon and its Subsidiaries, (i) to be
solely responsible and to pay for, and (ii) to indemnify and hold
the Seller and its Subsidiaries harmless from, any and all costs,
damages, losses, expenses or other liabilities arising out of or
relating to any and all claims for welfare benefits (including
health care continuation coverage and retiree welfare benefits)
under any of the Employee Plans and Agreements or otherwise by
any Employee, Former Salaried Employee, Former Union Employee or
dependent or beneficiary thereof, irrespective of when such
claims were incurred.
(i) Representatives of the Buyer shall be entitled to
meet with the Employees at mutually agreeable times prior to the
Closing to explain and answer questions about the conditions,
policies and benefits of employment by the Buyer or its
Subsidiaries after the Closing. The Seller shall cooperate with
the Buyer until Closing in communicating to such Employees any
additional information concerning employment after the Closing
which such
30
Employees may seek, or which the Buyer may desire to provide, and
during normal business hours shall allow additional meetings by
representatives of the Buyer with such Employees upon the
reasonable requests of the Buyer. In addition, after the
Closing, the Seller and the Buyer agree to furnish each other
with appropriate records for each of the Employees as may be
necessary to assist in proper benefit administration.
(j) The Buyer hereby assumes all liability for any
alleged failure to give, or to cause MidCon or any of its
Subsidiaries to give, all notices required by the U.S. Worker
Adjustment and Retraining Notification Act of 1988, as amended
(the "WARN Act"), and any similar state law or regulation by
reason of events occurring after the Closing. The Buyer shall
indemnify and hold harmless the Seller and its Affiliates with
respect to any and all claims asserted under the WARN Act or any
similar law or regulation because of a "plant closing" or "mass
layoff" with respect to MidCon or any of its Subsidiaries
occurring after the Closing. For purposes of this Agreement, the
Closing Date shall be the "effective date" for purposes of the
WARN Act.
5.2.4 Intercompany Agreements. After the Closing,
-----------------------
the Buyer shall cause MidCon and its Subsidiaries to perform
their obligations under any Intercompany Agreements which
continue in effect after the Closing.
5.2.5 Substitution of Undertakings. At the
------------------------------
Closing, the Buyer shall execute and deliver the Insurance
Novation Agreement as more fully described in Section 5.1.5.
31
The Buyer will use all commercially reasonable efforts to
cause to be terminated, released and discharged, on or prior to
the Closing Date, in a manner reasonably satisfactory to the
Seller, any commitments, guarantees and indemnities (including
letters of credit, bonds, promissory notes, commitments, or
obligations of whatsoever nature to any Governmental Entity or
any other Person) of the Seller and each of its Affiliates for
the direct and indirect benefit of MidCon or any of its
Subsidiaries as set forth on Schedule 5.2.5 and all such other
--------------
commitments, guarantees and indemnities provided by Seller in
accordance with the Cash Management Agreement (collectively
"Commitments"). For any Commitments for which the Buyer does not
obtain a termination, discharge or obtain a release of Seller and
its Affiliates at or prior to the Closing, the Buyer shall after
the Closing cause MidCon to pay to the Seller the following (for
purposes of this Section 5.2.5 initial capitalized terms not
defined in this Agreement and "Letter of Credit" shall have the
meaning set forth in the Cash Management Agreement):
(a) A fee in an amount equal to 0.5% per annum on
the Average Balance of each outstanding Letter of Credit;
(b) A fee equal to 0.5% per annum on the Average
Balance of each Guarantee;
(c) All costs and expenses incurred by the Seller
under any Letters of Credit for MidCon Consol; and
32
(d) The amount of payments made by the Seller to
or on behalf of MidCon Consol under any Guarantee or Letter of
Credit.
Payments pursuant to clauses (a) through (c) shall be made
within 10 days after the last day of the month in which such
costs and expenses were paid or fees incurred and payments
pursuant to clause (d) shall be made at the time such payment is
made by the Seller.
The Buyer shall continue to use all commercially reasonable
efforts to obtain, in a manner satisfactory to the Seller, all
terminations, releases and discharges of any remaining
Commitments as soon as practicable after the Closing. The Seller
shall have no obligation to extend or replace any of the
Commitments.
The Buyer agrees to cause MidCon to indemnify and hold
harmless the Seller after the Closing from and against any and
all claims, damages, losses, liabilities, costs or expenses
(including, without limitation, attorneys' fees and costs) which
the Seller may incur (or which may be claimed against the Seller
by any Person whomsoever) by reason of or in connection with the
guarantee, delivery or transfer of or payment under any
Commitment, including any claims, damages, losses, liabilities,
costs or expenses which the Seller may incur by reason of or in
connection with the failure of any bank issuing any such Letter
of Credit to fulfill or to comply with its obligations under any
such Letter of Credit.
5.2.6 Indemnification.
---------------
(a) The Buyer agrees that all rights to
indemnification or exculpation now existing in favor of the
directors, officers, employees and agents of MidCon and each of
33
its Subsidiaries as provided in their respective Certificates or
Articles of Incorporation or By-laws or otherwise, in each case,
in effect as of the date hereof with respect to matters occurring
prior to the Closing Date shall survive the Closing and shall
continue in full force and effect. After the Closing Date, the
Buyer shall cause MidCon to indemnify, defend and hold harmless
the present and former officers, directors, employees and agents
of MidCon and its Subsidiaries (each a "MidCon Indemnitee")
against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel)
and judgments, fines, losses, claims, liabilities and amounts
paid in settlement (provided that any such settlement is effected
with the prior written consent of the Buyer) arising out of
actions or omissions occurring at or prior to the Closing Date to
the full extent permitted by law, or MidCon's and each of its
Subsidiaries Certificate or Articles of Incorporation or By-laws,
in each case as in effect at the date hereof, including
provisions therein relating to the advancement of expenses
incurred in the defense of any action or suit; provided, that
nothing herein shall impair any rights or obligations of any
present or former directors or officers of MidCon or any of its
Subsidiaries.
(b) The Buyer shall, or shall cause MidCon to,
pay all expenses (including reasonable attorneys' fees), that may
reasonably be incurred by the MidCon Indemnitees in successfully
enforcing the rights to which the MidCon Indemnitees are entitled
under this Agreement or MidCon's Certificate of Incorporation or
By-laws or is otherwise entitled.
34
(c) In the event MidCon, the Buyer or any of
their successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and
assets to any Person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of
MidCon or the Buyer, as the case may be, shall assume the
obligations of MidCon and the Buyer set forth in this
Section 5.2.6.
(d) The provisions of this Section 5.2.6 are
intended to be for the benefit of, and shall be enforceable by,
each MidCon Indemnitee, his or her heirs and representatives.
5.3 Covenants of Both Parties.
-------------------------
5.3.1 Access and Information. The Seller shall
----------------------
afford to the Buyer, and to the Buyer's accountants, counsel and
other representatives, full access, during normal business hours
during the period prior to the Closing Date, to all of MidCon's
and its Subsidiaries' properties, books, contracts, commitments
and records and, during such period, Seller shall furnish
promptly to the Buyer (a) a copy of each report, schedule and
other document filed or received by MidCon or its Subsidiaries
during such period pursuant to the requirements of the FERC, and
(b) all other information concerning the business, properties and
personnel of MidCon and its Subsidiaries as the Buyer may
reasonably request; provided, however, that such access shall be
subject to the terms of any confidentiality agreements applicable
to MidCon and its Subsidiaries.
35
5.3.2 Further Action, Reasonable Efforts; Consents
--------------------------------------------
and Approvals. Upon the terms and subject to the conditions
- --------------
hereof, each of the Parties hereto shall use its commercially
reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
cause the conditions set forth in Section 4.2, Section 4.3 and
Section 4.4 to be satisfied and to consummate and make effective
the transactions contemplated hereby, including, without
limitation, using commercially reasonable efforts to obtain all
licenses, permits, orders, declarations, consents, approvals,
authorizations, certificates, qualifications and orders of, and
make all filings and required submissions with, all Governmental
Entities, and all shareholders, lenders and partners of, and
parties to contracts with, any of the Seller, the Buyer, MidCon
or any other Persons, in each case, as are necessary or desirable
for the consummation of the transactions contemplated hereby
(collectively "Consents"). The Seller shall, as soon as possible
after the date hereof, but in any event prior to the Closing,
deliver to the Buyer copies of all Consents obtained by the
Seller. The Buyer shall, as soon as possible prior to the
Closing, deliver to the Seller copies of all Consents obtained by
the Buyer. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the
purposes of this Agreement, the Buyer and the Seller shall use
their commercially reasonable efforts to take all such action.
Prior to the Closing, each Party shall use its best efforts not
to take any action, or enter into any transaction, that would
cause any of its representations or warranties contained in this
Agreement to be untrue.
5.3.3 Notice of Revisions. A Party (the
---------------------
"Notifying Party") may elect at any time prior to the Closing to
notify the other Party (the "Notified Party") of any revisions to
36
such Party's representations or warranties or a Schedule referred
to therein. If the Notified Party does not terminate this
Agreement pursuant to Section 7.1 within five (5) Business Days
after receipt of such notice, such written notice will be deemed
to qualify the representations and warranties, or amend the
Schedules, contained in Article II or III, as applicable, and to
have cured any misrepresentation or breach of representation,
warranty or covenant that otherwise might have existed hereunder
by reason of the matter covered by such revision.
Notwithstanding the foregoing, if the Notifying Party delivers a
notice of revision pursuant to this Section less than five (5)
Business Days prior to the Closing Date, then the Closing Date
automatically shall be extended to the date which is five (5)
Business Days from the date of the notice of revision or if not a
Business Day, then the Business Day immediately following that
date.
5.3.4 Substitute Note. At the Closing, the Seller
---------------
shall assign to the Buyer (a) the ESOP Note, and (b) by execution
and delivery to the Buyer of the Term Loan Assignment Agreement,
all of the Seller's rights and obligations under the Term Loan
Agreement and, in exchange therefor, at the Closing the Buyer
shall execute and deliver to the Seller the Term Loan Assignment
Agreement and shall issue to the Seller either (i) a Substitute
Note, the prompt and complete payment and performance in full of
which shall be secured by Government Securities maturing as to
principal and interest in such amounts and at such times as are
sufficient (without consideration of any reinvestment of such
interest and after payment of all Taxes or other charges or
assessments in respect of such Government Securities payable by
the Buyer) to provide U.S. legal tender to pay the principal of,
and each installment of interest on, such Substitute Note at
least one day before the date on which any such payment is
37
due and payable in accordance with the terms of such Substitute
Note, (ii) a Substitute Note, the payment of all interest and
principal of which is secured by one or more letters of credit,
in form and substance satisfactory to the Seller, issued by a
bank or group of banks with each such bank either (a) having an
investment grade credit rating by either Standard & Poor's
Corporation or Moody's Investors Service, Inc., so long as
neither of the above rating agencies has provided a credit rating
below investment grade, (b) having been agreed to by the Seller
or (c) if a bank is not such an investment grade credit, its
portion of the letter of credit can be fronted by a bank having
such investment grade credit or (iii) any combination of the
foregoing, as the Buyer may elect, provided that the aggregate
original principal amount of all such Substitute Notes is equal
to the sum of (x) the outstanding unpaid principal balance of the
ESOP Note as of the Closing Date and (y) all accrued and unpaid
interest on the ESOP Note to and including the Closing Date. If
the Buyer elects to deliver a Substitute Note at the Closing that
is secured by Government Securities, at the Closing, the Buyer
shall execute and deliver to the Seller a security agreement and
a control agreement, each in form and substance satisfactory to
the Seller, which provide the Seller with a valid, perfected,
first priority security interest in such Government Securities.
5.3.5 Interim Services Agreement. The Seller and
--------------------------
MidCon shall terminate the Services Agreement effective as of the
Closing with amounts due thereunder accrued up to the Closing as
provided in Section 5.1.2(b). The Seller and the Buyer shall
negotiate to the extent desired by the Buyer an interim services
agreement by and between the Seller and MidCon for the
continuation of any of the services provided by the Seller to
MidCon under the Service
38
Agreement upon terms and conditions which must be mutually
acceptable to the Seller and to the Buyer, in their respective
sole discretion.
5.3.6 Pipeline Lease and the Buyer's Pipeline Lease
---------------------------------------------
Guaranty. At the Closing, the Buyer shall execute and deliver to
- --------
the Seller a written guaranty (the "Buyer's Pipeline Lease
Guaranty"), pursuant to which the Buyer shall irrevocably and
unconditionally guarantee to the Pipeline Lessor the full and
timely performance, payment and discharge by the Pipeline Lessee
of all obligations and liabilities of the Pipeline Lessee under
the Pipeline Lease. The Buyer's Pipeline Lease Guaranty shall be
substantially in the form of the Pipeline Lease Guaranty, with
the Buyer as guarantor; provided, however that Section 11 thereof
shall be of no force or effect as long as the Pipeline Lease
Guaranty is in full force and effect. At the request of the
Buyer, the Seller shall cause the Pipeline Lessor to agree to a
termination of the Pipeline Lease Guaranty if, concurrently
therewith, the Buyer's Pipeline Lease Guaranty is amended to
include the Buyer's Pipeline Covenants for the benefit of the
Pipeline Lessor.
At or prior to the Closing, the Seller shall cause the
Pipeline Lessor and the Pipeline Lessee to amend the Pipeline
Lease to:
(a) provide the Pipeline Lessee with an option to purchase
the Leased Property at a price equal to its fair market value
upon termination of the Pipeline Lease, and on other terms and
conditions reasonably satisfactory to the Buyer and the Seller
and set forth in such amendment. The fair market value of the
Leased Property shall be determined by agreement between the
Pipeline Lessor and the Pipeline Lessee or if the Pipeline Lessor
and the Pipeline Lessee can not agree within a specific period
before the date on which the Pipeline Lease is to
39
terminate, then by a team of three independent appraisers each
having appropriate industry experience to make such a valuation,
with one appraiser to be selected by each of the Pipeline Lessor
and the Pipeline Lessee, and the third to be selected by the
first two appraisers. The determination of the fair market value
shall be the value agreed by at least two of the appraisers;
(b) permit assignment of the Pipeline Lease by the Pipeline
Lessee if (i) no event of default under the Pipeline Lease, and
no event that, with the giving of notice or the lapse of time or
both, would be such an event of default, shall have occurred and
be continuing, (ii) the Pipeline Lessee pays the costs and
expenses of the Pipeline Lessor in reviewing such proposed
assignment, and (iii) the Person to whom the Pipeline Lessee
assigns its rights under the Pipeline Lease (the "Assignee")
satisfies the following criteria: (x) fifty percent (50%) or
more of the Assignee's outstanding equity and voting interests is
owned, directly or indirectly, by the Pipeline Lessee or the
Buyer; or (y) (1) the Assignee is not affiliated with the
Pipeline Lessee or the Buyer, (2) the Assignee, or an entity that
absolutely and unconditionally guarantees the Assignee's
obligations under the Pipeline Lease (the "Assignee's
Guarantor"), has a tangible net worth of not less than
$100,000,000, and either has an Above Investment Grade Credit
Rating or, in the reasonable opinion of the Pipeline Lessor,
satisfies the minimum financial criteria then in effect for an
Above Investment Grade Credit Rating;
(c) provide that the Pipeline Lessee and the Buyer shall be
fully discharged from their obligations under the Pipeline Lease
and the Buyer's Pipeline Lease Guaranty, respectively, with
respect to events and obligations occurring after the date of an
assignment in
40
accordance with the foregoing clause (b) upon delivery to the
Pipeline Lessor of an assumption agreement, in form and substance
reasonably satisfactory to the Pipeline Lessor, pursuant to which
the Assignee assumes all of the Pipeline Lessee's liabilities and
obligations under the Pipeline Lease including, without
limitation, all liability for the payment of any rent,
termination values and any other amounts owing by the Pipeline
Lessee under the Pipeline Lease, which assumption agreement shall
include the Buyer's Pipeline Covenants for the benefit of the
Pipeline Lessor unless the Assignee's Guarantor delivers to the
Pipeline Lessor a written guaranty, in form and substance
reasonably satisfactory to the Pipeline Lessor, that includes the
Buyer's Pipeline Covenants for the benefit of the Pipeline
Lessor.
"Buyer's Pipeline Covenants" shall mean financial covenants
that are at least as restrictive as those contained in any
indenture, bond, promissory note, loan or credit agreement or
other evidence of indebtedness of the Buyer from time to time
outstanding.
"Leased Property" shall have the meaning set forth in the
Pipeline Lease.
"Investment Grade Credit Rating" means, with respect to any
Person, that the credit rating assigned to such Person's senior
unsubordinated long term indebtedness by at least two Rating
Agencies is at least BBB- (or its equivalent) or better.
"Above Investment Grade Credit Rating" means, with respect
to any Person, that the credit rating assigned to such Person's
senior unsubordinated long term indebtedness by at least two
Rating Agencies is at least Baa2 (or its equivalent) or better.
41
"Rating Agencies" shall mean any of Standard & Poor's
Ratings Group, Duff & Phelps Credit Rating Co. and Moody's
Investors Service.
Upon the incorporation by reference of covenants referred to
in the preceding sentence, the Seller shall cause MidCon to be
fully discharged from its obligations under the Pipeline Lease
Guaranty.
5.3.7 MidCon Power Services Corp. Unless the
----------------------------
Seller and the Buyer shall enter into mutually satisfactory
arrangements with regard to the operations and contracts of
MidCon Power Services Corp. on or before the Closing, the Seller
shall cause (a) MidCon Gas Services Corp. to declare a dividend
of, and transfer immediately prior to the Closing, all of the
outstanding capital stock of MidCon Power Services Corp. to
MidCon and (b) MidCon to declare a dividend of, and transfer
immediately prior to the Closing, all of the outstanding capital
stock of MidCon Power Services Corp. to the Seller after
transferring all employees, any tangible assets and any cash of
that corporation to MidCon Management Corp. The Seller and the
Buyer hereby agree to transfer to the Buyer the capital stock so
transferred to the Seller upon receipt of the FERC approval of
the transfer of such capital stock ownership to the Buyer. As a
result of any such transfer, MidCon Power Services Corp. shall be
deleted from Schedule 2.9 and the Seller can amend the remaining
Schedules to reflect the transactions between MidCon and its
Subsidiaries and MidCon Power Services Corp. In the event, in
the Seller's reasonable judgment FERC approval of any of the
transactions contemplated by this Section 5.3.7 is necessary,
which determination shall be made no later than December 31,
1997, the Seller shall advise the Buyer of such conclusion
together with supporting basis therefor and the Parties agree to
use their best efforts to agree whether such conclusion is
42
correct. If such approval is required the Parties agree to file
the documents which are required to be filed with FERC as quickly
as possible.
ARTICLE VI
TAXES
6.1 Section 338(h)(10) Election. There will be no election
---------------------------
under Section 338(h)(10) of the Code with respect to the purchase
and sale of the Shares.
6.2 Tax Sharing Agreement. The Seller shall cause the Tax
---------------------
Sharing Agreement between the Seller and MidCon to be terminated
as of the Closing Date; provided, however, that notwithstanding
such termination of the Tax Sharing Agreement, its provisions
will remain in effect with respect to any period of time during
the taxable year in which the termination occurs, for which
period the income of MidCon and its Subsidiaries must be
included in the federal Tax Returns or any state Tax Returns of
the Seller. With respect to any matters covered by this
Article VI, the provisions and conditions set forth in this
Agreement shall control over any conflicting or contradicting
provision or condition in the Tax Sharing Agreement.
6.3 Federal Income Tax Returns and Combined State Income
-----------------------------------------------------
Tax Returns for Periods Through the Closing Date. The Seller will
- ------------------------------------------------
include the income of MidCon and its Subsidiaries (including any
deferred income triggered into income by Reg. Sec. 1.1502-13 and
Reg. Sec. 1.1502-14 and any excess loss accounts taken into
income under Reg. Sec. 1.1502-19) on the Seller's consolidated
federal income Tax Return and each combined state income
43
Tax Returns for all periods through the Closing Date and pay any
federal and state income Taxes attributable to such income. The
allocation of such Tax liability between the Seller, on one hand,
and MidCon and its Subsidiaries, on the other hand, will be
governed by the provisions of the Tax Sharing Agreement. MidCon
and its Subsidiaries will furnish Tax information to the Seller
for inclusion in the Seller's federal consolidated income Tax
Return and each combined state income Tax Return for the period
which ends on the Closing Date in accordance with MidCon's past
custom and practice, and the Buyer will bear the cost of
complying with this provision. The income of MidCon and its
Subsidiaries will be allocated between the period up to and
including the Closing Date and the period after the Closing Date
by closing the books of MidCon and its Subsidiaries as of the end
of the Closing Date.
6.4 No Adjustment of MidCon Tax Liability for the Taxable
-----------------------------------------------------
Year Ending December 31, 1997. The liability of MidCon and its
- ------------------------------
Subsidiaries for consolidated federal and combined state income
Taxes with respect to the Taxable Year ending December 31, 1997,
as recorded on the 1997 Financial Statements, shall not be
adjusted to reflect the actual Tax liability reported on the
applicable Tax Returns as filed, and the provisions of Section V
of the Tax Sharing Agreement to the contrary shall not apply.
For purposes of calculating the Tax liability of MidCon and its
Subsidiaries under the Tax Sharing Agreement for any Tax year for
which the Tax Sharing Agreement remains in effect under
Section 6.2 of this Agreement, tax attributes which carry forward
from the Tax year ending December 31, 1997, shall not be adjusted
to reflect amounts reported on the applicable Tax Returns as
filed.
44
6.5 Liability of MidCon and its Subsidiaries for Federal
-----------------------------------------------------
and Combined State Income Tax. Within sixty (60) days after the
- ------------------------------
Closing Date, the Buyer shall cause MidCon and its Subsidiaries
to pay to the Seller a contribution toward the payment of Tax due
on the consolidated or combined Tax Return of the Seller
Affiliated Group for the taxable period ending on the Closing
Date, including any portion of deferred income triggered into
income by Reg. Sec. 1.1502-13 and Reg. Sec. 1.1502-14 and excess
loss accounts taken into income under Reg. Sec. 1.1502-19 to be
borne by MidCon and its Subsidiaries, with such amount to be
determined by applying the provisions of the Tax Sharing
Agreement.
6.6 Separate State, Local, Foreign Income Tax Returns. The
-------------------------------------------------
Seller shall file, or cause to be filed, all separate state,
local and foreign income Tax Returns for MidCon and its
Subsidiaries for which the Tax year ends on the Closing Date.
The Buyer will file, or cause to be filed, all separate state,
local and foreign income Tax Returns for MidCon and its
Subsidiaries for which the Tax year begins before and ends after
the Closing Date. The amount of any liability for taxes on or
measured by net income required to be reported on any state,
local or foreign Tax Return required to be filed by any of MidCon
and its Subsidiaries after the Closing Date which includes tax
items for a period which begins before and ends after the Closing
shall be allocated between the portion of such period ending on
the Closing Date and the portion of such period beginning on the
date after the Closing Date on the basis of the taxable income or
loss of MidCon and its Subsidiaries as determined from the books
and records of the relevant entity for such partial period.
45
6.7 Sales and Property Taxes. The amount of any liability
------------------------
for real and personal property taxes, business license taxes, ad
valorem taxes or any similar taxes based on the ownership of
property payable with respect to assets of the Business for a
period which begins before and ends after the Closing Date shall
be allocated between the portion of such period ending on the
Closing Date and the portion beginning on the day after the
Closing Date on a per diem basis. The amount of any liability
for sales taxes, gross receipts taxes, ad valorem taxes, transfer
taxes or other similar taxes based on the proceeds of
identifiable transactions or units of production payable by any
of MidCon and its Subsidiaries after the Closing Date for a
period which begins before and ends after the Closing Date shall
be apportioned between the portion of such period ending on the
Closing Date and the portion of such period beginning on the day
after the Closing Date on the basis of the actual activities of
MidCon and its Subsidiaries as determined from the books and
records of the relevant entity for such partial period.
6.8 State Franchise Taxes. The Buyer shall file, or cause
---------------------
to be filed, all separate state franchise Tax Returns for MidCon
and its Subsidiaries for which the franchise tax measurement
period begins before and ends after the Closing Date. The Seller
shall be responsible for any liability attributable to that
portion of such measurement period ending on the Closing Date.
The Buyer shall be responsible for any franchise tax liability
attributable to that portion of such measurement period
commencing on the day immediately following the Closing Date and
ending on the last day of such measurement period.
46
6.9 Adjustment Upon Leaving Consolidation. Section VII of
-------------------------------------
the Tax Sharing Agreement is incorporated by reference and any
payments thereunder shall be made within sixty (60) days after
the filing of the applicable federal and state Tax Returns.
Adjustments to or additional payments shall be made, as needed,
by reason of amended returns, claims for refund or audits by a
taxing authority with respect to any Tax year for which the Tax
Sharing Agreement remains in effect after the Closing Date.
6.10 Sales and Transfer Taxes with Respect to this
----------------------------------------------------
Transaction. All sales, gross receipts, or other similar transfer
- -----------
taxes, if any (including all stock transfer taxes, if any)
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the Buyer. The Buyer shall
at its expense file all necessary tax returns and other
documentation in respect to any such taxes.
6.11 Cooperation. The Seller and the Buyer shall (i) each
-----------
provide the other, and the Buyer shall cause MidCon and its
Subsidiaries to provide the Seller, with such assistance as may
reasonably be requested by any of them in connection with the
preparation of any Tax Return, audit or other examination by any
taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each retain and provide the
other with any material records or information which may be
relevant to such Tax Return, audit or examination, proceeding or
determination, and (iii) each provide the other with any amount
required to be shown on any Tax Return of the other for any
period. The Party requesting assistance hereunder shall
reimburse the other for reasonable out-of-pocket expenses
incurred in providing such assistance to the extent such expenses
exceed an aggregate amount of
47
$50,000. Without limiting the generality of the foregoing, the
Buyer shall retain, and shall cause MidCon and its Subsidiaries
to retain until the applicable statutes of limitations (including
any extensions) have expired, copies of all Tax Returns,
supporting work schedules and other records or information in its
possession which may be relevant to such returns for all taxable
periods from January 1, 1990 to the Closing Date, inclusive, and
shall not destroy or otherwise dispose of any such records
without first providing the Seller with an opportunity to review
and copy the same. Following the Closing Date, the Seller shall
forward to the Buyer all Tax statements received by the Seller
with respect to the assets of the Business for any period that
begins before and ends after the Closing Date within thirty (30)
days after its receipt thereof.
6.12 Tax Proceedings. Following the Closing Date, the Seller
---------------
shall control the conduct of all stages of any audit or other
administrative or judicial proceeding with respect to Taxes
reported on any Tax Return filed by the Seller or any Affiliate
of the Seller or on any Tax Return filed by MidCon and its
Subsidiaries for any taxable period ending on or prior to the
Closing Date. The Buyer shall control the conduct of all other
audits or administrative or judicial proceedings with respect to
the Tax liability of any of MidCon and its Subsidiaries.
6.13 Carrybacks. Except for carrybacks into the Seller's
----------
consolidated Tax Return for the annual tax period ending December
31, 1997, the Seller shall within 30 days pay to the Buyer any
Tax refund resulting from a carryback of a post-acquisition Tax
attribute of any of MidCon and Subsidiaries into the Seller
consolidated Tax Return in all cases where MidCon and
Subsidiaries cannot elect to waive a carryback. Such Tax
attributes will be considered to
48
produce a refund (or reduce Tax liability) only after all Tax
attributes of the Seller and other members of the Seller
Affiliated Group have been used or deemed used. The Seller shall
cooperate with MidCon and its Subsidiaries in obtaining such
refunds, including through the filing of amended Tax Returns or
refund claims. The Buyer agrees to indemnify the Seller for any
Taxes resulting from the disallowance of such post-acquisition
Tax attribute on audit or otherwise.
6.14 Prior Year Tax Returns. The Seller shall not amend or
----------------------
restate prior year tax returns which have been filed prior to the
date hereof as they relate specifically to MidCon without prior
consultation with the Buyer.
6.15 Retention of Carryovers. The Seller will not retain any
-----------------------
net operating loss carryovers or capital loss carryovers of
MidCon and its Subsidiaries under Reg. Sec. 1.1502-20(g).
6.16 Indemnification for Post-Closing Transactions. The
-----------------------------------------------
Buyer agrees to indemnify the Seller for any additional Tax owed
by the Seller (including Tax owed by the Seller due to this
indemnification payment) resulting from any transaction not in
the ordinary course of business occurring on the Closing Date
after the Buyer's purchase of the Shares.
49
ARTICLE VII
TERMINATION
7.1 Termination. The Parties may terminate this Agreement
-----------
before the Closing as follows:
(a) The Buyer and the Seller may terminate this
Agreement by mutual written consent.
(b) Subject to the provisions of Section 7.2, (i) by
the Seller if one or more of the conditions set forth in
Section 4.3 or Section 4.4 shall not have been satisfied or
waived by the Termination Date and (ii) by the Buyer if one or
more of the conditions set forth in Section 4.2 or Section 4.4
shall not have been satisfied or waived by the Termination Date.
7.2 Effects of Termination. If this Agreement is terminated
----------------------
pursuant to Section 7.1, all further obligations of the Parties
under this Agreement will terminate, except that the obligations
in Section 10.3 and Section 10.7 will survive. If this Agreement
is terminated by a Party because of a breach of the Agreement by
the other Party or because one or more of the conditions to the
terminating Party's obligations under this Agreement is not
satisfied as a result of the other Party's breach of a
representation or warranty or failure to comply with its
obligations under this Agreement, the terminating Party's right
to pursue all legal remedies will survive such termination
unimpaired; provided, however, that
(i) if this Agreement is terminated by the Seller
because of the Buyer's failure to perform or comply with any
covenant, or satisfy any condition, which is to be
50
performed or complied with or satisfied at or prior to the
Closing, (including the failure to obtain any Consent from a
Governmental Entity pursuant to the HSR Act), the Buyer shall pay
the Seller the amount of $100 million which the Parties agree
reflects compensation for the Seller's loss of opportunity to
sell the Shares to another person in a timely manner, and
(ii) if this Agreement is terminated by the Buyer
because of the Seller's failure to perform or comply with any
covenant, or satisfy any condition, which is to be performed or
complied with or satisfied at or prior to the Closing (which
shall not include the failure to obtain any necessary Consent
---
from a Governmental Entity pursuant to the HSR Act or by the
FERC), the Seller shall pay the Buyer the amount of $50 million
which the Parties agree reflects compensation for the Buyer's
loss of opportunity to purchase the Shares in a timely manner.
Each Party's right of termination under Section 7.1 is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be
an election of remedies except if the Party shall receive the
compensation provided in the preceding sentence.
ARTICLE VIII
SURVIVAL & INDEMNITY
8.1 Survival of Representations and Warranties; Limitations
-------------------------------------------------------
on Liability.
- ------------
(a) The respective representations and warranties of
the Parties set forth in this Agreement (except those in
Section 2.18) shall survive up to and including the first
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anniversary of the Closing; the representations and warranties of
the Seller in Section 2.18 shall survive up to and including the
second anniversary of the Closing; and after which respective
survival periods, such representations and warranties shall
terminate and be of no further force or effect.
(b) In the case of any claim arising out of or based
upon any breach of any representation or warranty of a Party set
forth in this Agreement, no claim may be made thereunder unless
the other Party delivers a Claim Notice within the survival
period under Section 8.1(a). If a Party delivers a Claim Notice
as provided in Section 8.4.2 prior to the expiration of the
survival period, then the survival period with respect to the
matter or matters described in such Claim Notice shall be tolled
until all such matters shall have been finally resolved and any
remedial action required in connection therewith shall have been
effected.
8.2 Indemnification by the Buyer. The Buyer shall
-------------------------------
indemnify, defend and hold harmless the Seller Indemnitees
against and from, and shall reimburse the Seller Indemnitees for,
any loss, claim, liability, damage, cost or expense incurred or
suffered by any of the Seller Indemnitees, (a) caused by, arising
out of, or based upon, any breach of any representation and
warranty by the Buyer on its own behalf contained in this
Agreement or any of the Related Agreements (to the extent that
the Buyer, MidCon or its Subsidiaries are a party thereto), and
(b) caused by, arising out of, based upon or relating to, any
breach of any covenant or agreement by the Buyer on its own
behalf or on behalf of MidCon or its Subsidiaries contained in
this Agreement or any of the Related Agreements (to the extent
that the Buyer, MidCon or its Subsidiaries is a party thereto),
in each case, if and to the extent arising from or related to
52
occurrences or events that occurred after the Closing and, in
each case, together with interest at a rate per annum equal to
the Reference Rate from the date upon which such loss, claim,
liability, damage, cost or expense was incurred or suffered to
the date of payment.
8.3 Indemnification by the Seller.
-----------------------------
8.3.1 The Seller shall indemnify, defend and hold
harmless the Buyer Indemnitees against and from, and shall
reimburse the Buyer Indemnitees for:
(a) any loss, claim, liability, damage, cost or
expense incurred or suffered by any of the Buyer Indemnitees
(i) caused by, arising out of, or based upon, any breach of any
representation or warranty by the Seller contained in this
Agreement or any of the Related Agreements, or (ii) caused by,
arising out of, or based upon, any breach of any covenant or
agreement (other than a representation or warranty) by the Seller
contained in this Agreement or any Related Agreement;
(b) any loss, claim, damage, liability, cost or
expense arising out of the obligations of MidCon or its
Subsidiaries in respect of the MidCon ESOP Agreements (other
than any liability or obligation to pay principal or interest
arising under or pursuant to the ESOP Note, the Term Loan
Agreement or the Term Loan Assignment Agreement), in each case,
together with interest at a rate per annum equal to the Reference
Rate from the date upon which such loss, claim, liability,
damage, cost or expense was incurred or suffered to the date of
payment;
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(c) any Taxes with respect to any Tax year or
portion thereof ending on or before the Closing Date (or for any
Tax year beginning before and ending after the Closing Date to
the extent allocable (determined in a manner consistent with
Sections 6.3, 6.6, 6.7 and 6.8 of this Agreement) to the portion
of such period beginning before and ending on the Closing Date),
other than Taxes with respect to the taxable year in which
Closing occurs to which the provisions of the Tax Sharing
Agreement remain in effect after the Closing, consistent with
Section 6.2 of this Agreement; provided, however, that Seller's
obligation pursuant to this sentence shall not include any
liability to indemnify and hold harmless the Buyer Indemnitee for
Tax liabilities (i) to the extent such Taxes are included in or
covered by any reserve for Tax liability recorded on the 1997
Financial Statements and (ii) unless the amount of a particular
Tax liability shall exceed $100,000 and then only to the extent
the aggregate of all such Tax liabilities (exceeding $100,000)
shall exceed ten million dollars ($10,000,000); and
(d) any loss, claim, damage, liability, cost or
expense arising out of or relating to any claims by Persons which
own interests in the assets assigned by MidCon Gas Services Corp.
("MGS") to MC Panhandle Inc. ("MCP") pursuant to the Assignment
and Assumption Agreement dated December 31, 1996 by and between
MGS and MCP, including those cases referred to on Schedule 2.13
but only to the extent such losses, claims, damages, liabilities,
costs and expenses (i) relate to the liability of MidCon or its
Subsidiaries in such matter and (ii) exceed $10 million;
provided, however, the Seller shall be entitled to defend, as
more fully provided in Section 8.4.5, all actions, suits,
proceedings or claims subject to this clause (d).
54
8.3.2 The Seller shall indemnify, defend and hold
harmless MidCon and its Subsidiaries (collectively, the "Tax
Indemnitees" and individually, a "Tax Indemnitee") against and
from and shall reimburse the Tax Indemnitees from any liability
that any of the Tax Indemnitees may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any
increase in Tax liability arising out of or with respect to the
ownership or disposition of, or investment in, Great Plains
Gasifications Associates and MCN Coal Gasification Company.
8.4 Interpretation. The provisions of each of the foregoing
--------------
Sections of this Article VIII shall be interpreted as follows:
8.4.1 The indemnity provided for by each of such
Sections shall extend to, and the amount of any actual loss,
liability, damage, cost or expense incurred or suffered by any
Indemnified Person (whether a Seller Indemnitee or a Buyer
Indemnitee) shall include, all losses, liabilities, damages,
costs and expenses of such Indemnified Person, as the case may
be, including amounts paid in settlement, costs of investigation
and reasonable fees and expenses of attorneys, accountants or
other agents and experts reasonably incident to matters
indemnified against and the enforcement of such indemnity;
provided, however, that neither Buyer Indemnitees nor Seller
- -------- -------
Indemnitees shall be entitled to indemnification hereunder for
any loss of profits or other consequential damages. The losses,
liabilities, damages, costs and expenses included in the
indemnity provided for by each of the foregoing Sections of this
Article VIII are herein collectively called "Damages".
55
8.4.2 The amount claimed by an Indemnified Person
to be owing as described in each such Section, together with a
list identifying to the extent reasonably possible each separate
item of loss, liability, damage, cost or expense for which
payment is so claimed, shall be set forth by such Person in a
statement delivered to the indemnifying Party setting forth the
details of and the basis for such claim ("Claim Notice") and
shall be paid by such indemnifying Party, as and to the extent
required herein, within 30 days after receipt of such Claim
Notice or, if the indemnifying Party raises reasonable objection
thereto within such 30 days, then whenever a determination as to
whether the Indemnified Person is entitled to indemnification
hereunder shall have occurred or shall have been mutually agreed
to.
8.4.3 No payment on account of any actual loss,
liability, damage, cost or expense pursuant to the provisions of
Section 8.3.1(a) or Section 8.3.1(b) shall be required to be made
by the Seller unless the Buyer Indemnitees shall have delivered
to the Seller a Claim Notice therefor prior to the first
anniversary of the Closing Date. No payment on account of any
actual loss, liability, damage, cost or expense pursuant to the
provisions of Section 8.3.1(c), Section 8.3.1(d) or Section 8.3.2
shall be required to be made by the Seller unless the Buyer
Indemnitees or the Tax Indemnitees, respectively, shall have
delivered to the Seller a Claim Notice therefor prior to the
second anniversary of the Closing Date. No payment on account of
any actual loss, liability, damage, cost or expense pursuant to
the provisions of Section 8.2 (except for payments for breach of
Buyer's covenants in Section 5.2 and Section 5.3 and Article VI)
shall be required to be made by the Buyer unless the Seller's
Indemnitee shall have delivered to the Buyer a Claim Notice
therefor prior to the first anniversary of the Closing Date.
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8.4.4 If any of the Buyer Indemnitees, the Tax
Indemnitees, or Seller Indemnitees shall deliver a Claim Notice
as provided in Section 8.4.3 prior to the applicable anniversary
of the Closing Date, then the survival period with respect to
each matter described in detail in such Claim Notice shall be
tolled until such matter shall have been finally resolved and any
remedial action required in connection therewith shall have been
effected.
8.4.5 In the event that any action, suit or
proceeding shall be brought against any Indemnified Person by any
third party, which action, suit or proceeding, if determined
adversely to the interests of such Indemnified Person, would
entitle such Indemnified Person to indemnity pursuant to the
provisions of Section 8.2 or Section 8.3, if the Claim Notice has
been timely given pursuant to Section 8.4.3, such Indemnified
Person shall reasonably promptly notify the indemnifying Party of
the same in writing, but any failure to so notify shall not
relieve the applicable indemnifying Party from any liability
which it may have to such Indemnified Person under such
Section 8.2 or Section 8.3 unless such failure would prejudice
materially the rights of the Party entitled to receive such
notification. The Person seeking indemnification pursuant to the
provisions of this Article VIII shall have the right, at its sole
cost and expense, to participate in any legal action for which
indemnification shall be sought. However, the Party from whom
indemnification shall be sought shall have the right to assume
the defense thereof with counsel reasonably acceptable to the
Person seeking indemnification and shall have the sole right to
settle or otherwise dispose of such legal action in any manner it
deems appropriate. The Person seeking indemnification shall
make, at its sole cost and expense, personnel and records
available to the indemnifying Party for the defense of claims or
legal actions, as may be reasonably requested by the indemnifying
Party, and shall take such
57
reasonable actions as may be necessary to mitigate its damages,
which cost of mitigation shall be covered by the indemnity in
this Article VIII.
8.5 Exclusive Remedy. The sole and exclusive liability of
----------------
the Seller to the Buyer Indemnitees or the Tax Indemnitees, and
of the Buyer to the Seller Indemnitees, for Damages under or in
connection with this Agreement or the transactions contemplated
hereby (including without limitation, for any breach or
inaccuracy of any representation or warranty or for any breach of
any covenant required to be performed hereunder) and the sole and
exclusive remedy of the Buyer Indemnitees or the Tax Indemnitees
and the Seller Indemnitees with respect to any of the foregoing,
shall be as expressly set forth in this Article VIII and the
Seller and the Buyer hereby waive, release and agree not to
assert any other remedy for Damages, including, without
limitation, common law and statutory rights.
ARTICLE IX
DEFINITIONS
9.1 "Affiliate" shall mean, with respect to any Person, any
other Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common
Control with such Person.
9.2 "Affiliated Group" means any affiliated group within
the meaning of Code Section 1504(a) or any similar group defined
under a similar provision of state, local or foreign law.
58
9.3 "Agreement" shall mean this Stock Purchase Agreement,
including its Exhibits and Schedules, as the same may be amended
in writing from time to time in accordance with their respective
terms.
9.4 "B Facility Loan" shall mean a loan by MidCon to the
Seller as more fully set forth in the Cash Management Agreement.
9.5 "Business" shall mean the business and operations
conducted by MidCon and its Subsidiaries as of the date hereof.
9.6 "Business Day" shall mean any day on which national
banks in the City of New York, State of New York, are open for
business.
9.7 "Buyer" shall mean KN Energy, Inc., a Kansas
corporation.
9.8 "Buyer Benefit Plans" shall have the meaning set forth
in Section 5.2.3(c).
9.9 "Buyer Indemnitees" shall mean the Buyer and each of
its Affiliates and their respective officers, directors,
employees and agents.
9.10 "Buyer's Pipeline Lease Guaranty" shall have the
meaning set forth in Section 5.3.6.
9.11 "C Facility Loan" shall mean a loan by the Seller to
MidCon as more fully set forth in the Cash Management Agreement.
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9.12 "Cash Management Agreement" shall mean the Intercompany
Cash Management Agreement, dated as of November 20, 1996, by and
between the Seller and MidCon.
9.13 "Certificate of Designations" shall mean the
Certificate of Designations of the CMIC Preferred Stock, as filed
with the Secretary of State of the State of Delaware on November
20, 1996.
9.14 "Claim Notice" shall have the meaning set forth in
Section 8.4.2.
9.15 "Closing" shall have the meaning set forth in
Section 4.1.
9.16 "Closing Date" shall mean the Business Day on which the
Closing shall occur.
9.17 "CMIC Preferred Stock" shall mean the Cumulative MidCon-
Indexed Convertible Preferred Stock (Par Value $1.00 Per Share)
of the Seller.
9.18 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
9.19 "Commitments" shall have the meaning set forth in
Section 5.2.5.
9.20 "Common Stock" shall have the meaning set forth in
Section 2.4.
9.21 "Consents" shall have the meaning set forth in Section
5.3.2.
9.22 "Control" (and its derivative terms "Controlled",
"Controls" etc.) shall mean the power and right to direct the
management and policies of another Person, whether by
60
ownership of voting securities, the ability to elect a majority
of the board of directors or other managing board or committee,
by management contract, or otherwise.
9.23 "Current Assets" shall mean assets that are reasonably
expected to be realized in cash or sold or consumed within one
year or less, determined in accordance with GAAP on a consistent
basis.
9.24 "Current Liabilities" shall mean liabilities,
indebtedness and obligations that are reasonably expected to be
payable within one year or less, determined in accordance with
GAAP on a consistent basis.
9.25 "Damages" shall have the meaning set forth in
Section 8.4.1.
9.26 "Dividend Note" shall mean that certain Dividend Note,
dated November 20, 1996, in the original principal amount of
$1,600,000,000, issued by MidCon to the Seller.
9.27 "Employee Plans and Agreements" shall mean each bonus,
deferred compensation, incentive compensation, stock purchase,
stock option, employment, consulting, severance or termination
pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each
other "employee benefit plan" (within the meaning of section 3(2)
of ERISA), program, agreement or arrangement, whether formal or
informal, written or oral, and whether legally binding or not,
sponsored, maintained or contributed to or required to be
contributed to by the Seller or MidCon or any of their
Subsidiaries for the
61
benefit of any employee, former employee, consultant, officer, or
director of MidCon or any of its Subsidiaries.
9.28 "Employees" shall mean collectively the Salaried
Employees and the Union Employees.
9.29 "Employee Welfare Benefit Plan" shall have the meaning
set forth in Section 3(1) of ERISA.
9.30 "Encumbrance" shall mean any lien, charge, encumbrance,
conditional sale agreement, option, right of purchase, warrant,
title retention agreement, pledge, restriction on transfer,
voting trust, security interest or other adverse claim, whether
arising by contract or law.
9.31 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
9.32 "ESOP Note" shall mean that certain Non-Recourse
Promissory Note, dated November 20, 1996, in the amount of
$1,398,600,000, issued by the MidCon ESOP Trust to the Seller.
9.33 "Facilities" shall have the meaning set forth in the
Cash Management Agreement.
9.34 "FERC" shall mean the Federal Energy Regulatory
Commission.
9.35 "Financial Statements" shall have the meaning set forth
in Section 2.10.
62
9.36 "Former Salaried Employees" shall mean the former
nonunion employees of MidCon or any of its Subsidiaries (i) who
retired, died, became disabled or otherwise terminated employment
prior to the Closing Date and (ii) who are not immediately after
the Closing in the active employment of the Seller or any of its
Subsidiaries.
9.37 "Former Union Employees" shall mean the former
employees of MidCon or any of its Subsidiaries who were
represented by a collective bargaining unit represented by the
Union, including such employees who, on the Closing Date and
pursuant to the terms of the union contract in effect as of the
date of such employee terminated from service, retired, died,
became disabled or otherwise terminated employment prior to the
Closing Date.
9.38 "GAAP" shall mean United States generally accepted
accounting principles. GAAP relating to the Seller or MidCon
shall be that applied on a basis consistent with the preparation
of the Financial Statements.
9.39 "Governmental Entity" shall mean any federal, state,
local or foreign governmental or regulatory authority or agency.
9.40 "Government Securities" means direct non-callable
obligations of, or non-callable obligations timely payments of
which are guaranteed by, the United States of America, for the
payment of which guarantee or obligations the full faith and
credit of the United States of America is pledged.
9.41 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
63
9.42 "Indemnified Person" shall mean one of the Seller
Indemnitees or the Buyer Indemnitees as the case may be.
9.43 "Insurance Novation Agreement" shall mean the agreement
substantially in the form of Exhibit 5.1.5(b).
9.44 "Insurance Release Agreement" shall mean the agreement
substantially in the form of Exhibit 5.1.5(a).
9.45 "Intercompany Agreements" shall mean (i) the Services
Agreement, (ii) the Cash Management Agreement, (iii) the Tax
Sharing Agreement, (iv) the MidCon Restructuring Agreements,
(v) the Dividend Note, (vi) the Pipeline Lease, (vii) the
Pipeline Lease Guaranty and (viii) the Originator Receivable
Sales Agreement.
9.46 "Knowledge" shall mean, with respect to any Party, the
actual conscious awareness of factual information, without
independent investigation, of officers of such Party.
9.47 "LIBO Business Day" shall mean any day not a Saturday,
Sunday or legal holiday in the State of New York and on which
banks and the Federal Reserve Bank of New York are open for
business in New York City; provided, however, that the term "LIBO
Business Day" shall also exclude any day on which banks are not
open for dealings in Dollar deposits in the London Interbank
Market.
9.48 "LIBO Rate" shall mean, for any interest period, the
interest rate per annum reflected in the Wall Street Journal
under MONEY RATES London Interbank Offered Rates (LIBOR), or such
independent source as shall be agreed by the Seller and the
Buyer, for three
64
months, or such shorter period as may be applicable to the
interest period, for the date that is two LIBO Business Days
prior to the beginning of such interest period.
9.49 "Material Adverse Effect," with respect to any Person,
shall mean an adverse effect, circumstance, condition,
development or occurrence having (a) the effect in each
individual case of a loss, liability, obligation or damages of
more than twenty-five million dollars or (b) the effect in the
aggregate of all losses, liability, obligation or damages of more
than fifty million dollars, net in each case of any benefit
arising from the event, liability, obligation, claim, litigation
or violation giving rise to the adverse effect.
9.50 "MidCon" shall mean MidCon Corp., a Delaware
corporation.
9.51 "MidCon ESOP" shall mean the MidCon Corp. Employee
Stock Ownership Plan established by the Seller, effective as of
November 20, 1996.
9.52 "MidCon ESOP Agreements" shall mean (i) the MidCon
Corp. ESOP Trust Agreement by and between the Seller and U.S.
Trust Company of California, N.A., as trustee, effective November
20, 1996, (ii) the MidCon ESOP, (iii) the Funding Agreement,
dated November 20, 1996, by and between the Seller and U.S. Trust
Company of California, N.A., in its capacity as trustee of the
MidCon ESOP Trust; (iv) the Stock Purchase Agreement, dated
November 20, 1996, by and between the Seller and the MidCon ESOP
Trust; (v) the Pledge Agreement dated as of November 20, 1996, by
and among the Seller, in its capacity as collateral agent, the
Seller, in its individual capacity, MidCon and the MidCon ESOP
Trust; (vi) the Stockholders' Agreement dated November 20, 1996
by and between the Seller and the
65
MidCon ESOP Trust, (vii) the Certificate of Designations;
(viii) the ESOP Note and (ix) the Term Loan Agreement.
9.53 "MidCon ESOP Trustee" shall have the same meaning as
"Trustee" in the MidCon ESOP. The MidCon ESOP Trustee is the
U.S. Trust Company of California, N.A. as of the date of this
Agreement.
9.54 "MidCon Indemnitees" shall have the meaning set forth
in Section 5.2.6.
9.55 "MidCon Loans" shall mean loans made by the Seller to
MidCon as more fully set forth in the Cash Management Agreement.
9.56 "MidCon Restructuring Agreements" shall mean all the
agreements referred to in the definition of "MidCon
Restructuring" in the Certificate of Designations.
9.57 "1997 Financial Statements" shall have the meaning set
forth in Section 5.1.6.
9.58 "Notified Party" shall have the meaning set forth in
Section 5.3.3.
9.59 "Notifying Party" shall have the meaning set forth in
Section 5.3.3.
9.60 "OPC Loans" shall mean loans made by MidCon to the
Seller as more fully set forth in the Cash Management Agreement.
9.61 "Originator Receivables Sale Agreement" shall mean the
Originator Receivables Sale Agreement, dated as of October 29,
1992, by and among Occidental Receivables, Inc.,
66
Occidental Chemical Corporation and the MidCon subsidiaries
listed as originators on the signature pages thereto, as amended.
9.62 "Party" or "Parties" shall mean the Seller or the
Buyer, or both, as the case may be.
9.63 "Person" shall mean an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization, business, government or political
subdivision thereof, governmental agency or other entity.
9.64 "Pipeline Lease" shall mean the Intrastate Pipeline
System Lease, dated as of December 31, 1996, by and between the
Pipeline Lessor and the Pipeline Lessee.
9.65 "Pipeline Lease Guaranty" shall mean the Guaranty and
Agreement, dated December 31, 1996, by MidCon in favor of the
Pipeline Lessor with regard to the guaranty of the obligations in
favor of the Pipeline Lessee.
9.66 "Pipeline Lessee" shall mean MidCon Texas Pipeline
Operator, Inc., a Delaware corporation, and its successors and
assigns.
9.67 "Pipeline Lessor" shall mean MidCon Texas Pipeline,
L.P., a Delaware limited partnership, and its successors and
assigns.
9.68 "PUHCA" shall mean the Public Utility Holding Company
Act of 1935, as amended.
9.69 "Purchase Price" shall have the meaning set forth in
Section 1.2.
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9.70 "Reference Rate" shall mean the rate of interest
announced from time to time by The Chase Manhattan Bank, N.A., as
its reference rate. This rate of interest shall be applied to
the actual elapsed days over the total days in the applicable
calendar year.
9.71 "Related Agreements" shall mean (a) the Insurance
Release Agreement, (b) the Insurance Novation Agreement, (c) the
Term Loan Assignment Agreement, (d) an interim services
agreement, if any, and (e) any security agreement and control
agreement or any letter of credit issued pursuant to
Section 5.3.4.
9.72 "Salaried Employees" shall mean all employees,
including salaried, hourly employees of MidCon or any of its
Subsidiaries who are not Union Employees and who are immediately
prior to the Closing (i) in the active employment of MidCon or
any of its Subsidiaries, or (ii) on sick leave, short term
disability, long term disability, or other leave of absence
approved by the Seller or any of its Subsidiaries.
9.73 "SEC" shall mean the Securities and Exchange
Commission.
9.74 "SEC Reports" shall have the meaning set forth in
Section 2.11.
9.75 "Securities Act" shall mean the Securities Act of 1933,
as amended.
9.76 "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
9.77 "Seller" shall mean Occidental Petroleum Corporation, a
Delaware corporation.
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9.78 "Seller Indemnitees" shall mean the Seller and each of
its Affiliates and their respective officers, directors,
employees and agents.
9.79 "Services Agreement" shall mean the Services Agreement
dated November 20, 1996 by and between the Seller and MidCon.
9.80 "Shares" shall have the meaning set forth in
Section 2.4.
9.81 "Significant Subsidiary" shall mean the following
Subsidiaries of MidCon: mc2, Inc., MidCon Gas Products Corp.,
MidCon Gas Services Corp., MidCon Power Services Corp., MidCon
Texas Pipeline Operator, Inc., Natural Gas Pipeline Company of
America, NGPL Offshore Company, NGPL - Canyon Compression Co.,
NGPL - Trailblazer Inc., and Palo Duro Pipeline Company, Inc.
9.82 "Subsidiary" of any Person shall mean another Person,
with respect to which such first Person owns, directly or
indirectly, an amount of the voting securities or other voting
ownership or partnership interests sufficient to elect at least a
majority of its board of directors or other governing body (or,
if there are no such voting interests, more than 50% of its
equity).
9.83 "Substitute Note" shall mean one or more notes payable
to the order of the Seller, substantially in the form of
Exhibit 9.83 hereto, which provides for interest at a rate equal
- ------------
to 0.3% plus the rate of interest (the "fixed rate equivalent")
applicable to a promissory note with a fixed rate of interest
that has the same present value as a promissory note that bears
interest at the LIBO Rate applicable for each interest period,
assuming that both notes have the
69
same original principal amount as such Substitute Note and pay
interest and principal at the same times as such Substitute Note,
which fixed rate equivalent shall be determined on the fifth
Business Day prior to the Closing Date by reference to the
implied forward LIBO Rates derived from the eurodollar futures
market, which implied forward LIBO Rates are published by an
independent source agreed to by the Buyer and the Seller, in
accordance with a methodology previously agreed to by the Buyer
and the Seller.
9.84 "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, environmental (including
taxes under Code Section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether
disputed or not.
9.85 "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
9.86 "Tax Sharing Agreement" shall mean the Tax Sharing
Agreement dated as of November 20, 1996 by and between the
Seller and MidCon.
9.87 "Term Loan Agreement" shall mean the Term Loan
Agreement, dated as of November 20, 1996, by and among the
Seller, MidCon Corp. ESOP Trust and MidCon.
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9.88 "Term Loan Assignment Agreement" shall mean an
agreement substantially in the form set forth in Exhibit 9.88.
------------
9.89 "Termination Allowance Plan" shall mean the MidCon
Corp. Termination Allowance Plan adopted by MidCon as amended
from time to time.
9.90 "Termination Date" shall mean June 30, 1998 or such
other date as the Parties may mutually agree in writing.
9.91 "Union" shall mean the United Steel Workers (Local
1445--2) representing certain hourly employees of MidCon.
9.92 "Union Contract" shall mean the collective bargaining
agreement between Natural Gas Pipeline of America and the United
Steel Workers Local 1445-2.
9.93 "Union Employees" shall mean all employees of MidCon or
its Subsidiaries immediately prior to the Closing Date who are
part of the collective bargaining unit represented by the Union,
including such employees who, on the Closing Date and pursuant to
the terms of the Union Contract, (i) are in the active employment
of MidCon or any of its Subsidiaries, or (ii) are on layoff, sick
leave or other leave of absence.
71
ARTICLE X
MISCELLANEOUS
10.1 Further Assurances. Subject to the terms and
-------------------
conditions herein provided, each of the Parties agrees to use all
reasonable commercial efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable commercial efforts
to obtain all necessary waivers, consents and approvals in
connection with any governmental requirements set forth in
Section 2.3 and Section 3.3 of the Agreement, and to effect all
necessary registrations and filings. In case at any time after
the Closing Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers
and/or directors of the Seller, the Buyer or MidCon shall take
all such necessary action.
10.2 Preservation of Books and Records.
---------------------------------
(a) Each Party agrees that for the period specified in
subpart (b) such Party shall take all necessary action to ensure
that all corporate books and records of MidCon and its
Subsidiaries with respect to periods ending on or before the
Closing Date in the possession or control of such Party or its
Affiliates shall be open for inspection by representatives of the
other Party at any time during regular business hours and that
the other Party may during such statutory period at its expense
make such excerpts therefrom as it may reasonably request.
72
(b) For the period of 10 years following the Closing
Date or such longer period pursuant to Article VI, no Party or
its Affiliates shall destroy or give up possession of any
original or any copy of any of the books and records relating to
any matter for which a Party shall have any continuing
responsibility under this Agreement or any agreement contemplated
by this Agreement without first offering to the other Party the
opportunity, at its expense, to obtain such original or a copy
thereof. During such period, the Party shall use reasonable
commercial efforts to cooperate with the other Party and make
such books and records available to the employees and
representatives of the other Party to the extent that the other
Party may reasonably require for its corporate and other business
purposes.
10.3 Confidentiality. Each Party and its Affiliates shall,
---------------
and shall cause their respective employees, agents, accountants,
legal counsel and other representatives to perform and comply
with the two Confidentiality Agreements dated October 9, 1997 and
December 16, 1997 respectively between the Parties.
10.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given upon personal
delivery, facsimile transmission (which is confirmed) or delivery
by an overnight express courier service (delivery, postage or
freight charges prepaid), or on the fourth day following deposit
in the United States mail (if sent by registered or certified
mail, return receipt requested, delivery, postage or freight
charges prepaid), addressed to the parties at the following
addresses (or at such other address for a party as shall be
specified by like notice):
73
(a) if to Seller:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Facsimile Number: (310) 443-6195
(b) if to Buyer:
KN Energy, Inc.
P.O. Box 281304
370 Van Gordon
Lakewood, Colorado 80228-8304
Attention: Vice President
Facsimile Number: (303) 763-3115
10.5 Public Announcements. Prior to the Closing, the
---------------------
Parties shall not, and shall not permit any of their respective
Affiliates to, issue any press release or other public
announcement concerning this transaction except (a) with the
prior approval of the other Party, or (b) when, on the advice of
legal counsel, such release or announcement is required by the
federal securities laws or the rules and regulations of any of
the national exchanges, in which case the Parties shall, to the
extent practicable, first consult with each other.
10.6 Successors and Assigns. No party to this Agreement may
----------------------
assign any of its rights or obligations under this Agreement
without the express written consent of the other Party hereto.
Any assignment in violation of the foregoing shall be null and
void. Subject to the preceding sentences of this Section 10.6,
the provisions of this Agreement (and, unless
74
otherwise expressly provided therein, of any document delivered
pursuant to or in connection with this Agreement) shall be
binding upon and inure to the benefit of the Parties and their
respective legal representatives, successors and assigns.
10.7 Expenses. Whether or not this Agreement is
--------
consummated, all costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the
Party incurring such expense. Any brokerage, finders or other
similar fees or commissions payable to Merrill Lynch & Co. or to
Credit Suisse First Boston Corporation in connection with the
transactions contemplated by this Agreement shall be paid by the
Seller. Any brokerage, finder's or other similar fees payable to
Morgan Stanley & Co. Incorporated, Petrie Parkman & Co., Inc. or
to Salomon Brothers Inc in connection with the transactions
contemplated by this Agreement shall be paid by the Buyer.
10.8 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void,
unenforceable or against the applicable regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
75
10.9 Construction; Interpretation.
----------------------------
(a) When a reference is made in this Agreement to an
Article, Section, Exhibit or Schedule, such reference shall be to
an Article, Section, Exhibit or Schedule to this Agreement unless
otherwise indicated.
(b) The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by
the words "without limitation."
(c) The information set forth in any Section or in any
Schedule shall be deemed to qualify and relate to every provision
of this Agreement.
(d) The table of contents and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(e) The Parties agree that they have been represented
by counsel during the negotiation and execution of this Agreement
and, therefore waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the Party
drafting such agreement or document.
(f) Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all valid
and enforceable rules and regulations promulgated thereunder,
unless the context requires otherwise.
76
10.10 Entire Agreement; Third Party Beneficiaries. This
-------------------------------------------
Agreement, those certain Confidentiality Agreements by and
between the Seller and the Buyer (including the documents and the
instruments referred to herein and therein) as more fully
described in Section 10.3 and that certain letter agreement from
the Seller to the Buyer dated the date hereof regarding
compensation of certain officers of MidCon (a) constitute the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided
under Section 5.2.3, Section 5.2.6, Section 8.2 and Section 8.3,
are not intended to confer upon any person other than the Parties
any rights or remedies hereunder.
10.11 Amendment and Modification. This Agreement may
--------------------------
not be amended, modified and supplemented, and no amendment to
this Agreement shall be effective, unless evidenced by an
instrument in writing signed by each Party.
10.12 Governing Law. This Agreement shall be governed
-------------
and construed in accordance with the laws of the State of
Delaware, without regard to principles of conflicts of law.
10.13 Waiver of Jury Trial. Each of the Buyer and the
--------------------
Seller hereby irrevocably waive all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement
or actions of the Buyer and the Seller in the negotiation,
administration, performance and enforcement hereof.
77
10.14 Consent to Jurisdiction and Forum Selection. Each
-------------------------------------------
Party hereby irrevocably agrees that any legal action or
proceeding against it or any of its Affiliates arising out of
this Agreement may be brought in the courts of the State of
Delaware, or of the United States of America District Court for
Delaware and does hereby irrevocably (a) designate, appoint and
empower the Secretary of State of the State of Delaware to
receive for and on behalf of it and its Affiliates service of
process in the State of Delaware, and (b) consent to service of
process outside the territorial jurisdiction of such courts in
the manner permitted by law. In addition, each Party, on its own
behalf and on behalf of its Affiliates, irrevocably waives
(i) any objection which such Party or its Affiliates may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising out of, or relating to, this Agreement brought
in any such court, (ii) any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum, and (iii) the right to object, with respect
to any such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such Party
or any other Party.
10.15 Counterparts. This Agreement may be executed in
------------
one or more counterparts, each of which shall be considered one
and the same agreement and shall become effective when two or
more counterparts have been signed by each of the Parties and
delivered to the other Party, it being understood that all
Parties need not sign the same counterpart.
78
IN WITNESS WHEREOF, the Seller and the Buyer have caused
this Agreement to be signed by their respective officers
thereunder duly authorized, all as of the date first written
above.
OCCIDENTAL PETROLEUM CORPORATION
("Seller")
By: STEPHEN I. CHAZEN
-----------------------------
Its:
[Corporate Seal]
KN ENERGY, INC.
("Buyer")
By: LARRY HALL
------------------------------
Its:
[Corporate Seal]
79
EXHIBIT 4.2.3
OPINION OF COUNSEL
TO SELLER
1. The Seller is a corporation validly existing and in
good standing under the laws of the State of Delaware.
2. The Seller has the requisite corporate power and
authority to enter into the Agreement, each Security
Agreement, each Control Agreement, the Insurance Release
Agreement, the Insurance Novation Agreement, and the Term
Loan Assignment Agreement and the Letter Agreement
referenced in Section 10.10 of the Agreement (together, the
"Transaction Documents") and to perform its obligations
thereunder.
3. The authorized capital stock of MidCon consists of
1,400,000 shares of common stock, par value $.01 per share,
all of which are outstanding. The Seller owns all of the
outstanding Common Stock of record and beneficially, free
and clear of all adverse claims.
4. The Board of Directors of the Seller has duly
authorized the execution and delivery of the Transaction
Documents by the Seller and the consummation of the
transactions contemplated thereby, and no other corporate
proceeding on the part of the Seller is necessary to
authorize the execution and delivery of the Transaction
Documents by the Seller and the consummation by it of the
transactions contemplated thereby.
5. Each of the Transaction Documents has been duly
executed and delivered by the Seller.
6. Assuming the due authorization, execution and delivery
of each of the Transaction Documents by the parties thereto
other than the Seller, each of the Transaction Documents is
a valid and binding obligation of the Seller, enforceable
against it in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of
equity (regardless of whether such enforcement is considered
in a proceeding at law or in equity).
7. Neither the execution and delivery by the Seller of the
Transaction Documents, nor the performance by the Seller of
its obligations thereunder, will, as of the Closing Date,
(i) violate or conflict with any provision of the Restated
Certificate of Incorporation, as amended, or By-laws, as
amended, of the Seller (ii) violate or constitute a material
default under any provision of, or result in acceleration of
any obligation under, or give rise to a right to any party
to terminate its obligations under, any material contract,
lease, undertaking, indenture, bond, debenture, mortgage,
deed
of trust, note or other instrument or other agreement
known to such counsel to which the Seller is a party.
8. No consent, approval, or authorization of any
government or governmental instrumentality or court under
any Seller Applicable Laws is required for the execution and
delivery by the Seller of the Transaction Documents or the
performance by the Seller of its obligations thereunder,
except such as have been obtained. "Seller Applicable Laws"
means the laws of the General Corporation Law of the State
of Delaware and the federal laws of the United States of
America that in the experience of such counsel are normally
applicable to transactions of the type contemplated by the
Transaction Documents.
9. Neither the Seller nor MidCon is a "holding company" or
a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the
PUHCA.
2
EXHIBIT 4.3.4
OPINION OF COUNSEL
TO BUYER
1. The Buyer is a corporation validly existing and in good
standing under the laws of the State of Kansas.
2. The Buyer has the requisite corporate power and
authority to enter into the Agreement, each Substitute Note,
each Security Agreement, each Control Agreement, the
Insurance Release Agreement, the Insurance Novation
Agreement, the Term Loan Assignment Agreement and the
Buyer's Pipeline Lease Guarantee (collectively, the "Buyer
Transaction Documents") and to perform its obligations
thereunder.
3. The Board of Directors of the Buyer has duly authorized
the execution and delivery of the Buyer Transaction
Documents by the Buyer and the consummation of the
transactions contemplated thereby, and no other corporate
proceeding on the part of the Buyer is necessary to
authorize the execution and delivery of the Buyer
Transaction Documents by the Buyer and the consummation by
it of the transactions contemplated thereby.
4. Each of the Buyer Transaction Documents has been duly
executed and delivered by the Buyer.
5. Assuming the due authorization, execution and delivery
of each of the Buyer Transaction Documents by the parties
thereto other than the Buyer, each of the Buyer Transaction
Documents is a valid and binding obligation of the Buyer,
enforceable against it in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of
equity (regardless of whether such enforcement is considered
in a proceeding at law or in equity).
6. Neither the execution and delivery by the Buyer of the
Buyer Transaction Documents, nor the performance by the
Buyer of its obligations thereunder, will, as of the Closing
Date, (i) violate or conflict with any provision of the
certificate of incorporation, or by-laws, of the Buyer (ii)
violate or constitute a material default under any provision
of, or result in acceleration of any obligation under, or
give rise to a right to any party to terminate its
obligations under, any material contract, lease,
undertaking, indenture, bond, debenture, mortgage, deed of
trust, note or other instrument or other agreement known to
such counsel to which the Buyer is a party.
7. No consent, approval, or authorization or certificate
of any government or governmental instrumentality or court
under any Applicable Laws is required for the execution and
delivery by the Seller of the Transaction Documents or the
performance by the Buyer
of its obligations thereunder, except such as have been
obtained. "Buyer Applicable Laws" means the laws of the
State of Kansas and the federal laws of the United States of
America that in the experience of such counsel are normally
applicable to transactions of the type contemplated by the
Transaction Documents including, without limitation, the
Federal Power Act and the Natural Gas Act.
8. The Seller has a valid, perfected, first priority
security interest in securities account number __________
maintained with _____________ in the name "____________" and
all securities, funds and other property from time to time
credited to such account and all security entitlements with
respect thereto.*
___________________________________
*This opinion shall be given by [Simpson Thacher & Bartlett]
and shall cover all collateral required to secure any
Substitute Note issued pursuant to the Agreement.
2
EXHIBIT 5.1.5(a)
SETTLEMENT AGREEMENT
AND POLICY RELEASE
This SETTLEMENT AGREEMENT AND POLICY RELEASE (this
"AGREEMENT") is entered into this ____ day of _________, 1998
between OPCAL INSURANCE, INC., a Hawaii corporation, on behalf of
itself and its affiliates, parents, subsidiaries, agents,
employees, predecessors, and successors (collectively "OPCAL"),
and MIDCON CORP., a Delaware corporation and its subsidiaries,
affiliates, agents, employees, predecessors, and successors
(individually and collectively "MIDCON").
RECITALS:
WHEREAS, OPCAL issued to MIDCON certain insurance policies
whereby OPCAL, in consideration of the payment of premiums,
committed to insure certain risks of MIDCON (herein the
"POLICIES") as listed on the attached schedule.
WHEREAS, OCCIDENTAL PETROLEUM CORPORATION, a Delaware
corporation ("OCCIDENTAL") has agreed to sell all of the
outstanding common stock of MIDCON to KN ENERGY, INC., a Kansas
corporation.
WHEREAS, as part of OCCIDENTAL's sale of MIDCON's stock, its
indirect subsidiary, OPCAL, and MIDCON desire fully and finally
to settle and release all their respective rights, obligations
and liabilities, whether known or unknown, as respects MIDCON's
losses and expenses only, under the POLICIES.
AGREEMENTS:
NOW, THEREFORE, IT IS AGREED BY AND BETWEEN OPCAL AND MIDCON
THAT:
1. In consideration of the sale of all of the outstanding
common stock of MIDCON and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, OPCAL
and MIDCON do hereby release and forever discharge one another
and their respective predecessors, parents, affiliates,
subsidiaries, agents, managing agents, officers, directors,
shareholders, successors, assigns and all other persons, firms,
corporations and other entities who may be deemed to act or have
acted, or who may be deemed to act in the future, on their
respective behalfs in connection with or with respect to the
POLICIES from any and all present and future payment obligations,
adjustments, executions, offsets, actions, causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills,
covenants, controversies, agreements, promises, damages, expenses
(including, but not limited to, court costs and attorneys' fees),
judgments, claims, demands, liabilities or losses whatsoever,
whether known or unknown, claimed or suspected, fixed or
contingent, which OPCAL and MIDCON and their respective
predecessors, successors and assigns ever had, now have, or
hereafter may have, whether grounded in law or in equity, in
contract or in tort, or otherwise, and whether obtained by
subrogation, assignment or otherwise, by reason of any matter
whatsoever arising under of the POLICIES or any claims handling
thereunder, it being the intention of the parties that this
AGREEMENT operate as a full and final settlement of all past,
current and future liabilities, whether alleged or actual, to one
another under the POLICIES to the fullest extent possible under
the law, provided however, that nothing in this AGREEMENT shall
affect any rights OPCAL may have with respect to any of its
reinsurers.
2. MIDCON hereby agrees to indemnify OPCAL and to hold it
harmless from and against, and pay on its behalf the amount of
any judgment, payment award, loss, claim, expense, cost, damage
or liability incurred by it arising out of, resulting from or in
any way connected with any claim against OPCAL arising as a
result of MIDCON having been an insured under the POLICIES.
3. MIDCON does hereby withdraw all requests, demands, and
tenders for defense, indemnity or other reimbursement heretofore
submitted to OPCAL, and does hereby covenant and agree to forever
relinquish and abandon any and all rights, whether actual or
alleged, known or unknown, accrued or unaccrued, under the
POLICIES.
4. This AGREEMENT is not intended to and shall not be
construed to confer any benefits on any other person or entity
other than the signatories.
5. This AGREEMENT may be executed in multiple
counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together
constitute one and the same instrument and agreement.
6. This AGREEMENT contains the entire agreement between
the parties as respects its subject matter. All discussions and
agreements previously entertained between the parties concerning
the subject matter of this AGREEMENT are merged into this
AGREEMENT. This AGREEMENT may not be modified or amended, nor
any of its provisions waived, except by an instrument in writing,
signed by both parties hereto.
7. Should any part or provision of this AGREEMENT be
determined invalid for any reason, both parties hereto understand
and agree that the remaining portions hereof shall continue in
effect.
8. Both parties hereto understand and agree that this
AGREEMENT shall be governed by and interpreted and construed
under the laws of the State of California which are effective
this date.
-2-
IN WITNESS WHEREOF the parties hereto have executed this
Settlement Agreement and Policy Release by their duly authorized
representatives in duplicate as of the last date set forth below.
OPCAL INSURANCE, INC.
on behalf of itself and its predecessors,
affiliates, parents and subsidiaries
By: Witness:
---------------------------- ----------------------
Title:
--------------------------
Date:
---------------------------
MIDCON CORP.
on behalf of itself and its predecessors,
affiliates, parents and subsidiaries
By: Witness:
------------------------------ ----------------------
Title:
----------------------------
Date:
----------------------------
-3-
EXHIBIT 5.1.6(a)
ATTACHMENT
DEDUCTIBLES
-------------------------------------
CORP&
INCEPT. EXPIR. LAYER COVERAGE INSURED POLICY # INSURER OXYCHEM OXYUSA MIDCON SUBS
11/1/95 11/1/96 $10M PRIMARY GENERAL/ OPC & Subs 96-4201 OPCAL INS., INC. $1MM/ $1MM/ $1MM/ $0
PRODUCTS OCC (2) OCC (2) OCC (2)
11/1/96 11/1/97 $10M PRIMARY GENERAL/ OPC & Subs 97-4201 OPCAL INS., INC. $1MM/ $1MM/ $1MM/ $0
PRODUCTS OCC (2) OCC (2) OCC (2)
10/15/92 10/15/93 $10M PRIMARY LIABILITY OPC & Subs 92-93-28 OPCAL INS., INC. $250K/ $250K/ $250K/ $0
DEDUCTIBLES OCC (1) OCC (1) OCC (1)
10/15/93 11/1/94 $10M PRIMARY LIABILITY OPC & Subs 94-4210 OPCAL INS., INC. $250K/ $250K/ $250K/ $0
DEDUCTIBLES OCC (2) OCC (2) OCC (2)
11/1/94 11/1/95 $10M PRIMARY LIABILITY OPC & Subs 95-4210 OPCAL INS., INC. $250K/ $250K/ $250K/ $0
DEDUCTIBLES OCC (2) OCC (2) OCC (2)
11/1/95 11/1/96 $10M PRIMARY LIABILITY OPC & Subs 96-4210 OPCAL INS., INC. $1MM/ $1MM/ $1MM/ $0
DEDUCTIBLES OCC (2) OCC (2) OCC (2)
11/1/96 11/1/97 $10M PRIMARY LIABILITY OPC & Subs 97-4210 OPCAL INS., INC. $1MM/ $1MM/ $1MM/ $0
DEDUCTIBLES OCC (2) OCC (2) OCC (2)
10/15/91 10/15/92 $10M PRIMARY PRIMARY OPC & Subs ML90-13(II)OPCAL INS., INC. $25K (ON) $25K (ON) $25K (ON)
MARINE LIAB. & $100K & $100K & $100K
(OFF) (OFF) (OFF)
10/15/92 11/1/93 $10M PRIMARY PRIMARY OPC & Subs 92-9303 OPCAL INS., INC. $25K (ON) $25K (ON) $25K (ON)
MARINE LIAB. & $100K & $100K & $100K
(OFF) (OFF) (OFF)
11/1/93 11/1/94 $10M PRIMARY PRIMARY OPC & Subs 94-2201 OPCAL INS., INC. $250K/OCC $250K/OCC $250K/
MARINE LIAB. OCC
11/1/94 11/1/95 $10M PRIMARY PRIMARY OPC & Subs 95-2201 OPCAL INS., INC. $250K/OCC 250K/OCC $250K/
MARINE LIAB. OCC
11/1/95 11/1/96 $10M PRIMARY PRIMARY OPC & Subs 96-2201 OPCAL INS., INC. $250K/OCC $250K/OCC $250K/
MARINE LIAB. OCC
11/1/96 11/1/97 $10M PRIMARY PRIMARY OPC & Subs 97-2201 OPCAL INS., INC. $250K/OCC $250K/OCC $250K/
MARINE LIAB. OCC
10/15/92 10/15/93 $1M Statutory WORKERS' MidCon 92-93-95 OPCAL INS., INC. $0
COMP.
10/15/93 11/15/94 $1M Statutory WORKERS' MidCon 94-4101 OPCAL INS., INC. $0
COMP.
11/1/94 11/1/95 $1M Statutory WORKERS' MidCon 95-4101 OPCAL INS., INC. $0
COMP.
11/1/95 11/1/96 $1M Statutory WORKERS' MidCon 96-4101 OPCAL INS., INC. $0
COMP.
11/1/96 11/1/97 $1M Statutory WORKERS' MidCon 97-4101 OPCAL INS., INC. $0
COMP.
(1)IN ADDITION TO DEDUCTIBLE PRORATION OF EXPENSES BASED ON DEDUCTIBLE TO
TOTAL SETTLEMENT
(2)STRAIGHT DEDUCTIBLE NO PRORATION
OF EXPENSES
(3)POLICY DEDUCTIBLE EQUALS POLICY LIMITS, DIVISION DEDUCTIBLE ARE REFLECTED IN LIABILITY
DEDUCTIBLE POLICIES.
(4)$10MM PLUS ALL RELATED DEFENSE EXPENSES
THERE MAY BE OTHER POLICIES THAT WERE ERRONEOUSLY NOT INCLUDED. THE FAILURE TO INCLUDE THEM IS NOT A LIMITATION OF THE
INDEMNITOR'S INDEMNIFICATION OBLIGATIONS UNDER THE AGREEMENT THIS ADDENDUM IS ATTACHED TO.
EXHIBIT 5.1.5(b)
NOVATION AGREEMENT
entered into by and between
National Union Fire Insurance Company of Pittsburgh, PA.
[Add names of National Union affiliates]
(herein the "Company")
and
KN Energy, Inc.
(herein "Purchaser")
and
Occidental Petroleum Corporation,
a Delaware corporation
(herein "Occidental")
and
its wholly-owned captive insurance company,
Opcal Insurance, Inc.,
a Hawaii corporation
(herein "Opcal")
WHEREAS, the Company and Occidental and Opcal have previously entered
into the following Indemnity Agreements and Reinsurance Agreements,
respectively, together with any Addenda, Policy and Funding Schedule(s)
thereto (collectively the "Agreements"):
1. Faculative Reinsurance Agreement between National Union Fire
Insurance Company of Pittsburgh, PA and Piper Indemnity Limited,
effective April 1, 1980;
2. Faculative Reinsurance Agreement Restated as of July 1, 1987
between National Union Fire Insurance Company of Pittsburgh, PA
and Piper Indemnity Limited;
3. Faculative Reinsurance Agreement Restated as of October 15,
1992 between Insurance Company of the State of Pennsylvania,
National Union Fire Insurance Company of Pittsburgh, PA, Commerce
and Industry Insurance Company, Birmingham Fire Insurance Company
of Pennsylvania, American Home Assurance Company, Landmark
Insurance Company and Piper Indemnity Limited;
4. Faculative Reinsurance Agreement Restated as of October 15,
1993 between Insurance Company of the State of Pennsylvania,
National Union Fire Insurance Company of Pittsburgh, PA,
Birmingham Fire Insurance Company of Pennsylvania, Illinois
National Insurance Company and Opcal, Insurance Inc., Successor
by Merger to Piper Indemnity Limited;
5. Faculative Reinsurance Agreement Restated as of November 1,
1994 between Insurance Company of the State of Pennsylvania,
National Union Fire Insurance Company of Pittsburgh, PA,
Birmingham Fire Insurance Company of Pennsylvania, Illinois
National Insurance Company, American Home Assurance Company and
Opcal, Insurance Inc.;
6. Faculative Reinsurance Agreement Restated as of November 1,
1995 between Insurance Company of the State of Pennsylvania,
National Union Fire Insurance Company of Pittsburgh, PA,
Birmingham Fire Insurance Company of Pennsylvania, American Home
Assurance Company, Commerce & Industry and Opcal, Insurance Inc.;
7. Deductible Indemnity Agreement between National Union Fire
Insurance Company of Pittsburgh, PA and Occidental Petroleum
Corporation, effective July 1, 1987; and
8. Deductible Indemnity Agreement between National Union Fire
Insurance Company of Pittsburgh, PA, Insurance Company of the
State of Pennsylvania and Occidental Petroleum Corporation,
effective October 15, 1992.
WHEREAS, Occidental, as Indemnitor, desires that it be replaced as the
Client under the Indemnity Agreements, and Opcal desires that it be
released and discharged by the Company under the Reinsurance Agreements,
with respect to losses and expenses of Occidental's subsidiary, MidCon
Corp., a Delaware corporation and of its various consolidated subsidiaries
and affiliates, listed in Exhibit A hereto (collectively "MidCon"), arising
under or relating to policies which are the subject of the respective
Agreements (collectively "losses and expenses").
WHEREAS, Purchaser, a company organized and doing business under the
laws of the State of Kansas, desires to indemnify the Company, in return
for its release and discharge of indemnity and reinsurance obligations of
Occidental and Opcal, respectively, under the Agreements, with respect to
MidCon's losses and expenses only; and
WHEREAS, the Company consents to and accepts the Purchaser's
indemnification in place of Occidental's and Opcal's respective obligations
and liabilities under the Agreements, as to MidCon's losses and expenses
only.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein the parties hereto agree as follows:
2
1. This Novation Agreement shall take effect as of the Closing, as
defined in the Stock Purchase Agreement between Occidental and Purchaser,
dated ___________, 1997 (herein the "Effective Time"), at which time
Occidental and Opcal hereby transfer, delegate, convey and assign to
Purchaser all rights, duties, obligations and interests as Indemnitor or
Reinsurer under the Agreements with respect to MidCon's losses and expenses
only. Purchaser agrees to accept, assume, undertake and perform all such
rights, duties and obligations under the Agreements with respect to
MidCon's losses and expenses only:
(i) as if it were originally the Client (Indemnitor) or
Reinsurer under the Agreements as to such losses and expenses; and
(ii) regardless of whether such losses and expenses or the
rights, duties and obligations of the Client (Indemnitor) or Reinsurer
arose before or after the Effective Time.
2. In consideration of Purchaser's assumption of the obligations and
liabilities for MidCon's losses and expenses under the Agreements, at the
Effective Time, the Company hereby releases and discharges Occidental and
Opcal, their respective present and former subsidiaries and affiliates,
directors, officers, employees and shareholders, from all present and
future claims, costs, damages, penalties, demands, attorneys' fees,
liabilities and obligations to the Company of whatsoever character, arising
out of the Agreements but only with respect to MidCon's losses and
expenses, regardless of whether such losses and expenses were incurred or
attributed to claims noticed or asserted before or after the Effective
Time, provided, however, that Occidental and Opcal shall otherwise remain
liable to the Company under the Agreements with respect to all other losses
and expenses.
3. Upon the release and discharge of Occidental and Opcal at the
Effective Time, the Company shall look solely to Purchaser as its
Indemnitor under the Agreements with respect to MidCon's losses and
expenses only, regardless of whether such losses and expenses were incurred
or attributable to claims noticed or asserted before or after the Effective
Time.
4. The Company hereby represents and warrants that the list of
Agreements set forth in the recital clause of this Novation Agreement
comprise a complete list of all such agreements executed by the Company and
Occidental or Opcal between ____________, 19__ and the Effective Time with
respect to the insureds listed in Exhibit A hereto
5. The parties hereto agree that not later than thirty (30) days
after the Effective Time, Purchaser shall provide a letter of credit in
favor of the Company to secure the indemnity obligations and liabilities
which the Purchaser is hereby assuming from Occidental and Opcal,
respectively. Such letter of credit will be issued and delivered to the
Company in an amount and form as required by the Company, and from a bank
acceptable to the Company.
6. This Novation Agreement may be executed in counterparts each of
which shall be treated as an original and to form one and the same
document.
3
7. The terms of the Agreements, except as amended herein, remain
unchanged and in full force and effect.
8. This Novation Agreement shall be binding on the successors and
assigns of the parties hereto.
9. This Novation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of law rules thereof.
/
/
/
/
/
/
/
/
/
/
/
/
/
4
IN WITNESS WHEREOF, the Company, Purchaser, Occidental and Opcal have
caused this Novation Agreement to be executed by their duly authorized
representatives on the date indicated below.
Dated: ____________, 1997
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
By:_________________________________
Its:_________________________________
[Add signature lines for National Union affiliates]
KN ENERGY, INC.
By:_________________________________
Its:_________________________________
OCCIDENTAL PETROLEUM
CORPORATION
By:_________________________________
Its:_________________________________
OPCAL INSURANCE, INC.
By:_________________________________
5
Its:_________________________________
EXHIBIT A
% Owned by
MidCon
MCN Coal Gasification Company 100%
(Delaware)
MCN Gulf Processing Corp. 100%
(Delaware)
MCN Overseas Inc. 100%
(Delaware)
MCN Properties Corp. 100%
(Delaware)
MidCon Business Services Corp. 100%
(Delaware)
MidCon Gas Services Corp. 100%
(Delaware)
MGS Marketing Corp. 100%
(Delaware)
MidCon Development Corp. 100%
(Delaware)
MidCon Exploration Company 100%
(Illinois)
MidCon Gas Products Corp. 100%
(Delaware)
MidCon Texas Gas Services Corp. 100%
(Delaware)
% Owned by
MidCon
MidCon Gas Products of New 100%
Mexico Corp.
(Delaware)
MidCon NGL Corp. 100%
(Delaware)
MidCon Power Services Corp. 100%
(Delaware)
MidCon Texas Gas Limited, Inc. 100%
(Delaware)
MidCon Texas Pipeline, L.P. * 49%
(Delaware)
MidCon Texas Pipeline 100%
Operator, Inc.
(Delaware)
MidTex Pipeline Company 100%
(Delaware)
Palo Duro Pipeline Company, 100%
Inc.
(Delaware)
mc2 Inc. 100%
(Delaware)
MidCon Management Corp. 100%
(Delaware)
MidCon Marketing Corp. 100%
(Delaware)
MidCon Mexico Pipeline Corp. 100%
(Delaware)
% Owned by
MidCon
MidCon Gas Natural de Mexico, 98%
S.A. de C.V. *
(Mexico)
MidCon Razorback Pipeline 100%
Corp.
(Delaware)
Natural Gas Pipeline Company 100%
of America
(Delaware)
MidCon Dehydration Corp. 100%
(Delaware)
West Cameron Dehydration 50%
Company, L.L.C. *
(Delaware)
MidCon NGV Corp. 100%
(Delaware)
NALOCO, Inc. (Del.) 100%
(Delaware)
NATOCO, Inc. 100%
(Delaware)
NGPL Independence Pipeline 100%
Company
(Delaware)
NGPL Offshore Company 100%
(Delaware)
NGPL-Canyon Compression Co. 100%
(Delaware)
% Owned by
MidCon
Canyon Creek Compression 70%
Company
(Illinois)
NGPL-Overthrust Inc. 100%
(Delaware)
NGPL-TIPCO, Inc. 100%
(Delaware)
NGPL-Trailblazer Inc. 100%
(Delaware)
Occidental Energy Development 100%
Corp.
(Delaware)
MidCon Gas Natural de Mexico, 2%
S.A. de C.V. *
(Mexico)
United Texas Transmission 100%
Company
(Delaware)
__________________
*Multiple Parents
EXHIBIT 9.83
To Stock Purchase Agreement
KN ENERGY, INC.
PROMISSORY NOTE
[$ Amount] [ Date ]
1. Payment of Principal and Interest. FOR VALUE
---------------------------------
RECEIVED, the undersigned, KN Energy, Inc., a Kansas
corporation ("Obligor"), promises to pay to the order of
Occidental Petroleum Corporation, a Delaware corporation
(together with its successors and assigns, the "Lender"),
the principal sum of ____________________ on the Maturity
Date, and to pay interest on the unpaid principal amount
hereof from time to time outstanding under this
Promissory Note, at the rate of ___% per annum, from the
date hereof, payable quarterly on each Interest Payment
Date (commencing on the first Interest Payment Date that
is at least 20 days subsequent to the date of this
Promissory Note); provided, however, that if any Interest
Payment Date is not a Business Day, interest shall be
paid on the next succeeding Business Day. Any amount of
principal of, or interest on, this Promissory Note which
is not paid when due (whether by acceleration or
otherwise) shall be payable on demand and shall bear
interest from the date when due until paid, at a rate per
annum equal to the interest rate set forth above plus two
percent (2%) per annum. All computations of interest
under this Promissory Note shall be made on the basis of
a year of 360 days for the actual number of days
(including the first day but excluding the last day)
elapsed. All interest which shall be accrued under this
Promissory Note shall become due and payable as set forth
above and upon
1
the acceleration (as hereinafter set forth) of this
Promissory Note. The rate of interest payable on this
Promissory Note shall in no event exceed the maximum rate
of interest permitted by applicable law.
2. Definitions. As used herein, the following terms
-----------
shall have the following respective meanings:
"Business Day" shall mean any day not a Saturday,
Sunday or legal holiday in the State of New York and on
which banks and the Federal Reserve Bank of New York are
open for business in New York City; provided, however,
that the term "Business Day" shall also exclude any day
on which banks are not open for dealings in Dollar
deposits in the London Interbank Market.
"Interest Payment Date" shall mean January 1,
April 1, July 1 and October 1 of each year.
"Interest Period" shall mean each period commencing
on the date of this Promissory Note or on the last day of
the preceding Interest Period applicable to this
Promissory Note and ending on the numerically
corresponding day in the calendar month that is three (3)
months later; provided, however, that the initial
Interest Period shall end on the next succeeding Interest
Payment Date that is at least twenty (20) days subsequent
to the date of this Promissory Note; and provided,
further, that if any Interest Period would end on a day
that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day.
2
"Maturity Date" shall mean January 1, 1999; provided,
however, that if such date is not a Business Day, the
"Maturity Date" shall be the next succeeding Business Day.
3. Representations and Warranties. Obligor
------------------------------------
represents and warrants as follows:
(a) Obligor is a corporation duly incorporated,
validly existing and in good standing under the
laws of the state of Kansas and has all
requisite corporate power to issue and deliver
this Promissory Note. The execution, delivery
and performance by Obligor of this Promissory
Note have been duly authorized by all necessary
corporate action on the part of Obligor.
(b) Neither the issuance of this Promissory Note nor
the performance by Obligor of its obligations
hereunder will violate any provision of law,
regulation, judgment or order or any contract,
agreement, indenture, note or other instrument
binding upon Obligor or its charter or by-laws
or give cause for acceleration of any
indebtedness of Obligor.
(c) No authority from, or approval by, any
governmental body, commission or agency, state
or federal, is required for the execution,
delivery or performance by Obligor of this
Promissory Note.
4. Security. The prompt and complete payment and
--------
performance in full of this Promissory Note is secured by
that certain [letter of credit dated __________ issued by
_______ payable to Lender] [Security Agreement [describe]
for the Government Securities and the Control Agreement
[describe]].
3
5. Event of Default. The occurrence of any of the
----------------
following events, acts or occurrences shall constitute an
"Event of Default" hereunder:
(i) either (a) Obligor shall generally fail to pay,
or admit in writing its inability to pay, its debts as
they become due, or shall voluntarily commence any case
or proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution,
liquidation or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for itself or
a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its
creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of
any involuntary petition filed against it in any
bankruptcy, insolvency or similar case or proceeding, or
shall be adjudicated bankrupt, or shall make a general
assignment for the benefit of creditors, or shall consent
to, or acquiesce in the appointment of, a receiver,
trustee, custodian or liquidator for itself or a
substantial portion of its property, assets or business,
or (b) corporate action shall be taken by Obligor for the
purpose of effectuating any of the foregoing, or
(ii) involuntary proceedings or an involuntary
petition shall be commenced or filed against Obligor
under any bankruptcy, insolvency or similar law or
seeking the dissolution, liquidation or reorganization of
Obligor or the appointment of a receiver, trustee,
custodian or liquidator for Obligor or of a substantial
part of the property, assets or business of Obligor, or
any writ, judgment, warrant of attachment, execution or
similar process shall be issued or levied against a
substantial part of the property, assets or business of
Obligor, and such proceedings or petition shall not be
dismissed, or such writ, judgment, warrant of attachment,
4
execution or similar process shall not be released, vacated
or fully bonded, within sixty (60) days after commencement,
filing or levy, as the case may be; or
(iii) Obligor shall default in any payment of
principal or interest under this Promissory Note and such
default shall continue unremedied; or
(iv) Any representation by Obligor contained in this
Promissory Note may prove at any time to be incorrect in
any material respect when made; or
(v) Obligor shall default in the performance or
observance of any other term, covenant or agreement
contained in this Promissory Note and such default shall
continue unremedied; or
(vi) The [describe the Letter of Credit or describe
the Government Securities and Securities Agreement]
securing this Note shall cease to be in full force and
effect.
6. Notice of Event of Default. Obligor shall notify
--------------------------
the Lender within five (5) days after the occurrence of any
Event of Default of which Obligor acquires knowledge.
7. Remedies. Upon the occurrence of an Event of
--------
Default hereunder (unless all Events of Default have been
cured or waived by the Lender), the Lender may, at its
option, (i) by written notice to Obligor, declare the
entire unpaid principal balance of this Promissory Note,
together with all accrued interest thereon, immediately due
and payable regardless of any prior forbearance, and (ii)
exercise any and all rights and remedies available to it
under
5
applicable law, including, without limitation, the right to
collect from Obligor all sums due under this Promissory
Note.
8. Payments. Payments of the principal of, interest
--------
on, and any other sums owing under, this Promissory Note
shall be made in lawful money of the United States of
America in Federal Reserve Bank funds or other immediately
available funds. All such payments shall be made at such
place or places in the United States of America, and in
such manner, as may be specified by Lender to Obligor in
writing.
9. No Prepayments. Obligor may not prepay all or any
--------------
part of any outstanding principal amount.
10. Obligations Absolute and Unconditional. The
------------------------------------------
Obligor's obligations hereunder are absolute and
unconditional and shall not be affected by any
circumstances whatsoever. The Obligor hereby agrees to make
or cause to be made all payments hereunder in full when
due, whether in respect of principal, interest or any other
amount owed hereunder without notice, demand, counterclaim,
set-off, deduction, defense, abatement, suspension,
limitation, deferment, diminution, recoupment or other right
that the Obligor may have against the Lender or any other
Person and hereby waives and agrees with respect to any
payment hereunder not to assert any defense or right of
counterclaim, set-off or recoupment, or other right that it
may have against the Lender or any other Person.
6
11. Assignment, Etc. Without the consent of the
---------------
Obligor, the Lender may assign, pledge or grant to one or
more assignees, all or a portion of its interests and
rights under this Note.
12. Notices. All notices, demands and other
-------
communications required or permitted by this Promissory Note
to be given to, or made upon, Obligor or Lender shall be in
writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return
receipt requested, or by telecopier, to the following
address of Obligor or Lender, as the case may be, or to such
other address with respect to Obligor or Lender as Obligor
or Lender shall notify the other in writing:
If to Obligor:
KN Energy, Inc.
P.O. Box 281304
370 Van Gordon
Lakewood, Colorado 80228-8304
Attention: Treasurer
Facsimile No.: (303) [___________]
If to Lender:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: Treasurer
Facsimile No.: (310) 443-6686
Each such notice, demand or other communication shall be
deemed to be given for the purposes of this Promissory Note
on the day on which such notice, demand or other
communication is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Promissory
Note.
7
13. Fees and Expenses. In addition to, and not in
-----------------
limitation of, any rights which Lender may have under this
Promissory Note, any agreement or applicable law, Obligor
agrees, subject only to any limitation imposed by applicable
law, to pay all expenses, including reasonable attorneys'
fees and legal expenses, paid or incurred by Lender in
endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
14. Waiver. The rights and remedies of the Lender
------
under this Promissory Note shall be cumulative and not
alternative. No waiver by the Lender of any right or remedy
under this Promissory Note shall be effective unless in a
writing signed by the Lender. Neither the failure nor any
delay in exercising any right, power or privilege under this
Promissory Note will operate as a waiver of such right,
power or privilege and no single or partial exercise of any
such right, power or privilege by the Lender will preclude
any other or further exercise of such right, power or
privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of the Lender arising out of this
Promissory Note can be discharged by the Lender, in whole or
in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by the Lender; (b) no waiver
that may be given by the Lender will be applicable except in
the specific instance for which it is given; and (c) no
notice to or demand on Obligor will be deemed to be a waiver
of any obligation of Obligor or of the right of the Lender
to take further action without notice or demand as provided
in this Promissory Note. Obligor hereby waives diligence,
presentment, demand, protest, notice of dishonor and protest
and any other notice of any kind whatsoever.
8
15. Severability. If any provision in this Promissory
------------
Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this
Promissory Note will remain in full force and effect. Any
provision of this Promissory Note held invalid or
unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or
unenforceable.
16. Successors and Assigns. This Promissory Note shall
----------------------
bind Obligor and its successors and assigns.
17. Section Headings, Construction. The headings of
------------------------------
Sections in this Promissory Note are provided for
convenience only and will not affect its construction or
interpretation. All words used in this Promissory Note will
be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided,
the words "hereof" and "hereunder" and similar references
refer to this Promissory Note in its entirety and not to any
specific section or subsection hereof.
18. Governing Law. This Promissory Note shall be
-------------
governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to principles of
conflicts of laws.
KN ENERGY, INC.
By:
-----------------------
Name:
Title:
9
Exhibit 9.88
------------
TERM LOAN ASSIGNMENT AGREEMENT
Term Loan Assignment Agreement, dated as of __________,
1998 (this "Agreement"), by and between Occidental Petroleum
Corporation, a Delaware corporation (the "Seller"), and KN
Energy, Inc., a Kansas corporation (the "Buyer").
RECITALS
--------
Whereas, the Seller and the Buyer have entered into a
Stock Purchase Agreement, dated as of December ____, 1997
(the "Stock Purchase Agreement"), which provides for the
sale by the Seller of all of the outstanding common stock
(the "Shares") of MidCon Corp., a Delaware corporation
("MidCon") to the Buyer. Unless otherwise defined herein or
the context otherwise requires, initially capitalized terms
used herein have the meanings provided in the Stock Purchase
Agreement.
Whereas, the MidCon Corp. ESOP Trust (the "Trust") was
established pursuant to the Trust Agreement, dated November
20, 1996 by and
1
between U.S. Trust Company of California, N.A., not in its
individual capacity but solely in its capacity as trustee
(the "Trustee") and the Seller.
Whereas, the Seller, the Trust and MidCon entered into
the Term Loan Agreement, dated as of November 20, 1996
(together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "Term
Loan Agreement").
Whereas, pursuant to the Term Loan Agreement, the Trust
has issued to the Seller a Non-Recourse Promissory Note,
dated November 20, 1996, in an aggregate principal amount of
US $1,398,600,000 (the "ESOP Note") and MidCon has agreed to
guarantee the obligations of the Trust under the ESOP Note
and the Term Loan Agreement.
Whereas, to secure the obligations of the Trust under
the ESOP Note and the Term Loan Agreement, the Seller (in
its individual capacity and also as a collateral agent), the
Trust and MidCon have entered into a Pledge Agreement, dated
as of November 20, 1996 (the "Pledge Agreement").
Whereas, it is a condition to the Closing that the
Buyer issue and deliver to the Seller the Substitute Note
pursuant to Section 5.3.4 of the
2
Stock Purchase Agreement, that the Seller assign the ESOP
Note to the Buyer and that the Buyer and the Seller enter
into this Agreement.
NOW THEREFORE, in consideration of the foregoing and
other consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto agree as
follows:
1. Transfer of the ESOP Loan. Effective as of the
-------------------------
Closing, the Seller hereby assigns to the Buyer all of the
Seller's rights under the ESOP Note and the Term Loan
Agreement including, without limitation, all unpaid interest
with respect to the ESOP Note. The Seller shall deliver a
copy of this Agreement to the Trustee on behalf of the Trust
and the Buyer shall specify by written notice to the Trustee
and MidCon the address notices shall thereafter be sent to
Buyer in lieu of "Occidental".
2. Representations of the Buyer. The Buyer hereby
----------------------------
represents and warrants that it is legally authorized to
enter into this Agreement and acknowledges and confirms that
it has received a copy of the Term Loan Agreement and the
exhibits related thereto, and the Pledge Agreement and has
received such other documents and information as it deems
appropriate to enter into this Agreement.
3
3. Pledge Agreement. The Parties understand that the
----------------
Pledge Agreement may be terminated concurrent with the
execution of this Agreement.
4. Counterparts. This Agreement may be executed by
------------
the Parties in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and
all of which taken together shall constitute one and the
same agreement.
4
OCCIDENTAL PETROLEUM CORPORATION
(The Seller)
By:
----------------------------------
Name:
-----------------------------
Title:
------------------------------
KN ENERGY, INC.
(The Buyer)
By:
----------------------------------
Name:
-----------------------------
Title:
------------------------------
5