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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 19, 2011
ENERGY TRANSFER EQUITY, L.P.
(Exact name of Registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation)
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001-32740
(Commission
File Number)
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30-0108820
(IRS Employer
Identification Number) |
3738 Oak Lawn
Dallas, Texas 75219
(Address of principal executive offices, including zip code)
(214) 981-0700
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
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Item 1.01. |
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Entry into a Material Definitive Agreement. |
Second Amended and Restated Agreement and Plan of Merger
On July 19, 2011, Energy Transfer Equity, L.P., a Delaware limited partnership (the
Partnership), entered into a Second Amended and Restated Agreement and Plan of Merger (the
Second Amended Merger Agreement) with Sigma Acquisition Corporation, a Delaware corporation and
wholly owned subsidiary of the Partnership (Merger Sub), and Southern Union Company, a Delaware
corporation (SUG). The Second Amended Merger Agreement modifies certain terms of the Amended and
Restated Agreement and Plan of Merger entered into by the Partnership, Merger Sub and SUG on July
4, 2011 (the First Amended Merger Agreement). Under the terms of the Second Amended Merger
Agreement, Merger Sub will merge with and into SUG, with SUG continuing as the surviving entity and
becoming a wholly owned subsidiary of the Partnership (the Merger).
As more fully explained below and in the Second Amended Merger Agreement, the consideration
payable in the Merger (other than for shares owned by SUG, any direct or indirect wholly owned
subsidiary of SUG and by stockholders who have perfected and not withdrawn a demand for appraisal
rights under Delaware law) will consist of a mixture of cash and common units of the Partnership
(ETE Common Units) such that at the effective time of the Merger (the Effective Time) (i) at
least 50%, and no more than 60%, of the shares of SUG common stock issued and outstanding
immediately prior to the Effective Time (the Outstanding SUG Shares) will be cancelled and
converted into the right to receive cash in the amount of $44.25 per Outstanding SUG Share (subject
to reduction of that amount of cash per Outstanding SUG Share, and supplementation with ETE Common
Units, in the event that holders of more than 60% of the Outstanding SUG Shares elect to receive
cash) (Cash Consideration) and (ii) at least 40%, and no more than 50%, of the Outstanding SUG
Shares will be cancelled and converted into the right to receive 1.00 ETE Common Unit per
Outstanding SUG Share (subject to reduction of that number of ETE Common Units per Outstanding SUG
Share, and supplementation with cash, in the event that holders of more than 50% of the Outstanding
SUG Shares elect to receive ETE Common Units) (Equity Consideration and, together with the Cash
Consideration, the Merger Consideration).
Election to Receive Cash Consideration or Equity Consideration
The Second Amended Merger Agreement provides for holders of Outstanding SUG Shares to elect to
receive, subject to the limits described below, either:
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$44.25 per Outstanding SUG Share (a Cash Election); or |
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1.00 ETE Common Unit per Outstanding SUG Share (and cash in lieu of fractional ETE
Common Units) (an Equity Election). |
This election is subject to the following limits:
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The aggregate cash consideration will be capped at 60% of the aggregate Merger
Consideration. Thus, if holders of more than 60% of the Outstanding SUG Shares elect
to receive cash, the amount of cash per Outstanding SUG Share to be received by holders
making a Cash Election will be reduced (pro rata across all Outstanding SUG Shares
subject to a Cash Election), so that no more than 60% of the aggregate Merger
Consideration is payable in cash and the remainder of the consideration in respect of
Outstanding SUG Shares subject to a Cash Election will be payable in ETE Common Units
at an exchange ratio of 1.00 ETE Common Unit per Outstanding SUG Share (and cash in
lieu of fractional ETE Common Units). |
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The aggregate ETE Common Unit consideration will be capped at 50% of the aggregate
Merger Consideration. Thus, if holders of more than 50% of the Outstanding SUG Shares
make an Equity Election, the number of ETE Common Units per Outstanding SUG Share to be
received by holders making an Equity Election will be reduced (pro rata across all
Outstanding SUG Shares subject to an Equity Election), so that no more than 50% of the
aggregate Merger Consideration is payable in ETE Common Units and the remainder of the
consideration in respect of Outstanding SUG Shares subject to an Equity Election will
be payable in cash at $44.25 per share. |
Treatment of SUG Equity-Based Awards
Pursuant to SUGs equity incentive plans, individual award agreements and the terms of the
Second Amended Merger Agreement, all stock options and stock appreciation rights outstanding
immediately prior to the Effective Time will vest. To the extent not exercised prior thereto, all
unexercised stock options and stock appreciation rights will be cancelled immediately prior to the
Effective Time. Each stock option and stock appreciation right so cancelled which has an exercise
price of less than $44.25 will be converted into the right to receive an amount in cash equal to
$44.25 less (i) the applicable exercise price and (ii) any applicable deductions and withholdings
required by law.
Shares of restricted stock for which restrictions have not otherwise lapsed or expired and are
outstanding prior to the Effective Time will have their associated restrictions accelerate and
expire immediately prior to the Effective Time and the total number of shares of SUG common stock
subject to such restricted stock grant will be converted into the right to receive the Cash
Consideration or the Equity Consideration (at the election of the individual holders thereof), less
all deductions and withholdings required by law (such deduction to come first from any cash payable
as part of the consideration for such restricted stock and then by reducing the number of ETE
Common Units otherwise payable as part of the consideration for such restricted stock (with the ETE
Common Unit valued at the closing price thereof on the day prior to the closing of the Merger for
this purpose)).
Each unvested award of restricted share units with respect to shares of SUG common stock under
a SUG stock plan that is outstanding immediately prior to the Effective Time (a SUG RSU) will
fully vest, and each SUG RSU will be converted into the right to receive a lump sum cash payment,
less any applicable deductions and withholdings required by law, equal to the greater of (i) $44.25
and (ii) the closing price of the ETE Common Units on the New York Stock Exchange on the closing
date of the Merger.
Representations, Warranties and Covenants
The Second Amended Merger Agreement includes customary representations, warranties and
covenants of the Partnership and SUG. The Partnership and SUG have also agreed, subject to certain
exceptions, to operate their respective businesses in the ordinary course until the Merger is
consummated. SUG has agreed not to knowingly encourage or facilitate discussions with third parties
regarding other proposals to acquire SUG and to certain restrictions on its ability to respond to
any such unsolicited proposal. The no-shop restrictions are substantively unchanged from the
corresponding provisions in the First Amended Merger Agreement.
Conditions to Closing
Consummation of the Merger is subject to customary conditions, including, without limitation:
(i) the adoption of the Second Amended Merger Agreement by the stockholders of SUG, (ii) the
expiration or early termination of the waiting period applicable to the Merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any required approvals
thereunder, (iii) the receipt of required approvals from the Federal Energy Regulatory Commission,
the Massachusetts Department of Public Utilities and the Missouri Public Service Commission, (iv)
the effectiveness of a registration statement on Form S-4 relating to the ETE Common Stock to be
issued in the Merger, and (v) the absence of any law, injunction, judgment or ruling prohibiting or
restraining the Merger or making the consummation of the Merger illegal. Under the Second Amended
Merger Agreement, the Partnership is required to agree to divestitures and business restructuring,
subject to certain limitations, to obtain antitrust and regulatory approvals.
Termination
The Second Amended Merger Agreement contains certain termination rights for both the
Partnership and SUG, including, among others, the right to terminate if the Merger is not completed
by June 30, 2012, subject to extensions under certain circumstances, to December 31, 2012. In the
event of a termination of the Second Amended Merger Agreement under certain circumstances, SUG may
be required to pay the Partnership a termination fee of $181.3 million (a change from the
termination fee of $162.5 million payable under the First Amended Merger Agreement), or the
Partnership may be required to pay SUG a termination fee of $181.3 million (a change from the
termination fee of $162.5 million payable under the First Amended Merger Agreement), in each case
depending on the circumstances of the termination. Additionally, in certain circumstances, upon
termination of
the Second Amended Merger Agreement, the Partnership or SUG may be obligated to pay the
others costs and expenses in an amount not to exceed $54.0 million (a change from $50.0 million in
the First Amended Merger Agreement).
Assumption of Partnership Benefits and Obligations Under Amended Citrus Merger Agreement
Pursuant to the terms of the Second Amended Merger Agreement, assuming all conditions to the
consummation of the Merger have been or will be satisfied upon closing, immediately prior to the
Effective Time, the Partnership will assign and SUG will assume the benefits and obligations of the
Partnership under that certain Amended and Restated Agreement and Plan of Merger, dated as of July
19, 2011 (the Amended Citrus Merger Agreement), by and between the Partnership and Energy
Transfer Partners, L.P., a Delaware limited partnership (ETP), the terms of which are more fully
described below. A portion of the proceeds to be received by SUG under the Amended Citrus Merger
Agreement will be contributed to Merger Sub and used fund a portion of the Cash Consideration.
A copy of the Second Amended Merger Agreement is filed as Exhibit 2.1 to this report and is
incorporated herein by reference. The foregoing description of the Second Amended Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the Second Amended
Merger Agreement.
The Second Amended Merger Agreement has been included to provide security holders with
information regarding its terms. It is not intended to provide factual information about the
Partnership or SUG and should not be relied on by any other person or entity for any purposes. The
Second Amended Merger Agreement contains representations and warranties of the Partnership and SUG
made to each other as of specific dates. The assertions embodied in those representations and
warranties were made solely for purposes of the contract between the Partnership and SUG and may be
subject to important qualifications and limitations agreed to by the Partnership or SUG in
connection with the negotiated terms, which qualifications and limitations are not necessarily
reflected in the Second Amended Merger Agreement. Moreover, some of those representations and
warranties may not be accurate or complete as of any specified date, may be subject to a
contractual standard of materiality different from those generally applicable to unitholders or may
have been used for purposes of allocating risk between the Partnership and SUG rather than
establishing matters as fact.
Financing Commitment
On July 19, 2011, the Partnership entered into a bridge commitment letter (the Commitment
Letter) with Credit Suisse Securities (USA) LLC and Credit Suisse AG (collectively, Credit
Suisse) that amends, restates and supersedes the commitment letter entered into by the Partnership
and Credit Suisse on July 4, 2011. Pursuant to the Commitment Letter, Credit Suisse has committed
to provide a 364-day senior bridge term loan credit facility (the Bridge Term Facility) in an
aggregate principal amount of $3.7 billion (or such lesser amount as is equal to the lesser of (i)
the amount that is sufficient to fund the Cash Consideration in the Merger and (ii) the amount that
the Partnership may elect to borrow). The commitment is subject to various conditions, including
(i) the absence of a material adverse effect on SUG having occurred, (ii) Credit Suisses
satisfaction that during the 60-day period after the date of the Commitment Letter, and subject to
certain exceptions, there are no other issues of debt securities or commercial bank or other credit
facilities by the Partnership, SUG or their respective wholly owned subsidiaries, (iii) the
execution of satisfactory definitive documentation and (iv) other customary closing conditions.
A copy of the Commitment Letter is filed as Exhibit 99.1 to this report and is incorporated
herein by reference. The foregoing description of the Commitment Letter and the transactions
contemplated thereby does not purport to be complete and is qualified in its entirety by reference
to the Commitment Letter.
Support Agreement
Concurrently with the execution of the Second Amended Merger Agreement, Mr. Lindemann, Mr.
Herschmann, and members of Mr. Lindemanns family, who directly or indirectly own approximately
16,744,285 shares of SUG common stock (or 20,139,036 shares when including unexercised options and
shares of restricted stock that are not entitled to vote until exercise or the expiration of
restrictions, respectively), representing approximately 13.43% of the shares outstanding, have
entered into a Second Amended and Restated Support Agreement with the Partnership and Merger Sub
(as amended and restated, the Support Agreement), which replaces and supersedes the amended and
restated support agreement previously entered into by those parties in connection with the
execution of the First Amended Merger Agreement. The Support Agreement provides, among
other things, that such stockholders will vote their shares in favor of adoption of the Second
Amended Merger Agreement unless there is a change of recommendation by SUGs Board of Directors and
that they will elect to receive Equity Consideration rather than Cash Consideration in the Merger
(other than with respect to unexercised options which will be treated as described above).
A copy of the Support Agreement is filed as Exhibit 10.1 to this report and is incorporated by
herein by reference. The foregoing description of the Support Agreement does not purport to be
complete and is qualified in its entirety by reference to the Support Agreement.
Citrus Dropdown Transaction
On July 19, 2011, the Partnership entered into the Amended Citrus Merger Agreement with ETP.
The Amended Citrus Merger Agreement modifies certain terms of the Agreement and Plan of Merger
entered into by the Partnership and ETP on July 4, 2011. As stated above, pursuant to the terms of
the Second Amended Merger Agreement, immediately prior to the Effective Time, the Partnership will
assign and SUG will assume the benefits and obligations of the Partnership under the Amended Citrus
Merger Agreement.
Under the Amended Citrus Merger Agreement it is anticipated that SUG will cause the
contribution to ETP of a 50% interest in Citrus Corp., which owns 100% of the Florida Gas
Transmission pipeline system and is currently jointly owned by SUG and El Paso Corporation (the
Citrus Dropdown). The Citrus Dropdown will be effected through the merger of Citrus ETP
Acquisition, L.L.C., a Delaware limited liability company and wholly owned subsidiary of ETP, with
and into CrossCountry Energy, LLC, a Delaware limited liability company and wholly owned subsidiary
of SUG that indirectly owns a 50% interest in Citrus Corp. (CrossCountry). In exchange for the
interest in Citrus Corp., SUG will receive approximately $2.0 billion, consisting of $1.895 billion
in cash and $105 million of ETP common units, with the value of the ETP common units based on the
volume-weighted average trading price for the ten consecutive trading days ending immediately prior
to the date that is three trading days prior to the closing date of the Citrus Dropdown. The
Partnership owns ETPs general partner, all of the incentive distribution rights of ETP and
approximately 50.2 million ETP common units. In order to increase the expected accretion to be
derived from the Citrus Dropdown, the Partnership has agreed to relinquish its rights to
approximately $220 million of the incentive distributions from ETP that the Partnership would
otherwise be entitled to receive over 16 consecutive quarters following the closing of the
transaction.
The Special Committee (the ETE Special Committee) of the Board of Directors (the ETE
Board) of LE GP, LLC, the Partnerships general partner, composed of the ETE Boards independent
directors, determined that the Citrus Dropdown is in the best interests of the Partnership, and
recommended that the Conflicts Committee of the ETE Board (the ETE Conflicts Committee) and the
ETE Board, subject to the approval of the ETE Conflicts Committee, approve and adopt the Citrus
Dropdown. The ETE Conflicts Committee, which is composed of two independent directors, determined
that the Citrus Dropdown is advisable, fair and reasonable to and in the best interests of the
Partnership and the Partnerships limited partners and recommended that the ETE Board approve the
Citrus Dropdown. Upon the recommendation of the ETE Special Committee and the ETE Conflicts
Committee, the ETE Board determined that the Amended Citrus Merger Agreement and the transactions
contemplated thereby are advisable, fair and reasonable to the Partnership and the limited partners
of the Partnership. A conflicts committee of the Board of Directors (the ETP Board) of Energy
Transfer Partners, L.L..C., the general partner of ETPs general partner, approved the Amended
Citrus Merger Agreement and the Citrus Dropdown.
The Amended Citrus Merger Agreement includes customary representations, warranties and
covenants of ETP and the Partnership (including representations, warranties and covenants relating
to SUG, CrossCountry and certain of CrossCountrys affiliates). Subject to certain exceptions, the
Partnership has also agreed not to, among other things, amend, supplement, restate or otherwise
modify the Second Amended Merger Agreement or agree to, grant or permit to exist any waiver of a
condition, covenant or other provision in the Second Amended Merger Agreement if such waiver would
be adverse to ETPs interest in the Citrus Dropdown or would be reasonably likely to prevent or
materially delay the consummation of the transactions contemplated by the Amended Citrus Merger
Agreement. Additionally, without ETPs prior approval, the Partnership has agreed not to approve
certain actions by CrossCountry and certain of its affiliates.
Consummation of the Citrus Dropdown is subject to customary conditions, including,
without limitation: (i) satisfaction or waiver of the closing conditions set forth in the Second
Amended Merger Agreement, (ii) the receipt by ETP of any necessary waivers or amendments to its
credit agreement, (iii) the amendment of ETPs
partnership agreement to reflect the agreed upon relinquishment by the Partnership of
incentive distributions from ETP discussed above, and (iv) the absence of any order, decree,
injunction or law prohibiting or making the consummation of the transactions contemplated by the
Amended Citrus Merger Agreement illegal. The Amended Citrus Merger Agreement contains certain
termination rights for both the Partnership and ETP, including, among others, the right to
terminate if the Citrus Dropdown is not completed by December 31, 2012 or if the Second Amended
Merger Agreement is terminated.
Pursuant to the Amended Citrus Merger Agreement, the Partnership has granted ETP a right of
first offer with respect to any disposition by the Partnership or SUG of Southern Union Gas
Services, a subsidiary of SUG that owns and operates a natural gas gathering and processing system
serving the Permian Basin in West Texas and New Mexico.
A copy of the Amended Citrus Merger Agreement is filed as Exhibit 2.2 to this report and is
incorporated herein by reference. The foregoing description of the Amended Citrus Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the Amended Citrus
Merger Agreement.
Forward-Looking Statements
This report may include certain statements concerning expectations for the future, including
statements regarding the anticipated benefits and other aspects of the proposed Merger or the
Citrus Dropdown, that are forward-looking statements as defined by federal law. Such
forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and
other factors that are difficult to predict and many of which are beyond the control of the
management teams of the Partnership, ETP or SUG. Among those is the risk that conditions to closing
the Merger or the Citrus Dropdown are not met or that the anticipated benefits from the proposed
Merger or the Citrus Dropdown cannot be fully realized. An extensive list of factors that can
affect future results are discussed in the reports filed with the Securities and Exchange
Commission (the SEC) by the Partnership, ETP and SUG. The Partnership, ETP and SUG undertake no
obligation to update or revise any forward-looking statement to reflect new information or events.
Additional Information
In connection with the Merger, the Partnership and SUG have filed a proxy statement /
prospectus and other documents with the SEC. Investors and security holders are urged to carefully
read the definitive proxy statement / prospectus because it contains important information
regarding the Partnership, SUG and the Merger.
A definitive proxy statement / prospectus will be sent to stockholders of SUG seeking their
approval of the transaction. Investors and security holders may obtain a free copy of the
definitive proxy statement / prospectus (when available) and other documents filed by the
Partnership and SUG with the SEC at the SECs website, www.sec.gov. The definitive proxy statement
/ prospectus and such other documents relating to the Partnership may also be obtained free of
charge by directing a request to Energy Transfer Equity, L.P., Attn: Investor Relations, 3738 Oak
Lawn Avenue, Dallas, Texas 75219, or from the Partnerships website, www.energytransfer.com. The
definitive proxy statement / prospectus and such other documents relating to SUG may also be
obtained free of charge by directing a request to Southern Union Company, Attn: Investor Relations,
5444 Westheimer Road, Houston, Texas 77056, or from SUGs website, www.sug.com.
The Partnership, SUG and their respective directors and executive officers may, under the
rules of the SEC, be deemed to be participants in the solicitation of proxies in connection with
the proposed transaction. Information concerning the interests of the persons who may be
participants in the solicitation is set forth in the proxy statement / prospectus.
Item 9.01. Financial Statements and Exhibits.
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Exhibit Number |
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Description of the Exhibit |
2.1
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Second Amended and Restated Agreement and Plan of Merger,
dated as of July 19, 2011, by and among Energy Transfer
Equity, L.P., Sigma Acquisition Corporation and Southern
Union Company |
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Exhibit Number |
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Description of the Exhibit |
2.2
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Amended and Restated Agreement and Plan of Merger, dated as
of July 19, 2011, by and between Energy Transfer Partners,
L.P. and Energy Transfer Equity, L.P. |
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10.1
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Second Amended and Restated Support Agreement dated July
19, 2011 by and among Energy Transfer Equity, L.P., Sigma
Acquisition Corporation and certain stockholders of
Southern Union Company |
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99.1
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Commitment Letter dated July 19, 2011 by and among Energy
Transfer Equity, L.P., Credit Suisse Securities (USA) LLC
and Credit Suisse AG |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Energy Transfer Equity, L.P.
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By: |
LE GP, LLC,
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its general partner |
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Date: July 20, 2011 |
By: |
/s/ John W. McReynolds
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John W. McReynolds |
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President and Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit Number |
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Description of the Exhibit |
2.1
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Second Amended and Restated Agreement and Plan of Merger,
dated as of July 19, 2011, by and among Energy Transfer
Equity, L.P., Sigma Acquisition Corporation and Southern
Union Company |
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2.2
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Amended and Restated Agreement and Plan of Merger, dated as
of July 19, 2011, by and among Energy Transfer Partners,
L.P. and Energy Transfer Equity, L.P. |
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10.1
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Second Amended and Restated Support Agreement dated July
19, 2011 by and among Energy Transfer Equity, L.P., Sigma
Acquisition Corporation and certain stockholders of
Southern Union Company |
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99.1
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Commitment Letter dated July 19, 2011 by and among Energy
Transfer Equity, L.P., Credit Suisse Securities (USA) LLC
and Credit Suisse AG |
exv2w1
Exhibit 2.1
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and among
ENERGY TRANSFER EQUITY, L.P.,
SIGMA ACQUISITION CORPORATION
and
SOUTHERN UNION COMPANY
Dated as of June 15, 2011
As Amended and Restated:
July 4, 2011
and
July 19, 2011
Table of Contents
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ARTICLE I. THE MERGER |
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Section 1.1. The Merger |
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Section 1.2. Closing |
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Section 1.3. Effective Time |
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Section 1.4. Effects of the Merger |
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Section 1.5. Certificate of Incorporation and By-laws of the Surviving Corporation |
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Section 1.6. Directors |
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Section 1.7. Officers |
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ARTICLE II. CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES |
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Section 2.1. Effect on Capital Stock |
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Section 2.2. Election Procedures |
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Section 2.3. Exchange of Shares |
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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Section 3.1. Qualification, Organization, Subsidiaries, etc. |
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Section 3.2. Capital Stock |
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Section 3.3. Corporate Authority Relative to this Agreement; No Violation |
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Section 3.4. Reports and Financial Statements |
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Section 3.5. Internal Controls and Procedures |
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Section 3.6. No Undisclosed Liabilities |
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Section 3.7. Compliance with Law; Permits |
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Section 3.8. Environmental Laws and Regulations |
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Section 3.9. Employee Benefit Plans |
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Section 3.10. Absence of Certain Changes or Events |
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Section 3.11. Investigations; Litigation |
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Section 3.12. Information Supplied |
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Section 3.13. Regulatory Matters |
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Section 3.14. Tax Matters |
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Section 3.15. Employment and Labor Matters |
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Section 3.16. Intellectual Property |
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Section 3.17. Real Property |
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Section 3.18. Required Vote of the Company Stockholders |
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Section 3.19. Opinion of Financial Advisor |
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Section 3.20. Material Contracts |
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Section 3.21. Finders or Brokers |
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Section 3.22. Insurance |
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Section 3.23. Consulting Agreements and Noncompetition Agreements |
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Section 3.24. No Additional Representations |
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
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Section 4.1. Qualification, Organization, Subsidiaries, etc. |
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Section 4.2. Equity Interests |
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Section 4.3. Partnership / Corporate Authority Relative to this Agreement; No Violation |
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Section 4.4. Reports and Financial Statements |
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Section 4.5. Internal Controls and Procedures |
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Section 4.6. No Undisclosed Liabilities |
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Section 4.7. Compliance with Law; Permits |
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Section 4.8. Environmental Laws and Regulations |
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Section 4.9. Employee Benefit Plans |
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Section 4.10. Absence of Certain Changes or Events |
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Section 4.11. Investigations; Litigation |
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Section 4.12. Information Supplied |
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Section 4.13. Regulatory Matters |
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Section 4.14. Tax Matters |
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Section 4.15. Employment and Labor Matters |
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42 |
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Section 4.16. Real Property |
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43 |
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Section 4.17. Vote of Parent Partners; Merger Sub Approval |
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44 |
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Section 4.18. Opinion of Financial Advisors |
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45 |
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Section 4.19. Material Contracts |
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45 |
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Section 4.20. Finders or Brokers |
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47 |
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Section 4.21. Lack of Ownership of Company Common Stock |
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47 |
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Section 4.22. Financing |
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47 |
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Section 4.23. No Additional Representations |
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48 |
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ARTICLE V. COVENANTS AND AGREEMENTS |
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48 |
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Section 5.1. Conduct of Business by the Company |
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48 |
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Section 5.2. Conduct of Business by Parent |
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55 |
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Section 5.3. Mutual Access |
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56 |
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Section 5.4. Non-Solicitation by the Company |
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57 |
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Section 5.5. Filings; Other Actions |
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62 |
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Section 5.6. Equity-Based Awards |
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63 |
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Section 5.7. Employee Matters |
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64 |
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Section 5.8. Regulatory Approvals; Reasonable Best Efforts |
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66 |
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Section 5.9. Takeover Statutes |
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69 |
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Section 5.10. Public Announcements |
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69 |
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Section 5.11. Indemnification and Insurance |
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69 |
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Section 5.12. Control of Operations |
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71 |
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Section 5.13. Certain Transfer Taxes |
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71 |
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Section 5.14. Section 16 Matters |
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71 |
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Section 5.15. Agreed Tax Treatment |
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71 |
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Section 5.16. Tax Representation Letters |
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72 |
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Section 5.17. NYSE Listing |
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72 |
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Section 5.18. Financing and Financing Assistance |
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72 |
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Section 5.19. Citrus Transfer |
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71 |
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-ii-
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Page |
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ARTICLE VI. CONDITIONS TO THE MERGER |
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76 |
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Section 6.1. Conditions to Each Partys Obligation to Effect the Merger |
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76 |
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Section 6.2. Conditions to Obligation of the Company to Effect the Merger |
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76 |
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Section 6.3. Conditions to Obligation of Parent to Effect the Merger |
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78 |
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Section 6.4. Intentionally Omitted |
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78 |
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Section 6.5. Frustration of Closing Conditions |
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78 |
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ARTICLE VII. TERMINATION |
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79 |
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Section 7.1. Termination or Abandonment |
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79 |
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Section 7.2. Effect of Termination |
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80 |
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Section 7.3. Expense Reimbursement; Breakup Fee |
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80 |
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ARTICLE VIII. MISCELLANEOUS |
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82 |
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Section 8.1. No Survival |
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82 |
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Section 8.2. Expenses |
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83 |
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Section 8.3. Counterparts; Effectiveness |
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83 |
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Section 8.4. Governing Law |
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83 |
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Section 8.5. Jurisdiction; Specific Enforcement |
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83 |
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Section 8.6. WAIVER OF JURY TRIAL |
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84 |
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Section 8.7. Notices |
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84 |
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Section 8.8. Assignment; Binding Effect |
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86 |
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Section 8.9. Severability |
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86 |
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Section 8.10. Entire Agreement |
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86 |
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Section 8.11. Amendments; Waivers |
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86 |
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Section 8.12. Headings |
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86 |
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Section 8.13. No Third Party Beneficiaries |
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87 |
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Section 8.14. Interpretation |
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87 |
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Section 8.15. Definitions |
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87 |
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Exhibit A
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Form of Support Agreements |
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Exhibit B
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Form of ETP Merger Agreement |
-iii-
SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this Agreement), dated as
of July 19, 2011 (the Second Amendment Date), by and among Energy Transfer Equity, L.P.,
a Delaware limited partnership (Parent), Sigma Acquisition Corporation, a Delaware
corporation and a direct wholly owned subsidiary of Parent (Merger Sub), and Southern
Union Company, a Delaware corporation (the Company).
W I T N E S S E T H :
WHEREAS, on June 15, 2011, the parties entered into an Agreement and Plan of Merger (the
Original Merger Agreement);
WHEREAS, the parties amended and restated the Original Merger Agreement on July 4, 2011 by
entering into an Amended and Restated Agreement and Plan of Merger (the First Amended Merger
Agreement);
WHEREAS, the parties are entering into this Second Amended and Restated Agreement and Plan of
Merger in order to modify certain terms and conditions of the Original Merger Agreement and the
First Amended Merger Agreement, with effect from the date of execution of the Original Agreement;
WHEREAS, prior to consummation of the Merger, the Company will contribute to Merger Sub, in
exchange for shares in Merger Sub reflecting an equity interest proportionate to its Deemed Share
(as defined herein), an amount equal to the proceeds it receives, if any, pursuant to the Citrus
Transfer, not to exceed $1,450,000,000;
WHEREAS, for income tax purposes the parties intend that in the Merger Parent and the Company
shall be deemed to have acquired the Acquired Shares in proportion to their relative contributions
of Merger Consideration to Merger Sub;
WHEREAS, the parties intend that Merger Sub be merged with and into the Company (the
Merger), with the Company surviving the Merger as a direct wholly owned subsidiary of
Parent;
WHEREAS, each of the Board of Directors of the Company and Merger Sub have (a) determined that
it is in the best interests of the Company and Merger Sub, respectively, and their respective
stockholders, and declared it advisable, to enter into this Agreement, (b) approved the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated
hereby, including the Merger and (c) resolved to recommend adoption of this Agreement by their
respective stockholders;
WHEREAS, the general partner of Parent has (a) determined that it is in the best interests of
Parent and its unitholders, and declared it advisable, to enter into this Agreement and (b)
approved the execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger and the Unit Issuance (as defined herein);
WHEREAS, simultaneously with, and as a condition to, the execution of this Second Amended and
Restated Agreement and Plan of Merger, certain stockholders of the Company are
executing amended and restated support agreements with Parent, each dated as of the Second
Amendment Date, in the form of Exhibit A hereto (the Support Agreements),
pursuant to which, among other things, such stockholders have agreed to vote the shares of Company
Common Stock of which they are the record or beneficial owner in favor of the approval of this
Agreement and the Merger and/or have agreed to make a Common Unit Election with respect to such
shares of Company Common Stock in accordance with Section 2.1; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger qualify under Section
721(a) of the Internal Revenue Code of 1986, as amended (the Code) with respect to
holders of Company Common Stock receiving Common Units as Merger Consideration; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain representations,
warranties, covenants and agreements specified herein in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements contained herein, and intending to be legally bound hereby, Parent, Merger
Sub and the Company agree as follows, and the First Amended Merger Agreement is hereby amended and
restated in its entirety with effect from the date of execution of the Original Agreement, as
follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. At the Effective Time, upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the applicable provisions of the
General Corporation Law of the State of Delaware (the DGCL), Merger Sub shall be merged
with and into the Company, whereupon the separate corporate existence of Merger Sub shall cease,
and the Company shall continue its corporate existence under Delaware law as the surviving
corporation in the Merger (the Surviving Corporation) and a direct wholly owned
subsidiary of Parent.
Section 1.2. Closing. The closing of the Merger (the Closing) shall take
place at the offices of Locke Lord Bissell & Liddell, 600 Travis Street, Suite 2800, Houston, Texas
at 10:00 a.m., local time, on a date to be agreed upon by the parties in writing (the Closing
Date), which shall be no later than the third business day after the satisfaction or waiver
(to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied by action taken at the Closing, but
subject to the satisfaction or waiver of such conditions), or at such other place, date and time as
the Company and Parent may agree in writing; provided, however, that upon satisfaction or waiver of
all the conditions set forth in Article VI (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date, but subject to the satisfaction or waiver of such conditions)
Parent may, on one occasion, by giving written notice to the Company no later than two business
days prior to the date the Closing is scheduled to occur, elect to postpone the Closing Date for a
period of time not to exceed 15 consecutive business days in order to facilitate the Financings.
2
Section 1.3. Effective Time. On the Closing Date, the Company and Merger Sub shall
file the certificate of merger (the Certificate of Merger), executed in accordance with,
and containing such information as is required by, the relevant provisions of the DGCL with the
Secretary of State of the State of Delaware. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at
such later time as is agreed between the parties and specified in the Certificate of Merger in
accordance with the relevant provisions of the DGCL (such date and time is hereinafter referred to
as the Effective Time).
Section 1.4. Effects of the Merger. The effects of the Merger shall be as provided in
this Agreement and in the applicable provisions of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation, all as provided under the DGCL.
Section 1.5. Certificate of Incorporation and By-laws of the Surviving Corporation.
(a) At the Effective Time, the certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended in accordance with the provisions thereof and applicable Law.
(b) At the Effective Time, the by-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and hereof and applicable Law.
Section 1.6. Directors. Subject to applicable Law, the directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office until their respective successors are duly elected and qualified, or their
earlier death, resignation or removal.
Section 1.7. Officers. The officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death, resignation or
removal.
Section 1.8. Merger Sub Contribution. Immediately prior to the Effective Time, the
Company shall contribute to Merger Sub the funds, if any, it receives pursuant to the Citrus
Transfer (not to exceed $1,450,000,000) in exchange for an equity interest in Merger Sub
proportionate to its Deemed Share. Such obligation shall be deemed satisfied by the Companys
compliance with clause (ii) of Section 2.3(a). As used herein, Deemed Share means the
fraction (a) the numerator of which is the amount, if any, contributed by the Company to Merger Sub
pursuant to this Section 1.8 and (b) the denominator of which is the aggregate value of the Merger
Consideration, valuing the Common Units based upon the volume weighted average price of the Common
Units for the five trading days ending on the trading day immediately preceding the Effective Time.
3
ARTICLE II.
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Effect on Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Merger Sub or the holders of any securities of the Company or Merger Sub, each share of
common stock, par value $1.00 per share of the Company (such shares, collectively, Company
Common Stock, and each, a Share) issued and outstanding immediately prior to the
Effective Time (other than Cancelled Shares and Dissenting Shares) (the
Acquired Shares) shall, by virtue of this Agreement and without any action on the part of
the holder thereof, be converted into and shall thereafter represent the right to receive the
following consideration (collectively, the Merger Consideration), calculated in the
following order:
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(i) |
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Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time with respect to which an election to
receive cash (a Cash Election) has been effectively made and not
revoked or lost pursuant to Section 2.2 (each, a Cash Election Share)
shall be converted into the right to receive $44.25 in cash without interest
(the Per Share Cash Consideration); provided,
however, if (A) the product of the Per Share Cash Consideration and the
number of Cash Election Shares (such product being the Cash Election
Amount) exceeds the Available Cash Election Amount, then each Cash
Election Share shall be converted into a right to receive (1) an amount of cash
(without interest) equal to the product of (p) the Per Share Cash Consideration
and (q) a fraction, the numerator of which shall be the Available Cash Election
Amount and the denominator of which shall be the Cash Election Amount (such
fraction being the Cash Fraction) and (2) a number of Common Units
equal to the product of (r) 1.00 (the Exchange Ratio) and (s) one (1)
minus the Cash Fraction. The Available Cash Election Amount shall
equal (A) the product of (x) 0.60, (y) the Per Share Cash Consideration and (z)
the total number of shares of Company Common Stock (other than the Cancelled
Shares) issued and outstanding immediately prior to the Effective Time
minus (B) the product of the Per Share Cash Consideration and the total
number of Dissenting Shares immediately prior to the Effective Time. |
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(ii) |
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Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time with respect to which an election to
receive consideration consisting of Common Units (a Common Unit
Election) is properly made and not revoked or lost pursuant to Section 2.2
(each, a Common Unit Election Share), and each No Election Share
(which shall be deemed to be Common Unit Election Shares for purposes of this
Section 2.1(a)(ii)), shall be converted into the right to receive that number
of Common Units equal to the Exchange Ratio (together with any |
4
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|
|
cash in lieu of fractional Common Units to be paid pursuant to Section
2.1(d), the Per Share Common Unit Consideration);
provided, however, if the Cash Election Amount is less than an
amount equal to 5/6 (five sixths) multiplied by the Available Cash Election
Amount (the amount of such shortfall, if any, the Shortfall
Amount), then each Common Unit Election Share shall be converted into
the right to receive (1) a number of Common Units equal to the product of
(x) the Exchange Ratio and (y) a fraction, the numerator of which shall be
the Per Share Cash Consideration minus the amount of cash calculated in
clause (2) below and the denominator of which shall be the Per Share Cash
Consideration and (2) an amount of cash (without interest) equal to the
amount the Shortfall Amount divided by the number of Common Unit Election
Shares. |
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|
(iii) |
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Of the Shares converted pursuant to this Section 2.1(a), a
number of shares equal to the Deemed Share of the Acquired Shares shall be
treated as having been acquired by the Company pursuant to a transaction
described in Section 317(b) of the Code. |
(b) Cancellation of Shares. Each Share that is held directly or indirectly by the
Company or any of its wholly owned Subsidiaries immediately prior to the Effective Time (in each
case, other than any Shares held on behalf of third parties) (the Cancelled Shares)
shall, by virtue of the Merger and without any action on the part of the holder thereof, be
cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange
for such cancellation and retirement.
(c) Conversion of Merger Sub Common Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, each share of common stock, par
value $1.00 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully-paid and nonassessable share of common
stock, par value $1.00 per share, of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation. From and after the Effective
Time, all certificates representing the capital stock of Merger Sub shall be deemed for all
purposes to represent the number of shares of common stock of the Surviving Corporation into which
they were converted in accordance with the immediately preceding sentence.
(d) Fractional Units. No fractional Common Units shall be issued in the Merger, but
in lieu thereof each holder of Shares otherwise entitled to a fractional Common Unit will be entitled to receive, from the Exchange Agent in accordance with the
provisions of this Section 2.1(d), a cash payment in lieu of such fractional Common Unit
representing such holders proportionate interest, if any, in the proceeds from the sale by the
Exchange Agent (reduced by any fees of the Exchange Agent attributable to such sale) in one or more
transactions of Common Units equal to the excess of (A) the aggregate number of Common Units to be
delivered to the Exchange Agent by Parent pursuant to Section 2.3(a) over (B) the aggregate number
of whole Common Units to be distributed to the holders of Shares pursuant to Section 2.3(b) (such
excess, the Excess Shares). No certificates or scrip representing fractional Common Units
shall be issued in the Merger. The parties acknowledge
5
that payment of the cash consideration in lieu of issuing fractional Common Units was not
separately bargained-for consideration but merely represents a mechanical rounding off for purposes
of avoiding the expense and inconvenience to Parent that would otherwise be caused by the issuance
of fractional Common Units. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Shares in lieu of any fractional Common Units, the Exchange Agent
shall make available such amounts to such holders of Shares, without interest, subject to and in
accordance with Section 2.2.
(e) Adjustments to the Exchange Ratio. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding shares of capital
stock of the Company or Parent shall occur as a result of any reclassification, stock or unit split
(including a reverse stock or unit split) or combination, exchange or readjustment of shares or
units, or any stock or unit dividend or stock or unit distribution with a record date during such
period, the Exchange Ratio, the Per Share Common Unit Consideration, the Per Share Cash
Consideration, the Merger Consideration and any other similarly dependent items shall be equitably
adjusted to provide to Parent, Merger Sub and the holders of Company Common Stock the same economic
effect as contemplated by this Agreement prior to such action, and thereafter, all references in
this Agreement to the Exchange Ratio, Per Share Common Unit Consideration, Per Share Cash
Consideration, Merger Consideration and any other similarly dependent items shall be references
to the Exchange Ratio, Per Share Common Unit Consideration, Per Share Cash Consideration, Merger
Consideration and any other similarly dependent items as so adjusted; provided, however, that
nothing in this Section 2.1(e) shall be deemed to permit or authorize any party hereto to effect
any such change that it is not otherwise authorized or permitted to undertake pursuant to this
Agreement.
(f) Dissenting Shares. Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time and which are held
by stockholders properly exercising appraisal rights available under Section 262 of the DGCL (the
Dissenting Shares) shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until such holders shall have failed to perfect or
shall have effectively withdrawn or lost their rights to appraisal under the DGCL. Holders of
Dissenting Shares shall be entitled to payment of the appraised value of the Dissenting Shares held
by them to the extent permitted by and in accordance with Section 262 of the DGCL. If any such
holder shall have failed to perfect or shall have effectively withdrawn or lost such right to
appraisal, such holders Shares shall thereupon be converted into and become exchangeable only for
the right to receive, as of the later of the Effective Time and the time that such right to
appraisal shall have been irrevocably lost, withdrawn or expired, the Merger Consideration
specified in Section 2.1(a)(iii); provided, in such circumstance, to the fullest extent
permitted by Law, that Parent shall be entitled at its sole option to convert each such share into
the right to receive the Merger Consideration specified in either Section 2.1(a)(i) or 2.1(a)(ii).
The Company shall give Parent and Merger Sub (i) prompt written notice of any demands for appraisal
of any Shares, attempted withdrawals of such demands and any other instruments served pursuant to
the DGCL and received by the Company relating to rights to be paid the fair value of Dissenting
Shares, as provided in Section 262 of the DGCL, and (ii) the opportunity to participate in
negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent which will not be unreasonably withheld
or delayed, voluntarily make or agree to make any material payment with
6
respect to any demands for appraisals of capital stock of the Company, offer to settle or
settle any such demands.
Section 2.2. Election Procedures.
(a) An election form and other appropriate and customary transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the certificates theretofore
representing shares of Company Common Stock shall pass, only upon proper delivery of such
Certificates to the Exchange Agent) in such form as Parent shall specify and as shall be reasonably
acceptable to the Company (the Election Form) shall be mailed thirty days prior to the
anticipated Closing Date or on such other date as Parent and the Company shall mutually agree (the
Mailing Date) to each holder of record of Company Common Stock as of the close of
business on the fifth business day prior to the Mailing Date (the Election Form Record
Date).
(b) Each Election Form shall permit the holder (or the beneficial owner through appropriate
and customary documentation and instructions), other than any holder of Dissenting Shares, to
specify (i) the number of shares of such holders Company Common Stock with respect to which such
holder elects to receive the Per Share Common Unit Consideration and (ii) the number of shares of
such holders Company Common Stock with respect to which such holder elects to receive the Per
Share Cash Consideration. Any Shares with respect to which the Exchange Agent has not received an
effective, properly completed Election Form on or before 5:00 p.m., New York time, on the twentieth
(20th) day following the Mailing Date (or such other time and date as Parent and the Company shall
agree) (the Election Deadline) (other than Cancelled Shares or any shares of Company
Common Stock that constitute Dissenting Shares as of such time) shall be deemed to be No
Election Shares.
(c) Parent shall make available one or more Election Forms as may reasonably be requested from
time to time by all Persons who become holders (or beneficial owners) of Company Common Stock
between the Election Form Record Date and the close of business on the business day prior to the
Election Deadline, and the Company shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein.
(d) Any such election shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the Election Deadline. An Election Form
shall be deemed properly completed only if accompanied by one or more certificates (or customary
affidavits and, if required by Parent, the posting by such Person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made against it with
respect to such certificate) representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included in the Election Form.
Any Election Form may be revoked or changed by the Person submitting such Election Form, by written
notice received by the Exchange Agent prior to the Election Deadline. In the event an Election
Form is revoked prior to the Election Deadline, the shares of Company Common Stock represented by
such Election Form shall become No Election Shares and Parent shall cause the certificates
representing such shares of Parent Common Stock to be promptly returned without charge to the
Person submitting the Election Form upon written request to that effect from the holder who
submitted the Election Form, except to the extent (if
7
any) a subsequent election is properly made with respect to any or all of such shares of
Company Common Stock. Subject to the terms of this Agreement and of the Election Form, the
Exchange Agent shall have reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial defects in the Election Forms,
and any good faith decisions of the Exchange Agent regarding such matters shall be binding and
conclusive. None of Parent, the Company or the Exchange Agent shall be under any obligation to
notify any Person of any defect in an Election Form.
Section 2.3. Exchange of Shares.
(a) Exchange Agent. Prior to the Effective Time, Parent shall appoint an exchange
agent mutually acceptable to Parent and the Company (the Exchange Agent) for the purpose
of exchanging Shares for Merger Consideration. Prior to the Effective Time, (i) Parent shall
deposit, or shall cause to be deposited, with the Exchange Agent, in trust for the benefit of
holders of the Shares (other than the Cancelled Shares and any Dissenting Shares), certificates
representing the Common Units issuable pursuant to Section 2.1(a) and Section 5.6(a) (or
appropriate alternative arrangements shall be made by Parent if uncertificated Common Units will be
issued) and an amount of cash sufficient (when combined with the Company Cash Funds) to effect the
delivery of the Merger Consideration to the holders of Company Common Shares (other than Cancelled
Shares and any Dissenting Shares) and (ii) the Company shall deposit the Company Cash Funds with
the Exchange Agent. Following the Effective Time, Parent agrees to make available to the Exchange
Agent, from time to time as needed, cash sufficient to pay any distributions pursuant to Section
2.3(c). All such certificates representing Common Units and cash deposited with the Exchange Agent
from time to time is hereinafter referred to as the Exchange Fund. As used herein,
Company Cash Funds means the cash proceeds received, if any, by the Company pursuant to
the Citrus Transfer, not to exceed $1,450,000,000.
(b) Exchange Procedures. As soon as reasonably practicable after the Effective Time
and in any event not later than the fifth business day following the Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of Shares, which at the Effective Time were
converted into the right to receive the Merger Consideration pursuant to Section 2.1, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and that risk of loss and
title to the Shares shall pass, only upon delivery of the Shares to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Shares in exchange for, as applicable, cash
Merger Consideration, certificates representing whole Common Units (or appropriate alternative
arrangements shall be made by Parent if uncertificated Common Units will be issued), cash in lieu
of any fractional Common Units pursuant to Section 2.1(d) and any distributions payable pursuant to
Section 2.3(c). Upon surrender of Shares for cancellation to the Exchange Agent, together with such
letter of transmittal, duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder
of such Shares shall be entitled to receive in exchange therefor, as applicable, that number of
whole Common Units (after taking into account all Shares surrendered by such holder) to which such
holder is entitled pursuant to Section 2.1 and payment by cash or check of that amount of cash
Merger Consideration to which such holder is entitled pursuant to Section 2.1, that amount of cash
in lieu of fractional Common Units which such holder is entitled to receive pursuant to Section
2.1(d) and any distributions payable pursuant to Section 2.3(c), and the Shares so surrendered
shall forthwith be cancelled. If any cash
8
payment is to be made to, or any Common Units constituting any part of the Merger Consideration is to be
registered in the name of, a person other than the person in whose name the applicable surrendered
Share is registered, it shall be a condition to the payment or registration thereof that the
surrendered Share be in proper form for transfer and that the person requesting such payment or
delivery of the Merger Consideration pay any transfer or other similar Taxes required as a result
of such registration in the name of a person other than the registered holder of such Share or
establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
Until surrendered as contemplated by this Section 2.2(b), each Share shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger Consideration (and any
amounts to be paid pursuant to Section 2.1(d) or Section 2.3(c)) upon such surrender. No interest
shall be paid or shall accrue on any amount payable pursuant to Section 2.1(d) or Section 2.3(c).
(c) Distributions with Respect to Unexchanged Shares. No distributions with respect
to Common Units with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Share with respect to the Common Units represented thereby, and no cash payment in
lieu of fractional Common Units shall be paid to any such holder pursuant to Section 2.1(d), until
such Share has been surrendered in accordance with this Article II. Subject to applicable Laws,
following surrender of any such Share, there shall be paid to the recordholder thereof, without
interest, (i) promptly after such surrender, the number of whole Common Units issuable in exchange
therefor pursuant to this Article II, together with any cash payable in lieu of a fractional Common
Unit to which such holder is entitled pursuant to Section 2.1(d) and the amount of distributions
with a record date after the Effective Time theretofore paid with respect to such whole Common
Units and (ii) at the appropriate payment date, the amount of distributions with a record date
after the Effective Time and a payment date subsequent to such surrender payable with respect to
such whole Common Units. The Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable under this Agreement to any holder of Shares, such amounts as are
required to be withheld or deducted under the Code or any provision of U.S. state or local Tax Law
with respect to the making of such payment. To the extent that amounts are so withheld or deducted
and paid over to the applicable Governmental Entity, such withheld or deducted amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of the Shares, in
respect of which such deduction and withholding were made.
(d) No Further Ownership Rights in Company Common Stock; Closing of Transfer Books.
All Common Units issued upon the surrender for exchange of Shares in accordance with the terms of
this Article II and any cash paid pursuant to Section 2.1(d) or Section 2.3(c) shall be deemed to
have been issued (or paid) in full satisfaction of all rights pertaining to the Shares previously
represented by such Shares. After the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Shares are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be cancelled and exchanged as provided in this
Article II.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund (including the
proceeds of any investments thereof) that remains undistributed to the former holders of
9
Shares for one year after the Effective Time shall be delivered to Parent upon demand, and any
holders of Shares who have not theretofore complied with this Article II shall thereafter look only
to Parent for payment of their claim for the Merger Consideration, any cash in lieu of fractional
Common Units pursuant to Section 2.1(d) and any distributions pursuant to Section 2.3(c).
(f) No Liability. Notwithstanding anything in this Agreement to the contrary, none of
the Company, Parent, Merger Sub, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of Shares for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company SEC Documents (excluding any disclosures set forth in any
risk factor section and in any section relating to forward-looking statements, to the extent that
they are cautionary, predictive or forward-looking in nature), where the relevance of the
information as an exception to (or disclosure for purposes of) a particular representation is
reasonably apparent on the face of such disclosure, or in the disclosure schedule delivered by the
Company to Parent immediately prior to the execution of this Agreement (the Company Disclosure
Schedule) (each section of which qualifies the correspondingly numbered representation,
warranty or covenant if specified therein and such other representations, warranties or covenants
where its relevance as an exception to (or disclosure for purposes of) such other representation,
warranty or covenant is reasonably apparent), the Company represents and warrants to Parent and
Merger Sub as follows:
Section 3.1. Qualification, Organization, Subsidiaries, etc.
(a) Each of the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own, lease and operate its properties and
assets, to carry on its business as presently conducted and to perform its material obligations
under all Company Material Contracts. Each of the Company and its Subsidiaries is qualified to do
business and is in good standing as a foreign corporation in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, validly existing, qualified or in good
standing, or to have such power or authority, would not have, individually or in the aggregate, a
Company Material Adverse Effect.
(b) As used in this Agreement, a Company Material Adverse Effect means a material
adverse event, change, effect, development, condition or occurrence on or with respect to the
business, financial condition or continuing results of operations of the Company and its
Subsidiaries, taken as a whole, other than any event, change, effect, development, condition or
occurrence: (i) disclosed in the Company SEC Documents filed or furnished prior to the date of
this Agreement (excluding any disclosure set forth in any risk factor section, or in any Section
relating to forward looking statements, and any other disclosures therein, in each case, to the
10
extent that they are cautionary and predictive or forward looking in nature) or as disclosed on the
face of the Company Disclosure Schedule, (ii) in or generally affecting the economy or the
financial or securities markets in the United States or elsewhere in the world or (iii) resulting
from or arising out of (A) any changes or developments in national, regional, state or local
wholesale or retail markets for natural gas, natural gas transmission or distribution, or related
products or services including those due to actions by competitors or due to changes in commodities
prices or hedging markets therefor, (B) any changes or developments in national, regional, state or
local wholesale or retail natural gas prices, (C) the announcement or the existence of, or
compliance with, this Agreement or the Original Merger Agreement or the transactions contemplated
hereby or thereby (including the impact thereof on the relationships, contractual or otherwise, of
the Company or any of its Subsidiaries with employees, labor unions, customers, suppliers or
partners, and including any lawsuit, action or other proceeding with respect to the Merger or any
of the other transactions contemplated by this Agreement or the Original Merger Agreement), (D) any
taking of any action at the written request of Parent or Merger Sub, (E) any adoption,
implementation, promulgation, repeal, modification, reinterpretation or proposal of any rule,
regulation, ordinance, order, protocol or any other Law of or by any national, regional, state or
local Governmental Entity, or market administrator, (F) any changes in GAAP or accounting standards
or interpretations thereof, (G) any weather-related or other force majeure event or outbreak or
escalation of hostilities or acts of war or terrorism, or (H) any changes in the share price or
trading volume of the Shares or in the Companys credit rating, or the failure of the Company to
meet projections or forecasts (unless due to any event, change, effect, development, condition or
occurrence which has otherwise resulted in a Company Material Adverse Effect); except, in
each case with respect to subclauses (A) (B) and (E) (G) of this clause (iii), to the extent
materially and disproportionately affecting the Company and its Subsidiaries, taken as a whole,
relative to other similarly situated companies in the industries in which the Company and its
Subsidiaries operate.
(c) The Company SEC Documents include a true and complete copy of the Companys amended and
restated certificate of incorporation and by-laws, each as amended through the date hereof
(collectively, the Company Organizational Documents), and promptly upon request, the
Company will make available to Parent the certificate of incorporation, certificate of limited
partnership, certificate of formation, bylaws, limited partnership agreement, limited liability
company agreement or comparable constituent or organizational documents of each material Subsidiary
of the Company.
Section 3.2. Capital Stock.
(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company
Common Stock, par value, $1.00 per share and 6,000,000 shares of preferred stock, no par value per
share (Company Preferred Stock). As of July 18, 2011, (i) 125,979,243 shares of Company
Common Stock were issued and 124,739,364 shares were outstanding, which does not include restricted
stock awards outstanding as of such date, (ii) 1,239,879 shares of Company Common Stock were held
in treasury, (iii) 341,213 restricted shares were issuable and, based on a price of $43.33 per
share of Company Common Stock, 4,470,127 shares of Company Common
Stock were issuable, in each case pursuant to the Company Stock Plans in respect of Company
Equity Awards, and (iv) no shares of Company Preferred Stock were issued or outstanding. All
outstanding shares of Company Common Stock are duly authorized, validly issued, fully-paid
11
and nonassessable and free of preemptive rights and all shares of Company Common
Stock reserved for issuance as noted in clause (iii), when issued in accordance with the respective
terms thereof, will be duly authorized, validly issued, fully-paid and nonassessable and free of
preemptive rights.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure Schedule and in subsection
(a) above (and other than Shares issuable pursuant to the terms of outstanding awards under the
Company Stock Plans), there are no outstanding subscriptions, options, warrants, calls, convertible
securities, exchangeable securities or other similar rights, agreements or commitments to which the
Company or any of its Subsidiaries is a party (i) obligating the Company or any of its Subsidiaries
to (A) issue, transfer, exchange, sell or register for sale any shares of capital stock or other
equity interests of the Company or any Subsidiary of the Company or securities convertible into or
exchangeable for such shares or equity interests, (B) grant, extend or enter into any such
subscription, option, warrant, call, convertible securities or other similar right, agreement or
arrangement, (C) redeem or otherwise acquire any such shares of capital stock or other equity
interests or (D) provide a material amount of funds to, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or (ii) granting any
preemptive or antidilutive or similar rights with respect to any security issued by the Company or
any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes
or other indebtedness, the holders of which have the right to vote (or which are convertible or
exchangeable into or exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
(d) There are no voting trusts or other agreements or understandings to which the Company or
any of its Subsidiaries is a party with respect to the voting or registration of the capital stock
or other equity interest of the Company or any of its Subsidiaries.
(e) The Company SEC Documents contain an accurate and complete copy of the Company Stock Plans
and the forms of Company Stock Awards and Company RSUs (collectively, Company Equity
Awards). There have been no repricings of any Company Stock Awards through amendments,
cancellation and reissuance or other means since January 1, 2009. None of the Company Equity
Awards have been granted in contemplation of the Merger or the transactions contemplated in this
Agreement and, except as set forth on Section 3.2(e) of the Company Disclosure Schedule, no Company
Equity Awards have been granted since December 31, 2010. None of the Company Stock Awards was
granted with an exercise price below or deemed to be below the per Share closing price on the New
York Stock Exchange (the NYSE) on the date of grant. All grants of Company Equity Awards
were validly made and properly approved by the Board of Directors of the Company (or a duly
authorized committee or subcommittee thereof) in compliance with all applicable Laws and the terms
of the applicable Company Stock Plan and recorded on the consolidated financial statements of the
Company in accordance with GAAP, and, where applicable, no such grants involved any back dating,
forward dating or similar practices with respect to grants of Company Stock Awards. Section
3.2(e) of the Company Disclosure Schedule sets forth a complete list of all Company Equity Awards
outstanding as of the date hereof and with respect to each Company Equity Award, the
12
holder
thereof, the number of shares of Company Common Stock subject thereto and the exercise price
thereof, if applicable.
(f) Except as set forth in Section 3.2(f) of the Company Disclosure Schedule, the Company or a
Company Subsidiary owns, directly or indirectly, all of the issued and outstanding shares of
capital stock or other equity interests of each Subsidiary of the Company, free and clear of any
Liens other than Company Permitted Liens, and all of such shares of capital stock or other equity
interests are duly authorized, validly issued, fully-paid and nonassessable (except as such
nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the
Delaware Revised Uniform Limited Partnership Act (the Delaware LP Act) or Sections 18-607
and 18-804 of the Delaware Limited Liability Company Act, as amended (the Delaware LLC
Act)) and free of preemptive rights. Except as set forth on Section 3.2(f) of the Company
Disclosure Schedule and for equity interests in the Companys Subsidiaries, neither the Company nor
any of its Subsidiaries owns, directly or indirectly, any equity interest in any person (or any
security or other right, agreement or commitment convertible or exercisable into, or exchangeable
for, any equity interest in any person), or has any obligation to acquire any such equity interest,
security, right, agreement or commitment or to provide funds to or make any investment (in the form
of a loan, capital contribution or otherwise) in, any person.
(g) As used in this Agreement, Company Permitted Lien means any Lien (i) for Taxes
or governmental assessments, charges or claims of payment not yet delinquent, being contested in
good faith or for which adequate accruals or reserves have been established, (ii) that is a
carriers, warehousemens, mechanics, materialmens, repairmens or other similar lien arising in
the ordinary course of business, (iii) arising under conditional sales contracts and equipment
leases with third parties entered into in the ordinary course of business, (iv) not created by the
Company or its Subsidiaries that affect the underlying fee interest of a Company Leased Real
Property, (v) that is disclosed on the most recent consolidated balance sheet of the Company
included in the Company SEC Documents or notes thereto or securing liabilities reflected on such
balance sheet, (vi) created pursuant to the agreements set forth on Section 3.2(g) of the Company
Disclosure Schedule, (vii) grants to others of Rights-of-Way, surface leases, crossing rights and
amendments, modifications, and releases of Rights-of-Way, easements and surface leases in the
ordinary course of business, (viii) with respect to Rights-of-Way, restrictions on the exercise of
any of the rights under a granting instrument that are set forth therein or in another executed
agreement, that is of public record or to which the Company or any of its Subsidiaries otherwise
has access, between the parties thereto, (ix) which an accurate up-to-date survey would show, (x)
resulting from any facts or circumstances relating to Parent or its Affiliates, or (xi) that does
not and would not reasonably be expected to materially impair the continued use of a Company Owned
Real Property or a Company Leased Real Property as currently operated.
(h) As used in this Agreement, Rights-of-Way means easements, licenses,
rights-of-way, permits, servitudes, leasehold estates, instruments creating an interest in real
property, and other similar real estate interests.
Section 3.3. Corporate Authority Relative to this Agreement; No Violation.
13
(a) The Company has the requisite corporate power and authority to enter into this Agreement
and, subject to receipt of the Company Stockholder Approval, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the Board of Directors of
the Company and, except for the Company Stockholder Approval (assuming Parent is not an interested
stockholder under Section 203 of the DGCL), no other corporate proceedings on the part of the
Company are necessary to authorize the consummation of the transactions contemplated hereby. As of
the Second Amendment Date, the Board of Directors of the Company has unanimously (among the
directors present and voting) resolved to recommend that the Companys stockholders approve this
Agreement and the transactions contemplated hereby (the Company Recommendation). This
Agreement has been duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the legal, valid and binding agreement of Parent and Merger Sub, constitutes
the legal, valid and binding agreement of the Company and is enforceable against the Company in
accordance with its terms, except as such enforcement may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or
other Laws affecting or relating to creditors rights generally or (ii) the rules governing the
availability of specific performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity or at law (the
Remedies Exceptions).
(b) Other than in connection with or in compliance with (i) Section 251 of the DGCL, (ii) the
Securities Exchange Act of 1934 (the Exchange Act), (iii) the Securities Act of 1933 (the
Securities Act), (iv) the rules and regulations of the NYSE, (v) the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the HSR Act), (vi) the Federal Power Act, 16 U.S.C.
§§ 791a-825r and/or the regulations promulgated by Federal Energy Regulatory Commission (the
FERC) thereunder (the FPA), and the approval of the FERC thereunder (the
FERC Approval), (vii) the approval of the Massachusetts Department of Public Utilities
(the MDPU Approval), (viii) the approval of Missouri Public Service Commission (the
MPSC Approval), (ix) the approval of the Federal Communications Commission (the
FCC) for the transfer of control (or assignment, as applicable) of the Companys business
radio and other Title III wireless licenses, pursuant to Section 310 of the Communications Act of
1934, as amended, 47 U.S.C. § 310(d) (the FCC Approval); and (x) the approvals set forth
in Section 3.3(b) of the Company Disclosure Schedule (collectively, the Company
Approvals), and, subject to the accuracy of the representations and warranties of Parent and
Merger Sub in Section 4.3(b), no authorization, consent, order, license, permit or approval of, or
registration, declaration, notice or filing with, any United States, state of the United States or
foreign governmental or regulatory agency, commission, court, body, entity or authority,
independent system operator, regional transmission organization, other market administrator, or
national, regional or state reliability organization (each, a Governmental Entity) is
necessary, under applicable Law, for the consummation by the Company of the transactions
contemplated by this Agreement, except for such authorizations, consents, approvals or filings that
are not required to be obtained or made prior to consummation of such transactions.
(c) Except as set forth in Section 3.3(c) of the Company Disclosure Schedule, the execution
and delivery by the Company of this Agreement do not, and (assuming the Company Approvals are
obtained and the Requisite Regulatory Approvals are obtained without any
14
adverse condition or
restraint) the consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not (i) result in any loss, or material suspension, limitation or impairment
of any right of the Company or any of its Subsidiaries to own or use any assets material to the
conduct of their business or result in any material violation
of, or material default (with or
without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to the loss of a material benefit under
any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or license binding upon the
Company or any of its Subsidiaries or result in the creation of any liens, claims, mortgages,
encumbrances, pledges, security interests, equities or charges of any kind (each, a Lien)
other than Permitted Liens, in each case, upon any of the properties or assets of the Company or
any of its Subsidiaries, (ii) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws or other equivalent organizational document, in each case
as amended or restated, of the Company or any of its Subsidiaries or (iii) materially conflict with
or materially violate any applicable Laws.
(d) This Agreement and the Merger have been approved by the Continuing Directors of
CrossCountry Energy, LLC, a Delaware limited liability company (CrossCountry). For the
purposes of this subsection (d), the term Continuing Director shall have the meaning ascribed
thereto in that certain Capital Stock Agreement, dated June 30, 1986, among El Paso Energy
Corporation (as successor interest to Sonat, Inc. by virtue of a merger), CrossCountry (as
successor in interest to Enron Corp., which in turn was the successor in interest to InterNorth,
Inc. by virtue of a name change, which in turn was the successor in interest to Houston Natural Gas
corporation by virtue of a merger) and Citrus Corp. relating to the ownership by El Paso and
CrossCountry of the Capital Stock of Citrus Corp. and its wholly owned subsidiaries, as amended.
CrossCountry is currently a Principal to such Capital Stock Agreement.
Section 3.4. Reports and Financial Statements.
(a) The Company and each of its Subsidiaries has filed or furnished all forms, documents and
reports required to be filed or furnished prior to the date hereof by it with the Securities and
Exchange Commission (the SEC) since January 1, 2009 (the Company SEC
Documents). As of their respective dates or, if amended, as of the date of the last such
amendment, the Company SEC Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder, and none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading, except that information set forth in the Company SEC Documents as of a later date (but
before the date of this Agreement) will be deemed to modify information as of an earlier date.
(b) The consolidated financial statements (including all related notes and schedules) of the
Company included in the Company SEC Documents fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries, as at the
respective dates thereof, and the consolidated results of their operations and their consolidated
cash flows for the respective periods then ended (subject, in the case of the unaudited statements,
15
to normal year-end audit adjustments and to any other adjustments described therein, including the
notes thereto) in conformity with United States generally accepted accounting principles
(GAAP) (except, in the case of the unaudited statements, as permitted by the SEC) applied
on a consistent basis during the periods involved (except as may be indicated therein or in the
notes thereto).
Section 3.5. Internal Controls and Procedures. The Company has established and
maintains disclosure controls and procedures and internal control over financial reporting (as such
terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act)
as required by Rule 13a-15 under the Exchange Act. The Companys disclosure controls and
procedures are reasonably designed to ensure that all material information required to be disclosed
by the Company in the reports that it files or furnishes under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the
SEC, and that all such material information is accumulated and communicated to the Companys
management as appropriate to allow timely decisions regarding required disclosure and to make the
certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act). The Companys management has completed an assessment of the effectiveness of
the Companys internal controls over financial reporting in compliance with the requirements of
Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2010 and such assessment
concluded that such controls were effective. Based on its most recent evaluation of internal
controls over financial reporting prior to the date hereof, management of the Company has disclosed
to the Companys auditors and the audit committee of the Company Board (i) any significant
deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting that are reasonably likely to adversely affect in any material respect the Companys
ability to report financial information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Companys internal control over
financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any,
has been disclosed to Parent prior to the date hereof.
Section 3.6. No Undisclosed Liabilities. Except (a) as reflected or reserved against
in the Companys consolidated balance sheets (or the notes thereto) included in the Company SEC
Documents, (b) as permitted or contemplated by this Agreement, (c) for liabilities and obligations
incurred since December 31, 2010 in the ordinary course of business consistent with past practice
and (d) for liabilities or obligations that have been discharged or paid in full in the ordinary
course of business, as of the date hereof, neither the Company nor any Subsidiary of the Company
has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise,
that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and
its consolidated Subsidiaries (or in the notes thereto), other than those which would not have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7. Compliance with Law; Permits.
(a) Except as set forth in Section 3.7 of the Company Disclosure Schedule, the Company and
each of its Subsidiaries are in compliance with and are not in default under or in violation of any
applicable federal, state, local or foreign law, statute, ordinance, rule, regulation, judgment,
order, injunction, decree or agency requirement of any Governmental Entity
16
(collectively,
Laws and each, a Law), except where such non-compliance, default or violation
would not have, individually or in the aggregate, a Company Material Adverse Effect. Since January
1, 2008, neither the Company nor any of its Subsidiaries has received any written notice or, to the
Companys knowledge, other communication from any Governmental Entity regarding any actual or
possible violation of, or failure to comply with, any Law, except as would not have, individually
or in the aggregate, a Company Material Adverse Effect.
(b) The Company and its Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents, certificates,
approvals, clearances, permissions, qualifications and registrations and orders of all Governmental
Entities, and all rights under any Company Material Contract with all Governmental Entities, and
have filed all tariffs, reports, notices, and other documents with all Government Entities
necessary for the Company and its Subsidiaries to own, lease and operate their properties and
assets and to carry on their businesses as they are now being conducted (the Company
Permits), except where the failure to have any of the Company Permits would not have,
individually or in the aggregate, a Company Material Adverse Effect. All Company Permits are valid
and in full force and effect and are not subject to any administrative or judicial proceeding that
could result in modification, termination or revocation thereof, except where the failure to be in
full force and effect or any modification, termination or revocation thereof would not have,
individually or in the aggregate, a Company Material Adverse Effect. The Company is, and each of
its Subsidiaries is, in compliance in all respects with the terms and requirements of such Company
Permits, except where the failure to be in compliance would not have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.8. Environmental Laws and Regulations.
(a) Except as set forth in Section 3.8 of the Company Disclosure Schedule or as would not
have, individually or in the aggregate, a Company Material Adverse Effect: (i) no notice,
notification, demand, request for information, citation, summons, complaint or order has been
received, no penalty has been assessed, and no investigation, action, claim, suit, proceeding or
review is pending or, to the knowledge of the Company, is threatened by any Governmental Entity or
other person relating to the Company or any Subsidiary of the Company or against any person or
entity whose liability the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law, and relating to or arising out of any Environmental
Law, (ii) the Company and its Subsidiaries are, and except for matters that have been fully
resolved with the applicable Governmental Entity, since January 1, 2008 have been in compliance
with all Environmental Laws (which compliance includes, but is not limited to, possession of all
Company Permits and compliance with the terms and conditions thereof), (iii) the Company is not
obligated to conduct or pay for, and is not conducting or paying for, any response, remedial,
investigatory or corrective action under any Environmental Law at any location, (iv) there has been
no release of Hazardous Materials at any real property currently owned, leased or operated by the
Company or any Subsidiary of the Company or, to the knowledge of the Company, formerly owned,
leased or operated by the Company or any Subsidiary of the Company or at any offsite disposal
location used by the Company or any Subsidiary of the Company to dispose of any Hazardous Materials
in concentrations or under circumstances that would require reporting or be reasonably likely to
result in investigation, remediation or other corrective or response action by the Company or any
Subsidiary of the
17
Company or, to the knowledge of Company and its Subsidiaries, by any person or
entity whose liability the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law, under any Environmental Law, (v) the Company is not
party to any order, judgment or decree that imposes any obligations under any Environmental Law,
(vi) there have been no ruptures or explosions in the Company Systems resulting in personal injury,
loss of life or material property damage, except to the extent any claims related to such ruptures
have been resolved and (vii) there are no defects, corrosion or other damage to any of the Company
Systems that could reasonably be expected to result in a pipeline integrity failure.
(b) As used in this Agreement:
|
(i) |
|
Company Systems means the refined petroleum
product, crude oil, natural gas, liquefied natural gas, natural gas liquid and
other pipelines, lateral lines, pumps, pump stations, storage facilities,
terminals, processing plants, and other related operations, assets, machinery
and equipment that are owned by the Company or any of its Subsidiaries or used
for the conduct of the business of the Company or any of its Subsidiaries as
it is presently conducted. |
|
|
(ii) |
|
Environment means the indoor and outdoor
environment, including but not limited to any ambient air, surface water,
drinking water, groundwater, land surface (whether below or above water),
subsurface strata, sediment, building surfaces, plant or animal life and
natural resources. |
|
|
(iii) |
|
Environmental Law means any Law or any binding
agreement issued or entered by or with any Governmental Entity relating to:
(A) the Environment, including pollution, contamination, cleanup,
preservation, protection and reclamation of the Environment; (B) any exposure
to or release or threatened release of any Hazardous Materials, including
investigation, assessment, testing, monitoring, containment, removal,
remediation and cleanup of any such release or threatened release; (C) the
management of any Hazardous Materials, including the use, labeling,
processing, disposal, storage, treatment, transport or recycling of any
Hazardous Materials and Laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials; or (D)
the presence of Hazardous Materials in any building, physical structure,
product or fixture. |
|
|
(iv) |
|
Hazardous Materials means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined
as such by, or regulated as such under, any Environmental Law, including any
regulated pollutant or contaminant (including any constituent, raw material,
product or by-product thereof), petroleum or natural gas hydrocarbons or any
liquid or fraction thereof, asbestos or asbestos-containing material,
polychlorinated biphenyls, lead paint, any |
18
|
|
|
hazardous, industrial or solid
waste, and any toxic, radioactive, infectious or hazardous substance, material
or agent. |
Section 3.9. Employee Benefit Plans.
(a) Section 3.9(a) of the Company Disclosure Schedule lists all material Benefit Plans
sponsored, maintained, contributed to or required to be contributed to by the Company, any of its
Subsidiaries, or any of their ERISA Affiliates, or under which the Company, any of its Subsidiaries
or any of their ERISA Affiliates may have any liability (contingent or otherwise) (the Company
Benefit Plans). Copies of the Company Benefit Plans and any amendments thereto have been made
available to Parent together with any applicable trust documents, the most recent summary plan
description (and summaries of material modifications, if applicable), non-discrimination testing
results, actuarial valuations, annual report (Form 5500 including, if applicable, Schedule B
thereto) and tax return (Form 990) prepared in connection with any such plan or related trust.
Except as set forth in Section 3.9(a) of the Company Disclosure Schedule, neither the Company nor,
to the knowledge of the Company, any other person or entity has any express or implied commitment,
whether legally enforceable or not, to adopt, terminate or materially modify any Company Benefit
Plan, other than with respect to a modification or termination required by ERISA or the Code. For
purposes of this Agreement, ERISA Affiliate of any entity means any other person, entity,
trade or business (whether or not incorporated) that, together with such entity, would be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code.
(b) Except for such non-compliance which would not, individually or in the aggregate,
materially and adversely affect the ability of the Company and its Subsidiaries to operate their
business in the ordinary course consistent with past practices, (i) each Company Benefit Plan has
been maintained and administered in compliance with its terms and with applicable Law, including
ERISA and the Code to the extent applicable thereto, and (ii) all contributions required to be made
under the terms of any Company Benefit Plan have been timely made or, if not yet due, have been
properly reflected in the Companys financial statements in accordance with GAAP. Except as set
forth in Section 3.9(b) of the Company Disclosure Schedule, any Company Benefit Plan intended to be
qualified under Section 401(a) or 401(k) of the Code has received a favorable determination letter
or equivalent opinion letter from the Internal Revenue Service, and the Company has made available
to Parent a copy of the most recent such letter for each such Company Benefit Plan.
(c) Except as set forth in Section 3.9(c) of the Company Disclosure Schedule, neither the
Company nor its Subsidiaries maintains, contributes to or is required to contribute to, or has in
the past six years maintained, contributed to or been required to contribute to any plan or
arrangement which provides retiree medical or welfare benefits, except pursuant to the continuation
coverage requirements of Section 601 et. Seq. of ERISA or Section 4980B of the Code.
(d) Except as set forth in Section 3.9(d) of the Company Disclosure Schedule, neither the
Company, its Subsidiaries nor any of their ERISA Affiliates maintains, contributes to or is
required to contribute to, or has in the past six years maintained, contributed to or been required
to contribute to any Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section
19
412 or 4971 of the Code. None of the Company Benefit Plans is a multiple employer welfare
arrangement (as defined in Section 3(40) of ERISA), a multiple employer plan (as defined in
Section 413(c) of the Code) or a multiemployer plan (as defined in Section 3(37) of ERISA), and
neither the Company, its Subsidiaries nor any other their ERISA Affiliates has during the past six
years maintained or contributed to, or been required to contribute to, or otherwise had any
obligation or liability in connection with, such a multiple employer plan or multiemployer plan.
(e) Except as set forth in Section 3.9(e) of the Company Disclosure Schedule, the consummation
of the transactions contemplated by this Agreement will not, either alone or in combination with
another event, (i) entitle any current or former employee, consultant, officer or other service
provider of the Company or any of its Subsidiaries to severance pay, unemployment compensation or
any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, consultant, officer or other service provider or (iii) trigger
any payment or funding (through a grantor trust or otherwise) of compensation or benefits, or (iv)
increase the amount payable or trigger any other material obligation, benefit (including loan
forgiveness), requirement or restriction pursuant to any Company Benefit Plan or otherwise.
Without limiting the foregoing, Section 3.9(e) of the Company Disclosure Schedule sets forth a list
of employment or consulting agreements with the Company containing change in control or similar
provisions that will be triggered by the consummation of the Merger or the entry into this
Agreement by the Company.
(f) Except as occasioned by differences between the Original Merger Agreement and this
Agreement, and except as set forth on Section 3.9(f) of the Company Disclosure Schedule, no amount
or benefit that could be, or has been, received (whether in cash or property or the vesting of
property or the cancellation of indebtedness) by any current or former employee or other service
provider of the Company or any Subsidiary of the Company who is a disqualified individual within
the meaning of Section 280G of the Code could be characterized as an excess parachute payment (as
defined in Section 280G(b)(1) of the Code) as a result of the consummation of the transactions
contemplated by this Agreement.
(g) Except as set forth on Section 3.9(g) of the Company Disclosure Schedule, each Company
Benefit Plan and any award thereunder (i) has been operated in good faith compliance in all
material respects with Section 409A of the Code since January 1, 2005, and all applicable
regulations and notices issued thereunder, and (ii) since January 1, 2009, has been in all material
respects in documentary compliance with Section 409A of the Code. Each Company Stock Award was
granted with an exercise price not less than the fair market value of the underlying Company Common
Stock on the date of grant. Except as set forth on Section 3.9(g) of the Company Disclosure
Schedule, no director, officer, employee or service provider of the Company or its affiliates is
entitled to a gross-up, make-whole or indemnification payment with respect to taxes imposed under
Section 409A or Section 4999 of the Code.
(h) Except as would not, individually or in the aggregate, materially and adversely affect the
ability of the Company and its Subsidiaries to operate their business in the ordinary course
consistent with past practices, there are no pending or, to the Companys knowledge, threatened
claims by or on behalf of any Company Benefit Plan, by any employee or beneficiary
20
covered under
any Company Benefit Plan or otherwise involving any Company Benefit Plan (other than routine claims
for benefits).
(i) Except as set forth on Section 3.9(i) of the Company Disclosure Schedule, no Company
Benefit Plan provides benefits or compensation to any employees or other service providers who
reside or provide services primarily outside of the United States.
Section 3.10. Absence of Certain Changes or Events. Since December 31, 2010:
(a) except as otherwise contemplated by this Agreement, the businesses of the Company and its
Subsidiaries have been conducted, in all material respects, in the ordinary course of business
consistent with past practices; and
(b) there has not been any event, change, effect, development, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have, a Company
Material Adverse Effect.
Section 3.11. Investigations; Litigation. Except as set forth in Section 3.11 of the
Company Disclosure Schedule or as would not, individually or in the aggregate, have a Company
Material Adverse Effect, (a) there is no investigation or review pending (or, to the knowledge of
the Company, threatened) by any Governmental Entity with respect to the Company or any of its
Subsidiaries, (b) there are no actions, suits, inquiries, investigations, proceedings, subpoenas,
civil investigative demands or other requests for information relating to potential violations of
law pending (or, to the knowledge of the Company, threatened) against or affecting the Company or
any of its Subsidiaries, or any of their respective properties at law or in equity and (c) there
are no orders, judgments or decrees of, or before, any Governmental Entity.
Section 3.12. Information Supplied. None of the information provided by the Company
for inclusion or incorporation by reference in (a) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of Common Units in the Merger
(including any amendments or supplements, the Form S-4) will, at the time the Form S-4
becomes effective under the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading or (b) the proxy statement relating to the Stockholders Meeting (the
Proxy Statement) will not, at the date it is first mailed to the Companys stockholders
and at the time of the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Proxy Statement and the Form S-4 (solely with respect to the portion thereof relating to the
Stockholders Meeting, and then, excluding any portion thereof based on information supplied by
Parent or Merger Sub for inclusion or incorporation by reference therein, with respect to which no
representation is made by the Company or any of its Subsidiaries) will comply as to form in all
material respects with the requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder. Notwithstanding the foregoing provisions of this Section
3.12, no representation or warranty is made by the Company with respect to information or
statements made or incorporated by reference in the Form S-4 or the Proxy Statement that were not
supplied by or on behalf of the Company.
21
Section 3.13. Regulatory Matters.
(a) Except as set forth in Section 3.13(a) of the Company Disclosure Schedule, none of the
Company and its Subsidiaries is a natural gas company under the Natural Gas Act, 15 U.S.C. §§
717-717W, and the regulations promulgated by FERC thereunder (NGA), a public utility,
transmitting utility, electric utility or electric utility company under the FPA, a common carrier
under the provisions of the Interstate Commerce Act implemented by the FERC pursuant to 49 USC §
60502 and the regulations promulgated by FERC thereunder (ICA), or a utility, utility
holding company, intrastate pipeline, gas service company, electric service company, gas company,
electric company, or any similar entity however described under the laws of any state or local
jurisdiction and the regulations promulgated thereunder. Except by reason of direct or indirect
ownership and/or control of Exempt Wholesale Generators, none of the Company or its Subsidiaries is
a holding company as defined in the Public Utility Holding Company Act of 2005, 42 U.S.C. §§
16451-16453, and the regulations promulgated by FERC thereunder (PUHCA).
(b) Each of the Companys Subsidiaries that is identified on Section 3.13(a) of the Company
Disclosure Schedule as a public utility under the FPA engages in the sale of electricity
exclusively at wholesale and has been authorized by the FERC, pursuant to the FPA, to make such
sales at market-based rates, and has been granted such waivers and blanket authorizations
(including blanket authorization to issue securities and to assume liabilities under Section 204 of
the FPA and 18 C.F.R. Pt. 34) as are customarily granted to entities with market-based rate
authority. Each such Subsidiary has obtained an order from the FERC finding it, or has in good
faith self-certified itself to the FERC, to be an Exempt Wholesale Generator under PUHCA. There
are no pending, or to the knowledge of the Company, threatened, judicial or administrative
proceedings to revoke any such Subsidiarys market-based rate authorization or Exempt Wholesale
Generator status, as applicable. To the knowledge of the Company, there are no facts that are
reasonably likely to cause any such Subsidiary to lose or be ineligible for its market-based rate
authorization or to lose its status as an Exempt Wholesale Generator under PUHCA.
(c) All filings (other than immaterial filings) required to be made by the Company or any of
its Subsidiaries during the three years preceding the date hereof, with the FERC under the FPA,
NGA, Natural Gas Policy Act of 1978, 15 U.S.C. §§ 3302-3432, and regulations promulgated by FERC
thereunder (NGPA), the ICA or PUHCA, the Department of Energy, the FCC, the MDPU, the
MPSC or any other applicable state public utility commission or department, as the case may be,
have been made, including all forms, statements, reports, notices, agreements and all documents,
exhibits, amendments and supplements appertaining thereto, including all rates, tariffs and related
documents, and all such filings complied, as of their respective dates, and, as amended or
supplemented, continue to comply with all applicable requirements of applicable statutes and the
rules and regulations promulgated thereunder, except for filings the failure of which to make or
the failure of which to make in compliance with all applicable requirements of applicable statutes
and the rules and regulations promulgated thereunder, would not, individually or in the aggregate,
materially and adversely affect the ability of the Company and its Subsidiaries to operate their
business in the ordinary course consistent with past practices.
22
Section 3.14. Tax Matters. Except as set forth in Section 3.14 of the Company
Disclosure Schedule or as would not have, individually or in the aggregate, a Company Material
Adverse Effect:
(a) The Company and its Subsidiaries (i) have duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to have been filed by or with
respect to the Company or any of its Subsidiaries, and all such Tax Returns are true, correct and
complete in all material respects, (ii) have duly and timely paid all Taxes shown as due on such
Tax Returns, (iii) have adequate accruals and reserves, in accordance with GAAP, on the financial
statements included in the Company SEC Documents for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of such financial
statements, (iv) have not, since the date of the financial statements included in the most recent
Company SEC Documents, incurred any liability for Taxes outside the ordinary course of business or
otherwise inconsistent with past custom and practice and (v) have not received written notice of
any deficiencies for any Tax from any taxing authority against the Company or any of its
Subsidiaries for which there are not adequate reserves on the financial statements included in the
Company SEC Documents.
(b) Neither the Company nor any of its Subsidiaries is the subject of any currently ongoing
tax audit or other proceeding with respect to Taxes nor has any Tax audit or other proceeding with
respect to Taxes been proposed against any of them in writing. As of the date of this Agreement,
there are no pending requests for waivers of the time to assess any Tax. Neither the Company nor
any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. There are no Liens for Taxes on
any of the assets of the Company or any of its Subsidiaries other than any Lien for Taxes not yet
delinquent, being contested in good faith or for which adequate accruals or reserves have been
established and disclosed in the Company SEC Documents. No claim has ever been made in writing by
a taxing authority of a jurisdiction where the Company or one of its Subsidiaries has not filed Tax
Returns claiming that the Company or such Subsidiary is or may be subject to taxation by that
jurisdiction.
(c) Neither the Company nor any of its Subsidiaries is obligated by any written contract,
agreement or other arrangement to indemnify any other person (other than the Company and its
Subsidiaries) with respect to Taxes. Neither the Company nor any of its Subsidiaries is a party to
or bound by any written Tax allocation, indemnification or sharing agreement (other than an
agreement with the Company or its Subsidiaries). To the knowledge of the Company, neither the
Company nor any of its Subsidiaries is liable under Treasury Regulation Section 1.1502-6 (or any
similar provision of the Tax Laws of any state, local or foreign jurisdiction) or as a transferee
or successor for any Tax of any person other than the Company and its Subsidiaries.
(d) The Company and its Subsidiaries have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
23
(e) Neither the Company nor any of its Subsidiaries was a distributing corporation or
controlled corporation in a transaction intended to qualify under Section 355 of the Code within
the past two years or otherwise as part of a plan that includes the Merger.
(f) Neither the Company nor any of its Subsidiaries has participated in any reportable
transaction within the meaning of Treasury Regulation Section 1.6011-4.
(g) The Company has made available to Parent or its legal or accounting representative copies
of all federal and state income Tax Returns for the Company and each of its Subsidiaries filed for
all periods including and after the period ended December 31, 2005.
(h) As used in this Agreement, (i) Taxes means any and all domestic or foreign,
federal, state, local or other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental
Entity, including taxes on or with respect to income, franchises, windfall or other profits, gross
receipts, occupation, property, transfer, sales, use, capital stock, severance, alternative
minimum, payroll, employment, unemployment, social security, workers compensation or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added or other taxes, fees,
duties, levies, customs, tariffs, imposts, assessments, obligations and charges of the same or a
similar nature to any of the foregoing, and (ii) Tax Return means any return, report or
similar filing (including the attached schedules) with respect to Taxes, including any information
return, claim for refund, amended return or declaration of estimated Taxes.
Section 3.15. Employment and Labor Matters.
(a) Except as set forth in Section 3.15(a) of the Company Disclosure Schedule, (i) neither the
Company nor any of its Subsidiaries is a party to or bound by any material collective bargaining or
similar agreement or work rules or practices with any labor union, labor organization or employee
association applicable to employees of the Company or any of its Subsidiaries, (ii) there are no
existing or, to the knowledge of the Company, threatened strikes or lockouts with respect to any
employees of the Company or any of its Subsidiaries (Company Employees), (iii) to the
knowledge of the Company, there is no union organizing effort pending or threatened against the
Company or any of its Subsidiaries, (iv) there is no material unfair labor practice, labor dispute
(other than, in each case, routine individual grievances) or labor arbitration proceeding pending
or, to the knowledge of the Company, threatened with respect to Company Employees and (v) there is
no slowdown or work stoppage in effect or, to the knowledge of the Company, threatened with respect
to Company Employees.
(b) Except for such matters that would not, individually or in the aggregate, materially and
adversely affect the ability of the Company and its Subsidiaries to operate their business in the
ordinary course consistent with past practices, the Company and its Subsidiaries are, and have
been, in material compliance with all applicable Laws respecting (i) employment and employment
practices, (ii) terms and conditions of employment and wages and hours, and (iii) unfair labor
practices. Neither the Company nor any of its Subsidiaries has any material liabilities under the
Worker Adjustment and Retraining Notification Act of 1998 as a result of any action taken by the
Company (other than at the written direction of Parent or as a result of any of the transactions
contemplated hereby).
24
Section 3.16. Intellectual Property. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, either the Company or a Subsidiary of the Company
owns, or is licensed or otherwise possesses legally valid and enforceable rights to use, all
Intellectual Property necessary to the conduct of their respective businesses as currently
conducted, free and clear of Liens other than Company Permitted Liens. The execution and delivery
by the Company of this Agreement do not, and the consummation of the transactions contemplated
hereby will not result in the loss, suspension, limitation, termination or other impairment of, or
give rise to any right of any person to suspend, limit, terminate, consent to or otherwise impair
the continued right of the Company or any of its Subsidiaries to own or use or otherwise exercise
any other rights that the Company or any of its Subsidiaries currently has with respect to, any
Intellectual Property material to the business of the Company and its Subsidiaries. There are no
actions, suits, proceedings, investigations or claims pending or, to the knowledge of the Company,
threatened that challenges the validity, enforceability, registration, ownership or use of any
Intellectual Property owned by the Company or one of its Subsidiaries and material to the conduct
of their business. Except as would not have, individually or in the aggregate, a Company Material
Adverse Effect, (a) there are no proceedings pending, and neither the Company nor any of its
Subsidiaries has received any written claims, in each case alleging infringement, misappropriation
or other violation by the Company or any of its Subsidiaries of the Intellectual Property rights of
any person, (b) the conduct of the business of the Company and its Subsidiaries does not infringe,
misappropriate or otherwise violate any Intellectual Property rights of any person, (c) neither
the Company nor any of its Subsidiaries has made any claim against any other person alleging a
violation, misappropriation or infringement of the Intellectual Property rights of the Company or
any of its Subsidiaries and (d) no person is infringing, misappropriating or otherwise violating
any Intellectual Property rights of the Company or any of its Subsidiaries. As used in this
Agreement, Intellectual Property means all intellectual property and industrial property
rights of any kind or nature, including all U.S. and foreign: (i) trademarks, trade names, service
marks, service names, logos, assumed names, domain names and other similar designations of source
or origin, and any registrations or applications for the foregoing, together with the goodwill of
the business connection with the use of and symbolized by any of the foregoing; (ii) registered and
unregistered copyrights; (iii) patents, patent applications, patent disclosures, and all related
continuations, continuations-in-part, divisionals, reissues, reexaminations, substitutions, and
extensions thereof; and (iv) trade secrets, know-how and other confidential business information.
The computers, software, servers, workstations, routers, hubs, switches, circuits, networks, data
communications lines and all other information technology infrastructure and equipment
(collectively, the IT Assets) of the Company and its Subsidiaries (i) operate and perform
in all material respects in accordance with their documentation and functional specifications and
otherwise as required by the Company and its Subsidiaries and have not materially malfunctioned or
failed within the past three (3) years and (ii) are sufficient for the immediate and reasonably
foreseeable needs of the Company and its Subsidiaries. The Company and its Subsidiaries have
implemented commercially reasonable measures, consistent with industry standards, to protect the
confidentiality, integrity and security of the IT Assets (and all information and transactions
stored or contained therein or transmitted thereby). The Company and its Subsidiaries have
implemented commercially reasonable data backup, data storage, system redundancy and disaster
avoidance and recovery procedures, as well as a commercially reasonable business continuity plan,
in each case consistent with customary industry practices.
25
Section 3.17. Real Property. Except as set forth in Section 3.17 of the Company
Disclosure Schedule:
(a) With respect to each material real property owned by the Company or any Subsidiary other
than Company Real Property Leases and Rights-of-Way (such property collectively, the Company
Owned Real Property), except as would not have, individually or in the aggregate, a Company
Material Adverse Effect, (i) either the Company or a Subsidiary of the Company has marketable and
insurable fee simple title to such Company Owned Real Property, free and clear of all Liens other
than any Company Permitted Liens and conditions, encroachments, easements, rights-of-way,
restrictions and other encumbrances that do not adversely affect the existing use of the real
property subject thereto by the owner (or lessee to the extent a leased property) thereof in the
operation of its business (Permitted Encumbrances), (ii) there are no leases, subleases,
licenses, rights or other agreements affecting any portion of the Company Owned Real Property that
would reasonably be expected to adversely affect the existing use of the Company Owned Real
Property by the Company in the operation of its business thereon, and (iii) there are no
outstanding options or rights of first refusal in favor of any other party to purchase such Company
Owned Real Property or any portion thereof or interest therein that would reasonably be expected to
adversely affect the existing use of the Company Owned Real Property by the Company in the
operation of its business thereon. Neither the Company nor any of its Subsidiaries has received
notice of any pending, and to the knowledge of the Company there is no threatened, condemnation
proceeding with respect to any Company Owned Real Property, except proceedings which would not
have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Except as would not have, individually or in the aggregate, a Company Material Adverse
Effect, (i) each material lease, sublease and other agreement, including mineral or storage rights
(collectively, the Company Real Property Leases) under which the Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy any material real property (the
Company Leased Real Property) at which the material operations of the Company or any of
its Subsidiaries are conducted, is valid, binding and in full force and effect, (ii) neither the
Company nor any of its Subsidiaries is currently subleasing, licensing or otherwise granting any
person the right to use or occupy a material portion of a Company Leased Real Property that would
reasonably be expected to adversely affect the existing use of the Company Leased Real Property by
the Company in the operation of its business thereon, and (iii) no uncured default of a material
nature on the part of the Company or, if applicable, its Subsidiary or, to the knowledge of the
Company, the landlord thereunder, exists under any Company Real Property Lease, and no event has
occurred or circumstance exists which, with the giving of notice, the passage of time, or both,
would constitute a material breach or default under a Company Real Property Lease. Except as would
not have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each
of its Subsidiaries has a good and valid leasehold interest, subject to the terms of the Company
Real Property Leases, in each parcel of Company Leased Real Property, free and clear of all Liens,
except for Company Permitted Liens and Permitted Encumbrances. Neither the Company nor any of its
Subsidiaries has received notice of any pending, and, to the knowledge of the Company, there is no
threatened, condemnation proceeding with respect to any Company Leased Real Property, except such
proceeding which would not have, individually or in the aggregate, a Company Material Adverse
Effect.
26
(c) Except as would not, individually or in the aggregate, have a Company Material Adverse
Effect: (i) each of the Company and its Subsidiaries has such Rights-of-Way that are necessary for
the Company and its Subsidiaries to use and operate their respective assets and properties in the
manner that such assets and properties are currently used and operated, and each such Right-of-Way
is valid and free and clear of all Liens (other than Company Permitted Liens); (ii) the Company and
its Subsidiaries conduct their businesses in a manner that does not violate any of the
Rights-of-Way; (iii) the Company and its Subsidiaries have fulfilled and performed all of their
obligations with respect to such Rights-of-Way; and (iv) the Company has not received written
notice of the occurrence of any ongoing event or circumstance that allows, or after the giving of
notice or the passage of time, or both, would allow the limitation, revocation or termination of
any Right-of-Way or would result in any impairment of the rights of the Company and its
Subsidiaries in and to any such Rights-of-Way. All pipelines operated by the Company and its
Subsidiaries are subject to Rights-of-Way, and there are no gaps (including any gap arising as a
result of any breach by the Company or any of its Subsidiaries of the terms of any Rights-of-Way)
in the Rights-of-Way other than gaps that would not, individually or in the aggregate, have a
Company Material Adverse Effect
Section 3.18. Required Vote of the Company Stockholders. (a) Assuming Parent is not
an interested stockholder under Section 203 of the DGCL, the affirmative vote of a majority of
the outstanding Company Common Stock entitled to vote on this Agreement and the Merger is the only
vote of holders of securities of the Company which is required to approve this Agreement and the
Merger (the Company Stockholder Approval), (b) the action of the Board of Directors of
the Company in approving this Agreement is sufficient to render inapplicable to this Agreement and
the transactions contemplated hereby the restrictions on business combinations (as defined in
Section 203 of the DGCL) as set forth in Section 203 of the DGCL and (c) no other Takeover Laws are
applicable to the Merger, this Agreement, or any of the transactions contemplated hereby and
thereby. As used in this Agreement, Takeover Laws means any moratorium, control share
acquisition, fair price, supermajority, affiliate transactions or business combination
statute or regulation or other similar state anti-takeover Laws and regulations.
Section 3.19. Opinion of Financial Advisor. The Special Committee of the Board of
Directors of the Company has received the opinion of each of Evercore Group L.L.C. and Goldman,
Sachs & Co. to the effect that, as of the date of each such opinion and subject to the assumptions,
limitations, qualifications and other matters considered in the preparation thereof, the Merger
Consideration is fair, from a financial point of view, to the holders of Company Common Stock. The
Company shall, promptly following receipt of said opinions in written form, furnish an accurate and
complete copy of said opinions to Parent solely for informational purposes.
Section 3.20. Material Contracts.
(a) Except for this Agreement, the Company Benefit Plans and agreements filed as exhibits to
the Company SEC Documents and the agreements set forth on Section 3.20(a) of the Company Disclosure
Schedule, as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a
party to or bound by:
27
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(i) |
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any material contract (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC); |
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(ii) |
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any contract imposing any material restriction on the right
or ability of the Company or any of its Subsidiaries to (A) compete with any
other person or (B) acquire or dispose of the securities of another person; |
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(iii) |
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any mortgage, note, debenture, indenture, security
agreement, guaranty, pledge or other agreement or instrument evidencing
Indebtedness of the Company or any of its Subsidiaries in an amount in excess
of $50.0 million; |
|
|
(iv) |
|
any Contract that provides for the acquisition, disposition,
license, use, distribution or outsourcing of assets, services, rights or
properties with a value or requiring annual fees in excess of $50.0 million; |
|
|
(v) |
|
any Contract to acquire all or a substantial portion of the
capital stock, business, property or assets of any other person for an amount
of cash (or value of non-cash consideration), in excess of $50.0 million; |
|
|
(vi) |
|
any joint venture, partnership or limited liability company
agreement or other similar Contract relating to the formation, creation,
operation, management or control of any joint venture, partnership or limited
liability company, other than any such Contract solely between or among the
Company and or any of its Subsidiaries; |
|
|
(vii) |
|
any Contract limiting or restricting the ability of the
Company or any of its Subsidiaries to make distributions or declare or pay
dividends in respect of their capital stock, partnership interests, membership
interests or other equity interests, as the case may be; |
|
|
(viii) |
|
any Contract containing any exclusivity or most favored nation clause; |
|
|
(ix) |
|
any Contract that involves future expenditures or receipts by
the Company or any of its Subsidiaries of more than $50.0 million in any one
year period that cannot be terminated on less than 90 days notice without
material payment or penalty; |
|
|
(x) |
|
any acquisition Contract that contains earn out or other
contingent payment obligations, or remaining indemnity or similar obligations,
that could reasonably be expected to result in future payments by or to the
Company or any of its Subsidiaries in excess of $25.0 million; |
|
|
(xi) |
|
any Contract with a labor union or guild (including any
collective bargaining agreement); |
|
|
(xii) |
|
any Contract containing provisions triggered by any change
of control of the Company or any of its Subsidiaries; |
28
|
(xiii) |
|
any Contract in favor of directors, officers, members, managers or partners
relating to employment or compensation or providing rights to indemnification; |
|
|
(xiv) |
|
any Contract the loss or breach of which could reasonably be
expected to have a Company Material Adverse Effect; and |
|
|
(xv) |
|
any material lease or sublease with respect to leased real
property. |
All contracts of the types referred to in clauses (i) through (xv) above are referred to
herein as Company Material Contracts. As used herein, Contract shall mean any
agreement, contract, obligation, promise, understanding or undertaking (whether written or oral and
whether express or implied) that is legally binding and (i) under which the Company or any of its
Subsidiaries has or may acquire any rights, (b) under which the Company or any of its Subsidiaries
has or may become subject to any obligation or liability or (c) by which the Company or any of its
Subsidiaries, or the assets owned or used by the Company or any of its Subsidiaries, is or may
become bound. Section 3.20 of the Company Disclosure Schedule sets forth a complete and correct
list of all Company Material Contracts as of the date of this Agreement that have not been filed or
incorporated by reference in the Company SEC Reports. The Company has delivered or made available
to Parent true and correct copies of all Company Material Contracts.
(b) Neither the Company nor any Subsidiary of the Company is in material breach of or material
default under the terms of any Company Material Contract. To the knowledge of the Company, no
other party to any Company Material Contract is in material breach of or material default under the
terms of any Company Material Contract. Each Company Material Contract is a valid and binding
obligation of the Company or the Subsidiary of the Company that is party thereto and, to the
knowledge of the Company, of each other party thereto, and is in full force and effect, subject to
the Remedies Exceptions.
Section 3.21. Finders or Brokers. Except for Evercore Group L.L.C. and Goldman, Sachs
& Co., neither the Company nor any of its Subsidiaries has employed any investment banker, broker
or finder in connection with the transactions contemplated by this Agreement who might be entitled
to any fee or any commission in connection with or upon consummation of the Merger. The Company
has furnished to Parent accurate and complete copies of its agreements with Evercore Group L.L.C.
relating to the transactions contemplated by this Agreement.
Section 3.22. Insurance. The Company and its Subsidiaries maintain insurance in such
amounts and against such risks substantially as the Company believes to be customary for the
industries in which it and its Subsidiaries operate. Neither the Company nor any of its
Subsidiaries has received notice of any pending or threatened cancellation or material premium
increase (retroactive or otherwise) with respect to any such material insurance policy, and each of
its Subsidiaries is in compliance in all material respects with all conditions contained therein.
Section 3.23. Consulting Agreements and Noncompetition Agreements. Each of the
Consulting Agreements and Noncompetition Agreements referred to in the Original Agreement
29
have been
terminated by mutual consent of the parties thereto on or prior to the date of the First Amended
Merger Agreement.
Section 3.24. No Additional Representations. The Company acknowledges that neither
Parent nor Merger Sub makes any representation or warranty as to any matter whatsoever except as
expressly set forth in this Agreement or in any certificate delivered by Parent or Merger Sub to
the Company in accordance with the terms hereof, and specifically (but without limiting the
generality of the foregoing) that neither Parent nor Merger Sub makes any representation or
warranty with respect to (a) any projections, estimates or budgets delivered or made available to
the Company (or any of their respective affiliates, officers, directors, employees or
Representatives) of future revenues, results of operations (or any component thereof), cash flows
or financial condition (or any component thereof) of Parent and its Subsidiaries or (b) the future
business and operations of Parent and its Subsidiaries, and the Company has not relied on such
information or any other representation or warranty not set forth in this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the Parent SEC Documents (excluding any disclosures set forth in any
risk factor section and in any section relating to forward-looking statements, and any other
disclosures therein, in each case to the extent that they are cautionary, predictive or
forward-looking in nature) or as contemplated by the Drop-Down Agreements, where the relevance of
the information as an exception to (or disclosure for purposes of) a particular representation is
reasonably apparent on the face of such disclosure, or in the disclosure schedule delivered by
Parent to the Company immediately prior to the execution of this Agreement (the Parent
Disclosure Schedule) (each section of which qualifies the correspondingly numbered
representation, warranty or covenant if specified therein and such other representations,
warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such
other representation, warranty or covenant is reasonably apparent), Parent and Merger Sub represent
and warrant to the Company as follows:
Section 4.1. Qualification, Organization, Subsidiaries, etc.
(a) Each of Parent and its Subsidiaries is a legal entity duly-organized, validly existing and
in good standing under the Laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and operate its properties and
assets, to carry on its business as presently conducted and to perform its material obligations
under all Parent Material Contracts. Each of Parent and its Subsidiaries is qualified to do
business, and is in good standing as a foreign entity in each jurisdiction where the ownership,
leasing or operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, validly existing, qualified or in good
standing, or to have such power or authority, would not have, individually or in the aggregate, a
Parent Material Adverse Effect.
30
(b) As used in this Agreement, a Parent Material Adverse Effect means a material
adverse event, change, effect, development, condition or occurrence on or with respect to the
business, financial condition or continuing results of operations of Parent and its Subsidiaries,
taken as a whole, other than any event, change, effect, development, condition or occurrence: (i)
disclosed in the Parent SEC Documents filed or furnished prior to the date of this Agreement
(excluding any disclosure set forth in any risk factor section, or in any Section relating to
forward looking statements, and any other disclosures therein, in each case, to the extent that
they are cautionary and predictive or forward looking in nature) or as disclosed on the face of the
Parent Disclosure Schedule (ii) in or generally affecting the economy or the financial or
securities markets in the United States or elsewhere in the world, or (iii) resulting from or
arising out of (A) any changes or developments in national, regional, state or local wholesale or
retail markets for natural gas, natural gas transmission or distribution or related products or
services including those due to actions by competitors or due to changes in commodities prices or
hedging markets therefor, (B) any changes or developments in national, regional, state or local
wholesale or retail natural gas prices (C) the announcement or the existence of, or compliance
with, this Agreement or the Original Merger Agreement or the transactions contemplated hereby or
thereby (including the impact thereof on the relationships, contractual or otherwise, of Parent or
any of its Subsidiaries with employees, labor unions, customers, suppliers or partners, and
including any lawsuit, action or other proceeding with respect to the Merger or any of the other
transactions contemplated by this Agreement or the Original Merger Agreement), (D) any taking of
any action at the written request of the Company, (E) any adoption, implementation, promulgation,
repeal, modification, reinterpretation or proposal of any rule, regulation, ordinance, order,
protocol or any other Law of or by any national, regional, state or local Governmental Entity, or
market administrator, (F) any changes in GAAP or accounting standards or interpretations thereof,
(G) any weather-related or other force majeure event or outbreak or escalation of hostilities or
acts of war or terrorism, or (H) any changes in the share price or trading volume of the Common
Units or in Parents credit rating, or the failure of Parent to meet projections or forecasts
(unless due to any event, change, effect, development, condition or occurrence which has otherwise
resulted in a Parent Material Adverse Effect); except, in each case with respect to
subclauses (A) (B) and (E) (G) of this clause (iii), to the extent materially
disproportionately affecting Parent and its Subsidiaries, taken as a whole, relative to other
similarly situated companies in the industries in which Parent and its Subsidiaries operate
(c) Parent has made available to the Company prior to the date of this Agreement a true and
complete copy of Parents Certificate of Limited Partnership as amended (the Parent
Certificate of Limited Partnership), and Third Amended and Restated Agreement of Limited
Partnership (as amended through the date hereof, the Parent Partnership Agreement and
together with the Parent Certificate of Limited Partnership, the Parent Organizational
Documents), ETPs Certificate of Limited Partnership as amended (the ETP Certificate of
Limited Partnership) and Second Amended and Restated Agreement of Limited Partnership (the
ETP Partnership Agreement), and the certificate of incorporation, certificate of limited
partnership, certificate of formation, bylaws, limited partnership agreement, limited liability
company agreement or comparable constituent or organizational documents of each material Subsidiary
of Parent.
Section 4.2. Equity Interests.
31
(a) The authorized equity interests of Parent consist of Series A Convertible Preferred Units
representing limited partner interests in Parent (Series A Preferred Units), common units
representing limited partner interests in Parent (Common Units) and a general partner
interest in Parent (General Partner Interest). As of June 13, 2011, the issued and
outstanding limited partner interests and general partner interests of Parent consisted of (i)
3,000,000 Series A Preferred Units, (ii) 222,978,708 Common Units and (iii) and an approximate 0.3%
General Partner Interest. As of June 13, 2011, 2,853,676 Common Units were issuable pursuant to
employee and director equity plans of Parent (the Parent Equity Plans). The authorized
equity interests of Energy Transfer Partners, L.P., a Delaware limited partnership (ETP),
consist of common units representing limited partner interests in ETP (ETP Common Units),
Class E Units representing limited partner interests in ETP (Class E Units), the
Incentive Distribution Rights (as defined in the ETP Partnership Agreement) and a general partner
interest in ETP (ETP General Partner Interest). As of June 13, 2011, the issued and
outstanding limited partner interests and general partner interests of ETP consisted of (i)
8,853,832 Class E Units, (ii) 208,805,626 ETP Common Units, (iii) the Incentive Distribution Rights
and (iv) and an approximate 1.6% ETP General Partner Interest. As of June 13, 2011, 3,147,524 ETP
Common Units were issuable pursuant to employee and director equity plans of ETP (the ETP
Equity Plans). All outstanding equity securities of Parent and of ETP are duly authorized,
validly issued, fully-paid and nonassessable (except as such nonassessability may be affected by
matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and free of
preemptive rights (except as set forth in the ETP Partnership Agreement).
(b) Except as set forth in subsection (a) above and as set forth on Section 4.2(b) of the
Parent Disclosure Schedule, there are no outstanding subscriptions, options, warrants, calls,
convertible securities, exchangeable securities or other similar rights, agreements or commitments
to which Parent or any of its Subsidiaries is a party (i) obligating Parent or any of its
Subsidiaries to (i) issue, transfer, exchange, sell or register for sale any Common Units, Class E
Units or other equity interests of Parent or any Subsidiary of Parent or securities convertible
into or exchangeable for such partnership units or equity interests, (ii) grant, extend or enter
into any such subscription, option, warrant, call, convertible securities or other similar right,
agreement or arrangement, (iii) redeem or otherwise acquire any such partnership units or other
equity interests or (iv) provide a material amount of funds to, or make any material investment (in
the form of a loan, capital contribution or otherwise) in, any Subsidiary or (ii) granting any
preemptive or antidilutive or similar rights with respect to any security issued by Parent or its
Subsidiaries.
(c) Neither Parent nor any of its Subsidiaries has outstanding bonds, debentures, notes or
other indebtedness, the holders of which have the right to vote (or which are convertible or
exchangeable into or exercisable for securities having the right to vote) with the unitholders of
Parent on any matter.
(d) There are no voting trusts or other agreements or understandings to which Parent or any of
its Subsidiaries is a party with respect to the voting or registration of equity securities of
Parent or any of its Subsidiaries.
(e) As of the date of this Agreement, the authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.01 per share, all of which are validly
32
issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the
Effective Time will be, owned by Parent or a direct or indirect wholly owned Subsidiary of Parent.
Merger Sub has no outstanding option, warrant, right or any other agreement pursuant to which any
person other than Parent may acquire any equity security of Merger Sub. Merger Sub has not
conducted any business prior to the date hereof and has, and prior to the Effective Time will have,
no assets, liabilities or obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions contemplated by this
Agreement.
(f) When issued pursuant to the terms hereof, all outstanding Common Units constituting any
part of the Merger Consideration will be duly authorized, validly issued, fully-paid (to the extent
required under the Parent Partnership Agreement) and nonassessable (except as such nonassessability
may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act)
and free of preemptive rights (except as set forth in the Parent Partnership Agreement).
(g) Except as disclosed in Section 4.2(g) of the Parent Disclosure Schedule, Parent or a
Parent Subsidiary owns, directly or indirectly, all of the issued and outstanding equity interests
of each Subsidiary of Parent, free and clear of any Liens other than Parent Permitted Liens, and
all of such equity interests have been duly authorized and validly issued and are fully paid,
nonassessable (except as such nonassessability may be affected by matters described in Sections
17-303, 17-607 and 17-804 of the Delaware LP Act or Sections 18-607 and 18-804 of the Delaware LLC
Act) and free of preemptive rights. Except for equity interests in Parents Subsidiaries, neither
Parent nor any of its Subsidiaries owns directly or indirectly any equity interest in any person
(or any security or other right, agreement or commitment convertible or exercisable into, or
exchangeable for, any equity interest in any person), or has any obligation to acquire any such
equity interest, security, right, agreement or commitment or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in, any person.
(h) As used in this Agreement, Parent Permitted Lien means any Lien (i) for Taxes or
governmental assessments, charges or claims of payment not yet delinquent, being contested in good
faith or for which adequate accruals or reserves have been established, (ii) that is a carriers,
warehousemens, mechanics, materialmens, repairmens or other similar lien arising in the
ordinary course of business, (iii) arising under conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business, (iv) not created by Parent or
its Subsidiaries that affect the underlying fee interest of a Parent Leased Real Property, (v) that
is disclosed on the most recent consolidated balance sheet of Parent included in the Parent SEC
Documents or notes thereto or securing liabilities reflected on such balance sheet, (vi) created
pursuant to the agreements set forth on Section 4.2(h) of the Parent Disclosure Schedule, (vii)
grants to others of Rights-of-Way, surface leases, crossing rights and amendments, modifications,
and releases of Rights-of-Way, easements and surface leases in the ordinary course of business,
(viii) with respect to Rights-of-Way, restrictions on the exercise of any of the rights under a
granting instrument that are set forth therein or in another executed agreement, that is of public
record or to which Parent or any of its Subsidiaries otherwise has access, between the parties
thereto, (ix) which an accurate up-to-date survey would show, (x) resulting from any facts or
circumstances relating to the Parent or its Affiliates, or (xi) that
33
does not and would not
reasonably be expected to materially impair the continued use of a Parent Owned Real Property or a
Parent Leased Real Property as currently operated.
Section 4.3. Partnership / Corporate Authority Relative to this Agreement; No
Violation.
(a) Each of Parent and Merger Sub has requisite partnership or corporate power and authority
to enter into this Agreement, the Support Agreement and each other document to be entered into by
Parent and Merger Sub in connection with the transactions contemplated hereby (together with this
Agreement, the Parent Transaction Documents) and, subject to the approval of Parent as
the sole stockholder of Merger Sub, which approval shall be delivered by Parent immediately
following execution of this Agreement, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the other Parent Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly and validly
authorized by the general partner of Parent and the Board of Directors of Merger Sub, and no other
entity or equity-holder proceedings on the part of Parent, Merger Sub or their respective equity
holders, except Parent as the sole stockholder of Merger Sub, are necessary to authorize the
consummation of the transactions contemplated hereby. As of the Second Amendment Date, the general
partner of Parent has unanimously approved the issuance of Common Units (the Unit
Issuance) in connection with the Merger. Each of the Parent Transaction Documents has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming such Parent
Transaction Document constitutes the legal, valid and binding agreement of the counterparty
thereto, each of the Parent Transaction Documents constitutes the legal, valid and binding
agreement of each of Parent and Merger Sub and is enforceable against Parent and Merger Sub in
accordance with its terms, except as such enforcement may be limited by the Remedies Exceptions.
(b) Other than in connection with or in compliance with (i) the Exchange Act, (ii) the
Securities Act, (iii) the rules and regulations of the NYSE, (iv) the HSR Act, (v) the FPA and the
FERC Approval, (vi) the MDPU Approval, (vii) the MPSC Approval, (viii) the FCC Approval, and (ix)
the approvals set forth in Section 4.3(b) of the Parent Disclosure Schedule (collectively, the
Parent Approvals), and, subject to the accuracy of the representations and warranties of
the Company in Section 3.3(b), no authorization, consent, order, license, permit or approval of, or
registration, declaration, notice or filing with, any Governmental Entity is necessary, under
applicable Law, for the consummation by Parent or Merger Sub of the transactions contemplated by
this Agreement, except for the filing of the Certificate of Merger and for such authorizations,
consents, approvals or filings that are not required to be obtained or made prior to consummation
of such transactions or that, if not obtained or made, would not materially impede or delay the
consummation of the Merger and the other transactions contemplated by this Agreement or materially
and adversely affect the ability of Parent and its Subsidiaries to operate their business in the
ordinary course consistent with past practices.
(c) The execution and delivery by Parent and Merger Sub of this Agreement do not, and,
assuming receipt of the Parent Approvals, the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not (i) result in any loss, or material suspension,
limitation or impairment of any right of Parent or any of its Subsidiaries to own or use any assets
material to the conduct of their business or result in any material violation
34
of, or material
default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or to the loss of a material
benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage,
indenture, lease, agreement, contract, instrument, permit, concession, franchise, right or license
binding upon Parent or any of its Subsidiaries or result in the creation of any Liens other than
Permitted Liens, in each case, upon any of the properties or assets of Parent or any of its
Subsidiaries, (ii) conflict with or result in any violation of any provision of the certificate of
incorporation or by-laws or other equivalent organizational document, in each case as amended or
restated, of Parent or any of its Subsidiaries or (iii) materially conflict with or materially
violate any applicable Laws.
Section 4.4. Reports and Financial Statements.
(a) Parent and each of its Subsidiaries has filed or furnished all forms, documents and
reports required to be filed or furnished prior to the date hereof by it with the SEC since January
1, 2009 (the Parent SEC Documents). As of their respective dates or, if amended, as of
the date of the last such amendment, the Parent SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that information set forth in the Parent SEC Documents
as of a later date (but before the date of this Agreement) will be deemed to modify information as
of an earlier date.
(b) The consolidated financial statements (including all related notes and schedules) of
Parent included in the Parent SEC Documents fairly present in all material respects the
consolidated financial position of Parent and its consolidated Subsidiaries, as at the respective
dates thereof, and the consolidated results of their operations and their consolidated cash flows
for the respective periods then ended (subject, in the case of the unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein, including the notes
thereto) in conformity with GAAP (except, in the case of the unaudited statements, as permitted by
the SEC) applied on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto).
Section 4.5. Internal Controls and Procedures. Parent has established and maintains
disclosure controls and procedures and internal control over financial reporting (as such terms are
defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required
by Rule 13a-15 under the Exchange Act. Parents disclosure controls and procedures are reasonably
designed to ensure that all material information required to be disclosed by Parent in the reports
that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC, and that all such material
information is accumulated and communicated to Parents management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications required pursuant to
Sections 302 and 906 of the Sarbanes-Oxley Act. Parents management has completed an assessment of
the effectiveness of Parents internal control over financial reporting in compliance with the
requirements of Section 404 of the Sarbanes-Oxley
35
Act for the year ended December 31, 2010, and
such assessment concluded that such controls were effective. Based on its most recent evaluation
of internal control over financial reporting prior to the date hereof, management of Parent has
disclosed to Parents auditors and the audit committee of the board of directors of the general
partner of Parent (i) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting that are reasonably likely to adversely
affect in any material respect Parents ability to report financial information and (ii) any fraud,
whether or not material, that involves management or other employees who have a significant role in
Parents internal control over financial reporting, and each such deficiency, weakness and fraud so
disclosed to auditors, if any, has been disclosed to the Company prior to the date hereof.
Section 4.6. No Undisclosed Liabilities. Except (a) as reflected or reserved against
in Parents consolidated balance sheets (or the notes thereto) included in the Parent SEC
Documents, (b) as permitted or contemplated by this Agreement, (c) for liabilities and obligations
incurred since December 31, 2010 in the ordinary course of business consistent with past practice
and (d) for liabilities or obligations which have been discharged or paid in full in the ordinary
course of business, neither Parent nor any Subsidiary of Parent has any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to
be reflected on a consolidated balance sheet of Parent and its consolidated Subsidiaries (or in the
notes thereto), other than those which would not have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.7. Compliance with Law; Permits.
(a) Parent and each of its Subsidiaries are in compliance with and are not in default under or
in violation of any applicable Law, except where such non-compliance, default or violation would
not have, individually or in the aggregate, a Parent Material Adverse Effect. Except as set forth
in Section 4.7 of the Parent Disclosure Schedule, since January 1, 2008, neither Parent nor any of
its Subsidiaries has received any written notice or, to Parents knowledge, other communication
from any Governmental Entity regarding any actual or possible violation of, or failure to comply
with, any Law, except as would not have, individually or in the aggregate, a Parent Material
Adverse Effect.
(b) Parent and its Subsidiaries are in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals, clearances,
permissions, qualifications and registrations and orders of all Governmental Entities, and all
rights under any Parent Material Contract with all Governmental Entities, and have filed all
tariffs, reports, notices and other documents with all Governmental Entities necessary for Parent
and its Subsidiaries to own, lease and operate their properties and assets or to carry on their
businesses as they are now being conducted (the Parent Permits), except where the failure
to have any of the Parent Permits would not have, individually or in the aggregate, a Parent
Material Adverse Effect. All Parent Permits are valid and in full force and effect and are not
subject to any administrative or judicial proceeding that could result in modification, termination
or revocation thereof, except where the failure to be in full force and effect would not have,
individually or in the aggregate, a Parent Material Adverse Effect. Parent is, and each of its
Subsidiaries is, in compliance in all respects with the terms and requirements
36
of such Parent Permits, except where the failure to be in compliance would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.8. Environmental Laws and Regulations.
(a) Except as would not have, individually or in the aggregate, a Parent Material Adverse
Effect: (i) no notice, notification, demand, request for information, citation, summons, complaint
or order has been received, no penalty has been assessed, and no investigation, action, claim,
suit, proceeding or review is pending or, to the knowledge of Parent, is threatened by any
Governmental Entity or other person relating to Parent or any Subsidiary of Parent or against any
person or entity whose liability Parent or any of its Subsidiaries has or may have retained or
assumed either contractually or by operation of law, and relating to or arising out of any
Environmental Law, (ii) Parent and its Subsidiaries are, and except for matters that have been
fully resolved with the applicable Governmental Entity, since January 1, 2008 have been in
compliance with all Environmental Laws (which compliance includes, but is not limited to,
possession of all Parent Permits and compliance with the terms and conditions thereof), (iii)
Parent is not obligated to conduct or pay for, and is not conducting or paying for, any response,
remedial, investigatory or corrective action under any Environmental Law at any location, (iv)
there has been no release of Hazardous Materials at any real property currently owned, leased or
operated by Parent or any Subsidiary of Parent or, to the knowledge of Parent, formerly owned,
leased or operated by Parent or any Subsidiary of Parent or at any offsite disposal location used
by Parent or any Subsidiary of Parent to dispose of any Hazardous Materials in concentrations or
under circumstances that would require reporting or be reasonably likely to result in
investigation, remediation or other corrective or response action by Parent or any Subsidiary of
Parent or, to the knowledge of Parent and its Subsidiaries, by any person or entity whose liability
Parent or any of its Subsidiaries has or may have retained or assumed either contractually or by
operation of law, under any Environmental Law, (v) Parent is not party to any order, judgment or
decree that imposes any obligations under any Environmental Law, (vi) there have been no ruptures
or explosions in Parent Systems resulting in personal injury, loss of life or material property
damage, except to the extent any claims related to such ruptures have been resolved and (vii) there
are no defects, corrosion or other damage to any of Parent Systems that could reasonably be
expected to result in a pipeline integrity failure.
(b) As used in this Agreement, Parent Systems means the refined petroleum product,
crude oil, natural gas, liquefied natural gas, natural gas liquid and other pipelines, lateral
lines, pumps, pump stations, storage facilities, terminals, processing plants, and other related
operations, assets, machinery and equipment that are owned by Parent or any of its Subsidiaries or
used for the conduct of the business of Parent or any of its Subsidiaries as it is presently
conducted.
Section 4.9. Employee Benefit Plans. Except as would not, individually or in the
aggregate, materially and adversely affect the ability of Parent and its Subsidiaries to operate
their business in the ordinary course consistent with past practices, (i) neither Parent, its
Subsidiaries nor any of their ERISA Affiliates maintains, contributes to or is required to
contribute to any Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412
or 4971 of the Code and (ii) none of the Benefit Plans sponsored, maintained or contributed to by
Parent or any of its Subsidiaries, or to which Parent or any of its Subsidiaries is required to
37
contribute, is a multiple employer welfare arrangement (as defined in Section 3(40) of
ERISA), a multiple employer plan (as defined in Section 413(c) of the Code) or a multiemployer
plan (as defined in Section 3(37) of ERISA), and neither Parent, its Subsidiaries nor any of their
ERISA Affiliates has during the past six (6) years contributed to, been required to contribute to
or otherwise had any obligation or liability in connection with such a multiple employer plan or
multiemployer plan.
Section 4.10. Absence of Certain Changes or Events. Since December 31, 2010:
(a) except as otherwise contemplated by this Agreement, the businesses of Parent and its
Subsidiaries have been conducted, in all material respects, in the ordinary course of business
consistent with past practices; and
(b) there has not been any event, change, effect, development, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to have, a Parent
Material Adverse Effect.
Section 4.11. Investigations; Litigation. Except as would not, individually or in the
aggregate, have a Parent Material Adverse Effect, (a) there is no investigation or review pending
(or, to the knowledge of Parent, threatened) by any Governmental Entity with respect to Parent or
any of its Subsidiaries, (b) there are no actions, suits, inquiries, investigations, proceedings,
subpoenas, civil investigative demands or other requests for information relating to potential
violations of law pending (or, to the knowledge of Parent, threatened) against or affecting Parent
or any of its Subsidiaries, or any of their respective properties at law or in equity and (c) there
are no orders, judgments or decrees of, or before, any Governmental Entity.
Section 4.12. Information Supplied. None of the information provided by Parent or its
Subsidiaries for inclusion or incorporation by reference in (a) the Form S-4 will, at the time the
Form S-4 becomes effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein not misleading or (b) the Proxy Statement will, at the date it is first mailed
to the Companys stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement (other than the portion thereof relating solely to
the Stockholders Meeting) and the Form S-4 (other than the portion thereof based on information
supplied by the Company for inclusion or incorporation by reference therein, with respect to which
no representation is made by Parent or any of its Subsidiaries) will comply as to form in all
material respects with the requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder. Notwithstanding the foregoing provisions of this Section
4.12, no representation or warranty is made by Parent with respect to information or statements
made or incorporated by reference in the Form S-4 or the Proxy Statement which were not supplied by
or on behalf of Parent.
Section 4.13. Regulatory Matters.
38
(a) Except as set forth in Section 4.13(a) of the Parent Disclosure Schedule, none of Parent
and Parents Subsidiaries is a natural gas company as defined in the NGA, a common carrier under
the ICA or a utility, utility holding company, electric service company or electric company however
described under the laws of any state or local jurisdiction and the regulations promulgated
thereunder.
(b) All filings (other than immaterial filings) required to be made by Parent or any of its
Subsidiaries during the three years preceding the date hereof, with the FERC under the NGA, the
NGPA, the ICA, the Department of Energy or any applicable state public utility commission or
department, as the case may be, have been made, including all forms, statements, reports, notices,
agreements and all documents, exhibits, amendments and supplements appertaining thereto, including
all rates, tariffs and related documents, and all such filings complied, as of their respective
dates, and, as amended or supplemented, continue to comply with all applicable requirements of
applicable statutes and the rules and regulations promulgated thereunder, except for filings the
failure of which to make or the failure of which to make in compliance with all applicable
requirements of applicable statutes and the rules and regulations promulgated thereunder, would not
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.14. Tax Matters. Except as would not have, individually or in the aggregate,
a Parent Material Adverse Effect:
(a) Parent and its Subsidiaries (i) have duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to have been filed by or with
respect to Parent or any of its Subsidiaries, and all such Tax Returns are true, correct and
complete, (ii) have duly and timely paid all Taxes shown as due on such Tax Returns, (iii) have
adequate accruals and reserves, in accordance with GAAP, on the financial statements included in
the Parent SEC Documents for all Taxes payable by Parent and its Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements, (iv) have not, since
the date of the financial statements included in the most recent Parent SEC Documents, incurred any
liability for Taxes outside the ordinary course of business or otherwise inconsistent with past
custom and practice and (v) have not received written notice of any deficiencies for any Tax from
any taxing authority against Parent or any of its Subsidiaries for which there are not adequate
reserves on the financial statements included in the Parent SEC Documents.
(b) Neither Parent nor any of its Subsidiaries is the subject of any currently ongoing tax
audit or other proceeding with respect to Taxes nor has any Tax audit or other proceeding with
respect to Taxes been proposed against any of them in writing. As of the date of this Agreement,
there are no pending requests for waivers of the time to assess any Tax. Neither Parent nor any of
its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. There are no Liens for Taxes on
any of the assets of Parent or any of its Subsidiaries other than any Lien for Taxes not yet
delinquent, being contested in good faith or for which adequate accruals or reserves have been
established and disclosed in the Parent SEC Documents. No claim has ever been made in writing by a
taxing authority of a jurisdiction where Parent or one of its Subsidiaries has not filed Tax
Returns claiming that Parent or such Subsidiary is or may be subject to taxation by that
jurisdiction.
39
(c) Neither Parent nor any of its Subsidiaries is obligated by any written contract, agreement
or other arrangement to indemnify any other person (other than Parent and its Subsidiaries) with
respect to Taxes. Neither Parent nor any of its Subsidiaries is a party to or bound by any written
Tax allocation, indemnification or sharing agreement (other than an agreement with Parent or its
Subsidiaries). To the knowledge of Parent, neither Parent nor any of its Subsidiaries is liable
under Treasury Regulation Section 1.1502-6 (or any similar provision of the Tax Laws of any state,
local or foreign jurisdiction) or as a transferee or successor for any Tax of any person other than
Parent and its Subsidiaries.
(d) Parent and its Subsidiaries have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee, independent contractor,
creditor, unitholder or other third party.
(e) Neither Parent nor any of its Subsidiaries was a distributing corporation or controlled
corporation in a transaction intended to qualify under Section 355 of the Code within the past two
(2) years or otherwise as part of a plan that includes the Merger.
(f) Neither Parent nor any of its Subsidiaries has participated in any reportable
transaction within the meaning of Treasury Regulation Section 1.6011-4.
(g) Parent has made available to the Company or its legal or accounting representative copies
of all federal income Tax Returns for Parent and each of its Subsidiaries filed for all periods
including and after the period ended December 31, 2005 and all state income Tax Returns for Parent
and each of its Subsidiaries filed for all periods including and after the period ended December
31, 2005.
Section 4.15. Employment and Labor Matters.
(a) (i) Except as set forth in Section 4.15(a) of the Parent Disclosure Schedule, neither
Parent nor any of its Subsidiaries is a party to or bound by any material collective bargaining or
similar agreement or work rules or practices with any labor union, labor organization or employee
association applicable to employees of Parent or any of its Subsidiaries , (ii) there are no
existing or, to the knowledge of Parent, threatened strikes or lockouts with respect to any
employees of Parent or any of its Subsidiaries (Parent Employees), (iii) to the knowledge
of Parent, there is no union organizing effort pending or threatened against Parent or any of its
Subsidiaries, (iv) there is no unfair labor practice, labor dispute (other than, in each case,
routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of
Parent, threatened with respect to Parent Employees and (v) there is no slowdown or work stoppage
in effect or, to the knowledge of Parent, threatened with respect to Parent Employees.
(b) Except for such matters that would not, individually or in the aggregate, materially and
adversely affect the ability of Parent and its Subsidiaries to operate their business in the
ordinary course consistent with past practices, Parent and its Subsidiaries are, and have been, in
material compliance with all applicable Laws respecting (i) employment and employment practices,
(ii) terms and conditions of employment and wages and hours, and (iii) unfair labor practices.
Neither Parent nor any of its Subsidiaries has any material liabilities under the Worker Adjustment
and Retraining Notification Act of 1998 as a result of any action
40
taken by Parent (other than at the written direction of Parent or as a result of any of the
transactions contemplated hereby).
Section 4.16. Real Property.
(a) With respect to each material real property owned by Parent or any Subsidiary (such
property collectively, the Parent Owned Real Property), except as would not have,
individually or in the aggregate, a Parent Material Adverse Effect, (i) either Parent or a
Subsidiary of Parent has marketable and insurable fee simple title to such Parent Owned Real
Property, free and clear of all Liens other than any Parent Permitted Liens and Permitted
Encumbrances, (ii) there are no leases, subleases, licenses, rights or other agreements affecting
any portion of the Parent Owned Real Property that would reasonably be expected to adversely affect
the existing use of the Parent Owned Real Property by Parent in the operation of its business
thereon, and (iii) there are no outstanding options or rights of first refusal in favor of any
other party to purchase such Parent Owned Real Property or any portion thereof or interest therein
that would reasonably be expected to adversely affect the existing use of the Parent Owned Real
Property by Parent in the operation of its business thereon. Neither Parent nor any of its
Subsidiaries has received notice of any pending, and to the knowledge of Parent there is no
threatened, condemnation proceeding with respect to any Parent Owned Real Property, except
proceedings which would not have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) Except as would not have, individually or in the aggregate, a Parent Material Adverse
Effect, (i) each material lease, sublease and other agreement (collectively, the Parent Real
Property Leases) under which Parent or any of its Subsidiaries uses or occupies or has the
right to use or occupy any material real property (the Parent Leased Real Property) at
which the material operations of Parent or any of its Subsidiaries are conducted, is valid, binding
and in full force and effect, (ii) neither Parent nor any of its Subsidiaries is currently
subleasing, licensing or otherwise granting any person the right to use or occupy a material
portion of a Parent Leased Real Property that would reasonably be expected to adversely affect the
existing use of the Parent Leased Real Property by Parent in the operation of its business thereon,
and (iii) no uncured default of a material nature on the part of Parent or, if applicable, its
Subsidiary or, to the knowledge of Parent, the landlord thereunder, exists under any Parent Real
Property Lease, and no event has occurred or circumstance exists which, with the giving of notice,
the passage of time, or both would constitute a material breach or default under a Parent Real
Property Lease. Except as would not have, individually or in the aggregate, a Parent Material
Adverse Effect, Parent and each of its Subsidiaries has a good and valid leasehold interest,
subject to the terms of the Parent Real Property Leases, in each parcel of Parent Leased Real
Property, free and clear of all Liens, except for Parent Permitted Liens and Permitted
Encumbrances. Neither Parent nor any of its Subsidiaries has received notice of any pending, and,
to the knowledge of Parent, there is no threatened, condemnation proceeding with respect to any
Parent Leased Real Property, except such proceeding which would not have, individually or in the
aggregate, a Parent Material Adverse Effect.
(c) Except as would not, individually or in the aggregate, have a Parent Material Adverse
Effect: (i) each of Parent and its Subsidiaries has such Rights-of-Way that are necessary for
Parent and its Subsidiaries to use and operate their respective assets and properties in the
41
manner that such assets and properties are currently used and operated, and each such
Right-of-Way is valid and free and clear of all Liens (other than Parent Permitted Liens); (ii)
Parent and its Subsidiaries conduct their businesses in a manner that does not violate any of the
Rights-of-Way; (iii) Parent and its Subsidiaries have fulfilled and performed all of their
obligations with respect to such Rights-of-Way; and (iv) Parent has not received written notice of
the occurrence of any ongoing event or circumstance that allows, or after the giving of notice or
the passage of time, or both, would allow the limitation, revocation or termination of any
Right-of-Way or would result in any impairment of the rights of Parent and its Subsidiaries in and
to any such Rights-of-Way. All pipelines operated by Parent and its Subsidiaries are subject to
Rights-of-Way, and there are no gaps (including any gap arising as a result of any breach by Parent
or any of its Subsidiaries of the terms of any Rights-of-Way) in the Rights-of-Way other than gaps
that would not, individually or in the aggregate, materially and adversely affect the ability of
Parent and its Subsidiaries to operate their business in the ordinary course consistent with past
practices.
Section 4.17. Vote of Parent Partners; Merger Sub Approval.
(a) The general partner of Parent has approved this Agreement, the Merger and the Unit
Issuance. No vote of holders of securities of Parent, other than the approval of and action by its
general partner, is required to approve the Unit Issuance and no other vote of the holders of any
class of Parent equity holders, other than the approval of and action by its general partner, is
necessary to approve this Agreement or the transactions contemplated hereby, including the Merger.
(b) The Board of Directors of Merger Sub, by written consent duly adopted prior to the Second
Amendment Date, (i) determined that this Agreement and the Merger are advisable and fair to and in
the best interests of Merger Sub and its stockholder, (ii) duly approved and adopted this
Agreement, the Merger and the other transactions contemplated hereby, which adoption has not been
rescinded or modified and (iii) recommended this Agreement for adoption by Parent, as the sole
stockholder of Merger Sub. Immediately following execution of this Agreement, Parent, as the sole
stockholder of Merger Sub, will duly approve and adopt this Agreement and the Merger
Section 4.18. Opinion of Financial Advisors. The Board of Directors of Parent has
received the opinion of Credit Suisse Securities (USA) LLC to the effect that, as of the date of
such opinion and subject to the assumptions, limitations, qualifications and other matters
considered in the preparation thereof, the Merger Consideration is fair, from a financial point of
view, to Parent. Parent shall, promptly following receipt of such opinion in written form, furnish
an accurate and complete copy of said opinion to the Company solely for informational purposes.
Section 4.19. Material Contracts.
(a) Except for this Agreement, Parents Benefit Plans and agreements filed as exhibits to
Parent SEC Documents and the agreements otherwise provided or made available to the Company, as of
the date of this Agreement, neither Parent nor any of its Subsidiaries is a party to or bound by:
42
(i) |
|
any material contract (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC); |
(ii) |
|
any contract imposing any material restriction on the right or
ability of Parent or any of its Subsidiaries to (A) compete with any other
person or (B) acquire or dispose of the securities of another person; |
|
(iii) |
|
any mortgage, note, debenture, indenture, security agreement,
guaranty, pledge or other agreement or instrument evidencing Indebtedness of
Parent or any of its Subsidiaries in an amount in excess of $500.0 million; |
|
(iv) |
|
any Contract that provides for the acquisition, disposition,
license, use, distribution or outsourcing of assets, services, rights or
properties with a value or requiring annual fees in excess of $500.0 million; |
|
(v) |
|
any Contract to acquire all or a substantial portion of the
capital stock, business, property or assets of any other person for an amount
of cash (or value of non-cash consideration), in excess of $500.0 million; |
|
(vi) |
|
any joint venture, partnership or limited liability company
agreement or other similar Contract relating to the formation, creation,
operation, management or control of any joint venture, partnership or limited
liability company, other than any such Contract solely between or among Parent
and or any of its Subsidiaries; |
|
(vii) |
|
any Contract limiting or restricting the ability of Parent or
any of its Subsidiaries to make distributions or declare or pay dividends in
respect of their capital stock, partnership interests, membership interests or
other equity interests, as the case may be; |
|
(viii) |
|
any Contract containing any exclusivity or most favored nation clause; |
|
(ix) |
|
any Contract that involves future expenditures or receipts by
Parent or any of its Subsidiaries of more than $500.0 million in any one year
period that cannot be terminated on less than 90 days notice without material
payment or penalty; |
|
(x) |
|
any acquisition Contract that contains earn out or other
contingent payment obligations, or remaining indemnity or similar obligations,
that could reasonably be expected to result in future payments by or to Parent
or any of its Subsidiaries in excess of $250.0 million; |
|
(xi) |
|
any Contract with a labor union or guild (including any
collective bargaining agreement); |
|
(xii) |
|
any Contract containing provisions triggered by any change of
control of Parent or any of its Subsidiaries;
|
43
(xiii) |
|
any Contract in favor of directors, officers, members, managers or partners
relating to employment or compensation or providing rights to indemnification; |
|
(xiv) |
|
any Contract the loss or breach of which could reasonably be
expected to have a Parent Material Adverse Effect; and |
|
(xv) |
|
any lease or sublease with respect to leased real property
requiring annual payments in excess of $50 million. |
All contracts of the types referred to in clauses (i) through (xv) above are referred to
herein as Parent Material Contracts. Section 4.19(a) of the Parent Disclosure Schedule
sets forth a complete and correct list of all Parent Material Contracts as of the date of this
Agreement that have not been filed or incorporated by reference in Parent SEC Reports. Parent has
delivered or made available to Parent true and correct copies of all Parent Material Contracts.
(b) Neither Parent nor any Subsidiary of Parent is in material breach of or default under the
terms of any Parent Material Contract. To the knowledge of Parent, no other party to any Parent
Material Contract is in material breach of or default under the terms of any Parent Material
Contract. Each Parent Material Contract is a valid and binding obligation of Parent or the
Subsidiary of Parent which is party thereto and, to the knowledge of Parent, of each other party
thereto, and is in full force and effect, subject to the Remedies Exceptions.
Section 4.20. Finders or Brokers. Except for Credit Suisse Securities (USA) LLC,
neither Parent nor any of its Subsidiaries has employed any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger. Parent has furnished to the
Company accurate and complete copies of its agreement with Credit Suisse Securities (USA) LLC
relating to the transactions contemplated by this Agreement.
Section 4.21. Lack of Ownership of Company Common Stock. Neither Parent nor any of
its Subsidiaries nor any affiliate or associate of Parent or any of its Subsidiaries (as such
terms are defined in Section 203 of the DGCL) beneficially owns (or has beneficially owned in the
past three years) directly or indirectly, any Shares or other securities convertible into,
exchangeable for or exercisable for Shares or any securities of any Subsidiary of the Company
(including for purposes of Section 203 of the DGCL), and neither Parent nor any of its Subsidiaries
has any rights to acquire any Shares except pursuant to this Agreement. Except for the Support
Agreements, there are no voting trusts or other agreements or understandings to which Parent or any
of its Subsidiaries is a party with respect to the voting of the capital stock or other equity
interest of the Company or any of its Subsidiaries.
Section 4.22. Financing. As of the Second Amendment Date, Parent has delivered to the
Company true, complete and correct copies of the fully executed commitment letter (such letter, as
amended, modified or waived from time to time to the extent permitted herein, or any financing
commitment in respect of an Alternative Financing as contemplated by the last sentence of Section
5.18(b), the Commitment Letter) and fee letter (the Fee Letter) executed in
connection with the debt financing of a portion of the cash component of the Merger
44
Consideration (the Financing) (with certain fee amounts and certain economic terms
of the market flex provisions redacted). As of the Second Amendment Date, the Commitment Letter
is in full force and effect and constitutes the legal, valid, binding and enforceable obligations
of Parent and, to the knowledge of Parent, the other parties thereto (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting
creditors rights generally and general principles of equity). As of the Second Amendment Date,
the Commitment Letter has not been amended or modified in any respect and the respective
commitments therein have not been withdrawn or terminated. There are no conditions precedent or,
to the knowledge of Parent, other contingencies related to the funding of the full amount of the
Financing on the terms set forth in the Commitment Letter (as such terms may be altered in
accordance with the market flex provisions set forth in the Fee Letter) other than as expressly
set forth as of the Second Amendment Date in the Commitment Letter. As of the Second Amendment
Date, no event has occurred that, with or without notice, lapse of time or both, would constitute a
breach by Parent or any other party thereto under the Commitment Letter. Subject to the terms and
conditions of the Commitment Letter, as of the Second Amendment Date, assuming compliance by the
Company in all material respects with its covenants contained in Section 5.1 and Section 5.18(d)
and assuming satisfaction of the conditions set forth in Section 6.1 and Section 6.3, the aggregate
proceeds to be disbursed pursuant to the agreements contemplated by the Commitment Letter, together
with other financial resources of Parent, including cash on hand and marketable securities, will,
in the aggregate, be sufficient to fund the payment of the cash component of the Merger
Consideration. As of the Second Amendment Date, assuming satisfaction of the conditions set forth
in Section 6.3, Parent has no reason to believe that either it or any other party will be unable to
satisfy on a timely basis any condition of the Financing under the Commitment Letter or the Fee
Letter or that the Financing contemplated by the Commitment Letter will not be made available to
Parent on the Closing Date; provided that Parent is not making any representation or warranty
regarding the Companys future performance, the effect of any inaccuracy of the representations and
warranties of the Company in this Agreement or the failure of the Company to comply with any of its
covenants in all material respects under this Agreement.
Section 4.23. No Additional Representations. Parent and Merger Sub acknowledge that
the Company does not make any representation or warranty as to any matter whatsoever except as
expressly set forth in this Agreement or in any certificate delivered by the Company to Parent or
Merger Sub in accordance with the terms hereof, and specifically (but without limiting the
generality of the foregoing) that the Company makes no representation or warranty with respect to
(a) any projections, estimates or budgets delivered or made available to Parent or Merger Sub (or
any of their respective affiliates, officers, directors, employees or Representatives) of future
revenues, results of operations (or any component thereof), cash flows or financial condition (or
any component thereof) of the Company and its Subsidiaries or (b) the future business and
operations of the Company and its Subsidiaries, and neither Parent or Merger Sub has relied on such
information or any other representations or warranties not set forth in this Agreement.
45
ARTICLE V.
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company.
(a) From and after the date hereof and prior to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 7.1 (the Termination
Date), and except (i) as may be required by applicable Law, (ii) as may be agreed in writing
by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may
be contemplated or required by this Agreement or (iv) as set forth in Section 5.1(a) of the Company
Disclosure Schedule, the Company covenants and agrees with Parent that the business of the Company
and its Subsidiaries shall be conducted, and that such entities shall not take any action except in
the ordinary course of business, and shall use their commercially reasonable efforts to preserve
intact their present lines of business, maintain their rights and franchises and preserve their
relationships with customers and suppliers; provided, however, that no action by the Company or its
Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b)
shall be deemed a breach of this sentence unless such action would constitute a breach of such
other provision. The Company shall (i) promptly notify Parent of any material change in its
condition (financial or otherwise) or business or any termination, cancellation, repudiation or
material breach of any Company Material Contract (or communications indicating that the same may be
contemplated), and (ii) give prompt notice to Parent of any change, occurrence, effect, condition,
fact, event, or circumstance known to the Company that is reasonably likely, individually or taken
together with all other changes, occurrences, effects, conditions, facts, events and circumstances
known to such party, to result in a Company Material Adverse Effect; provided, however, that no
unintentional failure by the Company to provide a required notice under the last sentence of this
Section 5.1(a) with respect to any matter that would not result in a failure of the conditions set
forth in Section 6.3(a) shall result in a failure of the condition set forth in Section 6.3(b).
(b) The Company agrees with Parent, on behalf of itself and its Subsidiaries, that between the
date hereof and the Effective Time, without the prior written consent of Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), the Company:
|
(i) |
|
except in the ordinary course of business or as disclosed in
Section 5.1(b)(i) of the Company Disclosure Schedule, shall not, and shall not
permit any of its Subsidiaries that is not wholly owned by the Company or
Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of capital stock
(whether in cash, assets, stock or other securities of the Company or its
Subsidiaries), except (A) dividends or distributions by any Subsidiaries only
to the Company or to any Subsidiary of the Company in the ordinary course of
business, (B) dividends or distributions required under the applicable
organizational documents of such entity in effect on the date of this
Agreement, or (C) regular quarterly cash dividends with customary record and
payment dates on the shares of the Company Common Stock not in excess of $0.15
per share per quarter; |
46
|
(ii) |
|
except as otherwise permitted by this Agreement, shall not, and
shall not permit any of its Subsidiaries to, adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, or enter into a letter of intent or
agreement in principle with respect thereto, other than the Merger and other
than any mergers, consolidations, restructurings or reorganizations solely
among the Company and its Subsidiaries or among the Companys Subsidiaries; |
|
|
(iii) |
|
except as otherwise permitted by this Agreement or for
transactions between the Company and its Subsidiaries or among the Companys
Subsidiaries, shall not, and shall not permit any of its Subsidiaries, to
prepay, redeem, repurchase, defease, cancel or otherwise acquire any
Indebtedness or guarantees thereof of the Company or any Subsidiary, other than
(A) at stated maturity, (B) any required amortization payments and mandatory
prepayments (including mandatory prepayments arising from any change of control
put rights to which holders of such Indebtedness or guarantees thereof may be
entitled) and (C) Indebtedness or guarantees thereof disclosed in Section
5.1(b)(iii) of the Company Disclosure Schedule, in each case in accordance with
the terms of the instrument governing such indebtedness as in effect on the
date hereof; |
|
|
(iv) |
|
shall not, and shall not permit any of its Subsidiaries to,
make any acquisition of any other person or business or make any loans,
advances or capital contributions to, or investments in, any other person with
a value in excess of $50.0 million in the aggregate, except (A) as contemplated
by the Companys fiscal 2011 budget and capital expenditure plan, as attached
to Section 5.1(b)(iv) of the Company Disclosure Schedule (the Company 2011
Budget) (whether or not such acquisition, loan, advance, capital
contribution or investment is made during the 2011 fiscal year), (B) as
required by contracts disclosed in Section 5.1(b)(iv) of the Company Disclosure
Schedule or (C) as made in connection with any transaction solely between the
Company and a wholly-owned Subsidiary of the Company or between wholly-owned
Subsidiaries of the Company; provided, however, that notwithstanding the
foregoing, the Company shall not, and shall not permit any of its Subsidiaries
to, make any acquisition of any other person or business or make any loans,
advances or capital contributions to, or investments in, any other person which
would reasonably be expected to prevent, impede or delay the consummation of
the Merger by the End Date; |
|
|
(v) |
|
except as disclosed in Section 5.1(b)(v) of the Company
Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries
to, authorize any capital expenditures in excess of $50.0 million in the
aggregate, except for (A) expenditures contemplated by the Company 2011 Budget
(whether or not such capital expenditure is made during the 2011 fiscal year),
(B) expenditures contemplated by the Companys fiscal
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47
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2012 budget and capital expenditures plan, which shall not be greater than
the expenditures contemplated by the Company 2011 Budget plus 10%, excluding
extraordinary items contained in the Company 2011 Budget, or (C)
expenditures made in response to any emergency, whether caused by war,
terrorism, weather events, public health events, outages or otherwise; |
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(vi) |
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shall not, and shall not permit any of its Subsidiaries to,
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of the Company which remains a wholly owned
Subsidiary after consummation of such transaction; |
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(vii) |
|
except as disclosed in Section 5.1(b)(vii) of the Company
Disclosure Schedule or Company Benefit Plans or as required by applicable Law,
shall not, and shall not permit any of its Subsidiaries to, (A) increase the
compensation or other benefits payable or provided to the Companys directors,
officers, employees or other service providers, other than customary increases
in the ordinary course of business consistent with past practice, provided that
there shall be no limitation upon any compensation award or payment made in
accordance with and within the parameters of the Companys current compensation
plans, or made at the instruction of the Compensation Committee of the Board of
Directors of the Company if deemed necessary or appropriate in the judgment of
the Compensation Committee for the appropriate compensation and retention of
key employees of the Company after consultation with an outside
compensation consultant retained by the Compensation Committee, (B) enter into
or amend any employment, change of control, severance or retention agreement
with any director, officer or employee of the Company except (1) for agreements
entered into with any newly-hired employees who are not officers or (2) for
severance agreements entered into with employees who are not officers in
connection with terminations of employment, in each case, in the ordinary
course of business consistent with past practice, (C) establish, adopt, enter
into, terminate or amend any plan, policy, program or arrangement for the
benefit of any current or former directors, officers or employees or any of
their beneficiaries, except as permitted pursuant to clause (B) above or in the
ordinary course of business consistent with past practice as would not result
in a material increase in cost to the Company; provided, however, that the
foregoing exception shall not apply to any equity based plan, policy, program
or arrangement (or award under any of the foregoing), (D) enter into, terminate
or amend any collective bargaining agreements, or (E) make any change in the
key management structure of the Company or any of its material Subsidiaries,
including the hiring of additional officers or the termination of existing
officers;
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48
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(viii) |
|
shall not, and shall not permit any of its Subsidiaries to, enter into or
make any loans or advances to any of its officers, directors, employees, agents
or consultants (other than loans or advances (A) in the ordinary course of
business or (B) for travel and reasonable business expenses) or make any change
in its existing borrowing or lending arrangements for or on behalf of any of
such persons, except as required by the terms of any Company Benefit Plan; |
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(ix) |
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except as disclosed in Section 5.1(b)(ix) of the Company
Disclosure Schedule, shall not, and shall not permit any of its Subsidiaries
to, materially change financial accounting policies or procedures or any of its
methods of reporting income, deductions or other material items for financial
accounting purposes, except as required by GAAP, SEC rule or policy or
applicable Law; |
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(x) |
|
except as disclosed in Section 5.1(b)(x) of the Company
Disclosure Schedule, shall not adopt any amendments to its certificate of
incorporation or by-laws or similar applicable charter documents, and shall not
permit any of its Subsidiaries to adopt any material amendments to its
certificate of incorporation or by-laws or similar applicable charter
documents; |
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(xi) |
|
except for transactions among the Company and its wholly owned
Subsidiaries or among the Companys wholly owned Subsidiaries, shall not, and
shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of or
encumber, or authorize the issuance, sale, pledge, disposition or encumbrance
of, any shares of its capital stock or other ownership interest in the Company
or any of its Subsidiaries or any securities convertible into or exchangeable
for any such shares or ownership interest, or any rights, warrants or options
to acquire any such shares of capital stock, ownership interest or convertible
or exchangeable securities or take any action to cause to be exercisable any
otherwise unexercisable option under any existing Company Benefit Plans (except
as otherwise provided by the terms of this Agreement or the express terms of
any unexercisable or unexercised options or warrants outstanding on the date
hereof), other than (A) issuances of shares of Company Common Stock in respect
of any exercise of Company Stock Awards and settlement of any Company Equity
Awards outstanding on the date hereof or as may be granted after the date
hereof as permitted under this Section 5.1(b), (B) the sale of shares of
Company Common Stock pursuant to the exercise of options to purchase Company
Common Stock if necessary to effectuate an option direction upon exercise or
for withholding of Taxes, or (C) the grant of equity compensation awards at
times, in amounts, on terms and conditions and otherwise in the ordinary course
of business consistent with past practice and in accordance with Section
5.1(b)(xi) of the Company Disclosure Schedule;
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49
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(xii) |
|
except as expressly contemplated by this Agreement and for
transactions among the Company and its wholly owned Subsidiaries or among the
Companys wholly owned Subsidiaries, shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire
any shares of the capital stock of any of them or any rights, warrants or
options to acquire any such shares; |
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(xiii) |
|
shall not, and shall not permit any of its Subsidiaries to, incur, assume,
guarantee or otherwise become liable for any Indebtedness (directly,
contingently or otherwise), except (A) for any Indebtedness incurred in the
ordinary course of business, (B) for any Indebtedness among the Company and its
wholly-owned Subsidiaries or among the Companys wholly-owned Subsidiaries, (C)
for any Indebtedness incurred to replace, renew, extend, refinance or refund
any existing Indebtedness on substantially the same or more favorable terms to
the Company than such existing Indebtedness, (D) for any guarantees by the
Company of Indebtedness of Subsidiaries of the Company or guarantees by the
Companys Subsidiaries of Indebtedness of the Company or any Subsidiary of the
Company, which Indebtedness is incurred in compliance with this Section 5.1(b),
(E) as disclosed in Section 5.1(b)(xiii) of the Company Disclosure Schedule,
and (F) for any Indebtedness not to exceed $50.0 million in aggregate principal
amount outstanding at any time incurred by the Company or any of its
Subsidiaries other than in accordance with clauses (A)-(E); provided, however,
that in the case of each of clauses (A)-(F) such Indebtedness does not impose
or result in any additional restrictions or limitations on the Company or any
of its Subsidiaries or, following the Closing, the Surviving Corporation or any
of its Subsidiaries, or subject the Company or any of its Subsidiaries or,
following the Closing, the Surviving Corporation or any of its Subsidiaries, to
any additional covenants or obligations (other than the obligations to make
payment on such Indebtedness) to which the Company or its Subsidiaries is not
otherwise subject under the terms of any Indebtedness outstanding as of the
date hereof; |
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(xiv) |
|
except for transactions among the Company and its wholly owned
Subsidiaries or among the Companys wholly owned Subsidiaries, as expressly
contemplated by Section 5.19 hereof or as disclosed in Section 5.1(b)(xiv) of
the Company Disclosure Schedule, shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license, transfer, exchange or swap, mortgage
(including securitizations), or otherwise dispose of any material portion of
its material properties or non-cash assets, including the capital stock of
Subsidiaries; |
|
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(xv) |
|
except as disclosed in Section 5.1(b)(xv) of the Company
Disclosure Schedule, the Company shall not take any action, and shall not
permit any of its Subsidiaries to take any action, that would result in the
Company or any of its Subsidiaries becoming subject to any restriction not in
existence
|
50
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|
|
on the date hereof with respect to the payment of distributions or
dividends; |
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(xvi) |
|
other than in the ordinary course of business, shall not, and
shall not permit any of its Subsidiaries to, modify, amend or terminate, or
waive any rights under any Company Material Contract, in any material respect
in a manner that is adverse to the Company and its Subsidiaries, taken as a
whole or that could prevent or materially delay the consummation of the Merger
or the other transactions contemplated by this Agreement past the End Date (or
any extension thereof); |
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(xvii) |
|
except as disclosed in Section 5.1(b)(xvii) of the Company Disclosure
Schedule, shall not, and shall not permit any of its Subsidiaries to, waive,
release, assign, settle or compromise any claim, action or proceeding, other
than waivers, releases, assignments, settlements or compromises (A) equal to or
lesser than the amounts specifically reserved with respect thereto on the
balance sheet as of December 31, 2010 included in the Company SEC Documents or
(B) that do not exceed $50.0 million in the aggregate; |
|
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(xviii) |
|
shall not make, revoke or amend any material Tax election, enter into any
closing agreement, settlement or compromise of any claim or assessment with
respect to any material Tax liability, amend any material Tax Return, surrender
a claim for a material refund of Taxes or consent to any extension or waiver of
the statute of limitations period applicable to any material Tax claim or
assessment; |
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(xix) |
|
shall not knowingly or intentionally take any action that
would reasonably be expected to make any representation or warranty of the
Company hereunder inaccurate in any respect or that would cause the condition
in Section 6.3(a) not to be met; |
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(xx) |
|
other than in the ordinary course of business in accordance
with past practice, shall not, and shall not permit any of its Subsidiaries to,
modify, amend, permit to lapse, fail to renew, surrender, terminate, or waive
any rights under any Company Permit, in any respect in a manner that is
materially adverse to the Company and its Subsidiaries, taken as a whole or
that could prevent or materially delay the consummation of the Merger or the
other transactions contemplated by this Agreement past the End Date (or any
extension thereof); |
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(xxi) |
|
except in the ordinary course of business in accordance with
past practice, take or fail to take any action, or permit any of its
Subsidiaries to take or fail to take any action, that could cause the Company
or any of its Subsidiaries, or any of their assets or businesses that is not
already so regulated or treated to be a natural gas company as defined in the
NGA, a public utility, transmitting utility, electric utility or electric
utility
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51
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|
|
company under the FPA, a non-exempt holding company under PUHCA, a common
carrier under the ICA or a utility, utility holding company, intrastate
pipeline, gas service company, electric service company, gas company,
electric company, or any similar entity however described under the laws of
any state or local jurisdiction and the regulations promulgated thereunder;
and |
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(xxii) |
|
shall not, and shall not permit any of its Subsidiaries to, agree, in writing
or otherwise, to take any of the foregoing actions. |
Indebtedness means, with respect to any person, without duplication, (a) all obligations
of such person for borrowed money, (b) all obligations of such person evidenced by bonds,
debentures, notes or other debt securities or warrants or other rights to acquire any debt
securities of such person, (c) all capitalized lease or leveraged lease obligations of such person
or obligations of such person to pay the deferred and unpaid purchase price of property and
equipment, (d) all obligations of such person pursuant to securitization or factoring programs or
arrangements, or (e) all guarantees of any of the foregoing.
Section 5.2. Conduct of Business by Parent.
(a) From and after the date hereof and prior to the Effective Time or the Termination Date, if
any, and except (i) as may be required by applicable Law, (ii) as may be agreed in writing by the
Company (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may be
contemplated or required by this Agreement, (iv) as contemplated by the Drop-Down Agreements or (v)
as set forth in Section 5.2(a) of the Parent Disclosure Schedule, Parent covenants and agrees with
the Company that the business of Parent shall be conducted in, and that Parent shall not take any
action except in, the ordinary course of business and shall use its reasonable best efforts to
preserve intact its present lines of business, maintain its rights and franchises and preserve its
relationships with customers and suppliers; provided, however, that no action by Parent with
respect to matters specifically addressed by any provision of Section 5.2(b) shall be deemed a
breach of this sentence unless such action would constitute a breach of such other provision.
Parent shall (i) promptly notify the Company of any material change in its condition (financial or
otherwise) or business or any termination, cancellation, repudiation or material breach of any
Parent Material Contract (or communications indicating that the same may be contemplated), and (ii)
give prompt notice to the Company of any change, occurrence, effect, condition, fact, event, or
circumstance known to Parent that is reasonably likely, individually or taken together with all
other changes, occurrences, effects, conditions, facts, events and circumstances known to such
party, to result in a Parent Material Adverse Effect; provided, however, that no unintentional
failure by Parent to provide a required notice under the last sentence of this Section 5.2(a) with
respect to any matter that would not result in a failure of the conditions set forth in Section
6.2(a) shall result in a failure of the condition set forth in Section 6.2(b).
(b) Parent agrees with the Company that between the date hereof and the Effective Time,
without the prior written consent of the Company (which consent shall not be unreasonably withheld,
delayed or conditioned), Parent:
52
|
(i) |
|
except in the ordinary course of business, shall not authorize
or make any distribution with respect to its outstanding equity securities
(whether in cash, assets, partnership units, stock or other securities of
Parent or its Subsidiaries), except (A) regular quarterly cash distributions
with customary record and payment dates on the Common Units not in excess of
$0.625 per Common Unit per quarter, and (B) regular quarterly cash
distributions with customary record and payment dates on the Series A Preferred
Units not in excess of $2.00 per Series A Preferred Unit per quarter plus any
accrued and unpaid distributions on the Series A Preferred Units from prior
quarters; |
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(ii) |
|
except as otherwise permitted by this Agreement or as disclosed
in Section 5.2(b)(ii) of the Parent Disclosure Schedule, shall not adopt a plan
of complete or partial liquidation or dissolution or enter into a letter of
intent or agreement in principle with respect thereto; |
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(iii) |
|
except as disclosed in Section 5.2(b)(iii) of the Parent
Disclosure Schedule shall not split, combine or reclassify any of its equity
securities or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for its equity
securities, except for any such transaction by a wholly owned Subsidiary of
Parent which remains a wholly owned Subsidiary after consummation of such
transaction; |
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(iv) |
|
except as disclosed in Section 5.2(b)(iv) of the Parent
Disclosure Schedule, shall not adopt any amendments to its Parent
Organizational Documents; |
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(v) |
|
except for transactions among Parent and its wholly owned
Subsidiaries or among Parents wholly owned Subsidiaries, shall not directly or
indirectly, purchase, redeem or otherwise acquire any equity securities of
Parent or any rights, warrants or options to acquire any such equity
securities; |
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(vi) |
|
shall not knowingly or intentionally take any action that would
reasonably be expected to make any material representation or warranty of
Parent or Merger Sub hereunder inaccurate in any material respect or that would
cause the condition in Section 6.2(a) not to be met; and |
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(vii) |
|
shall not, and shall not permit any of its wholly owned
Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing
actions. |
(c) For the avoidance of doubt, none of the restrictions contained in this Section 5.2 shall
apply to ETP or its Subsidiaries.
Section 5.3. Mutual Access.
(a) For purposes of furthering the transactions contemplated hereby, each of the Company and
Parent shall afford the other party and (i) the officers and employees and (ii) the accountants,
consultants, legal counsel, financial advisors and agents and other representatives
53
(such persons described in this clause (ii), collectively, Representatives) of such
other party reasonable access during normal business hours, throughout the period prior to the
earlier of the Effective Time and the Termination Date, to its and its Subsidiaries personnel and
properties, contracts, commitments, books and records and any report, schedule or other document
filed or received by it pursuant to the requirements of applicable Laws and with such additional
accounting, financing, operating, environmental and other data and information regarding the
Company and its Subsidiaries, as Parent may reasonably request, and Parent and its Subsidiaries, as
the Company may reasonably request, as the case may be. Notwithstanding the foregoing, neither the
Company nor Parent shall be required to afford such access if it would unreasonably disrupt the
operations of such party or any of its Subsidiaries, would cause a violation of any agreement to
which such party or any of its Subsidiaries is a party, would cause a risk of a loss of privilege
to such party or any of its Subsidiaries or would constitute a violation of any applicable Law.
The foregoing notwithstanding, neither the Company nor Parent, nor any of their respective
officers, employees or Representatives, shall be permitted to perform any onsite procedures
(including an onsite study) with respect to any property of the other party or any of the other
partys Subsidiaries without the other partys prior written consent (which consent shall not be
unreasonably withheld, delayed or conditioned).
(b) The parties hereto hereby agree that all information provided to them or their respective
officers, directors, employees or Representatives in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be deemed to be Evaluation Material,
as such term is used in, and shall be treated in accordance with, the confidentiality agreement,
dated as of May 12, 2011, among the Company, ETP and Parent (the Confidentiality
Agreement).
Section 5.4. Non-Solicitation by the Company.
(a) The Company agrees that neither it nor any Subsidiary of the Company, nor any of their
respective officers, directors or employees, shall, and that it shall use its reasonable best
efforts to cause its and their respective Representatives not to (and shall not authorize or give
permission to its and their respective Representatives to), directly or indirectly: (i) solicit,
initiate, seek or knowingly encourage or facilitate the making, submission or announcement of, any
proposal that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal,
(ii) furnish any non-public information regarding the Company or any of its Subsidiaries to, or
afford access to the business, properties, books or records of the Company or any of its
Subsidiaries to, any person (other than Parent or Merger Sub), in connection with or in response to
an Acquisition Proposal, (iii) engage or participate in any discussions or negotiations with any
person (other than Parent or Merger Sub) with respect to any Acquisition Proposal, (iv) approve,
endorse or recommend (or publicly propose to approve, endorse or recommend) any Acquisition
Proposal, (v) enter into any letter of intent, term sheet, memorandum of understanding, merger
agreement, acquisition agreement, exchange agreement or any other agreement providing for any
Acquisition Transaction or requiring the Company to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement (except as contemplated by Section
7.1(h)) or (vi) resolve, propose or agree to do any of the foregoing; provided, however, that this
Section 5.4 shall not prohibit (A) the Company, or the Board of Directors of the Company, directly
or indirectly through any officer, employee or Representative, prior to obtaining the Company
Stockholder Approval, from taking any of the
54
actions described in clauses (ii) or (iii) above in response to an unsolicited Acquisition
Proposal that the Board of Directors of the Company, prior to taking any such particular action,
concludes in good faith, after consultation with its financial advisors and outside legal counsel
(it being understood that, for purposes of this Section 5.4, such a financial advisor or outside
legal counsel shall include a financial advisor or outside legal counsel to a duly constituted and
acting committee of the Board of Directors of the Company), constitutes or is reasonably likely to
result in a Superior Offer if (1) the Board of Directors of the Company concludes in good faith,
after consultation with its outside legal counsel, that the failure to take such action with
respect to such Acquisition Proposal would be reasonably likely to constitute a breach by the Board
of Directors of its fiduciary duties under applicable Laws, (2) such Acquisition Proposal did not
result from a breach of this Section 5.4, (3) the Company gives to Parent the notice required by
Section 5.4, and (4) the Company furnishes any non-public information provided to the maker of the
Acquisition Proposal only pursuant to a confidentiality agreement between the Company and such
person on substantially the same terms as the Confidentiality Agreement (it being acknowledged and
agreed that such confidentiality agreement need not contain a standstill or similar provision
that prohibits the third party recipient of such information from making any Acquisition Proposal)
and to the extent non-public information that has not been made available to Parent is made
available to the maker of the Acquisition Proposal, provide such non-public information to Parent
substantially concurrent with the time that it is provided to such other person; (B) the Company
from complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
Acquisition Proposal (or making any similar communication to stockholders in connection with any
amendment to the terms of a tender offer or exchange offer) so long as any action taken or
statement made to so comply is consistent with this Section 5.4; (C) the Company, or the Board of
Directors, directly or indirectly through any officer, employee or Representative disclosing
factual information regarding the business, financial condition or results of operations of the
Company or the fact that an Acquisition Proposal has been made, the identity of the party making
such proposal or the material terms of such proposal in the Proxy Statement or otherwise, to the
extent the Company in good faith determines that such information, facts, identity or terms is
required to be disclosed under applicable Law or that failure to make such disclosure is reasonably
likely to be inconsistent with its fiduciary duties under applicable Law; or (D) the Company, or
the Board of Directors, directly or indirectly through any officer, employee or Representative
making any statement or disclosure to the Companys stockholders required by applicable Law;
provided that any such action taken or statement or disclosure made that relates to an Acquisition
Proposal shall be deemed to be a Change of Recommendation unless the Board of Directors reaffirms
its recommendation in favor of the proposed transaction in such statement or disclosure or in
connection with such action (except that a mere stop, look and listen disclosure in compliance
with Rule 14d-9(f) of the 1934 Act shall not constitute a Change of Recommendation). So long as
the Company and its Representatives have otherwise complied with this Section 5.4, none of the
foregoing shall prohibit the Company and its Representatives from contacting in writing any persons
or group of persons who has made an Acquisition Proposal after the date of this Agreement solely to
request the
clarification of the terms and conditions thereof so as to determine whether the
Acquisition Proposal is, or could reasonably be expected to lead to, a Superior Offer, and any such
actions shall not be a breach of this Section 5.4.
(b) The Company shall promptly, and in no event later than twenty-four (24) hours after its or
any of its Representatives receipt of any Acquisition Proposal or any request for non-
55
public information relating to the Company or any of its Subsidiaries in connection with an
Acquisition Proposal, advise Parent orally and in writing of such Acquisition Proposal or request
(including providing the identity of the person making or submitting such Acquisition Proposal or
request, and, (x) if it is in writing, a copy of such Acquisition Proposal and any related draft
agreements and (y) if oral, a reasonably detailed summary thereof that is made or submitted by any
person during the period between the date hereof and the Closing). The Company shall keep Parent
informed in all material respects on a prompt basis with respect to any change to the material
terms of any such Acquisition Proposal (and in no event later than twenty-four (24) hours following
any such change). The Company agrees that it shall promptly provide to Parent any non-public
information concerning itself or its Subsidiaries provided to any other person in connection with
any Acquisition Proposal which was not previously provided to Parent.
(c) Immediately following the execution of this Agreement, (i) the Company shall, and shall
cause its Subsidiaries and its and their respective officers, directors and employees, and shall
use its reasonable best efforts to cause its and their respective Representatives to, immediately
cease and terminate any discussions existing as of the date of this Agreement between the Company
or any of its Subsidiaries or any of their respective officers, directors, employees or
Representatives and any person (other than Parent) that relate to any Acquisition Proposal, and
(ii) the Company shall, and shall use its reasonable best efforts to cause its Representatives to,
cause to be returned or destroyed all confidential information provided by or on behalf of the
Company or any Subsidiary to such person.
(d) Except as otherwise provided in Section 5.4(e), neither the Board of Directors of the
Company nor any committee thereof may (i) withhold, withdraw or modify, or publicly propose to
withhold, withdraw or modify, the Company Recommendation in a manner adverse to Parent, or (ii)
recommend, adopt or approve, or propose publicly to recommend, adopt or approve, any Acquisition
Proposal (any action described in this Section 5.4(d), a Change of Recommendation).
(e) Notwithstanding anything in this Agreement to the contrary, with respect to (i) an
Intervening Event or (ii) an Acquisition Proposal, the Board of Directors of the Company may at any
time prior to receipt of the Company Stockholder Approval, make a Change of Recommendation and/or
terminate this Agreement pursuant to Section 7.1(h), if (and only if): (A) in the case of (ii)
above, (x) an Acquisition Proposal (that did not result from a breach of Section 5.4(a)) is made to
the Company by a third party, and such Acquisition Proposal is not withdrawn; (y) the Companys
Board of Directors determines in good faith after consultation with its financial advisors and
outside legal counsel that such Acquisition Proposal constitutes a Superior Offer; and (z) the
Companys Board of Directors determines to terminate this Agreement pursuant to Section 7.1(h), (B)
in the case of (i) above, following consultation with outside legal counsel, the Companys Board of
Directors determines that the failure to make a Change of Recommendation would be reasonably likely
to constitute a breach by the Board of Directors of its fiduciary duties under applicable Laws; (C)
in the case of (i) and (ii) above, (x) the Company provides Parent ninety-six (96) hours prior
written notice of its intention to take such action, which notice shall include the information
with respect to such Intervening Event or Superior Offer, as the case may be, that is specified in
Section 5.4(b), (y) after providing such notice and prior to making such Change of Recommendation
in connection with an Intervening Event or a Superior Offer or taking any action pursuant to
Section 7.1(h) with
56
respect to a Superior Offer, the Company shall negotiate in good faith with Parent during such
ninety-six (96) hour period (to the extent that Parent desires to negotiate) to make such revisions
to the terms of this Agreement as would permit the Board of Directors of the Company not to effect
a Change of Recommendation in connection with an Intervening Event or a Superior Offer or to take
such action pursuant to Section 7.1(h) in response to a Superior Offer, and (z) the Board of
Directors of the Company shall have considered in good faith any changes to this Agreement offered
in writing by Parent and shall have determined in good faith, after consultation with its outside
legal counsel and financial advisors, that the event continues to constitute an Intervening Event
or that the Superior Offer would continue to constitute a Superior Proposal, in each case if such
changes offered in writing by Parent were to be given effect; provided that, for the avoidance of
doubt, the Company shall not effect a Change of Recommendation in connection with an Intervening
Event or a Superior Offer or take any action pursuant to Section 7.1(h) with respect to a Superior
Offer prior to the time that is ninety-six (96) hours after it has provided the written notice
required by clause (x) above; provided further, that in the event that the Acquisition Proposal is
thereafter modified by the party making such Acquisition Proposal, the Company shall provide
written notice of such modified Acquisition Proposal and shall again comply with this Section
5.4(e), except that the Companys advance written notice obligation shall be reduced to seventy-two
(72) hours (rather than the ninety-six (96) hours otherwise contemplated by this Section 5.4(e))
and the time the Company shall be permitted to effect a Change of Recommendation in connection with
a Superior Offer or to take action pursuant to Section 7.1(h) with respect to a Superior Offer
shall be reduced to the time that is seventy-two (72) hours after it has provided such written
notice (rather than the time that is the ninety-six (96) hours otherwise contemplated by this
Section 5.4(e)) (but in no event prior to the original ninety-six (96) hour advance notice period).
(f) As used in this Agreement:
|
(i) |
|
Acquisition Proposal means any bona fide offer,
inquiry, proposal or indication of interest, whether or not in writing,
received from a third party (other than an offer, inquiry, proposal or
indication of interest by Parent or Merger Sub or any of their respective
Subsidiaries) relating to any Acquisition Transaction; |
|
(ii) |
|
Acquisition Transaction means any transaction or
series of transactions (other than those contemplated by Section 5.19)
involving: (A) any merger, consolidation, share exchange, recapitalization or
business combination involving the Company or any of its material Subsidiaries;
(B) any direct or indirect acquisition, sale, issuance or repurchase of
securities, tender offer, joint venture, exchange offer or other similar
transaction or series of transactions which would result in a person or group
(as defined in the Exchange Act) of persons having direct or indirect
beneficial or record ownership of securities representing more than twenty
percent (20%) of the outstanding Company Common Stock; (C) any direct or
indirect acquisition of any business or businesses or of assets (including
equity interests in any Subsidiary) that constitute or account for twenty
percent (20%) or more of the consolidated net revenues, net income or assets
(based on the fair market value thereof) of |
57
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the Company and its Subsidiaries, taken as a whole; (D) any liquidation or
dissolution of the Company or any of its Subsidiaries or the payment of any
extraordinary dividend by the Company; or (E) any combination of the
foregoing; |
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(iii) |
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Intervening Event means a material event, fact,
circumstance, development or occurrence that is unknown to or by the Companys
Board of Directors as of the date of this Agreement (or if known, the magnitude
or material consequences of which were not known or understood by the Company
Board of Directors as of the date hereof), which event, fact, circumstance,
development, occurrence, magnitude or material consequence becomes known to or
by the Companys Board of Directors prior to obtaining the Company Stockholder
Approval; and |
|
(iv) |
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Superior Offer means a written Acquisition Proposal
to acquire at least (A) fifty percent (50%) of the equity securities of the
Company or (B) fifty percent (50%) or more of the assets of the Company and its
Subsidiaries, taken as a whole (based on the fair market value thereof), in
each case on terms that the Companys Board of Directors determines, in good
faith, after consultation with its outside legal counsel and its financial
advisor, is (A) if accepted, reasonably likely to be consummated, and (B) if
consummated would, based upon the advice of the Companys financial advisor, be
more favorable to the Companys stockholders from a financial point of view
than the Merger and the transactions contemplated by this Agreement (taking
into account any proposal by Parent to amend or modify the terms of this
Agreement which are committed to in writing), after taking into account such
factors (including timing, likelihood of consummation, break-up fees, expense
reimbursement provisions, required approvals, conditions to consummation,
legal, financial, regulatory and other aspects of the offer, and the person
making the offer) deemed relevant by the Board of Directors of the Company. |
Section 5.5. Filings; Other Actions.
(a) As promptly as reasonably practicable following the date of this Agreement, Parent and the
Company shall prepare and file with the SEC the Proxy Statement, and Parent shall prepare and file
with the SEC the Form S-4, in which the Proxy Statement will be included as a prospectus. Each of
Parent and the Company shall use reasonable best efforts to have the Form S-4 declared effective
under the Securities Act as promptly as reasonably practicable after such filing and to keep the
Form S-4 effective as long as necessary to consummate the Merger and the other transactions
contemplated hereby. The Company will cause the Proxy Statement to be mailed to the Companys
stockholders, as reasonably practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action required to be taken under any applicable state
or provincial securities laws in connection with the issuance and reservation of Common Units in
the Merger, and the Company shall furnish all information concerning the Company and the holders of
Company Common Stock as may be reasonably requested in connection with any such action. No filing
of, or amendment or supplement to, the
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Form S-4 or the Proxy Statement will be made by Parent or the Company, as applicable, without
the others prior consent (which shall not be unreasonably withheld, delayed or conditioned) and
without providing the other party a reasonable opportunity to review and comment thereon. Parent
or the Company, as applicable, will advise the other promptly after it receives oral or written
notice of the time when the Form S-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification of the Common Units
issuable in connection with the Merger for offering or sale in any jurisdiction, or any oral or
written request by the SEC for amendment of the Proxy Statement or the Form S-4 or comments thereon
and responses thereto or requests by the SEC for additional information, and will promptly provide
the other with copies of any written communication from the SEC or any state securities commission.
If at any time prior to the Effective Time any information relating to Parent or the Company, or
any of their respective affiliates, officers or directors, is discovered by Parent or the Company
which should be set forth in an amendment or supplement to any of the Form S-4 or the Proxy
Statement, so that any of such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that discovers such information
shall promptly notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the stockholders of the Company.
(b) The Company shall take all action necessary in accordance with applicable Laws and the
Company Organizational Documents to duly give notice of, convene and hold a meeting of its
stockholders, to be held as promptly as practicable after the Form S-4 is declared effective under
the Securities Act, to consider the adoption of this Agreement and the approval of the transactions
contemplated hereby, including the Merger (the Stockholders Meeting). The Company will,
except in the case of a Change of Recommendation, through its Board of Directors, recommend that
its stockholders adopt this Agreement and will use reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption of this Agreement and to take all other action
necessary or advisable to secure the vote or consent of its stockholders required by the rules of
the NYSE or applicable Laws to obtain such approvals.
Section 5.6. Equity-Based Awards.
(a) The Company shall cause each option to purchase shares of Company Common Stock or stock
appreciation right relating to Company Common Stock granted under a Company Benefit Plan that
provides for equity-based compensation (each such Company Benefit Plan, a Company Stock
Plan) that is outstanding immediately prior to the Effective Time (a Company Stock
Award) to become vested and exercisable prior to the Effective Time and shall, in accordance
with the terms of the applicable Company Stock Plan, provide notice to all holders of Company Stock
Awards that any Company Stock Award not exercised prior to the Effective Time shall be cancelled
and terminate upon the Effective Time. In consideration of such cancellation and termination of
Company Stock Awards, the Company shall pay to each holder of a Company Stock Award within five
business days following the Effective Time an amount, less applicable withholding Taxes, in cash
with respect to each share of Company Common Stock subject to the Company Stock Award equal to (i)
the Per Share Cash Consideration minus (ii) the per share exercise price or strike price of
the Company Stock Award. If Parent determines the consent of a holder of a Company Stock Award is
required to
59
effectuate the termination of any Company Stock Award, then the Company shall (i) use its
reasonable best efforts to obtain such consent from the holder of such Company Stock Award for no
additional consideration, except as approved by Parent in advance and (ii) shall make any
amendments to the terms of the Company Stock Plans or awards thereunder that may be necessary or
advisable to give effect to the termination of such Company Stock Awards, subject to the advance
approval of Parent which approval shall not be unreasonably withheld. The Company shall require
the holder of any Company Stock Award exercised prior the Effective Time to satisfy any withholding
obligation with respect to such Company Stock Award in accordance with the terms of the applicable
Company Stock Plan and award agreement.
(b) Each award of restricted Company Common Stock granted under a Company Stock Plan that is
outstanding immediately prior to the Effective Time (the Restricted Shares) shall, as of
the Effective Time, automatically and without any action on the part of the holder thereof, vest
and the restrictions with respect thereto shall lapse, and each share of Company Common Stock
subject to such grant of Restricted Shares shall be converted into cash, Common Units or a
combination of cash and Common Units in accordance with Section 2.1, depending on whether the
holder of such Restricted Shares makes a Cash Election or a Common Unit Election and subject to the
terms and conditions of Section 2.1. Unless the holder of such Restricted Shares shall have
remitted to the Company the amount required to be withheld with respect to the vesting and lapse of
restrictions on the Restricted Shares under the Code or any provision of state, local or foreign
tax Law, the consideration to be received by such holder pursuant to Section 2.1 shall be reduced
by the amount required to be deducted and withheld with respect to the vesting and lapse of such
restrictions on the Restricted Shares. Such reduction shall come first from the cash portion of
the consideration payable to the holder of the Restricted Shares under Section 2.1, if any, and if
there is no cash portion of such consideration or if the cash portion is not sufficient to satisfy
the amount required to be deducted and withheld with respect to vesting and lapse of such
restrictions on the Restricted Shares, then the number of Common Units to be received by the holder
of such Restricted Shares pursuant to Section 2.1 shall be reduced by a number of Common Units
(rounded up to the nearest whole unit with cash payable in respect of the resulting fractional
unit) equal to (i) the amount (or additional amount, as the case may be) required to be deducted
and withheld with respect to the vesting and lapse of such restrictions on the Restricted Shares,
divided by (ii) the closing price of one Common Unit on the New York Stock Exchange on the
day prior to the Closing Date.
(c) The Company shall cause each unvested award of restricted share units, performance shares
or phantom shares with respect to shares of Company Common Stock under a Company Stock Plan that is
outstanding immediately prior to the Effective Time (a Company RSU) to become fully
vested, and the Company shall, within five business days following the Effective Time pay to the
holder thereof, with respect to each share of Company Common Stock subject to such outstanding
Company RSU (giving effect to the acceleration of vesting contemplated by this Section 5.6(c)) a
lump sum cash payment, less any applicable withholding Taxes, equal to the greater of (i) the Per
Share Cash Consideration and (ii) the product of the Exchange Ratio multiplied by the closing price of
one Common Unit on the NYSE on the Closing Date, as reported in the Wall Street Journal or such
other source as may be determined by Parent.
(d) The Company shall use its reasonable best efforts to take any actions reasonably necessary
to effectuate the transactions contemplated by this Section 5.6. Prior to the Effective
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Time, the Company shall deliver to the holders of the Company Stock Awards and Company RSUs
notices, in form and substance reasonably acceptable to Parent, setting forth such holders rights
pursuant to this Agreement.
Section 5.7. Employee Matters.
(a) Parent shall cause the Surviving Corporation and each of its Subsidiaries, for the period
commencing at the Effective Time and ending on the first anniversary thereof, to maintain for the
individuals employed by the Company or any of its Subsidiaries at the Effective Time (the
Current Employees) compensation and benefits that are substantially comparable in the
aggregate to the compensation and benefits (i) provided to Current Employees as a group immediately
prior to the Effective Time (excluding, for this purpose, equity-based compensation and
participation in a defined-benefit pension plan unless such participation is mandated by the terms
of a collective bargaining or other similar agreement between the Company or one of its
Subsidiaries and an employee representative) or (ii) provided to similarly situated employees of
Parent and its Subsidiaries.
(b) Parent will cause the Surviving Corporation to provide credit for each Current Employees
length of service with the Company and its Subsidiaries prior to the Effective Time for
eligibility, vesting and benefits accrual purposes under any employee benefit plans of the
Surviving Corporation and its Subsidiaries to the same extent as such service was recognized under
a similar Company Benefit Plan; provided, that such prior service credit shall not be
required to the extent it results in a duplication of benefits. Parent shall use commercially
reasonable efforts to cause each health plan of Parent in which any Current Employee participates
following the Closing to (i) waive any pre-existing condition limitation for any condition for
which such Current Employee would have been entitled to coverage under the corresponding Company
Benefit Plan prior to the Effective Time and (ii) honor co-payments made, and deductibles
satisfied, by such Current Employee prior to the Effective Time. For purposes of this Agreement,
Benefit Plans means, with respect to any entity, any compensation or employee benefit
plans, programs, policies, agreements or other arrangements, whether or not employee benefit
plans (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (ERISA)), whether or not subject to ERISA, including bonus, cash or
equity-based incentive, deferred compensation, stock purchase, health, medical, dental, disability,
accident, life insurance, or vacation, paid time off, perquisite, fringe benefit, severance, change
of control, retention, employment, separation, retirement, pension, or savings, plans, programs,
policies, agreements or arrangements for the benefit of current or former directors, officers or
employees of such entity or any of its Subsidiaries or any dependant or beneficiary thereof.
(c) If requested by Parent, subject to the terms of any such Benefit Plan, the Companys Board
of Directors shall adopt resolutions, in form and substance reasonably acceptable to Parent,
terminating, effective at least one day prior to the Closing Date (the ERISA Effective
Date), any Company Benefit Plan qualified under Section 401(a) of the Code and containing a
Code Section 401(k) cash or deferred arrangement (a 401(k) Plan). Prior to the ERISA
Effective Date, the Company shall provide Parent with executed resolutions of its Board of
Directors authorizing such termination and amending any such 401(k) Plan commensurate with its
termination to the extent necessary to comply with all applicable Laws.
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The Company shall also take such other actions in furtherance of the termination of each
401(k) Plan as Parent may reasonably require, including such actions as Parent may require prior to
the Effective Time to support Parent obtaining a determination letter with respect to the
termination of each 401(k) Plan following the ERISA Effective Date. In addition, if requested by
Parent, the Company shall take such actions as may be necessary to eliminate, as of no later than
immediately prior to the Effective Time, from any 401(k) Plan or other retirement plan, any
investment fund, election or alternative that provides for an investment directly in shares of
Company Common Stock.
(d) Nothing in this Section 5.7 shall be construed as an amendment of, or undertaking to
amend, any Benefit Plan or to prevent the amendment or termination of any Benefit Plan. Nothing in
this Section 5.7 shall limit the right of Parent, the Surviving Corporation or any of their
Subsidiaries to terminate the employment of any Current Employee at any time, subject to any rights
to severance or other separation benefits accrued as of the applicable termination date under a
Company Benefit Plan. Without limiting the generality of Section 8.10, the provisions of this
Section 5.7 are solely for the benefit of the parties to this Agreement, and no current or former
director, officer, employee, other service provider or independent contractor or any other person
shall be a third-party beneficiary of this Agreement, and nothing herein shall be construed as an
amendment to any Parent Benefit Plan, Company Benefit Plan or other compensation or benefit plan or
arrangement for any purpose.
Section 5.8. Regulatory Approvals; Reasonable Best Efforts.
(a) Subject to the terms and conditions set forth in this Agreement, each of the parties
hereto shall use its reasonable best efforts (subject to, and in accordance with, applicable Law)
to take, or cause to be taken, promptly all actions, and to do, or cause to be done, promptly and
to assist and cooperate with the other parties in doing, all things necessary, proper or advisable
under applicable Laws to consummate and make effective the Merger and the other transactions
contemplated by this Agreement, including: (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals, including the Company Approvals and the Parent
Approvals, from Governmental Entities and the making of all necessary registrations and filings and
the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties other than any Governmental Entity (including consents
necessary in connection with the merger of CrossCountry Energy, LLC with and into a subsidiary of
Parent and thereafter a subsidiary of ETP), (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any Governmental Entity vacated or reversed, and (iv) the execution
and delivery of any additional instruments necessary to consummate the transactions contemplated by
this Agreement. In the event that any litigation, administrative or judicial action or other
proceeding is commenced challenging the Merger or any of the proposed transactions, each of the
Company, Parent and Merger Sub shall cooperate with each other and use its respective reasonable
best efforts to contest and resist any such litigation, action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation
of the transactions contemplated by this Agreement.
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(b) Subject to the terms and conditions herein provided and without limiting the foregoing,
the Company and Parent shall (i) as promptly as practicable (and in any event not more than ten
business days) after the date hereof, make their respective filings and thereafter make any other
required submissions under the HSR Act, (ii) use reasonable best efforts to cooperate with each
other in (A) determining whether any filings are required to be made with, or consents, permits,
authorizations, waivers or approvals are required to be obtained from, any third parties or other
Governmental Entities in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, (B) timely making all such filings and timely
seeking all such consents, permits, authorizations or approvals, (C) assuring that all such filings
are in material compliance with the requirements of applicable Regulatory Laws, and (D) making
available to the other party such information as the other party may reasonably request in order to
respond to information requests by any relevant Governmental Entity, (iii) use reasonable best
efforts to take, or cause to be taken, all other actions and do, or cause to be done, all other
things advisable to consummate and make effective the transactions contemplated hereby, and (iv)
subject to applicable legal limitations and the instructions of any Governmental Entity, keep each
other apprised of the status of matters relating to the completion of the transactions contemplated
thereby, including promptly furnishing the other with copies of notices or other communications,
filings or correspondence (or memoranda setting forth the substance thereof) between the Company or
Parent, or any of their respective Subsidiaries, and any third party and/or any Governmental Entity
(or members of their respective staffs) with respect to such transactions. The Company and Parent
shall use their respective reasonable best efforts to file applications for the FERC Approval, the
MDPU Approval, the MPSC Approval, the FCC Approval and any other filings, determined to be required
as promptly as practicable after the date hereof, but in no event later than thirty days after the
date hereof, and shall make such filings jointly if appropriate. Prior to transmitting any
material to any Governmental Entity (or members of their respective staffs), the Company and Parent
shall permit counsel for the other party a reasonable opportunity to review and provide comments
thereon, and consider in good faith the views of the other party in connection with, any proposed
written communication to any Governmental Entity (or members of their respective staffs) to the
extent permitted by Law. Each of the Company and Parent agrees not to participate in any meeting
or discussion, either in person or by telephone, with any Governmental Entity in connection with
the proposed transactions unless it consults with the other party in advance and, to the extent not
prohibited by such Governmental Entity or by Law, gives the other party the opportunity to attend
and participate.
(c) In furtherance and not in limitation of the foregoing, each of Parent, Merger Sub and the
Company shall use their reasonable best efforts to obtain the Requisite Regulatory Approvals,
including (i) responding to and complying with, as promptly as reasonably practicable, any request
for information regarding the transactions from any relevant Governmental Entity (including
responding to any second request for information under the HSR Act as promptly as reasonably
practicable); (ii) ensuring the prompt expiration of any applicable waiting period and clearance or
approval by any such relevant Governmental Entity, including defense against, and the resolution
of, any objections or challenges, in court or otherwise, by any relevant Governmental Entity
preventing consummation of the transactions; and (iii) assisting and cooperating with the other
party in doing all things necessary, proper or advisable to consummate and make effective the
transactions, under any applicable Regulatory Law with each relevant Governmental Entity. In the
event the parties, despite their reasonable
63
best efforts, have not obtained clearance or approval of the transactions from any relevant
Governmental Entity and/or resolved any objections or challenges by any relevant Governmental
Entity preventing consummation of the transactions by the Closing Date, the Closing Date shall
automatically be extended for an additional three months, and thereafter shall be extended for any
additional periods as agreed by both Company and Parent.
(d) Parent agrees to take, or cause to be taken, any and all steps and to make, or cause to be
made, any and all undertakings necessary to resolve such objections, if any, that a Governmental
Entity may assert under Regulatory Laws with respect to the transactions contemplated hereby, and
to avoid or eliminate each and every impediment under Regulatory Laws that may be asserted by any
Governmental Entity with respect to the Merger so as to enable the Closing to occur (i) as to the
Requisite Regulatory Approvals related to the HSR Act, the Clayton Act, the Sherman Act or the
Federal Trade Commission Act (the Antitrust Approvals), no later than the time at which
all Requisite Regulatory Approvals other than those related to the Antitrust Approvals are achieved
and (ii) as to Requisite Regulatory Approvals other than those related to the Antitrust Approvals,
as promptly as reasonably practicable and in any event no later than the End Date, including in
each case taking any action (including any action that limits Parents freedom of action, ownership
or control with respect to, or its ability to retain or hold, any of the businesses, assets,
product lines or properties of Parent or Company) as may be required in order to avoid the
commencement of any action to prohibit the merger, or, in the alternative, to avoid the entry of,
or to effect the dissolution of, any injunction, temporary restraining order or other order in any
action seeking to prohibit the merger; provided, however, that notwithstanding anything in
this Section 5.8 to the contrary, Parent shall not be required to take, or cause to be taken, any
such action to obtain the MDPU Approval or the MPSC Approval to the extent that such action would
require Parent, Merger Sub or the Company to take, or cause to be taken, any action with respect to
any of the assets, businesses or product lines of the Company or any of its Subsidiaries, or of
Parent or any of its Subsidiaries, or any combination thereof, if such action would result in a
material adverse effect on or with respect to the business, financial condition or continuing
results of operations of Parent and its Subsidiaries (including the Surviving Corporation), taken
as a whole (assuming Parent and its Subsidiaries (including the Surviving Corporation), taken as a
whole were an entity with the assets, liabilities and revenues of an entity the size of the Company
and its Subsidiaries, taken as a whole). Subject to the provisions of this Section 5.8, Parent
shall have sole discretion in determining the scope of undertakings to be taken, including the
scope of assets to be divested or held separate, or the conduct to be restricted, in order to meet
the obligations of this Paragraph; provided, however, any undertaking pursuant to this
Paragraph shall be conditioned on closing of the transactions in this Agreement. Further, Company
shall not, without the prior written consent of Parent, publicly or before any governmental entity
or other third party commit to or effect, by consent decree, hold separate order or otherwise, any
sale, divestiture, disposition, prohibition or limitation or other action of a type described in
this agreement. For purposes of this Section 5.8(d), ETP and Regency Energy Partners LP, a
Delaware limited partnership (Regency), and their respective Subsidiaries, shall be
deemed to be Subsidiaries of Parent.
(e) Parent and the Company and each of their respective Subsidiaries shall not take any action
with the intention to, or that could reasonably be expected to, hinder or delay the obtaining of
clearance or any necessary consent of any Governmental Entity under any Regulatory Law or the
expiration of the required waiting period under any Regulatory Law.
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(f) Notwithstanding the foregoing or any other provision of this Agreement, nothing in this
Section 5.8 shall limit a partys right to terminate this Agreement pursuant to Section 7.1(b) or
Section 7.1(c) so long as such party has, prior to such termination, complied with its obligations
under this Agreement, including this Section 5.8.
(g) As used in this Agreement, Regulatory Law means the Sherman Act of 1890, the
Clayton Antitrust Act of 1914, the HSR Act, the FPA, the NGA, the NGPA, the ICA, the PUHCA, the
Communications Act of 1934, as amended, state laws governing local distribution companies in the
States of Massachusetts and Missouri and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other Laws, including any
antitrust, competition or trade regulation Laws, that are designed or intended to (i) prohibit,
restrict or regulate actions having the purpose or effect of monopolization or restraint of trade
or lessening competition through merger or acquisition or (ii) protect the national security or the
national economy of any nation.
Section 5.9. Takeover Statutes. If any Takeover Law may become, or may purport to be,
applicable to the Merger, the Support Agreements or any other transactions contemplated hereby,
each of the Company and Parent shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects
of such statute or regulation on the transactions contemplated hereby.
Section 5.10. Public Announcements. Except (a) following any Change of Recommendation
or (b) with respect to action taken by the Company or its Board of Directors pursuant to, and in
accordance with, Section 5.4 so long as this Agreement is in effect, the parties shall use
reasonable best efforts to consult with each other before issuing, and provide each other the
reasonable opportunity to review and comment upon, any press release or any public announcement
primarily relating to this Agreement or the transactions contemplated hereby. Parent and the
Company agree to issue a mutually acceptable initial joint press release announcing this Agreement.
Section 5.11. Indemnification and Insurance.
(a) Parent and Merger Sub agree that all rights to exculpation, indemnification and
advancement of expenses now existing in favor of the current or former directors, officers or
employees, as the case may be, of the Company or its Subsidiaries as provided in their respective
certificates of incorporation or by-laws or other organization documents or in any agreement to
which the Company or any of its Subsidiaries is a party, shall survive the Merger and shall
continue in full force and effect. For a period of six years from the Effective Time, Parent and
the Surviving Corporation shall maintain in effect the exculpation, indemnification and advancement
of expenses provisions of the Companys and any of its Subsidiarys certificate of incorporation
and by-laws or similar organization documents in effect immediately prior to the Effective Time or
in any indemnification agreements of the Company or its Subsidiaries with any of their respective
directors, officers or employees in effect immediately prior to the Effective Time, and shall not
amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the
rights thereunder of any individuals who immediately before the Effective Time were current or
former directors, officers or employees of the
65
Company or any of its Subsidiaries; provided, however, that all rights to indemnification in
respect of any Action pending or asserted or any claim made within such period shall continue until
the disposition of such Action or resolution of such claim. From and after the Effective Time,
Parent shall assume, be jointly and severally liable for, and honor, guaranty and stand surety for,
and shall cause the Surviving Corporation and its Subsidiaries to honor and perform, in accordance
with their respective terms, each of the covenants contained in this Section 5.11 without limit as
to time.
(b) The Surviving Corporation shall, to the fullest extent permitted under applicable Law,
indemnify and hold harmless (and advance funds in respect of each of the foregoing) each current
and former director, officer or employee of the Company or any of its Subsidiaries and each person
who served as a director, officer, member, trustee or fiduciary of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or enterprise if such
service was at the request or for the benefit of the Company or any of its Subsidiaries (each,
together with such persons heirs, executors or administrators, an Indemnified Party), in
each case against any costs or expenses (including advancing attorneys fees and expenses in
advance of the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by applicable Law; provided, however, that the
Person to whom expenses are advanced provides an undertaking, if and only to the extent required by
Delaware law, to repay such advances if it is ultimately determined that such person is not
entitled to indemnification), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative (an Action),
arising out of, relating to or in connection with any action or omission by them in their
capacities as such occurring or alleged to have occurred whether before or after the Effective Time
(including acts or omissions in connection with such persons serving as an officer, director or
other fiduciary in any entity if such service was at the request or for the benefit of the
Company). In the event of any such Action, the Surviving Corporation shall cooperate with the
Indemnified Party in the defense of any such Action.
(c) For a period of six years from the Effective Time, Parent shall cause to be maintained in
effect the coverage provided by the policies of directors and officers liability insurance and
fiduciary liability insurance in effect as of the Effective Time by the Company and its
Subsidiaries with respect to matters arising on or before the Effective Time; provided, however,
that Parent shall not be required to pay annual premiums in excess of 300% of the last annual
premium paid by the Company prior to the date hereof in respect of the coverages required to be
obtained pursuant hereto, but in such case shall purchase as much coverage as reasonably
practicable for such amount.
(d) Parent shall pay all reasonable expenses, including reasonable attorneys fees, that may
be incurred by any indemnified party in enforcing the indemnity and other obligations provided in
this Section 5.11.
(e) The rights of each indemnified party hereunder shall be in addition to, and not in
limitation of, any other rights such indemnified party may have under the certificate of
incorporation or by-laws or other organization documents of the Company or any of its
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Subsidiaries or the Surviving Corporation, any other indemnification arrangement, the DGCL or
otherwise.
(f) In the event Parent, the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume the obligations of such party set forth in this Section 5.11.
(g) The obligations of Parent and the Surviving Corporation under this Section 5.11 shall not
be terminated, amended or modified in any manner so as to adversely affect any indemnified party
(including their successors, heirs and legal representatives) to whom this Section 5.11 applies
without the consent of such Indemnified Parties (it being expressly agreed that the Indemnifying
Parties to whom this Section 5.11 applies shall be third party beneficiaries of this Section 5.11,
and this Section 5.11 shall survive consummation of the Merger and shall be enforceable by such
Indemnified Parties and their respective successors, heirs and legal representatives against Parent
and the Surviving Corporation and their respective successors and assigns.
Section 5.12. Control of Operations. Without in any way limiting any partys rights
or obligations under this Agreement, the parties understand and agree that (a) nothing contained in
this Agreement shall give Parent or the Company, directly or indirectly, the right to control or
direct the other partys operations prior to the Effective Time and (b) prior to the Effective
Time, each of the Company and Parent shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its operations.
Section 5.13. Certain Transfer Taxes. Any liability arising out of any real estate
transfer Tax with respect to interests in real property owned directly or indirectly by the Company
or any of its Subsidiaries immediately prior to the Merger, if applicable and due with respect to
the Merger, shall be borne by the Surviving Corporation and expressly shall not be a liability of
stockholders of the Company.
Section 5.14. Section 16 Matters. Prior to the Effective Time, Parent and the Company
shall take all such steps as may be required to cause any dispositions of Company Common Stock
(including derivative securities with respect to Company Common Stock) or acquisitions of Common
Units (including derivative securities with respect to Common Units) resulting from the
transactions contemplated by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company or will become
subject to such reporting requirements with respect to Parent, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
Section 5.15. Agreed Tax Treatment. The parties to this Agreement intend that, with
respect to holders of Company Common Stock receiving Common Units as Merger Consideration, the
Merger qualify under Section 721(a) of the Code with respect to holders of Company Common Stock to
the extent they receive Common Units as Merger Consideration;
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provided however, this result may not apply to the extent such holders receive money or other
property, other than an operating cash flow distribution (as such term is defined in Treasury
regulation section 1.707-4), from Parent on any date through and including the second anniversary
of the Closing. Each party hereto agrees to file all federal (and, to the extent applicable, state
and local) income tax returns reporting the Merger in a manner consistent with such treatment.
Provided the opinion conditions contained in Section 6.2(e) and Section 6.2(f) have been satisfied,
Parent shall file the opinions described in Section 6.2(e) and Section 6.2(f) with the SEC by a
post-effective amendment to the Form S-4 promptly following the Closing, unless opinions issued to
the Company and Parent and addressing the qualification of the Merger (in similar form to those
opinions described in Section 6.2(e) and Section 6.2(f)) were previously filed with the SEC.
Section 5.16. Tax Representation Letters. Parent shall use its reasonable best
efforts to deliver to Bingham McCutchen LLP and Latham & Watkins LLP, counsel to Parent
(collectively Parents Counsel), and Roberts & Holland LLP and Locke Lord Bissell &
Liddell, LLP, counsel to the Company (collectively the Companys Counsel), a Tax
Representation Letter, dated as of the Closing Date (and, if requested, dated as of the date the
Form S-4 shall have been declared effective by the SEC) and signed by an officer of Parent and
Merger Sub, containing representations of Parent and Merger Sub, and the Company shall use its
reasonable best efforts to deliver to Parents Counsel and the Companys Counsel a Tax
Representation Letter, dated as of the Closing Date (and, if requested, dated as of the date
the Form S-4 shall have been declared effective by the SEC) and signed by an officer of the
Company, containing representations of the Company, in each case (notwithstanding Section 3.24 and
Section 4.23) as shall be reasonably necessary or appropriate to enable the Companys Counsel to
render the opinions described in Section 6.2(f) and Parents Counsel to render the opinions
described in Section 6.2(e).
Section 5.17. NYSE Listing. Parent shall use its reasonable efforts to cause the
Common Units to be issued in the Merger to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
Section 5.18. Financing and Financing Assistance.
(a) Parent shall use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, advisable or proper to consummate and obtain
the Financing on the terms and conditions described in the Commitment Letter (or on revised terms
that are not materially adverse to Parent as compared to the terms and conditions described in the
Commitment Letter and do not contain any provisions which would reasonably be expected to prevent,
materially delay or materially impede the consummation of the Financing or the transactions
contemplated by this Agreement, including any modified or additional conditions to the closing of
such Financing), including using reasonable best efforts to (i) maintain in effect the Commitment
Letter, (ii) satisfy on a timely basis all conditions to the funding of the Financing set forth in
the Commitment Letter, (iii) enforce the terms of the Commitment Letter and (iv) negotiate and
enter into definitive agreements with respect thereto on the terms and conditions contemplated by
the Commitment Letter (including after giving effect to any market flex provisions set forth in
the Fee Letter executed in connection with the Financing). Parent shall not, and shall not permit
Merger Sub to, agree to or permit any
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amendment, replacements, supplement or other modification of, or waive any of its material
rights under, the Commitment Letter without the Companys prior written consent (which consent
shall not be unreasonably withheld, conditioned or delayed); provided that Parent and Merger Sub
may (x) enter into any amendment, replacement, supplement or other modification to or waiver of any
provision of the Commitment Letter that does not contain any provisions that would reasonably be
expected to prevent, materially delay or materially impede the consummation of the Financing or the
transactions contemplated by this Agreement; and (y) amend the Commitment Letter to add lenders,
lead arrangers, book runners, syndication agents or similar entities who had not executed the
Commitment Letter as of the date of this Agreement so long as any such addition would not
reasonably be expected to prevent, materially hinder or materially delay the consummation of the
Financing or the transactions contemplated by this Agreement or the availability of the Financing
under the Commitment Letter. Parent shall exercise its option to extend the commitment to provide
the Financing in accordance with the terms of the Commitment Letter if it becomes necessary to
ensure that the Financing is available at Closing.
(b) In the event any portion of the Financing becomes unavailable on the terms and conditions
described in or contemplated by the Commitment Letter (including after giving effect to the market
flex provisions set forth in the Fee Letter executed in connection with the Financing) for any
reason, Parent shall, in consultation with the Company, use its reasonable best efforts to arrange
to obtain, as promptly as practicable following the occurrence of such event, alternative financing
from the same or alternative sources (the Alternative Financing) in an amount sufficient
to enable Parent to fund the payment of the cash component of the Merger Consideration, which
Alternative Financing would not contain any provisions that would reasonably be expected to
prevent, materially delay or materially impede the consummation of the Financing or the
transactions contemplated by this Agreement, including any conditions to the closing of such
Financing that are materially less favorable to Parent than the conditions to closing in the
Commitment Letter (as set forth therein immediately prior to such Alternative Financing). If an
Alternative Financing is required in accordance with this Section 5.18(b), Parent shall obtain, and
when obtained, provide the Company with a copy of, a new financing commitment that provides for
such Alternative Financing, and thereafter the Commitment Letter as defined herein shall refer to
such financing commitment in respect of the Alternative Financing.
(c) Prior to the Closing, the Company shall use its reasonable best efforts to provide to
Parent and Merger Sub, and shall use its reasonable best efforts to cause its Subsidiaries and the
respective officers, employees, agents and representatives of the Company and its Subsidiaries to,
provide to Parent and Merger Sub cooperation reasonably requested by Parent that is necessary or
reasonably required in connection with the Financing or any other financing that may be arranged by
Parent or ETP (together with the Financing, the Financings, and the sources of the
Financings, the Financing Sources), consisting of the following: (i) using reasonable
best efforts to cause the senior officers and other representatives of the Company and its
Subsidiaries, including without limitation Citrus Corp. (the Company Finance Parties) to
participate in meetings, presentations, road shows, due diligence sessions (including accounting
due diligence sessions), drafting sessions and sessions with rating agencies on reasonable advance
notice to the extent practicable; (ii) assisting with the preparation of appropriate and customary
materials for rating agency presentations, customary debt offering documents and
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customary bank information memoranda in connection with the Financings; (iii) using its
commercially reasonable efforts to assist with the preparation of any pledge and security
documents, any loan agreement, currency or interest hedging agreement, other definitive financing
documents on terms reasonably satisfactory to Parent, or other certificates, legal opinions or
documents as may be reasonably requested by Parent and usual and customary for transactions of the
type contemplated by the Financings, provided that no obligation of any Company Finance Party under
any such document or agreement shall be effective until the Effective Time; (iv) using commercially
reasonable efforts to facilitate the pledging of collateral, provided that no pledge shall be
effective until the Effective Time; (v) using reasonable best efforts to furnish to Parent and
Merger Sub and the Financing Sources, as promptly as reasonably practicable, with financial
statements regarding the Company Finance Parties as may be reasonably requested by Parent,
including all historical financial statements that meet the requirements of Regulation S-X
promulgated under the Securities Act and other financial data reasonably required in connection
with the Financing, including such financial information that Parent reasonably requires for the
preparation of pro-forma financial statements; (vi) providing monthly financial statements to the
extent the Company Finance Parties customarily prepare such financial statements within the time
such statements are customarily prepared; (vii) executing and delivering (or using reasonable best
efforts to obtain from its advisors), and causing the Company Finance Parties to execute and
deliver (or use reasonable best efforts to obtain from its advisors), customary certificates,
accounting comfort letters (including consents of accountants for use of their audit reports in any
financial statements relating to the Financing), legal opinions or other documents and instruments
relating to guarantees and other matters ancillary to the Financings as may be reasonably requested
by Parent as necessary and customary in connection with the Financings, (viii) providing audited
consolidated financial statements of the Company (and any other Company Finance Party that
regularly prepares such financial statements) covering the three (3) fiscal years immediately
preceding the date of any request therefor for which audited consolidated financial statements are
then currently available, unaudited financial statements for any regular quarterly interim fiscal
period or periods of the Company (and any other Company Finance Party that regularly prepares such
financial statements) ended after the date of the most recent audited financial statements and at
least 45 days prior to any request therefor (within 45 days after the end of each such period), and
(ix) requesting that its independent accountants cooperate with and assist Parent and ETP in
preparing customary and appropriate information packages and offering materials as the parties to
the Financings may reasonably request for use in connection with the Financings, in obtaining third
party consents in connection with such financing, and, if applicable, in extinguishing existing
indebtedness of the Company Finance Parties and releasing liens securing such indebtedness, in each
case to take effect at the Effective Time; provided, that the cooperation and actions required by
the Company Finance Parties pursuant to this Section 5.18(c) shall not be required to be taken if
any such cooperation or act (x) causes any representations or warranties of the Company in this
Agreement to be breached, (y) otherwise causes a breach of this Agreement or (z) would cause the
Company Finance Parties any material disruption in its business and the reasonable out-of-pocket
cost and expense of such cooperation and actions under
this Section 5.18(c) shall be borne by the
Parent. Notwithstanding anything to the contrary contained in this Agreement, the Company shall
not be deemed to be in breach of the covenant set forth in this Section 5.18(c) so long as it has
acted in good faith to comply with the cooperation and assistance set forth herein. The Company
may provide Parent with a written notice indicating
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that it has complied with the covenant set forth in this Section 5.18(c) (other than those
items that are not capable of being satisfied prior to Closing) which shall be deemed accepted by
Parent unless Parent shall object to such determination in writing within 5 business days from
receipt of such notice which objection shall specifically identify the area or areas where it
believes that the Company Finance Parties have not satisfied its obligations under this Section
5.18(c) (other than those items that are not capable of being satisfied prior to Closing).
(d) Parent acknowledges and agrees that obtaining the Financing is not a condition to Closing.
For the avoidance of doubt, if the Financing has not been obtained, Parent shall continue to be
obligated, until such time as the Agreement is terminated in accordance with its terms and subject
to the fulfillment or waiver of the condition set forth in Article VI to complete the Merger on the
terms contemplated by this Agreement.
(e) All material non-public information regarding the Company and its Subsidiaries provided to
Parent, Merger Sub, ETP and their respective representatives pursuant to Section 5.18(c) shall be
kept confidential by them in accordance with the Confidentiality Agreement. The Company hereby
consents to the use of all of its and its Subsidiaries names and logos in connection with the
Financing; provided that such names and logos are used solely in a manner that is not intended to
nor is reasonably likely to harm or disparage the Company or any of its Subsidiaries, the
reputation or goodwill of the Company or any of its Subsidiaries or any of their assets, including
their logos and marks.
Section 5.19. Citrus Transfer. Assuming all conditions to consummation of Merger have
been satisfied or will be satisfied upon the Closing, the Company will assume (and Parent will
assign its rights), immediately prior to the Effective Time, the obligations and rights of Parent
under the Amended and Restated Merger Agreement (the ETP Merger Agreement) attached
hereto as Exhibit B and perform Parents obligations under the ETP Merger Agreement, including
consummation of the transactions contemplated thereby (the Citrus Transfer), if all
conditions to consummation set forth in Sections 6.1 and 6.2 of the ETP Merger Agreement have been
satisfied or will be satisfied at closing thereof. Provided that the Company has complied with its
obligations under this Section 5.19 in all material respects, the consummation of the Citrus
Transfer shall not otherwise be a condition to consummation of the Merger.
ARTICLE VI.
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Partys Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to the fulfillment (or
waiver by all parties) at or prior to the Effective Time of the following conditions:
(a) The Company Stockholder Approval shall have been obtained.
(b) No injunction by any court or other tribunal of competent jurisdiction which prohibits the
consummation of the Merger shall have been entered and shall continue to be in effect.
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(c) The FERC Approval, the MDPU Approval (to the extent required by applicable law) and the
MPSC Approval shall have been obtained and shall have become Final Orders, the expiration or
termination of the waiting and review periods (and any extensions thereof) under the HSR Act shall
have occurred (the FERC Approval, the MDPU Approval, the MPSC Approval and the lapse of the waiting
period under the HSR Act being referred to as the Requisite Regulatory Approvals) and
there shall be no Final Order by a federal or state Governmental Entity prohibiting the Merger. As
used herein, the term Final Order means action by the relevant Governmental Entity which
has not been reversed, stayed, enjoined, set aside, annulled or suspended, with respect to which
any waiting period prescribed by Law before the transactions contemplated hereby may be consummated
has expired, and as to which all conditions (other than the conditions the satisfaction of which is
in control of a party) to the consummation of such transactions prescribed by law has been
satisfied.
(d) The Common Units to be issued in the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(e) The Form S-4 shall have been declared effective by the SEC under the Securities Act and no
stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
Section 6.2. Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the fulfillment of, or the
waiver by the Company on or prior to the Effective Time of, the following conditions:
(a) The representations and warranties of Parent and Merger Sub set forth in (i) this
Agreement (other than Section 4.2, Section 4.3 and Section 4.10(b)) shall be true and correct both
at and as of the date of this Agreement and at and as of the Closing Date as though made at and as
of the Closing Date (without regard to materiality, Parent Material Adverse Effect and similar
qualifiers contained in such representations and warranties), except where such failures to be so
true and correct would not, in the aggregate, have a Parent Material Adverse Effect, (ii) Section
4.3 shall be true and correct in all material respects both at and as of the date of this Agreement
and at and as of the Closing Date as though made at and as of the Closing Date, (iii) Section 4.2
shall be true and correct both at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date, except for de minimis inaccuracies, and (iv)
Section 4.10(b) shall be true and correct both at and as of the date of this Agreement and at and
as of the Closing Date as though made at and as of the Closing Date; provided, however, that
representations and warranties that are made as of a particular date or period shall be true and
correct (in the manner set forth in clauses (i), (ii), (iii) and (iv), as applicable) only as of
such date or period.
(b) Parent shall have in all material respects performed all obligations and complied with all
covenants required by this Agreement to be performed or complied with by it prior to the Effective
Time.
(c) Since the date of this Agreement, there shall not have occurred any Parent Material
Adverse Effect or any event or development that could, individually or in the aggregate, reasonably
be expected to result in a Parent Material Adverse Effect.
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(d) Parent shall have delivered to the Company a certificate, dated the Closing Date and
signed by the Chief Executive Officer or another senior officer of its general partner, certifying
to the effect that the conditions set forth in Section 6.2(a), Section 6.2(b) and Section 6.2(c)
have been satisfied.
(e) Parent shall have received from Parents Counsel, the following written opinions dated as
of the Closing Date and upon which the Company shall be expressly entitled to rely: (i) an opinion
from Bingham McCutchen LLP to the effect that for U.S. federal income tax purposes, Parent should
not be treated as an investment company for purposes of section 721(b) of the Code and (ii) an
opinion from Latham & Watkins LLP to the effect that for U.S. federal income tax purposes, 90% of
the current gross income of Parent constitutes qualifying income within the meaning of Section
7704(d) of the Code and Parent will be treated as a partnership for federal income tax purposes
pursuant to Section 7704(c) of the Code. In rendering such opinion, Parents Counsel shall be
entitled to rely upon assumptions, representations, warranties and covenants, including those
contained in this Agreement and in the Tax Representation Letters described in Section 5.16.
(f) The Company shall have received from the Companys counsel a written opinion dated as of
the Closing Date to the effect that for U.S. federal income tax purposes the Merger should qualify
under Section 721(a) of the Code with respect to holders of Company Common Stock to the extent they
receive Common Units as Merger Consideration; provided however, this result may not apply to the
extent such holders receive money or other property, other than an operating cash flow distribution
(as such term is defined in Treasury regulation section 1.707-4), from Parent on any date through
and including the second anniversary of the Closing. In rendering such opinion, the Companys
Counsel shall be entitled to rely upon assumptions, representations, warranties and covenants,
including those contained in this Agreement and in the Tax Representation Letters described in
Section 5.16 and on the opinions of Parents Counsel described in Section 6.2(e).
Section 6.3. Conditions to Obligation of Parent to Effect the Merger. The obligation
of Parent to effect the Merger is further subject to the fulfillment of, or the waiver by Parent on
or prior to the Effective Time of, the following conditions:
(a) The representations and warranties of the Company set forth in (i) this Agreement (other
than Section 3.2, Section 3.3(a)-(d), Section 3.10(b) and Section 3.21) shall be true and correct
both at and as of the date of this Agreement and at and as of the Closing Date as though made at
and as of the Closing Date (without regard to materiality, Company Material Adverse Effect and
similar qualifiers contained in such representations and warranties), except where such failures to
be so true and correct would not, in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (ii) Section 3.3(a) (c) shall be true and correct in all material
respects both at and as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date, (iii) Section 3.2 shall be true and correct at and as of the
date of this Agreement and at and as of the Closing Date as though made at and as of the Closing
Date, except for de minimis inaccuracies, and (iv) Section 3.3(d), Section 3.10(b) and Section 3.21
shall be true and correct both at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date; provided, however, that representations and
warranties that are made as of a particular date or period shall be true and
73
correct (in the manner set forth in clauses (i), (ii) and (iii), as applicable) only as of
such date or period.
(b) The Company shall have in all material respects performed all obligations and complied
with all covenants required by this Agreement to be performed or complied with by it prior to the
Effective Time.
(c) Since the date of this Agreement, there shall not have occurred any Company Material
Adverse Effect or any event or development that would, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect.
(d) The Company shall have delivered to Parent a certificate, dated the Closing Date and
signed by its Chief Executive Officer or another senior officer, certifying to the effect that the
conditions set forth in Section 6.3(a), Section 6.3(b) and Section 6.3(c) have been satisfied.
Section 6.4. Intentionally Omitted.
Section 6.5. Frustration of Closing Conditions. Neither the Company nor Parent may
rely, either as a basis for not consummating the Merger or terminating this Agreement and
abandoning the Merger, on the failure of any condition set forth in Section 6.1, Section 6.2 or
Section 6.2(f), as the case may be, to be satisfied if such failure was caused by such partys
willful and intentional material breach of any material provision of this Agreement.
ARTICLE VII.
TERMINATION
Section 7.1. Termination or Abandonment. Notwithstanding anything in this Agreement
to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective
Time, whether before or after any approval of the Merger by the stockholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either Parent or the Company if the Merger shall not have been consummated on or prior
to June 30, 2012 (the End Date), provided, however, that if all of the conditions to
Closing, other than the condition set forth in Section 6.1(c), shall have been satisfied or shall
be capable of being satisfied at such time, the End Date may be extended by Parent or the Company
from time to time by written notice to the other party up to a date not beyond December 31, 2012,
the latest of any of which dates shall thereafter be deemed to be the End Date; and provided,
further, that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be
available to a party if the failure of the Closing to occur by such date shall be due to the
material breach by such party of any representation, warranty, covenant or other agreement of such
party set forth in this Agreement;
(c) by either the Company or Parent if an injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger and such injunction
shall have become final and non-appealable; provided that the party seeking to
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terminate this Agreement pursuant to this Section 7.1(c) shall have used its reasonable best
efforts to remove such injunction to the extent such party is required to use its reasonable best
efforts pursuant to this Agreement;
(d) by either the Company or Parent if the Stockholders Meeting (including any adjournments
or postponements thereof) shall have concluded and the Company Stockholder Approval shall not have
been obtained;
(e) by the Company, if Parent shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would result in a failure of a condition set forth in Section 6.1
or Section 6.2 and (ii) by its nature, cannot be cured prior to the End Date or, if by its nature
such breach or failure is capable of being cured by the End Date, Parent does not diligently
attempt or ceases to diligently attempt to cure such breach or failure after receiving written
notice from the Company describing such breach or failure in reasonable detail (provided that the
Company is not then in material breach of any representation, warranty, covenant or other agreement
contained herein);
(f) by Parent, if the Company shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would result in a failure of a condition set forth in Section 6.1
or Section 6.3 and (ii) by its nature, cannot be cured prior to the End Date or, if by its nature
such breach or failure is capable of being cured by the End Date, the Company does not diligently
attempt or ceases to diligently attempt to cure such breach or failure after receiving written
notice from Parent describing such breach or failure in reasonable detail (provided that Parent is
not then in material breach of any representation, warranty, covenant or other agreement contained
herein);
(g) by Parent, (i) prior to the Company Stockholder Approval, in the event of a Change of
Recommendation or if the Board of Directors of the Company shall have approved or recommended to
its shareholders an Acquisition Transaction, or (ii) the Company shall have willfully and
materially breached any of its obligations under Section 5.4; and
(h) by the Company, prior to obtaining the Company Stockholder Approval and if the Company has
complied with its obligations under Section 5.4, in order to enter into a definitive agreement
with respect to a Superior Offer; provided that any such purported termination by the Company
pursuant to this Section 7.1(h) shall be void and of no force or effect unless the Company pays to
Parent the expense reimbursement in accordance with Section 7.3(a) and the Breakup Fee in
accordance with Section 7.3(c).
Section 7.2. Effect of Termination. In the event of termination of this Agreement
pursuant to Section 7.1, this Agreement shall terminate (except for the provisions of Section 7.3
and Article VIII), and there shall be no other liability on the part of the Company or Parent to
the other except as provided in Section 7.3 and, subject to Section 7.3(h), liability arising out
of or the result of, fraud or any willful or intentional breach of any covenant or agreement or
willful or intentional breach of any representation or warranty in this Agreement occurring prior
to
75
termination or as provided for in the Confidentiality Agreement, in which case the aggrieved
party shall be entitled to all rights and remedies available at law or in equity.
Section 7.3. Expense Reimbursement; Breakup Fee.
(a) If this Agreement is terminated (i) by either the Company or Parent pursuant to Section
7.1(d) and (A) prior to such termination, any person (other than Parent or its affiliates) shall
have made an Acquisition Proposal, which shall have been publicly announced or disclosed or
otherwise communicated to the Company, the Board of Directors of the Company or any Representative
of the Company (or any person shall have publicly announced a bona fide intention, whether or not
conditional, to make an Acquisition Proposal), and such Acquisition Proposal shall not have been
withdrawn prior to such termination and (B) within twelve months after such termination of this
Agreement, the Company shall have consummated, or shall have entered into an agreement to
consummate (which may be consummated after such twelve-month period), an Acquisition Transaction,
(ii) by the Company pursuant to Section 7.1(d), (iii) by Parent pursuant to Section 7.1(f), (iv) by
Parent pursuant to Section 7.1(g), or (v) by the Company pursuant to Section 7.1(h), then the
Company shall, promptly upon written demand by Parent (and in any event no later than two business
days after such written demand is delivered to the Company) reimburse Parent, by wire transfer of
same day federal funds to the account specified by Parent, for all out-of-pocket fees and expenses
incurred or paid by or on or behalf of Parent and Merger Sub in connection with the Merger or
related to the preparation, negotiation, execution and performance of this Agreement, the
Commitment Letter, the Fee Letter and the Support Agreements, including all fees and expenses of
counsel, financial advisors, accountants, experts, and consultants retained by Parent or Merger
Sub, and all commitment and other fees of the financing sources in connection with the Financings,
such amount not to exceed $54.0 million.
(b) If this Agreement is terminated by the Company pursuant to Section 7.1(e) (other than for
a failure to cause the Closing to occur as a result of Parents failure to obtain the Financing or
any Alternative Financing), then Parent shall promptly upon written demand by the Company (and in
any event no later than two business days after such written demand is delivered to Parent)
reimburse the Company, by wire transfer of same day federal funds to the account specified by the
Company, for all out-of-pocket fees and expenses incurred or paid by or on or behalf of the Company
in connection with the Merger or related to the preparation, negotiation, execution and performance
of this Agreement, including all fees and expenses of counsel, financial advisors, accountants,
experts, and consultants retained by the Company, such amount not to exceed $54.0 million.
(c) If this Agreement is terminated (i) by Parent pursuant to Section 7.1(f), (ii) by Parent
pursuant to Section 7.1(g) or (iii) by the Company pursuant to Section 7.1(h), then the Company
shall pay to Parent the Breakup Fee (x) within two business days after termination of this
Agreement in the case of a termination pursuant to clauses (i) and (ii) above and (y) upon
termination of this Agreement, and as a condition to the effectiveness of such termination, in the
case of a termination pursuant to clause (iii) above.
(d) If this Agreement is terminated by the Company or Parent pursuant to Section 7.1(b) or
Section 7.1(d) or by Parent pursuant to Section 7.1(f) and (i) prior to the Company
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Stockholder Approval, any person (other than Parent or its affiliates) shall have made an
Acquisition Proposal which shall have been publicly announced or disclosed or otherwise
communicated to the Company, the Board of Directors of the Company or any Representative of the
Company (or any person shall have publicly announced a bona fide intention, whether or not
conditional, to make an Acquisition Proposal) and such Acquisition Proposal shall not have been
withdrawn prior to the Company Stockholder Approval and (ii) within twelve months after such
termination of this Agreement, the Company shall have consummated, or shall have entered into an
agreement to consummate (which may be consummated after such twelve-month period), an Acquisition
Transaction, then the Company shall pay to Parent the Breakup Fee, by wire transfer of same day
federal funds to the account specified by Parent, on the date such Acquisition Transaction is
consummated, or, if earlier, contemporaneously with or immediately after the entry into of any
binding agreement to consummate the Acquisition Transaction.
(e) If this Agreement is terminated by the Company pursuant to Section 7.1(e) (other than for
a failure to cause the Closing to occur as a result of Parents failure to obtain the Financing or
any Alternative Financing), then Parent shall pay to the Company the Breakup Fee in immediately
available funds within two (2) business days after termination of this Agreement.
(f) Solely for purposes of this Section 7.3, Acquisition Transaction shall have the
meaning ascribed thereto in Section 5.4, except that all references to twenty-five percent (25%)
shall be changed to fifty percent (50%).
(g) As used in this Agreement, Breakup Fee means $181.3 million.
(h) Upon payment of (i) the Breakup Fee to Parent pursuant to Section 7.3(c) or Section 7.3(d)
and any expense reimbursement required pursuant to Section 7.3(a), the Company shall have no
further liability with respect to this Agreement or the transactions contemplated hereby to Parent
or its stockholders and (ii) upon payment of the Breakup Fee to the Company pursuant to Section
7.3(e) and any expense reimbursement required pursuant to Section 7.3(b), Parent shall have no
further liability pursuant to this Agreement or the transactions contemplated hereby to the Company
or its stockholders; provided, that nothing herein shall release any party from liability
arising out of or the result of, fraud or any willful or intentional breach of any covenant or
agreement or willful or intentional breach of any representation or warranty in this Agreement and
provided further that whether or not the Breakup Fee has been paid, nothing in this
Agreement shall release Parent from any liabilities in the event that (i) all of the conditions to
Closing set forth in Section 6.1 and Section 6.3 have been satisfied (other than conditions that
can only be satisfied as of the Closing) and Parent does not cause the Closing to occur or (ii) the
Closing does not occur as a result of a breach by Parent of its obligations under Section 5.8. The
parties acknowledge and agree that in no event shall the Company or Parent be required to pay the
Breakup Fee, as applicable, on more than one occasion. In addition, the parties acknowledge that
the agreements contained in this Section 7.3 are an integral part of the transactions contemplated
by this Agreement and are not a penalty, and that, without these agreements, neither party would
enter into this Agreement. If the Company or Parent, as the case may be, fails to pay promptly the
amounts due pursuant to this Section 7.3, the Company or Parent, as the case may be, will also pay
to Parent or the Company, as the case may be, such partys reasonable costs and expenses (including
legal fees and expenses) in connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on
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the unpaid amount under this Section 7.3, accruing from its due date, at an interest rate per
annum equal to two percentage points in excess of the prime commercial lending rate quoted by The
Wall Street Journal. Any change in the interest rate hereunder resulting from a change in such
prime rate will be effective at the beginning of the date of such change in such prime rate.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. No Survival. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger, except for covenants and agreements which contemplate performance after the
Effective Time or otherwise expressly by their terms survive the Effective Time.
Section 8.2. Expenses. Except as set forth in Section 7.3, whether or not the Merger
is consummated, all costs and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring or required to incur such
expenses, except that the HSR Act filing fees and expenses incurred in connection with the
printing, filing and mailing of the Proxy Statement and Form S-4 (including applicable SEC filing
fees) shall be borne equally by Parent and the Company.
Section 8.3. Counterparts; Effectiveness. This Agreement may be executed in two or
more counterparts (including by facsimile), each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument, and shall become
effective when one or more counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 8.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 8.5. Jurisdiction; Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement were not performed, or
were threatened to be not performed, in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that, in addition to any other remedy that may be available to
it, including monetary damages, each of the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement exclusively in the Delaware Court of Chancery and any state appellate
court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to
accept jurisdiction over a particular matter, any state or federal court within the State of
Delaware), and all such rights and remedies at law or in equity shall be cumulative, except as may
be limited by Section 7.3. The parties further agree that no party to this Agreement shall be
required to obtain, furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 8.5 and each party waives any
objection to the imposition of such relief or any right it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument. In addition, each of the
78
parties hereto irrevocably agrees that any legal action or proceeding with respect to this
Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and obligations arising hereunder brought
by the other party hereto or its successors or assigns, shall be brought and determined exclusively
in the Delaware Court of Chancery and any state appellate court therefrom within the State of
Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any state or federal court within the State of Delaware). Each of the parties hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and
agrees that it will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties
hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any
claim that it is not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to serve in accordance with this Section 8.5, (b) any claim that it
or its property is exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by the applicable Law, any claim that (i) the suit, action or proceeding
in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced
in or by such courts. Notwithstanding the foregoing, each of the parties hereto agrees that it
will not bring or support any action, cause of action, claim, cross-claim or third-party claim of
any kind or description, whether in law or in equity, against the Financing Sources in any way
relating to this Agreement or any of the transactions contemplated by this Agreement, including but
not limited to any dispute arising out of or relating in any way to the Commitment Letter or the
performance thereof, in any forum other than the Supreme Court of the State of New York, County of
New York, or, if under applicable law exclusive jurisdiction is vested in the Federal courts, the
United States District Court for the Southern District of New York (and appellate courts thereof).
Section 8.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.7. Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission, by reliable overnight delivery service (with
proof of service) or hand delivery, addressed as follows:
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To Parent or Merger Sub:
Energy Transfer Equity, L.P.
3738 Oak Lawn Avenue
Dallas, Texas 75219
Facsimile: (214) 981-0703
Attention: General Counsel
with copies to:
Latham & Watkins LLP
717 Texas Avenue, 16th Floor
Houston, Texas 77002
Facsimile: (713) 546-5401
Attention: William N. Finnegan IV, Esq.
Sean T. Wheeler, Esq.
To the Company:
Southern Union Company
5444 Westheimer Road
Houston, Texas 77056
Facsimile: (713) 989-1213
Attention: General Counsel
with copies to:
Locke Lord Bissell & Liddell
2200 Ross Avenue
Suite 2200
Dallas, Texas 75230
Facsimile: (214) 740-8800
Attention: Don M. Glendenning, Esq.
Dovi Adlerstein, Esq.
Morris, Nichols, Arsht & Tunnell LLP
1201 N. Market Street
18th Floor
Wilmington, Delaware 19801
Attention: Fredrick H. Alexander, Esq.
Melissa DiVincenzo, Esq.
80
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Facsimile: (212) 558-3588
Attention: Joseph B. Frumkin, Esq.
George J. Sampas, Esq.
or to such other address as any party shall specify by written notice so given, and such notice
shall be deemed to have been delivered as of the date so telecommunicated or personally delivered.
Any party to this Agreement may notify any other party of any changes to the address or any of the
other details specified in this paragraph; provided, however, that such notification shall only be
effective on the date specified in such notice or five (5) business days after the notice is given,
whichever is later. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt of the notice as of the
date of such rejection, refusal or inability to deliver.
Section 8.8. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties; provided, however, that (i) Merger Sub may assign
any of its rights and delegate any of its obligations hereunder to a wholly owned direct or
indirect Subsidiary of Parent without the prior written consent of the Company and (ii) Parent may
assign any of its rights (but not delegate any of its obligations) under this Agreement to one or
more wholly owned direct or indirect subsidiaries of Parent without the prior written consent of
the Company, so long as, in each of (i) and (ii), such assignment does not delay the Closing.
Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Section 8.9. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 8.10. Entire Agreement. This Agreement together with the exhibits hereto,
schedules hereto and the Confidentiality Agreement constitute the entire agreement, and supersede
all other prior agreements and understandings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof and thereof, and this Agreement is not intended
to grant standing to any person other than the parties hereto. In connection with the execution of
this Agreement, Parent and the Company hereby waive the applicability of the first paragraph on
page four of the Confidentiality Agreement to Parent and its affiliates from and after the date
hereof.
Section 8.11. Amendments; Waivers. At any time prior to the Effective Time, any
provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub or, in
the case of a waiver, by the party against whom the waiver is to be effective;
81
provided, however, that after receipt of Company Stockholder Approval, if any such amendment
or waiver shall by applicable Law or in accordance with the rules and regulations of the NYSE
require further approval of the stockholders of the Company, the effectiveness of such amendment or
waiver shall be subject to the approval of the stockholders of the Company. Notwithstanding the
foregoing, no failure or delay by the Company or Parent in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or
further exercise of any other right hereunder.
Section 8.12. Headings. Headings of the Articles and Sections of this Agreement are
for convenience of the parties only and shall be given no substantive or interpretive effect
whatsoever. The table of contents to this Agreement is for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Section 8.13. No Third Party Beneficiaries. Each of Parent, Merger Sub and the
Company agrees that (a) their respective representations, warranties, covenants and agreements set
forth herein are solely for the benefit of the other party hereto, in accordance with and subject
to the terms of this Agreement, and (b) except for Section 5.11, and except for Section 8.6 and the
final sentence of Section 8.5 (which are enforceable by each of the Financing Sources and its
successors and assigns) this Agreement is not intended to, and does not, confer upon any person
other than the parties hereto any rights or remedies hereunder, including the right to rely upon
the representations and warranties set forth herein.
Section 8.14. Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. Whenever the words include, includes or including are used in this
Agreement, they shall be deemed to be followed by the words without limitation. The words
hereof, herein and hereunder and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this Agreement, unless
the context otherwise requires. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well as to the feminine
and neuter genders of such term. Any statute defined or referred to herein means such statute as
from time to time amended, modified or supplemented, including by succession of comparable
successor statutes. Each of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be
construed as if it is drafted by all the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any of the provisions of this
Agreement. All references herein to the date hereof, the date of this Agreement or similar
references shall be deemed to refer to the date of execution of the Original Agreement.
Section 8.15. Definitions.
(a) References in this Agreement to Subsidiaries of any party means any corporation,
partnership, association, trust or other form of legal entity of which (i) fifty percent (50%) or
more of the voting power of the outstanding voting securities are on the date hereof directly or
indirectly owned by such party or (ii) such party or any Subsidiary of such party is a
82
general partner on the date hereof (excluding partnerships in which such party or any
Subsidiary of such party does not have a majority of the voting interests in such partnership other
than ETP which will be deemed a Subsidiary of Parent solely for purposes of Article IV hereof).
References in this Agreement (except as specifically otherwise defined) to affiliates
means, as to any person, any other person which, directly or indirectly, controls, or is controlled
by, or is under common control with, such person; provided, however, that (other
than for purposes of Section 4.21) the term affiliate shall not include ETP, Regency, or
any of their respective Subsidiaries. As used in this definition, control (including,
with its correlative meanings, controlled by and under common control with)
means the possession, directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of securities or partnership or
other ownership interests, by contract or otherwise. References in this Agreement (except as
specifically otherwise defined) to person means an individual, a corporation, a
partnership, a limited liability company, an association, a trust or any other entity, group (as
such term is used in Section 13 of the Exchange Act) or organization, including a Governmental
Entity, and any permitted successors and assigns of such person. As used in this Agreement,
knowledge means (i) with respect to Parent, the actual knowledge, after reasonable
investigation, of the executive officers of Parent or the individuals listed in Section 8.15(a) of
the Parent Disclosure Schedule and (ii) with respect to the Company, the actual knowledge, after
reasonable investigation, of the executive officers of the Company or the individuals listed on
Section 8.15(a) of the Company Disclosure Schedule. As used in this Agreement, business
day means any day other than a Saturday, Sunday or other day on which the banks in New York
are authorized by law or executive order to be closed. References in this Agreement to specific
laws or to specific provisions of laws shall include all rules and regulations promulgated
thereunder. Any statute defined or referred to herein or in any agreement or instrument referred
to herein shall mean such statute as from time to time amended, modified or supplemented, including
by succession of comparable successor statutes. As used in this Agreement, Drop-Down Agreements
shall mean the ETP Merger Agreement and related financing arrangements entered into in order to
satisfy the obligations under the ETP Merger Agreement.
(b) Each of the following terms is defined in the section of this Agreement set forth opposite
such term:
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401(k) Plan
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Section 5.7(c) |
Acquired Shares
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Section 2.1(a) |
Acquisition Proposal
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Section 5.4 |
Acquisition Transaction
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Section 5.4 |
affiliates
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Section 8.15(a) |
Agreement
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Preamble |
Alternative Financing
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Section 5.18(b) |
Antitrust Approvals
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Section 5.8(d) |
Available Cash Election Amount
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Section 2.1(a)(i) |
Benefit Plans
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Section 5.7(b) |
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Breakup Fee
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Section 7.3(g) |
business day
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Section 8.15(a) |
Cancelled Shares
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Section 2.1(b) |
Certificate of Merger
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Section 1.3 |
Cash Election
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Section 2.1(a)(i) |
Cash Election Amount
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Section 2.1(a)(i) |
Cash Election Share
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Section 2.1(a)(i) |
Cash Fraction
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Section 2.1(a)(i) |
Change of Recommendation
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Section 5.4 |
Citrus Transfer
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Section 5.19 |
Class E Units
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Section 4.2(a) |
Closing Date
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Section 1.2 |
Closing
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Section 1.2 |
Code
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Recitals |
Common Unit Election
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Section 2.1(a)(ii) |
Common Unit Election Share
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Section 2.1(a)(ii) |
Common Units
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Section 2.1(a)(i) |
Company
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Preamble |
Company 2011 Budget
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Section 5.1(b)(iv) |
Company Approvals
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Section 3.3(b) |
Company Benefit Plans
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Section 3.9(a) |
Company Cash Funds
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Section 2.3(a) |
Company Common Stock
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Section 2.1(a) |
Company Disclosure Schedule
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Preamble to Article III |
Company Employees
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Section 3.15(a) |
Company Equity Awards
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Section 3.2(e) |
Company Finance Parties
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Section 5.18(c) |
Company Leased Real Property
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Section 3.17(b) |
Company Material Adverse Effect
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Section 3.1(b) |
Company Material Contracts
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Section 3.20(a) |
Company Organizational Documents
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Section 3.1(c) |
Company Owned Real Property
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Section 3.17(a) |
Company Permits
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Section 3.7(b) |
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Company Permitted Lien
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Section 3.3(c) |
Company Preferred Stock
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Section 3.2(a) |
Company Real Property Leases
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Section 3.17(b) |
Company Recommendation
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Section 3.3(a) |
Company RSU
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Section 5.6(c) |
Company SEC Documents
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Section 3.4(a) |
Company Stock Award
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Section 5.6(a) |
Company Stock Plans
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Section 5.6(a) |
Company Stockholder Approval
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Section 3.18 |
Company Systems
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Section 3.8(b)(i) |
Companys Counsel
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Section 5.16 |
Confidentiality Agreement
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Section 5.3(b) |
Contract
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Section 3.20(a) |
control
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Section 8.15(a) |
Controlled Group Liability
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Section 3.9(b) |
CrossCountry
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Section 3.3(d) |
Current Employees
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Section 5.7(a) |
Deemed Shares
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Section 1.8 |
Delaware LLC Act
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Section 3.2(f) |
Delaware LP Act
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Section 3.2(f) |
Derivative RSU Consideration
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Section 5.6(c) |
DGCL
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Section 1.1 |
Dissenting Shares
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Section 2.1(f) |
Effective Time
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Section 1.3 |
Election Deadline
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Section 2.2(b) |
Election Form
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Section 2.2(a) |
Election Form Record Date
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Section 2.2(a) |
End Date
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Section 7.1(b) |
Environment
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Section 3.8(b)(ii) |
Environmental Law
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Section 3.8(b)(iii) |
ERISA
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Section 5.7(b) |
ERISA Affiliate
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Section 3.9(a) |
ERISA Effective Date
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Section 5.7(c) |
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ETP
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Section 4.2(a) |
ETP Certificate of Limited Partnership
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Section 4.1(c) |
ETP Common Units
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Section 4.2(a) |
ETP Equity Plans
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Section 4.2(a) |
ETP General Partner Interest
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Section 4.2(a) |
ETP Merger Agreement
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Section 5.19 |
ETP Partnership Agreement
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Section 4.1(c) |
Exchange Ratio
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Section 2.1(a)(i) |
Excess Shares
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Section 2.1(d) |
Exchange Act
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Section 3.3(b) |
Exchange Agent
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Section 2.3(a) |
Exchange Fund
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Section 2.3(a) |
Exchange Ratio
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Section 2.1(a)(i) |
FERC Approval
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Section 3.3(b) |
FERC
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Section 3.3(b) |
Financing
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Section 4.22 |
Financing Sources
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Section 5.18(c) |
Form S-4
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Section 3.12 |
FPA
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Section 3.3(b) |
GAAP
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Section 3.4(b) |
General Partner Interest
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Section 4.2(a) |
Governmental Entity
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Section 3.3(b) |
Hazardous Materials
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Section 3.8(b)(iv) |
HSR Act
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Section 3.3(b) |
ICA
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Section 3.13(a) |
Indebtedness
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Section 5.1(b) |
Intellectual Property
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Section 3.16 |
Intervening Event
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Section 5.4(h)(iii) |
IT Assets
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Section 3.16 |
knowledge
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Section 8.15(a) |
Law
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Section 3.7(a) |
Laws
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Section 3.7(a) |
Lien
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Section 3.3(c) |
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Mailing Date
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Section 2.2(a) |
MDPU Approval
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Section 3.3(b) |
Merger Consideration
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Section 2.1(a) |
Merger Sub
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Preamble |
Merger
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Recitals |
MPSC Approval
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Section 3.3(b) |
NGA
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Section 3.13(a) |
NGPA
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Section 3.13(c) |
No Election Shares
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Section 2.2(b) |
Noncompetition Persons
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Section 3.23 |
NYSE
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Section 3.2(e) |
Original Merger Agreement
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Recitals |
Parent
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Preamble |
Parent Approvals
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Section 4.3(b) |
Parent Certificate of Limited Partnership
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Section 4.1(c) |
Parent Disclosure Schedule
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Preamble to Article IV |
Parent Employees
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Section 4.15(a) |
Parent Equity Plans
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Section 4.2(a) |
Parent Leased Real Property
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Section 4.16(b) |
Parent Material Adverse Effect
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Section 4.1(b) |
Parent Material Contracts
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Section 4.19(a) |
Parent Organizational Documents
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Section 4.1(c) |
Parent Owned Real Property
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Section 4.16(a) |
Parent Partnership Agreement
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Section 4.1(c) |
Parent Permits
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Section 4.7(b) |
Parent Permitted Lien
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Section 4.3(c) |
Parent Real Property Leases
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Section 4.16(b) |
Parent SEC Documents
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Section 4.4(a) |
Parent Systems
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Section 4.8(b) |
Parent Transaction Documents
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Section 4.3(a) |
Parents Counsel
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Section 5.16 |
Per Share Cash Consideration
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Section 2.1(a)(i) |
Per Share Common Unit Consideration
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Section 2.1(a)(ii) |
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Permitted Encumbrances
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Section 3.17(a) |
person
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Section 8.15(a) |
Proxy Statement
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Section 3.12 |
PUHCA
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Section 3.13(a) |
Regency
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Section 5.8(d) |
Regulatory Law
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Section 5.8(g) |
Remedies Exceptions
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Section 3.3(a) |
Representatives
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Section 5.3(a) |
Requisite Regulatory Approvals
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Section 6.1(c) |
Restricted Shares
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Section 5.6(b) |
Rights-of-Way
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Section 3.2(h) |
Sarbanes-Oxley Act
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Section 3.5 |
SEC
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Section 3.4(a) |
Securities Act
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Section 3.3(b) |
Series A Preferred Units
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Section 4.2(a) |
Share
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Section 2.1(a) |
Shortfall Amount
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Section 2.1(a)(ii) |
Stockholders Meeting
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Section 5.5(b) |
Subsidiaries
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Section 8.15(a) |
Superior Offer
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Section 5.4(f)(iv) |
Support Agreements
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Recitals |
Surviving Corporation
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Section 1.1 |
Takeover Laws
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Section 3.18 |
Tax Representation Letter
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Section 5.16 |
Tax Return
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Section 3.14(h) |
Taxes
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Section 3.14(h) |
Termination Date
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Section 5.1(a) |
under common control with
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Section 8.15(a) |
Unit Issuance
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Section 4.3(a) |
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the date first above written.
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ENERGY TRANSFER EQUITY, L.P.
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By: |
LE GP, L.L.C., its general partner
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By: |
/s/ John W. McReynolds
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Name: |
John W. McReynolds |
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Title: |
President and Chief Financial Officer |
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SIGMA ACQUISITION CORPORATION
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By: |
/s/ John W. McReynolds
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Name: |
John W. McReynolds |
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Title: |
President and Chief Financial Officer |
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SOUTHERN UNION COMPANY
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By: |
/s/ Eric D. Herschmann
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Name: |
Eric D. Herschmann |
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Title: |
President and Chief Operating Officer |
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exv2w2
Exhibit 2.2
Execution Version
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
by and among
ENERGY TRANSFER PARTNERS, L.P.,
CITRUS ETP ACQUISITION, L.L.C.,
ENERGY TRANSFER EQUITY, L.P.,
SOUTHERN UNION COMPANY,
and
CROSSCOUNTRY ENERGY, LLC
July 19, 2011
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INTERPRETATIONS |
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1.1 Definitions |
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1.2 Interpretations |
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2 |
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ARTICLE II THE MERGER; CONVERSION OF INTERESTS; CLOSING |
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2.1 The Merger |
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3 |
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2.2 Effective Time |
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3 |
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2.3 Effects of the Merger |
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3 |
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2.4 Effect of Merger |
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3 |
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2.5 Limited Liability Company Agreement of the Surviving Entity |
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3 |
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2.6 Directors |
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2.7 Officers |
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2.8 Borrowing by ETP; Tax Treatment of Merger and Cash Consideration |
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2.9 Time and Place of Closing |
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4 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF ETE |
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3.1 Organization; Qualification |
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3.2 Authority; Enforceability |
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3.3 Non-Contravention |
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3.4 Governmental Approvals |
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3.5 Capitalization |
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3.6 Ownership of CrossCountry Energy; Citrus |
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3.7 Compliance with Law |
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3.8 Title to Properties and Assets |
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3.9 Rights-of-Way |
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3.10 Financial Statements |
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3.11 Absence of Certain Changes |
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3.12 Environmental Matters |
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3.13 Material Contracts |
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3.14 Legal Proceedings |
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3.15 Permits |
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3.16 Taxes |
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3.17 Employee Benefits |
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3.18 Brokers Fee |
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3.19 Regulatory Status |
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3.20 Intellectual Property |
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3.21 Insurance |
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-i-
TABLE OF CONTENTS
(continued)
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3.22 Disclosure of Material Facts |
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3.23 Affiliate Transactions |
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3.24 ROFO Interest |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ETP |
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4.1 Organization; Qualification |
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4.2 Authority; Enforceability; Valid Issuance |
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4.3 Non-Contravention |
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4.4 Governmental Approvals |
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4.5 Matters Relating to the Merger |
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4.6 Brokers Fee |
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ARTICLE V COVENANTS OF THE PARTIES |
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5.1 Conduct of Business |
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5.2 Notice of Certain Events |
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5.3 Access to Information |
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5.4 Governmental Approvals |
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5.5 Expenses |
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5.6 Further Assurances |
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5.7 Public Statements |
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5.8 Tax Matters |
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5.9 Joinder |
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5.10 Right of First Offer |
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ARTICLE VI CONDITIONS TO CLOSING |
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6.1 Conditions to Obligations of Each Party |
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6.2 Conditions to Obligations of ETE |
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6.3 Conditions to Obligations of ETP |
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ARTICLE VII TERMINATION RIGHTS |
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7.1 Termination Rights |
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7.2 Effect of Termination |
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-ii-
TABLE OF CONTENTS
(continued)
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ARTICLE VIII INDEMNIFICATION |
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8.1 Indemnification by Southern Union |
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8.2 Indemnification by ETP |
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8.3 Limitations and Other Indemnity Claim Matters |
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8.4 Indemnification Procedures |
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8.5 No Reliance |
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8.6 ETE Guarantee |
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ARTICLE IX GOVERNING LAW AND CONSENT TO JURISDICTION |
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9.1 Governing Law |
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9.2 Jurisdiction; Specific Enforcement; Enforcement of Rights |
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9.3 Waiver of Jury Trial |
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ARTICLE X GENERAL PROVISIONS |
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10.1 Amendment and Modification; Conflicts Committee Control |
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10.2 Waiver of Compliance; Consents |
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10.3 Notices |
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10.4 Assignment |
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10.5 Third Party Beneficiaries |
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10.6 Entire Agreement |
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10.7 Severability |
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10.8 Representation by Counsel |
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10.9 Disclosure Schedules |
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10.10 Facsimiles; Counterparts |
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-iii-
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Exhibits |
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Exhibit A
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Definitions |
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Exhibit B
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Form of ETP Partnership Agreement Amendment |
-iv-
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this Agreement), dated as of July 19,
2011 (the Execution Date), by and among Energy Transfer Partners, L.P., a Delaware limited
partnership (ETP), and, upon its joinder hereto pursuant to Section 5.9, Citrus ETP
Acquisition, L.L.C., a Delaware limited liability company and wholly-owned subsidiary of ETP (ETP
Merger Sub), on the one hand, and Energy Transfer Equity, L.P., a Delaware limited partnership
(ETE) and, upon their joinder hereto pursuant to Section 5.9, Southern Union Company, a
Delaware corporation (Southern Union), and CrossCountry Energy, LLC, a Delaware limited liability
company (CrossCountry Energy), on the other hand.
Each of the parties to this Agreement is sometimes referred to individually in this Agreement
as a Party and all of the parties to this Agreement are sometimes collectively referred to in
this Agreement as the Parties. Notwithstanding the foregoing, prior to their joinder hereto
pursuant to Section 5.10, none of ETP Merger Sub, Southern Union or CrossCountry Energy
shall be a Party to this Agreement and shall have no rights or obligations of a Party hereunder.
R E C I T A L S
WHEREAS, ETE, Southern Union, and Sigma Acquisition Corporation, a Delaware corporation and
direct wholly-owned subsidiary of ETE (Sigma Acquisition), entered into an Agreement and Plan of
Merger, dated June 15, 2011 (as amended and restated as of July 4, 2011 and July 19, 2011 and as
otherwise amended, supplemented, restated or otherwise modified from time to time, the Sigma
Merger Agreement) pursuant to which Sigma Acquisition will merge with and into Southern Union with
Southern Union as the surviving entity and each share of common stock of Southern Union will be
converted into the right to receive the consideration specified therein (the Sigma Merger), and
as a result thereof, Southern Union will become a direct wholly-owned subsidiary of ETE;
WHEREAS, on July 4, 2011, the Parties entered into an Agreement and Plan of Merger (the
Original Merger Agreement);
WHEREAS, the Parties are entering into this Amended and Restated Agreement and Plan of Merger
in order to modify certain terms and conditions of the Original Merger Agreement, with effect from
the date of execution of the Original Merger Agreement;
WHEREAS, immediately prior to the effective time of the Sigma Merger, pursuant to the Sigma
Merger Agreement, ETE shall assign and Southern Union shall assume the benefits and obligations of
ETE under this Agreement but ETE shall remain a Party as described herein;
WHEREAS, the parties desire to merge ETP Merger Sub with and into CrossCountry Energy, which
indirectly owns 50% of the outstanding capital stock of Citrus Corp., a Delaware corporation
(Citrus), with CrossCountry Energy as the surviving entity and, as a result thereof,
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a wholly-owned subsidiary of ETP in return for the consideration being paid to ETE as set
forth herein (the Merger);
WHEREAS, for Federal income tax purposes, it is intended that the Merger be treated as a
contribution to a partnership under Section 721(a) of the Internal Revenue Code of 1986, as amended
(the Code); and
WHEREAS, in connection with transactions contemplated hereby, ETE and ETP desire to amend
certain provisions of the ETP Partnership Agreement in the form of the Partnership Agreement
Amendment attached hereto to as Exhibit B (the ETP Partnership Agreement Amendment); and
WHEREAS, ETE and ETP desire to make certain representations, warranties, covenants and
agreements specified herein in connection with this Agreement.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the representations, warranties, agreements and covenants
contained in this Agreement, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the Parties undertake and agree as follows, and the
Original Merger Agreement is hereby amended and restated in its entirety with effect from the date
of execution of the Original Merger Agreement, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. Capitalized terms used in this Agreement but not defined in the body of this
Agreement shall have the meanings ascribed to them in Exhibit A. Capitalized terms defined
in the body of this Agreement are listed in Exhibit A with reference to the location of the
definitions of such terms in the body of this Agreement.
1.2 Interpretations. In this Agreement (a) the singular includes the plural and vice versa; (b)
reference to a Person includes such Persons successors and assigns but, in the case of a Party,
only if such successors and assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity; (c) reference to any gender
includes each other gender; (d) references to any Exhibit, Schedule, Section, Article, Annex,
subsection and other subdivision refer to the corresponding Exhibits, Schedules, Sections,
Articles, Annexes, subsections and other subdivisions of this Agreement unless expressly provided
otherwise; (e) references in any Section, Article or definition to any clause means such clause of
such Section, Article or definition; (f) hereunder, hereof, hereto and words of similar
import are references to this Agreement as a whole and not to any particular provision of this
Agreement; (g) the word or is not exclusive, and the word including (in its various forms)
means including without limitation; (h) each accounting term not otherwise defined in this
Agreement has the meaning commonly applied to it in accordance with GAAP; (i) references to days
are
to calendar days; and (j) all references to money refer to the lawful currency of the United
States. The Table of Contents and the Article and Section titles and headings in this Agreement
are inserted for convenience of reference only and are not intended to be a part of, or to affect
the meaning or interpretation of, this Agreement.
2
ARTICLE II
THE MERGER; CONVERSION OF INTERESTS; CLOSING
2.1 The Merger. At the Effective Time, upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the applicable provisions of the Delaware Limited Liability
Company Act, as amended to date (the Delaware Act), ETP Merger Sub shall be merged with and into
CrossCountry Energy, whereupon the separate existence of ETP Merger Sub shall cease, and
CrossCountry shall continue its existence as a limited liability company under Delaware law as the
surviving entity (the Surviving Entity) in the Merger and a direct wholly owned subsidiary of
ETP.
2.2 Effective Time. On the Closing Date, Southern Union shall cause CrossCountry Energy to file
the certificate of merger (the Certificate of Merger), executed in accordance with, and
containing such information as is required by, the relevant provisions of the Delaware Act with the
Secretary of State of the State of Delaware. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at
such later time as is agreed between the parties and specified in the Certificate of Merger in
accordance with the relevant provisions of the Delaware Act (such date and time is hereinafter
referred to as the Effective Time).
2.3 Effects of the Merger. The effects of the Merger shall be as provided in this Agreement and
in the applicable provisions of the Delaware Act. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all of the property, rights, privileges,
powers and franchises of CrossCountry Energy and ETP Merger Sub shall vest in the Surviving Entity,
and all debts, liabilities and duties of CrossCountry Energy and ETP Merger Sub shall become the
debts, liabilities and duties of the Surviving Entity, all as provided under the Delaware Act.
2.4 Effect of Merger. At the Effective Time, by virtue of the merger and without any further
action on the part of any member of CrossCountry Energy or ETP Merger Sub or any further action by
any party or other person, (i) (a) all of the limited liability company interests in ETP Merger Sub
(all of which are owned by ETP) shall automatically be converted into and become all of the limited
liability company interests in the Surviving Entity, (b) ETP shall automatically be deemed admitted
to the Surviving Entity as the sole member in respect of such limited liability company interests
and (c) the Surviving Entity shall continue without dissolution; and (ii) (a) all of the limited
liability company interests in CrossCountry Energy owned by Southern Union
immediately prior to the effective time (which constituted all of the limited liability
company interests in CrossCountry Energy at such time) shall automatically be converted into the
right to receive the Merger Consideration and shall otherwise cease to be outstanding and (b)
Southern Union shall cease to be a member of CrossCountry Energy and the Surviving Entity.
2.5 Limited Liability Company Agreement of the Surviving Entity. At the Effective Time, the
limited liability company agreement of CrossCountry Energy in effect immediately prior to the
Effective Time shall be the limited liability company agreement of the Surviving Entity until
thereafter amended in accordance with the provisions thereof and applicable Law.
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2.6 Directors. Subject to applicable Law, at the Effective Time, the directors of ETP Merger Sub
immediately prior to the Effective Time shall be the initial directors of the Surviving Entity and
shall hold office until their respective successors are duly elected and qualified, or their
earlier death, resignation or removal.
2.7 Officers. At the Effective Time, the officers of ETP Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Entity and shall hold office until
their respective successors are duly elected and qualified, or their earlier death, resignation or
removal.
2.8 Borrowing by ETP; Tax Treatment of Merger and Cash Consideration. In connection with the
Merger, Southern Union shall guarantee (on a last dollar basis) a new and separate borrowing by
ETP that will be used by ETP exclusively to pay the Cash Consideration (the ETP Debt).
Immediately prior to the Closing, ETP shall finance the amount of the Cash Consideration pursuant
to the ETP Debt. The Parties intend that (i) the Merger shall be treated as a contribution by
Southern Union to ETP of the assets of CrossCountry Energy (and the assets of the subsidiaries of
CrossCountry Energy that are also treated as disregarded entities of Southern Union) in exchange
for the Cash Consideration and Unit Consideration in a transaction consistent with the requirements
of Section 721(a) of the Code; (ii) the receipt by Southern Union of the Cash Consideration shall
be treated as a distribution to Southern Union by ETP under Section 731 of the Code; (iii) the
distribution of the Cash Consideration to Southern Union shall be made first out of proceeds of the
ETP Debt, and such portion of the Cash Consideration shall qualify as a debt-financed transfer
under Section 1.707-5(b) of the Treasury Regulations promulgated under the Code (the Treasury
Regulations); and (iv) Southern Unions share of the ETP Debt under Sections 1.752-2 and
1.707-5(a)(2)(i) of the Treasury Regulations shall be the entire amount of the ETP Debt. The
Parties agree to file all Tax Returns and otherwise act at all times in a manner consistent with
this intended treatment of the Merger, the Cash Consideration and the ETP Debt, including
disclosing the distribution of the Cash Consideration in accordance with the requirements of
Section 1.707-3(c)(2) of the Treasury Regulations.
2.9 Time and Place of Closing. The closing of the Merger (the Closing) will take place at the
offices of Latham & Watkins LLP, 717 Texas Avenue, Houston, Texas 77002 on the second Business Day
after all of the conditions set forth in Article VI (other than those conditions which by
their terms are only capable of being satisfied at the Closing, but subject to the satisfaction or
due waiver of those conditions) have been satisfied or waived by the Party or Parties entitled to
waive such conditions, unless another time, date and place are agreed to in writing by the Parties.
The date of the Closing is referred to in this Agreement as the Closing Date.
2.10 Deliveries and Actions at Closing.
(a) Southern Union Deliveries and Actions. At the Closing, Southern Union and
CrossCountry Energy will execute and deliver, or cause to be executed and delivered, to ETP, each
of the following documents, where the execution or delivery of documents is contemplated, and will
take or cause to be taken the following actions, where the taking of actions is contemplated:
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(i) Certificate of Merger. An executed Certificate of Merger substantially
consistent with the terms of this Agreement;
(ii) Closing Certificate. The certificate contemplated by Section
6.3(c); and
(iii) FIRPTA Certificate. A certificate of Southern Union in the form
specified in Treasury Regulation Section 1.1445-2(b)(2)(iv) that Southern Union is not a
foreign person within the meaning of Section 1445 of the Code.
(b) ETE Deliveries and Actions. At the Closing, ETE will cause to be executed and
delivered, to ETP, a counterpart of the ETP Partnership Agreement Amendment executed by Energy
Transfer Partners, L.L.C.
(c) ETP Deliveries and Actions. At the Closing, ETP and ETP Merger Sub will execute
and deliver, or cause to be executed and delivered, to Southern Union, each of the following
documents, where the execution or delivery of documents is contemplated, and will take or cause to
be taken the following actions, where the taking of actions is contemplated:
(i) Cash Consideration. The Cash Consideration by wire transfer of immediately
available funds to an account designated by Southern Union;
(ii) Unit Consideration. The Unit Consideration by issuance of a certificate
of common units to Southern Union; and
(iii) Closing Certificate. The certificate contemplated by Section
6.2(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ETE
ETE hereby represents and warrants to ETP as follows:
3.1 Organization; Qualification.
(a) ETE is a limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware and has all requisite limited partnership power and authority to own,
lease and operate its properties and to carry on its business as it is now being conducted, and is
duly qualified, registered or licensed to do business as a foreign entity and is in good standing
in each jurisdiction in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the failure to be so duly
qualified, registered or licensed and in good standing would not reasonably be expected to have,
individually or in the aggregate, a Citrus Parties Material Adverse Effect or to prevent or
materially delay the consummation of the transactions contemplated by the Transaction Documents to
which ETE is, or will be, a party or to materially impair ETEs ability to perform its obligations
under the Transaction Documents to which it is, or will be, a party.
(b) Each of the Citrus Parties is duly formed, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, and is duly
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qualified,
registered or licensed to do business as a foreign entity and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to be so duly
qualified, registered or licensed and in good standing would not reasonably be expected to have,
individually or in the aggregate, a Citrus Parties Material Adverse Effect or to prevent or
materially delay the consummation of the transactions contemplated by the Transaction Documents.
(c) ETE has made available to ETP true and complete copies of the Organizational Documents of
the Citrus Parties in its possession as in effect on the Execution Date.
3.2 Authority; Enforceability.
(a) ETE has the requisite partnership power and authority to execute and deliver the
Transaction Documents to which it is, or will be, a party, and to consummate the transactions
contemplated thereby. The execution and delivery by ETE of the Transaction Documents to which ETE
is, or will be, a party, and the consummation by ETE of the transactions contemplated thereby, have
been duly and validly authorized by ETE, and no other limited partnership proceedings on the part
of ETE are necessary to authorize the Transaction Documents to which it is, or will be, a party or
to consummate the transactions contemplated by the Transaction Documents to which it is, or will
be, a party.
(b) Upon its joinder hereto in accordance with Section 5.9, each of Southern Union and
CrossCountry Energy will have the requisite corporate or limited liability company power and
authority, as the case may be, to execute and deliver the Transaction Documents to which it is, or
will be, a party, and to consummate the transactions contemplated thereby. Upon its joinder hereto
in accordance with Section 5.9, the execution and delivery by each of Southern Union and
CrossCountry Energy of the Transaction Documents to which it is, or will be, a party, and the
consummation by such Party of the transactions contemplated thereby, will have been duly and
validly authorized by either Southern Union or CrossCountry Energy, and no other corporate or
limited liability company, as the case may be, proceedings on the part of Southern Union or
CrossCountry Energy will be necessary to authorize the Transaction Documents to which it is, or
will be, a party or to consummate the transactions contemplated by the Transaction Documents to
which it is, or will be, a party.
(c) The Transaction Documents to which ETE is, or will be, a party have been (or will be, when
executed and delivered at the Closing) duly executed and delivered by ETE, and, assuming the due
authorization, execution and delivery by the other parties thereto, each Transaction Document to
which ETE is, or will be, a party constitutes (or will constitute, when executed and delivered at
the Closing) the valid and binding agreement of ETE, enforceable against ETE in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws relating to or affecting
creditors rights generally and subject, as to enforceability, to legal principles of general
applicability governing the availability of equitable remedies, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether such enforceability is
considered in a proceeding in equity or at law) (collectively, Creditors Rights).
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(d) Upon its joinder hereto in accordance with Section 5.9, the Transaction Documents
to which Southern Union or CrossCountry Energy is, or will be, a party will have been (or will be,
when executed and delivered at the Closing) duly executed and delivered by Southern Union or
CrossCountry Energy, and, assuming the due authorization, execution and delivery by the other
parties thereto, each Transaction Document to which Southern Union or CrossCountry Energy is, or
will be, a party will constitute (or will constitute, when executed and delivered at the Closing)
the valid and binding agreement of Southern Union or CrossCountry Energy, enforceable against
Southern Union or CrossCountry Energy in accordance with its terms, except as such enforceability
may be limited by Creditors Rights.
(e) The Sigma Merger Agreement has been duly authorized, executed and delivered by ETE, and
assuming the due authorization, execution and deliveries by the other parties thereto, the Sigma
Merger Agreement is a valid and binding agreement of ETE, enforceable against ETE in accordance
with its terms, except as enforceability may be limited by Creditors Rights.
3.3 Non-Contravention. After taking into account all amendments and consents obtained in
connection with the Sigma Merger, the execution, delivery and performance by the ETE/Southern Union
Merger Parties of the Transaction Documents to which they are, or will be, a party and the
consummation by the ETE/Southern Union Merger Parties of the transactions contemplated thereby
do not and will not: (i) result in any breach of any provision of the Organizational Documents of
the ETE/Southern Union Merger Parties or any of the Citrus Parties; (ii) constitute a default (or
an event that with notice or passage of time or both would give rise to a default) under, or give
rise to any right of termination, cancellation, amendment or acceleration (with or without the
giving of notice, or the passage of time or both) under any of the terms, conditions or provisions
of any Contract to which the ETE/Southern Union Merger Parties or any of the Citrus Parties is a
party or by which any of their respective property or assets are bound or affected; (iii) assuming
compliance with the matters referred to in Section 3.4, violate any Law to which the
ETE/Southern Union Merger Parties or the Citrus Parties are subject or by which any of their
respective properties or assets are bound or affected, or (iv) constitute (with or without the
giving of notice or the passage of time or both) an event which would result in the creation of any
Lien (other than Permitted Liens) on any asset of the ETE/Southern Union Merger Parties or the
Citrus Parties, except, in the cases of clauses (ii), (iii) and (iv) for such defaults or rights of
termination, cancellation, amendment or acceleration or violations as would not reasonably be
expected to have a Citrus Parties Material Adverse Effect or to prevent or materially delay the
consummation of the transactions contemplated by the Transaction Documents to which the
ETE/Southern Union Merger Parties are, or will be, a party or to materially impair either
ETE/Southern Union Merger Partys ability to perform its obligations under the Transaction
Documents to which it is, or will be, a party.
3.4 Governmental Approvals. No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Authority is necessary for the consummation
by the ETE/Southern Union Merger Parties of the transactions contemplated by the Transaction
Documents to which they are, or will be, a party, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals that have been obtained or made or
that would in the ordinary course be made or obtained after the Closing, or which, if not obtained
or made, would not reasonably be expected to have a Citrus Parties Material Adverse
7
Effect or to prevent or materially delay the consummation of the transactions contemplated by the Transaction
Documents to which the ETE/Southern Union Merger Parties are, or will be, a party or to materially
impair the ETE/Southern Union Merger Parties ability to perform their respective obligations under
the Transaction Documents to which they are, or will be, a party.
3.5 Capitalization.
(a) Schedule 3.5 of the ETE Disclosure Schedule sets forth, as of the Execution Date,
a correct and complete description of the following: (i) all of the issued and outstanding
membership interests and Voting Interests of each of the Citrus Parties and (ii) the record owners
of the membership interests or Voting Interests of each of the Citrus Parties. There are no other
outstanding equity interests or Voting Interests of any of the Citrus Parties.
(b) Except as set forth in the Organizational Documents of the Citrus Parties, there are no
preemptive rights, rights of first refusal or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements, calls, subscription agreements, commitments or rights of any kind that
obligate any of the Citrus Parties to issue or sell any equity interests or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any Person a right to
subscribe for or acquire, any equity interests in any of the Citrus Parties, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. There are no preemptive
rights, rights of first refusal or other outstanding options, warrants, conversion rights,
redemption rights, repurchase rights, calls or subscription agreements pursuant to the
Organizational Documents of the Citrus Parties or any other agreement to which any of the Citrus
Parties is a party that is or will be exercisable in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
(c) None of the Citrus Parties has outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the holders of equity interests in the Citrus Parties on
any matter.
3.6 Ownership of CrossCountry Energy; Citrus.
(a) Southern Union indirectly owns 100% of the outstanding membership interests of
CrossCountry Energy, free and clear of all Liens other than (i) any transfer restrictions imposed
by federal and state securities laws and (ii) any transfer restrictions contained in the
Organizational Documents of CrossCountry Energy.
(b) CrossCountry Energy owns 100% of the outstanding membership interests in CrossCountry
Citrus, LLC free and clear of all Liens other than (i) any transfer restrictions imposed by federal
and state securities laws and (ii) any transfer restrictions contained in the Organizational
Documents of CrossCountry Citrus, LLC.
(c) CrossCountry Citrus, LLC owns 50% of the outstanding capital stock in Citrus free and
clear of all Liens other than (i) any transfer restrictions imposed by federal and state securities
laws and (ii) any transfer restrictions contained in the Organizational Documents of Citrus.
8
(d) There are no agreements, arrangements or commitments obligating any Person to grant,
deliver or sell, or cause to be granted, delivered or sold, the equity interests of the Citrus
Parties, by sale, lease, license or otherwise, other than (i) this Agreement and (ii) the purchase
rights in the Citrus Capital Stock Agreement.
(e) There are no voting trusts, proxies or other agreements or understandings to which ETE or
to which, after giving effect to the Sigma Merger, any Subsidiary of ETE will be bound with respect
to the voting of the equity interests of the Citrus Parties other than the Citrus Capital Stock
Agreement.
3.7 Compliance with Law. Except for Environmental Laws, Laws requiring the obtaining or maintenance of a Permit and
Tax matters, which are the subject of Sections 3.12, 3.15 and 3.16,
respectively, and except as to matters that would not reasonably be expected to have a Citrus
Parties Material Adverse Effect or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement, (a) each of the Citrus Parties is in compliance with
all applicable Laws, (b) none of the Citrus Parties has received written notice of any violation of
any applicable Law and (c) none of the Citrus Parties is under investigation by any Governmental
Authority for potential non-compliance with any Law.
3.8 Title to Properties and Assets. Except as set forth on Schedule 3.8 of the ETE
Disclosure Schedule or as to matters that would not reasonably be expected to have a Citrus Parties
Material Adverse Effect or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement, the Citrus Parties have title to or rights or interests in its real
property and personal property, free and clear of all Liens (subject to Permitted Liens),
sufficient to allow it to conduct its business as currently being conducted.
3.9 Rights-of-Way. Except as set forth on Schedule 3.9 of the ETE Disclosure Schedule,
(a) the Citrus Parties have such Rights-of-Way from each Person as are necessary to use, own and
operate the Citrus Parties assets in the manner such assets are currently used, owned and operated
by the Citrus, (b) the Citrus Parties have fulfilled and performed all of their obligations with
respect to such Rights-of-Way and (c) no event has occurred that allows, or after the giving of
notice or the passage of time, or both, would allow, revocation or termination thereof or would
result in any impairment of the rights of the holder of any such Rights-of-Way.
3.10 Financial Statements.
(a) Attached hereto as Schedule 3.10(a) of the ETE Disclosure Schedule are true and
complete copies of the following financial statements (collectively, the Citrus Financial
Statements): (i) an audited balance sheet of the Citrus Entities as of December 31, 2010 and the
related audited statements of income, statements of shareholders equity and cash flows for the
12-month period then ended and (ii) an unaudited balance sheet of the Citrus Entities as of March
31, 2011 and the related unaudited statements of income, changes in owners equity and cash flows
for the quarterly period then ended (the Interim Financial Statements).
(b) The Citrus Financial Statements and the Interim Financial Statements have been prepared in
accordance with GAAP, applied on a consistent basis throughout the periods presented thereby and
fairly present in all material respects the financial position and operating
9
results, equity and
cash flows of the Citrus Entities as of, and for the periods ended on, the respective dates
thereof, subject, however, in the case of the Interim Financial Statements, to normal year-end
audit adjustments and accruals and the absence of notes and other textual disclosures required by
GAAP.
(c) The Citrus Parties do not have any liabilities, whether accrued, contingent, absolute or
otherwise, except for (i) liabilities set forth on the balance sheet of the Citrus Entities dated
as of March 31, 2011 or the notes thereto, (ii) liabilities that have arisen since March 31, 2011
in the ordinary course of business and (iii) liabilities that would not reasonably be expected to
have a Citrus Parties Material Adverse Effect.
(d) Other than the Citrus Entities, no Citrus Party (i) conducts or has conducted any material
activities or operations or (ii) currently has any employees.
3.11 Absence of Certain Changes. Except as set forth on Schedule 3.11 of the ETE
Disclosure Schedule, as disclosed in the Southern Union SEC Reports filed with the Securities and
Exchange Commission prior to the date hereof or as expressly contemplated by this Agreement, since
December 31, 2010, the business of the Citrus Parties has been conducted in the ordinary course and
in a manner consistent with past practice and there has not been:
(a) any event, occurrence or development which has had, or would be reasonably expected to
have, a Citrus Parties Material Adverse Effect;
(b) purchase any securities or ownership interests of, or make any investment in, any Person,
other than ordinary course overnight investments consistent with the cash management policies of
the Citrus Parties;
(c) any declaration, setting aside or payment of any dividends on or distributions in respect
of any equity interests or other securities of the Citrus Parties;
(d) any amendment, supplement, restatement or other modification to the Organizational
Documents or any of the Citrus Parties, in each case that would reasonably be expected to be
materially adverse to ETP or to prevent or materially delay the consummation of the transactions
contemplated by this Agreement;
(e) any material change to the Citrus Parties tax methods, principles or elections; or
(f) any agreement by the Citrus Parties to do any of the foregoing.
3.12 Environmental Matters. Except as to matters set forth on Schedule 3.12 of the ETE
Disclosure Schedule and except as to matters that would not reasonably be expected to have a Citrus
Parties Material Adverse Effect:
(a) the Citrus Parties are in compliance with all applicable Environmental Laws;
(b) the Citrus Parties possess all Permits required under Environmental Laws for its
operations as currently conducted and is in compliance with the terms of such Permits, and such
Permits are in full force and effect;
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(c) the Citrus Parties and their properties and operations are not subject to any pending or,
to the Knowledge of ETE, threatened Proceeding arising under any Environmental Law, nor has any of
the Citrus Parties received any written and pending notice, order or complaint from any
Governmental Authority alleging a violation of or liability arising under any Environmental Law;
and
(d) to the Knowledge of ETE, there has been no Release of Hazardous Substances on, at, under,
to, or from any of the properties of the Citrus Parties, or from or in connection with the Citrus
Parties operations in a manner that would reasonably be expected to give rise to any liability
pursuant to any Environmental Law.
3.13 Material Contracts.
(a) Except as set forth on Schedule 3.13 of the ETE Disclosure Schedule or filed or
incorporated by reference as an exhibit to the Southern Union SEC Reports as of the date hereof, as
of the Execution Date, none of the Citrus Parties is party to or bound by any Contract (each, a
Citrus Material Contract) that:
(i) relates to (A) the purchase of materials, supplies, goods, services or other
assets, (B) the purchase, sale, transporting, gathering, processing, or storing of natural
gas, condensate or other liquid or gaseous hydrocarbons or the products therefrom, or the
provision of services related thereto or (C) the construction of capital assets, in the
cases of clauses (A), (B) and (C) that (1) provides for either (x) annual payments by the
Citrus Parties in excess of $10,000,000 or (y) aggregate payments by the Citrus Parties in
excess of $20,000,000 and (2) cannot be terminated by the Citrus Parties on 90 days or less
notice without payment by the Citrus Parties of any material penalty;
(ii) (A) relates to the creation, incurrence, assumption, or guarantee of any
indebtedness for borrowed money by the Citrus Parties or (B) creates a capitalized lease
obligation;
(iii) is in respect of the formation of any partnership or joint venture or otherwise
relates to the joint ownership or operation of the assets owned by the Citrus Parties;
(iv) includes the acquisition or sale of assets with a book value in excess of
$10,000,000 (whether by merger, sale of stock, sale of assets or otherwise); and
(v) otherwise involves the payment by or to the Citrus Parties of more than $10,000,000
in the aggregate and cannot be terminated by the Citrus Parties on 90 days or less notice
without payment by the Citrus Parties of any material penalty.
(b) Each Citrus Material Contract is a valid and binding obligation of the respective Citrus
Party, and is in full force and effect and enforceable in accordance with its terms against the
respective Citrus Party and, to the Knowledge of ETE, the other parties thereto, except, in each
case, as enforcement may be limited by Creditors Rights. ETE has made available to ETP a true and
complete copy of each Citrus Material Contract in its possession.
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(c) None of the Citrus Parties nor, to the Knowledge of ETE, any other party to any Citrus
Material Contract is in default or breach in any material respect under the terms of any Citrus
Material Contract and no event has occurred that with the giving of notice or the passage of time
or both would constitute a breach or default in any material respect by the Citrus Parties, or the
to the Knowledge of ETE, any other party to any Citrus Material Contract, or would permit
termination, modification or acceleration under any Citrus Material Contract.
(d) As of the Execution Date, to the Knowledge of ETE, none of the Citrus Parties has received
notice that any current supplier, shipper or customer intends to amend or discontinue a business
relationship (including termination of a Citrus Material Contract) with the Citrus Parties that
could reasonably be expected to generate revenues for the Citrus Parties or pursuant to which the
Citrus Parties could reasonably be expected to incur costs, in either case of $10,000,000 or more
in the aggregate.
3.14 Legal Proceedings. Other than with respect to Proceedings arising under Environmental
Laws which are the subject of Section 3.12 or as is set forth on Schedule 3.14 of
ETE Disclosure Schedule, there are no Proceedings pending or, to the Knowledge of ETE, threatened
against any of the Citrus Parties, except such Proceedings as would not reasonably be expected to
have a Citrus Parties Material Adverse Effect or to prevent or materially delay the consummation of
the transactions contemplated by the Transaction Documents to which ETE is or will be, a party or
to materially impair ETEs ability to perform its obligations under the Transaction Documents to
which it is, or will be, a party.
3.15 Permits. Other than with respect to Permits issued pursuant to or required under
Environmental Laws that are the subject of Section 3.12, the Citrus Parties have all
Permits as are necessary to use, own and operate their assets in the manner such assets are
currently used, owned and operated by the Citrus Parties, except where the failure to have such
Permits would not reasonably be expected to have a Citrus Parties Material Adverse Effect.
3.16 Taxes. Except as set forth on Schedule 3.16 of the ETE Disclosure Schedule:
(a) All material Tax Returns required to be filed with respect to the Citrus Parties have been
filed and all such Tax Returns are complete and correct in all material respects and all material
Taxes due relating the Citrus Parties have been paid in full. There are no claims (other than
claims being contested in good faith through appropriate proceedings and for which adequate
reserves have been made in accordance with GAAP) against any of the Citrus Parties for any Taxes,
and no assessment, deficiency, or adjustment has been asserted or proposed in writing with respect
to any Taxes or Tax Returns of or with respect to the Citrus Parties.
(b) No tax audits or administrative or judicial proceedings are being conducted or are pending
with respect the Citrus Parties.
(c) All material Taxes required to be withheld, collected or deposited by or with respect to
the Citrus Parties have been timely withheld, collected or deposited as the case may be, and to the
extent required, have been paid to the relevant taxing authority.
12
(d) There are no outstanding agreements or waivers extending the applicable statutory periods
of limitation for any material Taxes associated with the ownership or operation of the assets of
the Citrus Parties for any period.
(e) ETE is not a foreign person as defined in Section 1445(f)(3) of the Code, and the rules
and Treasury Regulations promulgated thereunder, or an entity disregarded as separate from its
owner for United States federal income tax purposes.
(f) None of the Citrus Parties, has engaged in a transaction that would be reportable pursuant
to Treasury Regulation § 1.6011-4 or any predecessor thereto.
(g) For each taxable year since its formation, each of CrossCountry Citrus and CrossCountry
Energy, is, or has been, properly classified as a partnership or an entity disregarded as separate
from its owner for United States federal income tax purposes.
3.17 Employee Benefits. Except as would not reasonably be expected to have a Citrus Parties
Material Adverse Effect, (i) each employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA), for which Citrus or any
member of its Controlled Group (defined as any organization which is a member of a controlled
group of corporations within the meaning of Section 414 of the Code would have any liability (each,
a Plan)) has been maintained in compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and the Code; (ii) no
prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan excluding transactions effected pursuant to a statutory or
administrative exemption; (iii) each Plan that is intended to be qualified within the meaning of
Section 401(a) of the Code has received a favorable determination or opinion letter as to its
qualification, has been established under a standardized master and prototype or volume submitter
plan for which a current favorable IRS advisory letter or opinion letter has been obtained by the
plan sponsor and is valid as to the adopting employer, or has time remaining under applicable Laws
to apply for a determination or opinion letter or to make any amendments necessary to obtain a
favorable determination or opinion letter; (iv) no Plan that is subject to the minimum funding
standards of Section 412(a) or 430 of the Code or Section 302(a) or 330 of ERISA has failed to meet
such minimum funding standards within the last five years; and (v) neither the Company nor any
member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under
Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC, in the ordinary
course and without default) in respect of a Plan (including a multiemployer plan, within the
meaning of Section 4001(a)(3) of ERISA).
3.18 Brokers Fee. Except for fees payable to Credit Suisse Securities (USA) LLC in
connection with the Merger Agreement and transactions contemplated thereby, which shall be paid by
ETE, no broker, investment banker, financial advisor or other Person is entitled to any brokers,
finders, financial advisors or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or on behalf of ETE.
13
3.19 Regulatory Status. The Citrus Parties (i) have all necessary approvals from FERC to
provide service to customers pursuant to the Natural Gas Act and the Natural Gas Policy Act of
1978, as amended, and (ii) have made all required FERC filings necessary to offer such service,
except where failure to have any such approval or to have made any such filing would not reasonably
be expected to have a Citrus Parties Material Adverse Effect.
3.20 Intellectual Property. The Citrus Parties own or have the right to use pursuant to
license, sublicense, agreement or otherwise all material items of Intellectual Property required in
the operation of their business as presently conducted. No third party has asserted in writing
delivered to the Citrus Parties an unresolved claim that the Citrus Parties are infringing on the
Intellectual Property of such third party. To the Knowledge of ETE, no third party is infringing
on the Intellectual Property owned by the Citrus Parties.
3.21 Insurance. The Citrus Parties maintain liability, property, fire, casualty, product
liability, workers compensation and other insurance policies, that insure or relate to the assets
of the Citrus Parties. ETE believes that such policies are reasonably adequate in light of
industry practices.
3.22 Disclosure of Material Facts. ETE has disclosed or otherwise made known to the ETP
Conflicts Committee and Mike Smith, VP Mergers and Acquisitions, all material facts known to ETE
regarding the Merger and the Citrus Parties as of the date of this Agreement.
3.23
Affiliate Transactions. Except as described in the Citrus Financial Statements and
Interim Financial Statements, there are no assessments, contracts, transfers of assets, commitments
or other transactions, whether or not in the ordinary course of business, to or by which any of the
Citrus Parties on the one hand, and ETE, Southern Union and their respective Affiliates (other than
the Citrus Parties) on the other hand.
3.24 ROFO Interest Except as set forth in this Agreement and the Sigma Merger Agreement,
there are no rights of first offer, rights of first refusal or other outstanding rights, options,
warrants, purchase rights, agreements, arrangements, calls, subscription agreements, commitments or
rights of any kind that obligate (or could obligate) Southern Union or any of its Affiliates to
Transfer, or offer to Transfer, all or any portion of the ROFO Interest, or giving any Person a
right to acquire, or offer to acquire, all or any portion of the ROFO Interest, and no securities or obligations
evidencing such rights are authorized, issued or outstanding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ETP
ETP hereby represents and warrants to ETE as follows:
4.1 Organization; Qualification. Each ETP Merger Party is an entity duly formed, validly
existing and in good standing under the laws of the State of Delaware and has all requisite
organizational power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and is duly qualified, registered or licensed to do business
as a foreign entity and is in good standing in each jurisdiction in which the property
14
owned,
leased or operated by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so duly qualified, registered or licensed and in good
standing would not reasonably be expected to have an ETP Material Adverse Effect or to prevent or
materially delay the consummation of the transactions contemplated by the Transaction Documents to
which it is, or will be, a party or to materially impair the ability of such ETP Merger Party to
perform its obligations under the Transaction Documents to which it is, or will be, a party. ETP
has made available to ETP true and complete copies of the Organizational Documents of ETP and ETP
Merger Sub, as in effect on the Execution Date.
4.2 Authority; Enforceability; Valid Issuance.
(a) Each ETP Merger Party has the requisite limited partnership or limited liability company,
as applicable, power and authority to execute and deliver the Transaction Documents to which it is,
or will be, a party, and to consummate the transactions contemplated thereby. The execution and
delivery by each ETP Merger Party of the Transaction Documents to which it is, or will be, a party,
and the consummation by it of the transactions contemplated thereby, have been duly and validly
authorized by such ETP Merger Party, and no other limited partnership or limited liability company
proceedings on the part of such ETP Merger Party are necessary to authorize the Transaction
Documents to which it is, or will be, a party or to consummate the transactions contemplated by the
Transaction Documents to which it is, or will be, a party.
(b) The Transaction Documents have been (or will be, when executed and delivered at the
Closing) duly executed and delivered by ETP and ETP Merger Sub, and, assuming the due
authorization, execution and delivery by the other parties thereto, each Transaction constitutes
(or will constitute, when executed and delivered at the Closing) the valid and binding agreement of
ETP and ETP Merger Sub, enforceable against ETP and ETP Merger Sub in accordance with its terms,
except as such enforceability may be limited by Creditors Rights.
4.3 Non-Contravention. Except for the consent referenced in Section 6.3(d), the execution, delivery and
performance of the Transaction Documents and the consummation by ETP and ETP Merger Sub of the
transactions contemplated thereby do not and will not: (a) result in any breach of any provision
of the Organizational Documents of ETP or ETP Merger Sub; (b) constitute a default (or an event
that with notice or passage of time or both would give rise to a default) under, or give rise to
any right of termination, cancellation, amendment or acceleration (with or without the giving of
notice, or the passage of time or both) under any of the terms, conditions or provisions of any
Contract to which ETP or ETP Merger Sub is a party or by which any property or asset of ETP or ETP
Merger Sub is bound or affected; (c) assuming compliance with the matters referred to in
Section 4.4, violate any Law to which ETP or ETP Merger Sub is subject or by which any of
their properties or assets is bound; or (d) constitute (with or without the giving of notice or the
passage of time or both) an event which would result in the creation of any Lien (other than
Permitted Liens) on any asset of ETP or ETP Merger Sub, except, in the cases of clauses (b), (c)
and (d), for such defaults or rights of termination, cancellation, amendment, acceleration,
violations or Liens as would not reasonably be expected to have an ETP Material Adverse Effect or
to prevent or materially delay the consummation of the transactions contemplated by the Transaction
Documents to which ETP is, or will be, a party or to materially impair ETPs ability to perform its
obligations under the Transaction Documents to which it is, or will be, a party.
15
4.4 Governmental Approvals. No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Authority is necessary for the consummation
by ETP or ETP Merger Sub of the transactions contemplated by the Transaction Documents other than
such declarations, filings, registrations, notices, authorizations, consents or approvals that have
been obtained or made or that would in the ordinary course of business be made or obtained after
the Closing, or which, if not obtained or made, would not reasonably be expected to have an ETP
Material Adverse Effect or to prevent or materially delay the consummation of the transactions
contemplated by the Transaction Documents or to materially impair ETP or ETP Merger Subs ability
to perform its obligations under the Transaction Documents to which it is, or will be, a party.
4.5 Matters Relating to the Merger. ETP has undertaken such investigation as it has deemed
necessary to enable it to make an informed and intelligent decision with respect to the execution,
delivery and performance of this Agreement. ETP has had an opportunity to ask questions and
receive answers from ETE regarding the business, properties, prospects, and financial condition of
the Citrus Parties (to the extent ETE possessed such information). The foregoing, however, does
not modify the representations and warranties of ETE in Article III and such
representations and warranties constitute the sole and exclusive representations and warranties of
ETE to ETP in connection with the transactions contemplated by this Agreement.
4.6 Brokers Fee. Except for the fee payable to RBS Securities Inc., which shall be paid by ETP, no broker,
investment banker, financial advisor or other Person is entitled to any brokers finders,
financial advisors or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of ETP.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business.
(a) From the Execution Date through the earlier of termination of the Sigma Merger Agreement
or consummation of the Sigma Merger, without the prior written consent of ETP, ETE shall not, and
shall cause its Affiliates not to, (i) amend, supplement, restate or otherwise modify the Sigma
Merger Agreement (as it exists on the date hereof), (ii) agree to, grant or permit to exist any
waiver of a condition, covenant or other provision in the Sigma Merger Agreement (as it exists on
the date hereof) or (iii) otherwise act, or fail to act with respect to the rights and obligations
of ETE and its Affiliates under the Sigma Merger Agreement (as it exists on the date hereof), in
the case of the foregoing clauses (i), (ii) and (iii) in a manner reasonably likely to have a
Citrus Parties Material Adverse Effect or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing, nothing in this
Section 5.1(a) shall prevent ETE from exercising its right to terminate the Sigma Merger
Agreement in accordance with the terms thereof.
(b) From the closing of the Sigma Merger through the Closing, ETE shall, and shall cause each
of its Subsidiaries to, carry on the businesses of CCE Acquisition, CCE Holdings and the Citrus
Parties in the usual, regular and ordinary course in substantially the same manner as
16
heretofore
conducted and shall use all commercially reasonable efforts to preserve intact their present
business organizations, keep available the services of their current officers and employees and
endeavor to preserve their relationships with customers, suppliers and others having business
dealings with any of them to the end that its goodwill and ongoing business shall not be impaired
in any material respect at the Closing.
(c) From the closing of the Sigma Merger through the Closing, except as described in
Schedule 5.1 of the ETE Disclosure Schedule or consented to or approved in writing by ETP,
which consent or approval shall not be unreasonably withheld, conditioned or delayed, ETE shall not
take, and shall cause its controlled Affiliates not to take, any action to amend the Organizational
Documents of the Citrus Parties or approve, the taking by CCE Acquisition, CCE Holdings or the
Citrus Parties of the following actions:
(i) purchase any securities or ownership interests of, or make any investment in, any
Person, other than ordinary course overnight investments consistent with the cash management
policies of the Citrus Parties;
(ii) make any capital expenditure in excess of $10,000,000 in the aggregate, except as
required on an emergency basis or for the safety of individuals or the environment;
(iii) make any material change to the Citrus Parties tax methods, principles or
elections; or
(iv) take or fail to take any action that is reasonably likely to have a Citrus Parties
Material Adverse Effect or to prevent or materially delay the consummation of the
transactions contemplated by this Agreement; or
(v) agree or commit to take any of the actions described above.
5.2 Notice of Certain Events.
(a) Each Party shall promptly notify the other Parties of:
(i) any event, condition or development that has resulted in the inaccuracy or breach
of any representation or warranty, covenant or agreement contained in this Agreement made by
or to be complied with by such notifying Party at any time during the term hereof and that
would reasonably be expected to result in any of the conditions set forth in Article
VI not to be satisfied; provided, however, that no such notification shall be deemed to
cure any such breach of or inaccuracy in such notifying Partys representations and
warranties or covenants and agreements or in the ETE Disclosure Schedule or the ETP
Disclosure Schedule for any purpose under this Agreement and no such notification shall
limit or otherwise affect the remedies available to the other Parties;
(ii) any notice or other communication from any Person alleging that the consent of
such Person is or may be required in connection with the transactions contemplated by the
Transaction Documents;
17
(iii) any notice or other communication from any Governmental Authority in connection
with the transactions contemplated by the Transaction Documents; and
(iv) any Proceedings commenced that would be reasonably expected to prevent or
materially delay the consummation of the transactions contemplated by the Transaction
Documents or materially impair the notifying Partys ability to perform its obligations
under the Transaction Documents.
(b) ETE shall promptly (and in any event within 24 hours) notify and provide ETP with a copy
of any notice or other communication received or sent by ETE and its Affiliates pursuant to the
Sigma Merger Agreement.
5.3
Access to Information. From the date hereof until the Closing Date, to the extent ETE has the right under the Sigma
Merger Agreement, upon the request from ETP, ETE will: (a) give ETP and its counsel, financial
advisors, auditors and other authorized representatives (collectively,
Representatives) reasonable access to the offices, properties, books and records of the Citrus
Parties and to the books and records relating to the Citrus Parties and permit ETP to make copies
thereof, in each case (i) during normal business hours and (ii) solely to the extent that ETE
either (1) has access to such offices, properties, books and records and has the right, to provide
access to such offices, properties, books and records to such Persons or (2) has the right to
require Southern Union to provide such access to such Persons; and (b) furnish to ETP and its
Representatives such financial operating data and other information relating to the Citrus Parties
as such Persons may reasonably request, solely to the extent that ETE either (i) possesses such
financial and operating data and other information and has the right, to furnish such financial and
operating data and other information to such Persons or (ii) has the right, pursuant to the Citrus
Capital Stock Agreement, to require the Citrus Parties to furnish such financial and operating data
and other information to such Persons. Any investigation pursuant to this Section
5.3 shall be conducted in such manner as not to interfere with the conduct of the business of
the Citrus Parties. Notwithstanding the foregoing, ETP shall not be entitled to perform any
intrusive or subsurface investigation or other sampling of, on or under any of the properties of
the Citrus Parties without the prior written consent of ETE. Notwithstanding the foregoing
provisions of this Section 5.3, ETE shall not be required to, or to cause the Citrus
Parties to, grant access or furnish information to ETP or any of its Representatives to the extent
that such information is subject to an attorney/client or attorney work product privilege or that
such access or the furnishing of such information is prohibited by Law or an existing Contract. To
the extent practicable, ETE shall make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding sentence apply. To the
fullest extent permitted by Law, ETE and its Representatives and Affiliates shall (1) not be
responsible or liable to ETP for personal injuries sustained by ETPs Representatives in connection
with the access provided pursuant to this Section 5.3 and (2) shall be indemnified and held
harmless by ETP for any losses suffered by any such Persons in connection with any such personal
injuries; provided such personal injuries are not caused by the gross negligence or willful
misconduct of ETE.
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5.4
Governmental Approvals.
(a) The Parties will cooperate with each other and use commercially reasonable efforts to
obtain from any Governmental Authorities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained and to make any filings with or notifications or
submissions to any Governmental Authority that are necessary in order to consummate the
transactions contemplated by the Transaction Documents and shall diligently and expeditiously
prosecute, and shall cooperate fully with each other in the prosecution of, such matters.
(b) The Parties agree to cooperate with each other and use commercially reasonable efforts to
contest and resist, any action, including legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) of any Governmental Authority that is in effect and
that restricts, prevents or prohibits the consummation of the transactions contemplated by the
Transaction Documents.
5.5 Expenses. All costs and expenses incurred by ETP in connection with the Transaction
Documents and the transactions contemplated thereby shall be paid by ETP and all costs and expenses
incurred by ETE and Southern Union in connection with the Transaction Documents and the
transactions contemplated thereby shall be paid by ETE and Southern Union; provided, however, that
if any action at law or equity is necessary to enforce or interpret the terms of the Transaction
Documents, the prevailing Party shall be entitled to reasonable attorneys fees and expenses in
addition to any other relief to which such Party may be entitled. Notwithstanding the foregoing, in
the event that (a) this Agreement is terminated and (b) ETE is entitled to expense reimbursement or
a Breakup Fee (as defined in the Sigma Merger Agreement) in connection with termination of the
Sigma Merger Agreement, ETE shall pay to ETP or its designees, as promptly as possible (but in any
event within two Business Days) following receipt of an invoice therefor, all out of pocket fees
and expenses incurred by ETP or its Affiliates in connection with the transactions contemplated by
this Agreement up to $8,000,000.
5.6 Further Assurances. Subject to the terms and conditions of this Agreement, each of the
Parties shall use its commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to
consummate the transactions contemplated by the Transaction Documents. Without limiting the
generality of the foregoing, each Party will use its commercially reasonable efforts to obtain
timely all authorizations, consents and approvals of all third parties necessary in connection with
the consummation of the transactions contemplated by this Agreement prior to the Closing. The
Parties will coordinate and cooperate with each other in exchanging such information and assistance
as any of the Parties hereto may reasonably request in connection with the foregoing.
5.7 Public Statements. The Parties shall consult with each other prior to issuing any public
announcement, statement or other disclosure with respect to the Transaction Documents or the
transactions contemplated thereby and none of ETP and its Affiliates, on the one hand, nor the ETE
and its Affiliates, on the other hand, shall issue any such public announcement,
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statement or other
disclosure without having first notified ETE, on the one hand, or ETP, on the other hand; provided,
however, that any of ETP and its Affiliates, on the one hand, and ETE and its Affiliates, on the
other hand, may make any public disclosure without first so consulting with or notifying the other
Party or Parties if such disclosing party believes that it is required to do so by Law or by any
stock exchange listing requirement or trading agreement concerning the publicly traded securities
of ETP or any of its Affiliates, on the one hand, or ETE or any of its Affiliates, on the other
hand.
5.8 Tax Matters.
(a) Cooperation. Each of the Parties shall cooperate fully, as and to the extent
reasonably requested by the other Party, in connection with the filing of Tax Returns and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon the other Partys request) the provision of records and information
relevant to any such audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of any material
provided hereunder.
(b) Transfer Taxes. All transfer and other such Taxes and fees (including any
penalties and interest) incurred in connection with the Merger shall be paid equally by Southern
Union (on the one hand) and ETP (on the other hand) when due.
5.9 Joinder.
(a) ETP shall cause ETP Merger Sub to execute and deliver to ETE a joinder agreement in a form
reasonably acceptable to ETE and ETP (a Joinder Agreement) as soon as practicable after the date
hereof. Upon execution and delivery of such Joinder Agreement, ETP Merger Sub shall become a Party
under this Agreement for all purposes.
(b) Pursuant to the Sigma Merger Agreement, Southern Union and CrossCountry Energy shall
execute and deliver to ETP and ETP Merger Sub a Joinder Agreement immediately prior to the
effective time of the Sigma Merger. Upon execution and delivery of such Joinder Agreements,
Southern Union and CrossCountry Energy shall each become a Party under this Agreement for all
purposes.
5.10 Right of First Offer
(a) In the event that either ETE or Southern Union (collectively, for purposes of this
Section 5.10, the SUGS Owner) seek or propose to Transfer, directly or indirectly, all or
any material portion of the Southern Union Gas Services Business (the ROFO Interest) in one or a
series of transactions, and such Transfer is not a Permitted SUGS Transfer, then the SUGS Owner
shall first comply with the provisions of this Section 5.10 prior to Transferring or
agreeing to Transfer the ROFO Interest.
(b) The SUGS Owner shall give written notice to ETP of any proposed Transfer of the ROFO
Interest (the ROFO Notice). In the event the SUGS Owner has been approached by any Person (a
Third-Party Buyer) to purchase all or a portion of the ROFO Interest (a Third-Party Offer), the
SUGS Owner shall provide all material terms of such Third-Party Offer to
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ETP. For a period of 30
days (the ROFO Offer Period) after the date the SUGS Owner has provided ETP with a ROFO Notice
containing (if applicable) the material terms of all Third-Party Offers received by ETE, ETP shall
have the right, but not the obligation, to submit a written offer to purchase the ROFO Interest
(the ROFO Offer), on such terms and conditions as ETP may determine and which terms and
conditions shall be described in the ROFO Offer. Upon receipt of the ROFO Offer, if any, the SUGS
Owner may elect in its sole discretion to accept or reject the ROFO Offer.
(c) In the event that the SUGS Owner elects to accept the ROFO Offer, then the SUGS Owner
shall be bound to Transfer to ETP, and ETP shall be bound to purchase from the
SUGS Owner, the ROFO Interest on the terms and conditions set forth in the ROFO Offer (with
such modifications as may be mutually agreed upon by ETP and the SUGS Owner), and the definitive
agreement with respect to such Transfer of the ROFO Interest shall be entered into within 30 days
of the SUGS Owners acceptance of the ROFO Offer.
(d) In the event that the SUGS Owner rejects, or within the ROFO Offer Period does not
receive, the ROFO Offer, then for a 90-day period after the earlier of (i) the date on which the
SUGS Owner rejects the ROFO Offer and (ii) the expiration of the ROFO Offer Period (the
Solicitation Period), the SUGS Owner may solicit a Third-Party Offer. If the SUGS Owner receives
a Third-Party Offer within the Solicitation Period, and the consideration payable for the ROFO
Interest pursuant to such Third Party Offer exceeds the consideration payable for the ROFO Interest
pursuant the ROFO Offer (such Third Party Offer is referred to as a Qualifying Third Party
Offer), the SUGS Owner may, within 30 days after the end of the Solicitation Period, enter into a
definitive agreement (a Third-Party Agreement) to Transfer the ROFO Interest to the Third-Party
Buyer making the Qualifying Third-Party Offer on terms no less favorable to the SUGS Owner than the
Qualifying Third Party Offer. Any noncash consideration set forth in the ROFO Offer or a Third
Party Offer shall be valued at its fair market value, as agreed by the SUGS Owner and ETP, and
failing such agreement, as determined by an independent third party appraiser selected by the SUGS
Owner and reasonably acceptable to ETP (the costs for which third party appraiser shall be shared
equally by the SUGS Owner, on the one hand, and ETP, on the other hand). The SUGS Owner shall give
written notice to ETP not less than 5 days prior to the execution of any Third-Party Agreement,
which written notice shall contain all material terms of the Third-Party Agreement. The SUGS Owner
shall not amend or modify any executed Third-Party Agreement in a manner such that the
consideration payable thereunder for the ROFO Interest would no longer constitute a Qualifying
Third-Party Offer.
(e) Prior to the date that is 30 days after the end of the Solicitation Period, the SUGS Owner
may not enter into a Third-Party Agreement or otherwise Transfer or agree to Transfer the ROFO
Interest, in each case in respect of a Third Party Offer that is not a Qualifying Third Party Offer
without ETPs prior written consent, which may be withheld in ETPs sole discretion. After such
date the ROFO Interest shall once again become subject to the restrictions of this Section
5.10, and the SUGS Owner shall no longer be permitted to enter into a Third-Party Agreement or
otherwise Transfer or agree to Transfer the ROFO Interest without again fully complying with the
provisions of this Section 5.10.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Each Party. The respective obligation of each Party to
consummate the Closing is subject to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any one or more of which may be waived in writing, in whole or in part,
as to a Party by such Party (in such Partys sole discretion):
(a) Governmental Restraints. No order, decree or injunction of any Governmental
Authority shall be in effect, and no Law shall have been enacted or adopted that enjoins, prohibits
or makes illegal the consummation of the transactions contemplated by the Transaction Documents and
no Proceeding by any Governmental Authority with respect to the transactions contemplated by the
Transaction Documents shall be pending that seeks to restrain, enjoin, prohibit or delay the
transactions contemplated by the Transaction Documents.
(b) Sigma Merger. Each of the conditions to the Sigma Merger shall have been
fulfilled (or waived by all of the parties to the Sigma Merger Agreement in accordance with the
terms thereof) or shall be reasonably capable of being fulfilled at the effective time of the Sigma
Merger in accordance with the terms of the Sigma Merger Agreement, and the parties to the Sigma
Merger Agreement shall be ready, willing and able to consummate the Sigma Merger.
6.2 Conditions to Obligations of ETE. The obligation of ETE to consummate the Closing is
subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions,
any one or more of which may be waived in writing, in whole or in part, by ETE (in ETEs sole
discretion):
(a) Representations and Warranties of ETP. The representations and warranties of ETP
in this Agreement shall be true and correct (without regard to any reference as to materiality,
materially, material respects or ETP Material Adverse Effect) in all respects as of the Closing
Date as if remade on the Closing Date (except for representations and warranties made as of a
specific date, which shall be true and correct in all respects as of such specific date), with only
such failures to be so true and correct as has not had, and would not reasonably be expected to
have, an ETP Material Adverse Effect.
(b) Performance. ETP shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or complied with by ETE on
or prior to the Closing Date.
(c) Closing Certificate. ETE shall have received a certificate, dated as of the
Closing Date, signed by an executive officer of ETP certifying that the conditions set forth in
Sections 6.2(a) and 6.2(b) have been satisfied.
(d) Closing Deliverables. ETP shall have delivered or caused to be delivered all of
the closing deliveries set forth in Section 2.10(b).
6.3 Conditions to Obligations of ETP. The obligation of ETP to consummate the Closing is
subject to the satisfaction, on or prior to the Closing Date, of each of the following
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conditions,
any one or more of which may be waived in writing, in whole or in part, by ETP (in ETPs sole
discretion):
(a) Representations and Warranties of ETE. The representations and warranties of ETE
in this Agreement shall be true and correct (without regard to any reference as to materiality,
materially, material respects or Citrus Parties Material Adverse Effect) in all respects as of the
Closing Date as if remade on the Closing Date (except for representations and
warranties made as of a specific date, which shall be true and correct in all respects as of
such specific date), with only such failures to be so true and correct as has not had, and would
not reasonably be expected to have, a Citrus Parties Material Adverse Effect.
(b) Performance. ETE shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or complied with by ETE on
or prior to the Closing Date.
(c) Closing Certificate. ETP shall have received a certificate, dated as of the
Closing Date, signed by an executive officer of ETE certifying that the conditions set forth in
Sections 6.3(a) and 6.3(b) have been satisfied.
(d) ETP Loan Documents Waiver. ETP shall have received waivers and/or amendments of
the ETP Loan Documents related to the transactions contemplated hereby acceptable to ETP.
(e) Citrus Parties Material Adverse Effect. There shall not have occurred after the
date of this Agreement, a Citrus Parties Material Adverse Effect, or any event or development that
could, individually or in the aggregate, reasonably be expected to result in a Citrus Parties
Material Adverse Effect.
(f) Amendments to Sigma Merger Agreement. The Sigma Merger Agreement shall not have
been amended, supplemented, restated or otherwise modified in a manner adverse to ETPs interest in
the acquisition of 50% of the equity interests of Citrus, or which would be reasonably likely to
prevent or materially delay the consummation of the transactions contemplated by this Agreement.
(g) Closing Deliverables. ETE and Southern Union shall have delivered or caused to be
delivered all of the closing deliveries set forth in Section 2.10(a).
(h) Joinder Agreements. The Joinder Agreements referred to in Section 5.9(b)
shall have been executed and delivered to ETP.
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ARTICLE VII
TERMINATION RIGHTS
7.1 Termination Rights. This Agreement may be terminated at any time prior to the Closing as
follows:
(a) By mutual written consent of ETE and ETP;
(b) By either ETE or ETP, if any Governmental Authority of competent jurisdiction shall have
issued a final and non-appealable order, decree or judgment prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) By either ETE or ETP in the event that the Closing has not occurred on or prior to
December 31, 2012 (the Termination Date); provided, however, that (i) ETE may not
terminate this Agreement pursuant to this Section 7.1(c) if such failure of the
Closing to occur is due to the failure of ETE to perform and comply in all material respects with
the covenants and agreements to be performed or complied with by ETE and (ii) ETP may not terminate
this Agreement pursuant to this Section 7.1(c) if such failure of the Closing to occur is
due to the failure of ETP to perform and comply in all material respects with the covenants and
agreements to be performed or complied with by ETP;
(d) By ETE if there shall have been a breach or inaccuracy of ETPs representations and
warranties in this Agreement or a failure by ETP to perform its covenants and agreements in this
Agreement, in any such case in a manner that would result in, if occurring and continuing on the
Closing Date, the failure of the conditions to the Closing set forth in Section 6.2(a) or
Section 6.2(b), unless such failure is reasonably capable of being cured, and ETP is using
all commercially reasonable efforts to cure such failure by the Termination Date; provided,
however, that ETE may not terminate this Agreement pursuant to this Section 7.1(d) if (i)
any of ETEs representations and warranties shall have become and continue to be untrue in a manner
that would cause the condition set forth in Section 6.3(a) not to be satisfied or (ii)
there has been, and continues to be, a failure by ETE to perform its covenants and agreements in
such a manner as would cause the condition set forth in Section 6.3(b) not to be satisfied;
or
(e) By ETP if there shall have been a breach or inaccuracy of ETEs representations and
warranties in this Agreement or a failure by ETE to perform its covenants and agreements in this
Agreement, in any such case in a manner that would result in, if occurring and continuing on the
Closing Date, the failure of the conditions to the Closing set forth in Section 6.3(a) or
Section 6.3(b), unless such failure is reasonably capable of being cured, and ETE is using
all commercially reasonable efforts to cure such failure by the Termination Date; provided,
however, that ETP may not terminate this Agreement pursuant to this Section 7.1(e) if (i)
any of ETPs representations and warranties shall have become and continue to be untrue in a manner
that would cause the condition set forth in Section 6.2(a) not to be satisfied or (ii)
there has been, and continues to be, a failure by ETP to perform its covenants and agreements in
such a manner as would cause the condition set forth in Section 6.2(b) not to be satisfied.
(f) By ETE or ETP if the Sigma Merger Agreement is terminated.
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7.2 Effect of Termination. In the event of the termination of this Agreement pursuant to
Section 7.1 all rights and obligations of the Parties under this Agreement shall terminate,
except for the provisions of this Section 7.2, Article IX, Section 5.5 and
Section 5.7; provided, however, that no termination of this Agreement shall relieve any
Party from any liability for or arising out of any willful or intentional breach of this Agreement
by such Party or for Fraud by such Party and all rights and remedies of a non-breaching Party under
this Agreement in the case of any such willful or intentional breach or Fraud, at law and in
equity, shall be preserved, including the right to recover reasonable attorneys fees and expenses.
Except to the extent otherwise provided in the immediately preceding sentence, the Parties agree
that, if this Agreement is terminated, the Parties shall have no liability to each other under or
relating to this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Southern Union. Subject to the terms of this Article VIII,
from and after the date hereof (with respect to Section 8.1(b)) ETE shall, and from and
after the Closing (with respect to Section 8.1(a), (c) and (d)) Southern
Union shall, indemnify and hold harmless ETP and its respective partners, members, managers,
directors, officers, employees, consultants and permitted assigns (collectively, the ETP
Indemnitees), to the fullest extent permitted by Law, from and against any losses, claims,
damages, liabilities and costs and expenses (including reasonable attorneys fees and expenses)
(collectively, Losses) incurred, arising out of or relating to the following:
(a) the failure of any representation or warranty of ETE contained in this Agreement to be
true and correct (without regard to any reference as to materiality, materially, material respects
or Citrus Parties Material Adverse Effect) as of the date of this Agreement or as of the Closing
(as if made on and as of the Closing); provided that the truth and correctness of representations
and warranties that by their terms expressly speak of a specified date will be determined as of
such date;
(b) any breach of any of the covenants or agreements of ETE or Southern Union contained in
this Agreement;
(c) any Taxes of the Citrus Parties attributable to a Tax period or portion thereof that ends
on or before the Closing Date (excluding Taxes that Southern Union is obligated to pay as set forth
in Section 5.8(b)); and
(d) any (i) employee or former employee of CrossCountry Energy or any Subsidiary thereof with
respect to any act, omission or event occurring on or before the Closing Date or (ii) any employee
benefit plan, within the meaning of Section 3(3) of ERISA, presently or previously maintained,
sponsored, or contributed to by ETE or any ERISA Affiliate of ETE, including Southern Union or any
ERISA Affiliate of Southern Union; and
8.2 Indemnification by ETP. Subject to the terms of this Article VIII, from and after
the Closing, ETP shall indemnify and hold harmless ETE and Southern Union and each of their
respective directors, officers, employees, consultants and permitted assigns (collectively, the
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ETE/Southern Union Indemnitees and, together with the ETP Indemnitees, the Indemnitees), to the
fullest extent permitted by Law, from and against Losses incurred, arising out of or relating to:
(a) the failure of any representation or warranty of ETP contained in this Agreement to be
true and correct (without regard to any reference as to materiality, materially, material respects
or ETP Material Adverse Effect)as of the date of this Agreement or as of the Closing (as if made on
and as of the Closing); provided that the truth and correctness of representations and warranties
that by their terms expressly speak of a specified date will be determined as of such date; and
(b) any breach of any of the covenants or agreements of ETP contained in this Agreement.
8.3 Limitations and Other Indemnity Claim Matters. Notwithstanding anything to the contrary
in this Article VIII or elsewhere in this Agreement (except the last sentence of
Section 5.5, which shall not be affected by this Section 8.3), the following terms
shall apply to any claim for monetary damages arising out of this Agreement or related to the
transactions contemplated hereby:
(a) De Minimis. No indemnifying party (an Indemnifying Party) will have any
liability under this Article VIII in respect of any individual claim involving Losses
arising under Section 8.1(a) or Section 8.2(a) to any single ETE Indemnitee or ETP
Indemnitee, as applicable, of less than $300,000 (each, a De Minimis Claim). Notwithstanding the
forgoing, this Section 8.3(a) shall not apply to Losses arising out of or relating to (i)
any breach or inaccuracy of the ETE Fundamental Representations or the ETP Fundamental
Representations or (ii) the matters described in Section 8.1(c), or Section 8.1(d).
(b) Deductible.
(i) Southern Union will not have any liability under Section 8.1(a) unless and
until the ETP Indemnitees have suffered Losses in excess of $15,000,000 in the aggregate
(the Deductible) arising from Claims under Section 8.1(a) that are not De Minimis
Claims, and then, subject to Section 8.3(c)(i), ETE will have liability for all
recoverable Losses claimed under Section 8.1(a) (including De Minimis Claims);
provided that the limitation set forth in this Section 8.3(b)(i) shall not apply to
Losses arising out of or relating to: (A) any breach or inaccuracy of the representations
and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4,
3.5, 3.6, 3.16 or 3.18 (collectively, the ETE Fundamental
Representations) (B) any breach of any covenants or agreements of ETE set forth in this
Agreement or (C) the matters described in Section 8.1(c), Section 8.1(d) and
Section 8.1(e).
(ii) ETP will not have any liability under Section 8.2(a) until the
ETE/Southern Union Indemnitees have suffered Losses in excess of the Deductible, and then,
subject to Section 8.3(c)(ii), ETP will have liability for all recoverable Losses
claimed under Section 8.2(a) (including De Minimis Claims); provided that the
limitation set forth in this Section 8.3(b)(ii) shall not apply to Losses arising
out of or relating to: (A) any
26
breach or inaccuracy of the representations and warranties set forth in Sections 4.1, 4.2, 4.3 4.4 and 4.6
(collectively, the ETP Fundamental Representations) or (B) any breach of any covenants or
agreements of ETP set forth in this Agreement
(c) Cap.
(i) Southern Unions aggregate liability under this Agreement and from the transactions
contemplated hereby shall not exceed 10% of the Merger Consideration (the Cap); provided
that the limitation set forth in this Section 8.3(c)(i) shall not apply to Losses
arising out of or relating to: (i) any breach or inaccuracy of any ETE Fundamental
Representation, (ii) any breach of any covenants or agreements of ETE set forth in this
Agreement or (iii) the matters described in Section 8.1(c), Section
8.1(d) and Section 8.1(e).
(ii) ETPs aggregate liability under this Agreement and from the transactions
contemplated hereby shall not exceed the Cap; provided that the limitation set forth in this
Section 8.3(c)(ii) shall not apply to Losses arising out of or relating to: (A) any
breach or inaccuracy of any ETP Fundamental Representation or (B) any breach of any
covenants or agreements of ETP set forth in this Agreement that by their terms are to be
performed after the Closing Date.
(d) Survival; Claims Period.
(i) If the Closing occurs, the representations, warranties, covenants and agreements of
the Parties under this Agreement shall survive the execution and delivery of this Agreement
and shall continue in full force and effect until the one-year anniversary of the Closing
Date (the Expiration Date); provided that (i) the ETE Fundamental Representations (other
than the representations set forth in Section 3.16) and the ETP Fundamental
Representations shall survive indefinitely, (ii) the representations and warranties set
forth in Section 3.16 (Taxes) and the obligations of ETE pursuant to Section
8.1(c) shall survive the execution and delivery of this Agreement and shall continue in
full force and effect until ninety (90) days after the expiration of the applicable statute
of limitations (which shall be deemed to be the Expiration Date with respect to such
representations and warranties) and (iii) any covenants or agreements contained in this
Agreement that by their terms are to be performed after the Closing Date shall survive until
fully discharged.
(ii) If the Closing occurs, no action for a breach of any representation or warranty
contained herein (other than representations or warranties that survive indefinitely
pursuant to Section 8.3(d)(i)) shall be brought after the Expiration Date, except
for claims of which a Party has received a Claim Notice setting forth in reasonable detail
the claimed misrepresentation or breach of warranty with reasonable detail, prior to the
Expiration Date.
(e) Calculation of Losses. In calculating amounts payable to any ETP Indemnitee or
ETE Indemnitee (each such person, an Indemnified Party) for a claim for indemnification
hereunder, the amount of any indemnified Losses shall be determined without duplication of any
27
other Loss for which an indemnification claim has been made or could be made under any other
representation, warranty, covenant, or agreement and shall be computed net of (i) payments actually
recovered by the Indemnified Party under any insurance policy with respect to such Losses and (ii)
any prior or subsequent actual recovery by the Indemnified Party from any Person with respect to
such Losses.
(f) Waiver of Certain Damages. Notwithstanding any other provision of this Agreement,
in no event shall any Party be liable for punitive, special, remote, speculative or lost profits
damages of any kind or nature, regardless of the form of action through which such damages are
sought, except (i) for any such damages recovered by any third party against an Indemnified Party
in respect of which such Indemnified Party would otherwise be entitled to
indemnification pursuant to the terms hereof and (ii) in the case of consequential damages,
(A) to the extent an Indemnified Party is required to pay consequential damages to an unrelated
third party and (B) to the extent of consequential damages to an Indemnified Party arising from
fraud or willful conduct.
(g) Sole and Exclusive Remedy. Except for the assertion of any claim based on fraud
or willful misconduct, the remedies provided in this Article VIII shall be the sole and
exclusive legal remedies of the Parties, from and after the Closing, with respect to this Agreement
and the transactions contemplated hereby.
8.4 Indemnification Procedures.
(a) Each Indemnitee agrees that promptly after it becomes aware of facts giving rise to a
claim by it for indemnification pursuant to this Article VIII, such Indemnitee must assert
its claim for indemnification under this Article VIII (each, a Claim) by providing a
written notice (a Claim Notice) to the Indemnifying Party allegedly required to provide
indemnification protection under this Article VIII specifying, in reasonable detail, the
nature and basis for such Claim (e.g., the underlying representation, warranty, covenant or
agreement alleged to have been breached). Notwithstanding the foregoing, an Indemnitees failure
to send or delay in sending a third party Claim Notice will not relieve the Indemnifying Party from
liability hereunder with respect to such Claim except to the extent the Indemnifying Party is
prejudiced by such failure or delay and except as is otherwise provided herein, including in
Section 8.3(e).
(b) In the event of the assertion of any third party Claim for which, by the terms hereof, an
Indemnifying Party is obligated to indemnify an Indemnitee, the Indemnifying Party will have the
right, at such Indemnifying Partys expense, to assume the defense of same including the
appointment and selection of counsel on behalf of the Indemnitee so long as such counsel is
reasonably acceptable to the Indemnitee. If the Indemnifying Party elects to assume the defense of
any such third party Claim, it shall within 30 days of its receipt of the Claim Notice, notify the
Indemnitee in writing of its intent to do so. The Indemnifying Party will have the right to settle
or compromise or take any corrective or remediation action with respect to any such Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted by the Indemnifying Party
to a final conclusion or settled at the discretion of the Indemnifying Party. The Indemnitee will
be entitled, at its own cost, to participate with the Indemnifying Party in the defense of any such
Claim. If the Indemnifying Party assumes the defense of any such third-party Claim but fails to
diligently prosecute such Claim, or if the Indemnifying Party does
28
not assume the defense of any
such Claim, the Indemnitee may assume control of such defense and in the event it is determined
pursuant to the procedures set forth in Article IX that the Claim was a matter for which
the Indemnifying Party is required to provide indemnification under the terms of this Article
VIII, the Indemnifying Party will bear the reasonable costs and expenses of such defense
(including reasonable attorneys fees and expenses). Notwithstanding the foregoing, the
Indemnifying Party may not assume the defense of the third-party Claim (but will be entitled at its
own cost to participate with the Indemnified Party in the defense of any such Claim) if the
potential Losses under the third-party Claim could reasonably and in good faith be expected to
exceed, in the aggregate when combined with all claims previously made by the
Indemnified Party to the Indemnifying Party under this Article VIII, the maximum
amount for which the Indemnifying Party may be liable pursuant to Section 8.3(c); provided,
however, that to the extent the Parties are not in agreement with respect to the calculation of
potential Losses the Indemnifying Party shall have the right to assume the defense of the
third-party Claim in accordance herewith until the Parties have agreed or a final non-appealable
judgment has been entered into, with respect to the determination of the potential Losses.
(c) Notwithstanding anything to the contrary in this Agreement, the Indemnifying Party will
not be permitted to settle, compromise, take any corrective or remedial action or enter into an
agreed judgment or consent decree, in each case, that subjects the Indemnitee to any criminal
liability, requires an admission of guilt, wrongdoing or fault on the part of the Indemnitee or
imposes any continuing obligation on or requires any payment from the Indemnitee without the
Indemnitees prior written consent.
8.5 No Reliance.
(a) THE REPRESENTATIONS AND WARRANTIES OF ETE CONTAINED IN ARTICLE III CONSTITUTE THE
SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF ETE TO ETP IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. THE REPRESENTATIONS OF ETP CONTAINED IN ARTICLE IV
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF ETP TO ETE IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES,
NO PARTY OR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH
RESPECT TO SUCH PARTY OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH PARTY DISCLAIMS
ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH PARTY OR ANY OF ITS AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE
DISTRIBUTION OF, OR ANY PERSONS RELIANCE ON, ANY INFORMATION, DISCLOSURE OR OTHER DOCUMENT OR
OTHER MATERIAL MADE AVAILABLE TO ANY PARTY IN ANY DATA ROOM, ELECTRONIC DATA ROOM, MANAGEMENT
PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT). EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, EACH PARTY
DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST,
STATEMENT, OR INFORMATION MADE, COMMUNICATED OR FURNISHED (ORALLY OR IN WRITING)
29
TO ANY OTHER PARTY
OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING OPINIONS,
INFORMATION, PROJECTIONS, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO ANY PARTY OR ANY
OFFICER, DIRECTOR, EMPLOYEE, AGENT OR REPRESENTATIVE OF SUCH PARTY OR ANY OF ITS AFFILIATES).
Except as provided in Sections 7.2, 8.1 and 8.2, no Party nor any
Affiliate of a Party shall assert or threaten, and each Party hereby waives and shall cause such
Affiliates to waive, any claim or other method of recovery, in contract, in tort or under
applicable Law, against any Person that is not a Party (or a successor to a Party) relating to the
transactions contemplated by this Agreement.
8.6 ETE Guarantee. Upon the joinder of Southern Union of this Agreement pursuant to
Section 5.9, ETE will unconditionally guarantee the obligations of Southern Union under
this Article VIII pursuant to a written agreement satisfactory to ETP.
ARTICLE IX
GOVERNING LAW AND CONSENT TO JURISDICTION
9.1 Governing Law. This Agreement shall be governed by and construed in accordance with the
Laws of the State of Delaware, without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would cause the application
of the Laws of any jurisdiction other than the State of Delaware.
9.2 Jurisdiction; Specific Enforcement; Enforcement of Rights.
(a) The Parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed, or were threatened to be not performed, in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in
addition to any other remedy that may be available to it, including monetary damages, each of the
parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement exclusively in the Delaware
Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or
federal court within the State of Delaware), and all such rights and remedies at law or in equity
shall be cumulative. The parties further agree that no party to this Agreement shall be required to
obtain, furnish or post any bond or similar instrument in connection with or as a condition to
obtaining any remedy referred to in this Section 9.2 and each party waives any objection to
the imposition of such relief or any right it may have to require the obtaining, furnishing or
posting of any such bond or similar instrument. In addition, each of the parties hereto irrevocably
agrees that any legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any judgment in respect of
this Agreement and the rights and obligations arising hereunder brought by the other party hereto
or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of
Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware
Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal
court within the State of Delaware). Each of the Parties hereto hereby
30
irrevocably submits with regard to any such action or proceeding for itself and in respect of
its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts
and agrees that it will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than the aforesaid courts. Each of the Parties
hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above named courts for any reason other than the
failure to serve in accordance with this Section 9.2, (b) any claim that it or its property
is exempt or immune from jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted
by the applicable Law, any claim that (i) the suit, action or proceeding in such court is brought
in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
(b) Each of the Parties agrees that the ETP Conflicts Committee shall have the sole and
exclusive authority to take or refrain from taking any action on behalf of ETP with respect to any
legal action or Proceeding with respect to this Agreement and the rights and obligations arising
hereunder or for recognition and enforcement of any judgment in respect of this Agreement.
9.3 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE X
GENERAL PROVISIONS
10.1 Amendment and Modification; Conflicts Committee Control. This Agreement may be amended,
modified or supplemented only by written agreement of ETE and ETP. Notwithstanding anything in
this Agreement to the contrary, in the case of ETP, in addition to any approvals required by the
ETP Partnership Agreement or under this Agreement, any amendments, modifications or supplements to
this Agreement, or any termination of this Agreement, in either case by ETP, must be approved by
the ETP Conflicts Committee.
10.2 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure
of any of the Parties to comply with any obligation, covenant, agreement or condition in this
Agreement may be waived by the Party or Parties entitled to the benefits thereof only by a written
instrument signed by the Party or Parties granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or
estoppel with respect to, any subsequent or other failure; provided, however, that in the case
of ETP, in addition to any approvals required by the ETP Partnership Agreement or under this
Agreement, any such waivers must be approved by the ETP Conflicts Committee.
31
10.3 Notices. Any notice, demand or communication required or permitted under this Agreement shall
be in writing and delivered personally, by reputable overnight delivery service or other courier or
by certified mail, postage prepaid, return receipt requested, and shall be deemed to have been duly
given (a) as of the date of delivery if delivered personally or by overnight delivery service or
other courier or (b) on the date receipt is acknowledged if delivered by certified mail, addressed
as follows; provided that a notice of a change of address shall be effective only upon receipt
thereof and provided further that any notice, demand or communication delivered pursuant to this
Section 10.3 shall also be made by facsimile, email or telephone, none of which shall
constitute notice:
If to ETP to:
Energy Transfer Partners, L.P.
3738 Oak Lawn
Dallas, TX 75219
Attention: General Counsel and Chairman of the Conflicts Committee
Facsimile: + 1 (214) 981-0703
Phone: + 1 (214) 981-0700
Email: tom.mason@energytransfer.com
With copies (which shall not constitute notice) to:
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, Texas 77002
Facsimile: + 1 (713) 758-2346
Attention: Jeffery B. Floyd &
David P. Oelman
If to ETE to:
Energy Transfer Equity, L.P.
3738 Oak Lawn
Dallas, TX 75219
Attention: Thomas P. Mason, Vice President, General Counsel and Secretary
Facsimile: + 1 (214) 981-0703
Phone: + 1 (214) 981-0700
Email: tom.mason@energytransfer.com
With copies (which shall not constitute notice) to:
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Facsimile: + 1 (212) 751-4864
Attention: Charles E. Carpenter
32
10.4 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and
their successors and permitted assigns. No Party may assign or transfer this Agreement or any of
its rights, interests or obligations under this Agreement without the prior written consent of the
other Parties; provided, that ETE shall be permitted to assign, and Southern Union shall be
permitted to assume, all of ETEs rights, benefits and obligations under this Agreement; provided,
further, that no such assignment shall relieve ETE of its obligations hereunder. Any attempted
assignment or transfer in violation of this Agreement shall be null, void and ineffective.
10.5 Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the
benefit of the Parties hereto and their respective successors and permitted assigns. Except as
provided in Sections 8.1 and 8.2, none of the provisions of this Agreement shall be
for the benefit of or enforceable by any third party, including any creditor of any Party or any of
their Affiliates. No such third party shall obtain any right under any provision of this Agreement
or shall by reasons of any such provision make any claim in respect of any liability (or otherwise)
against any other Party.
10.6 Entire Agreement. This Agreement, the Confidentiality Agreement and the other Transaction
Documents constitute the entire agreement and understanding of the Parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, both oral and written,
among the Parties or between any of them with respect to such subject matter.
10.7 Severability. Whenever possible, each provision or portion of any provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable Law, but if any
provision or portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of any provision in
such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.8
Representation by Counsel. Each of the Parties agrees that it has been represented by independent counsel of its
choice during the negotiation and execution of this Agreement and the documents referred to herein,
and that it has executed the same upon the advice of such independent counsel. Each Party and its
counsel cooperated in the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto shall be deemed the work product of the Parties and
may not be construed against any Party by reason of its preparation. Therefore, the Parties waive
the application of any Law providing that ambiguities in an agreement or other document will be
construed against the Party drafting such agreement or document.
10.9 Disclosure Schedules. The inclusion of any information (including dollar amounts) in any
section of the ETE Disclosure Schedule or the ETP Disclosure Schedule shall not be deemed to be an
admission or acknowledgment by a Party that such information is required to be listed on such
section of the ETE Disclosure Schedule or the ETP Disclosure
33
Schedule or is material to or outside
the ordinary course of the business of such Party or the Person to which such disclosure relates.
The information contained in this Agreement, the Exhibits and the Schedules is disclosed solely for
purposes of this Agreement, and no information contained in this Agreement, the Exhibits or the
Schedules shall be deemed to be an admission by any Party to any third Person of any matter
whatsoever (including any violation of a legal requirement or breach of contract). The disclosure
contained in one disclosure schedule contained in the ETE Disclosure Schedule or ETP Disclosure
Schedule may be incorporated by reference into any other disclosure schedule contained therein, and
shall be deemed to have been so incorporated into any other disclosure schedule so long as it is
readily apparent that the disclosure is applicable to such other disclosure schedule.
10.10 Facsimiles; Counterparts. This Agreement may be executed by facsimile signatures by any Party
and such signature shall be deemed binding for all purposes hereof, without delivery of an original
signature being thereafter required. This Agreement may be executed in one or more counterparts,
each of which, when executed, shall be deemed to be an original and all of which together shall
constitute one and the same document.
[Signature page follows]
34
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its
respective duly authorized officers as of the date first above written.
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Energy Transfer Partners GP, L.P., |
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its general partner |
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its general partner |
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Vice President Mergers & Acquisitions
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ENERGY TRANSFER EQUITY, L.P. |
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Signature Page to
Agreement and Plan of Merger
EXHIBIT A
Affiliate means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a specified Person. A Person shall
be deemed to control another Person if such first Person possesses, directly or indirectly, the
power to direct, or cause the direction of, the management and policies of such other Person,
whether through the ownership of voting securities, by contract or otherwise.
Agreement is defined in the recitals to this Agreement.
Business Day means any day that is not a Saturday, Sunday or other day on which commercial
banks in the State of Texas are authorized or obligated to be closed by applicable Laws.
Cap is defined in Section 8.3(c)(i).
Cash Consideration means $1,895,000,000.
CCE Acquisition means CCE Acquisition LLC, a Delaware limited liability company.
CCE Holdings is defined in the recitals to this Agreement.
Certificate of Merger is defined in Section 2.2.
Citrus is defined in the recitals to this Agreement.
Citrus Capital Stock Agreement means that certain Capital Stock Agreement, dated June 30,
1986, among El Paso Energy Corporation (as successor interest to Sonat, Inc. by virtue of a
merger), CrossCountry Energy (as successor in interest to Enron Corp., which in turn was the
successor in interest to InterNorth, Inc. by virtue of a name change, which in turn was the
successor in interest to Houston Natural Gas corporation by virtue of a merger) and Citrus Corp.
relating to the ownership by El Paso and CrossCountry Energy of the capital stock of Citrus and its
wholly owned subsidiaries, as amended.
Citrus Entities means Citrus, Florida Gas Transmission Company, LLC, a Delaware limited
liability company and Citrus Energy Services, Inc., a Delaware corporation.
Citrus Financial Statements are defined in Section 3.10(a).
Citrus Material Contract is defined in Section 3.13(a).
Citrus Parties means collectively CrossCountry Energy, the Citrus Entities, and each other
Subsidiary of CrossCountry Energy.
Citrus Parties Material Adverse Effect means any Material Adverse Effect in respect of the
Citrus Parties.
Claim is defined in Section 8.4(a).
A-1
Claim Notice is defined in Section 8.4(a).
Closing is defined in Section 2.9.
Closing Date is defined in Section 2.9.
Code means the Internal Revenue Code of 1986, as amended.
Confidentiality Agreement means the Confidentiality Agreement dated as of June 30, 2011, by
and between ETE and ETP.
Contract means any agreement, contract, obligation, promise, understanding or undertaking
(whether written or oral and whether express or implied) that is legally binding.
Control means, where used with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such
Person, whether through ownership of Voting Interests, by contract or otherwise, and the terms
Controlling and Controlled have correlative meanings.
Creditors Rights is defined in Section 3.2(c).
CrossCountry Energy is defined in the recitals to this Agreement.
Deductible is defined in Section 8.3(b)(i).
Delaware Act is defined in Section 2.1.
De Minimis Claim is defined in Section 8.3(a).
Disclosure Schedule means, (i) with respect to ETE, the ETE Disclosure Schedule and (ii)
with respect to ETP, the ETP Disclosure Schedule.
Effective Time is defined in Section 2.2.
Environmental Laws means any and all Laws pertaining to the prevention of pollution, the
protection of human health (including worker health and safety) and the environment (including
ambient air, surface water, ground water, land, surface or subsurface strata and natural
resources), and the investigation, removal and remediation of contamination.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means, with respect to any entity, trade or business, any other entity,
trade or business that is a member of a group described in Section 414(b),(c), (m) or (o) of the
Code or Section 4001(b)(l) of ERISA that includes the first entity, trade or business, or that is a
member of the same controlled group as the first entity, trade or business pursuant to section
4001(a)(14) of ERISA.
ETE is defined in the recitals to this Agreement.
A-2
ETE Fundamental Representations is defined in Section 8.3(b)(i).
ETE Disclosure Schedule means the disclosure schedule to this Agreement prepared by ETE and
delivered to ETP on the Execution Date.
ETE/Southern Union Indemnitees is defined in Section 8.2.
ETE/Southern Union Merger Parties means ETE, Southern Union and CrossCountry Energy.
ETP is defined in the recitals to this Agreement.
ETP Board means the Board of Directors of Energy Transfer Partners, L.L.C., a
Delaware limited liability company.
ETP Common Units means common units representing limited partner interests in ETP.
ETP Conflicts Committee means the Conflicts Committee of the ETP Board, as constituted by
resolution of the ETP Board on June 30, 2011, as it may be reconstituted by the ETP Board from time
to time with membership in accordance with the definition of Conflicts Committee in the ETP
Partnership Agreement.
ETP Credit Agreement means the Amended and Restated Credit Agreement, dated as of July 20,
2007, by and among ETP as Borrower, Wachovia, Bank National Association, as Administrative Agent,
and the lenders party thereto, as amended, supplemented or otherwise modified from time to time
ETP Debt is defined in Section 2.8.
ETP Disclosure Schedule means the disclosure schedule to this Agreement prepared by ETP and
delivered to ETE on the Execution Date.
ETP Fundamental Representations is defined in Section 8.3(b)(ii).
ETP Indemnitees is defined in Section 8.1.
ETP Loan Documents means the Loan Documents as defined in the ETP Credit Agreement.
ETP Material Adverse Effect means any Material Adverse Effect in respect of ETP.
ETP Merger Parties means ETP and ETP Merger Sub.
ETP Merger Sub is defined in the recitals to this Agreement.
ETP Partnership Agreement means the Second Amended and Restated Agreement of Limited
Partnership of Energy Transfer Partners, L.P., as amended and in effect as of the date of this
Agreement.
A-3
ETP Partnership Agreement Amendment is defined in the recitals to this Agreement.
Execution Date is defined in the recitals to this Agreement.
Expiration Date is defined in Section 8.3(d)(i).
FERC means the Federal Energy Regulatory Commission of the United States of America.
Fraud means actual fraud involving a knowing and intentional misrepresentation of a material
fact.
GAAP means generally accepted accounting principles in the United States of America.
Governmental Authority means any executive, legislative, judicial, regulatory or
administrative agency, body, commission, department, board, court, tribunal, arbitrating body or
authority of the United States or any foreign country, or any state, local or other governmental
subdivision thereof.
Hazardous Substances means each substance, waste or material regulated, defined, designated
or classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant
or toxic substance under any Environmental Law; provided that the term Hazardous Substances shall
be deemed not to include petroleum, petroleum products, natural gas or natural gas liquids that are
in containers, pipelines (including natural gas storage facilities) or vessels that are in good
condition and compliant with applicable Environmental Laws.
Indemnified Party is defined in Section 8.3(e).
Indemnifying Party is defined in Section 8.3(a).
Indemnitees is defined in Section 8.2.
Intellectual Property means patents, trademarks, copyrights, and trade secrets.
Interim Financial Statements is defined in Section 3.10(a).
Joinder Agreement is defined in Section 5.9(a).
Knowledge means with respect to ETE, the actual knowledge, after reasonable investigation,
of Kelcy Warren, John McReynolds, Martin Salinas, Thomas P. Mason, Jerry Langdon, Mike Smith and
Mackie McCrea.
Law means any law, statute, code, ordinance, order, rule, rule of common law, regulation,
judgment, decree, injunction, franchise, permit, certificate, license or authorization of any
Governmental Authority.
A-4
Lien means, with respect to any property or asset, (i) any mortgage, pledge, security
interest, lien or other similar property interest or encumbrance in respect of such property or
asset, and (ii) any easements, rights-of-way, restrictions, restrictive covenants, rights, leases
and other encumbrances on title to real or personal property (whether or not of record).
Losses is defined in Section 8.1.
Material Adverse Effect means, with respect to any Person, a material adverse event, change,
effect, development, condition or occurrence on or with respect to the business, financial
condition or continuing results of operations of such Persons and its Subsidiaries, taken as a
whole ; provided, however, that, a Material Adverse Effect shall not be deemed to have occurred as
a result of any of the following changes, events or developments (either alone or in combination):
(a) any change in general economic or financial markets which does not have a disproportionate
impact on the business of such Person and its Subsidiaries; (b) any change in natural gas prices
which does not have a disproportionate impact on the business of such Person and its Subsidiaries;
(c) any change affecting the natural gas transportation industry generally which does not have a
disproportionate impact on the business of such Person and its Subsidiaries; (d) any change in
accounting requirements or principles imposed by GAAP or any change in Law after the Execution Date
which, in each case, does not have a disproportionate impact on the business of such Person and its
Subsidiaries; or (e) any change resulting from the execution of this Agreement or the announcement
of the transactions contemplated hereby.
Merger is defined in the recitals to this Agreement.
Merger Consideration means the Cash Consideration and the Unit Consideration.
Organizational Documents means, with respect to any Person, the articles of incorporation,
certificate of incorporation, certificate of formation, certificate of limited partnership, bylaws,
limited liability agreement, operating agreement, partnership agreement, stockholders agreement
and all other similar documents, instruments or certificates executed, adopted or filed in
connection with the creation, formation or organization of such Person, including any amendments
thereto (including, in the case of Citrus, the Citrus Capital Stock Agreement).
Original Merger Agreement is defined in the recitals to this Agreement.
Party and Parties are defined in the recitals of this Agreement.
Permits means all permits, approvals, consents, licenses, franchises, exemptions and other
authorizations, consents and approvals of or from Governmental Authorities.
Permitted Liens means, with respect to any Person, (a) statutory Liens for current Taxes
applicable to the assets of such Person or assessments not yet delinquent or the amount or validity
of which is being contested in good faith and for which adequate reserves have been established in
accordance with GAAP; (b) mechanics, carriers, workers, repairmens, landlords and other
similar liens arising or incurred in the ordinary course of business of such Person relating to
obligations as to which there is no default on the part of such Person, (c) Liens as may have
arisen in the ordinary course of business of such Person, none of which are material
A-5
to the ownership, use or operation of the assets of such Person; (d) any state of facts that
an accurate on the ground survey of any real property of such Person would show, and any easements,
rights-of-way, restrictions, restrictive covenants, rights, leases, and other encumbrances on title
to real or personal property filed of record, in each case, that do not materially detract from the
value of or materially interfere with the use and operation of any of the assets of such Person;
(e) statutory Liens for obligations that are not delinquent, (f) Liens encumbering the fee interest
of those tracts of real property encumbered by Rights-of-Way, (g) legal highways, zoning and
building laws, ordinances and regulations, that do not materially detract from the value of or
materially interfere with the use of the assets of such Person in the ordinary course of business
and (h) any Liens with respect to assets of such Person, which, together with all other Liens, do
not materially detract from the value of such Person or materially interfere with the present use
of the assets owned by such Person or the conduct of the business of such Person.
Permitted SUG Transfer means any Transfer directly resulting from a sale or merger of ETE or
any merger or consolidation of ETE.
Person means any natural person, corporation, limited partnership, general partnership,
limited liability company, joint stock company, joint venture, association, company, estate, trust,
bank trust Citrus Parties, land trust, business trust, or other organization, whether or not a
legal entity, custodian, trustee-executor, administrator, nominee or entity in a representative
capacity and any Governmental Authority.
Plan is defined in Section 3.17.
Proceeding means any civil, criminal or administrative actions, suits, investigations or
other proceedings.
Qualifying Third Party Offer is defined in Section 5.10(c).
Release means any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping,
or disposing.
Representatives is defined in Section 5.3.
Rights-of-Way means easements, rights-of-way and similar real estate interests.
ROFO Interest is defined in Section 5.10(a).
ROFO Notice is defined in Section 5.10(b).
ROFO Offer is defined in Section 5.10(a).
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
Sigma Acquisition is defined in the recitals to this Agreement.
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Sigma Merger is defined in the recitals to this Agreement.
Sigma Merger Agreement is defined in the recitals to this Agreement.
Sigma Merger Sub is defined in the recitals to this Agreement.
Solicitation Period is defined in Section 5.10(c).
Southern Union is defined in the recitals to this Agreement.
Southern Union Gas Services Business means the gathering, processing and transportation
assets owned by Southern Union Gas Services and its Affiliates.
Southern Union SEC Reports means the Annual Report on Form 10-K filed on February 25, 2011
and the Quarterly Report on Form 10-Q filed on May 9, 2011, in each case by Southern Union with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Subsidiary means, with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which a majority of the Voting Interests are
owned or Controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
SUGS Owner is defined in Section 5.10(a).
Surviving Entity is defined in Section 2.1.
Tax means any tax, charge, fee, levy, penalty or other assessment imposed by any United
States federal, state, local or foreign taxing authority or any other taxing authority, including
any excise, real and personal property (tangible or intangible), income, sales, transfer, margin,
franchise, payroll, withholding, social security or other tax, including any interest, penalties or
additions attributable thereto.
Tax Return means any return, report, information return, declaration, claim for refund or
other document (including any related or supporting information or schedules) supplied or required
to be supplied to any taxing authority or any Person with respect to Taxes and including any
supplement or amendment thereof.
Termination Date is defined in Section 7.1(c).
Third-Party Agreement is defined in Section 5.10(d).
Third-Party Buyer is defined in Section 5.10(b).
Third Party Offer is defined in Section 5.10(b).
Transaction Documents means this Agreement, the Certificate of Merger and the ETP
Partnership Agreement Amendment.
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Transfer means any direct or indirect transfer, assignment, sale, conveyance, license,
lease, or partition, and includes any involuntary transfer such as a sale of any part of the
Interest therein in connection with any bankruptcy or similar insolvency proceedings, or any other
disposition. A Transfer shall not include any pledge, hypothecation or encumbrance.
Treasury Regulations is defined in Section 2.8.
Unit Consideration means a number of ETP Common Units derived by dividing (a) $105,000,000
by (b) the Volume-Weighted Average Trading Price for the ten consecutive trading days ending
immediately prior to the date that is three trading days prior to the Closing Date.
Volume-Weighted Average Trading Price means, for any specified period of consecutive trading
days for the ETP Common Units, an amount equal to (i) the cumulative sum of the product of (A) the
sale price for each trade of ETP Common Units occurring during such period times and (B) the number
of ETP Common Units sold at such price, divided by (ii) the total number of ETP Common Units so
traded during such period.
Voting Interests of any Person as of any date means the equity interests of such Person
pursuant to which the holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers, general partners or trustees of such
Person (regardless of whether, at the time, equity interests of any other class or classes shall
have, or might have, voting power by reason of the occurrence of any contingency) or, with respect
to a partnership (whether general or limited), any general partner interest in such partnership.
A-8
EXHIBIT B
FORM OF
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
OF
ENERGY TRANSFER PARTNERS, L.P.
This Amendment No. 1 (this Amendment No. 1) to the Second Amended and Restated
Agreement of Limited Partnership of Energy Transfer Partners, L.P. (the Partnership),
dated as of July 28, 2009 (the Partnership Agreement), is hereby adopted effective as of
[________], [____] (the Amendment Effective Date), by Energy Transfer Partners GP, L.P.,
a Delaware limited liability company (the General Partner), as general partner of the
Partnership. Capitalized terms used but not defined herein have the meaning given such terms in the
Partnership Agreement.
WHEREAS, Section 13.1(d)(i) of the Partnership Agreement provides that the General Partner,
without the approval of any Partner, may amend any provision of the Partnership Agreement to
reflect a change that, in the discretion of the General Partner, does not adversely affect the
Unitholders in any material respect; and
WHEREAS, acting pursuant to the power and authority granted to it under Section 13.1(d)(i) of
the Partnership Agreement, the General Partner has determined that the following amendment to the
Partnership Agreement does not adversely affect the Unitholders in any material respect.
NOW THEREFORE, the General Partner does hereby amend the Partnership Agreement as follows:
Section 1. Section 6.4 is hereby amended by adding a new subsection (b) to such Section:
(b) Notwithstanding anything to the contrary in this Section 6.4, for a period of sixteen
consecutive Quarters commencing with Quarter in which the Amendment Effective Date occurs, any
distributions to the holder of the Incentive Distribution Rights provided for in clauses (iii),
(iv) and (v) of Subsection 6.4(a) shall be reduced by $13.75 million per Quarter.
Section 2. Except as hereby amended, the Partnership Agreement shall remain in full force and
effect.
Section 3. This Amendment shall be governed by, and interpreted in accordance with, the laws
of the State of Delaware, all rights and remedies being governed by such laws without regard to
principles of conflicts of laws.
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IN WITNESS WHEREOF, this Amendment has been executed as of the date first above written.
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ENERGY TRANSFER PARTNERS GP, L.P. |
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Energy Transfer Partners, L.L.C., |
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its general partner |
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B-2
exv10w1
Exhibit 10.1
SECOND AMENDED AND RESTATED SUPPORT AGREEMENT
This SECOND AMENDED AND RESTATED SUPPORT AGREEMENT, dated as of July 19, 2011 (this
Agreement), is by and among Energy Transfer Equity, L.P., a Delaware limited partnership
(Parent), Sigma Acquisition Corporation, a Delaware corporation and direct wholly owned
subsidiary of Parent (Merger Sub, and together with Parent, the Parent
Parties), George L. Lindemann, Dr. Frayda B. Lindemann, George L. Lindemann, Jr., Adam M.
Lindemann, Sloan Lindemann Barnett, and Eric D. Herschmann (the Stockholders).
RECITALS:
WHEREAS, the Parent Parties and the Stockholders entered into a Support Agreement on June 15,
2011 (the Original Agreement);
WHEREAS, the Parent Parties and the Stockholders amended and restated the Original Agreement
on July 4, 2011 by entering into an Amended and Restated Support Agreement (the First Amended
Agreement);
WHEREAS, the Parent Parties and the Stockholders wish to amend and restate the First Amended
Agreement for the purpose of adding certain provisions thereto;
WHEREAS, concurrently with the execution of this Agreement, the Parent Parties and Southern
Union Company, a Delaware corporation (the Company), are entering into a Second Amended
and Restated Agreement and Plan of Merger, dated as of the date hereof (as amended, supplemented,
restated or otherwise modified from time to time, the Merger Agreement), pursuant to
which, among other things, Merger Sub will merge with and into the Company (the Merger),
with the Company as the surviving entity, and each share of common stock of the Company
(Company Common Stock) will be converted into the right to receive the merger
consideration specified therein; and
WHEREAS, as of the date hereof, each Stockholder is the record and beneficial owner in the
aggregate of, and has the right to vote and dispose of, the number of shares of Company Common
Stock set forth opposite such Stockholders name on Schedule I hereto; and
WHEREAS, as a material inducement to the Parent Parties to enter into the Merger Agreement,
the Parent Parties have required that the Stockholders agree, and each Stockholder has agreed, to
enter into this agreement and abide by the covenants and obligations with respect to the Covered
Shares (as hereinafter defined) set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual representations, warranties,
covenants and agreements herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE 1
GENERAL
Section 1.1 Defined Terms. The following capitalized terms, as used in this
Agreement, shall have the meanings set forth below. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Merger Agreement.
Company Entity means each of the Company and its Subsidiaries.
Covered Shares means, with respect to each Stockholder, such Stockholders Existing
Shares, together with any shares of Company Common Stock that such Stockholder acquires, either
beneficially or of record, on or after the date hereof, including any shares of Company Common
Stock received as dividends, as a result of a split, reverse split, combination, merger,
consolidation, reorganization, reclassification, recapitalization or similar transaction or upon
exercise of any option, warrant or other security or instrument exercisable, convertible or
exchangeable into shares of Company Common Stock.
Existing Shares means, with respect to each Stockholder, all shares of Company
Common Stock owned, either beneficially or of record, by such Stockholder on the date of this
Agreement.
Permitted Transfer means a Transfer by a Stockholder (or an Affiliate thereof) to an
Affiliate of such Stockholder, provided that such transferee Affiliate agrees in writing to assume
all of such transferring Stockholders obligations hereunder in respect of the Covered Shares
subject to such Transfer and to be bound by, and comply with, the terms of this Agreement, with
respect to the Covered Shares subject to such Transfer, and all other Covered Shares owned
beneficially or of record from time to time by such transferee Affiliate, to the same extent as
such Stockholder is bound hereunder.
Transfer means, directly or indirectly, to sell, transfer, assign or otherwise
dispose of (whether by merger or consolidation (including by conversion into securities or other
consideration as a result of such merger or consolidation), by tendering into any tender or
exchange offer, by testamentary disposition, by operation of law or otherwise), either voluntarily
or involuntarily, or to enter into any contract, option or other arrangement or understanding with
respect to the voting of or sale, transfer, conversion, assignment or other disposition of (whether
by merger or consolidation (including by conversion into securities or other consideration as a
result of such merger or consolidation), by tendering into any tender or exchange offer, by
testamentary disposition, by operation of law or otherwise).
ARTICLE 2
VOTING
Section 2.1 (a) Agreement to Vote Covered Shares. Each Stockholder hereby irrevocably
and unconditionally agrees that, during the term of this Agreement, at any meeting of the
stockholders of the Company, however called, including any adjournment or postponement thereof, and
in connection with any written consent of the stockholders of the Company (or any class or
subdivision thereof), the Stockholder shall, in each case to the fullest extent that the Covered
Shares are entitled to vote thereon or consent thereto:
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(i) appear at each such meeting or otherwise cause its Covered Shares to be
counted as present thereat for purposes of calculating a quorum; and
(ii) vote (or cause to be voted), in person or by proxy, or deliver (or cause
to be delivered) a written consent covering, all of the Covered Shares:
(1) in favor of the approval or adoption of, or consent to, the
Merger Agreement, any transactions contemplated by the Merger Agreement and any
other action reasonably requested by Parent in furtherance thereof submitted for the
vote or written consent of stockholders of the Company;
(2) against the approval or adoption of (A) any Acquisition Proposal
or any other action, agreement, transaction or proposal made in opposition to the
approval of the Merger Agreement or inconsistent with the Merger and the other
transactions contemplated by the Merger Agreement, or (B) any action, agreement,
transaction or proposal that is intended, or would reasonably be expected, to result
in a material breach of any covenant, agreement, representation, warranty or any
other obligation of the Company Parties contained in the Merger Agreement or of such
Stockholder contained in this Agreement; and
(3) against any action, agreement, transaction or proposal that is
intended, would reasonably be expected, or the result of which would reasonably be
expected, to materially impede, interfere with, delay, postpone, discourage,
frustrate the purposes of or adversely affect the Merger or the other transactions
contemplated by the Merger Agreement, including but not limited to the following
actions (other than the Merger and the other transactions contemplated by the Merger
Agreement and actions requested or expressly permitted by Parent): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving a Company Entity; (B) a sale, lease or transfer of a
material amount of assets of a Company Entity, or a reorganization,
recapitalization, dissolution, liquidation or winding up of a Company Entity; (C)
(1) any change in a majority of persons who constitute the Board of Directors of the
Company as of the date hereof, except for changes requested or expressly permitted
by Parent, (2) any change in the present capitalization of the Company or any
amendment to any charter, bylaws, limited liability company agreement, limited
partnership agreement or other company constituent document of any Company Entity,
or (3) any other material change in a Company Entitys organizational structure or
business.
(b) Agreement to Make Common Unit Election. Each Stockholder hereby irrevocably and
unconditionally agrees to make a Common Unit Election (as defined in, and for purposes of, Section
2.1(a)(ii) of the Merger Agreement), with respect to all of its Covered Shares, in accordance with
the election procedures set forth in Section 2.2 of the Merger Agreement, as promptly as
practicable following its receipt of an Election Form with respect to its Covered Shares, and to
cause such election to remain valid and effective at all times until and including the Effective
Time. Each Stockholder understands and agrees that by making such Common Unit Election it will,
subject to the terms and conditions of the Merger Agreement, be
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entitled to receive Common Units
(and cash in lieu of fractional Common Units) in consideration for its Covered Shares, and that,
except as set forth in Section 2.1(a)(ii) of the Merger Agreement, it will not be entitled to
receive any cash consideration (other than cash in lieu of fractional Common Units) as
consideration for its Covered Shares.
Section 2.2 No Inconsistent Agreements. Each Stockholder hereby represents, covenants
and agrees that, except for this Agreement, such Stockholder (a) has not entered into, and shall
not enter into at any time while this Agreement remains in effect, any voting agreement or voting
trust with respect to its Covered Shares, (b) has not granted, and shall not grant at any time
while this Agreement remains in effect, a proxy, consent or power of attorney with respect to its
Covered Shares (except pursuant to Section 2.3 hereof) and (c) has not taken and shall not
take any action that would make any representation or warranty of such Stockholder contained herein
untrue or incorrect in any material respect or have the effect of preventing or disabling such
Stockholder from performing in any material respect any of its obligations under this Agreement.
Section 2.3 Proxy. In order to secure the obligations set forth herein, each
Stockholder hereby irrevocably appoints Parent, or any nominee thereof, with full power of
substitution and resubstitution, as its true and lawful proxy and attorney-in-fact, in the event
that such Stockholder does not comply with its obligations in Section 2.1, to vote or
execute written consents with respect to such Stockholders Covered Shares in accordance with
Section 2.1 hereof and with respect to any proposed postponements or adjournments of any
meeting of the stockholders of the Company at which any of the matters described in
Section 2.1 hereof are to be considered. Each Stockholder hereby affirms that this proxy
is coupled with an interest and shall be irrevocable, except upon termination of this Agreement,
and such Stockholder will take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy previously granted by
such Stockholder with respect to any of its Covered Shares. Parent may terminate this proxy with
respect to any Stockholder at any time at its sole election by written notice provided to such
Stockholder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Stockholders. Each Stockholder
(except to the extent otherwise provided herein) hereby represents and warrants to the Parent
Parties, severally for itself and with respect to its Covered Shares only, and not jointly with the
other Stockholders or with respect to the Covered Shares of any other Stockholder, as follows:
(a) Organization; Authorization; Validity of Agreement; Necessary Action.
Such Stockholder has the requisite power and authority and/or capacity to execute and deliver this
Agreement and to carry out its obligations hereunder. The execution and delivery by such
Stockholder of this Agreement and the performance by it of the obligations hereunder have been duly
and validly authorized by such Stockholder and no other actions or proceedings are required on the
part of such Stockholder to authorize the execution and delivery of this Agreement or the
performance by such Stockholder of its obligations hereunder. This Agreement has been duly
executed and delivered by such Stockholder and, assuming the due authorization, execution and
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delivery of this Agreement by the Parent Parties, constitutes a legal, valid and binding agreement
of such Stockholder, enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors rights and to general equitable principles.
(b) Ownership. Such Stockholder is the record and beneficial owner of, and
has good title to, its Existing Shares, free and clear of any Liens, except as may be provided for
in this Agreement. All of such Stockholders Covered Shares from the date hereof through and on
the Closing Date will be beneficially or legally owned by such Stockholder, except in the case of a
Permitted Transfer of any Covered Shares (in which case this representation shall, with respect to
such Covered Shares, be made by the transferee of such Covered Shares). Except as provided for in
this Agreement, such Stockholder has and will have at all times through the Closing Date sole
voting power (including the right to control such vote as contemplated herein), sole power of
disposition, sole power to issue instructions with respect to the matters set forth in
Article 2 hereof, and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of such Stockholders Existing Shares and with respect
to all of such Stockholders Covered Shares at any time through the Closing Date, except in the
case of a Permitted Transfer (in which case this representation shall, with respect to such Covered
Shares, be made by the transferee of such Covered Shares). Such Stockholder does not, directly or
indirectly, legally or beneficially own or have any option, warrant or other right to acquire any
securities of a Company Entity that are or may by their terms become entitled to vote or any
securities that are convertible or exchangeable into or exercisable for any securities of a Company
Entity that are or may by their terms become entitled to vote, nor is such Stockholder subject to
any contract, agreement, arrangement, understanding or relationship, other than this Agreement,
that obligates it to vote, acquire or dispose of any securities of a Company Entity.
(c) No Violation. Neither the execution and delivery of this Agreement by
such Stockholder nor its performance of its obligations under this Agreement will (i) result in a
violation or breach of, or conflict with any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under, or result in the
termination or cancellation of, or give rise to a right of purchase under, or result in the
creation of any Lien (other than under this Agreement) upon any of the properties, rights or assets
(including but not limited to its Existing Shares) owned by such Stockholder under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license,
contract, lease, agreement or other instrument or obligation of any kind to which such Stockholder
is a party or by which it or any of its respective properties, rights or assets may be bound,
(ii) violate any Law applicable to such Stockholder or any of its properties, rights or assets, or
(iii) result in a violation or breach of or conflict with its organizational and governing
documents, except in the case of clause (i) as would not reasonably be expected to prevent or
materially delay the ability of such Stockholder to perform its obligations hereunder.
(d) Consents and Approvals. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is necessary to be
obtained or made by such Stockholder in connection with its execution, delivery and performance of
this Agreement, except for any reports under Sections 13(d) and 16 of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated hereby.
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(e) Reliance by Parent. Such Stockholder understands and acknowledges that
the Parent Parties are entering into the Merger Agreement in reliance upon such Stockholders
execution and delivery of this Agreement and the representations, warranties, covenants and
obligations of such Stockholder contained herein.
(f) Adequate Information. Such Stockholder acknowledges that it is a
sophisticated party with respect to its Covered Shares and has adequate information concerning the
business and financial condition of the Company to make an informed decision regarding the
transactions contemplated by this Agreement and has, independently and without reliance upon any of
the Parent Parties and based on such information as such Stockholder has deemed appropriate, made
its own analysis and decision to enter into this Agreement. Such Stockholder acknowledges that no
Parent Party has made or is making any representation or warranty, whether express or implied, of
any kind or character except as expressly set forth in this Agreement.
Section 3.2 Representations and Warranties of Parent. Parent hereby represents and
warrants to each Stockholder that the execution and delivery of this Agreement by Parent and the
consummation of the transactions contemplated hereby have been duly authorized by all necessary
action on the part of the board of directors of the general partner of Parent. The Parent Parties
acknowledge that no Stockholder has made and no Stockholder is making any representation or
warranty of any kind except as expressly set forth in this Agreement.
ARTICLE 4
OTHER COVENANTS
Section 4.1 Prohibition on Transfers, Other Actions.
(a) Each Stockholder hereby agrees, except for a Permitted Transfer, not to (i)
Transfer any of the Covered Shares, beneficial ownership thereof or any other interest therein,
(ii) enter into any agreement, arrangement or understanding, or take any other action, that
violates or conflicts with, or would reasonably be expected to violate or conflict with, or would
reasonably be expected to result in or give rise to a violation of or conflict with, such
Stockholders representations, warranties, covenants and obligations under this Agreement, or
(iii) take any action that would restrict or otherwise affect such Stockholders legal power,
authority and right to comply with and perform its covenants and obligations under this Agreement.
Any Transfer in violation of this provision shall be null and void.
(b) Each Stockholder agrees that if it attempts to Transfer (other than a Permitted
Transfer), vote or provide any other Person with the authority to vote any of the Covered Shares
other than in compliance with this Agreement, such Stockholder shall unconditionally and
irrevocably (during the term of this Agreement) instruct the Company to not, (i) permit any such
Transfer on its books and records, (ii) issue a book-entry interest or a new certificate
representing any of the Covered Shares, or (iii) record such vote unless and until such Stockholder
has complied in all respects with the terms of this Agreement.
(c) Each Stockholder agrees that it shall not, and shall cause each of its
controlled Affiliates to not, become a member of a group (as that term is used in Section 13(d)
of the
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Exchange Act) that such Stockholder or such Affiliate is not currently a part of and that
has not been disclosed in a filing with the SEC prior to the date hereof (other than as a result of
entering into this Agreement) for the purpose of opposing or competing with the transactions
contemplated by the Merger Agreement.
(d) Each Stockholder agrees not to knowingly take any action that would make any of
its representations or warranties contained herein untrue or incorrect in any material respect or
would reasonably be expected to have the effect of preventing, impeding or interfering with or
adversely affecting in any material respect its performance of its obligations under or
contemplated by this Agreement.
Section 4.2 Further Assurances. Each of the parties hereto agrees that it will use
its reasonable best efforts to do all things reasonably necessary to effectuate this Agreement.
Section 4.3 Waiver of Appraisal Rights and Claims. Each Stockholder hereby waives any
and all rights of appraisal or rights to dissent from the consummation of the Merger and any
transactions contemplated by the Merger Agreement.
ARTICLE 5
NO SOLICITATION
Section 5.1 No Solicitation. Prior to the termination of this Agreement, each
Stockholder shall not, and shall cause its officers, employees, legal counsel, financial advisors,
agents and other representatives (collectively, Representatives) not to, directly or
indirectly (a) solicit or initiate, or knowingly encourage or facilitate, any Acquisition Proposal
or any inquiries regarding the submission of any Acquisition Proposal, (b) participate in any
discussions or negotiations regarding, or furnish any third party any confidential information
regarding the Company or its Subsidiaries in response to or in connection with any Acquisition
Proposal, or (c) enter into any agreement with respect to any Acquisition Proposal or approve or
resolve to approve any Acquisition Proposal; provided, however, notwithstanding anything in this
Agreement to the contrary, prior to obtaining the Company Stockholder Approval, the restrictions
set forth in this Section 5.1 shall not apply to the Stockholders and their Representatives,
including in their capacity as beneficial owners of the Covered Shares, to the extent that the
Company and its Subsidiaries, and its and their Representatives, are permitted by the terms of
Section 5.4(a) of the Merger Agreement to take such actions. Each Stockholder shall, and shall
cause its Representatives to, immediately cease and cause to be terminated all existing discussions
or negotiations with any third party conducted prior to the date of this Agreement with respect to
any Acquisition Proposal.
Notwithstanding any provision in this Agreement to the contrary, the Stockholders have entered
into this Agreement solely in their capacity as the beneficial owners of the Covered Shares, and
nothing herein shall limit or effect any actions taken by any Stockholder or Representative of a
Stockholder in such Stockholders or such Representatives capacity as a director or officer of the
Company. In addition, for purposes of this Agreement, the Company shall be deemed not to be an
Affiliate of any of the Stockholders, and any officer, director,
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employee, agent or advisor of the
Company (in each case, in their capacities as such), shall be deemed not to be a Representative of
a Stockholder.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Termination. This Agreement shall remain in effect until the earliest to
occur of (a) the Effective Time, (b) a Change of Recommendation in connection with an Intervening
Event pursuant to Section 5.4 of the Merger Agreement, or (c) the valid termination of the Merger
Agreement in accordance with its terms (including after any extension thereof), in which case this
Agreement shall terminate and be of no further force and effect with respect to all parties hereto.
The Parent may terminate this Agreement with respect to all or any portion of any Stockholders
Covered Shares by delivering a written notice to such Stockholder stating the portion of such
Stockholders Covered Shares with respect to which this Agreement is terminated (in which case such
Stockholders obligations hereunder shall terminate only with respect to the portion of its Covered
Shares so identified). Nothing in this Section 6.1 and no termination of this Agreement
shall relieve or otherwise limit any party of liability for any breach of this Agreement occurring
prior to such termination.
Section 6.2 No Ownership Interest. Nothing contained in this Agreement shall be
deemed to vest in any Parent Party any direct or indirect ownership or incidence of ownership of or
with respect to any Covered Shares. All rights, ownership and economic benefit relating to the
Covered Shares of any Stockholder shall remain vested in and belong to such Stockholder, and Parent
shall have no authority to direct such Stockholder in the voting or disposition of any of its
Covered Shares, except as otherwise provided herein.
Section 6.3 Publicity. Each Stockholder hereby permits Parent and the Company to
include and disclose in the Proxy Statement, and in such other schedules, certificates,
applications, agreements or documents as such entities reasonably determine to be necessary or
appropriate in connection with the consummation of the Merger and the transactions contemplated by
the Merger Agreement such Stockholders identity and ownership of the Covered Shares and the nature
of such Stockholders commitments, arrangements and understandings pursuant to this Agreement.
Parent and the Company hereby permit each Stockholder to disclose this Agreement and the
transactions contemplated by the Merger Agreement in any reports required to be filed by such
Stockholder or any of its Affiliates under Sections 13(d) and 16 of the Exchange Act.
Section 6.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or by facsimile or email (upon
telephonic confirmation of receipt) or on the first Business Day following the date of dispatch if
delivered by a recognized next day courier service. All notices hereunder shall be delivered as
set forth below or pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
- 8 -
If to Parent or Merger Sub, to:
Energy Transfer Equity, L.P.
3738 Oak Lawn Avenue
Dallas, TX 75219
Attention: John McReynolds
Facsimile: (214) 981-0706
Email: tom.mason@energytransfer.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
717 Texas Avenue, 16th Floor
Houston, Texas 77002
Attention: William N. Finnegan, Esq.
Sean T. Wheeler, Esq.
Fax: 713-546-5401
Email: bill.finnegan@lw.com
sean.wheeler@lw.com
If to any Stockholder, to the address set forth below such Stockholders name on Schedule I
hereto.
Section 6.5 Interpretation. The words hereof, herein and hereunder and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this Agreement unless
otherwise specified. Whenever the words include, includes or including are used in this
Agreement, they shall be deemed to be followed by the words without limitation. The meanings
given to terms defined herein shall be equally applicable to both the singular and plural forms of
such terms. The headings contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. This Agreement is the product
of negotiation by the parties having the assistance of counsel and other advisers. It is the
intention of the parties that this Agreement not be construed more strictly with regard to one
party than with regard to the others.
Section 6.6 Counterparts. This Agreement may be executed by facsimile and in
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same counterpart.
Section 6.7 Entire Agreement. This Agreement and, solely to the extent of the defined
terms referenced herein, the Merger Agreement, together with the schedule annexed hereto, embody
the complete agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or representations by
or among the parties, written and oral, that may have related to the subject matter hereof in any
way.
Section 6.8 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
- 9 -
(a) THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY
AND ALL DISPUTES BETWEEN THE PARTIES UNDER OR RELATING TO THIS AGREEMENT OR THE FACTS AND
CIRCUMSTANCES LEADING TO ITS EXECUTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REFERENCE TO SUCH
STATES PRINCIPLES OF CONFLICTS OF LAW). THE DELAWARE COURT OF CHANCERY (AND IF THE DELAWARE COURT
OF CHANCERY SHALL BE UNAVAILABLE, ANY DELAWARE STATE COURT AND THE FEDERAL COURT OF THE UNITED
STATES OF AMERICA SITTING IN THE STATE OF DELAWARE) WILL HAVE EXCLUSIVE JURISDICTION OVER ANY AND
ALL DISPUTES BETWEEN THE PARTIES HERETO, WHETHER IN LAW OR EQUITY, BASED UPON, ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY OR THE
FACTS AND CIRCUMSTANCES LEADING TO ITS EXECUTION, WHETHER IN CONTRACT, TORT OR OTHERWISE. EACH OF
THE PARTIES IRREVOCABLY CONSENTS TO AND AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS IN ANY SUCH DISPUTE, IRREVOCABLY CONSENTS TO THE SERVICE OF THE SUMMONS AND COMPLAINT AND
ANY OTHER PROCESS IN ANY OTHER ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY DELIVERY IN ANY METHOD CONTEMPLATED BY
SECTION 6.4 HEREOF OR IN ANY OTHER MANNER AUTHORIZED BY LAW, AND HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM
THAT (i) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (ii) SUCH PARTY
AND SUCH PARTYS PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY
LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.
(b) THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
WHICH ANY PARTY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. IF THE SUBJECT
MATTER OF ANY LAWSUIT IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY TO THIS
AGREEMENT SHALL PRESENT AS A NON-COMPULSORY COUNTERCLAIM IN ANY SUCH LAWSUIT ANY CLAIM BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. FURTHERMORE, NO PARTY TO THIS
AGREEMENT SHALL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL CANNOT BE WAIVED.
Section 6.9 Amendment; Waiver. The obligations of any Stockholder hereunder may not
be modified or amended except by an instrument in writing signed by Parent and by each Stockholder
with respect to which such modification or amendment will be effective. Each party may waive any
right of such party hereunder by an instrument in writing signed by such party
- 10 -
and delivered to the
party benefiting from such waiver. No amendment or waiver shall be permitted or effective without
the prior written consent of the Company.
Section 6.10 Remedies. The parties hereto agree that money damages would not be a
sufficient remedy for any breach of this Agreement and that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is hereby agreed that, prior to the valid
termination of this Agreement pursuant to Section 6.1 hereof, the parties hereto shall be
entitled to specific performance and injunctive or other equitable relief as a remedy for any such
breach, to prevent breaches of this Agreement, and to specifically enforce compliance with this
Agreement. In connection with any request for specific performance or equitable relief, each of
the parties hereto hereby waives any requirement for the security or posting of any bond in
connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for breach
of this Agreement but shall be in addition to all other remedies available at law or equity to such
party. The parties further agree that, by seeking the remedies provided for in this Section
6.10, no party hereto shall in any respect waive its right to seek any other form of relief
that may be available to it under this Agreement, including monetary damages in the event that this
Agreement has been terminated or in the event that the remedies provided for in this Section
6.10 are not available or otherwise are not granted.
Section 6.11 Severability. To the fullest extent permitted by law, any term or
provision of this Agreement, or the application thereof, that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is illegal, void, invalid or unenforceable,
the parties hereto agree that the court making such determination shall have the power to limit the
term or provision, to delete specific words or phrases, or to replace any illegal, void, invalid or
unenforceable term or provision with a term or provision that is legal, valid and enforceable and
that comes closest to expressing the intention of the illegal, void, invalid or unenforceable term
or provision, and this Agreement shall be enforceable as so modified. To the fullest extent
permitted by law, in the event such court does not exercise the power granted to it in the prior
sentence, the parties hereto shall replace such invalid or unenforceable term or provision with a
valid and enforceable term or provision that will achieve, to the extent possible, the original
economic, business and other purposes of such invalid or unenforceable term as closely as possible
in an acceptable manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
Section 6.12 Expenses. Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with this Agreement and the actions
contemplated hereby shall be paid by the party incurring such expenses, whether or not the Merger
is consummated.
Section 6.13 Successors and Assigns; Third Party Beneficiaries.
(a) Except in connection with a Permitted Transfer, neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto
- 11 -
(whether by operation of Law or otherwise) without the prior written consent of the other parties;
provided, however, that Parent and Merger Sub may transfer or assign their rights
and obligations under this Agreement, in whole or in part or from time to time in part, to one or
more of their Affiliates at any time. Any assignment in violation of the foregoing shall be null
and void. Subject to the preceding two sentences, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors and assigns.
(b) Other than the Company with respect to Section 6.3 hereof, this
Agreement is not intended to and shall not confer upon any Person (other than the parties hereto)
any rights or remedies hereunder.
[Signature pages follow.]
- 12 -
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly authorized.
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PARENT:
ENERGY TRANSFER EQUITY, L.P.
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By: |
LE GP, LLC, its general partner
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By: |
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Name: |
John McReynolds |
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Title: |
President and Chief Financial Officer |
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MERGER SUB:
SIGMA ACQUISITION CORPORATION
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By: |
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Name: |
John McReynolds |
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Title: |
President and Chief Financial Officer |
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[Signature Page of Parent and Merger Sub to Second Amended and Restated Support Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly authorized.
STOCKHOLDERS:
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/s/ George L. Lindemann
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/s/ Eric D. Herschmann |
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GEORGE L. LINDEMANN
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ERIC D. HERSCHMANN |
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/s/ Dr. Frayda B. Lindemann
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/s/ Adam M. Lindemann |
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DR. FRAYDA B. LINDEMANN
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ADAM M. LINDEMANN |
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/s/ George L. Lindemann, Jr.
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/s/ Sloan Lindemann Barnett |
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GEORGE L. LINDEMANN, JR.
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SLOAN LINDEMANN BARNETT |
[Signature Page of Stockholders to Second Amended and Restated Support Agreement]
Schedule I
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Shares of Company Common Stock Held |
Stockholder |
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Address |
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Beneficially or of-Record* |
George L. Lindemann
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1565 North Ocean Way
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Shares: 4,485,628**
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Palm Beach, Florida 33480
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Options: 1,888,162
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Eric D. Herschmann
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3333 Allen Parkway #2207
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Shares: 555,091***
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Houston, Texas 77019
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Options: 1,185,768
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Dr. Frayda B.
Lindemann
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1565 North Ocean Way
Palm Beach Florida, Florida
33480
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3,289,220 |
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George L.
Lindemann, Jr.
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1736 West 28th Street
Miami, FL 33141
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3,365,500 |
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Adam M. Lindemann
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77 East 77th Street
New York, NY 10075
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2,000,000
(approximate; +/-
not more than
100,000 shares)
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Sloan Lindemann
Barnett
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2920 Broadway Street
San Francisco, CA 94115
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3,369,667 |
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*- |
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As of June 14, 2011, Southern Union Company had 124,721,110 shares of common stock issued and
outstanding. As of June 14, 2011, the shares represented on the chart above represent approximately
13.43% of the issued and outstanding shares of common stock of Southern Union Company. The options
and non-expired/lapsed restricted shares awarded to Messrs. Lindemann and Herschmann have not been
included in the foregoing calculation as they are not able to be voted at this time. |
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**- |
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Included in this number are 144,888 shares held in the Southern Union Company Supplemental
Deferred Compensation Plan and 29,870 shares in the Southern Union 401(k) Savings Plan as of
December 31, 2010. Included in this number are 69,513 restricted shares awarded to Mr. Lindemann
under the Southern Union Company Third Amended and Restated 2003 Stock and Incentive Plan for which
restrictions have not otherwise lapsed/expired. The options and unlapsed/unexpired restricted
shares are not able to be voted at this time. |
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***- |
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Included in this number are 251,308 restricted shares awarded to Mr. Herschmann under the
Southern Union Company Third Amended and Restated 2003 Stock and Incentive Plan for which
restrictions have not otherwise lapsed/expired. The options and unlapsed/unexpired restricted
shares are not able to be voted at this time. |
[Schedule I to Support Agreement]
exv99w1
Exhibit 99.1
EXECUTION VERSION
CREDIT SUISSE SECURITIES (USA) LLC
CREDIT SUISSE AG
Eleven Madison Avenue
New York, New York 10010
CONFIDENTIAL
July 19, 2011
Energy Transfer Equity, L.P.
3738 Oak Lawn Avenue
Dallas, Texas 75219
Attention: John W. McReynolds, President and Chief Financial Officer
PROJECT SIGMA
$3.7 Billion Amended and Restated 364-Day Senior Bridge Term Loan Credit Facility
Commitment Letter
Ladies and Gentlemen:
You have advised Credit Suisse AG (acting through such of its affiliates or branches as it
deems appropriate, CS) and Credit Suisse Securities (USA) LLC (CS Securities and, together with
CS and their respective affiliates, Credit Suisse; Credit Suisse is also herein referred to as
we, us, our or the Commitment Parties) that you, directly or through one of your
wholly owned domestic subsidiaries, intend to acquire (the Acquisition) all of the equity
interests of Southern Union Company, a Delaware corporation (the Company) (such term and each
other capitalized term used but not defined herein having the meaning assigned to such term in the
Summary of Principal Terms and Conditions attached hereto as Exhibit A (the Term Sheet)). This
letter amends, restates and supersedes in its entirety that certain commitment letter dated as of
July 4, 2011 among you and us.
You have further advised us that, in connection therewith, the Borrower will obtain the
364-day senior bridge term loan credit facility (the Bridge Facility) described in the Term
Sheet, in an aggregate principal amount of $3.7 billion (or such lesser amount as you may elect to
borrow in your sole discretion).
1. Commitments.
In connection with the foregoing, CS (in such capacity the Initial Lender) is pleased to
advise you of its commitment to provide the entire principal amount of the Bridge Facility, upon
the terms set forth in this commitment letter (including the Term Sheet and other attachments
hereto, this Commitment Letter) and the conditions set forth in Section 6 of this Commitment
Letter and Exhibit B.
2. Titles and Roles.
You hereby appoint (a) CS Securities (in such capacity, the Arranger) to act, and the
Arranger hereby agrees to act, as a sole bookrunner and lead arranger for the Bridge Facility, and
(b) CS to act, and CS hereby agrees to act, as sole administrative agent for the Bridge Facility,
in each case upon the terms and subject to the conditions set forth or referred to in this
Commitment Letter. The Arranger and the Initial Lender, in such capacities, will perform the
duties and exercise the authority customarily performed and exercised by it in such roles. You
agree that CS will have left placement in any and all marketing materials or other documentation
used in connection with the Bridge Facility. You further agree that no other titles will be
awarded and no compensation (other than that expressly contemplated by this Commitment Letter and
the Fee Letters referred to below) will be paid in connection with the Bridge Facility unless you
and we shall so agree.
3. Syndication.
We reserve the right, prior to and/or after the execution of definitive documentation for the
Bridge Facility, to syndicate all or a portion of the Initial Lenders commitment with respect to
the Bridge Facility to a group of banks, financial institutions and other institutional lenders
(together with the Initial Lender, the Lenders) identified by us in consultation with you, and
you agree to provide us with a period of at least 30 consecutive days following the launch of the
general syndication of the Bridge Facility and prior to the Closing Date to syndicate the Bridge
Facility (provided that such period shall not include any day from and including August 21, 2011
through and including September 5, 2011, from and including November 23 through and including
November 25, 2011, from and including December 18, 2011 through and including January 2, 2012, from
and including June 30, 2012 through and including July 4, 2012 and from and including August 20,
2012 through and including September 4, 2012). Notwithstanding the right to syndicate the Bridge
Facility and receive commitments with respect thereto, (i) the Initial Lender shall not be
relieved, released or novated from its obligations hereunder (including its obligation to fund the
Bridge Facility on the date of the consummation of the Acquisition with the proceeds of the funding
under the Bridge Facility) in connection with any syndication or assignment of the Bridge Facility,
including its commitments in respect thereof, until after the Closing Date has occurred unless such
syndication or assignment is to a Permitted Assignee (as defined) and (ii) no assignment or
novation, other than to a Permitted Assignee, shall become effective with respect to all or any
portion of the Initial Lenders commitments in respect of the Bridge Facility until the Closing
Date. We intend to commence syndication efforts promptly upon the execution of this Commitment
Letter, and you agree to use commercially reasonable efforts to actively assist us in completing a
satisfactory syndication. Such assistance shall include (a) your using commercially reasonable
efforts to ensure that any syndication efforts benefit materially from your existing lending and
investment banking relationships and the existing lending and investment banking relationships of
the Company, (b) direct contact between senior management, representatives and advisors of you (and
your using commercially reasonable efforts to cause direct contact between senior management,
representatives and advisors of the Company) and the proposed Lenders, (c) assistance by you (and
your using commercially reasonable efforts to cause the assistance by the Company) in the
preparation of a customary Confidential Information Memorandum for the Bridge Facility (the
Information Materials), (d) prior to the launch of the syndication, confirmation that the
Borrower has a Public Debt Rating from each of Standard & Poors Ratings Service (S&P) and
Moodys Investors Service, Inc. (Moodys), and (e) the hosting, with the Arranger, of one meeting
of prospective Lenders. Without limiting your obligations to assist with syndication efforts as
set forth herein, it is understood that the Initial Lenders commitments hereunder are not
conditioned upon the
2
syndication of, or receipt of commitments in respect of, the Bridge Facility and in no event
shall the commencement or successful completion of syndication of the Bridge Facility constitute a
condition to the availability of the Bridge Facility on the Closing Date.
You agree, at the request of the Arranger, to assist in the preparation of a version of the
Information Materials to be used in connection with the syndication of the Bridge Facility,
consisting exclusively of information and documentation that is either (i) publicly available (or,
if applicable, contained in any prospectus or other offering memorandum related to any securities
issues in connection with the Permanent Debt Financing) or (ii) not material with respect to the
Borrower, the Company or their respective subsidiaries or any of their respective securities for
purposes of United States Federal securities laws (all such Information Materials being Public
Lender Information). Any information and documentation that is not Public Lender Information is
referred to herein as Private Lender Information. Before distribution of any Information
Materials, you agree to execute and deliver to the Arranger, either (i) a letter in which you
authorize distribution of the Information Materials to Lenders employees willing to receive
Private Lender Information or (ii) a separate letter in which you authorize distribution of
Information Materials containing solely Public Lender Information and represent that such
Information Materials do not contain any Private Lender Information. You further agree that each
document to be disseminated by the Arranger to any Lender in connection with the Bridge Facility
will, at the request of the Arranger, be identified by you as either (i) containing Private Lender
Information or (ii) containing solely Public Lender Information. You acknowledge that the
following documents contain solely Public Lender Information (unless you notify us promptly prior
to their intended distribution that any such document contains Private Lender Information): (a)
drafts and final definitive documentation with respect to the Bridge Facility, including term
sheets; (b) administrative materials prepared by the Commitment Parties for prospective Lenders
(such as a lender meeting invitation, bank allocation, if any, and funding and closing memoranda);
and (c) notification of changes in the terms of the Bridge Facility.
The Arranger will manage all aspects of any syndication in consultation with you, including
decisions as to the selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate, the allocation of the
commitments among the Lenders, any naming rights and the amount and distribution of fees among the
Lenders.
4. Information.
You hereby represent and covenant that (with respect to Information and Projections relating
to the Company and its subsidiaries, to the best of your knowledge) (a) all written and factual
information other than the projections (the Projections) and other information of a general
economic or industry-specific nature (the Information) that have been or will be made available
to us by or on behalf of you or any of your representatives is or will be, when furnished, complete
and correct in all material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the circumstances under which
such statements are made after giving effect to all supplements and updates thereto, and (b) the
Projections that have been or will be made available to us by or on behalf of you or any of your
representatives have been or will be prepared in good faith based upon assumptions that are
reasonable at the time made and at the time the related Projections are made available to us (it
being understood that the Projections by their nature are inherently uncertain, no assurances are
being given that the results reflected in the Projections will be achieved, and actual results may
differ materially from the Projections). You agree that if at any time prior to the closing of the
3
Bridge Facility any of the representations in the preceding sentence would be incorrect if the
Information and Projections were being furnished, and such representations were being made, at such
time, then you will promptly supplement the Information and the Projections so that such
representations will be correct under those circumstances. In arranging and syndicating the Bridge
Facility, we will be entitled to use and rely primarily on the Information and the Projections
without responsibility for independent verification thereof.
5. Fees.
As consideration for the Initial Lenders commitment hereunder, and the Arrangers agreement
to perform the services described herein, you agree to pay to us the fees set forth in this
Commitment Letter and in the Amended and Restated Fee Letter (the Arranger Fee Letter) and the
Amended and Restated Agent Fee Letter (the Agent Fee Letter and, together with the Arranger Fee
Letter, the Fee Letters), each dated the date hereof and delivered herewith with respect to the
Bridge Facility.
6. Conditions Precedent.
The Initial Lenders commitment hereunder, and each of our agreements to perform the services
described herein, are subject to (a) since December 31, 2010 there not having been any event,
change, effect, development, condition or occurrence that, individually or in the aggregate, has
had or would reasonably be expected to have, a Company Material Adverse Effect (as that term is
defined in the Merger Agreement), (b) our satisfaction that, during the 60 day period immediately
after the date of this Commitment Letter, there shall be no other issues of debt securities or
commercial bank or other credit facilities of the Borrower, the Company or their respective wholly
owned subsidiaries being announced, offered, placed or arranged (other than (i) the Permanent Debt
Financing, (ii) debt issued by the Company or its subsidiaries permitted under the Merger Agreement
and (iii) and any other financing agreed by the Arranger), (c) the negotiation, execution and
delivery of definitive documentation with respect to the Bridge Facility consistent with the terms
of this Commitment Letter or otherwise reasonably satisfactory to you and us, and (d) the other
conditions set forth or referred to in Exhibit B hereto.
Notwithstanding anything in this Commitment Letter, the Fee Letters or the definitive
documentation for the Bridge Facility to the contrary, (a) the only representations relating to the
Company and the Borrower and their subsidiaries and their business the making of which shall be a
condition to availability of the Bridge Facility on the Closing Date shall be (i) such of the
representations made by or on behalf of the Company and its subsidiaries in the Merger Agreement as
are material to the interests of the Lenders, but only to the extent that you have (or a subsidiary
has) the right to terminate your (or its) obligations under the Merger Agreement as a result of a
breach of such representations in the Merger Agreement, and (ii) the Specified Representations (as
defined below) and (b) the terms of the definitive documentation for the Bridge Facility shall be
in a form such that they do not impair availability of the Bridge Facility on the Closing Date if
the conditions set forth in this Section 6 and Exhibit B are satisfied. For purposes hereof,
Specified Representations means the representations and warranties set forth in the Term Sheet
relating to corporate power and authority, due authorization, execution and delivery, in each case
as they relate to the entering into and performance of the definitive documentation for the Bridge
Facility, the enforceability of such documentation, Federal Reserve margin regulations, the Patriot
Act, the Investment Company Act, non-contravention with material debt instruments, status of the
Bridge Facility as senior debt, solvency and accuracy of information.
4
7. Indemnification; Expenses.
You agree (a) to indemnify and hold harmless each of us and our respective officers,
directors, employees, agents, advisors, controlling persons, members and successors and assigns
(each, an Indemnified Person) from and against any and all losses, claims, damages, liabilities
and expenses, joint or several, to which any such Indemnified Person may become subject arising out
of or in connection with this Commitment Letter, the Fee Letters, the Transactions, the Bridge
Facility or any related transaction or any claim, litigation, investigation or proceeding relating
to any of the foregoing, regardless of whether any such Indemnified Person is a party thereto (and
regardless of whether such matter is initiated by a third party or by the Company or any of their
respective affiliates or equity holders), and to reimburse each such Indemnified Person upon demand
for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating
or defending any of the foregoing; provided that the foregoing indemnity will not, as to any
Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the extent
they are found in a final, non-appealable judgment of a court of competent jurisdiction to have
resulted primarily from the willful misconduct or gross negligence of such Indemnified Person, and
(b) to promptly reimburse each of us from time to time, upon presentation of a summary statement,
for all reasonable out-of-pocket expenses (including, but not limited to, expenses of our due
diligence investigation, consultants fees, syndication expenses, travel expenses and fees,
disbursements and other charges of counsel), in each case, incurred in connection with the Bridge
Facility and the preparation, negotiation and enforcement of this Commitment Letter, the Fee
Letters, the definitive documentation for the Bridge Facility and any ancillary documents and
security arrangements in connection therewith. Notwithstanding any other provision of this
Commitment Letter, no Indemnified Person shall be liable for any indirect, special, punitive or
consequential damages in connection with its activities related to the Bridge Facility.
8. Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities.
You acknowledge that each Commitment Party may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in respect of which you
may have conflicting interests regarding the transactions described herein or otherwise. We will
not furnish confidential information obtained from you by virtue of the transactions contemplated
by this Commitment Letter or our other relationships with you to other companies. You also
acknowledge that we do not have any obligation to use in connection with the transactions
contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by
us from other companies.
You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship
between you and any of us is intended to be or has been created in respect of any of the
transactions contemplated by this Commitment Letter, irrespective of whether any of us have advised
or is advising you on other matters, (b) each of us, on the one hand, and you, on the other hand,
have an arms-length business relationship that does not directly or indirectly give rise to, nor
do you rely on, any fiduciary duty on the part of any of us, (c) you are capable of evaluating and
understanding, and you understand and accept, the terms, risks and conditions of the transactions
contemplated by this Commitment Letter, (d) you have been advised that each of us is engaged in a
broad range of transactions that may involve interests that differ from your interests and that
none of us has any obligation to disclose such interests and transactions to you by virtue of any
fiduciary, advisory or agency relationship and (e) you waive, to the fullest extent permitted by
law, any claims you may have against any of us for breach of fiduciary duty or alleged breach of
fiduciary duty and agree that none of us shall have any liability (whether direct
5
or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on behalf of or in right of you, including your stockholders, employees or
creditors. Additionally, you acknowledge and agree that each of us is not advising you as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction (including, without
limitation, with respect to any consents needed in connection with the transactions contemplated
hereby). You shall consult with your own advisors concerning such matters and shall be responsible
for making your own independent investigation and appraisal of the transactions contemplated hereby
(including, without limitation, with respect to any consents needed in connection therewith), and
we shall have no responsibility or liability to you with respect thereto. Any review by us of the
Borrower, the Company, the Transactions, the other transactions contemplated hereby or other
matters relating to such transactions will be performed solely for our benefit and shall not be on
behalf of you or any of your affiliates.
You further acknowledge that each of us is a full service securities firm engaged in
securities trading and brokerage activities as well as providing investment banking and other
financial services. In the ordinary course of business, each of us may provide investment banking
and other financial services to, and/or acquire, hold or sell, for its own accounts and the
accounts of customers, equity, debt and other securities and financial instruments (including bank
loans and other obligations) of, you, the Borrower, the Company and other companies with which you,
the Borrower or the Company may have commercial or other relationships. With respect to any
securities and/or financial instruments so held by any of us or any of our customers, all rights in
respect of such securities and financial instruments, including any voting rights, will be
exercised by the holder of the rights, in its sole discretion.
9. Assignments; Amendments; Governing Law, Etc.
This Commitment Letter shall not be assignable by you without the prior written consent of the
Initial Lender and the Arranger (and any attempted assignment without such consent shall be null
and void), is intended to be solely for the benefit of the parties hereto (and Indemnified
Persons), and is not intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto (and Indemnified Persons).
The Initial Lender may assign all or a portion of its commitment hereunder to one or more
prospective Lenders (i) that are acceptable to you (such acceptance not to be unreasonably withheld
or delayed), (ii) that you have identified to us in writing on or prior to the date hereof or (iii)
who are party to the Existing Revolving Credit Agreement as of the date hereof unless otherwise
identified to the Initial Lender on or prior to the date hereof (each, a Permitted Assignee),
whereupon such Commitment Party shall be released from all or the portion of its commitment
hereunder so assigned. Any and all obligations of, and services to be provided by, a Commitment
Party hereunder (including, without limitation, Initial Lenders commitment) may be performed and
any and all rights of such Commitment Party hereunder may be exercised by or through any of their
respective affiliates or branches and, in connection with such performance or exercise, such
Commitment Party may exchange with such affiliates or branches information concerning you and your
affiliates that may be the subject of the transactions contemplated hereby and, to the extent so
employed, such affiliates and branches shall be entitled to the benefits afforded to such
Commitment Party hereunder. This Commitment Letter may not be amended or any provision hereof
waived or modified except by an instrument in writing signed by each of us and you. This
Commitment Letter may be executed in any number of counterparts, each of which shall be an original
and all of which, when taken together, shall constitute one agreement. Delivery of an executed
counterpart of a signature page of this Commitment Letter by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
6
hereof. Section headings used herein are for convenience of reference only, are not part of
this Commitment Letter and are not to affect the construction of, or to be taken into consideration
in interpreting, this Commitment Letter. You acknowledge that information and documents relating
to the Bridge Facility may be transmitted through SyndTrak, Intralinks, the internet, e-mail or
similar electronic transmission systems, and that, in the absence of gross negligence or willful
misconduct by Credit Suisse, none of us shall be liable for any damages arising from the
unauthorized use by others of information or documents transmitted in such manner. The Arranger
may place advertisements in financial and other newspapers and periodicals or on a home page or
similar place for dissemination of information on the Internet or worldwide web as it may choose,
and circulate similar promotional materials, after the closing of the Transactions in the form of a
tombstone or otherwise describing the names of you, the Borrower and your and their affiliates
(or any of them), and the amount, type and closing date of such Transactions, all at the expense of
the Arranger. This Commitment Letter and the Fee Letters supersede all prior understandings,
whether written or oral, between us with respect to the Bridge Facility. THIS COMMITMENT LETTER
AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMMITMENT LETTER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT ANY
DETERMINATION OF WHETHER A COMPANY MATERIAL ADVERSE EFFECT HAS OCCURRED SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
10. Jurisdiction.
Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and
its property, to the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in the Borough of Manhattan in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating to this Commitment
Letter, the Fee Letters or the transactions contemplated hereby or thereby, and agrees that all
claims in respect of any such action or proceeding may be heard and determined only in such New
York State court or, to the extent permitted by law, in such Federal court, (b) waives, to the
fullest extent it may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Commitment Letter, the Fee Letters or the transactions contemplated hereby or thereby in any New
York State court or in any such Federal court, (c) waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court and (d) agrees that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law. Service of any process, summons, notice or document by registered mail addressed to you at
the address above shall be effective service of process against you for any suit, action or
proceeding brought in any such court.
11. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF
THIS COMMITMENT LETTER, THE FEE LETTERS OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.
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12. Confidentiality.
This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter nor the Fee Letters nor any of their terms or substance, nor the activities of any of us
pursuant hereto, shall be disclosed, directly or indirectly, to any other person except (a) to your
officers, directors, employees, attorneys, accountants and advisors on a confidential and
need-to-know basis or (b) as required by applicable law or compulsory legal process (in which case
you agree to inform us promptly thereof prior to such disclosure); provided that you may disclose
this Commitment Letter and the contents hereof and the Fee Letter with certain terms redacted in a
manner reasonably acceptable to us (i) to the Company and its officers, directors, employees,
attorneys, accountants and advisors on a confidential and need-to-know basis, and (ii) in any
prospectus or other offering memorandum relating to any offering of the Permanent Debt Financing.
Notwithstanding anything herein to the contrary, any party to this Commitment Letter (and any
employee, representative or other agent of such party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions contemplated by
this Commitment Letter and the Fee Letters and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and tax structure,
except that (i) tax treatment and tax structure shall not include the identity of any existing or
future party (or any affiliate of such party) to this Commitment Letter or the Fee Letters and (ii)
no party shall disclose any information relating to such tax treatment and tax structure to the
extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.
For this purpose, the tax treatment of the transactions contemplated by this Commitment Letter and
the Fee Letters is the purported or claimed U.S. Federal income tax treatment of such transactions
and the tax structure of such transactions is any fact that may be relevant to understanding the
purported or claimed U.S. Federal income tax treatment of such transactions.
13. Surviving Provisions.
The indemnification, confidentiality, syndication, jurisdiction, governing law and waiver of
jury trial provisions contained herein and in the Fee Letters and the provisions of Section 8 of
this Commitment Letter shall remain in full force and effect regardless of whether definitive
financing documentation shall be executed and delivered and (other than in the case of the
syndication provisions) notwithstanding the termination of this Commitment Letter or the Initial
Lenders commitment hereunder and our agreements to perform the services described herein.
14. PATRIOT Act Notification.
We hereby notify you that, pursuant to the requirements of the USA PATRIOT Act, Title III of
Pub. L. 107-56 (signed into law October 26, 2001) (the PATRIOT Act), each of us and each Lender
is required to obtain, verify and record information that identifies the Borrower, which
information includes the name, address, tax identification number and other information regarding
the Borrower that will allow each of us or such Lender to identify the Borrower in accordance with
the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and
is effective as to each of us and each Lender. You hereby acknowledge and agree that we shall be
permitted to share any or all such information with each other Lender.
8
15. Acceptance and Termination.
If the foregoing correctly sets forth our agreement with you, please indicate your acceptance
of the terms of this Commitment Letter and of the Fee Letters by returning to us executed
counterparts hereof and of the Fee Letters not later than 11:59 PM, New York City time, on July 19,
2011. The Initial Lenders offer hereunder, and our agreements to perform the services described
herein, will expire automatically and without further action or notice and without further
obligation to you at such time in the event that we have not received such executed counterparts in
accordance with the immediately preceding sentence. This Commitment Letter will become a binding
commitment of the Initial Lender only after it has been duly executed and delivered by you in
accordance with the first sentence of this Section 15. Thereafter, all commitments and
undertakings of each Commitment Party hereunder will expire on the earliest of (hereinafter, the
Outside Date) (a) the Termination Date (as defined in the Merger Agreement in effect as of the
date hereof, including as such date may be extended in accordance with Section 7.1(b) of the Merger
Agreement in effect as of the date hereof), (b) the closing of the Acquisition, (c) the date that
the Merger Agreement is terminated or expires, (d) receipt by the Commitment Parties of written
notice from the Borrower of the Borrowers election to terminate all commitments hereunder in full,
and (e) July 4, 2012 or, if the Borrower elects to extend the commitment hereunder and pays the
relevant Commitment Extension Fee, for up to an additional 180 days (a Commitment Extension),
from the date hereof (which may be in the form of two separate extensions of 90 days each), in each
case in this subclause (e), such termination to occur at 11:59 p.m. of such Outside Date.
[Remainder of this page intentionally left blank]
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We are pleased to have been given the opportunity to assist you in connection with the
financing for the Acquisition.
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Very truly yours,
CREDIT SUISSE SECURITIES (USA) LLC
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By |
/s/ SoVonna Day-Goins
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Name: |
SoVonna Day-Goins |
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Title: |
Managing Director |
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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
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By |
/s/ Nupur Kumar
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Name: |
Nupur Kumar |
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Title: |
Vice President |
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By |
/s/ Shaheen Malik
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Name: |
Shaheen Malik |
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Title: |
Vice President |
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Accepted and agreed to as of
the date first above written:
ENERGY TRANSFER EQUITY, L.P.
By: LE GP, LLC, its general partner
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By |
/s/ John W. McReynolds
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Name: |
John W. McReynolds |
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Title: |
President and Chief Financial Officer |
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11
ANNEX I
PROJECT SIGMA
$3.7 Billion 364-Day Senior Bridge Term Loan Credit Facility
Summary of Principal Terms and Conditions
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Borrower:
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Energy Transfer Equity, L.P., a Delaware limited
partnership (the Borrower). |
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Transactions:
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The Borrower, directly or through one of its
wholly owned domestic subsidiaries (the
Purchaser), intends to acquire (the
Acquisition) all of the equity interests of
Southern Union Company, a Delaware corporation,
pursuant to an agreement and plan of merger (the
Merger Agreement) entered into among the
Purchaser, the Borrower and the Company on June
15, 2011, as amended and restated on the date
hereof, for a combination of cash consideration
of up to $3.5 billion and common units of the
Borrower (collectively, Acquisition
Consideration). In connection with the
Acquisition, the Borrower will (i) obtain a
364-day senior bridge term loan credit facility
described below under the caption Bridge
Facility and (ii) pay the fees and expenses
incurred in connection with the foregoing (the
Transaction Costs). It is anticipated that
some or all of the Bridge Facility will be
repaid through the Citrus Transfer (as defined
below) and/or replaced or refinanced by the net
proceeds from the issuance of debt securities
(the Senior Notes) or borrowings under a term
loan credit agreement (such facility, together
with the Senior Notes, the Permanent Debt
Financing). The transactions described in this
paragraph, other than the Citrus Transfer (as
defined below) are collectively referred to
herein as the Transactions. |
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Agent:
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Credit Suisse AG, acting through one or more of
its branches or affiliates (CS), will act as
sole administrative agent (collectively, in such
capacities, the Agent) for a syndicate of
banks, financial institutions and other
institutional lenders (together with CS, the
Lenders), and will perform the duties
customarily associated with such roles. |
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Joint Bookrunner and Joint
Lead Arranger:
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Credit Suisse Securities (USA) LLC will act as a
joint bookrunner and a joint lead arranger for
the Bridge Facility described below (in such
capacity, the Arranger), and will perform the
duties customarily associated with such roles. |
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Syndication Agent:
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At the option of the Arranger, one or more
financial institutions identified by the
Arranger and acceptable |
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to the Borrower (in such
capacity, the Syndication Agent). |
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Documentation Agent:
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At the option of the Arranger, one or more
financial institutions identified by the
Arranger and acceptable to the Borrower (in such
capacity, the Documentation Agent). |
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Bridge Facility:
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A 364-day senior bridge term loan credit
facility in an aggregate principal amount of
$3.7 billion (or such lesser amount as is equal
to the lesser of (i) the amount that is
necessary to fund the merger consideration
pursuant to Section 2.3(a) of the Merger
Agreement disregarding the exclusion for
dissenting shareholders or (ii) the amount that
you may elect to borrow in your sole
discretion)(the Bridge Facility). |
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Purpose:
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The proceeds of the Bridge Facility will be used
by the Borrower on the date of the initial
borrowing under the Bridge Facility (the
Closing Date), solely (a) to pay the
Acquisition Consideration, (b) to pay the
Transaction Costs and (c) to refinance
outstanding obligations under and replace the
Existing Revolving Credit Agreement if such
agreement is terminated. |
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Availability:
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The Bridge Facility must be drawn in a single
drawing on the Closing Date which shall occur on
or prior to the Outside Date. Amounts borrowed
under the Bridge Facility that are repaid or
prepaid may not be reborrowed. |
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Guarantees:
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Each existing and subsequently acquired or
organized subsidiary of the Borrower that is a
guarantor under the Existing Revolving Credit
Agreement (as defined below) will guarantee (the
Guarantees) the Bridge Loans on a senior
basis. |
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Interest Rates and Fees:
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As set forth on Annex I hereto. |
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Default Rate:
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The applicable interest rate plus 2.0% per annum. |
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Final Maturity, Amortization
and Conversion:
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The Bridge Facility will mature on the date that
is 364 days after the Closing Date (the
Maturity Date). There will be no scheduled
amortization. |
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Term-Out Option:
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The Borrower shall have the right to elect to
extend the Maturity Date to the date that is 15
months after the Closing Date with respect to
50% of the loans funded under the Bridge
Facility (the Term-Out Loans), subject to (i)
the provision of 30 days prior written notice of
the intent to exercise such election and (ii)
payment of the Term-Out Fee (as defined in Annex
I). |
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Mandatory Prepayments and
Commitment Reductions:
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After the Closing Date, the aggregate loans
under the Bridge Facility shall be prepaid, in
each case, dollar-for-dollar, by the following
amounts: |
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(a) 100% of the net cash proceeds of all asset
sales (other than the Citrus Transfer as defined
below) or other dispositions of property by the
Borrower and its restricted subsidiaries
(including proceeds from the sale of the stock
of any restricted subsidiary of the Borrower and
insurance and condemnation proceeds) (an Asset
Sale) in excess of $50.0 million in the
aggregate, subject to exceptions and
reinvestment provisions to be agreed upon; |
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(b) 100% of the net cash proceeds received by
the Borrower or any restricted subsidiary of the
Borrower from any incurrence of debt for
borrowed money (including, without limitation,
the net cash proceeds of any Permanent Debt
Financing) other than (i) any intercompany debt
of the Borrower or any of its wholly-owned
subsidiaries, (ii) any debt of the Borrower or
any of its subsidiaries incurred in the ordinary
course under any Existing Debt Instrument (which
shall include, for the avoidance of doubt, the
Revolving Credit Agreement dated as of September
10, 2010 among the Borrower, the lenders from
time to time a party thereto, Credit Suisse AG,
as Administrative Agent, and others (the
Existing Revolving Credit Agreement)), (iii)
borrowings to fund capital expenditures and
other general corporate purposes and (iv) other
debt for borrowed money to be agreed upon; and |
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(c) the net cash proceeds from the sale of all
of the outstanding equity interests in Citrus
Corp (the Citrus Transfer) by the Borrower or
any of its affiliates other than the Company and
its subsidiaries. |
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On or prior to the Closing Date, the aggregate
commitments in respect of the Bridge Facility
under the Commitment Letters shall be
permanently reduced by (1) 100% of the net cash
proceeds from any Permanent Debt Financing, (2)
100% of the net cash proceeds from any term loan
borrowing pursuant to any amendment,
restatement, modification or replacement of the
Existing Revolving Credit Agreement and (3) 100%
of the net cash proceeds from any issuance of
equity or equity-linked securities (in a public
offering or private placement) by the Borrower
other than (i) any equity issued pursuant to any
employee stock plan or employee compensation
plan in effect as of date hereof, (ii) any
equity issued as part of the Acquisition
Consideration, (iii) preferred units issued in
one or more transactions to facilitate any Drop
Down and (iv) other exceptions to be agreed
upon. |
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Without duplication of the foregoing, if on or
prior to the Closing Date, the Borrower obtains
an amendment of the Existing Revolving Credit
Agreement to permit the Transactions or
otherwise replaces the Existing Revolving Credit
Agreement with a new senior revolving credit
agreement, the aggregate commitments in respect
of the Bridge Facility under the Commitment
Letters shall be permanently reduced by an
amount equal to the commitments of the lenders
thereunder; provided the reduction under this
paragraph shall not exceed $200.0 million. |
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Voluntary Prepayments and
Reductions in Commitments:
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Voluntary reductions of the unutilized portion
of the commitments under the Bridge Facility and
prepayments of borrowings thereunder will be
permitted at any time, in minimum principal
amounts to be agreed upon, without premium or
penalty, subject to reimbursement of the
Lenders redeployment costs in the case of a
prepayment of Adjusted LIBOR borrowings other
than on the last day of the relevant interest
period. |
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Representations
and Warranties:
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Substantially similar to the Existing Revolving
Credit Agreement, (to be applicable to the
Borrower and its restricted subsidiaries)
including only the following: corporate status;
authority; no conflict; financial condition
(including audited financial statements, interim
financial statements and no material adverse
change); enforceable obligations; rights to
properties; litigation; no violation; ERISA;
Investment Company Act; tax returns and
payments; compliance with laws (including
PATRIOT Act, OFAC, FCPA and margin regulations);
no default; environmental matters; solvency;
full disclosure; subsidiaries; use of proceeds;
and status as senior debt, in each case subject
to exceptions to permit the Transactions, to
permit the Drop Downs and others to be agreed
upon. |
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Drop Downs means (a) the Citrus Transfer and
(b) the sale or transfer (by merger or
otherwise) of the Companys direct or indirect
interest in Southern Union Gas Services, Ltd. to
Regency Energy Partners, LP. or its subsidiaries
or to Energy Transfer Partners, L.P. or its
subsidiaries, in the case of (a) or (b), which
may be preceded by a sale or transfer (by merger
or otherwise) of such interest to the Borrower
or its wholly-owned subsidiaries or one or more
newly formed affiliated entities, and in each
case, all transactions related thereto. |
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Conditions Precedent to
Initial Borrowing:
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The initial borrowing under the Bridge Facility
will be subject solely to the conditions
precedent set forth in Section 6 of the
Commitment Letter and Exhibit A to the
Commitment Letter. |
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Affirmative Covenants:
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Substantially similar to the Existing Revolving
Credit Agreement (to be applicable to the
Borrower and its restricted subsidiaries),
including only the following: information
(including, annual financial statements,
quarterly financial statements, officers
certificates, default, change in the Borrower
ratings, securities laws filings, ERISA matters,
PATRIOT Act and other financial information);
notice of material events; maintenance of
property; maintenance of insurance; maintenance
of existence; compliance with laws (including
PATRIOT Act, OFAC, FCPA and margin regulations);
books and records; environmental matters;
further assurances; and securities demand and
cooperation, in each case subject to exceptions
to permit the Transactions, to permit the Drop
Downs and others to be agreed upon. |
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Negative Covenants:
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Substantially similar to the Existing Revolving
Credit Agreement (to be applicable to the
Borrower and its restricted subsidiaries),
including only the following: limitations on
liens and sale-leaseback transactions;
limitations on mergers or consolidation;
limitations on asset sales; restrictive
agreements; limitations on debt; limitations on
dividends on, and redemptions and repurchases
of, equity interests and other restricted
payments (other than usual and customary
distributions for a master limited partnership
similar to those included in the Existing
Revolving Credit Agreement); limitations on
investments in non-wholly owned entities and
acquisitions of entities or business units;
limitations on transactions with affiliates;
amendments or waivers of certain agreements;
fiscal year; conduct of business; tax status;
and limitations on hedging contracts, in each
case subject to exceptions to permit the
Transactions, to permit the Drop Downs and
others to be agreed upon. |
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Financial Covenant:
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Substantially similar to Existing Revolving
Credit Agreement (as may be amended,
supplemented or modified from time to time), in
each case, subject to modifications to reflect
the Transactions and Drop Downs and such other
modifications as may be mutually agreed upon. |
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Unrestricted Subsidiary:
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On the Closing Date, the Borrower may designate
one or more subsidiaries as an unrestricted subsidiary. |
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Thereafter, the Borrower will be
permitted to designate any existing or
subsequently acquired or organized subsidiary as
an unrestricted subsidiary and subsequently
re-designate any such unrestricted subsidiary as
a restricted subsidiary so long as the fair
market value of such subsidiary at the time it
is designated as an unrestricted subsidiary
shall be treated as an investment by the
Borrower at such time. Unrestricted
subsidiaries will not be subject to the
representation and warranties, affirmative or
negative covenant or event of default provisions
of the documentation. |
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Events of Default:
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Substantially similar to the Existing Revolving
Credit Agreement (to be applicable to the
Borrower and its restricted subsidiaries),
including only the following (subject, where
appropriate, to thresholds and grace periods to
be agreed upon): nonpayment of principal,
interest or other amounts; violation of
covenants; incorrectness of representations and
warranties in any material respect; cross event
of default and cross acceleration; bankruptcy;
material judgments; ERISA events and change of
control; in each case subject to exceptions to
permit the Transactions, to permit the Drop
Downs and others to be agreed upon. |
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Voting:
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Amendments and waivers of the definitive credit
documentation will require the approval of
Lenders holding more than 50% of the aggregate
amount of the loans and commitments under the
Bridge Facility (with certain amendments and
waivers also requiring class votes), except that
the consent of (a) each affected Lender shall be
required with respect to (i) increases in the
commitment of such Lender, (ii) reductions or
forgiveness of principal, interest or fees
payable to such Lender, (iii) extensions of the
Maturity Date or of the date for payment to such
Lender of any interest or fees and (iv) changes
that impose any additional restriction on such
Lenders ability to assign any of its rights or
obligations and (b) each Lender shall be
required with respect to (i) modifications to
certain provisions requiring the pro rata
treatment of Lenders, (ii) modification to
voting requirements or percentages, and (iii)
releases of all or substantially all of the
value of the Guarantees. |
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Cost and Yield Protection:
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Usual for facilities and transactions of this
type, including customary tax gross-up
provisions. |
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Assignments and
Participations:
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Prior to the Closing Date, the Lenders will be
permitted to assign commitments under the Bridge
Facility with the consent of the Borrower, not
to be unreasonably withheld or delayed; provided
that such |
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consent of the Borrower (x) shall not
be required (i) if such assignment is made to
another Lender under the Bridge Facility or an
affiliate or approved fund of any such Lender,
(ii) if such assignment is made to a Permitted
Assignee or (iii) after the occurrence and
during the continuance of an event of default
and (y) shall be deemed to have been given if
the Borrower has not responded within five
business days of a request for such consent.
From the Closing Date, the Lenders will be
permitted to assign loans under the Bridge
Facility without the consent of the Borrower.
Each assignment will be in an amount of an
integral multiple of $1,000,000. Assignments
will be by novation. |
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The Lenders will be permitted to sell
participations in loans and commitments without
restriction. Voting rights of participants
shall be limited to matters in respect of (a)
increases in commitments of such participant,
(b) reductions of principal, interest or fees
payable to such participant, (c) extensions of
final maturity of the loans or commitments in
which such participant participates and (d)
releases of all or substantially all of the
value of the Guarantees. |
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Expenses and
Indemnification:
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The Borrower will indemnify the Arranger, the
Agent, the Syndication Agent, the Documentation
Agent, the Lenders, their respective affiliates,
successors and assigns and the officers,
directors, employees, agents, advisors,
controlling persons and members of each of the
foregoing (each, an Indemnified Person) and
hold them harmless from and against all
reasonable out of pocket costs, expenses
(including reasonable fees, disbursements and
other charges of counsel) and liabilities of
such Indemnified Person arising out of or
relating to any claim or any litigation or other
proceeding (regardless of whether such
Indemnified Person is a party thereto and
regardless of whether such matter is initiated
by a third party or by the Borrower, the Company
or any of their respective affiliates or equity
holders) that relates to the Transactions,
including the financing contemplated hereby, the
Acquisition or any transactions in connection
therewith; provided that no Indemnified Person
will be indemnified for any cost, expense or
liability to the extent determined in the final,
non-appealable judgment of a court of competent
jurisdiction to have resulted primarily from its
gross negligence or willful misconduct. In
addition, the Borrower shall pay all reasonable,
out-of-pocket expenses (including, without
limitation, fees, |
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disbursements and other
charges of counsel) of (a) the Arranger, the
Agent, the Syndication Agent and the
Documentation Agent in connection with the
syndication of the Bridge Facility, the
preparation and administration of the definitive
documentation, and amendments, modifications and
waivers thereto, and (b) the Arranger, the
Agent, the Syndication Agent, the Documentation
Agent and the Lenders for enforcement costs and
documentary taxes associated with the Bridge
Facility. |
Governing Law and Forum:
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New York. |
Counsel to Agent
and Arranger:
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Simpson Thacher & Bartlett LLP. |
8
ANNEX I
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Interest Rates:
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The interest rates under the Bridge Facility will
be, at the option of the Borrower, Adjusted LIBOR
plus the Applicable Adjusted LIBOR Margin (as
defined below) or ABR plus the Applicable ABR
Margin (as defined below). |
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The Borrower may elect interest periods of 1, 2, 3
or 6 months for Adjusted LIBOR borrowings. |
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Calculation of interest shall be on the basis of
the actual days elapsed in a year of 360 days (or
365 or 366 days, as the case may be, in the case of
ABR loans based on CS Prime Rate) and interest
shall be payable at the end of each interest period
and, in any event, at least every three months. |
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ABR is the Alternate Base Rate, which is the
highest of (a) CS Prime Rate, (b) the Federal
Funds Effective Rate plus 1/2 of 1.0%, and
(c) Adjusted LIBOR for a one-month interest period,
plus 1.0%. |
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Adjusted LIBOR will at all times include statutory
reserves, and shall be deemed to be not less than
1.0%. |
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Pricing
Definitions:
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For the purposes hereof, the terms Applicable
Adjusted LIBOR Margin shall mean for the period
commencing on the Closing Date and ending on the
60th day thereafter, a rate per annum of 4.0% and
thereafter the Weighted Average Cap (as defined in
the Fee Letter) and Applicable ABR Margin shall
mean for the period commencing on the Closing Date
and ending on the 60th day thereafter, a
rate per annum of 3.0% and thereafter the Weighted
Average Cap minus 1.0%. |
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Duration Fees:
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The Borrower will pay a fee (the Duration Fee),
for the ratable benefit of the Lenders, in an
amount equal to (i) 0.50% of the
aggregate principal amount of the loans and
commitments under the Bridge Facility outstanding
on the date which is 90 days after the Closing
Date, due and payable in cash on such 90th day (or
if such day is not a business day, the next
business day); (ii) 0.75% of the
aggregate principal amount of the loans and
commitments under the Bridge Facility outstanding
on the date which is 180 days after the Closing
Date, due and payable in cash on such 180th day (or
if such day is not a business day, the next
business day); and (iii) 1.00% of the
aggregate principal amount of the loans and
commitments under the Bridge Facility outstanding
on the date which is 270 days after the Closing
Date, due and payable in cash on such 270th day (or
if such day is not a business day, the next
business day). |
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Term-Out Fee:
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The Borrower will pay a fee in an amount equal to 1.25% of the
Term-Out Loans (the Term-Out Fee). The Term-Out Fee will be payable on the earlier to occur
of (i) the original Maturity Date and (ii) the effective date of exercise of the Term-Out
Option. |
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EXHIBIT B
PROJECT SIGMA
$3.7 Billion 364-Day Senior Bridge Term Loan Credit Facility
Summary of Additional Conditions Precedent
The initial borrowing under the Bridge Facility shall be subject to the following additional
conditions precedent:
1. The Acquisition and the other Transactions shall be consummated simultaneously with the
closing under the Bridge Facility in accordance with the Merger Agreement; the Merger Agreement
shall not have been amended or modified, and no condition shall have been waived or consent
granted, in any respect that is material and adverse to the Lenders without the Arrangers prior
written consent (such consent not to be unreasonably withheld or delayed), it being understood and
agreed that any increase or decrease in the Acquisition Consideration (other than as a result of
any adjustment to the Acquisition Consideration as provided in the Merger Agreement as in effect on
the date hereof), any change to the definition of Company Material Adverse Effect or any
extension of the date for consummation of the merger, except as contemplated by the Merger
Agreement on the date hereof shall in each case be deemed to be material and adverse to the
Lenders.
2. After giving effect to the Transactions and the other transactions contemplated hereby, the
Borrower shall have outstanding no indebtedness or preferred stock other than (a) the loans and
other extensions of credit under the Bridge Facility, (b) the Permanent Debt Financing, (c) the
indebtedness incurred under the agreements and instruments set forth on their most recent filings
with the SEC (the Existing Debt Instruments), (d) the Series A convertible preferred units, (e)
any preferred units issued in one or more transactions to facilitate any Drop Down, (f) the
Existing Credit Agreement as amended, modified, refinanced, restated or replaced, and (g) other
limited indebtedness to be agreed upon.
3. The Arranger shall have received (a) U.S. GAAP audited consolidated balance sheets and
related statements of income, partners equity and cash flows of each of the Borrower and the
Company for the three most recent fiscal years ended at least 90 days prior to the Closing Date and
(b) U.S. GAAP unaudited consolidated and (to the extent available) consolidating balance sheets and
related statements of income, partners equity and cash flows of each of the Borrower and the
Company for each subsequent fiscal quarter (other than any fourth fiscal quarter) ended at least 45
days before the Closing Date.
4. The Arranger shall have received a pro forma consolidated balance sheet and related pro
forma consolidated statements of income and cash flows of the Borrower as of and for the
twelve-month period ending on the last day of the most recently completed four-fiscal quarter
period for which financial statements have been delivered pursuant to paragraph 3 above, prepared
after giving effect to the Transactions as if the Transactions had occurred as of such date (in the
case of such balance sheet) or at the beginning of such period (in the case of such other financial
statements).
5. The Agent shall have received customary legal opinions, corporate organizational documents,
good standing certificates, resolutions and other customary closing certificates.
6. The Agent shall have received a certificate from the chief financial officer of the
Borrower in form and substance reasonably satisfactory to the Agent certifying that the Borrower
and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other
transactions contemplated hereby, are solvent. It is understood and agreed that the solvency
certificate in the form attached hereto on Schedule I shall be deemed to be in a form satisfactory
to the Agent.
7. The Arranger, the Agent, the Syndication Agent, the Documentation Agent and the Lenders
shall have received all fees and expenses invoiced at least two (2) days prior to the Closing Date
required to be paid on or prior to the Closing Date.
8. The Arranger shall have received, at least five business days prior to the Closing Date,
all documentation and other information required by regulatory authorities under applicable know
your customer and anti-money laundering rules and regulations, including, without limitation, the
PATRIOT Act to the extent that such information is requested at least seven days prior to the
Closing Date.
B-2
SCHEDULE I
Form of Solvency Certificate
[See following page]
SOLVENCY CERTIFICATE
OF
ENERGY TRANSFER EQUITY, L.P. AND ITS SUBSIDIARIES
[__], 201__
This Solvency Certificate (the Certificate) of Energy Transfer Equity, L.P., a Delaware
limited partnership (the Borrower), and its Subsidiaries is delivered pursuant to Section [__] of
the 364-Day Credit Agreement dated as of [__] 201__ (the Credit Agreement) by and among the
Borrower, the Lenders from time to time party thereto, Credit Suisse AG, as Administrative Agent,
[__], as Documentation Agent, [__], as Syndication Agent. Unless otherwise defined herein,
capitalized terms used in this Certificate shall have the meanings set forth in the Credit
Agreement.1
I, [ ], the duly elected, qualified and acting Chief Financial Officer of the Borrower, DO
HEREBY CERTIFY in my capacity as an officer of the Borrower, as follows:
1. I have carefully reviewed the Credit Agreement and the other [Loan Documents] referred to
therein (collectively, the Transaction Documents) and such other documents as I have deemed
relevant and the contents of this Certificate and, in connection herewith, have made such
investigation, as I have deemed necessary therefor. Furthermore, I confirm and acknowledge that
the Administrative Agent and the Lenders are relying on the truth and accuracy of this Certificate
in connection with the Commitments and Loans under the Credit Agreement.
2. I have reviewed the pro forma consolidated balance sheet, attached hereto as Exhibit A,
delivered to the Administrative Agent and the Lenders pursuant to Section [__] of the Credit
Agreement (the Balance Sheet). I am familiar with the financial performance and prospects of the
Borrower and its Subsidiaries and hereby confirm that the Balance Sheet was prepared in good faith
and fairly presents, on a pro forma basis as of [__] (after giving effect to the transactions
contemplated by the Transaction Documents), the Borrowers and its Subsidiaries pro forma
consolidated financial condition, based on the information available to the Borrower and its
Subsidiaries at the time so furnished.
3. As of the date hereof, before and after giving effect to the Transactions, the fair value
of any and all property of the Borrower and its Subsidiaries, on a consolidated basis, is greater
than the probable liability on existing debts of the Borrower and its Subsidiaries, on a
consolidated basis, as they become absolute and matured.
4. As of the date hereof, before and after giving effect to the Transactions, the present fair
saleable value of any and all property of the Borrower and its Subsidiaries, on a consolidated
basis, is greater than the probable liability on existing debts of the Borrower and its
Subsidiaries, on a consolidated basis, as they become absolute and matured.
As of the date hereof, before and after giving effect to the Transactions, the Borrower and
its Subsidiaries, on a consolidated basis, are solvent and are able to pay their debts (including,
without limitation, contingent and subordinated liabilities) as they become absolute and mature.
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Note: Description to be modified to reflect the
description of the final Credit Agreement. Defined terms used herein shall
also be modified to reflect the defined terms used in the final Credit
Agreement. |
5. The Borrower and its Subsidiaries, on a consolidated basis, do not intend to, nor do they
believe that they will, incur debts that would be beyond their ability to pay as such debts mature.
6. As of the date hereof, before and after giving effect to Transactions, the Borrower and its
Subsidiaries are not engaged in businesses or transactions, nor about to engage in businesses or
transactions, for which any property remaining would, on a consolidated basis, constitute
unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which they are engaged.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, I have executed this Certificate as of the date first written above.
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By: |
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Name: |
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Title: |
Chief Financial Officer |
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